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May 11, 2007
name='1'>Bankruptcy Judge Lets
Catholic Churches Continue Construction
The judge overseeing the
bankruptcy of the
Catholic Diocese in
Diego on Thursday authorized 10
parishes, including two
in
size='3'>North
face='Times New Roman'
size='3'>County, Calif., to
spend a total of more
than $14 million on construction projects with money from parish
accounts and loans from the
diocese to the parishes, the
size='3'>North County
Times reported today. The two
w:st='on'>
size='3'>North
w:st='on'>
size='3'>County
size='3'>parishes, St. Margaret's in
face='Times New Roman'
size='3'>Oceanside and St. Mark's
in
w:st='on'>
Marcos, also are among four
churches that
Bankruptcy Judge Louise
DeCarl
Adler said that she wants to use to start to
resolve a key issue
in the bankruptcy case: which assets belong to individual parishes and
which belong to the
diocese. Judge Adler instructed James Stang, the
attorney for a
creditors’ committee, which has a claim to money from
the diocese, including
victims of alleged childhood sexual abuse at the hands of priests, to
file an action in the
bankruptcy court 'to find out whose property this is.' The diocese filed
for bankruptcy Feb.
27, bringing a halt to sexual abuse litigation on the eve of the first
trial of an abuse
case in
face='Times New Roman'
size='3'>San Diego. The
diocese has offered to
pay $95 million to settle the more than 140 sexual abuse claims filed
against it, but
attorneys for those who have sued in connection with alleged abuse by
priests have said a
fair settlement would be closer to $200 million.
href='http://www.nctimes.com/articles/2007/05/11/news/sandiego/9_01_205_10_07.txt'>Read
more.
name='2'>Congressional Panel to
Look at Conflicts in Consulting over Executive
Compensation
Members of Congress are
looking into the
potential conflicts among executive compensation consulting firms that
do other lucrative
work for the companies whose pay they help devise, the
face='Times New
Roman' size='3'>New York Times reported today.
The chairman of the
House Committee on Oversight and Government Reform has asked the largest
companies in the
industry for details on their client relationships and the revenues
these ties have
generated over the last five years. The companies — Hewitt
Associates; Mercer
Consulting, a unit of Marsh & McLennan; Towers Perrin and
Watson Wyatt Worldwide
— confirmed yesterday that they had received a letter dated May 8
from Oversight
Committee Chairman Henry A. Waxman (D-Calif.). Waxman asked the
consulting
firms identify companies among the nation’s 250 largest to
which they had
provided both executive pay consulting and other services and to
disclose total revenues
received for each type of service. Waxman asked that the companies
supply the information by
href='http://www.nytimes.com/2007/05/11/business/11pay.html?_r=1&oref=slogin&ref=bus
iness&pagewanted=print'>Read more.
Unit Seeks to Lift
Stay to Dismiss Civil Suit
A unit of bankrupt
financial services company
Refco Inc. has asked the court overseeing Refco’s bankruptcy to
lift an automatic stay
so the company can attempt to dismiss a pending civil case,
size='3'>Bankruptcy
Law360 reported yesterday. The pending suit
was filed against
Refco Commodity Management Inc. and IDS Futures Corp. in the U.S.
District Court for the
Northern District of Illinois in June 2006, four months before Refco
filed for bankruptcy.
The plaintiff in the suit, Gary L. Franzen, brought a proposed class
action with claims of
breach of contract, breach of fiduciary duty and negligence in regard to
the management of
the JWH Trust and IDS and RCMI’s joint management of two
investment funds. Franzen
sought to recover up to $69 million in losses. In March, the district
court approved a
settlement between Franzen and IDS, under which IDS agreed to compensate
the plaintiffs for
losses attributable to the management of the investment funds in
question. IDS also paid
$400,000 for the plaintiffs’ attorneys’ fees.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=24502'>Read
more. (Registration required.)
name='4'>Agencies Fight Pacific
Lumber’s Extension Bid
A group of
w:st='on'>
size='3'>California state
agencies has
objected to Pacific Lumber Co.’s bid to extend its period of
exclusivity, arguing that
the bankrupt timber company’s requests are not supported by the
evidence,
size='3'>Bankruptcy Law360 reported yesterday.
The agencies that
filed the objection are the California Resources Agency, the California
Department of
Forestry and Fire Protection, the California Department of Fish and
Game, the California
Wildlife Conservation Board, the California Regional Water Quality
Control Board and the
State Water Resources Control Board. The agencies noted that they are
amenable to a
reasonable extension of the exclusivity period as long as Pacific Lumber
provides a suitable
justification. The Pacific Lumber Co. and
its subsidiary debtors
cases are being jointly administered, under case number 07-20027, in the
U.S. Bankruptcy
Court for the Southern District of Texas.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=24440'>Read
more. (Registration required.)
name='5'>Electronics Retailer
Posts Loss, May File for Chapter 11
Tweeter Home Entertainment
Group Inc. posted a
quarterly loss on Thursday and said it may choose to file for chapter 11
protection, Reuters
reported yesterday. The cash-strapped electronics retailer, which last
month said it would
close 49 stores and cut 20 percent of its work force, believes 'it does
not have sufficient
working capital' for short-term needs. The operator of Sound Advice and
HiFi Buys stores
reported a loss for the second quarter ended March 31 of $35.2 million,
or $1.38 a share,
compared with a profit of $424,000, or 2 cents a share, a year earlier.
Revenue from
continuing operations fell 13 percent to $163 million. The company also
said it found
accounting errors related to its deferred compensation plan and will
file for a five-day
extension to submit its quarterly financial statements with regulators.
Tweeter added that
it plans to amend its financial statements for the fiscal year ended
Sept. 30, 2006.
href='http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-05
-10T163105Z_01_N10413209_RTRIDST_0_TWEETERHOME-RESULTS-UPDATE-2.XML'>Read
more.
name='6'>Calpine Creditors Win
Right to Challenge Liens
A group of Calpine
Corp.’s unsecured
creditors have won a hard-fought battle in the company’s chapter
11 case, winning the
right to challenge the seniority on $646.11 million in notes held by
first-lien
noteholders, Bankruptcy
Law360
reported yesterday. Judge
size='3'>Burton Lifland of the U.S. Bankruptcy
Court for the
Southern District of New York ruled in favor of the unsecured
creditors’ committee on
Thursday, granting their request to question the priority of the holders
of notes due in
2014. The unsecured creditors will now have until May 21 to file their
formal challenge to
the first-lien debt holders. Law Debenture Trust Co. of New York is the
trustee for the
first-lien debt, and Wilmington Trust Co. is the trustee for the
second-lien debt. The term
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=24431'>Read
more. (Registration required.)
name='7'>Experts Predict Economic
Slowdown Has Passed
The worst of the economic
slowdown has
passed, private economists said in the latest WSJ.com forecasting
survey, but they don't see
any reason to expect a significant acceleration, the
face='Times New Roman'
size='3'>Wall Street Journal reported today.
By a more than 5-to-1
margin, the economists said they believe the first quarter's 1.3 percent
growth -- the
weakest in four years -- marked the low point in the slowdown that
gripped the economy much
of last year. However, they expect growth to stay below 3 percent into
early 2008, leaving
2007 on track to have the slowest economic growth since 2002. On the
whole, the 60
economists predict that the gross domestic product, the broadest measure
of economic output,
will grow at a 2.2 percent annual rate this quarter. Over the second
half, they expect
growth of about 2.6 percent, which is a slight reduction from what they
had forecast in a
survey conducted last month. They don't expect growth to reach 3 percent
until the second
href='http://online.wsj.com/article/SB117872030985697253.html?mod=home_whats_news_us'>Read
more. (Registration required.)
Provider’s Bankruptcy Puts Repair Claims in Limbo
Automotive Professionals,
one of the
country's largest auto warranty claims companies, has suspended claims
payments on 300,000
contracts sold nationwide, the
size='3'>Houston
Chronicle reported today. 'Legally, I probably
have no obligation
to these customers, but I'm in a business that the premier thing is
customer service,' said
Ramsay Gillman, president of an auto dealership chain in
face='Times
&a
mp;#13; 

&#
13;


New
Roman'
size='3'>South Texas, who is still
honoring repairs. He
has sued in
size='3'>Houston federal court seeking
payment from the
company's insurers, including Marathon Financial Insurance Co., an
Illinois-based risk
retention group.For three years ending in 2005,
w:st='on'>
face='Times New Roman' size='3'>Marathon
size='3'>underwrote
Automotive Professionals policies, including those sold by Gillman
during that period. From
2002 to 2005,
size='3'>Bryan said, Marathon
underwrote 320,000 contracts
for Automotive Professionals, mostly in
w:st='on'>
size='3'>Texas,
w:st='on'>
face='Times New Roman' size='3'>Florida
size='3'>,
w:st='on'>
size='3'>Nevada
size='3'>and
face='Times New Roman'
href='http://www.chron.com/disp/story.mpl/chronicle/4794993.html'>Read
more.
International
name='9'>Competition Fears Cast
Doubt on Yukos Auction
As Yukos continues to
sell off its assets in
a series of auctions,
w:st='on'>
face='Times New Roman'
size='3'>Russia
size='3'>’s anti-monopoly agency has raised a protest regarding
one of the recent
winners of the bankrupt oil giant’s entities over competition
worries,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported
yesterday. PromRegionHolding, which has ties to
w:st='on'>
size='3'>Russia
size='3'>’s largest oil
producer Lukoil, paid $190.3 million on May 3 for Yukos’ southern
Russian assets,
besting state-controlled oil firm Rosneft and another bidder called
Versar. Earlier this
week, however, a spokesman for Yukos' bankruptcy receiver revealed that
the country’s
antimonopoly agency had questioned the outcome on the grounds that
PromRegionHolding was
prohibited from owning the assets. The company’s official receiver
reportedly intends
to examine the situation closely before advising the creditors committee
on how to
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=24423'>Read
more. (Registration required.)
name='10'>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 Daily Summary
of Troubled &
Fast Growing U.S. Companies and Other Business News
size='3'>published by
Bastien Financial Publications.
To begin receiving the COMPLETE
Daily e-Summary,
that emails you information on over 70 such companies each morning,
email
href='mailto:steve@creditnews.com'>
color='#0000ff'
size='3'>steve@creditnews.com
size='3'>your name, company name, address, phone and fax.
size='3'>We’ll set you up within 24 hours.
Receive an ABI
member’s discount of 50%
off the $500 annual subscription fee.
size='3'>Indicate “ABI CODE
27” in your email.
size='3'>California Coastal
Communities Inc., an
w:st='on'>
w:st='on'>
size='3'>Irvine, Ca.
land-development firm,
reported a first quarter net loss of $3 million, including an impairment
charge of $4
million. That compares with a $1.9 million profit in the year-earlier
period. Revenue
tumbled 56%–to $12.2 million.
size='3'>Cumulus Media
Inc., an
w:st='on'>
face='Times New Roman' size='3'>Atlanta
size='3'>,
w:st='on'>
size='3'>Ga.
size='3'>radio station owner and operator, reported a first quarter net
loss of $1.8
million, compared to net income of $857,000 in the year-earlier
period. The recent
results included a $3.6 million tax benefit. Revenue was $72.4
million, down from
$75.3 million a year ago. Based on the number of stations owned, Cumulus
Media is the
second-biggest radio company in the
w:st='on'>
w:st='on'>
size='3'>U.S.
size='3'>
size='3'>Ford Motor
Co., Dearborn, Mi., said that its plans to
idle two operations
in
size='3'>Cleveland, Oh.
will result in 1,800
lost jobs and extra costs of about $180 million.
size='3'>Goodyear Tire &
Rubber Co.,
w:st='on'>
face='Times New Roman' size='3'>Akron
size='3'>, Oh.,
plans to sell 22.5 million shares in a public offering, hoping to yield
net proceeds of $725
million, which it will use to help fund its turnaround efforts.
Goodyear will be able
to pay down some debt and invest in new products and
marketing.
size='3'>HealthSouth
Corp., the
w:st='on'>
face='Times New Roman'
size='3'>Birmingham, Al.
hospital operator, reported a first quarter net loss of $56.6 million,
including a $12.2
million litigation-related gain. Revenue edged up 2%–to $449
million.
size='3'>Perma-Fix
Environmental Solutions Inc., an
w:st='on'>
size='3'>Atlanta,
w:st='on'>
face='Times New Roman' size='3'>Ga.
size='3'>industrial
and nuclear waste management company, reported a first quarter net loss
of $1.1 million.
Revenue declined 5%–to $20.2 million.
TXU Corp., which is in the middle of a private-equity buyout,
reported a first
quarter loss of $497 million, down from a profit of $576 million in the
year-earlier
period. The recent results included more than $460 million in
charges related to costs
for stopping development of eight coal-fired power plants. TXU
will take further
charges of $79 million in the second quarter related to the plant
cancellations and faces
exposure of as much as $150 million for termination and suspension costs
at other
facilities. TXU, which is being purchased by a private-equity
group including Kohlberg
Kravis Roberts & Co. and TPG Inc. for $32 billion, saw an ongoing
loss of customers in
the quarter, down to 2.15 million compared to 2.3 million a year
ago. Revenue for the
first quarter declined 28%–to $1.7 billion