The Council of Mortgage Lenders forecast that up to 170,000 people are expected to struggle with their mortgage payments next year and 45,000 homes are expected to be repossessed as increases in interest rates hit those whose fixed-rate mortgage agreements are coming to an end, the Daily Scotsman reported today.  At the same time, house prices will edge forward by just 1 percent in 2008 and property sales will fall by 15 percent as first-time buyers find it more difficult to purchase property. The latest figures show mortgage approvals have already fallen to their lowest level since 2005, adding to speculation that the crisis at Northern Rock and the credit crunch is hitting the overheated U.K. property market.   Although house prices in Scotland are expected to continue to increase at a rate of three to five percent next year, this represents a considerable slow-down in a market that has been growing at a rate of 10-15 percent in recent years.

Investors in two Bear Stearns Cos. hedge funds that went bankrupt this past summer are looking into whether to install a forensic accounting and restructuring firm in place of Bear as controlling party, the Wall Street Journal reported today. The investors, who lost about $650 million in the two funds, will vote on the matter at the Wall Street firm’s headquarters in New York on Nov. 7 and in London on Nov. 14. More than 10 percent of investors in the two funds have petitioned for the change, setting up the vote, the person said. If more than 50 percent of investors approve, Bear will be replaced as controlling party by FTI Capital Advisors LLC, a broker-dealer subsidiary of FTI Consulting Inc. of Baltimore. Lawyers at Reed Smith LLP and some other firms representing institutional and retail investors in the funds have complained that Bear isn’t cooperating in providing information on the names of all investors or on the activities that led to the funds’ demise. FTI would be charged with conducting an investigation to see if there is cause to sue.

After an $8.4 billion write-down due in large part to the subprime mortgage downturn and an unauthorized merger approach to a rival bank, Wachovia, Merrill Lynch CEO E. Stanley O’Neal has lost the confidence of his board and is expected to resign as chairman and chief executive as early as today, the New York Times reported today. For a time, Merrill’s business flourished as O’Neal took on more risk and made deep cuts. In 2006, Merrill made $7 billion from using its capital to trade for itself and clients, compared with $2.2 billion in 2002. Some riskier businesses that the firm was involved with, like private equity and lending, fared well over the summer.  Merrill’s exposure to the volatile market for complex debt instruments called collateralized debt obligations exploded to more than $40 billion from around $1 billion about 18 months ago. In the second quarter, just before the collapse in the credit markets, fixed-income revenues skyrocketed 201 percent over the same quarter a year earlier. Underpinning this growth was the firm’s market-leading position in packaging different and risky kinds of debt.

Bankrupt auto parts maker Dana Corp. objected to a $20 million claim filed by one of its suppliers, alleging that the company’s underlying claims — which include allegations of trade secret theft — are lacking in merit, Bankruptcy Law360 reported yesterday. Dana argued that the $20 million claim filed by one-time supplier Jasco Tools Inc. results from Jasco’s discontent over Dana’s pre-petition business to resource parts from Jasco to an alternative supplier when the contract between Dana and Jasco expired. Jasco filed the claim based on a 1995 purchase agreement between the two companies under which Jasco provided precision-machined casings to Dana for five years. In 1999, the companies met to renegotiate the deal, although Dana also solicited bids from several other companies. Based on a bidding process, Dana awarded the contract to Nationwide Precision Products Corp., which prompted Jasco to bring a suit alleging that Dana and Nationwide “participated in a scheme to divert the business away from Jasco, as evinced by Nationwide’s hiring of two former Jasco employees.

Noting few Americans know what they pay for their 401(k) retirement programs, Senate Aging Chairman Herb Kohl (D-Wis.) said at a hearing yesterday that he plans to introduce legislation this week requiring pension plans to disclose fees to employers and participants, CongressDaily reported today.  Kohl said that the bill he and Sen. Tom Harkin (D-Iowa) wrote will help employers negotiate to obtain the lowest possible fees for their workers and assist participants in making decisions on investment plans. The bill would amplify the disclosures required by the Pension Protection Act of 2006. Bradford Campbell, head of the Employee Benefits Security Administration, testified that his agency is pursuing three initiatives in a regulatory framework. Within the next few weeks the department is issuing a final regulation requiring pension plans to include disclosure of their fees in the annual report they file with the Secretary of Labor, IRS and the Pension Benefit Guaranty Corporation, Campbell said. In a few months, the department will propose a regulation requiring disclosure of fees to employers who choose among plans.

Auto parts maker Delphi Corp. said Friday that its anticipated exit from bankruptcy by the end of 2007 might be extended to the first quarter of 2008, Reuters reported on Friday. Delphi, the largest U.S. auto-parts maker, had not been able to secure the $7.1 billion in debt financing it needs to pay creditors, including its former parent company, General Motors Corp. In a bid to give more time to Delphi to negotiate its reorganization plan with key stakeholders, the bankruptcy court delayed a hearing on the plan originally scheduled for Thursday to Nov. 8.

Movie Gallery Inc. is looking into a possible accounting error connected with the company’s acquisition of Hollywood Video, after having been notified by Ernst & Young LLP that Movie Gallery may have inappropriately netted the deferred tax liability connected to the Hollywood Video trade name against the company’s deferred tax assets in fiscal 2005, Bankruptcy Law360 reported yesterday. The issue is still being reviewed by Ernst & Young to determine if an accounting error actually occurred, and Movie Gallery has not yet had the chance to review the auditor’s findings. Movie Gallery also said that even if an error had occurred and a restatement of financial statements is necessary, “this is a solely noncash financial statement matter” that would not affect financial covenants, cash flows, tax returns or tax attributes.
See Also:  Bankruptcy Lawyers New York

Movie Gallery Inc., the second- largest U.S. video-rental chain, sought bankruptcy protection from creditors after two years of losses and increased competition from Blockbuster Inc. and Netflix Inc., Bloomberg News reported today. The company listed assets of $892 million and debt totaling $1.4 billion in its chapter 11 petition filed this morning in the U.S. Bankruptcy Court in Richmond, Virginia. Movie Gallery said that it has an agreement for Sopris Capital Advisors LLC to sponsor a plan calling for converting $325 million in 11 percent senior notes and $72 million in second lien debt into new stock. Sopris will backstop a $50 million rights offering to eligible noteholders. Movie Gallery has $150 million in financing for the reorganization provided by Goldman Sachs Credit Partners LP. The proposed reorganization would reduce Movie Gallery’s debt by $400 million and improve cash flow by cutting its interest payments.

Bankruptcy Judge Burton Lifland signed off on a settlement Wednesday between bankrupt energy company Calpine Corp. and HSBC Bank, ending a battle over nearly $110 million in claims, Bankruptcy Law360 reported on Friday. HSBC filed claims in July 2006 as the successor indenture trustee for the holders of 7.875 percent senior notes due 2008, the 7.75 percent senior notes due 2009, the 8.625 percent senior notes due 2010 and the 8.5 percent senior notes due 2011. The bank said damages were required for the notes due in 2008 and 2009. The notes coming due in 2010 and 2011 should receive “makewhole”premiums, the bank said. The two sides reached an agreement that HSBC would receive allowed general unsecured claims in the aggregate amount of $54 million.

The trial for the TransLand Financial Services involuntary bankruptcy was moved to Oct. 19, the Orlando Business Journal reported on Friday. Originally set for Oct. 3, the trial was delayed after the judge granted a request by creditors for a continuance.  The case began in August when Sanford, Fla.-based Federal Trust Bank, Minnesota-based MidCountry Bank and Nebraska-based Tier One bank sought to force TransLand into involuntary bankruptcy. The petitioning creditors say the Maitland-based lender owes them $22 million in loan payments. In addition, at least 24 individual lawsuits are on hold, awaiting the outcome of the involuntary bankruptcy proceeding. In the lawsuits, the plaintiffs allege that TransLand led them astray during their purchase of property in southwest Florida.