Unsecured creditors of Portrait Corp. of America Inc. (PCA) have thrown their support behind the bankrupt photography company’s bid to sell off its assets to Consumer Programs Inc. for $100 million, Bankruptcy Law360 reported yesterday. PCA’s bankruptcy filing was premised on a prenegotiated term sheet among the company’s senior noteholder committee, certain second-lien noteholders and the debtors’ equity sponsor, who provided for the reinstatement of PCA’s secured debt and the exchange of the company’s unsecured claims for virtually all of the equity of the reorganized company. The case is In re Portrait Corp. of America Inc., case number 06-22541, in the U.S. Bankruptcy Court for the Southern District of New York.

Collins & Aikman Corp. may encounter trouble selling off its carpet and acoustics business after the company’s creditors filed five different objections against the move on Friday, Bankruptcy Law360 reported yesterday. In a filing in the U.S. Bankruptcy Court for the District of Eastern Michigan, the company said that International Automotive Components Group North America Inc. would buy its automotive flooring and acoustic components business for about $134 million. The sales agreement also allows for the company’s senior secured lenders to invest in IAC up to an aggregate cap of 25 percent of the company’s outstanding stock. Ace American Insurance Co., who has issued various insurance policies to Collins & Aikman and its subsidiaries, filed a limited objection saying that several of the terms in the asset-purchase agreement were “very broad and could include the Ace policies.” Creditor General Electric Capital Corp. also filed a limited objection because it was “unable to determine with certainty whether and which of GECC’s assets, contract and leaser are included in the proposed sale and what consideration GECC will receive from the sale if they are.”

The Korean Ministry of Finance and Economy and the Supreme Court reported that a total of 45,057 individuals filed for bankruptcy in the first quarter, up 2.5 times from 17,679 and 7.4 times from 6,080 over the same period in 2006 and 2005, respectively, the Korean Donga reported today. The number of personal bankruptcy filings in March alone reached 16,232, up 2.6 times from 6,197 last March. At the current pace, the number of personal bankruptcies is likely to exceed last year’s total of 123,691, setting a new all-time high.

The House continued work on legislation to create stronger oversight at government-sponsored enterprises such as Fannie Mae and Freddie Mac and siphon money from their portfolios to create an affordable housing fund of more than $2.2 billion over the next five years, CongressDaily reported today. While the House continued to debate the bill and passage is expected, House leaders yesterday postponed final votes on the bill and amendments until Tuesday. In the most significant vote, members adopted an amendment, sponsored by Reps. Melissa Bean (D-Ill.) and Randy Neugebauer (R-Texas) that would specify the regulator could take action to restrict or cap Fannie’s and Freddie’s combined $1.4 trillion mortgage portfolio if it poses a safety and soundness risk to the companies themselves, but not in regards to the overall economy. Financial Services Chairman Barney Frank (D-Mass.), who sponsored the underlying bill, opposed the amendment because it would alter the agreement he struck with Treasury Secretary Paulson to provide the new regulator the ability to restrict Fannie’s and Freddie’s portfolios based on safety and soundness. Rep. Richard Baker (R-La.) a longtime GSE critic, also opposed the amendment, noting that the two engage in complicated derivatives and that they participate in hedging strategies involving billions of dollars with large banks such as Deutsche Bank, Barclays and BNP Paribas.

Strong consumer spending helped generate robust expansion in Japan during the January-March quarter, indicating that future growth could be driven mainly by consumers instead of corporate investment, which has fueled the economy in the past few years, the Wall Street Journal reported today. Japan’s gross domestic product expanded a healthy 0.6 percent in the January-March period from the fourth quarter, which translates into an annualized growth rate of 2.4 percent. The expansion was, however, slower than in the previous quarter, when growth was particularly strong following unusually weak figures in the July-September quarter. The growth rate for the October-December quarter was revised down slightly to an annualized pace of 5 percent from a previous estimate of 5.5 percent. A key contributor to growth during the January-March quarter was private consumption, which expanded by 0.9 percent from the previous quarter.

A leading auto industry analyst said that Delphi Corp. may be nearing agreements with the United Auto Workers and former parent General Motors Corp. the auto parts maker needs to exit bankruptcy, Reuters reported yesterday. “From what I understand, Delphi is very close to putting the final deal together, that would be in the next week or so,” said David Cole, chairman of the Center for Automotive Research. If Delphi does reach agreements with GM and the UAW, it would follow tacit UAW approval of private equity firm Cerberus Capital Management’s plans to buy Chrysler. Cerberus is also co-leader of a $3.4 billion equity investment proposal for Delphi. Delphi wants to file a reorganization plan by the end of July, but may need to find a replacement for Cerberus in the proposed equity investment and revise its outline for treating creditor claims. The equity investment, and Delphi’s plans to divest several business lines, depend on the company reaching agreements with its unions and GM on myriad issues including wages, benefits, work rules, plant closings and long-term customer contracts.
Chapter 7 Bankruptcy

While many low-income U.S. consumers were routinely denied credit a generation ago, the Brookings Institution released a study on Friday said that these same people now have easy access to debt as demonstrated by the current subprime mortgage crisis, Reuters reported on Friday. “Where 40 years ago lenders were being accused of ‘redlining’ lower income markets, now they are awash in credit,” said Matt Fellowes of the Brookings Institution. Increased delinquencies and foreclosures among subprime borrowers with damaged credit illustrate the problem, he said. The study, which draws on regulator data and credit rating reports, finds that about a third of lower income borrowers falls behind on bill payments in a typical year and a quarter pays more than 40 percent of their income every year on debt payments, including mortgage payments.

Tweeter Home Entertainment Group Inc. posted a quarterly loss on Thursday and said it may choose to file for chapter 11 protection, Reuters reported yesterday. The cash-strapped electronics retailer, which last month said it would close 49 stores and cut 20 percent of its work force, believes “it does not have sufficient working capital” for short-term needs. The operator of Sound Advice and HiFi Buys stores reported a loss for the second quarter ended March 31 of $35.2 million, or $1.38 a share, compared with a profit of $424,000, or 2 cents a share, a year earlier. Revenue from continuing operations fell 13 percent to $163 million. The company also said it found accounting errors related to its deferred compensation plan and will file for a five-day extension to submit its quarterly financial statements with regulators. Tweeter added that it plans to amend its financial statements for the fiscal year ended Sept. 30, 2006.

Auto parts maker Dana Corp. filed a motion Tuesday with the bankruptcy court requesting permission to buy two plants from a Dana Commercial Credit Corp. (DCCC), a Dana subsidiary that is not part of the bankruptcy proceedings, Bankruptcy Law360 reported yesterday. Dana said that the price for the plants was finally within market range, so buying now would be a good deal. Dana currently pays DCCC over $45,000 a month in rent for the Kentucky plant and $103,550 a month for the plant in California. Dana has proposed a purchase price for the plants of about $1.3 million and $6.1, respectively. In addition to asking for approval of the purchase, Dana has asked the court to waive any stay that would postpone the effectiveness of its proposed order.

Auto parts maker Dana Corp. has asked a bankruptcy court judge to lift the chapter 11 protection against litigation in order to allow the company to appeal a $43.9 million product liability verdict, Bankruptcy Law360 reported yesterday. If Dana’s appeal is successful, the ruling would eliminate a $70.8 million claim in the bankruptcy proceedings filed by Microtherm Inc., the plaintiff in the product liability case. The $43.9 million verdict resulted from a lawsuit filed by Microtherm in 2002, which claimed that heat sensors produced by Dana were defective. A hearing on the matter has been scheduled for May 23.