Month: October 2005

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Real Estate in the Aftermath of Hurricane Katrina

Hurricane Katrina struck the Gulf Coast on August 28, 2005 and was one of the worst natural disasters in American history.  Heavy rain and strong winds destroyed much of New Orleans and surrounding areas, leaving the Gulf Coast under water for weeks.  For houses not completely blown to the ground by the 145 mph winds, the amount of damage sustained generally depends on the length of time the home was submerged in floodwaters, allowing mold and rot to thrive in the structure of the home.  Because much of New Orleans was submerged for 2 weeks or more, the secretary of the Louisiana Department of Environmental Quality currently estimates that between 140,000 and 160,000 homes need to be leveled and completely rebuilt.  [1] 

How is the real estate market affected in the wake of a devastating hurricane? 

According to the National Association of Realtors, hurricanes have historically had only short-term effects

… Read the rest
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Will Time Help?: SOX 404 Compliance

September 21, 2005 marked the first open meeting of the Securities & Exchange Commission (SEC) under its new Chairman Christopher Cox.
More importantly, at that meeting the SEC approved a one year extension
for compliance with Sarbanes Oxley (SOX) section 404 for
non-accelerated filers.  [1]  The
Commission also proposed creating new categories for large accelerated
filers, who would be the only category subject to the initial phase-in
period and would make it easier for some companies to move from
accelerated to non-accelerated filer status. [2]

Section 404 of SOX requires companies to perform an audit of internal controls.  One
of the most controversial sections of the act, under the current rules
accelerated filers must include in its annual report an audit by
independent auditors and a report by management that cover the
company’s internal controls over financial reporting. [3]  For
accelerated filers the … Read the rest

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Under Pressure: Delphi Files Chapter 11 in Advance of New Law

On Saturday October 8th, Delphi Corporation ended the intense
speculation of media and industry watchers by filing for Chapter 11
bankruptcy protection in the U.S. Bankruptcy Court for the Southern
District of New York.[1]  Sources inside Delphi had indicated as late
as Friday that such a move was likely unless Delphi could negotiate a
last-minute reprieve in the form of a bailout package from its largest
creditors, General Motors and the United Autoworkers Union.

While Delphi is surely struggling, it is not currently strapped for
cash. So why file now? The answer lies in both the legal climate and in
business strategy.

Avoiding the New Bankruptcy Law

Delphi Corporation, along with 38 domestic subsidiaries and affiliates, filed voluntary petitions per 11 U.S.C. §
311 of the Bankruptcy Code, seeking relief under Chapter 11. [2]  In
one of the 40-plus motions filed on Saturday, Delphi requested joint
administration [3] to allow … Read the rest