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[Commentary] © 2002 Philip Hyde, The Timesizing Wire™, Box 622 Cambridge MA 02143 USA (617) 623-8080

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Bankruptcies, Jul-Sep/2002

9/29-30/2002  3 new bankruptcies, mentioned in (WSJ) Wall Street Journal &/or (NYT) NY Times (not counting "[When your company is] In bankruptcy, getting laid off hurts even worse - WorldCom's ex-employees suffer loss of severance, end of health insurance," by Shawn Young, WSJ, front page) -

1. 9/30  Bankruptcies...- Asbestos Claims Management Corp... Chapter 11, legal notice, WSJ, B6.

2. 9/30  Bankruptcies...- Velocita Corp... Chapter 11, legal notice, WSJ, B6.

3. 9/29  US Bankruptcy Court, Northern District of Georgia, Newnan Division - Knology Broadband, Inc., Debtor - ...Chapter 11..., legal notice, NYT, 3-11.

1. Enron-linked LJM2 Co-Investment files for bankruptcy, WSJ, C16.
   ...Chapter 11...partly in response to a lawsuit brought by its lenders.... LJM2, which was organized by former Enron CFO Andrew Fastow to move debt off Enron's balance sheet, owes $70m to a bank group led by Dresdner [which] sued...to recover the money....

2. Organogenesis files for bankruptcy, Bloomberg via NYT, C5.
   ...A maker of bioengineered skin substitute [Apligraf] filed for...Chapter 11 protection...in Massachusetts.... The company has assets of $24.5m and debt of $32.3m.... Novartis, which is owed $10.3m, is...the largest unsecured creditor....
   [32.3-24.5= $7.8m in net debt.]

1. Communication Dynamics files for bankruptcy, Reuters via NYT, C4.
   ...The parent of the cable TV products distributor TVC Communications Inc...filed to reorganize under Chapter 11 of the Bankruptcy Code. The company, based in Annville, Pa., filed on Monday...in Wilmington, Del.  [It] is expected to run its business without interruption..\.. TVC...was founded in 1952....

2. Bankruptcies...- SAirGroup Finance (USA) Inc... Chapter 11, legal notice, WSJ, B11.

• US Bankruptcy Court, Southern District of New York in re: Cedar Chemical Corp. and Vicksburg Chemical Co... - Chapter 11..., legal notice, NYT, C10.
  Notice of hearing on sale of debtor's assets subject to higher or better offers....

1. Bankruptcies...- Bangor & Aroostook Railroad Co... Chapter 11, legal notice, WSJ, B11.

2. Isle of Capri Casinos Inc., NYT, C4.
   ...agreed to purchase the State Line & Silver Smith Casino Resorts in Wendover, Nev., for $30m in cash. The agreement is subject to approval by state regulators and Federal Bankruptcy Court.

3. Claims prompt bankruptcy, Bloomberg via NYT, C12.
   ACandS Inc., a former insulation contracting company once owned by Armstrong World Industries, has filed for bankruptcy protection after insurers cut off coverage for asbestos claims. ACandS, based in Lancaster PA, listed assets of more than $100m and debts [the same] in its Chapter 11 petition in Federal Bakruptcy Court in Delaware, ACandS,,,has settled or resolved about 247,000 asbestos claims since 1981....

1. Bankruptcies...- American Homepatient Inc., a Delaware corporation... Chapter 11..., legal notice, WSJ, B6.
   [and listing no fewer than 24 variations on the theme. Lordy, if you think the government has a monopoly on wasteful paperwork, check out the private sector some time. And these 24 largely regional variations are nothing compared to the thousands of corporate entities that slimeballs like Enron created to "roundtrip" money and puff their bogus profits.]
   ..\..US Bankruptcy Court, Middle District of Tennessee, Nashville Division

2. Bankruptcies...- Stirling Chemicals Holdings Inc., et al., debtors... Chapter 11..., legal notice, WSJ, B6.
   ..\..US Bankruptcy Court, Southern District of Texas, Houston Division

• Poland: Elektrim declares bankruptcy, AP via NYT, B2.
  The debt-ridden...telecom and power conglomerate...filed for bankruptcy in a Warsaw court. Elektrim, once one of Poland's leading companies...accumulated debt of some $500m during an expansion drive....

• PurchasePro.com files for bankruptcy, Reuters via NYT, C2.
  The business software maker...based in Las Vegas..\..whose shares once traded as high as $224 [has] filed for bankruptcy protection and agreed to sell assets to the privately held Perfect Commerce, based in Palo Alto, Calif.... The sale [is] subject to approval by the US Bankruptcy Court in Nevada.

1. Reliance Steel completes purchase, WSJ, B8.
   ...of a Metals USA Inc. business [Specialty Metals Northwest], after approval by the court overseeing Metal USA's bankruptcy filing.... Metals USA filed for Chapter 11 bankruptcy protection in November [2001]....
   [Not caught and counted then, so we count it now.]

2. Bankruptcies - in the US Bankruptcy Court for the District of Delaware, WSJ, B9.
   In re: Network Access Solutions Corp. and NASOP Inc. debtors
   Chapter 11...
   Notice of deadline for filing proofs of claims.... Nov. 8, 2002....

• Consolidated Freightways to file for bankruptcy-court protection, Dow Jones via WSJ, A6.
  ...The Vancouver, Wash., trucking company, which has been struggling with its financing..\..in the latest corporate collapse is ending most operations immediately and will file for Chapter 11...as early as today, resulting in about 15,500 layoffs.... In a statement, the 73-year-old company said it was "unable to secure financing and to bridge the surety bond gap," and expected a second insurer would cancel coverage....
  Consolidated Freightways' collapse follows many high-profile Chapter 11 bankruptcy-court filings in 2002, including those of US Airways Group and WorldCom Inc....

• [And here's a low-profile, but much regretted Ch. 11 filing that happened unannounced last year, so we count it now as it moves from reorganization to liquidation -]
  Clothier to Everyman, Moe Ginsburg's is to close - Store specialized in inexpensive fashion - For 3 decades, a stop for bargain hunters and a politician or two, by Michael Wilson, NYT, A21.
  ...After 3 decades outfitting NYC bar mitzvahs and first job interviews and trial lawyers seeking a jury's trust, Moe Ginsburg Better Men's Clothing, the friendly uncle of fashion, is closing for good at the end of the month.
  The store filed for Chapter 11 bankruptcy protection on May 1, 2001, hoping to emerge reorganized and revitalized this year. 9/11 hit hard, though, for a store that counted on Wall Street and tourist business.... 9/11 was the final blow, but the first came years ago, the day some middle manager somewhere...invented casual Friday.... "We are old-fashioned people," Paul Ginsburg said in March as the store struggled. "For us, the notion of declaring bankruptcy had all the bad connotations"..\.. The liquidation sale, first reported yesterday in The Daily News, is squeezed into one of its five floors on Fifth Avenue at 21st Street....
  [Chapter 11 liquidation instead of Chapter 7? Guess Ch. 11 "swings both ways."]
  In its day, Moe Ginsburg sold 50,000 suits a month, along with everything else..\.. "For many men, it was like a second home," said Tom Pinto, manager for the last 10 years.... "It was a one-stop shop. A guy could spend a couple hours and get outfitted for the whole fall season, spring season," Mr. Pinto said. And walk out with a couple of bills left in his new pocket....

  8/31/2002  1 bankruptcy, mentioned in NY Times (NYT) &/or Wall Street Journal (WSJ) -

  • ViaSystems Group Inc., NYT, B3.
    ...St. Louis, a provider of manufacturing services,...reached a debt restructuring deal with its banks and debtholders that includes filing for bankruptcy protection, which it intends to do in late September.
  8/27/2002  1 bankruptcy story, reported in NY Times (NYT) or Wall Street Journal (WSJ) -
  1. Bankruptcy bill eases conflict curbs, by Randall Smith & Tom Hamburger, WSJ, C1.
     Bankruptcy bill outlook [blowout]
     Backers are optimistic about final passage after Congress returns in September despite opposition from anti-abortion and consumer watchdogs. Among provisions stirring criticism are those that would:
     
     • Narrow conflict of interest rules to permit a bankruptcy trustee to hire investment bankers even if the banker had served the bankrupt firm in the past....
       These restrictions often block such large Wall Street firms as Goldman Sachs..., Morgan Stanley and Merrill Lynch...from getting business advising troubled companies on how to restructure their finances. The result is that smaller firms such as Blackstone Group and Lazard, dominate the bankruptcy-advice market, which is burgeoning as the economy weakens and many telecomm, technology and energy companies hit the wall. "The change, if enacted,.. gives investment bankers a privileged position," says Brady Williamson, a lawyer in Madison, Wisc., who was chairman of the bankruptcy-review panel in 1997. He questioned the wisdom of loosening such conflict restrictions at a time when allegations of conflicts of accountants and investment bankers figured in so many corporate scandals such as Enron...and WorldCom.... [this para. from main text]
     • Limit jurisdiction for certain claims against accountants and other professionals in bankruptcy cases. Law would require review of claims in federal bankruptcy court, prohibiting trials in state courts.
     • Stop abortion protesters from using bankruptcy to avoid paying fines following conviction of abortion clinic violence charges. This provision is creating the most significant opposition to the bill.

1. Gadzoox Networks files for bakruptcy protection, Dow Jones/AP via NYT, B4.
   Hurt by waning sales...a maker of products for data storage networks...based in San Jose, Calif..\..filed for Chapter 11.... The bankruptcy petition, filed in Federal Bankruptcy Court for the Northern District of California, listed assets of about $10m and liabilities of about $14m....
   [So that gives us a debt of 14-10= $4m.]

2. Regent Communications, NYT, B4.
   ...Covington, Ky., said its bid to buy 12 radio stations from Brill Media, Evanston, Ill., for $62m had been approved by the administrator for Brill's bankruptcy proceeding.

• Brazil: Utility files for bankruptcy, by Tony Smith, NYT, W1.
  Companhia Energetica do Maranhao [CEMAR], owned by the PPL Corp., has filed.., the first electric utility to so so since Brazil started liberalizing the sector in the 1990's.... A court must decide...what to do with CEMAR's $180m in debt....

• Devon Mobile Communications, NYT, C6.
  ...Buffalo, a wireless company that is 49% owned by Adelphia Communications, Coudersport, Pa., sought bankruptcy protection after Adelphia cut off its financing.

• [for those of you who like you bad news diluted, here's a little Prozac that originated with USA Today - we'll omit it from our count of bankruptcy items, since it argues out of both sides of its mouth -]
  Business bankruptcy picture is not as bleak as it appears, by Matt Krantz, USA Today via AR, D3.
  ...Analysts who study companies' ability to pay their debt...say things aren't as bad as they seem....
  [And you know how far you can trust analysts these days - they're sooo unbiassed. So here is their "evidence" -]
  
  • fewer firms are defaulting on loans now than at the start of the year
    [maybe because there are fewer surviving firms??!]
    ...Only 4.35% of US companies defaulted during the 12 months that ended in July, says Moody's Investors Service citing the latest data available. That's down 4.95% of defaults suffered in the same period ended in February. ...The default rate has declined steadily since April, Moody's says..\..
  • fewer companies have been slapped with the lowest credit rating
    [maybe because the credit rating agency doesn't want to alarm people further??!]
    ...Only 49 companies have been given the dreaded "CCC" rating or lower and negative outlook from S&P's, as of Aug. 9, the latest data available..., down 17% from 59 in January..\.. That's still high, roughly twice the historical norm, says Diane Vazza, managing director at S&P. [And] when United Airlines' parent warned Wed. night that it might have to file for bankruptcy, S&P still had it rated as a B..\..
  • Falling bankruptcies. Only 129 publicly traded companies have filed for bankruptcy this year. That's about one bankruptcy every 1.8 days, says Bankruptcydata.com, down a bit from the pace in 2001, when a company went bankrupt about every 1.4 days.
    [What about when personal bankruptcies are added to this figure? And even if there is a brief respite, the downward path to economic depression is never consistent.]
  • Receptive investors.
    [Watch how they hilite two positive cases in a negative landscape -]
    Even some struggling companies are finding willing investors.
    1. Warren Buffett's Berkshire Hathaway, for instance, joined two other investors on July 8 [quite a stretch back!] to buy $500m in debt from CCC-rated telecom firm Level 3 Communications.
    2. Another CCC-rated telecom company, Choice One Communications, on Wednesday raised $49m from investors....
       [Oops! - followup:]
       Choice One Communications Inc., 10/07/2004 NYT, C4.
       ...New York, a provider of Internet and telephone services, filed for bankruptcy protection in New York with a plan to give its lenders 90% of the company's stock.
       [So one of their only two positive cases went bankrupt just over two years after this happytalkin' story.]

1. Atlantic Express Transportation files for Chapter 11, Reuters via NYT, B4.
   The...corporation whose buses carry children to school in 9 states filed for...bankruptcy protection yesterday.
   [The executives must have really been looting it to get this captive-market corporation to crash!]
   The privately held company, one of the largest bus operators in the U.S., listed $298.7m of assets and $257m of debts in papers filed with the bankruptcy court in Manhattan.
   [And they're filing in Manhattan for extra sympathy - this is a scam.]
   Including 64 affiliates that also sought court protection, the company listed $312.4m of assets and $330.6m of debts.
   [64 affiliates? This is a mini-Enron!   330.6-312.4= $18.2m "debt."]
   Nathan Schlenker, CFO of the parent company, the Atlantic Express Transportation Group, which also filed a Chapter 11 petition, said in a filing that the debtors intended to keep operating while they reorganized.
   [Oh, you bet they do - and they can keep skimming this milch cow and keep declaring bankruptcy to stiff suppliers every 7 years or so, especially if some 9/11-type event conveniently occurs to grant them cover.]
   Atlantic Express is based in Staten Island, NY.

2. Cold Metal Products Inc., NYT, B4.
   ...Sewickley, Pa., a steel processor, [will] seek bankruptcy protection because of high costs and pricing pressures in the steel industry.
   [More info on this bankruptcy from the WSJ in our downsizings on Monday, 8/19/2002 #1.]

3. Eatery files bankruptcy year after federal loan, AP via AR, B7.
   YUMA, Ariz. - A restaurant that opened a year ago with the help of a $140,000 loan arranged by the city has filed for Chapter 11 bankruptcy protection. Monarch's Rest Brewpub & Restaurant will remain open, co-owner and general manager Ian Watkinson said.
   City Administrator Joyce Wilson said the city was disappointed to learn of the bankruptcy filing but would do what it could to help the restaurant survive, including renegotiating the federal Community Development Block Grant loan. The federal loan program typically helps low-to-moderate-income families. But money from the program also can be used to help private businesses as long as they meet specific criteria.
   [Here's another federal bandaid program, expensive to taxpayers, that can be dismantled when we stop fooling around trying to stanch the hemorrhaging of our economy by worrying about the myriad of minor leaks at the bottom and sides, instead of the major leak at the top and center. Too much of the surviving human employment (and pay) is getting concentrated on too few people as waves of mechanization, automation, and robotization wash over and transform the economy. For the first 3/4 of the Industrial Revolution we adjusted the workweek downward to compensate (and even then we didn't do it fast or far enough, as 1929-1941 showed). Then we stopped. We've got to resume that downward adjustment and spread the vanishing work onto everyone. Only a balance of jobseekers and job openings can discipline employers enough to cut the kind of fraud and short-sightedness we've been seeing. There are difficulties along this path but they are the right difficulties. We call it Timesizing.]

4. 2 Valley electronics retailers shut down, by Glen Creno, AR, D1.
   Two of the [Phoenix] Valley's big-name electronics and appliance retailers have closed under pressure from a sour economy and booming competition from national chains.
   Roy Edwards Warehouse, which once operated stores in Phoenix, Gilbert, and Scottsdale, selling TVs, audio gear and appliances, filed for Chapter 7 bankruptcy liquidation....

5. 2 Valley electronics retailers shut down, by Glen Creno, AR, D1.
   ...Buzz Jensen's Sound Advice filed for a Chapter 7 liquidation and closed stores in Phoenix and Scottsdale.
   Jensen, a fixture in the TV, audio and home theater business for 23 years, now runs but doesn't own Paradise Home Entertainment in the Robb & Stucky store in Scottsdale...offering services similar to his old stores: sales, design and installation of home theater systems..\.. "About five different things hit me at once, and I couldn't recover from it," Jensen said.... He doubts he'll go back to owning stores. "The retail business, as we used to know it, has become a much more expensive and much less profitable situation," he said. "There's not a lot of funding to be a high-quality, slow-turn[over], one-on-one company."
   Local home theater and appliance retailers have been under the gun since the economy went bad and consumers began spending more cautiously. They also face stepped-up competition from aggressive newcomers like Showcase Home Entertainment and Ultimate Electronics, chains with big marketing and pricing muscle....

• [Ames graduates from bankruptcy to liquidation]
  Ames is going out of business, closing its 327 department stores, by John Hechinger, WSJ, A3.
  Ames Department Stores, unable to compete against Wal-Mart Stores Inc. and other national rivals, [is] leaving 21,500 employees out of work. The decision to liquidate comes a year after the Rocky Hill, Conn., company filed for US bankruptcy-court protection - its second such filing - with the hope of continuing to operate. But with suppliers leery of doing business with Ames before the back-to-school and holiday season, the company decided to shut its doors.... Ames said it expected to hold going-out-of-business sales at all of its stores, which would remain open for about 10 weeks.
  The company, which has stores in the Northeast, Midwest and Mid-Atlantic states, blamed its financial deterioration on a souring economy.... Analysts also said the company had made a mistake in its late 1998 acquisition of Hills Dept. Stores for $130m. With Hills, Ames took on about $300m in added debt and underwent a costly remodeling effort.... That acquisition reminded many analysts of an earlier doomed expansion. In 1988, Ames bought Zayres Stores for $800m, expanding into urban markets. But the chain, plagued by shoplifting, became a drag on profits. That, too, led to a bankruptcy-protection filing, in 1990; it emerged from bankruptcy that time in 1992..\..
  [So in buying Hills 6 years later, Ames' executives proved themselves incapable of learning from their own corporation's mistakes, and instead, caved to the prevailing takeover frenzy despite all the data on the failure of the strategy in the majority of cases.]
  Founded in 1958 in an old worsted mill in Southbridge MA, the company had billed itself as a survivor, the largest of the once-teeming category of regional discount retailers. Three of its other Northeastern rivals - Ann & Hope, Bradlees... and Caldor...- shut their doors in the past three years.
  ...It has incurred [obligations] after filing in US Bankruptcy Court in New York. According to filings with the court, Ames had about $670m in such debts, including $230m due to trade creditors..\.. An Ames spokesman...said the company had "a good chance" of paying off the[se] obligations..\..by selling off its inventory \and selling\ the leases on 140 stores.... The company had $240m in bonds before the bankruptcy filing and analysts said they are unlikely to be repaid \and\ for its fiscal year ended Feb. 2, 2002, Ames reported a net loss of $813m on sales of $3.3B....
  [So Ames probably has an exposure of at least 240+813= 1,053m= 1.053B in debt.]

• How the airline turmoil affects your ticket - Bankruptcy, big layoffs mean fewer flights, longer layovers; Should you connect in St. Louis? - Layovers may grow - but ticket prices could slip as rival carriers jockey for advantage, by Nicole Harris & Melanie Trottman, WSJ, D1 & D3.
  With
  • US Airways in bankruptcy court,
  • United Airlines possibly close to following suit and
  • American grounding jets and radically retooling its hub system,
  the industry is struggling through some of its biggest upheavals in decades. Airlines insist the effect of passengers will be minimal, but with this much uncertainty in the system, fliers are in for months of turbulence....
  [Compare -]
  Airline industry troubles spread - American, United plan to cut 9% of capacity, by Marilyn Adams & Dan Reed, USA Today, front page.

1. Bankruptcy move jolts confidence in large airlines - Wall St. hammers stocks - But some say restructuring of US Airways may help the industry over all, by Edward Wong, NYT, front page.
   [Keep smiling, every cloud has a silver lining, look on the bright side, the cup is half full not half empty, whistle a happy tune, count your blessings, keep siiinging in the rain...]
   US Airways flight to bankruptcy, editorial, NYT, A20.
   ...was as well thought out as they come....
   U.S. may be recast as financier of recovering airlines - US Airways to be test of an expanded role, by Stephen Labaton, NYT, C1.
   [This raises the question, of course - are they really going to recover?]
   Until this week...the Air Transportation Stabilization Board..\..the government board overseeing the bailout of the airline industry had acted like a bankruptcy court in miniature, requiring all applicants for financial aid to cut costs and wring major concessions from unions. Now, with the Ch. 11 filing of US Airways, which had applied for a $900m loan guarantee to secure a $1B loan, the Board takes on a new role as a potential financier of companies actually arising from bankruptcy....
   Texas Pacific hopes to revive another airline, by Sorkin & Atlas, NYT, C1.
   ...The Texas Pacific Group, the private equity firm that took Continental Airlines and America West out of bankruptcy nearly a decade ago, is putting its money [$500m] behind US Airways.....
   [Wonder where US Airways plans to get the other half billion?]
   Others failed, but this bankruptcy is given a chance - The Process: Other airline bankruptcies may have failed, but experts give this one a chance, by Daniel Altman, NYT, C1 & C6.
   ...Airlines...have a bad record of trying to survive bankruptcy filings.
   • Some large carriers, like Eastern and Braniff, which in 1982 was the first to file for protection under Chapter 11, disappeared altogether.
   • Others, like Pan Am, emerged to fly another day but later died.
   • Continental and America West each survived Ch. 11 in the early 1990s but only after 3 years in court.
   Uncertainty among US Airways customers - What will the airline look like after it emerges from Chapter 11?, by Donna Rosato, NYT, C8.
   ...But there was no sign of a rush away from bookings on the airline.
   ..."Certainly, a carrier that is reorganizing under Chapter 11 becomes a smaller carrier...," said David Castelveter, a US Airways spokesman....
   A bright side to US Airways tale, by Joe Sharkey, NYT, C9.
   ...according to Hal Rosenbluth, the CEO of Rosenbluth International, the 3rd-largest global travel management company. The US Airways action brings into sharp focus the fundamental problem that has pushed the airline industry to the edge of a cliff, he said. "The fare structure is broken."... The industry's travail will continue, he added, "until someone takes a leadership position and insists on a rational pricing structure." [His] report - "Who's zooming who?" - is on the *Rosenbluth website. Click on "About Us," then "Press Releases" and then "2001."
   US air travel continues to languish, by Joe Sharkey, NYT, C9.
   ...According to published airline schedules for August, the number of domestic flights was down 7%, and international flights down 8%.... The actual situation is worse than...because many airlines have been flying smaller-capacity planes since last year....

2. [Non-lawyers] preparing petitions: It irks the lawyers, but is it lawyering? [headline is nonsense without the addition], by Adam Liptak, NYT, front page.
   ...A rapidly expanding cottage industry that helps people file papers in bankruptcy and divorce cases and other legal proceedings like preparing wills has drawn increasing attention from the bench and the bar. In the last seven years, for example, Justice Dept. officials have filed almost 4,000 motions seeking to stop bankruptcy petition preparers or to reduce their fees....
   [One might wonder what legal basis they concoct for fixing other people's fees, let alone stopping their form-prep service.]

• [the dominoes begin to fall -]
  US Airways files Chapter 11 to help its restructuring - United may follow as bid for federal aid hits snag; A push for cost concessions, by Susan Carey, WSJ, A1.
  ...carrying too much debt and too few passengers...the first big airline...the nation's 7th-largest..\..to do so since 9/11.... The filing...listed assets of $7.81B and liabilities of $7.83B..\..
  [Let's see, 7.81-7.83= $0.02B= $20m in the red.]
  Now, 11 months after 9/11, every major airline except Southwest Airlines continues to lose money, despite steep cuts in capacity and layoffs of thousands of workers....
  [More likely, "continues to lose money because of layoffs of thousands of workers," something that Southwest does not do. A Reuters article called "Workplace: Experts say layoffs could weaken companies' prospects" - see 11/27/2001 #1 - "In the midst of one of the worst downturns ever in the airline industry, Southwest Airlines has avoided the thousands of layoffs that other airlines have launched.... Although the airline industry 'has been beaten like no other,' spokesman Ed Stewart of Southwest Airlines said, 'layoffs are absolutely the last thing we would consider.'" We have not seen an article which explicitly says that Southwest accordions its workweek, not its workforce (ie: timesizes, not downsizes), but if it does, that would mean the only profitable companies in two currently troubled industries are timesizing companies, the other being Nucor Corp. in the steel industry.]

• Bankruptcy bill opponents criticize loan - Inquiry is urged into ethics of a sponsor's [Rep. James Moran, D-Va.] debt consolidation deal - Questions about timing: first a [$447,500] loan, then the recipient's support for a bill, by Philip Shenon, NYT, A13.
  [Damn Democrats are just as slimey and stupid as the rancid Republicans.]

• Dade Behring, NYT, C3.
  ...Deerfield Park, Ill., a maker of medical diagnostic tests, filed for Chapter 11 bankruptcy protection.

• Vanguard Airlines files for bankruptcy and suspends service, by Edward Wong, NYT, C2.
  ...Chapter 11 bankruptcy protection because it had failed to get financing and had been operating since Sept. 11 on a diminishing pool of cash. Vanguard [Airlines is] based in Kansas City, Mo. [and] operates a total of 14 planes, consisting of Boeing 737's and MD-80's. \It\ was operating 70 flights to and from 18 cities.... It has been in business since 1994 but has not been profitable in the 6 years it has been a public company....
  The airline's announcement came on the same day that federal officials...turned down Vanguard for a loan guarantee. Vanguard [Airlines] had applied for backing on nearly all of an $8m private loan....
  [Guess we can assume that the airline is in the red at least to that extent = $8m.]

• Owner of Budget and Ryder rentals seeks Chapter 11, AP via NYT, C4.
  The Budget Group, which owns the world's 3rd-largest car and truck rental company, filed petitions yesterday in federal court seeking Chapter 11 bankruptcy protection for itself and 48 subsidiaries. The group, which rents cars and trucks under the names of Budget and Ryder, listed assets of $4.05B and debts of $4.33B in the petition, filed in US Bankruptcy Court in Wilmington, Del.
  [So, 4.33-4.05= 0.28B = $280m in debt.]
  The company, based in Daytona Beach, Fal., cited a slowdown in tourism after 9/11 as a major factor in its troubles. [Its] franchisees will not be affected....
  [The WSJ version is -]
  Budget Group's bankruptcy filing could lead to sale to competitor, by Stringer & Frank, WSJ, D5.

• Bankruptcy bill shows corporate clout still strong, by Gregg Hitt & Christine Whelan, WSJ, A4.
  [A nice alliterated headline - 3 alliterations: b-b, c-c, and st-st.]
  ...A final vote is expected when lawmakers reconvene in September....

1. A bankrupt bill, editorial, NYT, A22.
   It was probably too much to think that Congress's stand-up attitude to big business would last until the weekend. A little more than day after passing tough corporate-governance legislation, lawmakers rushed to approve an ill-advised overhaul of the nation's bankruptcy laws long sought by credit card companies and other creditors....

2. A sudden rush to declare bankruptcy is expected, bt Philip Shenon, NYT, B1.
   WASHINGTON...- With Congress close to final approval of a bill supported by the White House to overhaul the bankruptcy system, lawyers and consumers groups [yester]day predicted a rush of bankruptcy filings by people seeking to erase their credit card bills and other debts before the tougher rules take effect....

1. [1 bankruptcy]
   Jacobson Stores, struggling department store chain, to close, AP via NYT, C4.
   ...A 134-year-old regional...chain is going out of business.... Jacobson, based in Jackson, Mich., has 18 stores in Mich., Ind., Oh., Ken., Kan., and Fla..\.. A federal bankruptcy judge gave the retailer permission yesterday to sell its merchandise, credit cards and equipment to a group of liquidators. The decision ended months of uncertainty during which the company was unable to pay its bills or find a buyer. Jacobson...accepted a final offer from a group of 5 liquidators after an auction on Wednesday....
   [So this would probably be Chapter 7 bankruptcy in the form of liquidation, rather than Ch. 11 in the form of reorganization.]

2. [1 bankruptcy story]
   Negotiators agree on bill to rewrite bankruptcy laws - A victory for creditors - Measure makes it a lot harder to escape debts - Passage is expected, by Philip Shenon, NYT, front page.
   ...Credit card companies and other lenders have contended that they are being unfairly penalized as a result of the nation's growing rate of bankruptcy filings. There were 1.45 million filings last year, a record, up 19% from 2000.... The companies had drastically stepped up campaign contributions to members of Congress in recent years as they pushed for the legislation..\.. The bill...would end the ability of millions of Americans to use the bankruptcy system to wipe out credit card bills and other loans that are not secured by homes or other assets. Many of those debts would have to be paid back over time....
   [Thus concentrating more spending power in the unspendable accumulations in the top brackets and conducing even more strongly toward recession.]

• Bankruptcy flourishes in Asia, pointer blowout (to A8), WSJ, A1.
  For generations, philosophical teachings reined in Asians' spending habits. But throughout the region, purchases and debt have soared, often with governmental encouragement.
  [Thus the Western "gospel of consumption," crafted to justify maintaining long human workweeks regardless of inpouring worksaving technology such as automation and robotization, infects and creates toxic swelling throughout Asia. Here's the main article, complete with obtuse headline -]
  Asians defy Confucius and spend - Debt begets bankruptcy, threatening economies; Living high on the hog - Personal bankruptcy levels have exploded over the past five years in Hong Kong, by Jason Booth, WSJ, A8.
  HONG KONG -...Saving is out, spending is in and bankruptcy is on the rise..\.. After catching on in the U.S., it's becoming a familiar Asian story as well [in] economies such as Hong Kong and South Korea....
  Confucius...warned, "He that will not economize will have to agonize." But...the relative peace and prosperity of the past two decades - the Asian economic crisis of 1997-98 notwithstanding - have bred a more relaxed attitude toward personal finance. Across the region, consumer spending has soared in the past 10 years, while savings rates have fallen. In that period, household debt as a portion of total GDP (the value of the nation's goods and services) has more than doubled in South Korea, Hong Kong and Singapore.... In Korea...last year personal consumption surpassed exports to make up more than 56% of GDP. The consumer-spending zeal helped push up the Korean stock market and contributed to the still-growing influx of foreign capital.
  But now there are signs that the borrowing bonanza could backfire on Asian consumers - and the economies they have supercharged. ...Amid the global downturn...the broad expansion of credit [has] result[ed in] a sharp rise in deliquencies and personal bankruptcy cases. Today, as worried or broke consumers turn the spending spigot way down, their newly stingy ways threaten to do further damage to Asia's economies - economies already struggling with falling global stock markets [superficial - ed.] and the severe decline in demand from the U.S. and Europe for their manufactured goods [more significant - ed.].
  
  • In South Korea...deliquencies were up 25% in May from a year earlier. ...Newspapers are filled with...tales of debt-ridden teenagers and debt-spurred suicides.
  • Personal bankruptcy filings in Singapore in the Jan-Apr period were up 27% from two years earlier.
  • ...In Hong Kong [with its] 6.8m citizens..\..personal bankruptcy levels have exploded over the last 5 years, from fewer than 1000 to more than 20,000 expected this year [up 1900%].... These data come as 3 years of deflation further damp spending in the city. With persistent deflation, a decline in prices, people wait to buy, because it is always going to be cheaper in the future.
    [Conversely, persistent inflatoin causes people to rush to buy, because it's always going to be costlier in the future. Thus Arthur Dahlberg's third book (1938) touting scheduled-depreciating currency or expiration-dates on money was unnecessary. He should have stuck with the worktime centrifugation of his first two books.]
    Bankruptcy is still less common here than in the U.S., but it tends to be more severe.... The average debt load of a Hong Kong bankruptcy filing is double that of a U.S. filer: about 42 times the person's monthly income.
    [The WSJ tries to trace Hong Kong's consumer debt problems to the stock and property boom of the early 90s but then gives a couple of hints at something deeper -]
    ,,,Unemployment is at a record level as working-class jobs are moved across the border to China..\..
    Alfred Yiu, [an] English teacher \with\ 5 credit cards, 2 mortgages, a tax loan and a car loan totaling more than $500,000 [and] a self-confessed "impulse shopper" [who finally declared bankruptcy] would work 12-hour days to make HK$100,000 (US$12,800) in monthly payments to the banks. The hard work...made sense [only] as long as property prices conitnued to soar. [But now with the surge in bankruptcies,] "We are working Saturdays and Sundays - we don't live normal lives," says Edward Lau, a veteran [bankruptcy] bureaucrat....
    [There it is again. The symptoms of time blindness. The coexistence of compulsive consumption, bankruptcy, unemployment and overwork. In short, the complete lack of a mechanism to adjust the workweek to the changing technology level and automatically spread the employment now funneling onto a few people across the entire working-age population - along with the necessary skills. Our design entry? Timesizing.]

• Buying time: Debtor financing aids firms in bankruptcy court - Several big firms in financial services are involved in some of the largest corporate-bankruptcy cases filed in the U.S., by Marc Hopkins, Dow Jones via WSJ, B3B.
  For cash-strapped companies in bankruptcy proceedings caught in the balance between staying open and shutting down, debtor-in-possession [DIP] loan agreements have become the lifeline that keeps employees paid, vendors delivering and the doors open.... Kmart Corp. [has] $2B DIP financing, and...Adelphia Communications Corp. [has] a $1.5B DIP loan. Last week, WorldCom Inc...secured $2B in such financing....
  ...Peter Antoszyk, a partner at law firm Brown Rudnick Berlack & Israels in Boston...said that if a company does into default, the lender can exercise its rights under the US Bankruptcy Code and seize control of the company or sell assets from immediate payment.... [However, sometimes lenders do get burned -]
  The Winstar Communications Inc. Chapter 11 reorg turned into a Chapter 7 liquidation in January and left a group of lenders led by Citigroup's Corp USA Inc. unit, Credit Suisse Group's Credit Suisse First Boston, Bank of NY, J P Morgan Chase's Chase Manhattan Bank and investment bank CIBC on the hook for most of the company's $160m DIP loan....

• WorldCom files for bankruptcy; Largest U.S. case - Market is expected to reverberate after $107B collapse, by Simon Romero & Riva Atlas, NYT, front page.
  ...The WorldCom filing listed more than $107B in assets, far surpassing those of Enron [$49.8B], which filed last December [12/03/2001 #1]....
  WorldCom, built through rapid acquisitions, accumulated $41B in debts. Founded in 1983 as LDDS Communications, it became the nation's 2nd-largest long-distance company and the largest handler of Internet data....
  Although WorldCom has already cut its workforce significantly..\..John Sidgmore, WorldCom's CEO...said last night that he did not expect further layoffs for the time being....
  [and the accompanying article -]
  Bankruptcy's taut wiring - Trouble at WorldCom flows across industry, by Romero & Glater, NYT, front page.
  ...Even though WorldCom's bankruptcy filing had been expected for weeks, its reality creates a cascade of problems in the highly interdependent industry of local and long-distance phone carriers, as well as their equipment suppliers....
  [Followup]
  Bankruptcy judge permits WorldCom to void AOL accord, 10/09/2002 WSJ, D2.
  ...its $182.3m advertising contract with AOL Time Warner Inc....
  [More followup]
  WorldCom sees more revisions of its figures, by Seth Schiesel, 11/11/2002 NYT, C1.
  [How many revisions does that make now???]
  [Even more followup]
  MCI, Dow Jones via 6/02/2003 WSJ, B11.
  ...formerly WorldCom Inc...agreed to sell some Virginia real-estate assets of its MCI WorldCom Network Services Inc. unit for $133.4m [to] Jamestown TSA LP..\..and is seeking bankruptcy-court approval....

• Contour Energy Co., NYT, C11.
  ...Houston, a natural gas and oil explorer, filed for bankruptcy protection after Enron Corp.'s bankruptcy filing exposed it to market price fluctuations.
  [How apt that this is reported on page C11.]

• Japan: bankruptcies decline, by Ken Belson, NYT, B3.
  Corporate bankruptcies [declined] 4.7% in June from the month a year ago, the first decline in 10 months.... In all, 1,439 companies closed their doors last month leaving behind 674B yen ($5.8B) in debts, Tokyo Shoko Research said.

• State [of Arizona] bankruptcies on rise - Economy helps to drive personal filings up 10%, by Christine Romero, AR, D1.
  ...for the first 5 months of the year...to 11,389, compared with a year ago, according to the US Bankruptcy Court District of Arizona. That's on pace to break the record set in 1997. During the 5 months, 312 businesses filed for bankruptcy protection, about the same number as a year ago....

1. Japan: Builder in bankruptcy, Bloomberg via NYT, W1.
   Dai Nippon Construction, a general contractor,...filed for bankruptcy protection with 271.2B yen ($2.3B) in debt, much of which went toward ill-timed golf course development. It was the second-largest failure of a publicly traded Japanese company this year and brings the total to 23; last year the figure was 14. Like other contractors, Dai Nippon got into trouble when real estate prices collapsed at the beginning of the 1990's.

2. Germany: Babcock Borsig on the brink, Bloomberg via NYT, W1.
   ...A German engineering company employing 22,000 people [that] makes steam turbines, power plants, and industrial boilers..\..filed for protection from creditors after two days of talks with banks and politicians broke down. Babcock needed 200m euros ($196m) to pay June salaries but banks are reluctant to extend more credit. Its debt amounted to 1.5B euros ($1.47B) at the end of March. Chancellor Gerhard Schroeder was still pursuing ways to avert the collapse, which would be the 4th major corporate failure this year....
   [Followup]
   Big German engineering company fails - A fourth large company goes under in an election year, by Otto Pohl, 7/09/2002 NYT, W1.
   BERLIN...- After searching through[out] the weekend for a way to persuade its banks to advance more cash and keep it afloat, Babcock Borsig, the giant German engineering company, came up empty [yester]day.... The company...employs 13,000 people in Germany and 8,000 elsewhere, building power plants, turbines, boilers and other heavy machinery. Its workers have not yet been paid for June....
   [Gee, just like Russia.]
   With the economy in the doldrums, unemployment above 9% and rising, and federal elections in Germany less than 3 months away, officials are eager to avoid another prominent failure that could harm Chancellor Gerhard Schroeder's chances of re-election.
   [Looks like he's toast. Officials may be eager but they're ineffectual. None of them are catching onto Timesizing fast and focused enough to spread the vanishing work&wages and restore effective demand.]
   ...The premier of..\..North Rhine-Westphalia, where Babcock Borsig has its HQ,...Wolfgang Clement,...said that...the government would seek an overhaul of the company and replacement of its management, rather than liquidation. But Wolfgang Hartmann, a managing director of Commerzbank, told Reuter [yester]day that the company was beyond saving....
   Various political parties say the company's difficulties as emblematic of the weak German economy. The chief spokesman for the Christian Democrats, Mattias Wissmann, said Germany faced a serious structural crisis....
   [So does the whole world. We need an automatic mechanism that adjusts the workweek downward to maintain the workforce and the consumer base as we inject worksaving technology into our economies.]
   Babcock's failure follows those of
   1. the Kirch media group
   2. the aircraft manufacturer Fairchild Dornier
   3. and Philip Holzmann, a major construction and property company....
   [Time to oust Schroeder and get somebody who's a little more hip to the Timesizing imperative - to the power and urgency of sharing the vanishing work.]

1. CMGI buys bankrupt company, by Andrew Zipern, NYT, C11.
   The technology holding company that owns the search engine AltaVista [will] buy the assets of Software Logistics, a bankrupt company that does business as iLogistix, for $41m. Software Logistics, based in Fremont, Calif., makes supply-chain management software.... Most of the company's 500 employees will be offered jobs, CMGI said....

2. [2 in 1 -]
   Germany: PixelNet seeks debt relief, Bloomberg via NYT, W1.
   ...A German processor of digital photographs...filed for protection from creditors...at a local court in Dessau after its Photo Porst unit sought protection from creditors last week, [it] said in a statement to the Frankfurt exchange. Photo Porst is no longer able to repay loans it owes PixelNet on time [and] failed to find investors for the owner of photography stores that it acquired for a symbolic price of 1 deutsche mark (51 cents) last year....
   [Not such a bargain after all?]