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November 21 , 2003
House-Senate Staffers Meet On Kinks In FCRA
Measure
House and Senate conferees hope to meet in a formal session by week's
end to complete their work on legislation to update the Fair Credit
Reporting Act (FCRA), a Senate Banking Committee spokesman said
Thursday, CongressDaily reported. The FCRA conferees have not
met publicly yet to discuss the legislation, but their staffs have been
negotiating to iron out the differences between the two bills. 'They
continue to try to work out as many provisions as possible prior to a
meeting of the conferees,' the spokesman said, adding that the lawmakers
could schedule a formal session today if their staffs reach a deal, the
newswire reported. Both versions of the bill would add stronger federal
protections against identity theft to FCRA, while permanently extending
expiring FCRA provisions that pre-empt state consumer protection laws.
But unlike the House bill, the Senate version would require companies
that share customer information with affiliates to provide consumers
with an opportunity to 'opt out' of receiving marketing calls or mail
from those companies.
House OKs Pension Fund Relief for Airlines
The House on Thursday approved billions of dollars in pension fund
relief for airlines and other companies struggling to meet pension
obligations to their employees, the Associated Press reported. The
measure, wrapping up several must-do issues as Congress nears the end of
this year's session, also would extend for a year some $7 billion in tax
breaks that are set to expire. It passed by a voice vote. The
legislation, over the strong objections of the administration, would
give two years of relief to airlines that are having trouble meeting the
extra contributions required of companies with seriously underfunded
pension plans. Airlines next year and in 2005 would pay only 20 percent
of what they are currently required to contribute under the program
affecting chronically underfunded plans.
That translates into billions of dollars in savings for airlines such
as United Airlines, now under bankruptcy protection. In a quarterly
report filed with the Securities and Exchange Commission, United said it
could be required to contribute about $4.8 billion to its pension plan
trusts by the end of 2008, the newswire reported. 'If we don't address
this issue, airlines will go bankrupt as US Airways has and terminate
their plans,' said Rep. Dave Camp (R-Mich), reported AP. The Pension
Benefit Guaranty Corporation, which protects the pensions of 44 million
people, said a Senate Finance Committee plan to waive expedited
contributions to severely underfunded plans for three years would cause
shortfalls in those plans to grow by $40 billion. The pension part of
the bill also tracks legislation passed by the House last month
outlining a two-year fix on the formula by which companies pay into
their pension funds, with savings estimated at $26 billion. The
short-term relief is aimed at giving legislators time to come up with a
more equitable benchmark to determine funding for defined benefit
pension funds. It also would ensure that companies suffering from the
economic downturn don't abandon or default on pension plans.
IRS to Crack Down on 'Nonprofit' Credit Counselors (The
Washington Post)
The head of the Internal Revenue Service yesterday promised to
revoke the tax-exempt status of nonprofit credit-counseling agencies
that are motivated more by profit than by charity, The Washington Post
reported. Commissioner Mark W. Everson said the IRS is auditing more
than 30 of the agencies and reviewing more than 40 applications from
firms that want to start similar operations, to see whether they deserve
tax-exempt status. The House Subcommittee on Oversight hearing was
Congress's first into credit-counseling groups. Law enforcement
officials are concerned that the organizations misuse their nonprofit
status to attract customers and charge high fees. Subcommittee members
also expressed concern that the executives of such organizations are
paid excessively high salaries and also earn substantial additional fees
from for-profit firms that do business with the counseling
operations.
Everson said the 30 organizations being audited account for more than
40 percent of the $1 billion in annual revenue collected by the 850
credit-counseling agencies, the online newspaper reported. Nine of the
top 15 agencies, in terms of revenue, are being audited, the Post
reported. On Wednesday, another government agency, the Federal Trade
Commission, took its first action against a credit-counseling firm,
suing AmeriDebt Inc. of Germantown. The FTC accused AmeriDebt of
deceiving its customers by operating as a nonprofit when its purpose was
to make money for its founders. Four states also are suing AmeriDebt.
Yet AmeriDebt was barely mentioned yesterday. Instead, subcommittee
members focused on two other organizations whose representatives came to
defend their practices. Rep. Earl Pomeroy (D-N.D.) singled out the
$624,000 salaries earned by the top two executives of Cambridge Credit
Counseling Corp. To read the full article, point your browser to
href='http://www.washingtonpost.com/wp-dyn/articles/A1821-2003Nov20.html'>http://www.washingtonpost.com/wp-dyn/articles/A1821-2003Nov20.html.
Hearing panelists included Hon. Mark Everson, Commissioner, Internal
Revenue Service; J. Howard Beales III, Director, Bureau of Consumer
Protection, Federal Trade Commission; Deanne Loonin, Staff Attorney,
National Consumer Law Center, Boston, Mass.; W. Patrick Boisclair,
Chairman, Board of Trustees, National Foundation for Credit Counseling,
Macon, Ga.; David Jones, President, Association of Independent Consumer
Credit Counseling Agencies, Windermere, Fla.; Michael Hall, Chief
Executive Officer, Take Charge America Incorporated, Phoenix, Ariz.;
Montieth Illingworth, Corporate Spokesperson, Cambridge Credit
Counseling Corporation, Agawam, Mass.; and Chris Viale, Chief Operating
Officer, Cambridge Credit Counseling Corporation, Agawam, Mass. ABI will
provide a transcript of the hearing testimony as soon as it is
available.
House Subcommittee Holds Hearing on Credit
Counseling
The Subcommittee on Oversight of the House Committee on Ways and Means
held a hearing yesterday on non-profit credit counseling organizations.
The invited panelists included Hon. Mark Everson, Commissioner, Internal
Revenue Service; J. Howard Beales III, Director, Bureau of Consumer
Protection, Federal Trade Commission; Deanne Loonin, Staff Attorney,
National Consumer Law Center, Boston, Mass.; W. Patrick Boisclair,
Chairman, Board of Trustees, National Foundation for Credit Counseling,
Macon, Ga.; David Jones, President, Association of Independent Consumer
Credit Counseling Agencies, Windermere, Fla.; Michael Hall, Chief
Executive Officer, Take Charge America Incorporated, Phoenix, Ariz.;
Montieth Illingworth, Corporate Spokesperson, Cambridge Credit
Counseling Corporation, Agawam, Mass.; and Chris Viale, Chief Operating
Officer, Cambridge Credit Counseling Corporation, Agawam, Mass. ABI will
provide a transcript of the hearing testimony as soon as it is
available.
Job Claims Fall Again
The Labor Department announced that fewer people are filing new
claims for unemployment benefits, The Wall Street Journal
reported. The improving labor market, in turn, pushed up a closely
watched index used to forecast future economic activity. Initial job
claims decreased by 15,000 to 355,000 in the week ending Nov. 15, the
Labor Department said. The four-week average of claims dropped 9,000 to
367,250, its lowest level since February 2001. Claims are down by nearly
100,000 from a 2003 peak of 459,000 set in April, the online newspaper
reported.
UAL
UAL Settles Discrimination Suit
The government said it reached a settlement with UAL Corp.'s United
Airlines over complaints that the airline discriminated against
passengers who were perceived to be of Arab, Middle Eastern or Southeast
Asian descent after the Sept. 11, 2001, terrorist attacks, the
Associated Press reported. The airline agreed to spend about $1.5
million over three years for civil-rights training to employees who have
contact with the public.
United spokesman Jason Schechter said the airline didn't break any
antidiscrimination laws. 'We affirmatively deny that any passenger was
ever removed from a flight or denied boarding because of ethnic
background or national origin after Sept. 11,' Schechter said. The
government said its investigations revealed United had unlawfully
removed passengers or denied boarding because of their race, color,
national origin, religion or ancestry, reported the newswire.
UAL Reports Strong October Results
UAL Corporation, parent of United Airlines, yesterday filed its October
Monthly Operating Report with the U.S. Bankruptcy Court, PR Newswire
reported. The company reported a net income for October of $25 million,
excluding reorganization expenses of $149 million. The majority of
reorganization expenses were non-cash items resulting from the rejection
of aircraft as the company aligns its fleet to the market. Operating
profit for the month was $60 million. This is an improvement of about
$300 million compared to October one year ago. Positive cash flow during
the month was $7 million per day, excluding a quarterly retroactive wage
payment to International Association of Machinists members of $63
million. UAL met the requirements of its debtor-in-possession (DIP)
financing for the ninth straight month.
Armstrong Awaits Court OK of Reorganization
Flooring maker Armstrong World Industries Inc. said on Thursday it is
waiting for U.S. District Court action on recent bankruptcy court
recommendations that would confirm its plan of reorganization under
chapter 11, Reuters reported. Armstrong said it hopes to complete
reorganization and emerge from chapter 11 in early 2004. The
reorganization plan would cancel Armstrong's existing stock, which was
down 36 cents. Under the plan, new stock and other considerations would
be issued to creditors and certain warrants to buy new stock would be
issued to Armstrong Holdings, it said. At a hearing that ended on
Tuesday, a U.S. Bankruptcy Court judge 'announced proposed findings of
fact and conclusions of law that would dismiss all remaining objections
and approve' the reorganization plan, Lancaster, Pa.-based Armstrong
said. Armstrong Holdings said it scheduled a special shareholder meeting
for Dec. 3 to vote on a proposal for its dissolution, which is
conditional upon Armstrong World's reorganization under chapter 11,
reported the newswire.
Moody's Revises Portland General Electric Outlook
Moody's Investors Service confirmed the debt ratings of Portland General
Electric Company (PGE). In conjunction with confirming the ratings,
Moody's changed the rating outlook to developing from negative. The
change in PGE's rating outlook reflects the announcement that Oregon
Electric Utility Company LLC, a newly formed entity with financial
backing from private equity firm Texas Pacific Group (TPG), has signed a
definitive agreement to acquire PGE from Enron Corp. The developing
outlook incorporates the benefit to PGE's credit quality from potential
separation from Enron's ownership, and takes into account uncertainties
about how the transaction will ultimately be structured and financed.
The announced transaction, which has been approved by Enron's Board of
Directors and has the support of the official unsecured creditors'
committee in the Enron bankruptcy proceeding, is valued at approximately
$2.35 billion, including assumption of PGE's debt, Reuters reported.
Steelmaker Ivaco Cuts Jobs in Ontario and Quebec
Ivaco Inc. said on Thursday it was cutting 17 percent of its workforce
at operations in Ontario and Quebec, as the company works through its
restructuring plan, Reuters reported. Montreal-based Ivaco, which
obtained bankruptcy protection in September, said the reductions will
mostly affect management and supervisory positions. Ivaco blamed
difficult market conditions in the North American steel industry,
including the strong Canadian dollar and higher energy and
transportation costs, for sending it into protection.
Peregrine Systems Gains Approval of Settlement on Class 9
Claims
Peregrine Systems Inc. announced yesterday that the U.S. Bankruptcy
Court has approved a settlement that paves the way for distribution of
stock to former Peregrine shareholders and securities claimants, as well
as other subordinated claimants in class 9 of the company's plan of
reorganization, Canada Newswire reported.
Approval by the bankruptcy court in the District of Delaware resolves
issues regarding the relative value of the class 9 claims to equity in
the reorganized Peregrine business following its emergence from chapter
11 last summer. Under Peregrine's plan of reorganization, 63 percent of
stock in the reorganized company was distributed to bondholders, while
at least 33 percent and potentially as much as 37 percent was held for
allocation to the equity class, the securities class and other
subordinated claimants in class 9, along with certain litigation claims
and proceeds, reported the newswire.
DVI Unit Agrees to Transfer Servicing to U.S.
Bank
Bankrupt health care finance company DVI Inc. said on Thursday it had
reached a preliminary agreement to transfer to a unit of U.S. Bank the
right to collect payments on DVI leases, Reuters reported. DVI Financial
Services, the leasing subsidiary of DVI, has agreed to transfer the
rights to U.S. Bancorp unit US Bank Portfolio Services, the company said
in a filing with the U.S. Securities and Exchange Commission. The
transfer will take place only with the approval of the U.S. Bankruptcy
Court in Delaware, DVI said. Jamison, Pa.-based DVI filed for bankruptcy
protection in late August after 'apparent improprieties' in its
financial dealings prevented it from securing new financing.
Amerco Asks Court For Time To Amend Plan, Get Creditors
Votes
After reaching an agreement that resulted in the committee representing
Amerco's unsecured creditors supporting the company's turnaround plan,
the company said it needs more time to provide creditors with an updated
disclosure statement and get their votes. Amerco, parent of U-Haul
International, asked the U.S. Bankruptcy Court in Reno, Nev., to extend
its deadline to get votes on the plan to Feb. 28, 2004, a motion filed
Tuesday said. Amerco's exclusivity period, which prevents creditors from
filing competing reorganization plans, is set to expire Dec. 17, the
motion said. Company officials weren't immediately available for
comment.
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California A.G. Urges Regulators To Clarify Pacific Gas
Plan
California's Attorney General Tuesday asked the state's top utility
regulator to clarify that a lawsuit against PG&E Corp. won't be
affected by a proposed plan for restructuring bankrupt utility Pacific
Gas & Electric Co. Attorney General Bill Lockyer made the request in
a letter to Michael Peevey, President of the California Public Utilities
Commission. The commission is slated to vote Dec. 18 on at least three
proposed decisions on how to restructure the utility. Two are modified
versions of a settlement reached last June between the utility and
commission staff, while the third basically mirrors the settlement.
Lockyer filed a civil action against PG&E Corp. in San Francisco
Superior Court last year. He alleged that, by transferring $5 billion
from the utility to the parent through dividends and stock repurchases,
the company engaged in unfair and fraudulent business practices.
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AMC in Talks with Loews
AMC Entertainment Inc., the second-largest movie exhibitor in the
nation, said Wednesday that it is in talks with Loews Cineplex, the
nation's fifth-largest chain, about a possible 'business combination,'
the Kansas City Star reported. Loews is a private company owned by Onex
Corp., a Toronto-based holding company with 2002 revenues of about $23
billion. Onex and its partner, Oaktree Capital Management, took control
of Loews last year when it paid about $500 million for Loews' debt while
it was in the middle of a chapter 11 bankruptcy reorganization, which
the two later converted into 100 percent ownership of the exhibitor.
Loews was one of a half dozen of the nation's largest movie exhibitors
to seek chapter 11 bankruptcy protection in recent years amid a glut of
movie screens and debt taken on to build megaplexes.
Casino Reorganization Plan Filed in Bankruptcy
Court
Emerald Casino Inc. filed a reorganization plan in bankruptcy court late
Thursday afternoon that could start the clock ticking toward the sale of
the dormant casino license it now holds, the Chicago Sun-Times reported.
The plan, while detailing potential payouts to shareholders and
creditors of the company, did not address specifics about how the
license will be auctioned. Several communities in the area -- including
Rosemont, Des Plaines, Crestwood, Waukegan, Summit and Calumet City --
are teaming up with casino companies in hopes of winning the license.
The plan, already signed off on by Illinois Attorney General Lisa
Madigan, still needs approval from the Illinois Gaming Board and U.S.
Bankruptcy Judge Eugene Wedoff, the online newspaper
reported. The Gaming Board is set to conduct a public meeting on the
Emerald plan Dec. 9 and vote on it Dec. 15. Wedoff is expected to take
several months to consider arguments for and against the plan, which
does not allow parties accused of wrongdoing by the Gaming Board to
recoup their original investments in Emerald. He also could consider a
competing plan to sell the license filed by creditors of the company.
Emerald next will appear in bankruptcy court on Tuesday.
Chi-Chi's Asks Bankruptcy Court for Permission to Pay
Hepatitis Victims
Louisville, Ky.-based Chi-Chi's, the Mexican restaurant chain caught up
in a hepatitis A outbreak, has asked a bankruptcy court for permission
to pay a $500,000 insurance deductible to free up as much as $51 million
in insurance to settle claims by sickened customers and employees, the
Associated Press reported. The 16-page request was filed Wednesday in
U.S. Bankruptcy Court in Dover, Del., where the 100-restaurant chain
filed for chapter 11 protection on Oct. 8. Through Thursday, the
Pennsylvania Department of Health had confirmed 540 cases of hepatitis A
linked to a restaurant at the Beaver Valley Mall, about 25 miles
northwest of Pittsburgh. Three customers have died and at least 12
employees are among those infected at the restaurant, which voluntarily
closed through at least Jan. 2. A hearing on the request could occur as
early as Friday before U.S. Bankruptcy Judge Charles
Case, though Chi-Chi's creditors don't object to the motion
because offering the payments and settling potential lawsuits will help
the company's financial condition, said Chi-Chi's bankruptcy attorney,
William Lobel, of Newport Beach, Calif. Chi-Chi's
chapter 11 filing last month wasn't related to the hepatitis A outbreak,
which wasn't publicly confirmed by Pennsylvania Health Department
officials until Nov. 3. Chi-Chi's listed assets of $50 million to $100
million and debts exceeding $100 million in its bankruptcy filing.
AboveNet Cannot Yet Make SEC Filings
AboveNet Inc., formerly Metromedia Fiber Network Inc., said on Friday it
had been unable to prepare its 'fresh-start' balance sheets and file
quarterly or annual reports with the Securities and Exchange Commission,
Reuters reported. The telephone company, which emerged from chapter 11
bankruptcy protection in September, had implemented its fresh-start
accounting effective Sept. 1. 'The company has not compiled the
information necessary to prepare its 'fresh-start' balance sheet as of
Sept. 1, 2003 and the accounting impact that may result from the
investigation by the U.S. Securities [and] Exchange Commission,'
AboveNet said in an SEC filing, the newswire reported. The telephone
company said it could not predict when its audits would be complete and
when it would be able to resume filing financial reports. Metromedia
Fiber filed for bankruptcy protection last year.
Qwest Seeks to Buy Allegiance Telecom
Qwest Communications International Inc. wants to buy Allegiance Telecom
Inc. in a $350 million deal, The Wall Street Journal reported on Friday,
citing people familiar with the matter. The value of the transaction
with Allegiance Telecom, a Dallas-based telephone and data company that
filed for chapter 11 bankruptcy protection in May, would include cash
and assumed debt, the paper reported. Qwest seeks to boost revenue, even
as its residential phone business suffers under pressure from wireless
rivals, the paper said. The online newspaper reported that Qwest is
still far away from completing a deal and at least two other bidders
have expressed strong interest in Allegiance, the report said, citing an
unnamed source.
Ebbers Off Hook in Oklahoma, For Now
Oklahoma's attorney general on Thursday said he filed a motion to drop
criminal charges against former WorldCom Chief Executive Bernie Ebbers,
but will likely refile a complaint in March, Reuters reported. Oklahoma
Attorney General Drew Edmondson said he sought to withdraw the complaint
charging Ebbers with fraud in order not to interfere with a federal
prosecution of Scott Sullivan, the company's former CFO, the newswire
reported. The state had charged WorldCom, now known as MCI, Ebbers and
five other former executives with violating state securities laws by
knowingly giving false information to investors. The Oklahoma case
marked the first criminal charges against Ebbers, who pleaded not guilty
to the charges. He and the other former executives face up to 10 years
in jail if convicted.
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