North America

AbitibiBowater Inc. tried a creative debt-restructuring process out of court, but in the end filed for bankruptcy protection in the United States and the Companies' Creditors Arrangement Act in Canada, the Financial Post reported. "This was not the path that was preferred," said company spokesman Seth Kursman, "but we had exhausted all other options." He said the company's liquidity positions were severely constrained by more than $6 billion of debt. AbitibiBowater tried to keep the company out of the bankruptcy courts.
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Fiat's chief executive has returned to the United States for talks as pressure builds to seal a partnership deal with Chrysler before the end of the month, sources at the Italian car maker said on Monday. Chief Executive Sergio Marchionne is going to Detroit and Washington, where the government has given Fiat and Chrysler an April 30 deadline to get the U.S. car maker's unions and bondholders to agree the deal, the sources told Reuters on condition of anonymity.
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Ottawa is refusing to rescue AbitibiBowater Inc. with loan guarantees--putting thousands of jobs in communities across Canada at risk after the forest products giant filed for bankruptcy protection, the Globe and Mail reported. AbitibiBowater, one of the country's oldest companies and the world's biggest producer of newsprint, filed for Chapter 11 protection in the United States Thursday, citing a debt burden of more than $6 billion (U.S.), and plans to file for similar protection in Montreal today, under the Companies' Creditors Arrangement Act.
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The key players who will determine whether Chrysler LLC has a future in Canada are digging in their heels, increasing the danger that a rescue effort could collapse, the Globe and Mail reported. The campaign to convince the Canadian Auto Workers to offer more concessions to Chrysler Canada Inc. is growing increasingly public, with would-be Chrysler saviour Fiat SpA jumping into the fray this week, followed by Industry Minister Tony Clement, and yesterday, Chrysler Canada president Reid Bigland.
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Nortel Networks Corp.’s former employees and pensioners asked a Canadian judge to order the insolvent telephone-equipment maker to pay them benefits including severance and pension supplements, Bloomberg reported. The company filed for bankruptcy in January in the U.S. and Canada after losing almost $7 billion since 2005. Toronto-based Nortel ceased paying former workers some pension benefits and refused severance and termination payments, saying under bankruptcy protection those are unsecured claims.
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Toronto-based PharmEng International Inc., a contract drug manufacturer, says it plans to file a proposal under the Bankruptcy & Insolvency Act (Canada) after defaulting on millions of dollars in debt obligations, The Canadian Press reported. A. Farber & Partners Inc. has been appointed as the licensed trustee in bankruptcy for the company, PharmEng said. The move comes after the company defaulted on $7 million worth of debt obligations earlier this month. In addition, PharmEng said it's also in default under its $14 million credit facility and term loan with Landsbanki Islands h.f.
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Fiat SpA's chief executive, facing a two-week deadline to work out a partnership with Chrysler LLC, warned the troubled U.S. carmaker's unions he would ditch the idea unless they agreed to cut labor costs, Reuters reported. In a clear message to U.S. and Canadian unions, Sergio Marchionne told Wednesday's Globe and Mail newspaper a deal on the partnership had only a 50-50 chance of succeeding because of lack of progress in talks with union leaders. "Absolutely we are prepared to walk.
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Asarco LLC, the bankrupt Grupo Mexico SAB unit, must wait for a ruling on its proposed sale to Sterlite Industries Ltd., India’s biggest copper producer, for $1.1 billion in cash and a $600 million note. U.S. Bankruptcy Judge Richard Schmidt declined to rule on Asarco’s request to sign a sale contract with Sterlite at a hearing today in Corpus Christi, Texas. Lawyers for the buyer said they would try to get an extension of tomorrow’s deadline to allow the judge more time to reach a decision.
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Mexican mining company Grupo Mexico SAB threw a fresh punch in its fight to retain U.S. copper subsidiary Asarco LLC, pledging $1.3 billion in cash to take the unit out of Chapter 11 proceedings and defeat a rival bid by Vedanta Resources PLC, The Wall Street Journal reported. Though Vedanta's deal to acquire Asarco has a higher total--$1.7 billion--it includes just $1.1 billion in cash, plus a note for $600 million. A U.S. bankruptcy judge will have to determine which offer better serves Asarco's many creditors, including the U.S.
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As Barack Obama, the U.S. President, eyes a "quick and surgical" bankruptcy solution for ailing automakers, don't expect the wound in Canada to be as clean or neat should car companies here seek creditor protection under the Companies' Creditors Arrangement Act (CCAA). That's because of a difference in Canadian labour and insolvency law, the Financial Post reported. In the United States, insolvencies can be used to end high-cost union contracts if certain procedures are followed.
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