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Judiciary Committee Schedules Hearing on
WorldCom
The Senate Committee on the Judiciary will hold a hearing on Tuesday,
July 15, at 10 am in room 226 of the Dirksen Senate Office Building, on
'The WorldCom Case: Looking at Bankruptcy and Competition Issues.'
Factory Index, Expected to Rise, Shrinks
Instead
Manufacturing contracted in June for a fourth consecutive month as
factories kept inventories low until demand strengthens, an industry
report showed yesterday, Bloomberg News reported. The report, the
Institute for Supply Management's factory index, was surprising;
economists had instead expected improvement, the newswire reported. The
factory index registered 49.8 in June compared with 49.4 in May. A
reading below 50 signals contraction. A survey of 68 economists forecast
that the gauge would rise to 51, Bloomberg reported. Inventories shrank
the most since March 2002, pulling down the index and suggesting that
any increases in manufacturing would be gradual. Still, there were signs
that demand was starting to strengthen, with orders, production and
exports accelerating. The economy is forecast to grow 3.2 percent at an
annual pace in the third quarter, a notable rise from early in the year,
according to the newswire.
A separate report from the Commerce Department showed that
construction spending in May unexpectedly declined by the most in a year
as wet weather led to drops in housing and in public and private
construction, the New York Times reported. Spending on big
public works projects fell markedly, and building over all dropped 1.7
percent, to $869.8 billion at an annual pace, after falling 0.6 percent
in April. The decline was the third in a row and the largest since 1.7
percent in May 2002.
Even as Insider Buying Wanes, Post-bankruptcy Firms
Score (Wall Street Journal)
The Wall Street Journal reported today that although insider buying
dropped in June, company executives and directors showed some
uncharacteristic optimism in one sector-the ranks of companies formerly
in bankruptcy proceedings. Kmart Holding Corp., Warnaco Group Inc. and
Imperial Sugar Co. each attracted buyers, even as insiders in the market
at large appeared to be on the verge of spending the least of any month
in years, according to the online newspaper. To read the full article,
point your browser to
href='http://online.wsj.com/login?URI=%2Farticle%2F0%2C%2CSB10570921409118720…'>
http://online.wsj.com/article/0,,SB105709214091187200-search,00.html?co…%
28article%2Dbody%29.
United Airlines Expands Commuter-flight Agreement With
Mesa Air
UAL Corp.'s United Airlines tapped Mesa Air Group Inc. to provide
regional jetliner flights in a new 10-year agreement, expanding a
partnership between the carriers, Bloomberg News reported. Mesa, a
Phoenix-based regional airline, said it will begin
flying 35 jets for United Express in August, in addition to the 10
turboprop aircraft it has been operating for the United unit.
UAL, which filed for bankruptcy protection in December, has said it
is seeking to lower commuter-carrier costs by $80 million annually in
renegotiated contracts with reduced payments. The Chicago-based company
also said it was entertaining bids from potential new partners, reported
the newswire.
ABB Sends Documents to U.S. Court, Sees Asbestos Accord
`Soon'
ABB Ltd. submitted documents requested by a U.S. bankruptcy court and
expects the approval of a proposed $1.3 billion settlement of asbestos
claims “soon,” a spokesman said, Bloomberg News reported. On
June 23, U.S. Bankruptcy Judge Judith Fitzgerald in
Pittsburgh asked for more information about how the proposed accord
affects some plaintiffs. She overruled objections to the settlement,
except those regarding lawsuits aimed solely at Zurich-based ABB's Basic
and Lummus units.
ABB, which has had losses of $1.5 billion since 2001 as asbestos claims
rose, aims to settle more than 100,000 claims to shield it from more
lawsuits. Until the 1970s, its U.S.-based Combustion Engineering Inc.
unit made asbestos-lined boilers that some former workers say exposed
them to the cancer-causing mineral. “We have submitted the
additional information for the court’s consideration” before
a July 3 deadline, ABB said in a U.S. Securities and Exchange Commission
filing. “The information will be sufficient to satisfy the U.S.
Bankruptcy Court,” reported the newswire.
WorldCom Gets Approval to Sell Canada Ranch Seized From
Ebbers
WorldCom Inc. got a bankruptcy judge’s permission to sell a
Canadian ranch once owned by former CEO Bernard Ebbers for $68.5
million, Bloomberg News reported. U.S. Bankruptcy Judge Arthur
Gonzalez approved the sale to E. Stanley Kroenke, owner of
Denver’s Colorado Avalanche hockey team, the Denver Nuggets
basketball team and the St. Louis Rams football team. Kroenke will buy
the British Columbia property, Canada’s biggest working cattle
ranch. “The debtors are hereby authorized to execute all documents
and take all actions necessary or appropriate in furtherance of the
transaction,” Gonzalez said in a court order.
WorldCom has been selling assets it seized from Ebbers, who resigned
as CEO in April 2002 after borrowing $400 million from the company. When
Ebbers resigned, he put up the ranch as collateral for some of the
company loans. In 1998, he paid C$100
million ($73 million) for the 500,000-acre Douglas Lake Ranch, reported
the newswire.
GLOBAL CROSSING
Global Crossing Gets Judge's Approval for Sale to ST
Telemedia
Global Crossing Ltd. won a judge’s approval to sell a 61.5 percent
stake to Singapore Technologies Telemedia Pte., complicating billionaire
Carl Icahn’s effort to derail the buyout, Bloomberg News reported.
U.S. Bankruptcy Judge Robert Gerber in Manhattan
approved the transaction today after three days of hearings last
week,
overruling objections by Icahn’s XO Communications Inc., which
says it holds $790 million of Global Crossing’s bank debt. The
judge also rejected objections by Global Crossing lenders led by J.P.
Morgan Chase & Co. and IDT Corp.
Judge Gerber’s ruling preserves ST Telemedia’s buyout
rights through October and precludes Global Crossing from actively
seeking another buyer. Its creditors’ committee can still pursue
offers, and investment bankers for the panel have been in talks with
Icahn. Global Crossing must pay ST Telemedia at least $30 million in
damages if an alternative deal is completed, reported the newswire.
Court Grants Global Crossing's Extension
Request
A U.S. bankruptcy court on Tuesday granted a request by bankrupt
telephone company Global Crossing Ltd. for an extension preserving an
exclusive agreement to sell a majority stake in the company to Singapore
Technologies Telemedia, or STT, Reuters reported. Global Crossing had
sought an extension until October that would preserve STT’s
exclusive takeover rights so the two companies would have more time to
seek U.S. approval for the deal. “The debtors have shown the
requisite good cause for an exclusivity extension…they’ve
given me no reason to believe that they are abusing their exclusivity
rights,” Judge Robert Gerber of the U.S.
Bankruptcy Court for the Southern District of New York said in his
ruling, reported the newswire.
American Lays Off 3,100 Flight Attendants
About 3,100 American Airlines flight attendants were furloughed
effective on Tuesday as part of a restructuring plan aimed at saving the
bankruptcy-threatened airline, Reuters reported. The furloughs were
expected and include about 1,750 flight attendants who used to work for
TWA, which was bought out by American, and some 1,300 American flight
attendants, a spokeswoman said. The jobs account for about 3.5 percent
of the workforce at the world’s largest carrier. American is
trying to cut operating costs by about an annual $4 billion, and earlier
this year it reached deals with its major unions aimed at saving $1.8
billion a year. The airline has also reduced capacity and cut down on
its fleet, reported the newswire.
Longview Aluminum Seeks Extension for Reorganization
Plan
Longview Aluminum said on Tuesday it has asked for an extension to a
July 2 deadline to submit a reorganization plan to the court overseeing
its bankruptcy as it looks for affordable power to restart its idled
smelter, Reuters reported. Privately held Longview said in a statement
that its chairman, Michael Lynch, was still finalizing details of a plan
that would allow the company to self-source the energy needed to restart
the plant in Longview, Wash. “We are currently working out the
details of an innovative natural gas-for-electricity swap that would
allow Longview Aluminum access to power at a rate that would allow our
plant to operate profitably well into the future,” Lynch said,
reported the newswire. In March, the company decided that filing for
chapter 11 bankruptcy protection would be its best path to protecting
its assets and restarting the smelter, Reuters reported.
Pillowtex Lenders Won't Call Loans Before July 10
Pillowtex Corp. said on Tuesday its lenders agreed not to take action to
recover loans before July 11, following the company’s default on
interest and principal payments due June 30, Reuters reported.
Pillowtex, which emerged from chapter 11 bankruptcy last year, has said
it is considering “strategic alternatives” amid difficult
business conditions. Kannapolis, N.C.-based Pillowtex said it
didn’t make interest and principal payments due June 30. It said
it told lenders it didn’t think it could meet interest coverage
and leverage ratios on its loans. Pillowtex has recently been in talks
to be acquired by U.K.-based Homestead Fabrics Ltd. for about $300
million, reported the newswire.
Headway Files for Bankruptcy
Headway Corporate Resources Inc., a human resources and staffing
services company, on Tuesday said it filed for chapter 11 bankruptcy
protection and agreed on a restructuring plan with its creditors,
Reuters reported. The company said it received a notice from the
American Stock Exchange saying that it no longer complies with the
continued listing standards. Amex has advised the company that the last
day of trading for its stock was June 30.
The New York-based company said common shareholders would receive
nothing in the reorganization, which calls for creditors to exchange
debt for equity in the reorganized company. “After years of
operating under the weight of too much debt, we are thrilled to have
found a solution,” said Barry Roseman, president of Headway,
Reuters reported. The company said all of Headway’s operating
subsidiaries will continue to do business outside of bankruptcy, and it
does not expect the chapter 11 filing to have any impact on clients,
vendors or employees, reported the newswire.
NRG ENERGY
NRG Energy Agrees During Hearing To Amend Disclosure
Statement
The adequacy of NRG Energy Inc.’s disclosure statement came under
fire during a bankruptcy court hearing on Monday, with Judge Prudence
Carter Beatty listing a litany of issues that NRG attorneys promised to
address. Judge Beatty must approve that document, finding that it
sufficiently describes NRG’s plan to pay off creditors and emerge
from bankruptcy, before it’s sent to NRG creditors for their
blessing. During the Monday hearing, the judge mentioned numerous
details she said must be added in order to clarify the document.
NRG’s document is “very difficult to read,” Judge
Beatty said.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Judge Denies NRG Energy's Bid To Stop Supplying CL&P
With Power
A U.S. District Court judge has struck down NRG Energy Inc.’s bid
to stop supplying power to Northeast Utilities unit Connecticut Light
& Power, according to a ruling released late Monday. In his order,
Judge Richard Conway Casey of the U.S. District Court in Manhattan
deferred to the Federal Energy Regulatory Commission (FERC), which last
week ordered Xcel Energy Inc. unit NRG to continue supplying CL&P
with 45 percent of its power per a contract between the two companies.
NRG had stopped deliveries two weeks earlier, following a temporary
order from Casey allowing the move, and declined to resume service after
FERC’s ruling, saying it would wait for Judge Casey’s next
decision. Despite his earlier ruling, Judge Casey said Monday that his
court can’t override FERC.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Former PG&E Bankruptcy Trustee Sues Ashcroft Over 2002
Firing
The former bankruptcy trustee in Northern California who had overseen
cases including PG&E Corp.’s utility reorganization sued U.S.
Attorney General John Ashcroft
over her firing, reported Bloomberg News. Linda Ekstrom Stanley, who had
been appointed as trustee in 1994 by former Attorney General Janet Reno
and reappointed in 1999, was fired last July with about two years left
on her term. Stanley claims that Ashcroft “converted her five-year
term to an at-will tenure without recourse,” the newswire
reported.
Stanley had asserted rights on behalf of consumers in the Pacific Gas
& Electric bankruptcy, challenging California’s biggest
utility’s right to bill customers for its legal fees. She failed
in a bid to give consumers a place on the official creditors’
committee in the case. The Justice Department hasn’t seen the
lawsuit and declined to comment, said spokesman Charles Miller. The
agency last year said Stanley’s firing was part of a case-by-case
review of U.S. Trustees since the Bush administration came into office,
Bloomberg reported.
City Law Firm Seeks Bankruptcy Protection
DKW Law Group, a top-10 Pittsburgh-based firm long known as Doepken
Keevican & Weiss, has filed for voluntary bankruptcy , the
Pittsburgh Tribune-Review reported. The firm took the drastic step after
its main creditor, PNC Bank, prodded DKW to liquidate, according to the
chapter 11 petition filed on Monday in the U.S. Bankruptcy Court in
Pittsburgh, the online newspaper reported. “Bankruptcy is
extremely rare. But law firms are having financial difficulties
today,” said consultant Bill Brennan of Altman Weil, a
Philadelphia-area business consultant to the legal industry, the
Tribune-Review reported.
American HomePatient Emerges from Bankruptcy
American HomePatient Inc. emerged from bankruptcy yesterday, but the
company’s creditors are still fighting it, reported The
Tennessean. Monday, U.S. District Court Judge Thomas Wiseman rejected a
motion by American HomePatient’s creditors that would have delayed
the company’s emergence from bankruptcy until the court decided on
the creditors’ appeal of the bankruptcy plan, the online newspaper
reported. The creditors did not like the plan, although it specifies
full repayment of the debt.
The U.S. Bankruptcy Court in Nashville, Tenn., had approved the
company’s recommended interest rate of 6.8 percent, much lower
than the rate sought by creditors. “An interest rate of 12.16
percent results in a windfall to the lenders,” Judge
George Paine II said in a May 15 order confirming American
HomePatient’s reorganization plan. American HomePatient is one of
the nation’s largest providers of home health care services, with
287 centers in 35 states. One of its chief products is oxygen
ventilation systems. The company filed for bankruptcy protection in July
2002 in order to restructure $275.4 million in debt that was due at the
end of that year, The Tennessean reported.
Phoenix Group Corporation Files Amended Plan of
Reorganization
The Phoenix Group Corp. filed an amendment to the reorganization plan
and disclosure statement with the U.S. Bankruptcy Court for the Northern
District of Texas, Ft. Worth Division, on June 30, according to the
Business Wire. In that filing, the company articulated a reorganization
plan whereby Phoenix will be converting debt to equity, allowing Phoenix
to exit bankruptcy with a clean balance sheet. The Phoenix Group Corp.
is a Delaware corporation organized in June 1988. Phoenix has
predominately been engaged in providing health care management and
ancillary services to the long-term care industry. Management of the
company said it has undertaken to implement a strategic business plan to
reposition Phoenix through new growth initiatives involving targeted
business acquisitions in the home health care industry.
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