October 30, 2020

Court Gives Kodak Approval to Leave Bankruptcy

The ruling by Judge Allan L. Gropper of the Federal Bankruptcy Court for the Southern District of New York puts Kodak on track to exit bankruptcy in about two weeks.

“It will be enormously valuable for the company to get out of Chapter 11 and hopefully begin to regain its position in the pantheon of American business,” Judge Gropper said.

Kodak, based in Rochester, was for years synonymous with household cameras and family snapshots. It filed for bankruptcy protection in January 2012, weighed down by high pension costs and a delay of years in embracing digital camera technology.

Kodak’s chief executive, Antonio M. Perez, said in a statement, “We move on to emergence as a technology leader serving large and growing commercial imaging markets.” He said the company would have a leaner structure and a stronger balance sheet.

Kodak has sold assets, including its consumer operations, and will now focus mainly on commercial products like high-speed digital printing technology and flexible packaging for consumer goods.

In bankruptcy, Kodak failed to obtain significant value for its portfolio of patents. Experts said that was a crucial reason it had to sell core businesses and reinvent itself. But the bankruptcy resolved a major dispute with retirees over pensions, and it has forged a restructuring plan that, while wiping out shareholders, should pay secured creditors and second-lien noteholders in full.

General unsecured creditors are likely to receive a marginal payout in the neighborhood of 4 to 5 cents on the dollar.

“This comes on a day when many are losing retirement benefits and many are finding that their recovery as a creditor is just a minute fraction of what their debt is,” Judge Gropper said. “But I cannot decree a larger payment for creditors or any payment for shareholders if the value is not there.”

Kodak plans to emerge from bankruptcy as early as Sept. 3, its lawyer, Andrew Dietderich, said at a hearing in bankruptcy court.

Kodak’s bankruptcy capped a protracted plunge for the company, which was founded in 1880 by George Eastman, the inventor of the hand-held camera and rolled photographic film. Kodak’s market value topped $31 billion in the mid-1990s.

When it filed for bankruptcy, it hoped to fetch more than $2 billion for about 1,100 patents related to digital imaging. But partly as a result of losses in patent litigation with Apple, the company was able to sell the portfolio for only about $525 million to an alliance led by Intellectual Ventures and the RPX Corporation.

The company sought other ways to save money. In April, it resolved a crucial dispute with its British pension, which dropped a $2.8 billion claim against Kodak while buying the company’s personalized imaging and document imaging businesses for $650 million.

The company reached an $895 million financing deal in June with JPMorgan Chase, Bank of America and Barclays. It is also planning a $406 million rights offering, selling 34 million shares, or 85 percent of the equity in the reorganized company, with proceeds going to creditors.

Article source: http://www.nytimes.com/2013/08/21/business/court-gives-kodak-approval-to-leave-bankruptcy.html?partner=rss&emc=rss

DealBook: Amgen to Acquire the Gene-Hunting Firm DeCODE

A lab at deCODE Genetics, which found that the genetic nature of human disease was far more complex than anyone thought.DeCodeA lab at deCODE Genetics, which found that the genetic nature of human disease was far more complex than anyone thought.

The biotechnology giant Amgen, seeking to bolster its drug discovery efforts, said on Monday that it would pay $415 million in cash to acquire DeCode Genetics, a gene-hunting firm based in Iceland and known for its headline-grabbing discoveries linking genetic variations to disease.

In a bid to bolster its drug discovery efforts, the biotechnology giant Amgen said on Monday that it would pay $415 million to acquire deCODE Genetics, a gene-hunting business known for its headline-grabbing discoveries linking genetic variations to disease.

The companies are hoping the deal will be symbiotic. DeCODE will get a well-financed partner to further its research, while Amgen is hoping to capitalize on the cutting-edge findings.

DeCODE, a privately held company in Iceland, has studied the local population to identify genetic variations linked to schizophrenia, cancer and numerous other diseases. Just this year, it published a study identifying a rare mutation that protects people from getting Alzheimer’s disease, a second on a mutation that significantly raises the risk of Alzheimer’s, and a third suggesting that older men are more likely to father children with autism.

Despite its research efforts, deCODE has had trouble building a sustainable business, and it filed for bankruptcy protection in 2009. It was bought out of bankruptcy in 2010 by Saga Investments, a group led by two venture capital companies, Polaris Venture Partners and Arch Venture Partners.

A big issue for deCODE has been how to make money from its discoveries. Most of the genetic variations raised the risk of getting a disease by only a small amount. That meant there would be little demand for diagnostic tests to detect those variations.

But identifying the gene provides clues to the mechanism of the disease, which pharmaceutical companies might use. DeCODE never really had the financial wherewithal to develop drugs and it dropped its fledgling efforts when it emerged from bankruptcy.

Amgen, the world’s largest independent biotechnology company, says it believes it can use deCODE’s findings and technology to its advantage.

Dr. Sean Harper, Amgen’s executive vice president for research and development, said in an interview that drugs based on findings from animal models often did not work, but products based on human genetic discoveries had a better track record. Two of the most exciting experimental drugs in Amgen’s pipeline — one for osteoporosis and one for high cholesterol — come from human genetic studies.

“We’re looking for more of that confidence, more of that ability to pick the winners,” Dr. Harper said. He said Amgen had already dropped some targets based on published findings from deCODE.

Geoffrey Porges, an analyst at Sanford C. Bernstein, said in a note on Monday that while deCODE had good science, the payoff for Amgen in terms of bringing drugs to market would likely be five to 10 years away.

The deal is expected to close this month.

DeCODE was founded in 1996 by Kari Stefansson, a neurologist who had taught at the University of Chicago and Harvard. Dr. Stefansson realized that Iceland, his native country, would be an ideal place to perform studies in an attempt to detect genetic variants that raise or lower the risk of various diseases. Iceland has good medical and genealogical records and a population that is not very diverse genetically.

Dr. Stefansson, who remained chief executive of deCODE during the bankruptcy, said in an interview on Monday that he would continue to run the business as a subsidiary of Amgen. He said that deCODE would still publish its genetic findings in medical journals, rather than keeping them as secrets for Amgen. Sales of deCODE’s diagnostic tests are to be halted, he said.

Dr. Stefansson said Amgen would help turn deCODE’s discoveries into products. “From the point of view of proving to the world that this kind of genetics can lead to tangible benefits, this is extraordinarily good news,” he said.

The deal seems to be lucrative for Saga Investments, which paid $13.9 million for the company, according to Mr. Porges of Sanford Bernstein, who attributed that information to Capital IQ. DeCODE then raised $5.1 million in September 2011 from Hercules Technology Growth Capital, a publicly traded venture firm, Mr. Porges wrote in his note.

Terry McGuire, a co-founder and general partner of Polaris, said he did not have the exact figures but said that Saga spent about $50 million, including the purchase price and the money needed to run deCODE. He said Polaris and Arch each owned a little less than a third of deCODE.


This post has been revised to reflect the following correction:

Correction: December 10, 2012

An earlier version of this article misspelled the name of deCODE’s founder. He is Kari Stefansson, not Stefannson.

Article source: http://dealbook.nytimes.com/2012/12/10/amgen-to-acquire-gene-hunting-firm-decode/?partner=rss&emc=rss

DealBook: Bankrupt, Kodak Vows to Rebound

A Kodak sign in Times Square.Eduardo Munoz/ReutersA Kodak sign in Times Square. The company’s chief executive, Antonio Perez, below, says the bankruptcy filing should help Kodak rebound.Kodak's chief executive, Antonio Perez, says the bankruptcy filing should help the company rebound.Jonathan Fickies/Bloomberg News

In filing for bankruptcy protection early Thursday morning, Eastman Kodak executives say they are seeking to follow the path of American corporations that have reinvented themselves after a court-supervised reorganization, like United Airlines and Chrysler.

Antonio M. Perez, the company’s oft-criticized chief executive who has been trying to turn the company around since 2005, said the bankruptcy was a step “in our transformation in order to build the strong possible foundation for the Kodak of the future.”

“What everyone should expect from Kodak is business as usual,” he said, in a video message.

For critics, business as usual is exactly the problem with Kodak. They questioned how Kodak would emerge from bankruptcy as a viable company since it has not yet proved that its turnaround strategy, focusing on consumer and commercial printers, can turn a profit.

“My sense is they have played every card they can dig out of the deck,” said Jay Lawrence Westbrook, a business law professor at the University of Texas. He predicted that Kodak would liquidate most of its assets, with some parts remaining as viable companies, perhaps even called Kodak.

But he added, “I would be very surprised if they reorganized and look anything like the Kodak that went in.”

Shannon Cross, an analyst who has had a sell rating on Kodak since 2001, said the problem for Kodak was that its core businesses had not been making money and the company had been living off licensing fees for intellectual property.

“To me it’s not clear that the pieces that will be left at the end make sense as a stand-alone company,” she said. “It’s sad that it happened. It’s not a surprise, the way it’s been managed.”

The predecessor to Kodak, Eastman Dry Plate Company, was formed as a partnership in 1881 by George Eastman, and it became one of America’s blue-chip giants, a company whose name became synonymous with taking pictures and its ubiquitous yellow film box. But the company was slow to respond to competition in the film business from Fujifilm of Japan, which undercut Kodak’s prices.

And though one of its own researchers invented the digital camera, Kodak was slow to embrace digital photography.

At a court hearing on Thursday evening, a lawyer representing Kodak creditors questioned management’s plan to borrow $950 million from Citigroup to stay afloat during the bankruptcy process, noting that the company had burned through $2 billion in the last two years trying to reinvent itself.

“From our perspective, what’s past is prologue,” said Michael Stamer, the lawyer. “They have taken what we believe is reckless and destructive spending and imposed them on this case.”

Under Mr. Perez, who joined Kodak from Hewlett-Packard in 2003 and became chief executive in 2005, the company has tried to reinvent itself by focusing on printers, packaging and work force software.

Mr. Perez financed those efforts with billions in licensing fees from Kodak’s intellectual property, but analysts warned that Kodak was burning through cash too quickly and could eventually run out.

Kodak announced last July that it would try to sell some of its digital imaging patents, hoping to cash in on a frenzy for intellectual property that drove Google’s $12.5 billion takeover of Motorola Mobility. But Kodak failed to garner enough interest among potential buyers, driven in part by fears of the company’s deteriorating financial health.

In explaining the bankruptcy, Mr. Perez said his turnaround efforts were hurt by the recession, which slowed new business growth and expedited the decline of the film business. He said the objectives of the reorganization included obtaining new financing to shore up confidence in Kodak, selling some of the company’s patents and adjusting “legacy” costs — like health care benefits for retirees — to the company’s now smaller size.

“Kodak is taking a significant step toward enabling our enterprise to complete its transformation,” he said in prepared remarks.

The bankruptcy is expected to help with the patent sale, and it could also allow Kodak to shed some of its retiree obligations.

Bob Volpe, president of EKRA, an association of Kodak retirees, said the pension fund was well funded, and it generally could not be clawed back by the company or creditors. But the company also provides health benefits to its 38,000 retirees in the United States, he explained, and that coverage will probably be vulnerable in bankruptcy court. Last year, those health care benefits cost $240 million, according to company figures.

“If you look at the pattern of what has happened from other companies in bankruptcy, that’s what happened,” he said.

Allan L. Gropper, the federal bankruptcy judge overseeing the case, said, “Kodak is a great American institution, and every creditor here, I’m sure, wants to see it get out of Chapter 11 as soon as possible and to prosper. The question today is how to do that quickly and simply.”

The first task may be for Kodak to sell the patents it has been trying to unload, said Daniel C. McElhinney, managing director of corporate restructuring for Epiq Systems. Though buyers may have been skittish, he said a court-supervised sale provided greater protection against liens and other claims. A Kodak lawyer estimated the patents were worth $2.2 billion to $2.6 billion.

If the sale is successful, and depending on how much money remains, Kodak will then have to convince the court that it has a viable business plan. Lawrence R. Perkins, senior managing director at Conway Mackenzie, a restructuring and financial advisory firm, said that a bankruptcy could provide Kodak with a fresh start, but it would not be easy.

“This is going to be a tough one,” he said. “Just like anything else, the business has evolved. It’s going to be hard to unwind 130 years of history.”

Article source: http://feeds.nytimes.com/click.phdo?i=563db60dc75d5bbdf8258e78df489570

DealBook: Eastman Kodak Files for Bankruptcy

Kodak film headed for packaging at the factory. The company invented the digital camera, but rivals overtook that market.David Duprey/Associated PressKodak film headed for packaging at the factory. The company invented the digital camera, but rivals overtook that market.

Eastman Kodak said early Thursday that it filed for bankruptcy protection, as the 131-year-old film pioneer struggled to adapt to an increasingly digital world.

As part of its filing, made in the federal bankruptcy court in the Southern District of New York, Kodak will seek to continue selling a portfolio of 1,100 digital imaging patents to raise cash for its loss-making operations. The company plans to continue operating normally as it reorganizes under Chapter 11 protection.

“Kodak is taking a significant step toward enabling our enterprise to complete its transformation,” said Antonio M. Perez, the company’s chief executive, said in a news release. “At the same time as we have created our digital business, we have also already effectively exited certain traditional operations, closing 13 manufacturing plants and 130 processing labs, and reducing our workforce by 47,000 since 2003. Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core I.P. assets.”

The company said it obtained $950 million debtor-in-possession from Citigroup to provide it liquidity to operate during bankruptcy. Kodak said that its non-American subsidiaries are not part of the filing.

Kodak has become the latest giant to falter in the face of advancing technology. The Borders Group liquidated last year after having failed to gain a toehold in e-books, while Blockbuster sold itself to Dish Network last year as its retail outlets lost ground to online competitors like Netflix.

Founded in 1880 by George Eastman, Kodak became one of America’s most notable companies, helping establish the market for camera film and then dominating the field. But it has suffered from a variety of problems over the past four decades.

First came foreign competitors, notably Fujifilm of Japan, which undercut Kodak’s prices. Then the onset of digital photography eroded demand for traditional film, squeezing Kodak’s business so much that in 2003 the company said that it would halt investing in its longtime product.

Under Mr. Perez, Kodak has bet on inkjet printers. That strategy has yet to bear fruit, however: the company has made money in only one year since 2004.

It has also turned to patent lawsuits to generate revenue, winning settlements from the likes of LG of South Korea.

The company has burned through its cash reserves, stoking concerns that it may run out of money. As of Sept. 30, Kodak reported having $900 million in cash and short-term investments.

Its bankruptcy petition on Thursday listed $5.1 billion in assets and $6.75 billion in liabilities as of Sept. 30.

As a last-ditch effort to raise cash, Kodak announced last July that it had hired Lazard to sell its digital imaging patents, hoping to cash in on a frenzy for intellectual property that drove Google’s $12.5 billion takeover of Motorola Mobility. But the company had failed to garner enough interest among potential buyers.

But by the fall, it became apparent that Kodak was also preparing for a potential Chapter 11 filing, hiring advisers who could help with a court-supervised restructuring. Besides potentially aiding in the patent sale, bankruptcy protection could also allow Kodak to shed hundreds of millions of dollars in pension obligations.

Earlier this month, Kodak announced a corporate reorganization that split its businesses into consumer and commercial segments, which some analysts said may aid in the sale of parts of the business.

The company has also filed new patent infringement suits against a number of competitors, including Fujifilm and Apple Inc., an effort to shore up the value of the patents it hopes to sell.

Kodak is  being advised by Lazard, FTI Consulting  and the law firm of  Sullivan Cromwell. The company said that Dominic DiNapoli, vice chairman of FTI Consulting, would serve as chief restructuring officer during Chapter 11.

Article source: http://feeds.nytimes.com/click.phdo?i=c0e76ba09873e87b8e68711d39bce806

Ex-Nortel Executives’ Fraud Trial to Begin

Prosecutors contend that after Nortel suffered steep financial losses in the dot-com crash at the turn of the century, its postcrash bookkeeping was also fraudulent. On trial are Frank A. Dunn, Nortel’s former chief executive; Douglas C. Beatty, the former chief financial officer; and Michael J. Gollogly, the former controller. The three men were dismissed in 2004 and the company has since been largely broken up and sold.

All three men deny that they committed any fraud.

Nortel’s fall has spurred lingering resentment in Canada. Many of its shares were held by small investors who saw their value wiped out. The collapse also led to an important player in Canada’s technology sector’s coming under foreign control, even if many of the companies that bought Nortel’s assets, like Ciena of Linthicum, Md., maintain substantial operations staffed by former Nortel employees in Canada.

As is the custom in Canada, prosecutors will not publicly detail their case against the former executives until the trial begins in the Ontario Superior Court of Justice in Toronto. But their comments at pretrial hearings, and the charges themselves, indicate that the complex case largely rests on the government’s accusation that the three executives manipulated the company’s financial statements to create a slim and fictional profit. That profit, in turn, led to about $5 million in performance bonus payments to the three accused, prosecutors contend.

Brian H. Greenspan, one of the lawyers representing Mr. Gollogly, said that there are no allegations that the action of the executives caused the company’s collapse. Nortel filed for bankruptcy protection in January 2009.

“The trial has nothing to do with the demise of Nortel,” Mr. Greenspan said on Friday. “It has nothing to do with the bankruptcy; it has nothing to do with the investors who lost money during the fall of Nortel.”

He said that Mr. Gollogly had not manipulated the financial statements to obtain bonuses but “made an honest attempt to get the books in good order.”

He added, “It’s not as if a restatement means something is criminal.”

Gregory L. Lafontaine, the lawyer for Mr. Beatty, said, “Our position is that there was absolutely no fraud committed here by anybody, and we’re confident that the evidence will bear that out.”

Mr. Dunn’s lawyer did not respond to a request for comment but has said in earlier statements that his client had not committed any fraud.

The case is expected to be complex. Prosecutors have turned over about four million documents to the defendants, and the trial is likely to take several months.

Article source: http://feeds.nytimes.com/click.phdo?i=2c6450d289e3727d714373df690571c3

DealBook: Bi-Lo to Pay $9.50 a Share for Winn-Dixie

A Winn-Dixie store in Miami, Fla., in 2004.Joe Raedle/Getty ImagesA Winn-Dixie store in Miami in 2004.

Bi-Lo agreed on Monday to buy Winn-Dixie Stores for about $560 million, uniting two of the South’s better-known regional supermarket operators.

Under the terms of the deal, the privately held Bi-Lo will pay $9.50 a share in cash, 75 percent more than Winn-Dixie’s closing price on Friday.

The two companies said in a statement that the merger was driven by a desire for greater scale. Bi-Lo’s and Winn-Dixie’s geographic areas have no overlap. Bi-Lo operates 207 stores in South Carolina, North Carolina, Tennessee and Georgia, while Winn-Dixie runs 480 locations in Florida, southern Georgia, Alabama, Mississippi and Louisiana.

“The combined company will have a perfect geographic fit that will create a stronger platform from which to provide our customers great products at a great value, while continuing to offer exceptional service,” R. Randall Onstead Jr., Bi-Lo’s chairman, said in the statement.

Both companies had suffered over the last decade and subsequently filed for bankruptcy protection. Winn-Dixie filed in February 2005 and emerged a year later, having closed down hundreds of locations.

Bi-Lo filed for Chapter 11 protection in 2009 to help address coming debt maturities, and exited a year later. It is still owned by the private equity firm Lone Star Funds.

Both the Bi-Lo and Winn-Dixie brands are expected to live on after the merger, and neither company expects to close any stores. The location of the combined company’s headquarters has not been decided, though it is expected to maintain corporate presences in both Greenville, S.C., Bi-Lo’s home, and Jacksonville, Fla., Winn-Dixie’s base.

The deal is expected to close in the next two or three months, pending approval by Winn-Dixie shareholders.

Bi-Lo was advised by a raft of counselors: William Blair; Citigroup; the Food Partners; Alvarez Marsal’s transaction advisory group; Gibson, Dunn Crutcher; and Hunton Williams.

Winn-Dixie was advised by Goldman Sachs and the law firms King Spalding and Greenberg Traurig, while its special board committee was advised by Paul, Weiss, Rifkind, Wharton Garrison.

Article source: http://feeds.nytimes.com/click.phdo?i=e2d90c95b3d485e122ff37cc5e84e5fa

DealBook: Details Emerge on MF Global’s Last-Ditch Effort to Fill Shortfall

Jon S. Corzine on the trading floor of MF Global last year.David Goldman for The New York TimesJon S. Corzine on the trading floor of MF Global last year.

After MF Global discovered a nearly $1 billion shortfall in customer money in the early hours of Oct. 31, the brokerage firm lined up a last-ditch — but ultimately unsuccessful — effort to fill the hole, according to people briefed on the matter.

At the time, the revelation of missing money was about to scuttle a last-minute deal to sell part of MF Global to another brokerage firm. MF Global executives scrambled to assemble money from a variety of sources, including its own accounts at banks and clearinghouses, said these people, who requested anonymity because investigations into the matter were incomplete.

The firm was ready to proceed with the wire transfers, but was forced to abort at the last second. Hours later, MF Global filed for bankruptcy protection. And within days, Jon S. Corzine, the former New Jersey governor, had resigned as the firm’s chief executive.

Details surrounding the failed transfers are spotty, though investigators have since criticized the poor condition of MF Global’s books, which may have presented an incorrect picture of how much money the firm had at the time.

It is possible that MF Global lacked the necessary money to complete the transfers. In other cases, the firm’s banks, including JPMorgan Chase, may have needed additional time to verify its account balances.

Part of the reason that MF Global’s records were in disarray was a flurry of asset sales that the firm made in its last week in a frenzied effort to raise money.

What caused the initial shortfall remains the subject of wide-ranging investigations by regulators and the Justice Department. Even the precise amount that is missing has caused some dispute, with estimates ranging from about $600 million to more than $1.2 billion.

What is clear to investigators is that MF Global improperly used customer funds for its own needs during its final chaotic days, according to people with knowledge of the inquiries. That move essentially breached a fundamental Wall Street rule: customer money must remain separate from company cash.

Neither MF Global nor Mr. Corzine has been accused of any wrongdoing.

About $200 million in customer money that disappeared from MF Global surfaced at one point at JPMorgan in Britain during that last week, the people with knowledge of the inquiries have said.

That discovery could prove to be a major breakthrough in the weeks-long search for the missing funds, though hundreds of millions of dollars in customer money remains unaccounted for.

MF Global sent the $200 million to JPMorgan, some people close to the investigations believe, after it overdrew an account at the bank. JPMorgan raised questions about the money , but it never received assurances from MF Global.

It is possible that JPMorgan no longer holds the money, having served only as a middleman between MF Global and several trading partners.

Article source: http://feeds.nytimes.com/click.phdo?i=ef423e70020e13d51f7e3e78acfe06df

Auto Workers Strike Deal With Ford to Raise Wages and Add New Jobs

The U.A.W. and Ford on Tuesday announced a tentative agreement on a four-year contract that substantially mirrors the deal struck last month at G.M.

The union’s president, Bob King, said he anticipated reaching a settlement soon with Chrysler, the smallest and least profitable of the Detroit car companies.

“We want to go in and finish the job at Chrysler very quickly,” Mr. King said at a news conference here on Tuesday to announce details of the Ford pact.

About 41,000 union workers at Ford will vote over the next two weeks on whether to approve the agreement, which calls for the company to create 5,750 entry-level jobs in the United States over the four years of the contract. Those jobs are in addition to 6,250 positions that Ford previously said it would add over the next two years.

Besides increasing jobs and investment in its facilities in the United States, Ford also agreed to raise the hourly wages of entry-level employees to $19 by the end of the contract, from about $15 now.

Longtime auto workers, who earn about $28 an hour, did not get any increase in base wages. Instead, Ford agreed to give workers with at least one year on the job a $6,000 bonus for signing the new contract as well as annual $1,500 payments beginning next year and through 2015.

The bonuses are higher than those agreed to by G.M., which is still in the early stages of its comeback from a government bailout and bankruptcy protection in 2009.

Analysts said Ford had to sweeten its payments to workers because the company has posted better financial results than its crosstown rivals and rewarded its top executives with bonuses and stock options.

Ford agreed to pay the first six months of 2011 profit-sharing for workers — about $3,700 a worker — in November, and the balance next year. Usually, the automakers make profit-sharing payments after the calendar year.

John Fleming, Ford’s head of global manufacturing and labor affairs, said Tuesday that the contract was meant to reward workers and improve the company’s cost structure.

“We really believe that it’s fair to our employees and recognizes the contribution that they’ve made to the success of the Ford Motor Company,” Mr. Fleming said at a briefing. “But we’re also pleased that it will continue to improve our competitiveness directly here in the United States.”

Ford said it would invest an additional $4.8 billion in its United States plants beyond previously announced capital expenditures. Several factories received guarantees of new products in the contract, including an Ohio assembly plant that will build medium-duty trucks that had been slated for production in Mexico.

“Our membership not only wanted good wages, they wanted to make sure they had security in their jobs,” said Jimmy Settles, the U.A.W.’s chief negotiator with Ford. Ford officials declined to say whether the contract directly matched what G.M. achieved in terms of holding the line on labor costs. G.M. executives have said their deal will add about 1 percent to labor costs annually over the life of the contract.

Mr. King said he believed the Ford deal followed the pattern set by G.M. “The overall costs are very comparable,” he said.

The success of the Detroit labor talks is seen as significant because of the industry’s gradual comeback in the face of strong economic headwinds. The union tried to extract bonuses and new jobs without creating additional costs, said Harley Shaiken, a labor professor at the University of California, Berkeley.

“This is a good contract in very bad times, and that’s an unusual achievement,” Mr. Shaiken said. “It makes the companies more competitive and allows the workers to share in the success.”

Mr. King expressed confidence that Ford workers would approve the deal. G.M. employees ratified their agreement last week by almost two to one.

The negotiations may be trickier at Chrysler, which has taken longer than G.M. to turn around after its own federal bailout and trip through bankruptcy.

Now controlled by the Italian automaker Fiat, Chrysler is still struggling to achieve solid profitability. Sergio Marchionne, the chief executive of both companies, has said Chrysler could not afford contracts as rich as those at G.M. and Ford.

“The contract at Chrysler will not be identical to Ford’s deal,” Mr. Shaiken said. “But it is likely to be the same framework tailored to fit Chrysler.”

The union and Chrysler have agreed to extend their current contract until Oct. 19. Mr. King played down the possibility that the U.A.W. or Chrysler would have to seek arbitration to reach an agreement.

“Sergio doesn’t want to turn it over to a third party to decide, and I don’t want to turn it over to a third party,” Mr. King said.

This article has been revised to reflect the following correction:

Correction: October 4, 2011

An earlier version of this article incorrectly said that $2.4 billion of the $6.2 billion investments that Ford would make had already been announced. Actually, $1.4 billion was already announced.

Article source: http://feeds.nytimes.com/click.phdo?i=ff0e22a380278ff62cda7cc06489664a

Bucks Blog: Medical Debt Cited More Often in Bankruptcies

Andrew Harrer/Bloomberg

Medical debt is increasingly a factor in personal bankruptcy filings, an analysis of data at a large credit-counseling agency finds.

Roughly 20 percent of those seeking financial counseling this year and last cited medical debt as the primary cause of their decision to seek bankruptcy protection, according to CredAbility, an Atlanta-based nonprofit credit counseling agency that serves clients nationally. That’s up from about 12 to 13 percent in the prior two years. The analysis included more than 47,000 clients for the first half of this year, and more than 100,000 in each of the prior years. (Federal law requires anyone filing for bankruptcy to receive counseling in case other options are available.)

With unemployment persistently high, more people have lost health coverage along with their jobs, says Michelle Jones, the agency’s senior vice president of counseling. Health costs are escalating for employed people, as well, in the form of higher premiums and deductibles. More health plans are offering lower monthly premiums in exchange for higher deductibles, but that means people find themselves on the hook for more out-of-pocket costs, if they get sick.

One reason people tend to get into trouble with medical debt is that they are reluctant to default on health care payments, Ms. Jones said. So, rather than not pay their doctor, they take out a new credit card — often with high interest rates, if their credit is less than stellar– and run up debt on their credit cards to cover health care costs. The short-term problem is alleviated, but the interest begins to compound and in short order they’re in trouble.

“With medical bills, people are very compelled to make good on those debts,” she said. “If you’re sick, it’s the person taking care of you. So they feel bad about not making the payment. People take extraordinary steps to pay them.”

People who have lost their jobs, but are continuing their group coverage under the federal law known as COBRA, may find it difficult to make the higher premium payments and end up putting them on their credit cards if they can. Another scenario, she noted, is that if patients need continuing therapy, they may have to put payments on their credit cards, or they can’t continue treatment: “If they don’t pay, services won’t be provided.”

Medical debts can be particularly stressful because they tend to be referred to collection agencies quickly, since it’s expensive for clinics and hospitals to chase payments that aren’t covered by insurance.

There may be alternatives to a bankruptcy filing, she said, for those who have run up credit-card debt paying off their medical bills. They may, for instance, qualify for a debt management plan, which is a plan negotiated with creditors to allow the cardholder to pay down the debt over time, she said.

Have you incurred higher credit card debt because of medical bills?

Article source: http://feeds.nytimes.com/click.phdo?i=cd7a41b15635ea7d181e0aa36fc0f487

DealBook: Deal-Making Lifts Lazard and Evercore

Lazard said on Thursday that its second-quarter profit rose 23 percent from the period a year ago as increasing deal activity and growth in assets under management bolstered results, the investment bank said on Thursday.

Another investment bank, Evercore Partners, reported on Thursday a 119 percent gain in second-quarter revenue, to $142 million.

The results of both banks highlighted the improved market in deal-making, as companies seek growth through transactions such as mergers and asset sales.

Lazard’s chief financial officer, Matthieu Bucaille, said in an interview, “In uncertain or uneven environments, our business model does well, because people are looking for independent advice.”

Lazard reported net income of $65.8 million on a fully exchanged basis and core operating revenue of $486.9 million. Still, the 48-cents-a-share profit fell 1 cent below the average estimate of analysts surveyed by Thomson Reuters.

Its core mergers business reported a 17 percent rise in operating revenue, to $170.6 million for the quarter. Among the deals it worked on that closed in the quarter — important since banks generally earn fees when a transaction is completed — were the Mosaic Company’s spinoff from Cargill and Vodafone’s sale of its $11.3 billion stake in SFR of France.

The firm is also advising on pending transactions such as Medco’s $29 billion sale to Express Scripts, and is advising the Greek government in its debt negotiations.

As expected, Lazard’s restructuring business continued to decline, as fewer companies filed for bankruptcy protection. The unit’s revenue fell 40 percent, to $48.3 million.

Revenue at the firm’s asset management business, which is meant to smooth over the lumpiness of Lazard’s mergers unit, jumped 27 percent, to $237.7 million.

Lazard’s compensation ratio fell to 58.1 percent for the quarter from 59.8 percent in the year-earlier period. Mr. Bucaille said that the firm was maintaining a “laser focus” on keeping expenses contained, even as it hired several prominent executives this year.

Evercore has also made a number of hires. But adding experienced employees meant paying them well, and the firm gave out $101 million, or 71 percent of its revenue, as compensation this quarter, up from 70 percent in the period a year earlier.

Using adjusted pro forma numbers, Evercore had a quarterly profit of $17.8 million, or 43 cents a share, on revenue of $141 million. The adjusted earnings were slightly below analysts’ expectations.

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