February 62006

February 6, 2006

name='1'>Senate Looks to Begin Debate on Asbestos Trust Fund
this Week

While much attention will be focused on President Bush's FY07 budget,
this week will also bring long-delayed debate about legislation that
would set up a $140 billion trust fund to compensate people sickened by
asbestos, according to Congress Daily today. The issue reaches
the Senate floor today, but its prospects remain murky. The bill faces
procedural hurdles, the possibility of a slew of amendments, and
reluctance from even some senators who voted for it in committee. The
bill, which would halt all asbestos-related court cases by setting up
the trust fund to compensate victims, is sponsored by Senate Judiciary
Chairman Specter, and ranking member Patrick Leahy (D-Vt.). signaled he
would object today to a motion to begin debate. 'They do not have the
votes necessary to get the bill out of the Senate,' a spokesman for
Senate Minority Leader Reid said, predicting that even if backers corral
the 60 votes needed on the cloture vote, the bill would ultimately fail.
Specter said he had not received notice of amendments that senators
would seek to add to the bill, but he said he anticipates there will be
many. Some opponents have raised the possibility of attaching 'poison
pill' amendments to derail the bill. Specter said he and Leahy are
meeting with every senator to try to build support for the measure. He
predicted that if this bill fails, the Senate will not have another
chance to address problems in the asbestos-litigation system, which
lawmakers say is clogged with class-action lawsuits that have delayed
settlements and led to bankruptcies and small or no settlements for
victims. The trust fund would be made up of contributions from insurers
and companies facing asbestos lawsuits. Many of them oppose the bill,
saying it does not guarantee they would be able to stay out of court if
the trust fund runs dry. Many labor unions, too, oppose the bill,
complaining it does not provide sufficient compensation to asbestos
victims.

name='2'>GlycoGenesys Files for Chapter 11 Bankruptcy, Lays Off More
Than Half of Work Force

Struggling biotechnology company GlycoGenesys Inc. filed for chapter
11 bankruptcy protection in Massachusetts and laid off more than half of
its work force in an effort to salvage the business, the Associated
Press reported Friday. The company, which has been developing
carbohydrate-based drugs as potential cancer treatments, also said CEO
Bradley J. Carver has stepped down and will be temporarily replaced by
Frederick E. Pierce II, the company's vice president of business
development. The bankruptcy filing comes days after GlycoGenesys
received a warning that it could lose its exclusive license for the
company's primary drug candidate if it failed to make its required
$50,000 minimum royalty payment. By filing for bankruptcy protection,
GlycoGenesys stalled any efforts to terminate the license. The
Boston-based company began operations in 1993 and has recorded roughly
$103.5 million of losses since its inception. In its chapter 11 filing,
GlycoGenesys said it had total assets of $1.6 million against debt
totaling $2.9 million. The company said its largest creditors include
law firm Ropes & Gray LLP, Johnson Matthey Pharmaceutical Materials
and Wayne State University.
href='http://biz.yahoo.com/ap/060203/glycogenesys_ch_11.html?.v=2&printer=1'>Read
more.

name='3'>New Law's Fallout in New Jersey a Tough
Call

Business and consumer bankruptcy filings in New Jersey were up 20
percent last year to 49,583 from 41,303 in 2004, according to court
statistics, NorthJersey.com reported on Sunday. However, the surge in
filings before the new law took effect on Oct. 17 and a big drop-off
over the last 2 months of the 2005 is making comparisons with previous
years and predictions for trends in 2006 difficult. 'Clearly, Congress
intended to make bankruptcies harder than before, and maybe they did,'
said Prof. Jack Ayer, professor
emeritus at the University of California at Davis and ABI's Resident
Scholar. But little blips on the radar show 'the target may be more
elusive than they expected,' said Ayer. Nationally, 2.04 million
consumers filed for bankruptcy protection in 2005, a 31.6 percent
increase from the 1.55 million a year earlier, according to Lundquist
Consulting Inc., a California-based financial research company. Monthly
filings dropped sharply after the new law took effect, with New Jersey
reporting 15,052 new filings in October, but only 869 in November and
December combined. Even with the new law, there are some signs that, at
the least, the total number of personal bankruptcies is not likely to
drop because consumer debt continues to be a concern. The American
Bankers Association reported in mid-January that even with a small drop
in delinquencies, the proportion of consumers who were behind on their
credit card bills remained at near-record levels in the third quarter.
While most of the focus on the new bankruptcy law was on individuals, it
will also affect corporate filings, Ayer said. But the changes are in
keeping with the incremental adjustments made over the past 25 years, he
said.
href='http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXkyOS…'>Read
more.

name='4'>Winn-Dixie Stockholders' Plight Highlights Politics of
Bankruptcy

Depending on a pending ruling from Judge Jerry Funk of the U.S.
Bankruptcy Court for the Middle District of Florida, Winn-Dixie Stores
Inc.'s former official equity committee, which represents the company's
36,000 stockholders, may be allowed to participate in the chapter 11
proceedings, the Jacksonville Business Journal reported on
Friday. The journey of the equity committee highlights many of the
internal politics that occur during a chapter 11 reorganization over the
case's ultimate goal: deciding who gets what from the estate when it
emerges from bankruptcy. 'It's like your little brother trying to get
part of the pie,' said Prof. Lynn LoPucki, a law
professor at the University of California Los Angeles. 'You want to keep
him from cutting into the slice you want.' The U.S. Trustee disbanded
the equity committee Jan. 11 after a review of the company's operations
and business plan late last year. The committee was created early on,
the trustee and lawyers for the creditors committee and Winn-Dixie said
Jan. 30, because it was unknown what, if any, role stockholders would
play in the reorganization. But the disbandment also suspended several
inquiries the equity committee had requested into the company's
operations and business plan coming out of bankruptcy. The creditors'
committee and Winn-Dixie stated publicly at the hearing that there was
'no substantial likelihood of a return on equity' to company
stockholders as part of the company's developing reorganization plan.
href='http://www.bizjournals.com/jacksonville/stories/2006/02/06/story7.html?…'>Read
more.

name='5'>Actor Robert Blake Files for Bankruptcy

Robert Blake has filed for bankruptcy, 2 1/2 months after a civil
court jury found he 'intentionally caused' his wife's death and awarded
her children $30 million in damages, according to the Associated
Press on Friday. In Friday's filing, he listed his biggest
liabilities as the $30 million judgment, a $1,274,783 million federal
tax bill and a $334,337 state tax assessment. The filing says he has
assets of $100,001 and $500,000. Eric Dubin, the attorney who
represented Bakley's wife Bonny in the civil trial, said he
plans to file a motion for a new trial in the civil case. He has not
done so because the judge who presided over the trial became ill soon
after the verdict and has not affirmed or signed the jury's judgment.
href='http://news.yahoo.com/s/ap/20060204/ap_en_ce/blake_bankruptcy_5'>Read
more.

name='6'>UAW President Calls Delphi Chapter 11 Filing
Unneeded

UAW President Ron Gettelfinger said Sunday that while talks over the
future of Delphi Corp. were progressing, he still did not see a reason
for the parts supplier to file for bankruptcy, according to the
Detroit Free Press today. 'This is a mechanical bankruptcy,' he
added. 'I firmly do not believe Delphi needs to be in bankruptcy.' The
bankruptcy of Delphi and several other auto parts companies, as well as
plans by GM and Ford to cut 60,000 workers, suffused much of the talk
during the opening session of the UAW's National Community Action
Program Conference. The CAP is the union's political arm, charged with
lobbying for the interests of the UAW's 1.2 million active and retired
workers. Delphi filed for bankruptcy Oct. 8 after efforts to win labor
concessions from its unions and bailout money from GM failed. The
supplier expects to emerge from bankruptcy in summer 2007. Last month,
Delphi withdrew contract proposals it made in November that included
cuts in wages of more than 63 percent and plans to eliminate 24,000, or
60 percent , of the jobs with its labor unions. Gettelfinger
declined to specify any new proposals from Delphi, which has said it
could ask the bankruptcy court to throw out its union contracts. GM said
last month that its liabilities for UAW workers at Delphi could range
between $3.5 billion and $12 billion. It stepped in to avert a labor
strike at its largest supplier, which could quickly cripple GM's North
American factories.
href='http://www.freep.com/apps/pbcs.dll/article?AID=/20060206/BUSINESS01/602…'>Read
more.

name='7'>A.I.G. Is Expected to Offer $1.6 Billion to Settle with
Regulators

American International Group, the insurance giant, is expected to
announce a settlement with federal and state regulators later this week
that will require the company to pay about $1.6 billion to settle
charges covering a wide range of regulatory issues, according to two
people briefed on the negotiations, according to the New York
Times today. The regulators have been looking into violations at
A.I.G. that they say included improper accounting, bid-rigging and
skipped payments to state workers' compensation funds. The settlement,
which has been widely anticipated, would close a chapter in the recent
troubled history of A.I.G., which has been under scrutiny by the
Securities and Exchange Commission (SEC) for more than four years
and the New York attorney general since early 2004. The company still
faces shareholder lawsuits. The settlement is not expected to ban
contingent commissions, which are payments for steering insurance
contracts to certain companies. This industry practice was highlighted
in an investigation of bid-rigging by Eliot Spitzer, the New York
attorney general. But it is likely to require A.I.G. to make more
complete disclosures about such payments in the future. The deal is
still subject to approval by the SEC.
href='http://www.nytimes.com/2006/02/06/business/06insure.html?_r=1&oref=slog…'>Read
more.

name='8'>Judge takes Congress to Task in Texas Bankruptcy Case

Judge Frank Monroe of Austin said the new federal bankruptcy law is
full of traps for consumers, calling some of its provisions 'inane,'
'absurd' and incomprehensible to 'any rational human being,' the
Austin American-Statesman reported on Sunday. 'Apparently, it
is not the individual consumers of this country that make the donations
to the members of Congress that allow them to be elected and re-elected
and re-elected and re-elected.' Steve Jukabowski, a bankruptcy
specialist in Chicago and creator of the Bankruptcy Litigation Blog,
said Monroe's unusually strong language represents 'the pot boiling
over' in frustration at the new law. 'It's the kind of thing people know
but that you don't write down.' Monroe went on to say that the
people who need the relief aren't the type who have been planning and
counseling with lawyers. 'They've come to the end of their rope,
and this is the only thing left to save their house, car, whatever,'
Monroe said.  
href='http://www.statesman.com/news/content/news/stories/local/02/5bankrupt.h…'>Read
more.

name='9'>Bankruptcy Filings Slow in Southwest Colorado

Southwest Colorado residents who were frantically filing for
bankruptcy in the days before Oct. 17, after which erasing personal debt
became much harder, are nowhere to be seen, the Durango Herald
reported on Sunday. No chapter 7 filing has been registered in
Archuleta, La Plata or Montezuma counties since the new federal
bankruptcy law took effect. The establishment of an income limit was the
major change in the federal bankruptcy law. Under new guidelines,
tougher requirements apply for individuals who earn more than $40,000
annually. The income limit rises to $54,000 for a family of two, $58,000
for a family of three and $66,000 for a family of four. Add $6,300 for
each family member after four. Wright estimated that fewer than 5
percent of some 750 bankruptcy cases he's handled since 1984 involved
people who earned more than the present income limit. People don't take
bankruptcy lightly, Wright said. 'Very few people deliberately run up
debt and then walk away,' he said. 
href='http://durangoherald.com/asp-bin/article_generation.asp?article_type=ne…'>Read
more.

name='10'>Lawsuits Stun Chicago Diocese

The release of a controversial deposition from the bishop of the
Roman Catholic Diocese of Joliet, Ill., coupled with two new
lawsuits against the church, is the latest blow to the troubled suburban
diocese, at one time among those with the highest level of priests
removed from the ministry due to allegations of sexual misconduct with a
minor, the Chicago Sun Times reported on Saturday. The
revelations in the August deposition of Bishop Joseph Imesch -- in which
he admits not removing priests even when they had credible abuse
allegations against them -- have led some to wonder whether he will
thoroughly investigate allegations of sexual abuse in the future. Imesch
gave the deposition as part of a civil suit filed in DuPage County by a
Glen Ellyn man who alleges he was molested by former priest Edward
Stefanich in 1969. Last week, the Diocese of Joliet said it had not had
enough time to comment on the new lawsuits. In 2004, the diocese
revealed there had been 113 credible allegations of sexual misconduct
with a minor against 27 priests there since its founding in 1949.
href='http://www.suntimes.com/output/news/cst-nws-priests05.html'>Read
more.

Airlines

name='11'>Northwest Pilots Authorize Strike Vote

Northwest Airlines Corp.'s pilots' union approved a vote to authorize
a strike, a union leader said Friday, as it disagreed with the bankrupt
airline on plans for a regional carrier, extent of pay cuts and other
concessions sought by the company, Reuters reported on Saturday. Mark
McClain, head of the Northwest chapter of the Air Line Pilots
Association, told a U.S. bankruptcy judge in New York City that the
union's leadership had authorized him Thursday night to poll members on
a strike. The step is one of several the union has to take before
striking. Last month, it sought a $10 million contingency fund from its
parent organization to be used in case of a strike. The Eagan,
Minn.-based carrier, which filed for bankruptcy protection from
creditors in September, is seeking $2.5 billion in annual savings,
including $1.4 billion in permanent givebacks from labor. The airline
also has been negotiating out of court with the flight attendants' union
as well as the pilots' to reach agreements. The difference is
particularly pronounced in the case of negotiations between the carrier
and its pilots, with the gap between the two sides' various proposals
about what a new contract should be like topping $90 million in some
cases. The flight attendants' union has said that its latest proposal,
from Jan. 31, meets the company's 'ask' of $195 million. But issues
still remain, including how the company values the plan as well as the
manner in which those savings are achieved.
href='http://money.cnn.com/2006/02/03/news/companies/northwest.reut/index.htm…'>Read
more.

name='12'>United Pilot Pension Ruling Debated

A bankruptcy judge did not have the authority to cancel the pension
plan of United Airlines' pilots, a district court has ruled, the
Chicago Tribune reported on Saturday. U.S. District Judge John
Darrah ruled Thursday that the decision to terminate the plan should
have been made in the district court. Darrah's decision has renewed
hopes in some quarters that the employee pensions United said it could
no longer afford will be revived. But the Elk Grove Township,
Ill.,-based airline called the ruling a decision on a legal technicality
and said it was confident its pensions would not be restored. After more
than three years, United's parent, UAL Corp., exited bankruptcy
protection this week. The airline was able to attract $3 billion in exit
financing based on a financial plan that did not include any pension
liabilities. Retirees now have their benefits administered by the
Pension Benefit Guaranty Corp. It is unlikely that Darrah's ruling could
result in the restoration of United's pension plans, said Douglas Baird,
a bankruptcy expert at the University of Chicago Law School.
href='http://www.chicagotribune.com/business/chi-0602040082feb04,1,3479970.st…'>Read
more.

name='13'>Jeep Plant Hit by Bankrupt Supplier Shutdown

The unexpected shutdown of Haden Prism LLC due to the company’s
chapter 7 bankruptcy filing threatens to disrupt the launch of the
next-generation Jeep Wrangler at Chrysler Corp.'s new assembly plant in
Toledo, CarConnection.com reported on Sunday. The Auburn Hills,
Mich.-based Haden is one of three key suppliers central to the operation
of Chrysler's new assembly line. Instead of owning and operating the
plant on its own, the automaker partnered with the suppliers, who
collectively invested a sizable share of the project's total cost, and
will each operate a specific portion of the facility. More than
two-dozen U.S. auto suppliers are currently in default, having filed
chapter 11. Chrysler spokesman Jason Vines asserted that 'the impact (of
Haden's bankruptcy) is basically zero,' and that the automaker will move
to assume control of Haden's operation as quickly as possible.
href='http://www.thecarconnection.com/Auto_News/Auto_News/Jeep_Plant_Hit_By_S…'>Read
more.

name='14'>Bankruptcy Rush Dents Banks' Earnings

The rush of cash-strapped borrowers filing for bankruptcy ahead of
new, more-stringent filing guidelines that went into place late last
year clipped the earnings of Southern Nevada banks most active in
consumer lending, In Business Las Vegas reported on Friday. For
the most-recent quarter, the bank's net income was $3.77 billion, or 93
cents a share. That's off, albeit slightly, from net income of $3.85
million or 94 cents a share, in the fourth quarter 2004. 'The
fourth-quarter results included an estimated $524 million in incremental
charge-offs and $143 million provision expense attributable to
bankruptcy reform,' said a Bank of America statement. Similarly, Wells
Fargo also pointed to bankruptcy filings as a factor in the company's
financial performance. Howard Atkins, Wells Fargo's chief financial
officer, said in a statement that bankruptcy-related charge-offs
amounted to $171 million, or 7 cents a share. Looking forward, however,
bankers point to changes in the bankruptcy law as a positive
development.
href='http://www.inbusinesslasvegas.com/2006/02/03/feature3.html'>Read
more.

International

name='15'>British Young Adults Among Record Numbers Filing for
Bankruptcy

Record numbers of consumers, many as young as 19, gave up the
struggle last year to pay off debts amassed as a result of credit-driven
spending sprees and filed for bankruptcy or voluntary insolvency, the
U.K. Guardian reported Friday. Insolvency practitioners blamed
Britain's 'live-now-pay-later' culture and the ease of obtaining loans
for the 45 percent increase in the number of individuals going broke in
England and Wales in 2005 and said the total was likely to rise from
67,500 to at least 100,000 in 2006. Firms expect the first quarter of
2006 to be even worse than the final three months of 2005 and are
already reporting a sharp increase in the number of consumers calling
helplines as a result of the debts amassed during shopping binges over
Christmas and the New Year. There is no sign of the upward trend in
insolvency coming to an end, they said. Figures from the DTI showed that
the number of personal insolvencies rose by 15 percent in the final
three months of 2005 and were 57 percent higher than in the same quarter
of 2004. The total has doubled in the past three years.
href='http://money.guardian.co.uk/print/0,,5391492-110144,00.html'>Read
more.

name='1'>Stelco Seeks Approval to Transfer Businesses into Limited
Partnerships

Stelco Inc. is asking a judge to allow the company to transfer parts
of its business into separate limited partnerships once the insolvent
steelmaker emerges from bankruptcy protection in the next few weeks, the
Canadian Press reported on Friday. A court will decide next
Friday whether to approve the request, the Hamilton steel producer said
late Friday. Under the proposal made Jan. 20, Hamilton steel operations,
Lake Erie steel, Hamilton coke, Lake Erie coke, Hamilton energy, Lake
Erie energy, mining, Hamilton land and Lake Erie land, would be
reorganized into limited partnerships. As a condition of Stelco's
financing, the company's financial and corporate structure must be
approved by Tricap Management Ltd. and the other equity sponsors under
Stelco's court-approved restructuring plan. By transferring those
businesses into limited partnerships, it may also limit their liability
to additional claims as the steelmaker emerges from bankruptcy
protection. The company has been restructuring under bankruptcy
protection for more than two years.
href='http://news.yahoo.com/s/cpress/20060204/ca_pr_on_bu/stelco_1'>Read
more.