April 72007

 

name='1'>Low-Fare Airline Files for

Bankruptcy

Skybus Airlines, a
low-fare carrier that started operations less

than a year ago, filed for bankruptcy after stopping service, Bloomberg
News reported today. The airline is the

third to seek bankruptcy in the last two and a half weeks on rising fuel

costs and a slowing economy, joining the

Aloha Airgroup and ATA Airlines. Skybus started service on May 22, with
some tickets as low as $10 for a

four-hour flight. The closely held airline, based in
w:st='on'>

face='Times New








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an' size='3'>Columbus,

size='3'>Ohio, has assets
of $100 million to $500 million and debt

of $50 million to $100 million, according to its chapter 11 petition.
The largest unsecured creditor is World

Fuel Management of Chicago, with an $8.5 million claim, according to the

filing. 

href='http://www.nytimes.com/2008/04/07/business/07air.html?st=cse&sq=bankruptcy&scp=1'>Read

more.

Housing

name='2'>Senate Expects Vote on Housing Stimulus

Package this Week

The Senate is expected
this week to pass its housing-stimulus

package as cloture motion on the measure will occur Tuesday,

size='3'>CongressDaily reported today. Senate
Majority Leader Harry Reid (D-Nev.) and

Minority Leader Mitch McConnell (R-Ky.) are attempting to come to
agreement on the remaining amendments to be

voted upon, though they are not expected to significantly alter the
bill. The bill will allocate $4 billion in

Community Development Block Grant funding for cities to purchase and
rehabilitate foreclosed properties and $100

million in mortgage counseling. It provides targeted tax breaks, such as

allowing businesses to write off recent

losses to previous years, providing a tax credit for those who purchase
homes in foreclosure and giving greater

ability for housing finance agencies to use tax-exempt bonds to
refinance subprime loans.

name='3'>Senator Looks to Advance Expanded Housing

Relief Proposal

Facing criticism that the

current housing stimulus bill does not

go far enough to help distressed homeowners, Senate Banking Committee
Chairman

w:st='on'>
size='3'>Christopher J. Dodd

(D-Conn.) said that he would move quickly on broader legislation to help

troubled borrowers get cheaper mortgages

backed by public funds, the
size='3'>Washington Post

size='3'>reported on Saturday. Dodd said that he will hold hearings this

week on the measure, which is aimed at

assisting distressed borrowers, particularly those who owe banks more
than their homes are worth because of

plummeting prices. Under the proposal, the Federal Housing
Administration would encourage lenders to forgive a

portion of the loans and issue new, more affordable mortgages in
exchange for the federal government's financial

backing. In the House, Financial Services Committee Chairman Barney
Frank (D-Mass.) will hold hearings this week

on a similar measure. He and Dodd said that they hope to bring the
matter to a vote in their respective chambers

by the end of May. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2008/04/04/AR2008040403440_pf.html'>Read

more.

name='4'>Commentary: Amendment Would Strengthen

Regulation of GSEs

Sen. Mel Martinez
(R-Fla.) is offering an amendment to strengthen

regulation of Fannie Mae and Freddie Mac as part of the housing stimulus

package to be considered this week,

according to an editorial in today’s Wall Street

Journal.

w:st='on'>

size='3'>Martinez's
amendment would take the reform that the House

passed last year and attach it to the current housing bill. As reforms
go, it is far from perfect and would

require a very tough-minded regulator to stand up to the
government-sponsored enterprises and their political

patrons. However, it would at least give the regulator more tools to
manage the systemic risk posed by their size

and the implicit taxpayer guarantee of their liabilities. 

href='http://online.wsj.com/article/SB120752826994893795.html?mod=opinion_main_review_and_outlooks'>Read

more. (Registration required.)

name='5'>Investors Back Out of

w:st='on'>
size='3'>Delphi

size='3'>Deal

A multibillion-dollar
plan to pull Delphi Corp. out of bankruptcy

protection collapsed Friday when backers pulled out of the deal, raising

the chances that General Motors

Corp. may have to put more money into its former parts division,
the

size='3'>Wall Street Journal reported on
Saturday.

face='Times New Roman' size='3'>Delphi
size='3'>was counting on a $2.55 billion equity

investment from a group of investors led by hedge fund Appaloosa
Management LP to pave the way out of chapter 11

protection. However, Appaloosa filed a termination letter with the
Securities and Exchange Commission,

accusing
size='3'>Delphi

size='3'>of violating several terms of the agreement and arguing that
the investors are entitled to an $82.5

million 'alternate transaction fee.' It is likely

Delphi soon will file a lawsuit against Appaloosa and other plan
investors, accusing them of breaching their

agreement to fund

size='3'>Delphi's exit. 

href='http://online.wsj.com/article_print/SB120731881764189885.html'>Read

more. (Registration

required.)

w:st='on'>

size='3'>
name='6'>Washington
face='Times New Roman'

size='3'> Mutual to Get $5 Billion Infusion

Private-equity firm TPG
and other investors are close to a deal to

invest $5 billion in Washington Mutual Inc., the
face='Times New Roman' size='3'>Wall Street

Journal reported today. The injection of new
capital would allow the country's largest

savings and loan to ease its pressing capital requirements amid
punishing losses from the national mortgage

crisis. However it would substantially dilute current Washington Mutual
shareholders, who have already lost 74

percent of their investment over the past year. The thrift reported a
$1.87 billion loss in the fourth quarter

that was fueled by a sharp increase in the reserve for loan-related
losses. The company has been exposed to some

of the hardest-hit housing markets in the United States,
including California
size='3'>and

w:st='on'>
size='3'>Florida. Problems

have also spread to credit cards and other types of loans, so
Washington Mutual said it has been

bracing for a steep rise in loan charge-offs. 

href='http://online.wsj.com/article_print/SB120753199958893909.html'>Read

more. (Registration

required.)

w:st='on'>

size='3'>
name='7'>Alabama
w:st='on'>
size='3'> County
face='Times New Roman'

size='3'> Faces Possible Bankruptcy Filing

Officials in

face='Times New Roman' size='3'>Jefferson County
size='3'>,

w:st='on'>
size='3'>Ala., have laid
the

groundwork for the largest municipal bankruptcy in the nation's history
while publicly saying they have no

imminent plans for a filing, the
size='3'>Birmingham News

size='3'>reported yesterday. 
w:st='on'>

size='3'>Jefferson

face='Times New Roman'

size='3'>County has
$4.6 billion in overall debt, including

$3.2 billion in sewer bonds that have been floating to higher rates
since turmoil erupted in the nation's credit

markets in February. That has dramatically increased the county's
interest expense and triggered a financial

emergency that forced the county to delay a $53 million payment on some
sewer bonds that was due April

1. Commission
President Bettye Fine Collins, bankruptcy

lawyer Patrick Darby and top financial adviser James H. White III have
left little doubt that the county is

likely to file for chapter 9 bankruptcy unless a group of investment
banks accepts a proposal that would put the

sewer system's creditors on the hook for hundreds of millions of
dollars.

href='http://www.al.com/news/birminghamnews/index.ssf?/base/news/1207469773127031.xml&coll=2'>Read

more.

Judge

Disqualifies Lawyers from Katrina

Case

Citing ethical breaches,
a federal judge Friday barred a group

of

size='3'>Mississippi
size='3'>attorneys once affiliated with a well-known

tort lawyer from representing any policyholders in lawsuits against
State Farm Fire & Casualty Co. over

Hurricane Katrina damage, the Associated Press reported on Saturday.
U.S. District Judge L.T. Senter Jr.

in

size='3'>Gulfport,
w:st='on'>

size='3'>Miss., also
disqualified two key witnesses in the lawyers'

cases from testifying against State Farm or their former employer, a
firm that helped the Bloomington, Ill.-based

insurer adjust Katrina claims. Senter's rulings cited improper payments
that Richard 'Dickie' Scruggs, who

pleaded guilty last month to conspiring to bribe a judge, made to Cori
and Kerri Rigsby. After suing State Farm

for denying policyholders' Katrina claims, Scruggs touted the Rigsby
sisters as whistle-blowers and said they

were helping him build cases against the insurer. 

href='http://online.wsj.com/article/SB120739721225392587.html?mod=googlenews_wsj'>Read

more.

href='http://online.wsj.com/article/SB120739721225392587.html?mod=googlenews_wsj'>