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Senators Reach Deal on Portion of Asbestos Plan
U.S. Senators considering a national fund to compensate asbestos victims
on Thursday agreed that insurance payments would not reduce payouts by
the fund, but said they were still haggling over other features, Reuters
reported. The agreement clears a major hurdle, but concerns remain about
whether the proposed $108 billion fund could run out of money. Members
of the Senate Judiciary Committee, at a meeting to consider legislation
establishing the fund, were also bogged down on deciding how sick
someone must be before they are eligible to apply to the fund. 'A lot of
progress has been made, but we also don't have every issue resolved to
the satisfaction of all committee members at this time,' said Sen. Orrin
Hatch (R-Utah), committee chairman and chief architect of the bill.
Sen. Patrick Leahy (D-Vt.) welcomed the decision to limit
compensation deductions to past settlements or court judgments for the
same injury. But he wanted more time for negotiations to address whether
$108 billion was adequate, reported the newswire. Hatch said he would
not force a panel vote on the legislation on Thursday if 'sincere and
legitimate' progress were being made, Reuters reported.
Treasury Official Treads Near Credit Pre-emption Position
The Treasury Department official responsible for formulating the Bush
administration approach to re-extending the federal law governing credit
reporting said that it was important to have a 'standardized system of
information sharing' in order to combat identity theft,
CongressDaily reported. In remarks at the conclusion of an FTC
workshop on Wednesday, Assistant Treasury Secretary for Financial
Institutions Wayne Abernathy provided another rationale for continuing
the federal pre-emption of state laws governing credit bureaus. 'Many of
these identity thieves hide behind different state boundaries,'
Abernathy said. 'Unless you have a standardized system of information
sharing, how do you get the information to all the different law
enforcement venues?' Although the Treasury Department has yet to release
its formal position on extending the Fair Credit Reporting Act
pre-emptions, Abernathy's Wednesday talk eased closer to committing the
administration to supporting re-extension, reported the newswire.
Judge Announces Settlement in PG&E Restructuring
California Public Utilities Commission (CPUC) and Pacific Gas &
Electric Co. reached a settlement in efforts to merge rival plans to
restructure the bankrupt utility, a federal judge said on Thursday,
Reuters reported. 'The settlement is a good one,' Bankruptcy Judge
Randall Newsome told a news conference in San Francisco, calling the
plan 'very much in the public interest.' It will be filed at the
bankruptcy court next week. The settlement -- a compromise between
restructuring plans proposed by the utility, a unit of PG&E Corp.
and the CPUC-- would keep Pacific Gas & Electricity intact under
state rules, fully repay creditors about $13 billion in cash, and bring
the utility out of bankruptcy in early 2004. The compromise was hammered
out in court-ordered talks conducted since March behind closed doors
with Judge Newsome. While the settlement is still subject to review by
U.S. Bankruptcy Judge Dennis Montali, who presides over the case, and a
review and vote by the CPUC, it puts an end to litigation between the
two sides, Judge Newsome said, reported the newswire.
Engage Files Chapter 11, Selling Assets to Scene7
Engage Inc. on Thursday sought bankruptcy protection from creditors
after sales tumbled, and said it plans to sell substantially all of its
assets to Scene7 Inc., a graphics software company, Reuters reported.
Andover, Mass.-based Engage listed $52.1 million of assets and $16.6
million of debts in its voluntary chapter 11 petition filed with the
U.S. Bankruptcy Court in Worcester, Mass. The filing, which was
expected, also covers several of Engage's U.S. units, but not its
European operations. Engage said it is 'unlikely' that shareholders will
recover anything for their holdings.
Novato, Calif.-based Scene7 will pay $1.2 million in cash for
Engage's assets and assume about $650,000 to $850,000 in liabilities.
The purchase should be completed this summer, Engage said, reported the
newswire.
ANC Wins Court Approval for Asset Bidding
ANC Rental has won U.S. Bankruptcy Court approval for the bidding and
possible sale of its Alamo Rent a Car and National Car Rental chains to
a buyout firm for $230 million in cash, the Wall Street Journal
reported on Thursday, Reuters reported. A committee of creditors had
objected to the deal with Cerberus Capital Management, but backed down
before the court hearing, the newspaper reported. ANC Rental has been
operating under bankruptcy protection since 2001. The rental car
industry has suffered badly since the September 11 terrorist attacks,
and the weakened economy that ensued, keeping many would-be travellers
at home instead. The Journal said bids for ANC assets need to be
submitted no later than July 25, and that an auction will be held on
Aug. 4 if other bidders step forward. The deal with New York-based
Cerberus also includes an agreement for Cerberus to take on $2 billion
of ANC's debt secured by rental cars, as well as $60 million in
non-vehicle-related debt, and provide $150 million of working capital. A
representative of ANC was not immediately available for comment, and the
ruling could not be found on the court's Internet site, reported the
newswire.
Winston-Salem, N.C., Bankruptcy Judge Grants Frisby Technologies'
Assets Sale
A bankruptcy court judge in Winston-Salem, N.C., approved yesterday the
sale of some of the assets of Frisby Technologies Inc. for $1.25
million, the Winston-Salem Journal reported. The company, which
makes climate-control material for a number of industries, agreed to
sell some of its patents, trademarks and marketing materials to Carl
Freudenberg KG, a limited partnership organized in Germany and the
business unit that holds all intellectual property for Freudenberg
Vliesstoffe KG of Wienheim, Germany. Frisby filed for bankruptcy in
January and its top executives have left.
Mark Gillis, the chief restructuring officer for Frisby, told the court
that the sale was necessary because the company would need additional
financing to manage these assets otherwise. He also said that it was in
the company's best interest to reject executory contracts for a number
of reasons. 'If they were not rejected, it would be unlikely that Frisby
could serve those contracts as a licensor because of the inability to
obtain financing,' he said, reported the newspaper.
Touch America Files for Bankruptcy Protection
Butte, Mont.-based Touch America Holdings Inc., which suffered a string
of financial setbacks and a massive loss in stock value since its
conversion from the energy giant Montana Power Co., filed for bankruptcy
protection in Delaware on Thursday, reported the Great Falls
Tribune. In a news release late Thursday evening, Chairman and CEO
Bob Gannon said the company was seeking chapter 11 bankruptcy protection
'based on the continuing uncertainty about our liquidity,' the online
newspaper reported. The filing comes just one day after Touch America
laid off 216 employees -- more than half its remaining workforce. The
Tribune reported that the company has been ordered to pay Qwest
Communications more than $60 million in a dispute over the purchase
three years ago of Qwest assets. Touch America has asked federal
regulators to reconsider that decision, which is expected to be made
final next month.
FERC Could Rule On NRG Energy-CL&P Power Dispute Wednesday
The Federal Energy Regulatory Commission (FERC) has included the
power supply contract dispute between NRG Energy Inc. and Connecticut
Light & Power Co. (CL&P) on its June 25 meeting agenda,
indicating that it could issue its eagerly-awaited decision on the
contentious matter. The commission also listed on the agenda the related
matter of whether Northeast Utilities' CL&P, and ultimately its
customers, or its suppliers, which include a unit of NRG Energy, should
pay for costs stemming from changes New England made to its wholesale
power market in March. When asked by reporters at an energy conference
if FERC could issue decisions before next week, Chairman Pat Wood
responded, 'I can't say. We're talking about every option.'
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Bankruptcy Court Signs $20 Million Lease in Wilmington
In what legal observers describe as bricks-and-mortar proof of
Delaware's dominance in the nation's $2 billion-a-year bankruptcy
business, the court is getting three new courtrooms in downtown
Wilmington, according to the Delaware News Journal. Currently,
the court has two courtrooms of its own and access to a borrowed
courtroom. The General Services Administration has signed a 10-year
lease on nearly 70,000 square feet, nearly doubling the space the U.S.
Bankruptcy Court for the District of Delaware previously had, reported
the online newspaper. The deal is valued at more than $20 million,
according to Kevin McGonegal, vice president of Bellevue Realty Co., the
building's leasing agent. The court now controls the entire third and
fifth floors and most of the sixth floor of the 19-year-old building. In
addition, it controls half of the second floor in the 10-story building.
The new courtrooms should be open by the end of the year, Clerk of the
Court David D. Bird said, according to the newspaper.
'In the military, it's what they call 'reality on the ground,' ' said
Lynn LoPucki, a law professor at the University of California at
Los Angeles Law School and a vocal critic of competition among federal
bankruptcy courts, reported the Journal. LoPucki said the
commitment by the government to the additional space should further
entrench Delaware's position as a preferred venue for corporate
reorganizations under chapter 11 of the Bankruptcy Code. While it
appeared briefly last year that Delaware was losing cases to other
courts, particularly the one in Manhattan, filings this year by
companies with assets of more than $200 million are even with New York,
according to the newspaper. Based on LoPucki's data, Delaware and New
York each landed four of the 18 big cases this year, which means each
state captured 22.2 percent of business. Companies that filed in
Delaware include Fleming Companies Inc. and Wherehouse Entertainment
Inc. In May, the U.S. Senate approved a bill by Sen. Joe Biden (D-Del.),
senior Democrat on the Judiciary Committee, that creates 29 new
permanent bankruptcy judges, including four in Delaware. It would bring
the number of permanent judgeships in Delaware to six.
Roxio Sells Shares to Revive Napster
Roxio Inc. said it has raised $22 million in a private placement with
institutional shareholders, financing that will help it resurrect the
defunct Napster music service, the Wall Street Journal reported.
The Santa Clara, Calif.-based company sold four million shares of its
common stock for $5.50 a share to a group of institutional shareholders
it declined to name. The company said the financing will leave it with
$68 million in cash reserves, some of which it will use to fund its
investment in the new Napster service.
The investment will give the company a bigger financial cushion as it
makes a push into the Internet music business under the Napster brand, a
plan that Chief Executive Chris Gorog said had generated interest among
potential investors. Roxio has said it intends to invest $20 million in
relaunching pressplay under the Napster name by March. Late last year,
the company acquired most of the assets of Napster for $5 million out of
bankruptcy court, where Napster Inc. had been forced by a costly lawsuit
over music piracy by the recording industry, reported the online
newspaper.
Bankruptcy Court Approves Conseco Finance Plan
Conseco Finance Corp. (CFC) said on Thursday it received conditional
bankruptcy court approval for its third amended reorganization plan,
which entails the sale of its assets and would enable its parent company
to focus on the insurance business, reported Reuters. The U.S.
Bankruptcy Court for the Northern District of Illinois granted the
approval on the condition of court approval for the reorganization plan
of Conseco Inc., the bankrupt parent company. 'We believe the plan is in
the best interest of all CFC constituents, including creditors,
certificate holders and employees,' Conseco Finance President and Chief
Executive Chuck Cremens said. 'We are now ready to move to the next
stage of our reorganization process, the sale of CFC's assets, which we
expect to close within the next week,' reported the newswire.
NextWave Wins Approval for Clarity Wireless Pact
NextWave Telecom Inc. said on Thursday a bankruptcy court approved its
partnership with a venture capital firm to acquire additional wireless
licenses over the objections of federal regulators, Reuters reported.
The company, which has been reorganizing under bankruptcy protection
since 1998, received the go-ahead on Wednesday to enter into the pact
with Clarity Partners so they can seek and acquire airwaves needed to
deploy a nationwide broadband wireless service.
The Federal Communications Commission had objected to the plan before
the U.S. Bankruptcy Court for the Southern District of New York earlier
this week, arguing that NextWave had not provided enough information
about the venture or how it fits into NextWave's future business and
reorganization plans. 'The ability to take advantage of appropriate
opportunities will foster reorganization by allowing NextWave to
diversify its spectrum holdings and take advantage of new technologies
to deploy the most cost effective wireless broadband wireless
infrastructure,' the company said in a statement on Thursday, reported
the newswire.
U-Haul Parent Amerco on Brink of Bankruptcy
Amerco Inc., the parent of truck renter U-Haul International, might file
a bankruptcy petition as soon as Friday because it is having difficulty
securing $866 million of needed financing, the Financial Times
reported on Thursday on its web site, Reuters reported. The newspaper
cited no sources, saying specifically that a Friday bankruptcy filing
was possible. Citing people close to discussions with creditors, it said
Amerco might reach a last-minute deal to avert a bankruptcy filing, but
that some creditors and bondholders were losing patience. Amerco in
March said it was close to obtaining the financing, and expected to
secure it by May, reported the newswire.
Laidlaw Completes Exit Financing
Laidlaw Inc. said on Thursday it had completed its exit financing as
required by the terms of its plan of reorganization, as it prepares to
emerge from chapter 11 bankruptcy protection, Reuters reported. In a
release, the Burlington, Ontario-based transport operator said it had
placed $1.225 billion in escrow pending completion of the plan, which
will see the company re-based to the state of Delaware from Burlington,
Ontario.
Pillowtex Close to Being Sold for $300 Million
Pillowtex Corp., a maker of sheets and towels that emerged from
bankruptcy protection 13 months ago, is close to being bought by
UK-based Homestead Fabrics Ltd. in a $300 million deal, a source
familiar with the situation said on Thursday, Reuters reported. The deal
still has not gained approval from Pillowtex's bank lenders, Wachovia
Corp. and Bank of America Corp., and may fall apart, the source said. If
a buyout agreement is not reached, Kannapolis, N.C.-based Pillowtex
would likely be forced back into chapter 11 bankruptcy protection within
a few days, the source said. 'There is a deal that's on the table from
Homestead Fabrics,' the source said, speaking on condition of anonymity.
'Homestead has been working towards a deal for the last three weeks but
for the most part, we can't get the (creditors) to decide on the deal,'
reported the newswire.
Pillowtex has been looking for a buyer since late last year and
currently has about $200 million in debt. It has had trouble servicing
its debt payments however, as it struggles with heavy competition from
cheap imports in the depressed textile industry, Reuters reported.
Air Canada Plans to Buy up to 105 Regional Jets
The bankruptcy court-appointed monitor for insolvent Air Canada said on
Thursday the airline's restructuring plan includes raising C$4 billion
($3 billion) to buy up to 105 regional aircraft, Reuters reported. Ernst
& Young, the monitor, said in its seventh report to Ontario Superior
Court that Air Canada also plans to raise new equity and debt of about
C$1.35 billion to finance its operations once it emerges from bankruptcy
protection. The monitor also said Air Canada will try to convert its
unsecured debt into new equity of the restructured Air Canada, reported
the newswire.
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