The negotiation efforts of Delphi Corp.'s union employees took on
new urgency on March 31 as Delphi filed a motion with the U.S.
Bankruptcy Court seeking to reject its collective bargaining agreements
and modify its retiree benefits plans under sections 1113 and 1114 of
the Bankruptcy Code. [1] If Delphi's pension and benefits obligations
are ultimately rejected and then terminated, it will have a profound
effect on the Pension Benefit Guaranty Corp., the federal agency that
insures pension obligations. Already operating at a deficit, PBGC can
ill-afford to take on any of Delphi's estimated $10.7 billion in
under-funded liability for hourly employees' retirement benefits. [2]
In response to the recent distress terminations of pension plans in the
steel and airline industries, Congress has introduced several measure
to bolster the PBGC. As a consequence, Chapter 11 debtors may find it
more difficult to avoid pension liability as part of a reorganization… Read the rest
Spring Cleaning: Throwing Out Cases About Throwing Out the Trash
Spring is a time for getting rid of things that are outdated, have served their purpose or are just plain wrong. However, sometimes when companies do a little spring cleaning they can get in a lot of trouble. Obstruction of justice is a serious crime and one that the government has pursued vigorously in recent years. One
such case started five years ago when the SEC began an investigation of
Credit Suisse First Boston (CSFB) which led to charges of obstruction
of justice against CSFB investment banker Frank Quattrone. [1] Last
year a jury found Quattrone guilty of the charges and he was sentenced
to 18 months in prison. [2] However, on March 20, 2006 the 2nd Circuit
did a little spring cleaning of its own by vacating the verdict. [3]
Now the question is whether the government will let this case stay in
the trash … Read the rest
FDIC Increases Deposit Insurance For Retirement Accounts
On April 1st the Federal Deposit Insurance Corporation (“FDIC”) will
increase its deposit insurance coverage of retirement accounts from
$100,000 to $250,000. [1] This change represents the first boost to
coverage in over twenty-five years. [2] Despite coverage for
non-retirement accounts staying at the current level of $100,000, the
increase in coverage for retirement accounts will be beneficial to
consumers and banks alike. [3]
The
last increase in deposit insurance coverage took place in 1980 when it
was raised from $40,000 to $100,000. [4] However, many Americans now
have much more than $100,000 in retirement savings. [5] This meant
they were forced to bank at multiple institutions in order to have all
of their retirement funds insured. [6] Under the new law, individuals
will be able to have up to $250,000 in retirement funds at one bank.
[7] This will make banking easier for consumers and increase profits
for banks.
… Read the rest
State-Sponsored Investment Tax Incentives: Classic Competition, or Constitutionally Constrained?
I. Introduction
The
Supreme Court heard arguments on March 1st concerning the
constitutionality of an Ohio investment tax credit offered to the
DaimlerChrysler Corporation. The credit, entitling DaimlerChrysler to
a "ten-year 100 percent property tax exemption, as well as an
investment tax credit of 13.5% against state corporate franchise tax
for certain qualifying investments," is meant to encourage a $1.2
billion Jeep plant project in Toledo.[1] The investment tax credit is
being attacked on the grounds that, as a state action, it
unconstitutionally burdens interstate commerce in violation of the
Commerce Clause.[2] This sort of tax incentive is hardly anomalous;
indeed, 49 states offer similar tax incentives for the purpose of
encouraging in-state economic activity, thereby benefiting the citizens
of the state.[3] Given that attracting valuable in-state commercial
growth is a fixture of policy in most states, a ruling consistent with
the claim of unconstitutionality from the nation's highest Court
The Maritime Labor Convention: New Protections for those who work on the High Seas
I. Introduction
On February 23, 2006, the International Labor Organization adopted the Maritime Labor Convention. The convention is an attempt to consolidate all existing maritime labor regimes and to provide a comprehensive rights based charter for maritime employees. The United States participated in the conference in the hopes that by passing this convention more economic benefits may flow to the American maritime industry. The convention may provide a basis for American employees to maintain and enhance traditional rights such as maintenance and cure.
II. History & Standards
On February 23, 2006, after two weeks of frantic activity and last minute haggling, the International Labor Organization (ILO) adopted the long debated Maritime Labor Convention. [1] The convention, a comprehensive new labor regime for those working in the maritime industry, was adopted by a vote of 314 for, with no votes against, and four abstentions. [2] Two major goals of the treaty
Bankruptcy Judges Take on “Inane” Credit Counseling Requirements
While bankruptcy judges are obliged to apply and uphold the rule of
law as specifically set out by Congress, some have chosen to publicly
air their misgivings about the lack of discretion left to judges to
administer bankruptcy cases by the 2005 amendments to the Code. A
recent order by Judge Monroe of the Western District of Texas has
gained widespread attention for its scathing attack on the credit
counseling requirement. [1] It remains to be seen whether bankruptcy
judges and practitioners will be able to prompt review of this
provision, but the frustration evident in Judge Monroe's decision has
sent Congress a clear message.
The
credit counseling prerequisite to filing a bankruptcy petition is just
one example of how the 2005 Bankruptcy Abuse Prevention and Consumer
Protection Act has made bankruptcy relief more expensive, time
consuming, and restrictive than before. One initial study suggests that
the credit counseling industry … Read the rest
Out with the Old, In with the New: NYSE Group, Starting a New Tradition
March 7, 2006 will mark the end of a 213 year old tradition, but it will also be the start of new era. If
all goes according to schedule, tomorrow the New York Stock Exchange
(NYSE) will complete a merger with Archipelago Holdings Inc. (Arca). [1] The
merger will create a new publicly held corporation, NYSE Group Inc.
(stock symbol: NYX) making the NYSE a for-profit public company. [2] The
merger has been a long time in the making and is not only significant
for the Big Board, but is also a major milestone in the corporate world
as once again new standards have been set. [3] The
transaction will give the NYSE, already the world’s biggest exchange,
high tech trading capabilities and 49% of the stock trading market. [4]
The Old NYSE
It was less than three years ago that the future of … Read the rest
Purchasing Beachfront Property in Mexico: How Americans Circumvent Mexico’s Constitutional Prohibition
Because of the high-cost of real estate in the most desirable areas of the United States, especially southern California, many Americans are searching for a cheaper, less crowded alternative both for vacation homes and for primary residences. With thousands of miles of undeveloped coastline, and beachfront property costs at a fraction of those in the United States, Mexico has recently become a hot market for Americans wanting a laid-back atmosphere and an affordable vacation home with warm weather throughout the year. Though Mexico is the perfect place to build an affordable beachfront home, there is one slight problem for foreigners wishing to re-locate there: Article 27 of the Mexican Constitution prohibits ownership of beachfront property by foreigners and foreign corporations. Only persons born in Mexico or corporations established in Mexico can gain title to property within Mexico's "Restricted Zone." [1]
How do Americans get around this prohibition? The answer is
Illegal Long-Distance Tax Continues To Be Enforced
Despite the invalidation of communications excise tax, I.R.C. §
4251, by numerous federal courts the IRS is demanding that collection
of the tax continue. [1] The three percent communications excise tax
was originally imposed in 1898 as a temporary luxury tax to help fund
the Spanish-American war. [2] The tax applies to a number of
communications services among which is long-distance or “toll
telephone” service and is paid by everyone, both individuals and
businesses, who makes long-distance calls. [3]
For
purposes of the communications excise tax, the IRS defines toll
telephone service as “a telephonic quality communication for which . .
.there is a toll charge which varies in amount with the distance and
elapsed transmission time of each individual communication.” (emphasis
added) [4] The IRS contends that the word “and” in the statute should
be read as “either,” while those fighting the tax contend that “and”
should be read … Read the rest
The Windfall Profit Tax – A Legislator’s Hamster Wheel
I. Introduction
Surprise!
In 2005, Big Oil[1] again turned one of the larger profits it has seen
in recent years, with companies like Exxon Mobil boasting fourth
quarter numbers 27% greater than last year's profits (which, by the
way, were nothing to sneeze at).[2][3] And why shouldn't we be
surprised? After more than a year of paying a sky-high premium at the
pump and in the home, it is plain to see that the oil industry is not
sharing the burden of the high price of fuel with the consumer. Led by
Senate Democrats, a bill has been proposed to impose a one-time-only $5
billion windfall tax on big oil to help offset the country's more than
$300 billion deficit.[4]
II. Implications
There is no question that Big Oil can afford the hit. Five billion
dollars is chump change spread among corporations who routinely keep
tens of billions of dollars