Australian hedge-fund manager Basis Capital Funds Management Ltd. sought U.S. bankruptcy protection for its Yield Alpha Fund after it suffered big losses as a result of the fallout from the U.S. subprime-mortgage crisis, the Wall Street Journal reported today. The fund, based in the Cayman Islands, sought chapter 15 protection in U.S. Bankruptcy Court in Manhattan. Shareholders of the Yield Alpha master fund placed the fund in liquidation in the Cayman Islands, and U.S. Bankruptcy Judge Arthur J. Gonzalez granted the liquidators’ request for a temporary restraining order to block creditors from trying to seize remaining assets. Judge Gonzalez set a hearing for Sept. 6 on the Cayman liquidators’ request for a preliminary injunction that would effectively bar investors and other creditors from interfering in the fund’s liquidation.

The Gdansk shipyard in Poland could go bankrupt if it is forced to pay back millions in disputed state subsidies deemed illegal by European officials, the New York Times reported on Sunday. The troubles at the shipyard, and the reaction to them, reveal the larger contradictions in the Polish economy and society, where there is a widening gulf between those in modern businesses and those who are left behind, anchored in older industries such as shipbuilding. The European Union may be threatening the shipyard, but it comes bearing much larger gifts for Poland as a whole. From 2007-13, Poland is set to receive $91.4 billion in aid from Brussels. The shipyard, which once employed about 17,000 people, now provides jobs for a more modest 3,000. Andrzej Buczkowski, vice president of Stocznia Gdansk, the state-run shipbuilding company, defends the shipyard’s long-term viability, pointing to a profit of about $3.5 million for the first six months of the year.

Trusts representing creditors of the defunct futures and commodities broker Refco sued its legal, accounting and financial advisers yesterday for more than $2 billion over the company’s collapse, Reuters reported today. The Refco Litigation Trusts said they sued Banc of America Securities, Credit Suisse Securities and Deutsche Bank Securities in the circuit court of Cook County, Ill. The lawsuit also names the accounting firms Ernst & Young, PricewaterhouseCoopers and Grant Thornton; the law firm of Mayer, Brown, Rowe & Maw; certain loan participants; and Refco insiders. The lawsuit, the latest in a series of suits stemming from the company’s collapse, contends that Refco’s fraudulent scheme could have worked only “with the active assistance of Refco’s cadre of outside auditors, professionals and advisers.”

Ford CEO Alan Mulally said that he would stick with the restructuring program that was in place when he arrived nearly a year ago, adding that his goal is to return Ford’s North American operations to profitability by 2009, the New York Times reported today. Mulally’s biggest change, executives at the company say, has been to push Ford’s leaders to look at competition across the industry, not just across town at General Motors or Chrysler. With gasoline at $3 a gallon in parts of the country and a housing slump putting pressure on vehicle sales, auto companies are predicting the weakest industry sales since 1998. Ford, which earned a surprise profit of $750 million during the second quarter, said that it expects the rest of this year to be difficult. Ford is still plagued by the slump in sales of profitable big vehicles like the Explorer sport utility and the F-series pickup. Analysts say it will be 2011 before Ford completes a top-to-bottom makeover of its lineup, drawing from the vehicles it builds around the world, like the C-Max crossover in Europe, based on the European Focus. Ford will introduce yet another crossover, the Flex, next year.

Amid persistent fears of a global credit crisis, central banks worldwide continued pumping cash into money markets as  the Federal Reserve injected $3.75 billion, following the $3.5 billion it put into markets Monday, the Wall Street Journal reported today. The European Central Bank allotted €275 billion ($371 billion) in one-week funds, which is €46 billion more than it estimated banks need for routine business. And the Bank of Japan put 800 billion yen ($6.96 billion) into its market, following an infusion of one trillion yen Monday. Meanwhile, Russia’s central bank hurried to buoy the weakening ruble and keep money rates stable. In a rare move, Russia’s central bank sold around $4.5 billion on the market yesterday to help support the ruble, traders said. It also injected 87.8 billion rubles ($3.4 billion) into the market through two one-day securities repurchase agreements.

U.S. lawmakers are examining the fact that many hedge funds lend money like banks, but unlike traditional lenders, often don’t pay U.S. taxes on the profits, the Wall Street Journal reported today. While some tax lawyers contend that these types of transactions are proper, others argue that many variants are legally dubious and that tax laws should be changed to clarify what is permissible. It isn’t clear how much the current tax treatment of hedge-fund lending could be costing the U.S. Treasury, but it is likely in the billions of dollars. The Senate Finance Committee is examining whether the current tax treatment is correct and whether the law needs to be changed. Also, the Internal Revenue Service and Treasury Department seem to be taking notice. The issue of taxes paid by foreign entities engaged in lending was raised last year for the first time in the agency’s “Priority Guidance Plan,” which sets out new topics that the IRS and Treasury Department believe require attention. It was included again in this year’s plan.

Retired pilots accused Delta Air Lines Inc. of twisting tax law and asked a bankruptcy judge to award them $100 million in pension benefits they say Delta has avoided paying, Bankruptcy Law360 reported on Friday. In defending its claims, the proposed pilot class said that Delta has misconstrued and inconsistently applied the Internal Revenue Code and the limitations it places on pension payment, effectively leaving its pilots with substantially less than what they should be receiving in benefits. Delta transferred its pension plan on the Pension Benefit Guarantee Corp. (PBGC) in January. Just how much the PBGC will cover, however, is still being decided.
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Bankruptcy Judge Steven Rhodes granted Collins & Aikman’s request to keep its chapter 11 case open for another six months, Bankruptcy Law360 reported yesterday. Collins & Aikman filed an ex parte motion with the U.S. Bankruptcy Court for the Eastern District of Michigan on Tuesday, seeking until Feb. 28, 2008, to fight anticipated administrative claims against the company on its planned exit from bankruptcy at the end of August. Although the auto parts maker said that it expected to consummate the sale of its carpet and accoustics business and emerge from bankruptcy on or around Aug. 31, it would need another six months from the scheduled closing date of Aug 18 to “effectuate certain actions related to, or arising from” its chapter 11 case.

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Musicland Holdings Corp.’s unsecured creditors on Monday joined the company’s trade vendors’ committee in objecting to Wachovia Bank NA’s bid to stop the approval of Musicland’s liquidation plan, Bankruptcy Law360 reported yesterday. Wachovia’s objection hinges on a $25 million lawsuit filed by a group of entertainment companies. The bank said Musicland’s plan should not be confirmed until the bankrupt entertainment store chain creates some mechanism to indemnify Wachovia for potential losses connected with the suit. The suit, which was originally launched in Southern New York District Court in January and moved to bankruptcy court in May, was filed against Wachovia and another bank, Harris NA, over a last-minute $25 million loan paid to Musicland four months before the retailer filed for bankruptcy.
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Uncertainty over how the European Union will apply new regulations on carbon-dioxide emissions is clouding Ford Motor Co.’s effort to sell its Jaguar and Land Rover brands, the Wall Street Journal reported today. Some potential bidders for the brands, including several private-equity firms, are wary of new rules intended to lower auto emissions and curb the gases believed to contribute to global warming. They worry that Jaguar and Land Rover — niche makers of sports cars and sport-utility vehicles, respectively — will be hurt because they don’t have broader fleets including more-fuel-efficient cars to offset their less-efficient models. The potential for tighter regulation presents another hurdle for private-equity suitors and could complicate the auction for Ford at a time when it needs cash to fund its restructuring in North America. Jaguar and Land Rover, which are being sold together, could be valued at more than $3 billion.

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