April 19, 2004
National Century Liquidation Plan
Approved
A bankruptcy court on Friday approved a plan to
liquidate National Century Financial Enterprises, a health-care finance
company with more than $3 billion in debt that has been in
bankruptcy since November 2002, Reuters reported. The court-approved
plan will set up three different trusts, representing the interests of
different groups of creditors, many of which have sued the company's
founders and others over charges that they perpetrated a massive
fraud.
Two of the trusts will be geared toward settling with
or suing parties that have been accused of contributing to fraud at the
company, including Credit Suisse First Boston, J.P. Morgan Chase and
Bank One. Spokesmen for the banks declined to comment. National Century
filed for bankruptcy after it failed to give investors audited financial
statements for the previous year and lenders stopped advancing it new
money, the newswire reported.
Exide Gets Bankruptcy Court Clearance
Exide Technologies Inc. received confirmation of its
plan to restructure debt and exit bankruptcy from the court overseeing
its case, the Wall Street Journal
reported. The plan values the Princeton, N.J.-based maker of automotive
and industrial batteries at $1.5 billion, ousts current shareholders and
trades Exide's debt for shares in the restructured company. Confirmation
came two years and a day after Exide filed for chapter 11 protection. In
December, U.S. Bankruptcy Judge Kevin Carey said the company was too
valuable to leave unsecured creditors with cash and stock valued at only
$8.5 million, and refused to confirm Exide's first chapter 11 exit
strategy, the newspaper reported.
WorldCom/MCI
WorldCom to Exit Bankruptcy This
Week
WorldCom Inc. is set to end its 21-month journey
through bankruptcy reorganization tomorrow when it plans to emerge as a
new company under a new name, freed of more than $35 billion in debt,
the Washington Post reported. The
Ashburn, Va.-based telecommunications giant has been preparing to take
on its new identity since July 21, 2002, when it filed for protection
from its creditors after revealing the largest accounting fraud in U.S.
history. Read the
href='http://www.washingtonpost.com/wp-dyn/articles/A22590-2004Apr18.html'>article.
MCI Rescinds Deal With Investors After
Criticism
MCI has canceled a confidential
arrangement it struck with two of its largest investors after other
investors called the deal unfair, the Wall
Street Journal reported. A judge criticized the company's handling
of the arrangement with the two investors, who until last week were
expected to join the company's board. The deal called for the two
investment firms, MatlinPatterson Asset Management and Silver Lake
Partners, to swap all of their old MCI bonds for new MCI bonds, instead
of the mix of new stock and bonds that many other creditors will
receive. MCI said the arrangement was intended to preserve a tax benefit
for the company potentially valued at as much as $500 million, the
newspaper reported.
Mississippi Says WorldCom Owes $1
Billion In Taxes
WorldCom Inc.'s former home
state claims the bankrupt phone company owes $1 billion in back taxes,
lawyers in the case said Friday, Reuters reported. WorldCom already
faces $500 million in claims from more than a dozen other states, along
with a motion by the states to remove KPMG as WorldCom's auditor. The
state of Mississippi's claim, which was submitted a couple of weeks ago,
came to light on Friday, when the bankruptcy court judge heard
arguments on the states' KPMG motion. 'We have put in a claim for $1
billion,' said a special assistant with the Mississippi attorney
general, the newswire reported.
Bankruptcy Judge Extends
United's Exclusivity Period
The judge
overseeing the bankruptcy case of UAL Corp., the parent of United
Airlines, granted a request to extend the exclusivity period on the
company's reorganization plan to June 30, the
online Wall Street Journal
reported. Judge Eugene Wedoff of
the U.S. Bankruptcy Court for the Northern District of Illinois refused
to extend the period beyond that date. The
company's lead attorney, James
H.M. Sprayregen, said that although a number of issues were resolved
since last month's hearing, much work remains to be done before the
airline can emerge from bankruptcy.
S&P Raises Rating On Pacific Gas
And Electric Co.
Standard & Poor's on Friday
raised its rating on Pacific Gas and Electric Co., citing the California
utility's exit from bankruptcy this week, Reuters reported. A unit of
PG&E, Pacific Gas had filed for bankruptcy protection in 2001 after
California's deregulation plan prevented it from raising rates to recoup
soaring wholesale electricity prices. S&P
raised the corporate credit rating on Pacific Gas to 'BBB-minus,' its
lowest investment-grade, from 'D.' The outlook is stable.
Owens Corning Fights
Creditors' Bid For Documents
Creditors of Owens Corning are
asking a bankruptcy court to force the company to turn over documents
related to the company's asbestos claims settlements -- a request that
both the company and its committee of asbestos claimants are opposing.
The creditor committee has asked that the building products company
produce materials related to the analysis underlying its current
financial reserve estimations for asbestos litigation costs and/or
asbestos-related liability, as well as its historical reserve analysis
from 1997 through 2000. With regard to the current reserve analyses,
Owens Corning said in a court filing Friday that these materials might
eventually be discoverable, but they aren't yet.
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Kaiser Aluminum Faces Opposition On Wash. Smelter Sale
A federal power marketing agency and the trustee for revenue bonds tied
to Kaiser Aluminum Corp.'s Mead, Wash., smelter have objected to the
company's plan to sell the plant and a piece of land near it. Kaiser is
seeking approval from the court overseeing its chapter 11 reorganization
to sell the plant and the property to Commercial Development Co., which
bid $7.4 million at an auction earlier this month. The Commercial
Development bid topped the lead bid from CVB Northwest LLC, an affiliate
of Columbia Ventures Corp., which had offered $4 million.
The Bonneville Power Administration, a power marketer within the U.S.
Department of Energy, said in its objection filed Tuesday with the U.S.
Bankruptcy Court in Wilmington, Del., that Kaiser hasn't provided
information on whether it plans to transfer transmission contracts it
has with Bonneville or what the federal agency would be paid if Kaiser
rejects the deals.
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All-Stars Enlisted to
Stop 9th Circuit Split
Eric George, son
of California Chief Justice Ronald George, has organized lawyers from
across the political spectrum to oppose splitting the 9th U.S. Circuit
Court of Appeals, the Recorder reported. Such proposals have
been around for years, but one lawyer says the latest measures are
particularly dangerous because their authors hope to bank on the
national election to polarize people behind the cause. Read the
href='http://www.law.com/jsp/article.jsp?id=1082131844221'>article.
Air Canada
Judge Orders Air Canada To
Postpone Some Layoffs
An Ontario judge ordered Air
Canada on Friday to postpone layoffs of 51 service agents until their
case can be heard by an arbitrator, another setback in the national
carrier's efforts to emerge from bankruptcy protection, Reuters
reported. Air Canada, which is six months late in restructuring under
protection from creditors, admitted last month it fell short on its goal
to achieve C$1.1 billion ($815 million) in labor cost savings. The
Canadian Auto Workers union contested the service agent cuts, saying the
affected employees are not at the bottom of seniority lists.
Air Canada argued it could not follow regular layoff
rules because its recently hired customer service agents were fluent in
more languages.
Air Canada Lawyer Expects
Delay In Restructuring
Air Canada's top lawyer thinks
the insolvent airline will not meet its June 30 target to emerge from
bankruptcy protection, the Globe and Mail reported on Friday,
Reuters reported. 'We were all operating on the assumption that Air
Canada would emerge on June 30. This is not the first deadline that has
been set, and a substantial number of matters remain to be resolved and
completed,' Marvin Yontef, of law firm Stikeman Elliott, who is heading
up Air Canada's restructuring, told lawyers at a Toronto colloquium on
Thursday, the newspaper said.
Wilsons Amends Credit
Pact
Retailer Wilsons The Leather Experts Inc. on Friday
said it was negotiating for $35 million in new equity financing, and its
shares dropped 25 percent amid concerns that failure to reach a deal
could lead to a bankruptcy filing, Reuters reported. Under the deal it
is considering, two new equity investors would gain effective control of
the company, according to analyst William Armstrong of C.L. King &
Associates Inc. Wilsons said it amended its credit facility, provided by
GE Capital, CIT, Wells Fargo and LaSalle, to waive defaults and reset
financial covenants for future periods.