Image Entertainment Inc., a Chatsworth, Ca. film and video title distributor, reported a fourth quarter net loss of more than $3 million. Sales slipped nearly 1%–to $30.2 million. For the year, it lost $12.6 million on an 11% revenue decline–to $99.8 million.

Lou Pearlman, the creator of the Backstreet Boys and ‘N Sync, was indicted yesterday by a federal grand jury on charges he defrauded a bank out of $20 million the Associated Press reported yesterday. Pearlman was indicted on three counts of bank fraud, and single counts of mail and wire fraud for business with Evansville, Ind.-based Integra Bank N.A., according to court documents. Florida investigators separately allege Pearlman defrauded more than 1,000 individual investors out of more than $315 million. Several banks say he collectively owes them more than $120 million, according to bankruptcy court documents.
See Also:  Bankruptcy Lawyers New York

Proposals over whether to file for bankruptcy were considered again by the San Diego City Council as it looked at plans to convert the city’s pension system into a group trust that would protect the assets of two other agencies taking part in it, the San Diego Union Tribune reported today. San Diego City Employees’ Retirement System officials began exploring a group trust in August and asked the council this month to sign off on the agencies’ agreements before the new fiscal year starts Sunday. The San Diego Unified Port District and the San Diego County Regional Airport Authority require council approval for the contracts they’ve negotiated with pension officials. However, City Attorney Michael Aguirre wants more time so an outside lawyer can review documents related to the group trust and his office can hire a bankruptcy expert to offer the city additional advice. Pension board president Tom Hebrank told the council that the system’s current setup as a multiemployer trust doesn’t put the other agencies’ assets “beyond the reach of the city’s creditors” if San Diego were to go bankrupt.

The Securities and Exchange Commission (SEC) has opened about a dozen investigations involving complex bundled financial products, as well as the related near-collapse of two Bear Stearns Cos. hedge funds that invested in the subprime-mortgage market, the Wall Street Journal reported today. Responding to a question at a House Financial Services Committee hearing, SEC Chairman Christopher Cox said the agency’s enforcement division has “about 12 investigations” involving collateralized debt obligations (CDOs) and collateralized loan obligations (CLOs). Such bundles of debt or loans, which are sold off in smaller segments, have become very popular in recent years and are core drivers behind the surge in leveraged buyouts. The SEC’s enforcement division also has opened a preliminary investigation into the issues surrounding the Bear Stearns hedge funds, which invested in complex financial instruments backed by subprime mortgages.

See Also:  Chapter 7 Bankruptcy

Converse Industries Inc., a precision machining firm, petitioned for reorganization under chapter 11 earlier this month, the Milwaukee Journal-Sentinel reported today. Converse owes its 20 largest unsecured creditors about $9.3 million, with about $3.3 million of that secured by company-owned collateral, Converse provides machined parts for most of Harley’s model groups. Sales to Harley generate over 70 percent and Converse’s relationship with Harley dates to the 1990s, when Converse acquired another company that had been supplying the motorcycle builder since 1980.

The former chief of Enron Corp.’s high-speed Internet unit, who turned government witness and testified in the trial of former Enron CEO Jeffrey Skilling and company founder Kenneth Lay, was sentenced Monday to 27 months in prison, the Associated Press reported yesterday. It’s been nearly three years since Kenneth Rice, 48, pleaded guilty to securities fraud and agreed to help federal prosecutors on other cases related to the energy giant’s collapse. His sentencing was postponed as he cooperated with prosecutors. Rice had faced up to 10 years in prison and a fine of up to $1 million. The plea agreement with prosecutors also required him to forfeit $13.7 million in cash and property that included jewelry and a pair of exotic sports cars.
See Also:  Chapter 7 Bankruptcy

 A former Thaxton Group broker pled guilty to securities fraud, admitting that he played a role in the massive fraud that helped drive the high-risk lender into bankruptcy, Bankruptcy Law360 reported yesterday. James Garrett Jr. was ordered on Friday to spend the next eight years in prison, shortly after admitting to eight counts of securities fraud, South Carolina Attorney General Henry McMaster said. South Carolina Circuit Judge Daniel Pieper sentenced Garrett with five years probation connected to each of the counts and ordered him to pay more than $75,000 in restitution for his alleged misdeeds, according to McMaster. Thaxton entered chapter 11 protection in 2003, when the high-risk lender collapsed in a $242 million meltdown amid charges that Thaxton and Finova Capital Corp. committed securities fraud. Thaxton, which sold junk bonds to Finova, owes the company $110 million.
See Also:  Chapter 7 Bankruptcy

Highland Capital Management LP is again pursuing a deal that would make it the lead investor to spring Delphi Corp. from chapter 11, Bankruptcy Law360 reported yesterday. The company, which Delphi spurned previously for a bid from Cerberus Capital Management and Appaloosa Management, said Wednesday in a filing with the U.S. Securities and Exchange Commission that it has entered into a confidentiality agreement with Delphi. Highland recently met with representatives of Delphi and General Motors and plans to have additional meetings and discussions. In April, Delphi said that Cerberus, which had committed $1.7 billion to the purchase agreement, might still participate in Delphi’s exit financing, but not as a plan investor.

U.S. Trustee Kelly Beaudin Stapleton objected to New Century’s bid to hire Grant Thorton LLP as a tax accountant and ICP Consulting LLC as a liquidation advisor, saying that engagement letters with the firms contain provisions that courts have previously not allowed, Bankruptcy Law360 reported yesterday. In a motion filed Wednesday in the U.S. Bankruptcy Court for the District of Delaware, Stapleton also asked Grant Thorton to give back some money it earned from New Century prior to the sub-prime lender’s bankruptcy filing. The motion said that Grant Thorton hasn’t provided any details for the approximately $940,000 it received from New Century in the 90 days leading up to the chapter 11 filing. And the trustee argues that a payment of about $6,500 is a voidable preferential transfer that affects whether the firm is eligible to be employed in the case. The trustee has asked Grant Thorton to pay the money back to the estate and waive any pre-petition claim related to the invoice.

Despite pleas from House Small Business Committee members, SEC Chairman Christopher Cox indicated that his agency would not further delay provisions of the 2002 Sarbanes-Oxley corporate governance law that apply to small businesses, CongressDaily reported today. Cox said that the SEC’s recent proposal to revise Section 404 of the law would provide small firms more flexibility to meet standards of the measure that was passed in the aftermath of the Enron Corp. and WorldCom Inc. scandals. Under Section 404, companies would have to establish and maintain internal controls and financial reporting procedures, which also must be certified by an outside accounting firm. However, the requirement for the law was delayed for small firms. The law applies only to publicly traded companies.