American Bankruptcy Institute Update

June 28, 2005

In This Issue

Highlights

Legislation Update

Specter Hopes to Move Asbestos Bill Next Month

Senate Judiciary Chairman Arlen Specter (R–Pa.) said he hopes the asbestos bill (S. 852) will come to a floor vote shortly after the Independence Day recess, CongressDaily reported. The Senate Judiciary Committee approved the bill last month, with several Republicans on the panel saying they would object in a floor vote unless changes were made to the bill. Co-sponsors of the bill, including Judiciary ranking member Patrick Leahy (D–Vt.) and Sens. Orrin Hatch (R–Utah) and Dianne Feinstein (D–Calif.), have said they want to retain the bill’s core provisions, but Specter said he remains “open to suggestions” for other changes and plans to spend the next week to 10 days negotiating with potential allies. Backers of the asbestos bill are pressing for a July Senate floor vote, but Majority Leader Bill Frist (R–Tenn.) has not yet scheduled a time for a vote and is still reviewing the bill, a Frist spokesman said.

House Blocks United Airlines Deal with Pension Agency

The House approved an amendment on Friday to the $142.5 billion FY06 Labor–HHS spending bill that would block the Pension Benefit Guaranty Corp. (PBGC) from spending money to implement an April 22 agreement with United Airlines to terminate four pension plans and have the PBGC pay $6.6 billion, CongrssDaily reported. The amendment by Education and the Workforce ranking member George Miller (D–Calif.) passed on a 219–185 vote, garnering GOP votes from members concerned the deal would result in benefit cuts for airline employees. United officials have said the company cannot survive without terminating its pension responsibilities.

Bankruptcy Judge to Decide if Schools, Church Can Be Sold to Pay Abuse Victims

U.S. Bankruptcy Judge Patricia Williams is expected to rule in the next six weeks on whether parishes are stand-alone organizations or belong to the diocese, SpokesmanReview.com reported. The bankruptcy case of the Roman Catholic Diocese of Spokane, Wash., has lawyers arguing over whether churches and schools should be sold or mortgaged to settle sex abuse claims. James Stang (Pachulski Stang, et al.; Los Angeles) argued that decades of tragedy were a compelling reason to rule in favor of more than six dozen victims. He asked the judge to apply secular law rather than allow canon law to dictate the laws of the United States. Doing so would dismiss the notion that the diocese holds the most valuable assets of the church in trust and therefore should be out of the reach of victims.

Diocese attorney Shaun Cross (Paine Hamblen Coffin Brooke & Miller; Spokane, Wash.) said there is no current danger to children from Catholic priests and warned that a ruling in favor of victims could destroy a Catholic ministry of 97,000 people in Eastern Washington. Ford Elsaesser (Elsaesser, Jarzabek et al.; Sandpoint, Idaho), an attorney for the Association of Parishes, said the sides have plenty of room to negotiate. The hearing was the first of its kind in the United States, and the ruling could affect how the U.S. Catholic Church handles the settlement of sexual abuse claims. Across the country the Catholic Church has spent more than $1 billion to settle the abuse lawsuits. Spokane is the third diocese to file for bankruptcy protection.

Read the full story.

U.S. Consumer Confidence Rises to 3-Year High

The U.S. consumer confidence index rose to a three-year high of 105.8 in June, the Conference Board said today. Economists were expecting the index to rise to 104.1 from a revised 103.1 in May, according to a survey conducted by MarketWatch. The present situation index rose to 120.7 in June from 117.8 in May, the highest since September 2001. The improvement “suggests that business activity and labor market activity will continue to pick up over the next several months,” said Lynn Franco, director of the board’s consumer research unit. “And, with consumers in better spirits, and job concerns remaining relatively steady, there is little reason to expect a dramatic shift in consumers’ spending,” Franco said. Read the full release.

Federal Prosecutors Request 85-Year Sentence for Ebbers

Federal prosecutors have asked a U.S. judge to impose an effective life sentence for WorldCom Inc. founder Bernard Ebbers, convicted in March in the largest corporate fraud case in history, according to court papers released today, the Wall Street Journal reported. Prosecutors are seeking 85 years in prison for Ebbers, for nine counts of fraud, conspiracy and making false filings with regulators. Attorneys for Ebbers have asked Judge Barbara Jones to impose a lighter sentence, citing his good character, age, poor health and low risk of a repeat offense. Ebbers will be sentenced July 13 for his role in the company’s record-setting fraud.

Bankruptcy Petitions in May Up 5 Percent over 1 Year Ago

Personal bankruptcy petitions in May rose nearly 5 percent over year-ago levels, but fell sharply from the surge experienced in April when filings soared nearly 17 percent year-over-year, cardweb.com reported. Nearly 143,000 filings were made during May, compared to 136,509 for May 2004. This is the third month in a row that filings have moved up sharply after a steady two-year decline. Bankruptcy filings declined about 4 percent for the full-year of 2004.

Make Plans to Attend “Bankruptcy 2005: Views from the Bench”

Join ABI and the Georgetown University Law Center CLE for the annual “Views from the Bench,” held Oct. 7, 2005, in Washington, D.C., and earn up to 7.0 CLE credits, including 1.0 hour of ethics. The program features the views of 18 U.S. Bankruptcy Judges from across the United States. It offers discussions on timely topics—all updated with the latest legislative revisions—along with a unique opportunity for attendees to follow up on the morning’s topics in small groups with the judges and speakers. Explore the program information and register!

“Best of ABI” Audioconference Tomorrow Features Judges on the New Law

ABI will present the third in a series of “Best of ABI” audioconferences, “Judges’ Roundtable&8212;The New Bankruptcy Law,” tomorrow, June 29, 2005, at 3:00 pm (EDT). The panel of experienced bankruptcy judges from four different circuits will discuss the coming significant changes in business and consumer bankruptcy law. The panel was the top-rated program, as selected by the record crowd at the Annual Spring Meeting in Washington, D.C. The program is 90 minutes. Register here.

Commercial Fraud Task Force Committee e-Newsletter Available Online

The June issue of ABI’s Commercial Fraud Task Force Committee e-newsletter is available online. Read articles on identity theft and bankruptcy fraud and read the committee’s minutes from the 2005 Annual Spring Meeting.

ABI World Tutorial Highlights Discussion Groups

Do You Know?

A new online tutorial focuses on ABI’s discussion groups. The tutorial features a visual demonstration of how to sign in and use the online discussion groups. This is the second in a series of tutorials that will highlight the many resources and services that are available at the ABI World web site.

Latest Job Postings at ABI Career Center

Check out the ABI Career Center. The Center is a one-stop site for job seekers and employers in the insolvency community. Career Center resources are available free to both employers and job seekers. New positions are featured daily. The latest listings include: