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September 7, 2005
name='1'>Advocates Seek Delay of Bankruptcy Law For Hurricane
Victims
An effort to allow victims of Hurricane Katrina to avoid tough new
bankruptcy
rules set to take effect next month appeared to gain momentum
yesterday,
the Pittsburgh Post-Gazette reported today. A group of
House Democrats
led by Rep. John Conyers Jr. (D-Mich) hoped to have legislation
drafted
by as early as tomorrow aimed at protecting families and small
businesses
in the hurricane-ravaged South from extra costs, restrictions and
paperwork
that kick in under the new bankruptcy law Oct. 17.
The Consumer Federation of America along with the National
Association
of Consumer Bankruptcy Attorneys planned a news conference for this
morning
to urge Congress to act quickly to enact the protections. In the
Senate last
week, Sen. Russ Feingold (D-Wis.) said he was considering an
amendment to
delay the law's Oct. 17 implementation date, but an aide said
yesterday that
he wasn't sure if that idea was still under review.
Even an amendment targeted at disaster victims could be tough to
pass, observers
said. "How that would be viewed by proponents of [the new law]
that
they labored many years to pass, I don't know," said Sam
Gerdano, executive
director of the nonpartisan American Bankruptcy Institute. In any
case, Gerdano
questioned the need for special exemptions for hurricane victims. He
said
the new law already gives the courts discretion to waive provisions
under
special circumstances.
href='http://www.post-gazette.com'>Read more.
id='2'>Sanders introduces Credit Card Protection Act
Rep. Bernie Sanders (I-Vt.) yesterday announced legislation aimed
at ending
what he called "some of the most egregious anti-consumer
practices of
the nation's credit card companies," the Burlington Free
Press reported
today.
"
Too many Americans have been taken advantage of by the deceptive
advertising
of the credit card companies," Sanders said in a news release.
"Charging
economically vulnerable Americans outrageous interest rates and fees
is simply
not acceptable."
The Consumer Credit Card Protection Act of 2005 would stop some of
the
most egregious practices by prohibiting "bait and switch"
scams that
raise consumers' interest rates for events wholly unrelated to the
consumer's
credit card account. For example, by law, credit card issuers can
raise a
person's interest rate for a late payment on a telephone bill that
occurred
before that person applied for, received and potentially transferred
a balance
to, a so-called "fixed rate" credit card. This bill would
prohibit
that practice. The bill, if passed, would also require credit card
companies
to provide real notice to consumers before raising interest rates or
charging
fees (not hiding rate increases or fees provisions in the small font
of a "terms
agreement") and waiting for consumers to notice that their
rates have
jumped or that they have been charged an astronomical fee.
id='3'>Asbestos-linked Shares Fall as Congress Reconvenes
Shares of companies
with
asbestos liabilities tumbled yesterday on expectations that the U.S.
Congress
would put an asbestos bill on the back burner to focus on providing
relief
to victims of Hurricane Katrina and on helping to fill two seats on
the
U.S. Supreme Court, Reuters reported today. At midday on the New York
Stock
Exchange, Chemical company W.R. Grace and Co. was down 6.5 percent at
$10.96,
while USG Corp., a maker of building materials, fell 5.3 percent to
$63.93.
Owens Corning, a bankrupt fiberglass insulation maker, slid 6.6
percent to
trade at $4.98. Bankrupt aluminum producer Kaiser Aluminum Corp. fell
4.8 percent
to 6 cents a share, the newswire reported.
Analysts said that these priorities were likely to temporarily
delay attempts
by the Senate to create a $140 billion asbestos victims'
compensation fund
-- a bill that many Democrats and Republicans have expressed concern
about. "It's
just that Hurricane Katrina and the second vacancy on the Supreme
Court just
add additional uncertainty as far as timing," Crystal Skinner
at Susquehanna
Financial Group said. The co-author of the asbestos bill said
yesterday,
however, that he hoped it would come to the Senate floor during the
first
week of October. Senate Judiciary Committee Chairman Arlen Specter
(R-Penn.)
said that he was discussing the timetable with Senate Republican
Leader Bill
Frist (R-Tenn.). Specter noted that "a lot of variables are in
play" as
Congress recasts its agenda after Katrina and ahead of Supreme Court
hearings
next week.
id='4'>Productivity Revised Lower to 1.8 Percent
The productivity of
U.S.
nonfarm businesses slowed in the second quarter, while labor costs
shot sharply
higher, the Labor Department said today in a revision of an earlier
estimate,
CBS Marketwatch reported. Productivity - defined as output per hour
worked
- increased at a 1.8 percent annual rate in the quarter, down from 2.2
percent
estimated a month ago. It's the slowest increase since the third
quarter of
2004. In the past year, productivity has increased 2.2 percent, the
slowest
rate in more than two years. In the second quarter, output increased
4.1 percent
annualized while hours worked rose 2.2 percent. Hourly compensation
increased
4.4 percent, but just 0.2 percent when adjusted for inflation.
href='http://www.bls.gov/lpc/'> Read
the full story.
id='5'>San Diego City Council Opts Not to Fire Pension Board
President
The San Diego City
Council
yesterday decided not to fire the president of the board governing the
debt-ridden
San Diego City Employees' Retirement System, but filled one of four
vacancies
on the panel, Signonsandiego News Services reported yesterday. The
council
voted 3-3 against removing Peter Preovolos from the volunteer position
he's
held since being appointed in April. Preovolos, and the retirement
system board,
have drawn criticism from Councilwoman Donna Frye, who is running for
mayor,
and City Attorney Michael Aguirre for their continued refusal to waive
attorney-client
privilege for documents sought by investigators.
href='http://www.signonsandiego.com/news/metro/pension/20050906-1836-pension.html#'>Read
More.
id='6'>Diocesan Bankruptcies Raise Church Ownership Issues
The decision of three U.S.
dioceses to seek protection from creditors through the federal
bankruptcy
courts was always a gamble, according to an editorial in the
National
Catholic Reporter.
One has already lost the gamble in a first round in court, one has
sidestepped
the issue, and the third awaits its fate. At the heart of these
proceedings
is the question appearing with increasing frequency as dioceses face
financial
crises: Who owns the church? Facing hundreds of millions of dollars
in potential
awards to victims of clergy sexual abuse, the bishops of Tucson,
Ariz., Spokane,
Wash, and Portland, Ore., were convinced over the past year that
chapter
11 provided the best means to put their dioceses on sound financial
footing.
Critics
say that the dioceses hoped to avoid the scrutiny of civil trials.
The bishops
contend that the relatively orderly bankruptcy process affords the
best measure
of justice to both abuse victims and innocent parishioners.
href='http://www.ncronline.org/NCR_Online/archives2/2005c/090905/090905a.php'>
Read
the full story.
In other news, a federal judge ignored evidence and centuries of
religious
law when she ruled that Catholic churches and schools could be sold
to pay
sexual abuse claims against the Catholic Diocese of Spokane,
asserted an
appeal filed Tuesday by Bishop William Skylstad, the Spokesman
Review reported
today. Through his attorneys, Skylstad pointed to 11 areas where he
contends
that U.S. Bankruptcy Judge Patricia Williams erred
in her analysis of the
important legal question of whether parish assets belong to the
diocese.
Parishes named in the lawsuit also urged an immediate review by U.S.
District
Court in Spokane, arguing that the case is among the first of its
kind and
therefore ripe for appeal. Parishes, the diocese and alleged victims
have
all acknowledged that the case presents so many "firsts"
that appeals
will play an important role.
Airlines
id='7'>Airline Shakeout: High
Energy Costs Could Expand A Gap Between Strong and Weak
The Wall Street
Journal
reported today that the soaring cost of jet fuel is punishing the
airline industry's
weaker players -- which could present an opportunity for investors
willing
to make risky bets on the stronger ones. Jet-fuel prices have risen
faster
than crude-oil prices recently amid strong demand and tight supply. In
the
aftermath of Hurricane Katrina, supplies could be reduced further in
the United
States, where Gulf Coast refineries have been hobbled by the storm.
Likely
winners include budget leaders Southwest Airlines and Ireland's
Ryanair Holdings.
Such beleaguered carriers as Delta Air Lines and Italy's Alitalia,
meanwhile,
stand poised to suffer even more.
href='http://online.wsj.com/article/0,,SB112605838421433567,00-search.html?KEYWORDS=bankruptcy&COLLECTION=wsjie/archive'>Read
the full story.
id='8'>United Shifts Bankruptcy
Exit Goal to Mid-January
United Airlines has
now
targeted mid-January for its exit from bankruptcy, meaning it will
miss its
goal to emerge in 2005 and will pass a third anniversary operating
under court
protection, the Chicago Tribune reported today. The airline
is expected to
file its reorganization plan with the bankruptcy court in Chicago
today. Last
week, it filed a proposed plan confirmation schedule that would
culminate with
hearings the third week of January. Those hearings are expected to
take several
days. The No. 2 carrier had hoped to leave bankruptcy protection this
fall,
but meeting such a schedule proved overly optimistic when the filing
of the
reorganization plan was delayed last month at the request of
creditors. The
committee representing those owed money by United wanted more time to
review
the proposal.
id='9'>S&P Further Downgrades
Northwest's Debt Rating
Standard &
Poor's downgraded
Northwest Airlines Corporation's debt further into junk status
yesterday, several
days after the fourth-largest U.S. carrier warned that it is running
out of
time to avoid bankruptcy, the Associated Press reported today.
Northwest's
S&P rating fell from CCC+ to CCC- for its long-term corporate
debt. "Northwest
is managing through a strike by its mechanics well, but dramatically
increased
fuel expense and delays in securing needed concessions from other
unions have
deepened losses and are eroding its liquidity," S&P credit
analyst
Philip Baggaley said. Northwest warned Thursday that it expects to
lose $350
million to $400 million during the third quarter and that its
unrestricted
cash had fallen to $1.7 billion, down from $2.14 billion just two
months earlier.
Even though it will be flying less than usual, Northwest expects to
pay $900
million for fuel during the fourth quarter, 39 percent more than the
same period
last year.
href='http://www.baltimoresun.com/business/bal-bz.ual07sep07,1,2551229.story?coll=bal-business-headlines'>Read
more.
id='10'>This Month Pivotal for Owens
Corning Bankruptcy Exit Strategy
As Owens Corning
approaches
the fifth anniversary of its chapter 11 bankruptcy filing Oct. 5,
lawyers on
all sides agree that September will be a month for negotiating —
and
preparing to continue the fight, the Toledo Blade reported
yesterday. “This
is a relatively sensitive time in the case,” Norman
Pernick,
the company’s
lead bankruptcy lawyer in Wilmington, Del., said at a recent court
hearing.
Feuding bond, bank and asbestos claims creditors met with the company
last
month and will continue meeting this month to discuss the framework
for a new
bankruptcy-exit plan after an Aug. 14 appellate court ruling upset the
existing
proposal. But even as those meetings take place, the court fight
continues.
The U.S. Court of Appeals in Philadelphia has given parties until next
Tuesday
to reply to a request for a re-hearing on the issue of whether OC and
its subsidiaries
should be treated as one company or separately.
href='http://www.toledoblade.com/apps/pbcs.dll/article?AID=/20050906/BUSINESS03/50906035/-1/BUSINESS'>Read
more.
id='11'>Interstate Bakeries Turns
Monthly Profit
The sale of two
company
properties in California and Idaho helped Interstate Bakeries Corp.
yesterday
report its first monthly profit since filing for bankruptcy protection
almost
a year ago, the Lawrence Journal-World reported today. The
Kansas City, Mo.-based
maker of Wonder Bread and Hostess Twinkies said that it made $283,864
for the
four weeks ending July 23. Revenues actually fell to $250.8 million,
the lowest
in four months, and the company said it paid $4.2 million in
professional fees,
retention bonuses and other costs tied to its ongoing restructuring.
But the
company said those charges were offset by an $11.3 million gain made
on the
sale of two properties in San Pedro, Calif., and Boise, Idaho.
id='12'>May Resigns as HealthSouth
Chairman
Bob May, the
HealthSouth
Corp. board chairman who assured jittery investors in 2003 that the
fraud-scarred
company wouldn't seek bankruptcy, resigned yesterday. May was part of
HealthSouth's
emergency executive team in the months after the FBI raided the
Birmingham,
Ala. - based company's headquarters in March 2003, which led to the
indictment
of former Chief Executive Richard Scrushy and the first Sarbanes-Oxley
case
against
a
company leader, the Birmingham News reported today. May cited
increasing
personal and professional responsibilities for his resignation
Tuesday. He
is succeeded
as chairman by HealthSouth Director Jon Hanson.
id='13'>Anchor Glass Objections Filed
Anchor Glass
Container's
official committee of unsecured creditors filed an objection with the
U.S.
Bankruptcy Court to the company's motion for an order authorizing it
to obtain
post-petition financing and grant security interests and super
priority administrative
expense status, modifying the automatic stay, authorizing the company
to enter
into agreements with Wells Fargo National Association and granting
adequate
protection. The committee further objected to the company's motion
seeking
final approval of the debtor-in-possession financing from Wells Fargo.
For
more on Anchor Glass.
id='14'>Officials Hopeful Cities Can Buy Out NorthWestern
Back in June, the
group
of cities organized as Montana Public Power Inc. offered to buy
NorthWestern
Corp. for $32.50 a share, a $2 billion deal, the Billings
Gazette reported
yesterday. NorthWestern board members responded with a unanimous and
emphatic "no
thanks."
But that doesn't mean that the South Dakota-based utility, which
recently emerged
from bankruptcy, won't be sold whether company officials like it or
not. At
least one powerful hedge fund, which bought a huge piece of the
distressed
utility during bankruptcy reorganization, is seriously considering the
cities'
offer. The New York City hedge fund Harbert Distressed Investment
Master Fund
has hired a New York law firm and a group of financial analysts to
analyze
the terms.
href='http://www.montanaforum.com/modules.php?op=modload&name=News&file=article&sid=3608&mode=thread&order=0&thold=0'>Read
More.
name='15'>Some local lawyers, credit
counselors already seeing the effects of impending bankruptcy
bill
Local officials say
bankruptcy
reform won't affect most of those filing for debt relief, the
Muscatine
Journal reported today. However, for those it does affect, the
costs will be greater.
John Miller, chief executive officer of the Credit Bureau of
Muscatine, provides
the Muscatine and Louisa county recorders' offices with a variety of
statistics,
including divorces, deaths, marriages, births and bankruptcies. Miller
says
he hasn't noticed a sharp increase in bankruptcy filings since the
reform bill
was approved. "Not yet. We're kind of waiting for that, though.
We're
concerned with credit health, and bankruptcy is a last resort, but
this could
be one of those scares that creates a mad rush."