href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif'>
February 21, 2006
name='1'>Pension Measures Remain Far Apart
Reconciling the House-and
Senate-passed bills to force companies to better fund their pension
plans and shore up the Pension Benefit Guaranty Corp. will be difficult
prior to sending legislation to President Bush, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. Making the task more difficult is that the two
Republicans who pushed the legislation this far in their respective
chambers -- Rep. John Boehner (R-Ohio), the newly elected majority
leader, and Sen. Charles Grassley (R-Iowa), chairman of the Finance
Committee -- are far apart on a handful of critical issues. Even naming
the conference committee has been contentious as the Senate is fighting
internally over the size of its contingent with Democrats seeking an
extra slot. Because much of the final language will be decided by the
committee in closed-door meetings, Senate and House members are being
barraged by lobbyists pushing their positions.
href='http://online.wsj.com/article/SB114048102946478530-email.html'>Read
more.
face='Times New Roman' size='3'>
name='2'>Delphi
Motion to Cancel Contracts
Delphi Corp., the
nation’s largest auto parts supplier, has postponed a bankruptcy
motion to nullify its labor contracts and has set a March 30 deadline to
reach an agreement with General Motors Corp. and its unions, according
to executive leaders with the United Auto Workers,
w:st='on'>
size='3'>Delphi
the Detroit Free
Press reported on Friday.
size='3'>If Delphi is unable to reach an agreement by March 30, then the
next day
size='3'>Delphi
eliminate labor contracts and terminate hourly retirement health care
and life insurance plans, UAW President Ron Gettelfinger said
today. Jim McTevia, a managing member of
McTevia & Associates LLC Bingham Farms, a turnaround consultancy
firm, said even if
fails to reach an agreement by March 30, the court would
likely grant another extension. “It is my opinion that the court
will grant
size='3'>Delphi
size='3'>as much time as it needs to resolve problems,” said
McTevia.
href='http://www.freep.com/apps/pbcs.dll/article?AID=/20060217/NEWS11/60217003'>Read
more.
USG
Corp. Files Chapter 11 Reorganization Plan
Building products company USG
Corp., which was driven into bankruptcy in 2001 under the weight of
asbestos lawsuits, said it has filed its reorganization plan and plans
to emerge from chapter 11 bankruptcy protection later this year,
according to Reuters on Friday. The company also said a bankruptcy court
hearing to approve its disclosure statement is scheduled for April 3.
Chicago-based USG said the official committee for its asbestos claimants
and its counsel support the plan. USG reached a nearly $4 billion
settlement to resolve all current and future claims for asbestos-related
injuries against it in January.
href='http://today.reuters.com/news/newsArticle.aspx?type=businessNews&storyI…'>Read
more.
In related news, a group
of hedge funds, along with an arm of Fidelity Investments, are
challenging Berkshire Hathaway Inc. for the right to essentially
guarantee a $1.8 billion stock sale from USG Corp, the
face='Times New Roman' size='3'>Wall Street Journal reported
today. USG asked the U.S. Bankruptcy Court for the District of Delaware
last month to let Berkshire, which is controlled by investor Warren
Buffett, become the buyer of last resort for the $1.8 billion stock sale
in exchange for a $100 million fee. A group of
hedge funds led by Deephaven Capital Management LLC last week teamed up
with Fidelity to make a similar commitment, but at a far lower price --
$65 million. The group also is asking for a $12.5 million-plus
termination fee if their offer isn't accepted. If its proposal is
accepted,
size='3'>Berkshire
million regardless of whether of not the offer takes place. The hedge
fund group manages funds in excess of $50 billion, according to a letter
sent to Jeffrey Werbalowsky, the financial adviser to the USG committee
handling the matter.
href='http://online.wsj.com/article/SB114048639538378647-email.html'>Read
more.
World
Health Alternatives Files Chapter 11, Sells Assets
Struggling medical
staffing firm World Health Alternatives Inc. said late Monday that it
voluntarily filed for chapter 11 bankruptcy to speed a sale of its
assets to Jackson Healthcare Staffing, the Pittsburgh Business
Times reported today. For World Health, based
in
size='3'>Pa.
and sale culminate seven months of difficulties that started when the
company disclosed accounting discrepancies last August. Trouble for
World Health began when CEO Richard McDonald resigned for what the
company said were health and family reasons. World Health is now being
run by M. Benjamin Jones, who is an executive at New York-based Conway
Del Genio Gries & Co. LLC, a turnaround firm. He was named
restructuring officer of World Health in November and named president in
December. World Health entered into a 'stalking horse' agreement for the
sale of substantially all of its assets to Jackson Healthcare Staffing,
an affiliate of Jackson Healthcare Solutions LLC, for about $43 million
in cash and the assumption of certain liabilities.
size='3'>World Health also said it had secured $37 million in
debtor-in-possession financing from CapitalSource Finance LLC to pay
employees during the sale process.
href='http://pittsburgh.bizjournals.com/pittsburgh/stories/2006/02/20/daily10…'>Read
more.
name='5'>Galvex Abandons Plan for Chapter 11
Dismissal
In the face of strong
opposition, embattled steel maker Galvex has withdrawn its request to
dismiss chapter 11 proceedings, retreating from the motion it filed two
weeks ago, Portfolio
Media reported on Friday. The request drew
fire almost immediately from U.S. Trustee Deirdre
Martini, who last week questioned the
circumstances that would allow the dismissal of the bankruptcy. Galvex,
which filed for bankruptcy in January after defaulting on an $84 million
loan, reached an agreement with its primary lender Silver Point Capital
last week, asking that its case be thrown out as a result. But Martini
has argued that there are still some questions to be answered regarding
the company’s finances, and has asked the bankruptcy court to deny
Galvex’s request. She said that the company has not furnished
information about the details of the deal with its lender, nor has it
stipulated how it will pay off unsecured creditors. Martini recommended
that the judge appoint a trustee to oversee the case until the specifics
of the agreement are secured. The company listed assets of between $1
and $10 million in its chapter 11 filing.
w:st='on'>
name='6'>Spokane
face='Times



New
Roman' size='3'> Catholic Parishes
Oppose Settlement Offer
An organization of 82
Catholic parishes in
size='3'>Eastern Washington
opposing Spokane Bishop William Skylstad's settlement offer of $45.7
million to victims of sex abuse by priests, the Associated Press
reported on Saturday. The Association of Parishes, which was organized
to represent the financial interests of the individual congregations in
the diocese, contended the settlement raises the prospect that churches
or schools will be sold to raise the money. The effect of the parishes'
opposition is unclear, since a U.S. Bankruptcy Court judge in this case
previously ruled that the bishop controls all parish assets. The
Association of Parishes has appealed that ruling. David Clohessy
of
size='3'>St. Louis
national director of the victims group Survivors Network of those Abused
by Priests, said the opposition of the parishes is not significant. The
Association of Parishes was excluded from the negotiations between
Skylstad and the victims. The payment schedule in the proposed
settlement requires the diocese to pay $10 million this year and nearly
$27 million more in 20 months, creating 'an unacceptably high likelihood
of default by the diocese,' the statement said. 'Default by the diocese
translates into foreclosure on parish properties.'
href='http://seattletimes.nwsource.com/cgi-bin/PrintStory.pl?document_id=2002…'>Read
more.
name='7'>Judge Dismisses Former
w:st='on'>
size='3'>Ohio
size='3'>Mobster’s Bankruptcy Case
Former mob boss Lenny
Strollo's chapter 13 bankruptcy case has been dismissed, which may clear
the way for a civil case against him to proceed, the
face='Times New Roman' size='3'>Youngstown Vindicator
size='3'>reported on Saturday. Judge Kay Woods of U.S.
Bankruptcy Court for the Northern District of Ohio signed the order
Friday, one day after Strollo and his wife, Antoinette Russo, filed a
motion to voluntarily dismiss the case. Strollo filed for bankruptcy
July 25, just before a civil trial was to begin in
w:st='on'>
size='3'>Mahoning County Common Pleas
Court
death suit filed by the wife of a rival mobster.
href='http://www.vindy.com/content/local_regional/290709925285813.php'>Read
more.
Si
Tanka University Bankruptcy Dismissed
A bankruptcy judge has
granted a motion to dismiss Si Tanka University’s bankruptcy case
after determining there were insufficient assets to provide anything to
unsecured creditors, the South Dakota Plainsman reported
yesterday. Bankruptcy Judge Irvin Hoyt granted the request following a
hearing in
face='Times New






Roman'
size='3'>Pierre
w:st='on'>
size='3'>S.D.
size='3'>U.S.
size='3'>rustee had filed a motion to dismiss or convert the case to a
chapter 7 liquidation proceeding. Objecting to the motion were former
faculty members who have wages due them. “There are no
assets to convert to cash to pay unsecured creditors,” Hoyt said.
The judge also found there is no chance of reorganizing under the
chapter 11 and no reason to postpone any possible remedies. A spring
auction is expected for the former Si Tanka University buildings,
equipment and fixtures in Huron unless a prospect can be identified
before then to take over the campus.
href='http://www.plainsman.com/main.php?story_id=8067&page=23'>Read
more.
Enron
to Pay $134 Million for Workers, Retirees
Enron Corp.’s
workers and retirees will receive approximately $134 million under the
defunct energy company’s settlement of government and employee
claims, the
w:st='on'>
size='3'>U.S.
face='Times New Roman'> Department of Labor
announced, according to
size='3'>Portfolio Media on Friday. The figure
is nearly 38 percent of the $356.25 million Enron agreed to pay in
summer of 2005 on claims made by the department and the company's
retirement plan participants.
size='3'>'This agreement secures $134 million in cash, which will be
distributed to workers and retirees through their retirement plans. The
department will not rest until we have done everything we can to help
employees and retirees recover what they are owed,' Labor Secretary
Elaine Chao said. State Street Bank and Trust of Boston were hired to
oversee the retirement plans for Houston-based Enron and will be in
charge of the distribution. In addition to the $134 million settlement,
Enron officers previously agreed to pay $86.85 million to settle charges
of mismanagement of employee benefit plans. The settlement does not
include separate charges against the company’s fallen top
executives, Kenneth Lay and Jeffrey Skilling.
face='Times



New
Roman' size='3'>Alabama Officials Concerned
Increases in Pensions May Harm the State
Alabama's top pension
officials are warning lawmakers that the Retirement System of Alabama's
(RSA) financial health could decline if they give 7 percent pension
increases this fall to about 80,000 retirees of public schools and state
agencies, according to the
size='3'>Birmingham News on Sunday. Plans for
the increases are zooming through the legislature, along with plans to
give 5 percent pay raises to about 130,000 active employees of public
schools and state agencies. The increases would take effect Oct. 1.
All 140 seats in the legislature are up for grabs in the Nov. 7 general
election. Lawmakers last fall raised pensions for retirees by 4 percent.
That increased RSA's future obligations - its promised pension payments
to current and future retirees - by an estimated $500 million, RSA chief
executive David Bronner told lawmakers earlier this month. He urged them
to be cautious about giving retirees too big an increase this coming
fall; a 7 percent raise for retirees of public schools and state
agencies would increase RSA's future obligations by $817.1
million.
href='http://www.al.com/printer/printer.ssf?/base/news/114034424894550.xml&co…'>Read
more.
name='11'>CalPERS Opposes Plan that Would Create New Pension
System
The board of the California
Public Employees Retirement System (CalPERS) has voted to oppose a
constitutional amendment that would institute a less-generous pension
system for government employees hired on or after July 1, 2007, the
Associated Press reported on Friday. The measure by Assemblyman Keith
Richman, R-Chatsworth, would create a new defined-benefit plan for those
workers. It also would allow them to enroll in a voluntary, 401(k)-style
defined-contribution plan. The vote was 10-0 with two representatives of
Gov. Arnold Schwarzenegger abstaining. A 13th board member was absent.
'This bill comes at the wrong time,' said state Treasurer Phil
Angelides, a member of the CalPERS board and a Democratic candidate for
governor. 'This constant attack ... on pension security for the most
valuable public servants needs to stop.'
href='http://www.mercurynews.com/mld/mercurynews/news/local/states/california…'>Read
more.
name='12'>Financial Notables Urge Regulators to Not Dilute
Sarbanes-Oxley
A group of financial
notables has urged regulators to reject a proposal to exempt thousands
of smaller public companies from Sarbanes-Oxley-imposed rules on
internal controls, the
size='3'>Wall Street Journal reported today.
Former Securities and Exchange Chairman Arthur Levitt and former Federal
Reserve Chairman Paul Volcker and others warn in a Feb. 13 letter that
such a rule relaxation is 'misguided' and 'simply goes too far' in
addressing the concerns of small companies. Exempting smaller companies
from the internal-controls rules would be a mistake, according to the
letter writers. 'When new accounting and corporate-fraud scandals
develop, as they surely will, people will ask who was responsible for a
policy decision resulting in such sweeping exemptions,' they
wrote.
href='http://online.wsj.com/article/SB114049341489878791-email.html'>Read
more.
name='13'>Pension Problems? Not for Brokers
Business is booming for
those financial planners big and small able to tap into the growing
market of workers who are no longer confident of trusting their
retirement to their employers, according to Forbes Magazine
on Friday. 'The rank and file public doesn't make the
fine distinction between pension, profit sharing, 401(k); they hear
pensions are in trouble and worry about their own,' says financial
planner Joseph Birkofer of Legacy Asset Management in
w:st='on'>
size='3'>Houston
Benefit Guaranty Corp. statistics show that the number of
private-sector-defined benefit plans in the
w:st='on'>
size='3'>U.S.
plunged to 30,000 from 112,000 since 1985. Assets in defined-benefit
plans--plans that promised a certain payout on retirement--have dropped
to under $1.8 trillion from $2.1 trillion in 1999, according to the
Employee Benefit Research Institute, despite rising asset values over
the same period. EBRI notes that almost two-thirds of private sector
retirement assets are now held in defined-contribution plans, which
specify only the funds contributed now, not a retiree's payout. A recent
study by benefits consultant Hewitt Associates shows that 38 percent
of
face='Times New Roman'
size='3'>U.S.
size='3'>employers plan to offer a defined-benefit plan by the end of
2006, compared to 83 percent in 1990.
href='http://www.forbes.com/2006/02/16/pension-retirement-planning-cx_tvn_021…'>Read
more.
International
name='14'>Heros Files for Bankruptcy Amid Probe
Heros, a leading German
money-transport company, filed for bankruptcy on Monday as authorities
announced an investigation of suspected large-scale embezzlement by
employees of a subsidiary, the Associated Press reported yesterday. A
bankruptcy filing for all 23 units of Heros, which has more than 3,000
employees in
size='3'>Germany
elsewhere in Europe, was received Monday afternoon,
w:st='on'>
size='3'>Hanover
spokesman Michael Siebrecht said. It came shortly after state
investigators in Duesseldorf said they were investigating subsidiary
Nordcash Geldbearbeitungs GmbH, which handles cash for banks and
services firms, on suspicion of embezzlement. In a statement, they cited
suspicions of 'removal of customer money for their private uses by
employees over the course of the last years.' Investigators estimated
that some 300 million euros ($358 million) was embezzled _ a figure they
based on evidence seized during raids on firms and apartments on Friday
and on testimony from those allegedly responsible. A German money
transport industry association, BDGW, estimated that Heros had a market
share of about 50 percent.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/02/20/AR20060…'>Read
more.
name='15'>Huser Appeals Bankruptcy Declaration
Huser Ltd. filed an appeal
Friday against a Tokyo District Court decision to begin bankruptcy
procedures for the Tokyo-based condominium developer involved in an
earthquake-resistance data fabrication scam, the Japan Times
reported on Saturday. Huser, which filed the appeal with the Tokyo High
Court, did not reveal its reasons. The court-led bankruptcy procedures
are at the request of condo buyers who want to ensure the firm's assets
remain intact so they can receive damages. Lawyer Hideo Seto, who was
named Thursday by the district court as administrator for Huser's
bankruptcy procedures, said Friday he met with Huser President Susumu
Ojima overnight and received 5.4 million yen ($45, 667) in cash from the
firm. Seto told reporters he has confirmed that Huser, which has been
accused of selling a large number of condo complexes with insufficient
quake resistance, had a bank deposit balance of some 23 million yen
($194,517) and insurance programs for its executives that can be
converted into about 50 million yen ($422,864) when the firm cancels the
contracts. The Tokyo Metropolitan Government meanwhile opened a hearing
Friday on Huser and its sales agent, the former Huser Management Ltd.,
to pave the way to disqualify it as an authorized real-estate business,
for allegedly knowingly selling condos that were structurally
defective.
href='http://search.japantimes.co.jp/cgi-bin/nn20060218a5.html'>Read
more.
name='16'>British Airways Pension Deficit Talks
Ongoing
Talks are continuing on
possible solutions to British Airways' £1.4 billion ($2.43 billion)
pension deficit, the airline and a union said, playing down a newspaper
report that BA had tabled a proposal to cut staff pensions by more than
a third, Reuters reported on Sunday. 'We're looking at options at the
minute. We will be speaking with our trade unions to get their views, we
will be speaking with the pensions board but at this moment in time we
have not actually tabled any solutions,' a BA spokeswoman said. The
Transport and General Workers Union also dismissed talk of a formal
proposal from British Airways as speculation. BA said it expected to
suggest a solution for the deficit to its employees in March.
href='http://business.scotsman.com/latest.cfm?id=259822006'>Read
more.
name='17'>British Business Group Fears Pension Plan Will Hit Small
Firms
The Confederation of
British Industry (CBI) will hit out at Lord Adair Turner's proposals on
pension reform today, rubbishing his plans to compel employers to pay
into their staff pensions as both unfair and ineffective, the
Independent
size='3'>reported yesterday. Unveiling its submission to the Government
- before the proposed pensions reform White Paper due in the spring -
the business group will say that compelling businesses to pay 3 per cent
into employee pensions will place an unfair strain on smaller
businesses, while failing to increase savings rates. John Cridland, the
CBI's deputy director general added that he believed a compulsory
employer contribution of 3 percent would also encourage employers
currently paying more to reduce their contributions to the statutory
minimum. The CBI says it supports much of the Turner Report,
including plans to auto-enroll employees into their staff pension
scheme.
size='3'>
href='http://news.independent.co.uk/business/news/article346502.ece'>Read
more.
name='18'>Norwegian Electric Car Maker Faces
Bankruptcy
Workers at the
long-struggling Norwegian electric car maker Think Nordic are seeking to
force their employer into bankruptcy, the
size='3'>Aftenposten reported yesterday. The
workers haven't been paid since December. It's at least the second time
in recent months that Aurskog-based Think Nordic hasn't met payroll.
Management subsequently demanded debt negotiations, reports Romerikes
Blad, so a court-appointed administrator is now effectively running the
company. Think
Nordic has been struggling for survival since the Ford Motor Co.
literally pulled the plug on it in 2002, putting Think up for sale after
a short ownership period. Think Nordic's prospects also were cloudy
before Ford entered the picture, with Think's founder lacking the
capital and clout to mass-produce the company's popular electric cars,
even with some government support.
href='http://www.aftenposten.no/english/business/article1228600.ece'>Read
more.
name='19'>Australian Insolvency Practitioners Given Right to Fix
Costs
Insolvency practitioners
will be allowed to fix their fees ahead of work performed provided
it is based on a formula that definitely determines the amount,
according to a Austrialian Federal Court decision, the
face='Times New Roman' size='3'>Age reported
today. The amount will now be determined by creditors or a court after a
test case resolved uncertainty around whether the administrator's
remuneration could properly be fixed at a meeting of creditors using
hourly rates, subject to a cap. The Australian Securities &
Investments Commission (ASIC) had argued that hourly rates cannot be
applied without proper assessment of the tasks. While the court ruled
that there is potential for abuse in fixing remuneration, it was not a
reason to preclude it as a means of fixing remuneration. The decision
will be used by ASIC to prepare a guide for insolvency practitioners
seeking to fix their remuneration.
href='http://www.theage.com.au/news/Business/Administrators-given-right-to-fi…'>Read
more.
name='20'>Canadian Legislation Protects Workers During Insolvency
Process
While many labor-side
lawyers welcomed the Nov. 25 passage of Bill C-55, others wish the
legislation that promises a Wage Earner Protection Program and to
protect other union rights during the insolvency process hadn’t
been quite so rushed, according to the Law Times yesterday. The
new law protecting workers’ wages during the insolvency process
was rushed through for political purposes, says Andrew Kent, McMillan
Binch Mendelsohn’s newly named chief executive officer who was
actively involved in the legislative reform process and represented the
informal independent converts committee during Stelco Inc.’s
two-year restructuring process. That’s because the bill to
amend
face='Times New






Roman'
size='3'>Canada
size='3'>’s Bankruptcy and Insolvency Act and Companies’
Creditors Arrangement Act was so riddled with technical glitches that
the Senate committee charged with reviewing the reform package approved
it only on condition that it wouldn’t be proclaimed before June
30. The Wage Earner Protection Program Act estimated to assist as many
as 15,000 workers a year at a cost of up to $50 million would guarantee
wage payments of up to $3,000 per employee during the six months before
an employer declares bankruptcy or enters receivership.
href='http://www.lawtimesnews.com/index.php?option=com_content&task=view&id=4…'>Read
more.
href='http://www.lawtimesnews.com/index.php?option=com_content&task=view&id=4…'>