Federal-Mogul Corp. has resolved a key dispute that threatened to delay its exit from bankruptcy, but the judge overseeing the case remains skeptical the company will meet its goal of wrapping up its six-year chapter 11 reorganization by the end of 2007, the Associated Press reported yesterday. Lawyers for the struggling auto-parts company said at a court hearing Wednesday that Federal-Mogul has come to terms with PepsiAmericas Inc., but that it has yet to resolve objections – mainly from insurance companies – to other parts of the company’s chapter 11 plan. Under the circumstances, the company’s bid to get its bankruptcy plan confirmed by the end of December is “just an impossibility,” Bankruptcy Judge Judith Fitzgerald said. Federal-Mogul has been rushing to beat a Dec. 31 deadline, but if its chapter 11 plan isn’t confirmed by then, the company risks losing the favorable terms it secured on a $3.5 billion bankruptcy exit loan from Citibank.

The National Association of Realtors reported that purchases of previously owned homes in August dropped 4.3 percent from July, sending sales to a five-year low, the New York Times reported today. The annual sales rate fell to 5.50 million from 5.75 million in July, the steepest percentage decline since March. Existing-home sales are down nearly 13 percent over the last 12 months. Also yesterday, home builder Lennar reported the largest quarterly loss in its history after the company was forced to write down $848 million in the value of real estate. The bad news in the housing sector was coupled with a discouraging report on consumer confidence from the Conference Board, whose index tumbled to 99.8 in September from 105.6 in August, a steeper drop than previously forecast. The index is now at its lowest level in nearly two years.

Fireproof materials manufacturer RHI AG today said that a bankruptcy court has given the green light to a reorganization plan for the Austrian company’s four former U.S. subsidiaries, a ruling that could lead to a compensation payment of $40 million to RHI by year end, Dow Jones Newswires reported today. RHI placed its U.S. refractories subsidiaries NARCO, Harbison-Walker, AP Green and GIT under chapter 11 bankruptcy proceedings and deconsolidated the units in 2001, following legal claims by former employees for exposure to asbestos. In 2004, RHI reached a settlement with the four companies and their previous owners, Honeywell International Inc. (HON) and Halliburton Co. (HAL), to pave the way for a reorganization of the units and settle outstanding liabilities. According to this settlement, Honeywell International was to pay RHI $40 million after completion of former unit NARCO’s chapter 11 proceedings.

The Center for Responsible Lending said that college and graduate students are paying more than $960 million in overdraft fees a year while using combined identification and debit cards issued by universities, CongressDaily reported yesterday. The group estimated that students pay $3 in fees for every $1 borrowed in the form of an overdraft, with an average penalty of $34. Center for Responsible Lending Director Eric Halperin said that a single overdraft transaction can lead to a “cascade” of charges. As an example, he cited a student interviewed for the study who was hit with $245 in fees over four days on $13 in purchases. More than 100 universities have granted selected banks “exclusive marketing services” on their campuses through the cards, according to the report.  The report was released in conjunction with the House Financial Services Committee markup of H.R. 946 sponsored by Rep. Carolyn Maloney (D-N.Y.) that would require banks to provide a warning to ATM customers when they are about to make an overdraft. The House Financial Services Committee will be marking up H.R. 946 today.

OPFM Inc. in Reading, Pa., doing business as Personal Financial Management, filed for chapter 7 liquidation on Tuesday in federal bankruptcy court in Philadelphia. The filing by the mortgage broker and its five subsidiaries will affect more than 800 customers who face higher payments on their home loans. OPFM listed assets of over $60 million and liabilities of over $100 million. Personal Financial Management was incorporated in 1982 began as a financial counseling business and grew to encompass lending and investment services.

Bankrupt lender Aegis Mortgage Corp. wants to halt a pending employment lawsuit filed against the company and its hedge fund owner by Aegis’ founder and former chief executive, claiming the suit could hurt its chapter 11 case, Bankruptcy Law360 reported yesterday. In an adversary case complaint filed Monday in the U.S. Bankruptcy Court for the District of Delaware, Aegis asked for an injunction against D. Richard Thompson, who filed suit in Texas state court in May. In the alternative, the bankrupt lender has asked that the automatic stay be extended to “affiliated defendants” named in Thompson’s suit. The case has already been stayed as it applies to Aegis, but Thompson also named hedge fund Cerberus Capital Management LP and its parent company Madeleine LLC as defendants, along with several officers and managers of Cerberus and Aegis. Cerberus is a unit of Madeleine, Aegis’ largest equityholder.

The transfer of assets from the former Pittsburgh Brewing Co. to a new ownership group has been completed, the Associated Press reported today. Under a court-approved reorganization, the brewery will invest $4.1 million in modernization and will increase marketing to promote its brands. The company, which makes Iron City and other beers, is called Iron City Brewing Co., the name the brewery was founded under in 1861. Pittsburgh Brewing had originally sought bankruptcy protection in 2005 after the city Water and Sewer Authority threatened to cut off its water supply because of $2.5 million in unpaid bills. Pittsburgh Brewing disputed the charges but agreed in April to settle its debt by paying at least $575,000. Iron City Brewing is owned by a team of investors led by Unified Growth Partners, a private equity firm in Greenwich, Conn., led by John N. Milne.

The United Automobile Workers union and General Motors remained at odds on key issues, even as the union acknowledged the need for talks to move more quickly toward a settlement, the New York Times reported today. Talks recessed in the fourth session since the UAW’s contract with GM expired at 12:01 a.m. on Saturday. The negotiations were set to resume on Wednesday. The UAW’s contract with GM has been extended hour by hour. Contracts at Ford Motor and Chrysler have been extended indefinitely. The stop-and-start nature of the discussions suggested the two sides were still far apart on a deal that would cover GM’s 73,000 workers in the United States. The primary issue is the creation of a health care trust that would assume responsibility for $55 billion in benefits for employees, retirees and their families. The major sticking point appeared to be the way the trust would be financed. Normally such a trust, called a voluntary employee benefit association, or VEBA, is financed with a combination of cash, stock and possibly real estate.

The unsecured creditors’ committee of Werner Holdings has filed another amended disclosure statement and liquidation plan, which seeks to answer how the bankrupt ladder maker will pay out administrative claims, Bankruptcy Law360 reported yesterday. Last month, the U.S. Trustee in the case objected to bankrupt Werner Holding Co.’s disclosure statement and liquidation plan, arguing that the proposal does not properly address the handling of administrative claims. U.S. Trustee Kelly Beaudin Stapleton said the plan failed to indicate whether certain administrative claimants have agreed to be deferred or if there’s the possibility of a contingent payment of their administrative claims. The motion also said that an effort to convert the case to chapter 7 indicated the estates may not have enough assets to pay the priority claimants.
See Chapter 7

Global Power Equipment Group Inc. filed its chapter 11 plan and disclosure statement after almost a year in bankruptcy, Bankruptcy Law360 reported yesterday. The plan calls for Global Power’s existing equity interests to be canceled as of the plan’s effective date. However, stockholders will get one share of new common stock in the reorganized Global Power for each share of Global Power stock they own, as well as the possibility of buying more stock in the restructured company in accordance with the terms of a rights offering described in the plan, according to the disclosure statement. Another key element of the plan is the noteholder settlement agreement, under which 94 percent of the holders of the debtors’ pre-petition subordinated notes agreed to back the restructuring plan in exchange for the “’allowance of the subordinated noteholder claims in the aggregated amount of $89.7 million, and a cash payment of $86 million,” says the disclosure statement. A hearing before Bankruptcy Judge Brendan L. Shannon to consider the adequacy of the disclosure statement is slated for Oct. 9, according to court papers.