July 9, 2004
Senate Fails to Invoke
Cloture on Class Action Legislation
Senate Republicans failed to block a Democratic filibuster last night on
legislation to overhaul the rules for class action lawsuits, effectively
killing the bill's prospects for enactment this year,
CongressDaily reported. The underlying compromise bill had
the support of 62 senators. But most Democratic co-sponsors joined with
their Democratic colleagues and a few Republicans to reject cloture by a
44-43 vote, on a procedural move by Majority Leader Bill Frist (R-Tenn.)
that had brought deliberations to a virtual standstill the previous day.
Frist needed at least 60 votes to invoke cloture on his motion, which
would have prevented senators from offering unrelated amendments on all
issues except the minimum wage, the newswire reported.
Retail Sales Are Below Expectations
Blaming high gasoline prices and unseasonably cool
weather, many department stores, discounters and specialty-apparel
retailers posted unexpectedly lower sales in June, stalling five months
of robust retail sales and fueling concern about a possible slowdown in
consumer spending for the rest of the year, the Wall Street Journal
reported. At the same time, many
specialty-luxury retailers posted higher-than-expected sales for the
month. 'The positive surprises were overshadowed by more negative
results by some of the major retailers, and our view is that some of
these shortfalls are likely to bleed into the back-to-school periods,'
says Todd Slater, a retail analyst with Lazard LLC, the newspaper
reported.
U.S. Consumer Credit Up
$8.2 Billion In May, Fed Says
U.S. consumer debt outstanding
grew a higher-than-expected $8.2 billion in May, the Federal Reserve
said in a report today, Reuters reported. The central bank also revised
up April's credit increase to $5.3 billion, from an originally reported
$3.9 billion rise. The May increase was led by non-revolving debt, which
includes fixed-term loans for cars, boats, tuition expenses and other
items. Wall Street analysts had expected consumer credit to post a $7.5
billion increase in May.
Adelphia's Founder Guilty
of Fraud
Adelphia Communications Corp.
founder John Rigas and one of his sons were found guilty on Thursday of
securities fraud and conspiracy in the multibillion dollar collapse of
the cable television company, Reuters reported. The federal jury's
verdict against Rigas and his son, Timothy, came after an 18-week trial
in which prosecutors painted a portrait of executives who used company
money to pay for everything from personal land deals to vacation homes.
The jury found another Rigas son, Michael, not guilty of conspiracy, and
was undecided on whether he committed securities fraud. It found a
fourth defendant, Michael Mulcahey, not guilty of securities fraud and
conspiracy, the newswire reported.
Delta Pilots Ponder Productivity in Give-back
Deal
As the pilots union at Atlanta-based Delta Air Lines Inc. prepares
to make a formal offer of concessions to management in the coming weeks,
the union's top official said on Thursday he was seeking ways to make
pilots more productive, Reuters reported. Capt. John Malone, head of
Delta's unit of the Air Line Pilots Association, told Reuters in an
interview that the union was not pleased with changes to work rules made
at rivals American Airlines and bankrupt United Airlines, the newswire
reported. Delta has been in talks on concessions for the last year with
its 7,300 pilots. Discussions had stalled in recent months, but the
union has said its new proposal would contain more givebacks than its
last. Delta, the No. 3 U.S. airline, has warned it may be forced to file
for bankruptcy if it cannot secure major cost cuts.
ENRON
Enron Ex-Chief Pleads Not Guilty to
Fraud
Former Enron Corp. Chairman and Founder Kenneth Lay
pleaded not guilty on Thursday to criminal charges accusing him of
taking part in a 'top-echelon' conspiracy to dupe investors about the
energy giant's crumbling finances before it collapsed in 2001, Reuters
reported. Lay, who surrendered to the FBI earlier in the day, had been
taken to a federal courthouse in handcuffs to stand before U.S.
Magistrate Judge Mary Milloy. Lay was indicted by a federal grand jury
on 11 criminal counts, including securities, wire and bank fraud and
making false statements to banks, the newswire reported.
Bush Ties to Enron, Big
Business Back in Spotlight
The indictment of President Bush's one-time friend and
financial backer Kenneth Lay put the spotlight back on Bush's ties to
big corporate donors as he heads into the final months of the U.S.
presidential campaign, Reuters reported. Democrats seized on the
indictment to attack the president's personal and financial ties to
Enron, including suggesting the criminal action had been delayed. But
political analysts said on Thursday that while it was an embarrassment
for Bush, the indictment of the former Enron chairman was unlikely to
impact the campaign in any meaningful way.
NextWave Gets $974 Million for
Airwaves
NextWave Telecom Inc. said on Thursday it would sell
three wireless airwave licenses for $973.5 million including a New York
license that will go to Verizon Wireless for $930 million, Reuters
reported. Bankrupt wireless company NextWave said MetroPCS paid $43.5
million for two licenses in Florida. NextWave had planned to
put six licenses on the block, but said it withdrew the remaining
three licenses from Thursday's sale. NextWave plans to pay about $398
million from the proceeds of the sale to the Federal Communications
Commission as part of an agreement it made with the regulator earlier
this year, Reuters reported.
Loral Space Says
Creditor Talks Take Positive Turn
Loral Space &
Communications Ltd. said negotiations with creditors in its chapter 11
case that have included 'a significant degree of tension' recently
turned more constructive. The satellite company said in papers filed
this week with the U.S. Bankruptcy Court in Manhattan that it has made
'substantial progress toward achieving a consensus' on a reorganization
plan with the official committee of unsecured creditors. In a motion
filed Tuesday and obtained Thursday, Loral sought a 60-day extension of
its exclusive period to file a turnaround plan so it can continue talks
with the creditors' committee unimpeded. The company said negotiations
are 'at a very delicate and sensitive stage, and the debtors firmly
believe that the short extension of the exclusive periods ... will
enable these negotiations to come to fruition.'
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Cable & Wire USA
Chapter 11 Plan Faces Opposition
Cable & Wireless USA's
chapter 11 liquidation plan faces opposition from the U.S. Trustee
acting in the case and several creditors, including the Internal Revenue
Service, a group of Texas tax agencies and Southwestern Bell Telephone.
The company has proposed a plan that would grant certain third parties,
including its U.K.-based corporate parent, Cable & Wireless PLC,
'inordinately broad' releases from claims, Trustee Roberta DeAnglelis
said in court papers filed July 1. The papers said Cable & Wireless
PLC appears to have discretion over the administration of the company's
estate and plan. The trustee urged the court to examine the third-party
release for the parent company and others, saying that it goes far
beyond the standard set by case law.
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Bankruptcy Court Okays $5 Million Severance for
Footstar's Mickey Robinson
Footstar Inc. said the U.S. Bankruptcy Court approved a settlement
that the termination of former Chairman and Chief Executive J.M.
'Mickey' Robinson was not 'for cause' and he will receive $5 million,
Sporting Goods Business reported. In
the settlement that was filed with the Securities and Exchange
Commission, Robinson will receive an initial payment of $2.5 million and
another $2.5 million on the later date of the company's emergence from
bankruptcy or liquidation or between 12 and 18 months from now.
Footstar, which filed for chapter 11 bankruptcy protection in March,
will also pay Robinson's arbitration law firm $100,000 and return to
Robinson the artwork he purchased that is in the company's
possession, the SEC filing said.