Retiree groups say the stipend falls far short of what would be required to receive comparable care to what they receive under their current pension plans. Detroit’s restructuring is being watched closely by both bond markets and other distressed municipalities’ public sector unions. Bartell thinks bond markets won’t react too dramatically to the haircut and that Detroit will still be able to borrow at affordable rates in the future. After all, post-bankruptcy, the city’s financial situation will only have improved.
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As I explained in my column in the latest issue of Texas Monthly, the deal was designed to leverage the cost advantage of TXUs fleet of coal-fired power plants. Under deregulation, the wholesale price of electricity in Texas was tied to the price of natural gas. That meant TXU could generate power with coal well below the market price, essentially locking in a profit on the spread between the costs of the fuels. But soon after the deal closed, surging natural gas production from hydraulic fracturing caused gas prices to plunge, wiping out the cost advantage for TXUs coal plants. Suddenly, the debt from the buyout became crippling. The clouds of bankruptcy are gathering over the former TXU. Had it not been for the debt, EFH probably could have weathered the downturn in gas prices.
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“You’re hearing the yin-yang, the Alpha and Omega of reaction, that’s pretty clear,” Orr said during a conference call with reporters to discuss the plan. The plan to exit bankruptcy marks a watershed in Detroit’s case, the largest municipal bankruptcy in U.S. history. Creditors must now either accept the settlement or negotiate another solution. The ultimate decision will rest with U.S. Bankruptcy Judge Steven Rhodes who will determine if the final deal Detroit strikes with a majority of creditors is fair and feasible. In addition to digging Detroit out of debt by Orr’s self-imposed deadline of September, the plan also outlines how to restore the city to place where people want to live and businesses want to operate. Orr’s plan calls for spending $1.5 billion to improve essential services and public safety over 10 years, with up to $500 million earmarked for blight removal in a city where about 20 percent of the housing stock is abandoned. Even as Detroit tries to emerge from bankruptcy, the city’s pension funds and unions continue to argue in court that Detroit should not even be eligible for bankruptcy.
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Bankruptcy judge sticks to ‘aggressive timetable’ for Detroit case
said Dish Network Corp. (DISH) Chairman Charles Ergen ordered billionaire Carl Icahn to help force LightSquared into bankruptcy in 2012 as part of a scheme to gain control of its wireless spectrum. Ergen initiated the scheme in late 2011, months before the Chapter 11 filing, LightSquared said in papers filed yesterday in U.S. Bankruptcy Court in Manhattan . LightSquared made the allegations after a trial over purchases of its debt by SP Special Opportunities LLP, a fund owned by Ergen. Ergen knew in May 2012 that Icahn, who had just agreed to sell $247 million of LightSquared debt to SPSO, intended to vote in favor of forbearance on the debt, LightSquared said.
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In Detroit Bankruptcy, a Battle Over Speed
24, 2014 4:35 p.m. ET Suntech Power Holdings Co. filed for Chapter 15 bankruptcy protection Friday, in an attempt to stop some bondholders from interfering with professionals who are trying to turn Suntech from the world’s former largest solar-panel maker into a seller of solar products. Suntech, which owns pieces of companies that supported Suntech’s solar-panel manufacturing operations, on Friday filed for Chapter 15 protection in the U.S. Bankruptcy Court in Manhattan. Chapter 15 protection is used by companies that are already…
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U.S. trustees may randomly designate for audit one out of every 250 consumer bankruptcy cases per federal judicial district. The Bankruptcy Code also authorized audits of any cases in which debtors posted statistically unusual income or expenditures. Trustees select the cases but dont perform the audits; instead, that job falls to independent accountants. If auditors identify a material misstatement in their review of a debtors financial information, creditors will be notified and the bankruptcy court will be notified. Its up to the individuals involved in the case to determine what, if anything, happens next. Last year wasnt the first year that a tight budget affected the audits.
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The Celebrity Big Brother runner-up had owed about 140,000 to HM Revenue & Customs. They have now withdrawn a bankruptcy petition against the singer. An official from HMRC told a judge at a hearing in the High Court in London that the tax debt had been paid, later revealing how much the rapper had owed. Dappy was listed as “Contostavlos aka Dappy C” in a list of bankruptcy hearings before the judge – Deputy Registrar John Briggs. Dappy celebrated with Jim Davidson, the winner of Celebrity Big Brother Last year Dappy’s former bandmate Fazer was declared bankrupt, according to court records . In November 2013 Dappy had hospital treatment after falling off a horse and being kicked in the face by the animal. The rapper, 26, was riding at his home when the horse threw him off its back. In February that same year, he was given a six-month suspended sentence sentence over assault and affray charges. He was convicted over a fight at a petrol station in Guildford, Surrey, the previous year.
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Filing for Chapter 7 bankruptcy typically cancels debt such as credit card bills, past due utility bills, medical bills, and personal loans borrowed from friends and family, however alimony, child support and many outstanding federal taxes cannot be cancelled through bankruptcy. Only 28% of Americans are aware that alimony debt cannot be discharged through Chapter 7 bankruptcy. 37% know that child support debt cannot be cancelled. Only a third (33%) know that recent outstanding federal taxes cannot be cancelled through filing Chapter 7. Americans currently owe over $1 Trillion in student loans, however, less than a third of Americans (31%) know that student loan debt cannot necessarily be discharged by Chapter 7 bankruptcy. Nowadays most student loan debt is insured by the United States Department of Education, or other governmental units such as Sallie Mae, which make this type of loans generally dischargeable. Americans aren’t clear about how often it is possible to file for bankruptcy – only 14% know that it is only possible to file once every eight years. A much higher 26% realize that bankruptcy can show up on their credit report for up to ten years. Advantages and Disadvantages of Filing Loss of credit rating and business considerations outweigh shame when Americans consider the disadvantages of bankruptcy.
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Retirees and other creditor groups appeared to be taken aback by the expedited timetable, especially considering a slew of exhibits were left out of the 120-page plan of adjustment and 440-page disclosure statement . Attorneys representing the retiree and creditor groups asked Rhodes yesterday to slow the pace, but the judge didnt budge, citing Detroits lack of cash. The problem with delay is the city will not have any more money to pay you if this is put off two or four or six months, U.S. Bankruptcy Judge Steven Rhodes told attorney Carole Neville, who represents Detroit retirees. (Detroit) is not a retail operation with a Christmas season coming. One of the issues with the proposed bankruptcy-exit plan, as pointed out by a group of community groups this week, is the majority of it is based off if-come a pointed reference to the grand bargain proposal, roughly $850 million in pledged support to shore up Detroits pensions. In particular, a pledge of $350 million from the state legislature as proposed by Gov. Rick Snyder is needed in order for Orrs plan to move forward without substantial changes. Without the states support, the proposed cuts to pensions up to 34 percent for general retirees, 10 percent for police and fire employees could balloon. Also, of note: the same day the Plan of Adjustment was filed, the U.S. 6th Circuit Court of Appeals agreed to hear an appeal on Detroits eligibility for bankruptcy .
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25, 2014 7:33 p.m. ET DETROITDays after Detroit filed its financial-reorganization plan in court, the city and its creditors are battling over how quickly the judge should move to resolve the nation’s largest municipal bankruptcy case. Federal Bankruptcy Judge Steven Rhodes, who on Monday proposed a speedy timeline that could resolve the case by summer, in line with the city’s wishes,is balancing two competing interests. Creditors want more time to challenge the reorganization plan that could give some only cents on the dollar of what they are…
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Twinkies Bankruptcy Exposes Peril to Some U.S. Pensions: Economy
The agency projects 173 multiemployer plans will exhaust assets, costing it an estimated $10 billion and leading to the insurance programs insolvency in 10 to 15 years. Bigger Premiums The agency is asking Congress for an increase in insurance premiums and more ability to intervene before funds are insolvent. Although the Hostess partition will cost the agency an estimated $22.5 million, it could ultimately save money because the entire pension plan likely would have failed without it, PBGC Director Joshua Gotbaum said. The agency partitioned its first pension in 1983 to save benefits for restaurant workers and manufacturers in and around Detroit . In more info 2010, it split a Chicago plan , protecting 3,700 truckers and putting 1,500 on government payouts. Now its weighing carving up a second Hostess-related fund. After we announced the Hostess partition we got calls from folks in other plans saying what about us? Gotbaum said in an interview. If we had a lot more money, we could do a lot more plans. Central States The nations second-largest multiemployer fund, the Central States Southeast and Southwest Areas Health and Welfare Pension Funds, is also among the most troubled, with five retirees for every active employee. Covering 410,000 truck drivers, sanitation workers and others, the Teamsters plan paid out $2.1 billion more than it took in in 2012, with the average retiree receiving $15,000.
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