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January 10, 2008
Autos
face='Times New Roman'
size='3'>
name='1'>Delphi Begins Bankruptcy Financing
Talks
Delphi Corp. said today that it
plans to begin
talks this week with potential lenders for a $6.1 billion loan to help
the auto-parts
supplier exit bankruptcy, the Associated Press reported yesterday. The
proposed exit
facilities are being arranged by J.P. Morgan Securities Inc. and
Citigroup Global Markets
Inc. Delphi, which expects to emerge from chapter 11 this quarter,
reduced the amount of
the loan from $6.8 billion after retiming some payments from
2007 and lowering
projections for some planned cash payments in 2008.
href='http://biz.yahoo.com/ap/080109/delphi_bankruptcy.html?.v=1'>Read
more.
name='2'>GM's Ex-Finance Chief
to Be Chairman of Dana
Former General Motors
Corp. CFO John Devine
is poised to become chairman of auto-parts supplier Dana Corp. when the
company emerges
from bankruptcy protection as early as this month, the
face='Times New
Roman' size='3'>Wall Street Journal reported
today. Devine, who
also served as Ford Motor Co.'s CFO in the late 1990s, was part of a
group of former auto
executives and other individuals who have agreed to serve on Dana's
board once it emerges
from nearly two years in chapter 11. The list includes Gary Convis,
former chairman of
Toyota Motor Corp.'s North American manufacturing; Jerome York, former
chief financial
officer of what is now Chrysler LLC; and Mark Schulz, who recently
retired as head of
Ford's international operations. Dana had its reorganization plan
approved by 96 percent of
its unsecured creditors and has a $2 billion exit-financing commitment.
Dana's plan values
the company at $3.9 billion. It projects to break even on sales of $8.6
billion this year,
then earn $274 million on sales of $9 billion in 2009.
href='http://online.wsj.com/article/SB119993112412579873.html?mod=us_business_whats_news'>R
ead more. (Registration required.)
Million Government Settlement
A unit of American
International Group Inc.,
the world's largest insurer, yesterday agreed to pay $42.5 million to
clean up hazardous
waste sites in three states, the Associated Press reported yesterday.
The American
International Specialty Lines Insurance Co. Inc. agreed to pay an
initial $30 million
payment and 10 annual payments of $1.25 million to the Fruit of the Loom
trusts to clean up
contamination at four sites in
face='Times New Roman'
size='3'>Michigan,
w:st='on'>
face='Times New Roman' size='3'>New Jersey
size='3'>and
size='3'>Tennessee. The
sites were owned by
Fruit of the Loom, which filed for bankruptcy in 1999 and was acquired
in 2002 by
billionaire Warren Buffett's Berkshire Hathaway Inc. The court set up
two trusts to receive
and distribute the company's remaining assets, including its
environmental insurance
policies. The trusts tried to collect environmental cleanup costs from
the AIG unit under
an insurance policy that covered response costs and natural resource
damages. However,
American International Specialty Lines Insurance denied coverage and
then filed suit
seeking to confirm that it was not obligated to pay the trusts,
according to the Justice
Department, which intervened in the case on behalf of the Environmental
Protection Agency
href='http://biz.yahoo.com/ap/080109/aig_settlement.html?.v=2'>Read
more.
Mortgage
Lending
name='4'>Countrywide Spurs
Further Investor Selloff
Shares of Countrywide
Financial Corp. fell
further yesterday after the mortgage lender said its delinquency rate
continued to climb in
December as more homeowners are increasingly falling behind on their
mortgage payments,
the Wall Street
Journal
size='3'>reported today. Countrywide's loan delinquency rate rose to 7.2
percent of unpaid
principal balances from 4.6 percent a year earlier and 6.5 percent in
November. The
size='3'>U.S.'s
largest mortgage
firm also said it funded $23.55 billion in loans last month, above its
expectations and
slightly more than November's $23.25 billion -- but down from $42.83
billion a year
earlier. Countrywide's average daily applications in December were $1.54
billion, down 44
percent from a year earlier and down 17 percent from November's $1.85
billion. The
mortgage-loan pipeline was $35.06 billion, compared with $57.22 billion
a year earlier and
href='http://online.wsj.com/article_print/SB119992324655779333.html'>Read
more. (Registration required.)
name='5'>New Century, GECC Ask
for Approval of Chapter 11 Deal
Bankrupt New Century
Financial Corp. and
General Electric Capital Corp. have come to terms over claims in the
chapter 11 case,
asking a judge to allow GECC to hold a $5.3 million unsecured claim
after it received a
$1.8 million disbursement,
size='3'>Bankruptcy
Law360 reported yesterday. The bankrupt
company said $1.8 million
had already been disbursed to GECC through a reserve fund from a sale in
its case. In
addition to $390,000 that was already paid or returned to GECC, the
payment completely
satisfies the secured portion of GECC's claims, the motion said. A
hearing on the claims
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=43596'>Read
more. (Registration required.)
name='6'>PBGC Balks
at
size='3'>New York Racing's
Latest Chapter 11
Plan
The Pension Benefit Guaranty
Corp. (PBGC) is
protesting the New York Racing
nt size='3'>Association's latest chapter 11 proposal, arguing that the
bankrupt racing
franchise has failed to properly account for claims arising out of the
potential
termination of its five pension plans, Bankruptcy Law360
reported
yesterday. The PBGC initiated termination proceedings for NYRA's five
pension plans at the
end of December, citing concern over NYRA's ability to fund the plans in
the future. The
government agency pointed out that NYRA's plan was only 66 percent
funded, creating a $71.5
million shortfall that PBGC will now be forced to pick up.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=43635'>Read
more.
(Registration required.)
name='7'>Asarco Rebuffed in
Appeal over Pension Arbitration
Bankrupt copper producer
Asarco Inc. has
lost a bid to overturn a federal court's ruling that the union
representing its retired
workers was entitled to arbitration in a dispute over pension
benefits,
face='Times New Roman' size='3'>Bankruptcy Law360 reported
size='3'>yesterday. Asarco appealed a judgment of the
w:st='on'>
face='Times New Roman' size='3'>Arizona
size='3'>district court
that sided with the United Steelworkers of America and 20 former
employees who were laid
off from the company's copper smelting plant in
w:st='on'>
w:st='on'>El
Paso
size='3'>,
size='3'>Texas, nine years
ago. In a ruling
issued Monday, the U.S. District Court for the Ninth Circuit found that
the retirees, who
were denied their pension benefits under the company's retirement plan,
had the right to be
heard before an arbitration panel.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=43634'>Read
more.
(Registration required.)
In related news, hedge
fund Harbinger
Capital Partners is trying to deny Lehman Brothers Holdings' bid to get
paid in Asarco
LLC's bankruptcy case, the latest instance in which Lehman's work for
the mining company
has come under fire, the Associated Press reported yesterday. Harbinger,
an Asarco
bondholder, said in court papers filed yesterday with the U.S.
Bankruptcy Court in
w:st='on'>
size='3'>Chris
size='3'>ti,
w:st='on'>Texas
that Lehman 'has
failed to effectively perform its duties.' The fund, which was joined in
its objection by
Citigroup Global Markets, said that the Wall Street firm isn't
'consistently and
meaningfully' communicating with bondholders.
name='8'>Deloitte Agrees to Pay
Parmalat Bondholders
Deloitte & Touche USA
LLP and a
committee representing 32,000 Parmalat SpA bondholders reportedly
reached a deal on
Wednesday to reimburse the bondholders for the damages they suffered
from the dairy
company's fall into bankruptcy
size='3'>, Bankruptcy
Law360 reported yesterday. Under the
settlement, compensations
for bondholders would be up to 6 percent of the nominal value of the
investments made
before Nov. 11, 2003, Parmalat's ex-auditor said. The average payments
will provide 4.5 to
5 percent of up to €50,000 worth of bonds.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=43667'>Read
more. (Registration required.)
Payroll Services
Files for Bankruptcy
Axium International Inc.,
the entertainment
industry's third-largest payroll services and accounting firm, filed for
chapter 7 and
shuttered its offices in Los Angeles, New York, Toronto and London, the
Associated Press
reported yesterday. Employees were told in e-mail messages that the
company had a
'liquidity crisis' that forced it to cease all operations, said Randy
Klinenberg, chief of
Axium's rights-management software unit RightsMax. There was no
indication if the
bankruptcy was related to the
face='Times New Roman'
size='3'>Hollywood writers strike, now
in its third
month.
href='http://biz.yahoo.com/ap/080109/axium_bankruptcy.html?.v=1'>Read
more.
name='10'>Companies File
Bankruptcy Petition Against C.W. Mining
Aquila Inc. of
w:st='on'>
size='3'>Kansas
City, Mo., has filed an
involuntary chapter 11
petition against C.W. Mining Co., which also does business at Co-op
Mining Co., in an
effort to collect a $24.8 million judgment it won against it, the
face='Times New
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Roman' size='3'>Salt Lake City Tribune
size='3'>reported today. The involuntary petition, filed Tuesday in the
U.S. Bankruptcy
Court in
face='Times New Roman'
size='3'>Salt Lake City,
alleges that C.W.
Mining isn't paying its debts as they become due. Joining the petition
were House of Pumps
Inc. and Owell Precast LLC of
w:st='on'>
face='Times New
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Roman'
size='3'>Sandy, Utah. House
of Pumps says it's
owed $19,255, and Owell claims to be owed $3,440. In late October of
last year, Federal
Judge Tena Campbell ordered Price-based C.W. Mining to pay nearly $25
million to
size='3'>Aquila
size='3'>for failing to deliver on a contract for hundreds of thousands
of tons of
coal. Read
more.
w:st='on'>
face='Times New Roman' size='3'>Fed Chairman
Faces Wall
Street
size='3'> Criticism
While many on Wall Street
argue that Federal
Reserve Chairman Ben Bernanke should be dealing more aggressively with
the stock market
falling, unemployment rising and the economy flirting with a recession,
Bernanke has plenty
of defenders, particularly among academic economists, who say he is
exceptionally qualified
for the task of steering the nation’s monetary policy, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today.
Wall Street’s quarrel is partly with the Fed’s reluctance to
cut interest rates
even more than it already has, but they also object to what they
describe as the
Fed’s failure to accompany each cut with a statement on the
dangers ahead. However,
his fellow economists favor Bernanke’s attempts to be more
informative about the
Fed’s deliberations and to reflect diverging viewpoints in the
statements and the
rate cuts. The economists are concerned that the economy will not
respond to lower interest
rates. They note that the Fed, apart from lowering rates, has also made
money available on
easy terms to banks and to other lending institutions in which the
lenders and borrowers
href='http://www.nytimes.com/2008/01/10/business/10bernanke.html?_r=1&oref=slogin&r
ef=business&pagewanted=print'>Read more.
href='http://www.nytimes.com/2008/01/10/business/10bernanke.html?_r=1&oref=slogin&r
ef=business&pagewanted=print'>