Global Power Equipment Group Inc. revealed on Tuesday that it has reached an agreement with its creditors’ committee on the terms of its chapter 11 plan, Bankruptcy Law360 reported yesterday. It includes a rights offering available to all existing equity holders for an issuance of new common stock in the reorganized company that will be backstopped by up to $90 million in cash, a proposed settlement with the senior subordinated noteholders for a cash consideration paid out by a $34 million trust and a full payment in cash of all allowed creditors’ claims. The agreement also stipulated that a new secured credit facility would be established to repay the company’s existing debtor-in-possession financing facility and to meet other funding and working capital needs after Global Power has reorganized.

Credit-rating agencies that once blessed securities that backed subprime mortgage loans as safe investments are now experiencing a financial downturn, the Washington Post reported today. The stock of Moody’s Investors Service, one of the major raters, is down about 40 percent from its 52-week high on heavy trading. Members of Congress are calling for hearings and more oversight of the rating firms and institutional investors and industry observers have blamed the agencies for being months late in downgrading a slew of residential mortgage-backed securities that soon imploded. The big three raters have moved in recent weeks to restore confidence in their work even as they maintain that they acted appropriately and on time. They have adjusted how they rate bonds and other financial instruments, generated a series of new reports about the market and staged teleconferences to assuage investors hammered by the deterioration in subprime loans.

Heating and air conditioning company Fedders Corp. filed for chapter 11 protection for 16 of its North American affiliates on Wednesday, Bankruptcy Law360 reported yesterday. As part of its restructuring activities, Fedders said it is looking to sell off some of the company’s business units. In case the proceeds from a sale of business units are insufficient, the company said it will also develop a new business plan, and retain an investment bank to help analyze options. With approximately 1,600 employees, Fedders produces a wide range of residential and commercial heating and cooling equipment, air cleaners and humidifiers.  In its bankruptcy petition, Fedders listed total assets of $186.3 million and total debts of $322 million.

The U.S. mortgage unit of HSBC said yesterday that it will close an office in Indiana, a move that will affect about 600 workers, amid a severe downturn in U.S. credit and housing markets, Reuters reported yesterday. Escalating defaults on U.S. home loans have shaken financial markets worldwide, forcing HSBC, Europe’s biggest bank, to restructure its U.S. mortgage operations and set aside $1.7 billion for loan losses in the first quarter. A prolonged U.S. housing slump has resulted in nearly 88,000 job cuts in the financial services sector, consulting firm Challenger, Gray & Christmas said this week. HSBC Finance has been one of the largest providers of risky subprime loans in the United States. Investors are worried HSBC will rack up more mortgage-related losses in the second half of this year when several billion dollarsworth of those loans reset at higher interest rates amid a slumping U.S. housing market.

Hollinger Inc. bondholders have asked a U.S. bankruptcy court for a boost in the collateral that protects their $93 million investment in Hollinger, which now consists of stock in Sun-Times Media Group Inc., the Associated Press reported yesterday. The Sun-Times stock has “dropped precipitously in value” and it doesn’t look like Hollinger will be able to make a $6 million interest payment Sept. 4, noteholders said in court papers filed Monday. Those papers were filed in the bankruptcy court in Wilmington, Del., where Hollinger applied for chapter 15 protection on Aug. 1, the same day it began insolvency proceedings in Canada. Hollinger’s main asset is its 19.7 percent equity stake and 70 percent voting control of the Sun-Times newspaper group.

Bankrupt auto parts maker Dana Corp. has continued to work to tie up its suppliers’ claims, reaching an agreement with one supplier and requesting mediation with a second, Bankruptcy Law360 reported yesterday. In the settlement with Federal-Mogul, Dana agreed to pay the company over $805,000 and, in return, Dana was granted a $577,000 reclamation claim in Federal-Mogul’s bankruptcy case in the U.S. Bankruptcy Court for the District of Delaware. The agreement puts to rest a payment dispute between the two companies since Dana entered chapter 11 in March 2006. Dana also had its request to send its claims dispute with L&W Engineering Co. to mediation over a $250,000 claim. L&W said in a February 2007 claim request that Dana owed it payment for tubing supplies sent to the auto parts maker after it filed for bankruptcy protection.

The Securities and Exchange Commission (SEC) filed civil-fraud charges against investment adviser Sentinel Management Group Inc., claiming the bankrupt company’s woes are a case of fraud disguised as a casualty of the markets, the Wall Street Journal reported today. Early last week, Sentinel, a company that manages short-term cash for hedge funds and futures brokers, told clients it was halting redemptions because of the “liquidity crisis” in the credit markets. The news contributed to a 207.61-point fall in the Dow Jones Industrial Average when it became public Tuesday, and added to the sense of fear that gripped credit and stock markets all week long. In a complaint filed yesterday in U.S. District Court in Chicago, the SEC alleged that Sentinel suffered losses for several months leading up to the Aug. 13 letter to clients because of “undisclosed use of leverage, commingling and misappropriation of clients’ securities.”

As problems that began in subprime mortgage lending have expanded into the broader markets, hedge funds like Sowood have come face to face with the ghost of past financial crises: the one-two liquidity punch from banks and investors, the New York Times reported today. On the one side, Wall Street banks and brokerage firms, as they did with Sowood, have stepped up their demands for more cash and collateral as they restrict the money they are willing to lend. On the other, jittery investors seem ready to flee at any sign of trouble, as they did from the Bear Stearns Asset-Backed Securities Fund. The fund had a solid track record, no leverage and little exposure to subprime mortgages, but after it reported losses in July, investors demanded their money and Bear Stearns was forced to suspend redemptions. Pressure from banks to raise margin levels as well as pressure from investors could not have come at a worse time for hedge funds; the prices of the debt instruments they hold continue to fall, if they trade at all. Stocks widely held by hedge funds, from small-cap value stocks to potential targets for leveraged buyouts, have been pummeled. And with volatility in the markets, banks and hedge funds are scrambling to reduce risk and sell those securities that can be easily sold.

The Reserve Bank of Australia reported that credit card balances in the country rose 11.4 percent to $32.01 billion in June from $28.77 billion in June 2006, CreditandCollectionsWorld.com reported yesterday. The $32.01 billion balance is a 1 percent increase from May’s figure of $31.6 billion. Australia had 13.5 million card accounts in June 2007, up 4 percent from approximately 13 million in June 2006. As mortgages become more expensive, more Australians are using credit cards to borrow money, said Denis Orrock, general manager with Sydney-based financial researcher Infochoice Ltd.  Australia ranks third in terms of being at risk for household debt, following Norway and New Zealand, according to a recent study of 16 industrialized countries by Fitch Ratings.

Financial experts for retailer Sharper Image are expected to testify today that the company could be pushed into bankruptcy if it is forced to pay up to $900 million to settle a class action lawsuit being pushed by 27 state attorneys general and several plaintiffs attorneys, the Daily Business Review reported today. At a final fairness hearing today, U.S. District Judge Cecilia Altonaga must weigh Sharper Image’s financial health against the demands of various plaintiff groups and attorneys general who want customers compensated for $300 air purifiers they say were ineffective. An estimated 3 million consumers have purchased the San Francisco-based company’s Ionic Breeze purifiers since 1999. The machine, which was supposed to remove dust, pollen and other pollution from household air, did not work and in some cases caused more health problems, such as allergies, according to consumers.