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June 7, 2005
Rates Need Not Signal Weakness—Greenspan
Federal Reserve Chairman Alan Greenspan said it was hard to say why
long-term interest rates were so low, but that even if they moved below
short rates it need not signal a weakening economy, Reuters reported.
Speaking to a bankers’ conference in Beijing via satellite from
Washington, Greenspan said “new forces” in international
markets were likely behind the unusually low level of long-term rates
around the globe. “Their nature and their behavior is not
something we are going to fully understand, if ever; certainly except in
retrospect,” he said, the newswire reported.
Senate to Hold Hearings on Pension Legislation
The Senate Finance Committee will hold a hearing today on the case of
United Airlines, which transferred billions in pension liabilities onto
the nation’s pension insurer during bankruptcy proceedings,
CongressDaily reported. Also today, the Senate Health,
Education, Labor and Pensions Committee will hold a hearing on hybrid
and “multi-employer” pension plans. The panel holds another
pension hearing on Thursday to examine pension-fraud prevention. House
Education and the Workforce Chairman John Boehner (R–Ohio) is
poised as early as this week to introduce a pension bill he has authored
with Ways and Means Chairman William Thomas (R–Calif.).
Separately, a Washington Post article examines the
nation’s private pension plans. Read the article at
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/06/06/AR20050…'>www.washingtonpost.com/wp-dyn/content/article/2005/06/06/AR200506060171….
‘Bizarre’ Argument Lands Bankruptcy Attorney, Client in
Trouble
A creditor’s ill-advised theory that the assets of a
debtor’s fiancée must be included in a bankruptcy petition
has resulted in sanctions and a sharp reprimand from a federal judge,
the New York Law Journal reported. Northern District of New
York Bankruptcy Judge Robert E. Littlefield Jr. said the theory
advanced by attorney David P. Antonucci of Watertown, N.Y., was so
flawed that his client, Northern Federal Credit Union, should be
penalized as well for relying on such poor counsel. Read the full
article at
href='http://www.law.com/jsp/article.jsp?id=1118061317792'>http://www.law.com/jsp/article.jsp?id=1118061317792.
Credit Counseling Takes Another Hit
Following congressional hearings regarding the abuses in the credit
counseling industry and the increasing IRS scrutiny, the United States
Court of Appeals for the First Circuit has weighed in with strong
support for consumers, marketwatch.com reported. In a case of first
impression nationwide, the First Circuit held that credit repair
companies are not automatically excluded from the definition of a
“credit repair organization” simply because they are
organized as non-profit tax exempt entities. Rather, the court held that
to be immune from suit under the federal Credit Repair Organization Act
(CROA), the defendant must prove that it actually operates in a manner
consistent with both of those statuses. Read the
href='http://www.marketwatch.com/tools/quotes/archivedArticle.asp?archive=thi…'>full
article (registration required).
Wife of Ex-Enron CFO Released from Prison
The wife of former Enron Corp. CFO Andrew Fastow was released from
federal prison on Monday to a halfway house to serve out the remainder
of her one-year sentence, Reuters reported. Lea Fastow, a former
assistant treasurer at the failed energy trader, has been in jail since
last July after pleading guilty to filing a false tax return that
omitted her husband’s income from illicit dealings with Enron.
Adelphia to Sell Puerto Rico System for $520 Million
Bankrupt cable operator Adelphia Communications Corp. said on Monday
it will sell its Puerto Rico cable operations venture to two private
equity firms for $520 million, Reuters reported. London-based MidOcean
Partners and New York–based Crestview Partners plan to buy the
system, which has 137,000 subscribers in the San Juan area. The cable
system is jointly held by Adelphia and ML Media Partners.
United Auto Workers Members Approve Visteon Auto Supplier
Restructuring Plan
Members of the United Auto Workers (UAW) union have voted
overwhelmingly in favor of a plan to restructure and revive auto
supplier Visteon Corp., the union said on Monday, the Associated Press
reported. UAW members at 15 Visteon facilities ratified the plan by an
88.7 percent majority, the union said. The UAW represents about 17,400
workers at those facilities.
Abuse Judgment May Bankrupt Church
A $6 million judgment against the United Methodist Church in Missouri
is about $500,000 more than the church’s total net assets and
could bankrupt the church, the Missouri Conference’s new bishop
told members, the Associated Press reported. Last month, a Springfield
jury awarded $4 million in punitive damages to Teresa Norris, who
already had been awarded $2 million in compensatory damages, the
newswire reported.
AaiPharma Wins Final Court Approval on Bankruptcy Loan
AaiPharma Inc. has won bankruptcy court approval to borrow $210
million, a deal that means about $27 million in new cash for the
reorganizing drug maker, the dispatch.com reported. About $183 million
of AaiPharma’s debtor-in-possession financing will go to the banks
occupying the senior secured spot in the company's chapter 11 case, the
Wilmington, N.C.–based AaiPharma said Friday.
Aquila Bankruptcy Risk Cited By Regulators
Kansas regulators made public on Monday more parts of a report into
Aquila Inc.’s finances, including a passage that raised the
specter of bankruptcy for the utility, wichita.bizjournals.com reported.
The report, first released Feb. 14, called for the Kansas Corporation
Commission to take a hands-on approach with Aquila to help it wade
through its financial difficulties while protecting customers. Read the
full article at
href='http://wichita.bizjournals.com/wichita/stories/2005/06/06/daily10.html?jst=b_ln_hl'>wichita.bizjournals.com/wichita/stories/2005/06/06/daily10.html?jst=b_ln_hl.
Pension Loopholes Helped United Hide Troubles
Loopholes in the federal pension law allowed United Airlines to treat
its pension fund as solid for years, when in fact it was dangerously
weakening, according to a new analysis by the agency that guarantees
pensions, the New York Times reported. That analysis is
scheduled to be presented at a Senate Finance Committee hearing today. A
second report, by the comptroller general, found that most companies
that operate pension funds are using the same loopholes. Those loopholes
give companies ways—all perfectly legal—to make their
pension plans look healthier than they really are, reducing the amount
of money the companies must contribute. Read the full article at
href='http://www.nytimes.com/'>www.nytimes.com.
Solutia, Monsanto, Creditors Agree on Reorganization
Bankrupt chemicals company Solutia Inc. said today it has reached an
agreement with its former parent Monsanto Co. and an unsecured
creditors' committee on a plan to reorganize the company, Reuters
reported. The specialty chemical and performance films maker said the
“agreement-in-principle” provides for $250 million in new
investment in the reorganized Solutia, and Monsanto’s equity
interest in the company may be as high as 52.5 percent.
Payday Lenders Start Credit-building Program
A national group of payday lenders launched a program in the Chicago
area yesterday to help short-term borrowers build credit, the
suntimes.com reported. The Community Financial Services Association of
America, which represents about 60 percent of payday loan stores
nationwide, will report loan repayments to the PRBC, a national credit
reporting agency. Read the full article at
href='http://www.suntimes.com/output/business/cst-fin-payday06.html'>www.suntimes.com/output/business/cst-fin-payday06.html.