January 19, 2000
Sens. Daschle and Reid Oppose Cloture Vote on S. 625
In a 'Dear Colleague' letter dated Jan. 11 to the U.S. Senate,
Sen. Tom Daschle (D-S.D.) and Sen. Harry Reid (D-Nev.) asked their
colleagues to join them in opposing the cloture on the bankruptcy reform
bill, S. 625, when the Senate votes on Jan. 25. They support a 'rapid
conclusion to the debate...and will continue to urge the Majority Leader
to reconsider holding the cloture vote so that we can proceed and finish
this bill.' They reminded Senators that last fall they reached a
unanimous consent agreement, limiting non-relevant amendments to three
per side, and informed the Majority Leader of the subject matter of
those amendments before reaching the consent agreement. 'The agreement
also provided that all other amendments will not require roll call
votes, and Democrats have offered to consider all of the remaining
amendments under short time agreements.' They said that the bill could
be finished in less than a day, and that 'We should have finished it
last session, but, despite our entreaties, the Senate did not even
consider the bill on the Thursday or Friday before adjournment.' They
maintain Majority Leader Trent Lott (R-Miss.) has scheduled the cloture
vote simply to 'avoid voting on two relevant amendments: the Levin
amendment on gun company bankruptcies and the Schumer amendment on
bankruptcy filings by perpetrators of health clinic violence.' Both
Sens. Schumer (D-N.Y.) and Levin (D-Mich.) agreed to limit debate on
their amendments to 30 and 70 minutes, respectively, but the 'majority
refused both offers.' they said. Sens. Daschle and Reid said that Lott
has chosen repeatedly to file cloture to deprive Democrats of the right
to offer and debate their amendments, and that in this case, it is
'particularly troubling.' 'We have demonstrated good faith and
cooperated to the fullest extent possible with the Majority
Leader...After all these efforts, Democrats should not be denied votes
on the few amendments remaining.'
Credit Card Lenders Ease Marketing as Consumers Pay Down
Debt
The Consumer Federation of America (CFA) yesterday released
data that show that increasingly cautious borrowing by consumers has
forced credit card issuers to reduce their marketing efforts and
extension of credit. The data compiled by economist Lawrence A. Ausubel,
University of Maryland, reveal a significant decline in the per capita
personal bankruptcy rate, 9.43 percent from the fourth quarter of 1998
to the fourth quarter of 1999. He said there were 112,000 fewer personal
bankruptcies in 1999 than in 1998, the largest one-year decline on
record. CFA Legislative Director Travis Plunkett said, 'Credit card
issuers should abandon their hypocritical efforts to pass one-sided
bankruptcy legislation. Restricting consumer access to bankruptcy will
only encourage credit card issuers to market and lend more aggressively,
especially to the least affluent and sophisticated borrowers.' Prof.
Ausubel said, 'The bankruptcy bill would lead to a resurgence in the
incidence of badly over-extended consumers by encouraging lenders to
lower their credit standards and solicit riskier customers. Since the
bankruptcy crisis is self-correcting, it does not require harsh
legislation.'
CFA reported that credit card borrowers have cut back even more since
the middle of last year and have dramatically reduced their response to
credit card solicitations. Data from BAI Global indicate the response
rate to such mailings dropped from 2.8 percent in 1992 to 1.0 percent in
the first nine months of last year. CFA also reported that according to
VERIBANC, credit card lenders have seen net charge offs decline
steadily, primarily because of the decline from the spring of 1998 to
the end of last year in personal bankruptcies.
The CFA said the credit card lending industry has been the most
prominent proponent of bankruptcy legislation, passed by the House last
May and scheduled for cloture vote next Tuesday by the Senate. CFA said
S. 625 would not provide consumers with information that they could use
to avoid bankruptcy, that onerous legal and paperwork burdens in the
bill will disadvantage cash-strapped families that cannot afford an
attorney, that the means test to shift more filers into chapter 13 from
chapter 7 is arbitrary and inflexible and will make it harder for
modest-income Americans to get financial relief, and that the bill would
compromise the payment of high-priority debts, such as child support and
alimony, by increasing the amount of debt for which debtors will remain
liable.
Bankruptcy Judge Orders FCC to Show Cause Why Actions on
NextWave Licenses Are Not Null and Void
Bankruptcy Judge Adlai S. Hardin Jr.
(E.D.N.Y.), who is presiding over the NextWave Telecom chapter 11, has
ordered the Federal Communications Commission (FCC) to appear in court
and show cause why its actions last week purporting to cancel NextWave's
licenses and schedule them for re-auction are not null and void as a
matter of law and without force or effect. Judge Hardin's order was in
response to NextWave's request. The company also filed a memorandum
demonstrating that the FCC's action is contrary to explicit provisions
in the Bankruptcy Code and governing judicial precedent. A hearing has
been scheduled for Friday morning in White Plains, N.Y.
NextWave also said it plans to file a petition for rehearing
regarding the recent decision of the U.S. Court of Appeals for the
Second Circuit concluding that the bankruptcy courts lack authority to
adjudicate fraudulent conveyance actions brought against the government
in connection with obligations arising out of FCC spectrum auctions.
NextWave said that the Court of Appeals' ruling is 'an inexplicable
departure from the plain language of numerous governing statues and
settled judicial decisions, including the opinions of other federal
courts that have directly considered this precise issue.'
NextWave filed chapter 11 in June 1998 after it was unable to raise
the $4.3 billion it bid for so-called C-block wireless licenses held by
the FCC. The company prepared a reorganization plan that it said would
pay the FCC for the licenses and put the spectrum into immediate use for
the public benefit. NextWave said that instead, 18 months after giving
NextWave, its creditors and investors 'assurances that it recognized
NextWave's entitlement to the protections of the bankruptcy law, the FCC
now seeks to ignore those assurances in order to revoke and re-auction
the company's licenses, alleging that NextWave missed interest payments
while in bankruptcy. The attempt to deprive NextWave of its licenses is
baseless.'
Mariner Post-Acute Network Files Chapter 11
Mariner Post-Acute Network Inc. and Mariner Health Group Inc.,
and certain of their subsidiaries, have filed separate voluntary chapter
11 petitions in the District of Delaware, according to a newswire
report. Mariner Post-Acute Network said it has obtained a commitment for
$100 million in debtor-in-possession (DIP) financing from Chase
Manhattan Bank, and Mariner Health said it obtained a $50 million DIP
commitment from PNC Bank. Mariner said the filing was necessary in order
to relieve its debt burden, due in part to the pressure created by the
Balanced Budget Act of 1997 and its implementation. Mariner Post-Acute
Network, Atlanta, operates more than 400 skilled nursing sub-acute and
assisted living facilities.
Bankruptcy Creditors' Service Inc. announced publication of 'Mariner
Bankruptcy News,'
target='_parent'>which will track the chapter 11 case. The first
issue includes background information on the company's operations and
finances, detailed information from the petitions, lists of the largest
unsecured creditors and a calendar of key dates in the chapter 11 cases.
The newsletter is distributed by e-mail for $45 per issue. The first
issue is free online at
target='_parent'>http://www.bankrupt.com/mariner.txt.
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Roberds to File Chapter 11 and Close All Tampa Stores
Home furnishings retailer Roberds Inc., Dayton, Ohio, announced
it will close all of its Tampa, Fla., stores and file for chapter 11
protection because of stiff competition and mounting losses, according
to a newswire report. From January 1998 to September 1999, the company
lost $21 million. CEO Melvin Baskin said the company has tried to 'save'
Roberds, but that 'no company can sustain these losses for an extended
period of time.' Roberds operates 24 stores that sell name-brand
products, including furniture, bedding, major appliances and consumer
electronics. About 530 of the company's 1,600 employees will be laid off
as a result of the closings. The Buckhead area store in Atlanta has been
listed for sale and the company will operate the store until a buyer is
identified.
Judge Blocks Ronald Isley Deal
Bankruptcy Judge Kathleen March refused to sign off of an
agreement for rhythm and blues singer Ronald Isley to sell his assets to
a music financier, noting objections from several parties who may plan a
competitive bid for the assets, according to Variety. Judge
March ordered the parties back to court next month. Ronald Isley, who is
in bankruptcy, had reached an agreement with the Pullman Group in which
it would buy all of his assets out of bankruptcy, including his portion
of the Isley Brothers' classic R&B music catalog. Pullman, which
invented the Bowie Bonds named for singer David Bowie, would pay about
$2 million for the estate. Because Pullman would separately pay Isley's
outstanding IRS bill of about $2 million, the deal is valued by the
bankruptcy trustee at nearly $5 million.
Carl Icahn and Greate Bay Hotel Creditors' Committee Propose
Joint Plan for Sands
Financier Carl Icahn and the Unsecured Creditors' Committee of
Greate Bay Hotel and Casino Inc. yesterday filed a joint plan of
reorganization which would permit the Sands Hotel and Casino to emerge
from bankruptcy, according to a newswire report. The plan provides for
an investment of $60 million for 50 percent of the equity of the
reorganized casino by Cyprus LLC and Larch LLC, each either a direct or
indirect wholly owned limited liability corporation owned by Icahn.
General unsecured creditors would receive a lump sum cash payment of
$4.872 million to be paid on the effective date of the plan.
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Dairy Farmers Facing Bankruptcy
East Coast dairy farmers say a serious drop in milk prices has
left many of them in financial dire straits, according to the Associated
Press. Dairy farmers from Maryland, Pennsylvania, New York and Alabama
rallied yesterday outside the Maryland State House for fairness in milk
pricing, citing rising production in the Western United States, which
has lowered the federal minimum price of milk to $9.63 per 100 pounds
last month. This represents a drop of more than $6 since September, the
lowest price level since 1978. The low milk prices could have been
averted if Congress had allowed Maryland to join the Northeast
Interstate Dairy Compact, according to the president of the Maryland
Dairy Industry Association. The compact allows a federally authorized
organization of six New England states to set milk prices above the
federal minimum. Last year, Congress extended the compact for two years
but locked out prospective new members in a compromise between
Northeastern and Midwestern lawmakers. Maryland farmers said they need
milk prices of at least $14.40 per 100 pounds of milk, (about 12
gallons) in order to survive.
Purina Mills Files Plan
Purina Mills Inc., St. Louis, announced yesterday that less
than three months after filing chapter 11, it has filed its
reorganization plan and disclosure statement in Delaware, according to a
newswire report. A hearing on the adequacy of the statement is expected
in February, and after approval, the company will begin soliciting votes
for approval of the plan. Under the plan's terms, the equity interest in
Purina Mills' parent company, PM Holdings Corp., held by Koch
Agriculture Co. will be cancelled. Koch Agriculture also will provide a
one-time $600-million capital contribution to Purina. Purina Mills is
the country's largest producer and marketer of animal nutrition
products.
Japan's Bankruptcy Debt Eases Temporarily in 1999
Japanese corporate bankruptcies dropped in 1999, but they are
expected to increase this year as government-guaranteed loans dwindle
and big companies restructure, according to credit research firm Teikoku
Databank in Tokyo. Bankruptcies dropped 19.4 percent last year, while
liabilities dropped 5.8 percent. These are the first declines in three
years, Teikoku Databank said. But it warned that the the figures do not
indicate recovery of the second-largest economy as many small and
mid-sized companies were kept alive by government loan programs.
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