Suntech strikes yet another deal with bondholders

June 28 | Fri Jun 28, 2013 9:19am EDT

June 28 (Reuters) - China-based solar panel maker Suntech Power Holdings Co Ltd, whose main unit is in insolvency proceedings, said it had struck a deal with a majority of its bondholders to defer payment on a $541 million loan until Aug. 30, the third time the company has reached such an agreement.

Suntech defaulted on a principal payment on the 3 percent convertible notes on March 15, prompting the company's Chinese lenders to drag its main manufacturing unit into insolvency proceedings.

Lenders holding the senior notes will nominate two additional members to Suntech's board and will help to identify strategic and financial investors to bring in new capital, the company said in a statement on Friday.

Suntech said it was also looking at converting all major debt claims held by the bondholders into equity.

The company reached a deal with 60 percent of the note holders in March to defer payments until May 15, when it announced that it had struck another deal with some lenders to defer obligations until June 28.

At the end of March 2012, Suntech had total debt of $2.2 billion, including loans from China Development Bank, and a $50 million convertible loan from the International Finance Corporation, the private sector arm of the World Bank.

Chinese creditors of the bankrupt unit, Wuxi Suntech, claimed at the start of the debt restructuring process in May that the subsidiary owed them $2.5 billion. The restructuring process is expected to go on for months.

The eastern Chinese city of Wuxi, where Suntech Power is headquartered, is trying to maintain the company's production capacity and save thousands of local jobs.

Suntech has said that its Chinese unit has been experiencing a gradual improvement in business after a court-appointed debt administrator pushed to recover accounts receivable and trimmed inventories.

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Reader's Digest publisher expects to emerge from bankruptcy by end-July

June 28 | Fri Jun 28, 2013 8:31pm EDT

June 28 (Reuters) - The publisher of the Reader's Digest magazine said it expects to emerge from bankruptcy by the end of July after the bankruptcy court for the Southern District of New York approved its reorganization plan.

The Reader's Digest Association Inc and its affiliates filed for Chapter 11 bankruptcy protection for the second time in less than four years in February, citing a greater-than-expected decline in the media industry.

"The court's confirmation of our restructuring plan is an important step for our company and sets the stage for our future as a much more focused company," Chief Executive Robert Guth said in a statement.

The publisher, which had earlier filed for bankruptcy in 2009, will see its debt reduced by more than 80 percent to about $100 million under the restructuring plan, the company said.

It will also convert about $465 million of secured notes to equity.

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Stockton taxpayers want bigger role in California city's bankruptcy case

By Jim Christie

SAN FRANCISCO, June 28 | Fri Jun 28, 2013 9:55pm EDT

SAN FRANCISCO, June 28 (Reuters) - A group of California taxpayers went to court on Friday to demand a greater role in how the city of Stockton would raise taxes to exit the bankruptcy it filed a year ago.

The group asked the U.S. Bankruptcy Court in Sacramento for official committee status so its members could see details on Stockton's plan for increasing its sales tax. If granted this status, the group could also participate in talks about the city's plan to adjust its debts.

Stockton officials aim to file their debt-adjustment plan with the bankruptcy court in September following a vote by the city council on a sales tax increase.

Stockton's city manager wants the council to hold a vote next month on putting a ballot measure to voters in November that would ask them to raise the city's sales tax to 9.0 percent from 8.25 percent.

If approved by voters, the increase would go into effect next April and raise revenue to help Stockton exit bankruptcy, put more money into public safety programs and hire more police officers to help tackle crime in a city that ranks among the 10 most dangerous U.S. cities.

According to a draft of the tax plan, the increase would raise about $219 million over 10 years for public safety spending.

Over the same time, about $112 million in proceeds would fund the city's exit from bankruptcy. The effort would get a larger share of revenue initially as police staffing ramps up.

The taxpayers group wants more details on how the revenue would be allocated and it is concerned Stockton's creditors could press for a bigger share, which would set back plans for hiring more police officers.

"Creditors will no doubt seek as large a recovery as possible leaving taxpayers with significantly reduced health, safety and welfare services," according to an exhibit attached to the taxpayers group's court filing.

A city of about 300,000 residents in California's Central Valley, Stockton is the biggest U.S. city to have filed for bankruptcy and is trying to impose steep losses on its bond insurers and bondholders to restructure it finances.

The U.S. municipal debt market is watching to see if the Stockton prevails or its so-called capital markets creditors can convince the bankruptcy court to have the city cut its pension spending as part of a plan to exit bankruptcy.

Stockton has refused to cut pensions, saying it is prohibited by state law, and that its employees have suffered several years of pay and job cuts while its retired workers are losing subsidized medical coverage.

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Reader's Digest publisher expects to emerge from bankruptcy by end-July

June 28 | Fri Jun 28, 2013 8:31pm EDT

June 28 (Reuters) - The publisher of the Reader's Digest magazine said it expects to emerge from bankruptcy by the end of July after the bankruptcy court for the Southern District of New York approved its reorganization plan.

The Reader's Digest Association Inc and its affiliates filed for Chapter 11 bankruptcy protection for the second time in less than four years in February, citing a greater-than-expected decline in the media industry.

"The court's confirmation of our restructuring plan is an important step for our company and sets the stage for our future as a much more focused company," Chief Executive Robert Guth said in a statement.

The publisher, which had earlier filed for bankruptcy in 2009, will see its debt reduced by more than 80 percent to about $100 million under the restructuring plan, the company said.

It will also convert about $465 million of secured notes to equity.

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Suntech strikes yet another deal with bondholders

June 28 | Fri Jun 28, 2013 9:19am EDT

June 28 (Reuters) - China-based solar panel maker Suntech Power Holdings Co Ltd, whose main unit is in insolvency proceedings, said it had struck a deal with a majority of its bondholders to defer payment on a $541 million loan until Aug. 30, the third time the company has reached such an agreement.

Suntech defaulted on a principal payment on the 3 percent convertible notes on March 15, prompting the company's Chinese lenders to drag its main manufacturing unit into insolvency proceedings.

Lenders holding the senior notes will nominate two additional members to Suntech's board and will help to identify strategic and financial investors to bring in new capital, the company said in a statement on Friday.

Suntech said it was also looking at converting all major debt claims held by the bondholders into equity.

The company reached a deal with 60 percent of the note holders in March to defer payments until May 15, when it announced that it had struck another deal with some lenders to defer obligations until June 28.

At the end of March 2012, Suntech had total debt of $2.2 billion, including loans from China Development Bank, and a $50 million convertible loan from the International Finance Corporation, the private sector arm of the World Bank.

Chinese creditors of the bankrupt unit, Wuxi Suntech, claimed at the start of the debt restructuring process in May that the subsidiary owed them $2.5 billion. The restructuring process is expected to go on for months.

The eastern Chinese city of Wuxi, where Suntech Power is headquartered, is trying to maintain the company's production capacity and save thousands of local jobs.

Suntech has said that its Chinese unit has been experiencing a gradual improvement in business after a court-appointed debt administrator pushed to recover accounts receivable and trimmed inventories.

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Stockton taxpayers want bigger role in California city's bankruptcy case

By Jim Christie

SAN FRANCISCO, June 28 | Fri Jun 28, 2013 9:55pm EDT

SAN FRANCISCO, June 28 (Reuters) - A group of California taxpayers went to court on Friday to demand a greater role in how the city of Stockton would raise taxes to exit the bankruptcy it filed a year ago.

The group asked the U.S. Bankruptcy Court in Sacramento for official committee status so its members could see details on Stockton's plan for increasing its sales tax. If granted this status, the group could also participate in talks about the city's plan to adjust its debts.

Stockton officials aim to file their debt-adjustment plan with the bankruptcy court in September following a vote by the city council on a sales tax increase.

Stockton's city manager wants the council to hold a vote next month on putting a ballot measure to voters in November that would ask them to raise the city's sales tax to 9.0 percent from 8.25 percent.

If approved by voters, the increase would go into effect next April and raise revenue to help Stockton exit bankruptcy, put more money into public safety programs and hire more police officers to help tackle crime in a city that ranks among the 10 most dangerous U.S. cities.

According to a draft of the tax plan, the increase would raise about $219 million over 10 years for public safety spending.

Over the same time, about $112 million in proceeds would fund the city's exit from bankruptcy. The effort would get a larger share of revenue initially as police staffing ramps up.

The taxpayers group wants more details on how the revenue would be allocated and it is concerned Stockton's creditors could press for a bigger share, which would set back plans for hiring more police officers.

"Creditors will no doubt seek as large a recovery as possible leaving taxpayers with significantly reduced health, safety and welfare services," according to an exhibit attached to the taxpayers group's court filing.

A city of about 300,000 residents in California's Central Valley, Stockton is the biggest U.S. city to have filed for bankruptcy and is trying to impose steep losses on its bond insurers and bondholders to restructure it finances.

The U.S. municipal debt market is watching to see if the Stockton prevails or its so-called capital markets creditors can convince the bankruptcy court to have the city cut its pension spending as part of a plan to exit bankruptcy.

Stockton has refused to cut pensions, saying it is prohibited by state law, and that its employees have suffered several years of pay and job cuts while its retired workers are losing subsidized medical coverage.

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FCC's Alpine Holding GmbH to file for bankruptcy

VIENNA, June 27 | Thu Jun 27, 2013 9:54am EDT

VIENNA, June 27 (Reuters) - Alpine Holding GbmH, the Austrian unit of Spanish construction group FCC, said it would file for bankruptcy on Friday.

"The management of Alpine Holding GmbH informed the supervisory board today that Alpine Holding GmbH will file for bankruptcy at Handelsgericht Wien (the Vienna commercial court) tomorrow, June 28, 2013," the company said in a statement.

Its main operating unit, Alpine Bau, Austria's second-biggest construction company, filed last week for insolvency.

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Bankrupt Alabama county makes another deal ahead of final plan

By Melinda Dickinson and Verna Gates

BIRMINGHAM, Ala., June 27 | Thu Jun 27, 2013 3:41pm EDT

BIRMINGHAM, Ala., June 27 (Reuters) - Alabama's Jefferson County on Thursday approved another negotiated settlement covering $138 million of creditors' claims as the local government put finishing touches on a plan to wind up America's biggest municipal bankruptcy.

County officials said the so-called plan of adjustment, which includes years of rate hikes for sewer customers and a late 2013 sale by the county of $1.9 billion of refinancing debt, would be filed electronically on Sunday with the U.S. Bankruptcy Court for the Northern District of Alabama.

The court filing will be the latest chapter in a saga of corruption and mismanagement of public finances that brought the most populous county in the southern U.S. state to ask for creditors' protection in November 2011.

The county commissioners on Thursday voted 4 to 1 to approve the deal with Bank of Nova Scotia, State Street Bank & Trust and Bank of New York Mellon, which had been the county's liquidity banks and provided short-term loans.

The agreement will return 80 cents on the dollar to the banks, plus $2.7 million to satisfy claims of more than $20 million for interest costs tied to defaulted sewer debt, the commissioners were told during a commission meeting.

If implemented, the workout and the deals would impose the largest losses on municipal bondholders by a big U.S. local government since the 1930s.

Jefferson County's case may soon be eclipsed as the largest government bankruptcy in U.S. history by Detroit, a faded industrial center whose emergency manager has offered unsecured creditors as little as 10 cents on the dollar.

Home to Birmingham, Alabama's largest city, Jefferson County has already struck agreements with JPMorgan Chase and other creditors covering over 80 percent of the $4.2 billion of sewer-system and other debt that led to its bankruptcy filing.

As part of the agreements, the county will raise sewer rates by 7.41 percent a year over four years.

"This plan puts a financial burden on the rate payer. The bill for this falls on the poor," said County Commissioner George Bowman, who voted against the settlement.

During a court hearing in the case on Thursday, U.S. Bankruptcy Judge Thomas Bennett suspended litigation in several disputes between creditors and the county and set aside the week of November 11 for confirmation hearings on the county's proposed plan.

Bennett's rulings included a refusal to end a stay on a claim brought on behalf of the sewer system's customers.

The claim argued that much of the system's $3.1 billion of defaulted debt was illegitimate and should not be paid off by rate-payers. Those arguments can be made at the November hearings ahead of Bennett's ruling on the county's plan, the judge said.

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PRESS DIGEST - Wall Street Journal - June 28

June 28 | Fri Jun 28, 2013 1:01am EDT

June 28 (Reuters) - The following are the top stories in the Wall Street Journal. Reuters has not verified these stories and does not vouch for their accuracy.

* The Senate voted 68-32 to approve a sweeping plan to rewrite the nation's immigration laws and sent it to the House, where it faces a more difficult path. ()

* The Federal Reserve will vote next week to finalize capital rules for U.S. banks after regulators agreed to resolve a separate issue that had delayed action. ()

* The Supreme Court's most important ideological struggle isn't between left and right, but the narrower divide of Chief Justice John Roberts's conservatism and the libertarian streak of Justice Anthony Kennedy. ()

* Regulators charged former MF Global chief Jon Corzine and former executive Edith O'Brien with the unlawful misuse of nearly $1 billion. ()

* The Obama administration has begun assembling a shortlist of candidates for the Fed chairmanship, in the expectation that Ben Bernanke won't seek reappointment. ()

* China's top leaders are expected to name a senior government official with a deep finance background as head of its sovereign-wealth fund, China Investment Corp. ()

* The SEC is scrutinizing how certain investors might have received potentially market-moving information from the Institute for Supply Management ahead of the public, as the trade group changes its procedures to eliminate a delay in the distribution of the data. ()

* Pfizer Inc's board has authorized the buy back of an additional $10 billion in shares to boost shareholder value. ()

* Bank of America Corp spurned a request from American International Group Inc to renegotiate an $8.5 billion deal over soured mortgage-backed securities after a judge suggested mediation, according to a court filing by AIG. ()

* Textbook publisher Cengage Learning is preparing to file for bankruptcy court protection in the coming days. The company is owned by private equity firm Apax Partners. ()

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UPDATE 2-Ally's $2.1 bln payment to ResCap gets court's OK

Wed Jun 26, 2013 6:09pm EDT

* ResCap had "unreasonably" small amount of capital -report

* ResCap still needs formal plan to exit bankruptcy

* Ally still owes U.S. $10 bln on $17 bln bailout loan

By Nick Brown

NEW YORK, June 26 (Reuters) - A bankruptcy judge on Wednesday approved a settlement in which the U.S. government-owned Ally Financial Inc, formerly the finance arm of General Motors Co., will pay $2.1 billion to its bankrupt unit Residential Capital LLC.

U.S. Bankruptcy Judge Martin Glenn also made public a previously sealed examiner's report concluding that Ally made missteps that left ResCap with an "unreasonably" small amount of capital before putting it into bankruptcy last year.

The settlement is a key step in ResCap's eventual exit from Chapter 11 protection. It also will help Ally focus on its core business of auto lending and on repaying the U.S. government roughly $10 billion outstanding on a $17 billion loan for a bailout during the financial crisis.

The agreement still must be incorporated into a formal plan by ResCap charting its bankruptcy exit strategy, which will also need court approval.

"The standards applicable to this plan support agreement are not the same as the standards applicable to approving" a bankruptcy exit plan, Judge Glenn said during a hearing in U.S. Bankruptcy Court in Manhattan.

REPORT UNSEALED

Creditors had alleged that Ally had hastened ResCap's collapse by stripping some of its most valuable assets. A report by former bankruptcy Judge Arthur Gonzalez, the examiner in ResCap's bankruptcy, probed Ally's role.

That hefty study, which cost ResCap's estate about $80 million, had been kept under seal, but Glenn made it public now that the sides have settled.

Gonzalez found that ResCap was insolvent since Dec. 31, 2007, and "left with unreasonably small capital" from August of that year until it filed for bankruptcy in 2012.

It "reasonably should have believed it would incur debts beyond its ability to pay," Gonzalez found.

Gonzalez listed about $3.1 billion in legal claims that he believes would have likely prevailed if asserted in court, including claims for misallocation by Ally of certain loan revenues and ResCap tax attributes. He examined 9 million pages of documents, interviewed 83 witnesses, and turned in a 2,235-page report.

The government still owns about three-quarters of Ally, formerly a GM unit known as General Motors Acceptance Corp. Mortgages made by ResCap led to huge losses for Ally, and it still owes the government $10 billion.

Ally would pay the ResCap estate $1.95 billion in cash and expects $150 million more to come from its insurers. The total proposed contribution is up from the $750 million it initially offered, which creditors lambasted as far too low.

"Ally is highly encouraged by this pivotal court approval, which enables all parties involved to move forward to the final stages of ResCap's Chapter 11 cases," Ally said in a statement.

A lawyer for ResCap could not immediately be reached on Wednesday.

The settlement could yield a profit for unsecured bondholders like Paulson & Co, which will receive $351 million or so, about 35 cents on the dollar for their roughly $1 billion in claims.

While Paulson has not disclosed what it paid for its stake, it likely acquired it at a discount, as the bonds were trading lower than 30 cents on the dollar last May, when ResCap filed for bankruptcy, according to bond tracking program TRACE.

MBIA and FGIC, which insured residential mortgage-backed securities issued by ResCap, stand to get a larger piece of the settlement pie, about $1 billion total. But they have had to pay billions of dollars in claims stemming from the failed securities and may have to pay more in the future.

Other bond insurers would get about $96 million.

Holders of residential mortgage-backed securities - of which there are more than 40,000 among 392 separate RMBS trusts - stand to recoup about $672 million.

The settlement also resolves litigation including a securities class action led by the New Jersey Carpenters Health Fund, which would receive $100 million. A trust created for the benefit of other private securities claimants would receive $226 million.

The case is In re Residential Capital LLC, U.S. Bankruptcy Court, Southern District of New York, No. 12-12020.

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Accounting board seeks 'going concern' self-test for US firms

Wed Jun 26, 2013 6:22pm EDT

* U.S. companies may have to warn of going concern risks

* Few such warnings issued during global credit crisis

By Dena Aubin

NEW YORK, June 26 (Reuters) - U.S. companies would have to regularly assess their ability to continue as a going concern under a proposal issued on Wednesday by accounting rule-makers, an attempt to ensure investors get timelier warnings when companies get in trouble.

The proposal from the U.S. Financial Accounting Standards Board calls for companies to evaluate each quarter their ability to survive as a going concern, or stay afloat and pay its obligations. Currently, the company's auditors are primarily responsible for making this evaluation.

A company would have to issue its own warnings to investors when it is more likely than not that it would fail to meet its obligations over the next 12 months. Auditors would still be responsible for evaluating the company's going concern assessments.

FASB is seeking comment on the proposal through September 24. It did not give an estimate for an effective date.

Companies already have to disclose risks that they may run short of cash in footnotes to their financial statements, but those disclosures vary from company to company.

Going concern warnings are a highly sensitive issue for corporate managers, because lenders stop extending credit when they find out a company is near collapse.

FASB's proposal "makes it much more difficult for them to deny a difficult situation," said Paul Miller, professor of accounting at the University of Colorado at Colorado Springs.

Auditors also face huge risks in this area, because they can get hit with lawsuits if they fail to warn about a company that collapses, Miller said.

Going concern warnings were proven inadequate in the 2007-2009 global credit crisis when auditors failed to flag risks at banks that collapsed or required government bailouts.

A company's going concern status underpins every financial statement it prepares, with assets priced based on the assumption that the firm will survive to realize the assets' value. When the company is in danger of failing, its assets have to be re-priced based on what they would be worth in a liquidation.

Even before a company is in imminent danger of liquidation, there may be uncertainties about its going concern status, FASB said in a release. Accounting standards now have no guidance for managers on disclosing those uncertainties. (Reporting By Dena Aubin; Editing by Kim Dixon and David Gregorio)

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RPT-Bank regulator could be dooming UK mutuals

Thu Jun 27, 2013 3:20am EDT

* Nationwide scrambles to come up with credible plan

* UK mutuals panic following Nationwide leverage order

* Lack of investor appetite casts doubt on new PIB product

By Aimee Donnellan

LONDON, June 26 (IFR) - UK bank regulators enforcing tough new rules on capital could be sounding the death knell for mutual societies, a cornerstone of the country's financial network for generations.

New regulations on capital intended to shore up Britain's banks and prevent another financial crisis are in fact leaving many mutuals fearing that the end could be near.

Nationwide, the UK's largest building society, is under pressure to produce a plan by week's end for how it will drum up an additional GBP2bn of reserve capital.

Coming on the heels of a similar hurdle for The Co-operative Bank, the troubles for Nationwide - in business since 1846 - could doom what is widely considered as one of the most ethical forms of banking.

"This really could be the death of the UK mutual," one banker who asked not to be named, because of the sensitivity of the subject, told IFR.

"Nationwide has always been a defender of its model and is considered to be not only the largest but the strongest of its kind."

GETTING STRONGER

The heart of the issue is the so-called leverage ratio - the amount of core capital that all banks have to hold in reserve against the total sum of loans they have made.

Nationwide has to increase its ratio from 2% to 3%, effective in 2019 - but the Prudential Regulation Authority (PRA) is pressing banks to spell out plans now for how to meet the target.

Nationwide has been given until the end of June, or midnight on Sunday, to outline how it will come up with the roughly GBP2bn it needs to comply.

A spokesperson for Nationwide spoke with IFR on Wednesday and said it is continuing to work with the PRA to agree on a mutually agreeable timeframe to meet these requirements.

"We are confident we will meet the 3% leverage ratio for the 2019 deadline," he said.

But despite that sentiment, the PRA has frustrated banks by deciding they must come up with their plans some four-and-a-half years early, imposing an advance deadline that few if any mutuals could hope to meet.

"If Nationwide is having to come up with a plan to sort out its leverage ratio," said one UK debt banker, "then you can bet your bottom dollar that other mutual societies will have to do the same."

There are currently 46 building societies and 50 mutual lenders and deposit-takers servicing customers in the UK, according to the Building Societies Association.

And investment bankers say that many of them have been calling over the past few days, anxiously trying to figure out ways of quickly boosting their leverage ratios.

The Co-operative was the first mutual to come under pressure from the PRA over the ratios and, facing a GBP1.5bn capital shortfall, is planning to de-mutualise and become listed bank.

Mutual societies, which are collectively owned by their depositors, have built a reputation as highly ethical institutions that often have close ties to local communities.

Their demise would be seen as another blow to institutions that return profit to stakeholders that are often customers and can lend at more attractive rates. But the short deadlines being imposed by the PRA seem to give little room for the mutuals to manoeuvre.

As one debt capital banker put it: "The deadline seems unrealistic."

Andrew Bailey, the deputy governor for prudential regulation at the Bank of England, declined to comment Wednesday about the deadlines but said all bank plans needed to be "sensible, consistent and achievable".

NO WAY OUT?

UK mutuals have traditionally sold Permanent Interest Bearing Shares (PIBS) to create core capital.

Nationwide's Pillar 3 disclosure states it has some GBP1.3bn of PIBS outstanding. However, their prices have fallen 20 points to the low 80s in cash terms since the PRA's announcement, which was far harsher than the market expected.

"The PRA is now only counting Core Equity Tier 1 in its numeration calculations, when they had been expected to look at total capital," said Edward Stevenson, head of financial institutions group debt capital markets at BNP Paribas.

"As a result, Nationwide needs to find GBP2bn of common equity to ensure its leverage ratio is where it should be."

To get around this problem, Nationwide could raise core capital deferred shares (CCDS), the new form of PIBS.

But bankers say that raising just a tenth of the GBP2bn would be a challenge due to a lack of investor appetite for the product.

While Nationwide is by no means the only UK financial to fail to meet the targeted leverage level, it has the lowest leverage ratio of all eight lenders analysed thus far by the UK regulator.

"The PRA is applying a very blunt measure to Nationwide, but in response they are coming up with a plan to solve the problem, which will include CCDS and some Additional Tier 1," said a London-based debt banker.

"This should placate the regulator for the time being, but their only option may be a Co-operative-style demutualising."

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Kodak restructuring framework OK'd by court, will go to creditors

By Nick Brown

NEW YORK, June 25 | Tue Jun 25, 2013 5:13pm EDT

NEW YORK, June 25 (Reuters) - The framework of a plan by Eastman Kodak Co to restructure as a commercial imaging business was approved by a bankruptcy judge on Tuesday, bringing the former photography company one step closer to exiting from Chapter 11 protection.

Judge Allan Gropper in U.S. Bankruptcy Court in Manhattan said he was "happy" to green-light the so-called disclosure statement, which creditors will use as a reference when they vote on the plan in the coming weeks.

Kodak declared bankruptcy in January of 2012 because of high pension costs and after falling many years behind rivals in embracing digital technology in its photography business.

It has since sold a variety of assets, and will emerge from Chapter 11 as a mainly commercial imaging-focused enterprise.

Last week, the company announced it had reached an $895 million financing deal with JPMorgan Chase & Co, Bank of America Corp and Barclays Plc. Kodak will use the money to pay off loans that funded its bankruptcy, as well as for working capital after its exit from Chapter 11, expected later this year.

Kodak also plans to implement a $406 million rights offering, selling 34 million shares, or 85 percent of the equity in the reorganized company. Proceeds would go to repay various creditors, including more junior second-lien creditors that would no longer receive equity in the reorganized company.

Before Kodak can exit bankruptcy, its restructuring plan must be supported by creditors, and the plan must go before Gropper for a final sign-off. That hearing is expected to take place on Aug. 20.

Gropper voiced some compassion for Kodak's smaller creditors, many of whom have sent letters to the court expressing concerns about their claims, which stand to see little or no recovery.

One business owner in Colorado said in a letter to Gropper that her company may go bankrupt because of a $148,000 claim against Kodak, Gropper said.

Shareholders, whose stakes stand to be wiped out altogether, have flooded the court with letters, and some have sought representation of a committee to vouch for its interests. That is a decidedly uphill battle, since Gropper has already once refused to appoint a shareholder committee. But the judge said at Tuesday's hearing that shareholders deserve some answers, whether in the form of responses from Kodak or a hearing on the shareholders' concerns.

"These letters are heartfelt," Gropper said.

The case is In re: Eastman Kodak Co, U.S. Bankruptcy Court, Southern District of New York, No. 12-10202.

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Bankruptcy threat recedes as Atwater, California, approves budget

By Jim Christie

SAN FRANCISCO, June 25 | Tue Jun 25, 2013 6:45pm EDT

SAN FRANCISCO, June 25 (Reuters) - The small California city of Atwater has stepped away from the brink of bankruptcy with the approval of a budget that benefits from new revenue and does not rely on layoffs for the first time in five years.

Since it declared a fiscal emergency last October, the city of 28,000 was seen at risk of following Stockton, another city in California's Central Valley, into bankruptcy court. To keep its budget balanced, Atwater had cut 40 percent of its workforce over the past five years.

Atwater's new $12 million general fund budget approved late on Monday relies on revenue from a sales-tax hike and increased water, waste and garbage service rates, and will fund about 80 positions.

Revenue is expected to remain tight. The Central Valley was hit particularly hard by California's housing market crash and is lagging the state's coastal regions in job growth.

"We'll have to monitor the budget very, very closely, but we feel we can do it," Mayor Joan Faul told Reuters by telephone on Tuesday.

Atwater's improved finances give city employees, who feel they have made enough concessions in recent years, leverage at the bargaining table, said Nancy Vinson, a business agent for the American Federation of State, County and Municipal Employees.

The union represents about 40 Atwater employees and will ask the city for a 3.5 percent cost-of-living-adjustment and an end to furloughs, Vinson said.

"We've informed them we no longer believe they have a fiscal emergency," Vinson said. "Our position is that the concessions will go away."

Last year three California cities filed for protection from creditors. The mountain resort town of Mammoth Lakes has withdrawn its filing, but Stockton and San Bernardino, two sizeable cities, are pressing on with their bankruptcy cases.

The judge in Stockton's case recently found the city eligible for bankruptcy protection, allowing it to draft a plan to adjust its debts. Stockton aims to file that plan in September. San Bernardino is seeking similar court approval.

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Once bankrupt Vallejo, California ready to approve budget

SAN FRANCISCO, June 25 | Tue Jun 25, 2013 8:21pm EDT

SAN FRANCISCO, June 25 (Reuters) - Vallejo, California's leaders are poised to approve the city's second budget since it emerged from bankruptcy by endorsing a $71.2 million general fund spending plan, City Manager Daniel Keen said on Tuesday.

To close a projected $5.2 million shortfall, the plan assumes savings from concessions from employees in ongoing labor negotiations, Keen told Reuters in a telephone interview ahead of the city council's budget vote on Tuesday night.

Keen said the budget would serve as "placeholder" until talks wrap up. He declined to detail concessions Vallejo is seeking, or contingency plans, but said the city needs to pare salaries and benefits to help balance its books beyond its next fiscal year.

"The numbers we're asking for are big," Keen said.

A former Navy town near San Francisco, Vallejo made national headlines in 2008 when it declared bankruptcy, becoming the biggest city in the most populous U.S. state to make that dramatic move to restructure its finances.

Vallejo exited from bankruptcy in 2011. Since then two larger California cities, Stockton and San Bernardino, have filed for bankruptcy, raising concerns about the stability of local finances in California.

Stockton and San Bernardino filed for bankruptcy last year. Stockton recently won court approval to draft a plan for adjusting its debt. The city aims to file the plan in September. Upcoming hearings in San Bernardino's case could determine if it also moves on to that critical phase of municipal bankruptcy.

While Vallejo's finances face some uncertainty as labor talks press on, the city's revenue outlook is gradually improving, Keen said.

Property tax revenue is seen rising 1 percent in the coming fiscal year and could pick up should the city's housing market strengthen. Sales tax revenue is projected to grow by 4 percent.

Despite the revenue gains, Vallejo's general fund budget will remain a "status quo" spending plan, Keen said.

Some services will see spending increases as Vallejo expects $11 million in new revenue in its next fiscal year from a voter-approved measure that increased the city sales tax by 1 percent.

Its proceeds are set aside for rebuilding reserves, hiring more police officers and firefighters, paving streets, economic development activities and for projects urged by city residents.

The increase went into effect in April 2012 and has so far funded five new positions for police officers.

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Canadian regulator takes Ernst & Young to task on Zungui Haixi

By Euan Rocha

TORONTO, June 24 | Mon Jun 24, 2013 5:48pm EDT

TORONTO, June 24 (Reuters) - Accounting firm Ernst & Young (E&Y) conducted improper audits of Chinese clothing and footwear retailer Zungui Haixi before it collapsed in 2011 following claims of fraud, Canada's top securities regulator alleged on Monday.

Toronto-listed Zungui was one of several Chinese companies with North American listings to come under pressure in the wake of fraud allegations against now defunct Chinese forestry company Sino-Forest Corp.

The Ontario Securities Commission (OSC), Canada's largest securities regulator, ordered a halt in trading of Zungui's stock two years ago after the company said Ernst & Young halted its audit pending an investigation into "inconsistencies" in the company's bank documents.

However on Monday, the OSC alleged the accounting firm failed to act on a timely basis, despite seeing a number of red flags in the company's financial statements. It said E&Y failed to conduct a sufficient review, leaving key evidence in the hands of a staff member with limited experience.

A spokeswoman for E&Y said the firm intends to "vigorously defend" itself against the OSC's allegations.

"Issues concerning Zungui Haixi came to light as a result of actions we took during our 2011 audit," said Erika Bennett, a Toronto-based spokeswoman for E&Y. "We brought these issues to the attention of the audit committee and management, and eventually resigned as auditor. We have cooperated with the OSC throughout its subsequent investigation."

However, the regulator alleges E&Y's failure to comply with generally accepted auditing standards during its audits of Zungui Haixi - ahead of its initial public offering in 2009 and a subsequent annual audit in 2010 - constituted breaches of the Ontario Securities Act.

The OSC said to conduct the IPO audit, E&Y assembled a team overseen by a partner in the firm's China Market Group, but the partner did not review any of the underlying evidence gathered during the audit, instead only limiting her review to summary documents.

The regulator said E&Y's original senior manager for the IPO audit did not understand Chinese and had no experience with audits of China-based companies.

It alleged she was removed from the file after she informed the partner that she was "clearly not the right person to review the fieldwork in detail as much of the documentation in the working papers is in Chinese."

Her replacement also did not understand the language and also had no auditing experience with China-based companies, the OSC said.

A hearing on the matter has been scheduled for July 15.

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CFTC planning to file civil lawsuit against Corzine - NYT

June 25 | Tue Jun 25, 2013 1:46am EDT

June 25 (Reuters) - Federal regulators are planning a civil lawsuit against Jon Corzine over the collapse of MF Global Holdings Ltd and the commodity broker's misuse of customer money during its final days, the New York Times reported, citing law enforcement officials with knowledge of the case.

The Commodity Futures Trading Commission (CFTC), the federal agency that regulated MF Global, plans to approve the lawsuit as soon as this week, the NY Times said. (link.reuters.com/mej29t)

MF Global, led by former New Jersey Gov. Jon Corzine, went into court-protected bankruptcy in 2011 after investors were spooked by its exposure to $6.3 billion in European sovereign debt.

The bankruptcy became a political firestorm when investigators found that MF Global had misappropriated money in customers' trading accounts. Corzine and his management team have not faced criminal charges, but face civil allegations of breaching a fiduciary duty. Corzine has denied wrongdoing.

CFTC will probably blame Corzine for failing to prevent the breach at a lower rung of the firm, without directly linking him to the disappearance of more than $1 billion in customer money, the newspaper said. The agency is not expected to accuse Corzine of authorizing the breach of customer money, the NYT said.

If found liable, Corzine could face millions of dollars in fines and possibly a ban from trading commodities.

In a statement issued to the New York Times, Steven Goldberg, a spokesman for Corzine, denounced CFTC for planning to file what he called an "unprecedented and meritless civil enforcement action."

"If the CFTC brings this enforcement action, Corzine would welcome the opportunity to litigate this matter in an impartial venue, free from politically influenced prejudice and unfounded assertions, which have been frequently repeated despite the lack of a factual basis," Goldberg told the NYT.

MF Global effectively ended its bankruptcy earlier this month, saying court-appointed trustee Louis Freeh would step down and hand the estate's remaining wind-down duties to a new three-member board.

The company could not immediately be reached for comment by Reuters outside of regular U.S. business hours. (Reporting by Sakthi Prasad in Bangalore; editing by Patrick Graham)

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Poland - Factors to Watch on June 25

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Tue Jun 25, 2013 2:07am EDT

  Here are news stories, press reports and events to watch which  may affect Poland's financial markets on Tuesday. ALL TIMES GMT  (Poland: GMT + 2 hours):            RATES AND ECONOMY      Poland's economy could draw support from the weakening zloty  but an excessively quick pace of its depreciation could pose a  threat, a member of the Monetary Policy Council, Jerzy Hausner,  said.             NETIA, DEUTSCHE TELEKOM       Poland's No. 2 telecoms group Netia and German operator  Deutsche Telekom remain in the running for GTS Central Europe, a  provider of corporate telecoms services, wrote Dziennik Gazeta  Prawna.            PENSIONS      The government is expected to consider the long-awaited  review of the pensions and propose changes to the system. Prime  Minister Donald Tusk has said that all options were open,  including liquidation of the private pension funds or  introducing voluntary pension savings in the private funds.            RETAIL SALES, UNEMPLOYMENT      The statistics office releases May retail sales and  unemployment data. Economists polled by Reuters expect retail  sales 0.25 percent up year-on-year and unemployment at 13.7  percent. (0800)            BANKS      Foreign banks are not targeting any Polish lenders at the  moment, as there is little space for further market  consolidation, the head of Poland's financial sector supervisor  (KNF) Andrzej Jakubiak said.             For other related news, double click on:   Polish equities           E.Europe equities        Polish money              Polish debt              Eastern Europe             All emerging markets     Hot stocks                 Stock markets            Market debt news           Forex news                  For real-time index quotes, double click on:   Warsaw WIG20  Budapest BUX  Prague PX   ($1 = 3.1773 Polish zlotys)  

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Shipping company TMT Group files for bankruptcy

Fri Jun 21, 2013 7:31pm EDT

* Company hurt by falling rates, ship seizures, debt load

* Lawsuit also filed to protect detained vessels

By Jonathan Stempel

June 21 (Reuters) - TMT Group, a large global shipping company, has filed for bankruptcy protection, saying it was unable to restructure its debt after industry conditions deteriorated.

Twenty-three entities collectively known as TMT, whose 17 vessels transport cargo from oil to vehicles, filed for Chapter 11 protection from creditors on Thursday with the U.S. bankruptcy court in Houston, court filings show.

TMT said it had $1.52 billion of assets and $1.46 billion of liabilities, and wants court approval to hire the restructuring specialist AlixPartners as its financial adviser.

The filing came on the same day that another large shipper, South Korea's STX Pan Ocean Co Ltd, sought protection from creditors in the United States, less than two weeks after filing for court receivership in its home country.

Many shipping companies had in the years prior to the 2008 financial crisis been buying vessels as freight rates soared to records, only to see demand plummet as the extra capacity was arriving.

Lisa Donahue, co-head of AlixPartners' restructuring practice, in a court filing said that in the face of "extremely low charter rates" after the financial crisis, TMT began to face difficulty servicing its debt, and "was unable to take possession of several of its newbuild orders."

She also said seven existing vessels had been "arrested," or detained, at various ports around the world, and therefore could not generate income.

"Unfortunately, and despite the beginnings of rising charter rates, TMT's lenders and TMT were unable to come to terms," she said. "In fact, certain lenders have continued to push for sales of TMT's arrested vessels."

TMT separately filed a lawsuit in the Houston bankruptcy court against one dozen banks, materials companies and shipping companies to protect its interests in those vessels.

The TMT acronym was originally based on a company known as Taiwan Marine Transport, which was founded in 1958 as a banana boat operator in Asia, according to court documents. The acronym was changed in 2007 to Today Makes Tomorrow.

The case is In re: TMT USA Shipmanagement LLC et al, U.S. Bankruptcy Court, Southern District of Texas, No. 13-33740.

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Bond insurer hires new lawyers in California bankruptcy cases

SAN FRANCISCO, June 21 | Fri Jun 21, 2013 8:08pm EDT

SAN FRANCISCO, June 21 (Reuters) - Bond insurer National Public Finance Guarantee has hired a new law firm to represent it in the California municipal bankruptcy cases of San Bernardino and Stockton after a judge found its original firm had created a conflict for itself.

National spokesman Kevin Brown said on Friday that Weil, Gotshal & Manges will replace Winston & Strawn in the cases.

The unusual switch in law firms follows a decision last week by U.S. Bankruptcy Judge Meredith Jury in the San Bernardino case to disqualify Winston & Strawn at the behest of the California Public Employees' Retirement System.

The pension fund, known as Calpers, had complained that Winston & Strawn had recently hired attorneys away from K&L Gates, the law firm for Calpers in both bankruptcy cases.

The pension fund also demanded Winston & Strawn's disqualification from the Stockton case. A response to that was due this week but will not be filed with the bankruptcy court hearing the city's case as Winston & Strawn is stepping aside, Brown said.

"We're not objecting," Brown said.

U.S. Bankruptcy Judge Christopher Klein in April approved Stockton's eligibility for bankruptcy, allowing the city to draft a plan for adjusting its debts. Stockton aims to file that plan with Klein in September.

Hearings next month and in August could determine San Bernardino's eligibility for bankruptcy.

The U.S. municipal debt market is closely watching both cases as they may test who absorbs most of the financial pain when local governments go broke: bondholders or current and retired city employees.

Calpers manages the pension plans of the two cities and has fiercely resisted any cuts in pension payments.

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Europe unable to break impasse on who pays when banks fail

Fri Jun 21, 2013 11:23pm EDT

* EU talks end with no deal on rules to shut banks

* New law could impose losses on big savers, bondholders

* Germany's Schaeuble argues against flexibility in rules

* France's Moscovici, EU's Barnier say deal within reach

By John O'Donnell, Robin Emmott and Ingrid Melander

LUXEMBOURG, June 22 (Reuters) - Europe failed to agree on how to share the cost of bank collapses on Saturday, as Germany resisted attempts by France to water down rules designed to spare taxpayers in future crises.

Almost 20 hours of talks late into the night could not forge a way for countries to set up an EU-wide regime that would first impose losses on shareholders and bondholders when a bank fails, followed by depositors with more than 100,000 euros ($132,000).

Ministers will make a fresh attempt to break the impasse at a meeting on Wednesday, on the eve of an EU leaders summit, and resolve one of the most difficult questions posed by Europe's banking crisis - how to shut failed banks without sowing panic or burdening taxpayers.

"I think we can reach a deal if we take a few more days," said Michel Barnier, the European commissioner in charge of regulation. "We are not far off now from a political agreement."

The European Union spent the equivalent of a third of its economic output on saving its banks between 2008 and 2011, using taxpayer cash but struggling to contain the crisis and - in the case of Ireland - almost bankrupting the country.

German Finance Minister Wolfgang Schaeuble blamed the complexity of the issue and conflicting interests for not being able to reach a final result on Saturday. One EU official, who asked not to be named, described the meeting as chaotic.

At the heart of the disagreement, chiefly between Germany and France, was how much leeway countries should have when imposing losses on bondholders or large savers, a procedure known as "bail-in."

Such an approach was first tested out in Cyprus' bailout in March, but making it the EU norm would mark a radical departure from the bloc's crisis management in which taxpayers have footed the bill for a string of rescue programmes.

Britain, Sweden and France worry that forcing losses on depositors could cause a bank run or rattle confidence, and want countries to have wide-ranging freedom in deciding whether to take such bold steps.

Spain's Economy Minister Luis de Guindos underscored the sensitivity of the issue. "What's fundamental is there is agreement over the bail-in hierarchy and the protection of small depositors," he said.

Germany, however, wants strict norms. Schaeuble said the new rules should not vary across the 27-nation European Union because that could put some banks at a competitive disadvantage.

"There's clear disagreement between France and Germany. That's why the meeting broke up," said one EU diplomat.

France's Finance Minister Pierre Moscovici tried to play down any divisions and said a deal was possible next week.

'DANGEROUS'

While there is no immediate deadline for an agreement, indecision could hurt confidence in the ability of Europe's politicians to repair the financial system, encourage banks to lend and help the continent emerge from economic stagnation.

An agreement on European rules for closing banks is also a step required by Germany before it will sign off on a scheme for the 17-nation euro zone's bailout fund to help banks in trouble, potentially important in helping Ireland.

"The fact that the euro zone countries are trying to push a solution is very dangerous for the rest of us," Sweden's Finance Minister Anders Borg told reporters.

The regime to ensure that troubled banks are closed in an orderly way sets an important precedent for the euro zone, which is pursuing a project called banking union to supervise, control and support banks to rebuild confidence in the currency.

This scheme aims to form a common front across the single currency area when tackling failed banks, rather than leaving it to countries to manage alone.

At the wider EU level, the so-called resolution rules are needed so that the euro zone can mould its own regime and decide how the bloc's rescue fund helps banks.

Its rules, for example, on pushing losses on large savers, could be made stricter, in particular for banks seeking help from the fund, the European Stability Mechanism.

Euro zone finance ministers agreed late on Thursday to set aside 60 billion euros for banks via the fund.

If agreed, the rules would take effect at the start of 2015 with the provisions to impose losses coming as late as 2018.

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UPDATE 1-Detroit emergency manager launches pension corruption probe

Thu Jun 20, 2013 10:24pm EDT

By Steve Neavling

DETROIT, June 20 (Reuters) - Detroit Emergency Manager Kevyn Orr is ordering a joint probe into the city's two pension funds to investigate possible fraud, corruption, waste and other malfeasance.

Orr, a restructuring attorney appointed to reduce the city's runaway debt, signed an order on Thursday that calls for the city's auditor general and inspector general to investigate the funds, which handle pension benefits for more than 20,000 retirees.

"There have been many questionable investments that have been made by the fund boards, and some of those investments were made without the advice of their financial adviser," Orr's spokesman, Bill Nowling, said on Thursday. "We want to find out what happened."

The city's Police and Fire Retirement System, with 12,000 active and retired members, and the General Retirement System, with 18,000 members, issued a joint statement expressing disappointment that Orr had not met with officials prior to launching the investigations. "We intend to cooperate fully," the statement said.

Under the state's Emergency Manager law, Orr has the right to seize control of the city pension funds if their funding levels fall below 80 percent of obligations. The General Fund is below that level, at 77 percent, with $2 billion in assets, and the Police and Fire fund is 96 percent funded, with $3.1 billion in assets, according to the statement.

Those funding claims are in stark contrast to figures put forward in July by an actuary firm that Orr uses as a consultant, Seattle-based Milliman. The firm said "very rough preliminary guesstimates" show the police and fire pension fund was only 50 percent funded for the fiscal year ended June 30, 2010, and the general services pension fund was funded at only 32 percent.

Orr called for a preliminary report from the auditor and inspector to be issued within the next 60 days. The law requires him to make the report available to the public.

"The EM believes that any such waste, fraud, abuse or corruption in the administration, operation or implementation of benefit programs harms the city and its residents, and that identifying and correcting such waste, abuse, fraud or corruption is necessary and appropriate to carry out the purposes" of the state law that created the emergency manager position, Orr wrote in the order.

Mark Diaz, a member of the 16-member board that oversees the police and fire fund, acknowledged past troubles that led to criminal charges against former pension officials. However, he said, the pension funds are well run today.

"We're running a tight ship right now," said Diaz, who also is president of the Detroit Police Officers Association, the union that represents 1,923 officers.

The investigation takes place at a time when Orr is meeting with creditors, union leaders and others with an eye toward seeking financial concessions. Orr has said Detroit will end up in bankruptcy court if creditors do not accept considerable reductions in what the city owes.

The order comes on the same day unions met with Orr's restructuring team to discuss plans to reduce the city's long-term debt to stave off a Chapter 9 bankruptcy. The plan calls for shifting city-operated healthcare to Medicare or the Affordable Care Act and freezing pensions for current employees. Workers with less than 10 years on the job would be enrolled in a 401(k)-style retirement plan.

As expected, union leaders pledged to file suit, saying the state's constitution protects municipal pensions.

Shortfalls in the city's pension funds are among the most difficult problems facing Detroit, and pension payments to retirees are among issues being discussed in some of the meetings Orr and his staff are holding as he seeks to stave off a Chapter 9 bankruptcy filing.

This is not the first time corruption has been suspected in Detroit's pension systems. Earlier this month, Detroit-based investment adviser Chauncey Mayfield agreed to give back $3.1 million that U.S. regulators allege he stole from a pension fund for the city's police and firefighters.

The city's former treasurer, Jeffrey Beasley, also has been charged with taking bribes in exchange for steering business to Mayfield.

The government has taken action against others allegedly involved in pension-related corruption during the administration of former Detroit Mayor Kwame Kilpatrick. In March, two former Detroit city pension officials were indicted, a week after Kilpatrick was convicted for similar offenses.

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Hong Kong May bankruptcy petitions rise 4.8 pct from April

Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

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Poland - Factors to Watch on June 21

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Fri Jun 21, 2013 1:53am EDT

  Here are news stories, press reports and events to watch which  may affect Poland's financial markets on Friday. ALL TIMES GMT  (Poland: GMT + 2 hours):                RATES      In his interview for daily Polska The Times, Polish central  bank's rate-setting council member Jerzy Hausner said it was  debatable whether the bank should have started its easing cycle  earlier.      Another member of the 10-strong council, Andrzej Bratkowski  reiterated in his interview for the TVN CNBC channel that he  would support a 50 basis point rate cut at the bank's July  meeting, ending the easing cycle.            PGE       Poland's No.1 utility PGE will again analyse ways to boost  profitability of the planned new energy blocks in Opole,  signalling it may return to the 11.6 billion zloty ($3.7  billion) project, agency PAP quoted PGE CEO Krzysztof Kilian as  saying.            LOT       Poland's troubled flag carrier has asked for up to 381  million zlotys ($120 million) in further state aid as part of a  new rescue plan.          For other related news, double click on:   Polish equities           E.Europe equities        Polish money              Polish debt              Eastern Europe             All emerging markets     Hot stocks                 Stock markets            Market debt news           Forex news                  For real-time index quotes, double click on:   Warsaw WIG20  Budapest BUX  Prague PX   ($1 = 3.1773 Polish zlotys)  

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Ally deal draws limited objections from ResCap creditors

By Tom Hals

June 19 | Wed Jun 19, 2013 6:06pm EDT

June 19 (Reuters) - Ally Financial Inc's proposed $2.1 billion agreement reached last month with creditors of its bankrupt Residential Capital LLC subsidiary cleared a key court deadline with only one vigorous objection, though several warning shots were fired.

Ally agreed to the settlement last month to end allegations it stripped ResCap of choice assets including the online lender, Ally Bank, before dumping the business into bankruptcy, which left creditors empty-handed.

"The court respectfully should stop this runaway train in its tracks and address fundamental defects in what mounts to a pre-approved plan of reorganization that violates basic tenets of law and is unconfirmable," said Syncora Guarantee Inc, in the fiercest objection.

Syncora insured some of the mortgage-backed bonds issued by units of ResCap, which have fallen sharply in value, and it objected for a variety of reasons. Syncora alleged that ResCap did not explain how it decided to split money from the Ally settlement among different bond insurers.

The Department of Justice's bankruptcy watchdog, plaintiffs in a class action and government's pension insurer also objected as the deadline passed on Wednesday. Several parties also let the court know that while they were not formally objecting, they were taking up positions against the yet-to-be-filed reorganization plan.

The deal announced May 23 was meant to extract Ally from its disastrous foray into subprime home lending, allowing it to focus on its auto lending business and repaying the remainder of a $17 billion government bail-out.

The government owns about three-quarters of Ally, formerly General Motors Acceptance Corp, and is still owed more than $10 billion.

The Ally settlement is meant to be a blueprint for resolving ResCap's contentious Chapter 11 and the deal needs the approval of the U.S. Bankruptcy Court in Manhattan.

ResCap plans to file a plan of reorganization by July 3 that will explain in more detail how creditors will be paid.

A hearing has been scheduled for June 26 before Judge Martin Glenn to approve the Ally settlement plan.

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PRESS DIGEST-New York Times business news - June 20

June 20 | Thu Jun 20, 2013 1:02am EDT

June 20 (Reuters) - The following are the top stories on the New York Times business pages. Reuters has not verified these stories and does not vouch for their accuracy.

* The possibility of a bankruptcy filing by the city of Detroit has raised concerns about the fate of 62 classic cars managed by the city's historical society. ()

* The U.S. Federal Reserve, increasingly confident in the durability of economic growth, expects to start pulling back later this year from its efforts to stimulate the economy, the Fed Chairman, Ben Bernanke, said on Wednesday. ()

* Europe's top antitrust enforcer continued a crackdown on drug company efforts to keep low-cost generic versions of their medicines off the market, a campaign that is taking place on both sides of the Atlantic. ()

* George Zimmer, the founder of Men's Wearhouse Inc and a frequent presence in its commercials, was fired on the day of its shareholders' meeting. A disagreement between Mr. Zimmer and the board appeared to be the reason for the sudden dismissal, though it was not immediately clear what that disagreement was. ()

* The Philippines has the fastest-growing economy in East Asia. But unemployment is still rising and the number of people in poverty has barely changed in six years. ()

* Riverstone Holdings, a leading private equity firm focused on energy and power, announced on Wednesday that it had raised its largest-ever fund, a $7.7 billion vehicle that exceeds its $6 billion target. ()

* The British government is preparing to sell part of its holding in the Lloyds Banking Group and is weighing a breakup of the Royal Bank of Scotland, the chancellor of the Exchequer said. ()

* Sony Corp's Chief Executive Kazuo Hirai told shareholders on Thursday that movies and music were an indispensable part of the company, rejecting a renewed push by the American activist investor Daniel Loeb. ()

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FCC's Alpine Germany files for insolvency

VIENNA, June 20 | Thu Jun 20, 2013 3:28am EDT

VIENNA, June 20 (Reuters) - The German unit of FCC's Alpine Bau has filed for insolvency, following a similar move by its Austrian parent construction company on Wednesday.

Alpine Bau Deutschland has operations in the Netherlands, Poland, Russia and the United Arab Emirates as well as Germany, and employs 1,500 people. It had sales of around 600 million euros ($804 million) in 2012.

"We have a clear goal of cleaning up Alpine. The insolvency proceedings... are an appropriate way to create the necessary basis for a future of the company," Alpine Bau Deutschland Chief Executive Frank Jainz said in a statement late on Wednesday.

The company said it was looking for a new investor. ($1 = 0.7461 euros) (Reporting by Georgina Prodhan; editing by Patrick Graham)

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Alpine bondholders are asked to support debt package

VIENNA, June 17 | Mon Jun 17, 2013 4:25pm EDT

VIENNA, June 17 (Reuters) - Bondholders in Alpine, the Austrian unit of Spanish construction group FCC, may have to take part in debt restructuring at the group, it said after talks with creditors on Monday.

"In the opinion of the creditors a sustainable restructuring of Alpine group cannot be conceived without a contribution of the bondholders," it said in a statement, without elaborating.

It said talks had determined that Alpine needed a package of measures to meet its upcoming liquidity needs, but added it was confident it could manage a turnaround "based on the contributions of the financing partners and the shareholder".

Alpine lost 450 million euros ($600.6 million) last year as it began to exit unprofitable projects abroad. Its creditors have already taken a 150 million-euro haircut this year but more debt talks are under way.

Bondholders were spared any haircut so far.

Alpine has struggled as government austerity programmes in the euro zone have put construction projects on hold. Parent FCC was already under pressure to sell billions of euros of assets amid recession in Spain.

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UPDATE 3-Detroit default, restructuring plan break new ground -Moody's

Mon Jun 17, 2013 7:18pm EDT

June 17 (Reuters) - Detroit's default and debt restructuring plan are precedent-setting in the U.S. municipal market, Moody's Investors Service said on Monday, because the city is looking to bondholders, as well as labor unions and pensioners, to share the pain.

The city on Friday defaulted on a $39.7 million payment on certificates of participation and presented a plan to restructure its finances.

"The restructuring plan is unconventional and precedent-setting in the municipal market. It builds a strong case for insolvency, girding the city for a tough fight with creditors of all types," Moody's said in a statement.

The default on the taxable pension debt Detroit sold in 2005 and 2006 led Fitch Ratings on Monday to downgrade the rating of about $1.5 billion of COPs to the lowest level of D from C.

Moody's also on Monday downgraded several Detroit bond issues, including a cut in the city's general obligation unlimited tax rating to Caa3 from Caa2 and reductions of its general obligation limited tax and certificates of participation (COPs) ratings to Ca from Caa3.

The proposal by Emergency Manager Kevyn Orr calls for unsecured creditors to take a pro rata share of $2 billion of new limited recourse participation notes, which would be issued to replace approximately $11 billion of unsecured obligations.

"The substantial reduction offered to unsecured creditors, the extent of the city's financial stress and the complexity of the city's debt add to the uncertainty of many classes of debt ultimately recovering their investment," Moody's said.

On Thursday, before the city's announcement, Moody's downgraded several classes of Detroit debt to Caa2 with a negative outlook.

Much of Detroit's debt is insured. Syncora Holdings on Monday said that its wholly owned unit Syncora Capital Assurance Inc received notice of the default and confirmed its pledge to pay bondholders according to contractual terms.

The company's fourth quarter 2012 operating supplement showed $329 million of outstanding Detroit pension debt insured by Syncora Capital Assurance Inc.

On Friday two of the insurers, National Public Finance Guarantee Corp, a unit of MBIA, and Assured Guaranty Ltd , had already confirmed that bondholders will be reimbursed.

Moody's also said the plan is unusual as it proposes similar treatment of various debt security types.

It noted that Orr did not propose a plan for creditors who are considered secured, such as the debt of the city's water and sewer enterprises or the city's general obligation debt, which is enhanced by state aid and claims relative to interest rate swaps. However, the latter are subject to negotiations.

"The plan appears to treat the general obligation and pension obligation certificates similarly, which would be a break from tradition," Moody's said.

Standard & Poor's Ratings Services, which on Friday downgraded the city to CC from CCC minus, kept a negative outlook on the lower rating due to the potential Detroit could file for bankruptcy.

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PRESS DIGEST-New York Times business news - June 18

June 18 | Tue Jun 18, 2013 1:14am EDT

June 18 (Reuters) - The following are the top stories on the New York Times business pages. Reuters has not verified these stories and does not vouch for their accuracy.

* The fiscal crisis in Michigan is setting up as a gigantic clash between bondholders and city retirees over what money Detroit has left to pay them. Public finance experts have warned that broad societal problems could follow a loss of faith in municipalities' commitments to honor their pledges.

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* On Tuesday, MTV will introduce its latest deep dive into generational behavior: a nationwide study of 1,800 "young millennials." The findings will be presented to marketers and MTV programmers to help show how the channel and its sponsors can speak to the younger end of the audience.

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* Over the weekend, Facebook and Microsoft released reports about the overall number of data requests they had received from United States law enforcement agencies. On Monday, Apple Inc and Yahoo joined the chorus. But rather than provide clarity, some of the disclosures have left many questions unanswered.

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* Independent reviews of clinical trial data concluded that Medtronic Inc's Infuse, a bioengineered bone product, was not significantly better than a traditional bone graft, and that it might pose risks. ()

* European Union leaders and United States President Barack Obama announced on Monday the start of negotiations for a far-reaching trans-Atlantic trade deal, but French indignation over recent remarks by a high-ranking Brussels official created a sideshow at the Group of 8 meeting.

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* David Green, the director of Britain's Serious Fraud Office, plans to revive the agency's reputation with a criminal investigation into the rigging of the Libor.

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* Pharmaceutical companies that pay rivals to keep less-expensive generic versions of best-selling drugs off the market can expect greater federal scrutiny after a Supreme Court ruling on Monday. ()

* Eddy Cue, a senior vice president at Apple Inc, denied the government's charges that the company was working with e-book publishers to raise prices. ()

* Davis Polk & Wardwell has hired Jon Leibowitz, former chairman of the Federal Trade Commission, a coup for the law firm as it bolsters its increasing presence in Washington. ()

* After several years of intense demand for smaller, single-aisle workhorses, European plane maker Airbus on Monday secured a customer for its twin-deck A380 superjumbo jet, in a deal the company hoped would signal a revival in interest in larger passenger jets. ()

* LinkedIn Corp's Influencers program, which consists of people in leadership positions posting about their lives and careers, has transformed viewer engagement on the site, its chief executive said.

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