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September 19, 2002
Senate Panel OKs Asbestos Hearing
The Senate Judiciary Committee has formally scheduled a hearing next
Wednesday on asbestos litigation reform legislation,
CongressDaily reported. Industry proponents of revising the
system under which asbestos liability cases are tried and awarded are
hoping to persuade a majority of senators that their legislative
approach, which would use medical criteria to determine when a person
was legally disabled, is in the best interests of the industry and the
ill victims. While further committee action on the legislation, which
has yet to be introduced, is not expected before next session,
proponents are hoping next week's hearing will lay the groundwork for
their efforts in the 108th Congress.
House OKs Rental Legislation
The House narrowly approved legislation imposing federal standards on
the rent-to-own industry, voting 215-201 on the measure introduced by
Rep. Walter Jones (R-N.C.), CongressDaily reported. Bill
supporters said the measure is designed to create uniform national
disclosure standards for rent-to-own businesses. But critics, including
consumer activists, called the House vote an action hostile to states'
rights and consumer interests. 'It's a vote against consumers because
the bill takes away stronger laws that subject the industry to usury
ceilings, APR disclosures and other consumer protections,' Public
Interest Research Group officials said. The measure's fate is uncertain
in the Senate, where no similar legislation has yet been introduced.
Pitt Criticizes Schumer over Bankruptcy Reform
Rep. Joseph Pitts (R-Pa.) yesterday contended that Sen. Charles Schumer
(D-N.Y.) is to 'blame' for the impasse in the House over voting on a
bankruptcy reform bill conference agreement - a charge denied by a
Schumer spokesman, reported CongressDaily. Pitts is one of the
social conservatives whose objections to what they construe as an
anti-abortion rights 'rider' sponsored by Schumer have helped forestall
a vote on the bankruptcy bill. 'We all want to vote for this bill,'
Pitts said. 'The only person who seems happy to watch it die is Chuck
Schumer. This is not an intra-party fight among Republicans. Our beef is
with Chuck Schumer and Chuck Schumer only,' the newswire reported. A
Pitts spokesman noted, 'If Schumer hadn't attempted to amend this bill,
this wouldn't be an issue at all.' A Schumer spokesman countered by
saying: 'We've already compromised with Henry Hyde (R-Ill.), the leader
of the pro-life movement. If Rep. Pitts wants to know the reason the
bill is stalled, he should just look in the mirror,' reported
CongressDaily.
U.S. Lenders Warn Lawmakers against Bankruptcy Change
U.S. lenders cautioned lawmakers on Tuesday not to strip a controversial
provision from the bankruptcy overhaul legislation in an effort to gain
approval for the measure in the House of Representatives, Reuters
reported. The legislation, which would make it harder for debtors to
walk away from paying their bills, was close to passage in Congress in
July but stalled in the House over an abortion provision. Conservative
Republican lawmakers object to language that would prevent people who
block access to abortion clinics, even though it does not specifically
bar them from avoiding court fines by declaring bankruptcy. Unions, who
have generally opposed the measure, have also recently stepped up
lobbying against it, saying the abortion protest provision would also
have a chilling effect on labor, civil rights and environmental
demonstrators. Business lobbyists are urging House action on the bill
this week, but congressional aides say that is unlikely.
Knology Broadband Proceeds with Reorganization
Knology Inc. proposed a prepackaged plan of reorganization for its
Knology Broadband unit in response to the reluctance of some bondholders
to accept the company's previous debt restructuring plan, Dow Jones
reported. In a press release Wednesday, the data services company said
its prepackaged plan calls for notes issued by Broadband, amounting to
$444.1 million principal amount at maturity, to be exchanged for an
aggregate of $193.5 million of newly issued Knology notes and shares of
newly authorized preferred stock of Knology representing about 19.3
percent of Knology's outstanding stock, on an as-converted basis, after
giving effect to the reorganization.
The plan already has approval of certain lenders and holders and the
company believes it has the acceptances necessary to obtain the court's
approval of the prepackaged plan. The Broadband unit filed for
bankruptcy protection under chapter 11, which binds all creditors to the
plan, even if they did not vote on it. Knology said it is regrettably
taking 'the prepackaged route' versus the consensual exchange route
because of a few holdouts.
Global Crossing Plan Sees $407 Million Reorganized Equity
Value
Global Crossing Ltd. said it expects to have a total equity value of
$407 million when it reorganizes, assuming the chapter 11 reorganization
is completed by Jan. 1, Dow Jones reported. In a disclosure statement
filed Monday with its reorganization plan, the company projected that
reorganized Global Crossing and its subsidiaries, excluding Asia Global
Crossing and Global Marine Systems Inc., will post earnings before
interest and taxes, or EBIT, of $206 million and net income of $174
million in 2003.
Under the plan, the company's lenders-whose claims total $2.25
billion-would receive about $305 million in cash, $175 million in new
senior secured notes, 6 percent of the new common stock and 50 percent
of the beneficial interests in a litigation trust to be created to
pursue actions against third parties. As reported, the plan is supported
by the creditors' committee and premised on an agreement the company
signed in August with Hong Kong's Hutchison Whampoa Ltd. and Singapore
Technologies Telemedia Pte. Ltd. Judge Robert E. Gerber of the
U.S. Bankruptcy Court in Manhattan will consider approval of the
disclosure statement at a hearing Oct. 21.
Adelphia Communications Seeks OK for License to Show Sabres
Games
Adelphia Communications Corp. has asked the court handling its three
month-old chapter 11 bankruptcy case for approval to enter into a
license agreement that would allow it to broadcast and distribute
Buffalo Sabres hockey games, Dow Jones reported. The agreement would be
with Niagara Frontier Hockey L.P., a limited partnership that holds the
franchise for the Buffalo Sabres, according to papers Adelphia filed
with the U.S. Bankruptcy Court in Manhattan.
Niagara Frontier is owned by Adelphia founder and former chief executive
John Rigas, individually, and his three sons in their capacity as
shareholders of Patmos Inc. The Rigases resigned from their positions
with Adelphia in May, a few weeks after the company disclosed it had
guaranteed more than $3 billion in loans for the Rigases or entities
they controlled. A hearing on the request is scheduled for Friday by
U.S. Bankruptcy Judge Robert E. Gerber. In connection with the
deal, the National Hockey League agreed that it would support the
license agreement if Niagara Frontier is sold or files for
bankruptcy.
Halliburton: Asbestos Plaintiffs Agree to Extend Stay
Halliburton Co. signed an agreement with bankrupt Harbison-Walker
Refractories Co. and its asbestos creditors' committee to further extend
the stay of a temporary restraining order until Nov. 7, Dow Jones
reported. The stay of the bankruptcy court's Feb. 14 restraining order
freezes more than 200,000 pending asbestos claims against Halliburton's
Dresser Industries unit. The stay has now been extended seven times,
most recently to Sept. 18 from July 16. Harbison-Walker was spun off
from Dresser Industries in 1992, and Halliburton subsequently acquired
Dresser in 1998. Halliburton is suing Harbison-Walker in an attempt to
force Harbison-Walker to continue to assume responsibility for some
asbestos claims.
US Airways Receives Rival Bid from Alabama Pension Fund
Alabama's public-employee pension fund offered to invest $240 million
for a 37.5 percent stake in a restructured US Airways Group, topping an
offer made in August by private-equity firm Texas Pacific Group, the
Wall Street Journal reported. The rival offer, which was sent in
a letter to US Airways President David Siegel Wednesday and is contained
in documents being filed Thursday in federal bankruptcy court in
Alexandria, Va., could spark a bidding war for effective control of US
Air, the seventh-largest U.S. airline.
US Airways, which listed assets of $7.81 billion and liabilities of
$7.83 billion, was the first of the nation's largest airlines to file
for chapter 11 bankruptcy court protection after the Sept. 11 terrorist
attacks. Airlines, battered by high labor costs, the sluggish economy
and fierce price competition, have been struggling to stave off
bankruptcy-court filings. Texas Pacific, headed by David Bonderman,
agreed to invest $200 million for a 37.5 percent stake in US Airways as
part of a debtor-in-possession financing agreement arranged when US
Airways filed for bankruptcy-court protection on Aug. 11. Texas Pacific
also would get five of the 13 US Air board seats. By topping Texas
Pacific's bid, the Alabama fund is hoping to push the auction into high
gear. It could also open the door for other bidders to emerge, although
the hardships in the airline industry have already deterred many
potential buyers.
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