December 12, 2003
Fed Minutes Suggest Rates Could Stay Low Until 2005
Federal Reserve policy makers concluded at their October meeting that
inflation could remain low until 2005 and that they should not raise
interest rates until they saw concrete signs of rising prices, according
to minutes of the meeting released on Thursday, the New York
Times reported. According to the minutes released on Thursday,
members of the Fed's policy-making committee were convinced in late
October that inflation would remain quite low 'for the next year or two'
and that the 'slack' in both the job market and in factory use would not
disappear until 'the latter part of 2005 of even later,' reported the
Times.
Class Action, Asbestos Bills Could Both Be Passed
If the Senate approves a modified version of the controversial 'Class
Action Fairness Act' next year, it would not undermine prospects for
also passing legislation creating a compensation fund for victims of
asbestos-related illness, litigation reform advocates said yesterday
during a Washington Legal Foundation briefing, CongressDaily
reported. 'I don't think it's in jeopardy, frankly,' Patrick Hanlon of
the Washington law firm Shea & Gardner, who represents the Asbestos
Alliance, said of the asbestos bill, which stalled earlier this year.
Hanlon said the political dynamics of asbestos litigation reform differ
from those of the class-action debate. He called the class-action debate
a 'largely partisan issue,' but said there is broad consensus among
Senate Democrats and Republicans that 'something needs to be done' to
curb abuses in asbestos litigation.
Sherman Royce, president of the American Tort Reform Association,
predicted that Majority Leader Frist's (R-Tenn.) commitment to
class-action reform and the asbestos legislation will ensure a 'full
airing' for both bills next year. Frist has pledged to begin floor
action on the asbestos bill by the end of March. Frist also helped
broker a deal last month with sponsors of the class action bill and
three Democrats who had previously voted to block Senate action on that
measure.
Baldwin: Farm Bankruptcy Protection Law to Expire
Wisconsin Congresswoman Tammy Baldwin is blaming her fellow
lawmakers
for not reinstating a law that provides bankruptcy protections to family
farmers before a current program expires at the end of the year,
Wisconsin Ag Connection reported. Baldwin says a temporary
protection program expire on December 31, but House
Republican leaders refused to act before Congress left town for the
holidays. Baldwin said the number of chapter 12 filings has risen in the
past two years. Recently, she included a permanent and expanded chapter
12 provision in pending comprehensive bankruptcy reform legislation.
'Allowing this law to lapse is irresponsible,' she said. 'Farmers with
debts up to $1.5 million can qualify for chapter 12 protection, if
80-percent of that debt is related to farm operations,' she said,
reported the newspaper.
Moody's May Raise Xcel Energy Inc. Rating
Moody's Investors Service placed the ratings of Xcel Energy Inc. and its
operating utility subsidiaries under review for possible upgrade,
Reuters reported. The rating action reflects the emergence from
bankruptcy of NRG Energy Inc. and the release of Xcel's ownership in NRG
in conjunction with a settlement agreement with the major creditors of
NRG. On Dec. 5, 2003, NRG successfully completed its chapter 11
reorganization and emerged from bankruptcy. As part of the plan, Xcel,
NRG's former parent, agreed to extinguish its ownership in NRG to
creditors and agreed to provide up to $752 million of settlement
payments to creditors of NRG and its subsidiaries. Such payments are
expected to occur in March 2004 and in April 2004. The review is
prompted by the decrease in litigation risk as a result of the
settlement, and the decrease in the company's business risk profile now
that it no longer owns NRG, reported the newswire.
Court OKs Unitil Settlement with Bankrupt Mirant
Unitil Corp. on Thursday said a bankruptcy court has approved the U.S.
power company's settlement with bankrupt Mirant Corp., which will
continue fulfilling its obligations under a power supply agreement,
Reuters reported. Hampton, N.H.-based Unitil said it has agreed to
accelerate the payment of money it has held back from Mirant.
Edison International Resumes Quarterly Dividend
Utility holding company Edison International on Thursday said it will
resume paying a quarterly dividend after a lapse of more than three
years, Reuters reported. Rosemead, Calif.-based Edison suspended its
dividend at the height of California's 2000-01 energy crisis as its
Southern California Edison utility (SCE) teetered on the brink of
bankruptcy.
But Edison's financial health improved following a pact with state
regulators allowing it to collect from its customers billions of dollars
of energy procurement costs incurred during the energy crisis. SCE
finished collecting the funds in July. The quarterly dividend of $0.20
per share will be payable Jan. 31, 2004, to shareholders of record on
Jan. 26, 2004. The company last paid a dividend of $0.28 per share in
October 2000, reported the newswire.
Pilots Demand Back Payment
Hawaiian Airlines pilots demanded that the bankrupt carrier fully fund
their pension before paying bonuses to senior management and
compensation to the court-appointed trustee, Josh Gotbaum, the
Honolulu Advertiser reported. Gotbaum, who was appointed trustee
in July, has proposed that he be paid as much as $70,000 a month plus
'the reasonable cost' of renting a single-family home and automobile. He
also asked for severance and retention bonuses for senior managers. The
Air Line Pilots Association said in a statement the company should make
a $4.25 million pension payment it skipped in September before 'handing
over millions in executive compensation.' The association said 11 senior
officers at Hawaiian could receive as much as $1 million in severance
packages and continue to be paid their salary for one year after they
leave if they stay until the airline is handed over to a new owner.
Attorney Bruce Bennett, who represented Gotbaum said the pension issue
is a $60 million problem being negotiated between pilots and the
company. The $4.25 million payment is just part of a larger issue that
needs to be resolved, he said. The court has given them until February
to find a solution, and they are in the middle of negotiations, Bennett
said, reported the newspaper.
JP Morgan Sues Ex-Global Crossing Executives
Investment bank J.P. Morgan Chase & Co. has sued 23 former officers
and directors of Global Crossing Ltd. for $1.7 billion, accusing them of
hiding important financial information while running the fiber-optic
network, the Los Angeles Times reported. J.P. Morgan contends
founder Gary Winnick and others 'devised, directed and controlled' a
massive scheme to disguise Global Crossing's poor financial health so
the company could get $2.25 billion in loans, the Times reported. J.P.
Morgan was one of several creditors and bondholders that put a total of
$12.4 billion into Global Crossing before the carrier collapsed nearly
two years ago and filed for chapter 11 bankruptcy protection, the paper
added. Global Crossing is not a defendant in the J.P. Morgan lawsuit,
filed on Oct. 27 in New York state court. The company disclosed the suit
in a Securities and Exchange Commission filing on Monday, the Times
reported. Global Crossing emerged from bankruptcy Tuesday. It has moved
its headquarters to Florham Park, N.J., and reduced long-term debt to
$200 million from $11 billion.
Rigases Seek To Force Adelphia Communications To Give Up
Papers
Adelphia Communications Corp. founder John Rigas and his sons have
asked a bankruptcy court to force the company to turn over documents
prepared by a special committee of the company's independent directors.
The cable-television provider has engaged in a deliberate pattern of
delay and obstruction to prevent the Rigases' attempts to obtain
documents to defend themselves against Adelphia's charges, the Rigas
family said in a court filing. The filing accused Adelphia and its
special committee of using a multi-million dollar investigation to
attack the Rigases, and then denying the family access to investigation
materials that could be used in their defense.
Provided by Daily Bankruptcy Review (
href='http://www.djnewsletters.com/trial-form.html?promo=TDBRABI2'>http://www.djnewsletters.com/trial-form.html?promo=TDBRABI2)
Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Penn Traffic Receives Court Approval To Sell Big Bear Stores
A bankruptcy judge on Thursday gave its approval to Penn Traffic
Co.'s plans to sell off nine of its Big Bear stores in Ohio, the
Associated Press reported. The Syracuse-based regional grocer also will
begin going-out-of-business sales starting Sunday at 51 other Big Bear
stores, a process that will likely last four to eight weeks, said
company spokesman Joe Ramirez.
Under the plan approved Thursday by the U.S. Bankruptcy Court in
White Plains, N.Y., Pittsburgh-based Giant Eagle Inc. will pay $46.8
million for seven stores in Columbus, Marietta and Newark, Ohio. Penn
Traffic will sell its Big Bear store in The Plains, Ohio to Bob Bay and
Son. Co., while Needler Enterprises Inc. will purchase the store in
Chillicothe, Ohio.
Provided by Daily Bankruptcy Review (
href='http://www.djnewsletters.com/trial-form.html?promo=TDBRABI2'>http://www.djnewsletters.com/trial-form.html?promo=TDBRABI2)
Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Atlas Air Worldwide Holdings Provides Financial and Restructuring
Update
Atlas Air Worldwide Holdings announced in a press release today that it
continues to negotiate with its lessors and creditors in an effort to
restructure the terms and conditions of its debt and aircraft leases to
bring them in line with current and anticipated market conditions. The
company had previously reached agreements in principle with several of
its primary creditors and lessors to restructure its debt and leases.
Atlas is currently in discussions with its major creditors and lessors
to obtaining payment reductions and deferrals in order to achieve a
pre-negotiated restructuring through a chapter 11 filing. The company
has deferred the anticipated date of a chapter 11 filing from December
15, 2003 to February 1, 2004, according to the press release.
Delta Board Approves Pay, Option Changes
Delta said Thursday that it will seek shareholder approval for any
future agreements that promise large 'golden parachutes' for departing
executives, the Knight-Ridder reported. The Atlanta-based airline
also promised to change the way it accounts for employee option expenses
in 2005, once accounting standards become clearer. Delta shareholders
approved proposals on those issues at Delta's annual meeting in April.
The board of directors had opposed the nonbinding proposals. A Delta
spokesman said the new policy will not affect the $16 million in pension
benefits that outgoing Delta Chairman and CEO Leo Mullin will collect
when he retires in the spring. The spokesman also said the company could
still bypass the new practice when recruiting executives if perks are
deemed crucial to a hire, as long as it discloses them to
shareholders.
