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June 12, 2007
name='1'>Supreme Court Backs Paper Company in ERISA
Dispute
The Supreme Court
unanimously ruled in favor of Crown Vantage, a bankrupt paper mill
company, finding that it is under no obligation to consider an offer to
merge its pension plans as an alternative to terminating the
plans, Bankruptcy
Law360 reported yesterday.
face='Times New Roman'>The High Court found Monday that
Crown Vantage, which had been approached by a labor union pension fund
to merge the company’s 17 defined-benefit pension plans into the
union fund, was not required under federal law to consider the merger
proposal. At the time of the labor union’s offer, Crown Vantage
had already made a decision to terminate its pension plans and was
deliberating over whether to put the money toward purchasing annuities
for plan participants and beneficiaries. The union filed suit against
Crown Vantage in bankruptcy court, accusing it of breaching its
fiduciary duties under the Employment Retirement Income Security Act
(ERISA) because it did not conduct an appropriate inquiry into the
merger proposal. A federal bankruptcy court and a federal court ruled
against the union, but the Court of Appeals for the Ninth Circuit
in
size='3'>San Francisco
size='3'>ruled in October 2005 that the paper mill operator had violated
its duties to pension plan participants when it decided to annuitize its
pension obligations instead of merging the plan with the labor
union’s plan. The case is
size='3'>Beck v. Pace International Union,
case number 05-1448, in the U.S. Supreme Court.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=26593'>Read
more. (Registration required.)
name='2'>Tweeter Files for Bankruptcy
Tweeter Home Entertainment
Group Inc., seeking to recover from a bruising price war for flat-screen
televisions, filed for chapter 11 protection yesterday and said it
expects to continue normal business operations as it reorganizes, the
Associated Press reported yesterday. The Canton, Mass.-based electronics
retailer warned last month that a chapter 11 filing was possible if it
didn't obtain adequate financing. Tweeter President and CEO Joe McGuire
said that he was confident that the 35-year-old chain 'will emerge from
this process as a stronger, more competitive organization that is
well-positioned to respond to and succeed in the ever-changing consumer
electronics industry.' The company also said yesterday that it would
seek court approval to access $60 million in temporary financing that
General Electric Capital Corp. has extended to Tweeter.
href='http://biz.yahoo.com/ap/070611/tweeter_bankruptcy.html?.v=1'>Read
more.
name='3'>Pension Fund Seeks Class Status in Calpine
Case
A pension fund whose
shareholder lawsuit against Calpine Corp. has been put on hold intends
to seek class action status in bankruptcy court for its claims,
Bankruptcy Law360
reported yesterday. The Hawaii Structural Ironworkers
Pension Fund gave notice that it had filed a motion on Friday asking the
U.S. Bankruptcy Court for the Southern District of New York to award its
complaint class certification status. The motion is rooted in a lawsuit
the pension fund filed against Calpine in 2003 in the Superior Court of
the State of California County of Santa Clara. The suit stems from the
fund’s purchase of 66 million shares of Calpine stock in 2002. The
suit alleges that Calpine issued false and misleading statements in its
registration statement and prospectus for its April 2002 equity
offering. It accuses Calpine and some of its current and former officers
and directors, as well as the company’s underwriters and
investment banks, of strict liability and negligence.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=26474'>Read
more. (Registration required.)
name='4'>Supreme Court Refuses to Hear Nucor Appeal
In a blow to Nucor Corp.,
the U.S. Supreme Court has refused to hear a case involving claims that
the steel company violated antitrust laws by outbidding Gulf States
Reorganization Group Inc. (GSRG) in a bankruptcy auction,
Bankruptcy Law360
reported yesterday. Burt Rein, a partner at Wiley Rein
LLP, the firm representing Nucor in the matter, said that the company
continues to believe that the Supreme Court's decision in a separate
case, Weyerhaeuser Co.
v. Ross-Simmons Hardwood Lumber Co., has a
'critical bearing' on the issue presented in this case. (The
Weyerhaeuser ruling, handed down in February, upheld the standard that
predatory conduct can also apply to purchasing conduct.)
Nucor had appealed its case
to the Supreme Court after the U.S. Court of Appeals for the Eleventh
Circuit ruled in October 2006 that GSRG had properly demonstrated both
causation and antitrust injury in its suit against Nucor. The Supreme
Court case is Nucor
Corp. v. Gulf States Reorganization Group,
case number 06-1383, in the U.S. Supreme Court.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=26472'>Read
more. (Registration required.)
name='5'>Congressmen Press Banking Regulators on Banking Loophole
Used by Fraudsters
Representative Edward J.
Markey (D-Mass.), a senior member of the House Energy and Commerce
Committee, and House Financial Services Committee Chairman Barney Frank
(D-Mass.) wrote to banking regulators yesterday about the practice of
accepting and processing unsigned or 'remotely created' checks, often
generated by fraudsters in the names of unsuspecting victims, according
to a Financial Services Committee press release yesterday. This practice
is enabling the perpetration of schemes that are draining millions of
dollars from the bank accounts of vulnerable Americans, including the
elderly and individuals with chronic, debilitating diseases, as
highlighted by the New
York Times last month.
href='http://www.house.gov/apps/list/press/financialsvcs_dem/press061107.shtml'>Click
here to read the press release.
w:st='on'>
name='6'>Delaware
face='Times



New
Roman'
size='3'> Ruling May Make Bankruptcy Claims against Company
Executives More Difficult
A recent Delaware Supreme
Court decision may have undermined cases against directors and officers
of companies for actions they take just before they file for bankruptcy,
such as increasing the company's debt or signing major contracts with
creditors, theNational
Law Journal reported today. The court ruled in
May that creditors of a
w:st='on'>
size='3'>Delaware
size='3'>corporation that is insolvent or in the so-called 'zone of
insolvency' have no right to assert direct claims for breach of
fiduciary duty against its directors. Some lawyers believe the decision
eliminates the threat of suits that seek to recover from directors for
actions they took shortly before bankruptcy.
size='3'>The case was filed by 'putative creditor' North American
Catholic Educational Programming Foundation Inc. against three directors
of the
face='Times New Roman' size='3'>Delaware
corporation, Clearwire Holdings Inc., which had agreed to
buy the foundation's Federal Communications Commission-approved licenses
for microwave signal transmission to build a national wireless Internet
network (North American
Catholic Educational Programming Foundation Inc. v. Rob
Gheewalla, No. 06-521 (Del.)).
href='http://www.law.com/jsp/ihc/PubArticleIHC.jsp?id=1181552740578'>Read
more.
Autos
name='7'>Dura Seeks Relaxation of Terms of $300 Million Bankruptcy
Loan
Dura Automotive Systems is
offering to pay its lenders up to $300,000 in exchange for easing the
terms of a $300 million bankruptcy loan, the Associated Press reported
yesterday. The Rochester Hills, Mich.-based auto parts maker says it may
default on its loan without the changes and has asked a federal
bankruptcy judge to approve the change. The company says it expects to
emerge from bankruptcy later this year.
name='8'>Ford to Explore Sales Options
Ford, battling steep
losses, hired investment banks Goldman Sachs, Morgan Stanley and HSBC to
explore the sale of Jaguar and Land Rover, the
face='Times New Roman' size='3'>Washington Post
size='3'>reported today. Like other
w:st='on'>
size='3'>Detroit
size='3'>automakers, Ford has been hit hard by losses in its core North
American division, which depends heavily on profits from trucks and
sport-utility vehicles. Leaders at Ford, including CEO Alan R. Mulally,
have been grappling with questions about how to put the automaker on
track for a profitable future as an all-out war over market share grips
the
face='Times New Roman'
size='3'>U.S.
size='3'>auto industry. Ford, which lost $12.6 billion last year, is
undergoing a restructuring in
face='Times New Roman' size='3'>North America
size='3'>that involves closing plants and cutting more than 30,000
jobs.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/06/11/AR2007061101988_pf.html'>Read
more.
High
Court Rules against Philip Morris
The Supreme Court
rejected a plea by Philip Morris Cos. to move a consumer lawsuit out of
state court and into the federal system, a defeat for the tobacco
company, which will now have its case heard in front of a presumably
less-friendly
face='Times New Roman' size='3'>Arkansas
state judge, the
size='3'>Wall Street Journal reported today.
The tobacco case, a proposed class-action filed in
w:st='on'>
size='3'>Arkansas
court, alleged that Philip Morris misleadingly advertised 'light'
cigarettes as delivering less tar and nicotine than they actually did.
Philip Morris, a unit of Altria Group Inc., sought to remove the case to
federal court, which many corporations perceive as more friendly to
business interests. Since 1999, Altria has succeeded in having a large
number of pending cases switched from state courts to federal courts,
where some have been dismissed. Some of the biggest verdicts against
Philip Morris and other tobacco companies have arisen out of losses in
state courts. In this case, Philip Morris invoked a federal law dating
from 1812 that allows removal to federal court when a private party is
acting under government direction. Philip Morris argued that it was
following a test prescribed by the Federal Trade Commission determining
the tar and nicotine content of the light cigarettes. Removal to federal
court requires more than 'simply complying with the law,' Justice
Stephen Breyer wrote for the court.
href='http://online.wsj.com/article_print/SB118156954923331132.html'>Read
more. (Registration required.)
name='10'>Sole U.S. Uranium-Enrichment Company Is Struggling to
Stay in Business
Seventy years after
the
face='Times New Roman' size='3'>United
States
uranium enrichment, the sole American company in the business is
struggling to survive, while nuclear power experts worry that its
failure would leave the Russians dominant in the market for fuel
processing, the New York
Times reported today. The company, USEC, has
liquidated some of its valuable uranium inventories to stay afloat, as
its income has declined because of changing market
conditions. In the 1990s, the government
privatized its antiquated enrichment plants. USEC closed one, in
size='3'>Piketon
w:st='on'>
size='3'>Ohio
other, in
face='Times New Roman' size='3'>Paducah
size='3'>,
size='3'>Ky.
the
size='3'>Paducah plant is a
heavy user of costly electricity, which now amounts to more than 70
percent of USEC’s costs. Centrifuges, which are used by almost all
other enrichment plants, use only 5 percent of the electricity used by
the
size='3'>Paducah
February, USEC announced that the centrifuges it was developing would
cost $2.3 billion, up from a previous estimate of $1.7 billion, and
would take an extra year to deploy. The company has already spent about
$400 million on the centrifuges and is looking for financing to complete
the project, which it is trying to build in
w:st='on'>
size='3'>Piketon
w:st='on'>
size='3'>Ohio
href='http://www.nytimes.com/2007/06/12/business/12nuke.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
International
name='11'>New Bankruptcy Law Looks to Revolutionize
w:st='on'>China
China’s first
national bankruptcy law, which took effect June 1, now gives the country
a version of U.S. chapter 11, entitling foreign owners and creditors for
the first time in modern Chinese history to assert rights to assets they
own in China, Forbes.com reported today. It provides a legal framework
for foreign investors to pursue claims in an orderly fashion when
businesses fail, a missing piece of global commerce in the three decades
since
face='Times New Roman'
size='3'>China
size='3'>opened itself up to foreign investment. The new law also
makes
face='Times New Roman'
size='3'>China
size='3'>the first Asian country to adopt a U.S.-style bankruptcy
system. Like chapter 11,
w:st='on'>
size='3'>China
size='3'>’s law treats local and foreign creditors equally, and it
places lenders with secured claims ahead of company employees for the
first time. Previously, employees of failed companies had first dibs on
collateral held by creditors.
href='http://www.forbes.com/facesscan/2007/06/12/china-bankruptcy-law-face-markets-cx_jc_0612autofacescan01.html?partner=rss'>Read
more.
ABI is hosting a Webinar on China's new law on Aug. 22 from 1 - 2:30
ET.
href='http://www.abiworld.org/Scriptcontent/regStep0.cfm?CONF_CODE=China07'>Click
here to register.
name='12'>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
size='3'>Daily Summary of Troubled & Fast Growing U.S. Companies and
Other Business News 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
face='Times New Roman' color='#0000ff'
size='3'>steve@creditnews.com
size='3'>your name, company name, address, phone and fax.
We’ll set you up within 24 hours.
The
size='3'>ABI
is only $99 for an annual subscription.
size='3'>Indicate “
face='Times New Roman' size='3'>ABI
size='3'>CODE 27” in your email.
size='3'>American International Group Inc.
size='3'>agreed with the Office of Thrift Supervision to offer partial
refunds of fees to some mortgage customers and to provide new loans for
others. The
face='Times New Roman' size='3'>Manhattan
size='3'>,
size='3'>N.Y.
insurance firm earlier set up a $128 million reserve to cover
anticipated expenses.
size='3'>Bank of Montreal’s debt rating
was lowered by Standard & Poor’s Rating Service amid weak risk
management that allegedly led to large trading losses. The Montreal,
Quebec-based firm,
w:st='on'>
size='3'>Canada
size='3'>’s fourth-largest banking concern, recently reported
pretax losses of $641 million related to natural-gas-trading losses.
Bank of Montreal, the parent company of Chicago, Il.’s Harris
Bank, also raised concerns about losing marketshare in its mortgage and
deposit operations.
size='3'>Enuclia Semiconductor Inc., in
size='3'>Beaverton
outside
face='Times New Roman'
size='3'>Portland
layoff notices out to nearly 40% of its workers after a venture-capital
company decided to pull out. A total of three companies had been
involved in putting together a $20 million round of funding for Enuclia,
which has been developing a video processing chip for digital
televisions.
size='3'>News & Record, a newspaper
in
size='3'>North Carolina,
will trim its payroll by more than forty employees, or about 10% of its
workforce, as part of a “business
reorganization”.
size='3'>Novatel Wireless Inc. announced that
its chief financial officer will step down after serving for less than a
year. This is the second top official to leave the company within the
past year, raising questions about leadership at
Novatel.
size='3'>Samsonite Corp., the luggage company,
recorded $1.3 million in restructuring charges related to moving its
corporate offices from Denver, Co. to Mansfield, Ma. The company also
moved certain distribution functions to
w:st='on'>
size='3'>Jacksonville
Fl. Last year Samsonite incurred $1.6 million in extra expenses
related to the move. For its quarter ended 4/30, Samsonite lost
$2.9 million on net sales of $265 million. The firm added that it now
expects its fiscal results will be stronger than earlier
anticipated.
size='3'>Synergetics USA Inc., an
O’Fallon,
face='Times New Roman' size='3'>Mo.
size='3'>designer and maker of medical devices, reported a third quarter
net loss of $90,000, compared to a profit of $1.1 million in the
year-earlier third quarter. Revenue increased 10%–to $11.5
million. For the
recent quarter the company cited higher expenses and extra legal
costs.
href='http://business.guardian.co.uk/story/0,,2098101,00.html'>