March 72007

 

Court

Decision in Northwest Airlines Could Deter Hedge Fund Activity in
Bankruptcy Cases

A fight between Northwest
Airlines and a group of hedge funds to force each other to tip their
hands on investment decisions and discussions has led to what could be a

pivotal ruling on hedge fund disclosure, the Associated Press reported
yesterday. U.S. Bankruptcy Judge Allan Gropper is expected
today to make a final decision after ruling last week that a group of 13

investors must disclose information about the size of their equity
stakes in Northwest, when they bought and sold and what they paid. The
outcome has the potential to deter hedge fund involvement in companies
under bankruptcy court protection, restructuring lawyers say, which
could take away one of the newer tools companies use to help them exit
bankruptcy. 'It's a big deal for the hedge funds,' Kirkland & Ellis
LLP restructuring partner Jonathan Henes said. 'Hedge funds just cannot
disclose their trading histories and what they hold and what they
paid.'Henes said that if Judge Gropper held firm on his decision, the
larger hedge funds that can afford to hire their own attorneys would
continue to do so. Smaller firms, though, would be less likely to join
ad hoc equity committees if they are required to disclose their trading
information, he said. A group of 13 hedge funds led by Owl Creek Asset
Management LP plans to ask Judge Gropper to reconsider his decision to
force disclosure of their trading activity. The group said in a Jan. 11
filing that at that time it collectively held a $164.7 million equity
stake, some of which was acquired after Northwest had already entered
bankruptcy.

href='http://www.signonsandiego.com/news/business/20070306-1423-northwest-bankruptcy.html'>Read

more.

Chase

CEO to Apologize for Overcharges at Hearing

The chief executive of Chase
Card Services, one of the nation's five largest credit card issuers,
will apologize to Congress at a hearing today for charging a financially

strapped customer $7,500 in interest charges and late fees on purchases
of $3,200, the Washington Post reported today. Richard J.
Srednicki's apology before the Senate Permanent Subcommittee on
Investigations will follow testimony by the customer, Ohio resident
Wesley Wannemacher, on how Chase's penalty fees and interest charges
made his initial bill triple over six years. The hearing by the
subcommittee, part of the Homeland Security and Governmental Affairs
Committee, will examine credit card industry practices that subcommittee

Chairman Carl M. Levin (D-Mich.) says are 'unfair' and 'unethical.'
Wannemacher has paid the bank $6,300 - nearly twice the amount of his
original purchase - since March 2001. At the end of February, he still
owed $4,400. Chase said that as a result of his case, it will no longer
charge additional over-limit fees after a customer is over his or her
limit for more than 90 days.

href='http://www.washingtonpost.com/wp-dyn/content/article/2007/03/06/AR2007030602308_pf.html'>Read

more.

Fed
Chief Seeks to Limit Mortgage Agencies

Ben S. Bernake, chairman of the

Federal Reserve, urged Congress on Tuesday to bolster regulation of the
mortgage giants Fannie Mae and Freddie Mac, and suggested limiting their

holdings to guard against their debt posing any danger to the overall
economy, the Associated Press reported today. Bernanke has previously
supported efforts to pare the two mortgage companiesâ huge
portfolios. This time, however, he was a bit more specific and
recommended that their holdings might be linked to a 'measurable public
purpose, such as the promotion of affordable housing.' Bernanke said he
wanted to be clear that by suggesting the change in Fannie Mae's and
Freddie Mac's portfolio holdings, he was not advocating a change in the
exposure of the mortgage giantsâ subprime loans.

href='http://www.nytimes.com/2007/03/07/business/07fed.html?pagewanted=print'>Read

more.

name='4'>Amtrol Files Reorganization Plan

Amtrol Holdings Inc. has filed
its chapter 11 plan that will provide a debt-for-equity swap with
holders of its $97.8 million in senior subordinated notes, and allow
pre-petition and post-petition lenders and unsecured creditors to be
repaid in full, BankruptcyLaw360 reported yesterday. The
plan, filed on March 1, gives Amtrol's senior noteholders the option to
trade their notes for either a pro-rata share of 100 percent of
reorganized Amtrol's stock or a cash payment of 60 percent of the
principal amount of their notes. In its disclosure statement, filed
concurrently with its reorganization plan, Amtrol said it expects to
close on a $25 million revolving exit financing facility and a $110
million term loan, according to court documents. A confirmation hearing
for the plan has not been scheduled.

href='http://www.bankruptcylaw360.com/Secure/ViewArticle.aspx?id=19870'>Read

more. (Registration required.)

name='5'>Calpine Allowed to Seek Post-Petition
Financing

A bankruptcy judge on Monday
granted energy provider Calpine Corp.'s request to obtain a $5 billion
replacement of its debtor-in-possession loan to facilitate its exit
funding refinancing and debt repayment,
BankruptcyLaw360 reported yesterday. Several lenders have
objected since Calpine filed its motion earlier this year, concerned
over whether they would be able to seek pre-payments or damages.
Bankruptcy Judge Burton R. Lifland considered the objections when

issuing his decision, and calculated a percentage of damages that the
secured lenders could claim. When it filed its motion, Calpine said it
would use the funds to refinance the debtors' existing $2 billion
debtor-in-possession financing, and to repay approximately $ 2.5 billion

of secured pre-petition debt at one of the debtors' largest operating
subsidiaries, Calpine Generating Co. LLC.

href='http://www.bankruptcylaw360.com/Secure/ViewArticle.aspx?id=19912'>Read

more. (Registration required.)

Giuliani
Selling Investment Firm to Focus on Campaign

Rudolph W. Giuliani
announced the planned sale of his boutique investment bank to an
Australian company, a transaction that a company official said was part
of Giuliani’s increasing focus on his presidential campaign, the
New York Times reported yesterday.

The firm, Giuliani
Capital Advisors, is being sold to the Macquarie Group, a financial
services business based in
w:st='on'>
size='3'>Sydney,

size='3'>Australia
size='3'>, with more than 9,600 employees worldwide. Terms of the sale,
which is expected to be final in June, were not
released.

Giuliani Capital Advisors, a
subsidiary of Giuliani Partners, advises parties in bankruptcy
proceedings and has a practice in mergers and acquisitions. It has about

100 employees and reported revenues of $47.8 million in 2005, its most
recent filing, and the firm’s officials have described
Giuliani’s role as very limited. 

href='http://www.nytimes.com/2007/03/06/us/politics/06rudy.html?_r=1&oref=slogin&pagewanted=print'>Read

more.

 

Allied Files Joint Plan,
Seeks Removal Extension

Allied Holdings Inc. has filed
a joint reorganization plan and disclosure statement,
BankruptcyLaw360 reported yesterday. Allied filed a motion
Monday seeking the extension of the time that it has to request the
removal of cases from state to federal court, the fifth such motion that

Allied has filed during its bankruptcy case. The majority of suits
Allied faces are for product liability and automobile claims, according
to the motion. Allied wants the court to push pack the removal deadline
through May 31. The court had previously set the deadline at March 16.

href='http://www.bankruptcylaw360.com/Secure/ViewArticle.aspx?id=19866'>Read

more. (Registration required.)

Autos

name='7'>CEO Sees Difficulties in Splitting Off Chrysler
Brands

DaimlerChrysler CEO Dieter
Zetsche said that it would be difficult to break up Chrysler, as
analysts and other experts have speculated recently, because of an
integrated production system that binds together its various brands, the

New York Times reported today. 'Chrysler Group is very
integrated,' Zetsche said. 'The technical lines, like platforms, do not
go along the same lines as the brands. The less they are aligned with
the brands, the more difficult it would be to think of any separation.'
Zetsche emphasized that he was making an observation, not commenting on
options for how DaimlerChrysler might sell the Chrysler unit - a
prospect it confirmed three weeks ago that it was considering. However,
his statement seemed to reinforce reports that DaimlerChrysler hoped to
sell Chrysler as a single unit, rather than pull out single brands like
Jeep.

href='http://www.nytimes.com/2007/03/07/business/07auto.html?_r=1=slogin=business=print'>Read

more.

name='8'>  Wagoner Doesn't Expect to See Consolidation in U.S.
Auto Industry

General Motors Corp. Chief
Executive Rick Wagoner said he doesn't expect a consolidation in the
U.S. auto industry in the near term despite the intense pressures from
fierce competition and excess production capacity, the Wall Street
Journal reported today. He said that the U.S. auto industry has

enough plants to produce more vehicles than it sells for at least 10
years and that reducing manufacturing capacity is very difficult in the
auto industry. On another key issue facing GM, Wagoner said he believes
the chances of the U.S. adopting a national health care system are low,
even though rising health care costs have been attracting increased
attention in political circles. 'The U.S. economy has a huge
competitiveness issue over health care costs,' Wagoner said. He remains
doubtful, however, that the government will enact new laws that take
over a major portion of health care costs from corporations. 'From where

we are today, for the U.S. to embrace a national health-care system, if
our business strategy was waiting for that, that's high risk,' he said.

href='http://online.wsj.com/article/SB117326739289829456.html?mod=home_whats_news_us'>Read

more. (Registration required.)

name='9'>  Naturade Expects to Emerge from
Bankruptcy

Naturade Inc., a supplier of
natural nutritional supplements, said it expects to emerge from chapter
11 bankruptcy before the end of March after its reorganization plan was
approved by a U.S. bankruptcy court, Reuters reported yesterday. Under
the plan, Naturade's controlling shareholder Redux Holdings Inc. will
provide a substantial cash infusion to meet Naturade's future working
capital needs. The plan also features a comprehensive debt restructuring

and an equity allocation and allows existing shareholders in the company

to retain an equity interest.

International

name='10'>  Germany Says Corporate Bankruptcies
Down

The number of German businesses

filing for bankruptcy plunged to a six-year low last year as Europe's
biggest economy recovered, the Associated Press reported today. The
German Federal Statistics Office said that 30,562 firms went under in
2006, a 17 percent decrease from the previous year. That was the lowest
number since 2000, when 28,235 companies went bankrupt. The statistics
office also said that corporate bankruptcies were down 14.4 percent in
December from the same month a year earlier, with 2,515 companies going
under.

href='http://www.kiplingerforecasts.com/apnews/XmlStoryResult.php?storyid=320453'>Read

more.

name='11'>TROUBLED COMPANIES IN THE NEWS

1000’s of companies lose
money or experience some form of difficulty each
quarter. 

The business news
articles below are taken from the

size='3'>Daily Summary of Troubled & Fast Growing U.S. Companies and

Other Business News published by Bastien
Financial Publications. 

To begin receiving the COMPLETE

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Aksys, a Lincolnshire, Il. maker of kidney-dialysis machines,
said that its board of directors voted to cease operations. The firm
said in a recent filing with the Securities and Exchange Commission that

it owes more than $23 million on a loan from its majority shareholder,
Durus Life Sciences Master Fund.

Baron & Budd PC, a Dallas, Tx. plaintiffs' law firm, laid
off 160 workers at its own operations and those of its LeBlanc &
Waddell LLP affiliate.

Digital Angel Corp., a St. Paul, Mn. identification, location,

tracking and monitoring technology firm, reported a fiscal net loss of
$6.8 million on flat revenue of $57 million.

Huttig Building Products Inc., a St. Louis, Mo. distributor of

building materials, is shuttering a distribution facility in Hauppauge,
N.Y., affecting about thirty jobs. The firm cited the downturn in the
housing market and its $7.7 million loss in 2006.

Marriott International, the big hotel operator, revealed that
the Internal Revenue Service is challenging nearly $1 billion of past
tax deductions going back as far as fiscal 2000. Marriott, which says it

will defend its position, could face significant taxes and penalties if
the IRS claim stands.

USDTV in Salt Lake City, Ut. will close down its
digital-television service. The company had tried for four years to
build up a service that would compete with cable television.

For more information on companies throughout the U.S. that are facing

the challenge of today's competitive marketplace, e-mail
href='mailto:steve@creditnews.com'>steve@creditnews.com or call
800-407-9044.