Bankrupt Dura Automotive Systems Inc. filed a motion on Wednesday in opposition to its unsecured creditors’ attempts to compel it to file a portion of its business plan, contesting the creditors’ claims that since the information has already been leaked, the filing would cause no additional harm, Bankruptcy Law360 reported yesterday. The leak, they argued, put the unsecured creditors at risk and likely prompted a spike in trading. The unsecured creditors’ motion said the leak likely occurred after Dura met with the creditors and second-lien committees. The company said the motion by the unsecured creditors’ committee comes a month after the group discussed the issue with Dura. From the beginning, Dura has held that releasing the EBIDTA numbers would be detrimental to the company’s estates.

The plaintiffs in two qui tam suits accusing Pacific Lumber Co. of fraud in connection with a $390 million deal with California and the United States asked the court to deny the debtors’ bid to halt the suits, Bankruptcy Law360 reported yesterday. The plaintiffs filed their opposition papers Tuesday in response to a joint motion filed by Pacific Lumber and two bankrupt subsidiaries on June 5, which sought an injunction and asked the court to extend the automatic stay afforded bankrupt companies to Pacific Lumber’s non-bankrupt parent company Maxxam Inc. and Maxxam’s president and CEO Charles Hurwitz, as well as a supplement to the June 5 motion that was filed on June 18. The plaintiffs’ opposition papers blasted the debtors for trying to gain an unfair advantage by trying to block the qui tam litigation without serving the affected parties or their counsel, and failing to back up their motion with sufficient evidence. Pacific Lumber’s bankruptcy case is In re Scotia Development LLC, case number 07-20027 in the U.S. Bankruptcy Court for the Southern District of Texas.
See Also: Bankruptcy Lawyers New York

Unionized workers at Delphi, the big auto parts supplier, could vote this week to throw out the jobs bank, a longtime program that lets them continue receiving most of their pay after being laid off, the New York Times reported today. If so, the jobs bank, which critics call the epitome of the American auto industry’s inefficient labor practices, could be in its last months at the three Detroit automakers. Elimination of the jobs bank is one provision of a tentative agreement signed last week by the United Automobile Workers union, Delphi and Delphi’s former parent, General Motors, after nearly two years of divisive negotiations. In place of the jobs bank, which gives the laid-off employees 95 percent of their base pay, the agreement would provide $1,500 in severance pay for every month of service, to a maximum of $40,000, according to a 46-page memorandum detailing the deal.

Former employees of bankrupt subprime lender New Century Financial Corp. have sued the company to protect their retirement trust from becoming part of its chapter 11 estate, Bankruptcy Law360 reported on Friday. The company said the trust was part of a “top hat plan,” intended to provide high-level employees with extra benefits. Top-hat plans, unlike standard retirement plans, may become part of a bankrupt debtor’s estate under the Early Retirement Income Security Act (ERISA). But in their complaint filed Wednesday, the plaintiffs alleged that their plan does not qualify as a top-hat plan under ERISA. Top-hat plans may include only high-level employees with enough clout in the company to protect their own interests where ERISA does not, the plaintiffs said. ERISA also says that only highly compensated employees can be eligible for a top-hat plan. According to the terms of New Century’s plan, only employees making at least $125,000 per year were eligible.

The Pacific Lumber Co.’s (Palco) top officials, workers and a company subsidiary’s forestry staff would receive up to $3.4 million in bonuses if they can stem losses and meet production and harvest goals under a plan submitted to the federal court overseeing its bankruptcy case, the Eureka (Calif.) Times-Standard reported today. Palco CEO George O’Brien could receive $450,000 of that, and five other senior managers would get nearly $750,000 in total if losses can be kept below $7.7 million for the year. Another 25 salaried employees would be paid an additional $635,000. Scotia Pacific, Palco’s landholding arm, would also realize bonuses for its executives as Scotia Pacific Vice President Jeff Barrett could see $221,000 if harvest goals of 64 million board feet of redwood are reached, while another 14 employees would get $396,000. Up to $990,000 would go to about 300 millworkers for Palco and Britt Lumber Co. if production goals are met. If higher targets are achieved, the bonuses as part of the incentive plan could go up, according filings in U.S. Bankruptcy Court in Corpus Christi, Texas.

Pilots at American Airlines in Dallas, unhappy over pay and angry at company management, ousted their union’s top officers and elected a slate of newcomers who promised to take a harder line against the nation’s largest carrier, the Associated Press reported today. Miami-based pilot Lloyd Hill defeated incumbent President Ralph Hunter by more than a 2-to-1 margin in a runoff, and challengers also unseated the Allied Pilots Association’s next two ranking officials. Hill said immediately that the union’s proposal for a 30.5 percent pay increase next year “is not nearly enough.” The first test for the new officers will come quickly—the union is in the early stages of negotiations for a new contract in which it expects large raises. In an interview Wednesday night, Hill said he wants the company to succeed but current union leaders had tried too hard to find a middle ground with management.

Ownit Mortgage Solutions Inc.’s unsecured creditors are protesting $70,000 in fees that the bankrupt subprime lender plans to pay Pachulski Stang Ziehl Young Jones & Weintraub LLP for its help in putting together a compensation package for the company’s CEO, Bankruptcy Law360 reported yesterday. According to the creditors, those fees were incurred during weeks of negotiation and squabbling over a package for William Dallas, the company’s CEO, that they had opposed all along. During those negotiations, a compensation advisor was hired as well. Debtor counsel Jonathan Kim of Pachulski, however, stressed the extensive negotiation that had taken place between between the debtor and unsecured creditors and called the differences between their plans relatively minor. He also said the proposed compensation was significantly less than Dallas’ package before the company filed for chapter 11 in late 2006 and said Ownit had called it fair and reasonable.

Ford Motor, DaimlerChrysler and Volkswagen of America have raised objections to the part of Federal-Mogul Corp.’s amended reorganization plan that covers Abex Friction Products, a brake-pads business formerly owned by manufacturer Cooper Industries Inc., Bankruptcy Law360 reported yesterday. Cooper’s plan to filter money into Federal-Mogul’s trust it would absolve it of all asbestos litigation, according to the company. However, the auto makers see such a solution as unfairly putting the responsibility of compensation back on them. The primary difference between the current plan and the old one involves pneumo asbestos claims, which are, according to the plan, asbestos personal injury claims caused by exposure to asbestos-containing products like the friction products manufactured by Abex.
See Also: Chapter 7 Bankruptcy

Ford Motor Co. expects a sale of its Jaguar and Land Rover brands to take at least a month and possibly longer, as the auto giant seeks to drum up interest in the two United Kingdom brands from financial buyers, the Wall Street Journal reported today. The Dearborn, Mich., auto maker has had preliminary talks with Cerberus Capital Management LP about selling the brands to the private-equity company, but the discussions have been inconclusive. In May, Cerberus agreed to buy 80 percent of the U.S. arm of DaimlerChrysler AG. Industry analysts increasingly expect the company will off-load one or both of the units as it seeks to refocus on its North American operations, which are piling up big losses as high gasoline prices discourage sales of large pickup trucks and sport-utility vehicles.

Remy International Inc. said Friday that it intends to file a prepackaged chapter 11 petition that would allow it to cut $360 million in debt, joining a growing number of auto-parts companies that have had to resort to filing for bankruptcy court protection, the Associated Press reported Friday. The privately held Anderson, Ind., company said that it reached a deal with two groups of bondholders to swap debt for equity. The arrangement would wipe out Remy’s existing shareholders — including Citicorp Venture Capital and Warren Buffett’s Berkshire Hathaway Inc. — and put the company under the control of its bondholders. Remy, which supplies parts to General Motors Corp. and other big auto manufacturers, has been hit hard by rising raw-materials costs and production cutbacks by some of its customers. At the end of 2006, Remy had total assets of $842.8 million and total current liabilities of $1.2 billion. The company, spun-off from GM in 1994, moved some of its production to Mexico as part of its cost-cutting efforts. In January, it sold its diesel remanufacturing business to Caterpillar Inc. for $150 million.