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October 11, 2005
Automotive
Industry
Delphi and 38 of its
domestic
U.S. subsidiaries filed for chapter 11 on Saturday in New York,
PRNewswire reported
over the weekend. Delphi’s non-U.S. subsidiaries were not
included in the filing.
Delphi’s global management team will continue to manage both the
U.S. and global
businesses, and the company expects to emerge from chapter 11 in early
to mid-2007.
href='http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/…'>Read
the full story. Robert Dellinger will take over as CFO for newly
bankrupt
Delphi, Smartpros.com reported yesterday. Dellinger, 45, was most
recently the
CFO for Sprint Corp. Meanwhile, Bank of America Leasing & Capital
(BOA)
filed an objection Delphi’s motion to secure secured
post-petition financing
on a super priority basis, authorizing the use of cash collateral and
granting
adequate protection to secured pre-petition lenders,
BankruptcyData.com reported
today.
id='2'>Delphi
Pensions Could Be Saved
Delphi
Corp.’s CEO said that
the auto supplier could save its pension plan for U.S. hourly workers
only if
unions agree to work for a third of their former pay and benefits, the
Wall
Street Journal reported today. Robert "Steve" Miller
said that
if the United Auto Workers (UAW) agree to cut wages and benefits to
about $20
an hour, Delphi could be competitive with other auto-parts makers.
With those
wages, Miller said that Delphi also could generate enough capital to
help shore
up a pension plan underfunded by about $5 billion. The average union
worker’s
wage-and-benefit package at Delphi is about $65 an hour. Last week,
just days
before Delphi filed, the UAW rejected demands to cut workers’
pay package to
between $16 and $18 an hour.
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=48363%2B11…'>Read
more.
General Motors
A Wall Street
analyst warned
that General Motors has a 30 percent chance of filing for bankruptcy
following
the bankruptcy filing of GM’s largest parts supplier, Delphi,
the U.K. Guardian
reported today. The filing means that GM, which spun off Delphi in
1999, could
be liable for up to $11 billion in health care and pension benefits
for workers
who transferred to the parts supplier. It also faces possible supply
disruptions.
href='http://www.guardian.co.uk/business/story/0,3604,1589111,00.html'>Read
the full story.
id='4'>GM
Fears Up to $11 Billion Delphi Tab
GM said that it
may owe nothing
to Delphi’s union work force, setting the stage for a showdown
on the issue
with Delphi, its biggest supplier, in U.S. Bankruptcy Court, the
Detroit
News reported yesterday. The role of GM in Delphi’s historic
bankruptcy
filing is unclear on many fronts, none more so than what the No. 1
U.S. automaker
owes thousands of union workers formerly employed by GM before it spun
off Delphi
as a separate company in 1999.
href='http://www.detnews.com/2005/autosinsider/0510/10/A01-343339.htm'>Read
the full story.
id='5'>Pension
Funds Likely to Vex Next N.J. Governor
The rising cost of
providing
retirement benefits and health care to New Jersey’s retired
government
workers, elected officials, teachers, police and firefighters is
expected to
rise by $500 million in the coming year alone, the Gloucester
Times reported
yesterday. The winner of the Nov. 8 contest between Republican Douglas
Forrester
and Democrat Jon Corzine will need to find a way to cover the cost or
to restructure
perks and entitlements for state workers, one political scientist
said. Currently,
212,019 retired public employees derive benefits from six separate
pension systems.
href='http://www.nj.com/news/gloucester/local/index.ssf?/base/news-1/11288458…'>Read
more.
id='6'>Bankruptcy
Filing Rush Is On
For the week ending
Oct. 1,
bankruptcy courts reported a total of 68,387 filings, up from the
previous record
high of 55,052 the week before, according to data from Lundquist
Consulting.
Year-to-date, the number of filings has grown 14 percent compared with
the same
period in 2004, CNN Money reported yesterday. On a daily basis, the
increase
is far more dramatic. There were more than 13,000 filings per day on
average
in the week ending Oct. 1. That’s almost double the average
number of filings
per day in August. "The attorneys in my practice tell me
they’re absolutely
buried," said John Penn, president of the American
Bankruptcy Institute
and a partner in the Texas firm Haynes and Boone.
href='http://money.cnn.com/2005/10/10/pf/debt/bankruptcy_runup/index.htm?sect…'>Read
more.
id='7'>Former
Adelphia Executives Indicted
Adelphia
Communications’ founder
John J. Rigas and his son Timothy, the company’s former CFO,
were indicted by
a federal grand jury in an alleged $315 million tax-evasion scheme,
BankruptcyData.com
reported today. The Rigases were convicted in 2004 of conspiracy and
securities
fraud. Prosecutors accused them of looting Adelphia to finance $50
million in
cash advances, buy $1.6 billion in securities and repay $252 million
in margin
loans. A new grand jury indictment unsealed in Williamsport, Pa.,
charges the
pair with evading federal income taxes on some of those payments,
which were
booked as loans or "co-borrowing agreements." The new
indictment charges
that John Rigas, Adelphia’s former CEO, failed to report income
of $143 million
and that Timothy Rigas failed to report income of $239 million. They
were charged
with one count each of conspiracy to defraud the U.S. government and
separate
tax-evasion violations for 1998, 1999 and 2000. If convicted on all
counts,
the two could face a maximum of 20 years in prison and a fine of up to
$1 million.
Read more.
id='8'>Judge
OKs Falcon’s Bankruptcy Plan
Bankruptcy Judge
Barry Schermer
approved the reorganization plan of Falcon Products Inc. of Olivette,
Mo., allowing
the furniture maker to emerge from bankruptcy later this month as a
privately
held business, the St. Louis Post-Dispatch reported on Friday.
Schermer
also approved Falcon’s request to terminate its three pension
plans despite
opposition from the Pension Benefit Guaranty Corp. Terminating the
plans will
save $18.9 million in the next seven years, the company said. However,
the PBGC
balked at the idea of taking over Falcon’s plans. It had
estimated that the
plans were underfunded by about $34 million. A spokesman for the PBGC
said that
the corporation was reviewing its options. It could seek to appeal
Schermer’s
decision. If the PBGC doesn’t appeal, it will contact retirees
about their pensions
in several weeks. Under the reorganization plan, secured lenders
Oaktree Capital
Management LLC and Whippoorwill Associates Inc. take a majority
ownership in
the reorganized company through a debt-for-equity swap. They plan to
keep Falcon
a private company; its shares formerly were traded on the New York
Stock Exchange.
id='9'>Techneglas
Gets OK to Exit Chapter 11
The U.S. Bankruptcy
Court for
the Southern District of Ohio confirmed Techneglas’
reorganization plan Friday
and expects the process to close in the fourth quarter, the
Columbus Business
Journal reported yesterday. After three years of trimming staff,
Techneglas
filed for chapter 11 in September 2004. Its Columbus plant shut down
at the
same time, idling nearly 400 workers. The company has about 15 workers
in Columbus,
CEO Joe Schaeufele said. The staffers are handling accounting and
sales. Schaeufele
wasn’t sure how many would remain after the end of the year.
Techneglas employed
close to 3,500 in the late ‘90s at facilities in Columbus,
Perrysburg
and Pittston, Pa. It retains distribution operation in Perrysburg for
picture
tubes made overseas. The company may be close to a deal to sell its
South Columbus
plant, Schaeufele said. It’s unlikely the plant will be used for
its former
purpose, making glass picture tubes for television sets. Techneglas
suffered
from competition from newer TV formats, such as plasma and LCD
screens, and
cheaper competitors from Asia. Techneglas is a subsidiary of Nippon
Electric
Glass Ltd. of Japan.
id='10'>Spokane
Diocese Plans to Sell Properties to Pay Sex Abuse Claims
The Catholic
Diocese of Spokane
would sell its headquarters and the home of Bishop William Skylstad to
settle
claims of people who contend they were sexually abused by priests,
according
to a plan filed in U.S. Bankruptcy Court yesterday, the Associated
Press reported.
But the issue of who owns individual parishes, schools and other
Catholic property
in the diocese is still unresolved, so the plan carries few specifics
on the
amount of money that would be available for victims, according to
KHQ-TV in
Spokane. Attorneys for victims called the reorganization plan another
delay
tactic by the diocese, which filed for chapter 11 bankruptcy
protection last
December. Diocese attorney Shaun Cross acknowledged that the plan to
emerge
from bankruptcy does not include the usual financial worth information
because
the issue of assets is not decided, but he says that the plan
"creates
a framework for the resolution of all claims in a global way."
Skylstad,
in Rome on church business, issued a statement saying that the plan
deals justly
with the claims of clergy sex abuse while allowing the Spokane Diocese
to continue
its ministry
Airlines
id='11'>JetBlue
Takes on Rivals for Boston-New York Route
JetBlue Airways
Corp. will
use new 100-seat jets to begin up to 10 daily flights between New York
and Boston,
taking on competitors in a long-established air shuttle service on the
same
route, Reuters reported today. JetBlue’s Boston-New York route
will make
it a direct competitor of the traditional air shuttle service flown by
bankrupt
Delta Air Lines Inc. and by US Airways Group Inc., which recently
emerged from
bankruptcy. JetBlue will offer introductory fares of $25 each way on
what will
be up to 10 flights between the cities, with fares later settling at
between
$40 and $120 each way, undercutting the established shuttle. JetBlue
is also
still taking deliveries of its main, larger aircraft type, the Airbus
A320.
id='12'>Two
Unions Court NWA Flight Attendants
Northwest Airlines
Corp.
flight attendants who want to leave their current union now have two
choices,
the Associate Press reported yesterday. The Transportation Workers
Union (TWU)
has said that it will solicit a mail-in vote by Northwest flight
attendants.
They’ve already received cards from the Association of Flight
Attendants (AFA).
A vote in favor of a new union by more than half of Northwest’s
9,600 flight
attendants would prompt an election. The attempts to recruit Northwest
flight
attendants comes at a bad time for their current union, the
Professional Flight
Attendants Association (PFAA). The bankrupt airline is asking workers
for concessions,
and has said that it will ask a bankruptcy court judge to impose the
cuts if
they aren’t negotiated soon. PFAA has also been buffeted by
resignations from
its negotiating committee in the midst of the talks. The TWU already
represents
Southwest Airlines flight attendants. The Association of Flight
Attendants announced
its organizing drive at Northwest on Sept. 14, hours before Northwest
filed
for bankruptcy protection. The AFA represents some 45,000 members at
22 airlines,
including bankrupt United Airlines, a unit of UAL Corp. PFAA has
represented
Northwest flight attendants since 2003, when it persuaded flight
attendants
to leave the Teamsters.