North America

The governments of Canada and Ontario are in advanced negotiations to provide unprecedented bankruptcy financing for the Canadian operations of General Motors Corp. and Chrysler LLC, The Globe and Mail reported. According to people familiar with the matter, federal and provincial officials are in the final stages of discussions with the U.S. Treasury and senior auto executives toward a contribution of as much as $6 billion (U.S.) for unique cross-border financing that would see GM and Chrysler through the initial phases of creditor protection.

Quebecor World filed a reorganization plan with a U.S. court aimed at recapitalizing the printer of Time and Cosmopolitan magazines to allow it to emerge from creditor protection by mid-July, Reuters reported. The Montreal-based commercial printer said late on Monday that a U.S. bankruptcy court would hear the plan on May 15, with details of what creditors will be able to recover released 10 days prior to the court hearing.

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.

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.

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.

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.

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.

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.

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.

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.