Following on these earlier posts here and here, this Washington Post article reports on yesterday’s test of the unmanned X-43A “scramjet” that broke the aircraft speed record for the second time this year. The X-43A flew at nearly 10 times the speed of sound as scientists continue their quest for “hypersonic” flight.
If this is the Republican Party’s idea of wise leadership, then we are in for a long four years. Professor Bainbridge provides his usual insightful thoughts.
Schlotzsky’s, the Austin-based sandwich franchisor that filed a chapter 11 case earlier this year, has proposed in its bankruptcy case that its assets be sold at an auction next week.
This proposal comes on the heels of a $88 million quarterly loss, large operating deficits as a debtor-in-possession, and tepid interest from reorganization investors. The auction sale will essentially liquidate the company, and almost certainly means that neither unsecured creditors or shareholders in the company will receive any dividend on their claims or equity interests.
Absent a “white knight” investor, restaurant reorganizations almost always fail. The margins are just too thin, and the competition so robust, for management to make enough headway from an operations standpoint in chapter 11 to persuade creditors to take a stake in a reorganized company that comes out of chapter 11 without substantial new capital.
Paul A. Frame, Jr., the former CEO of Houston-based geophysical seismic provider Seitel, Inc., has been indicted of defrauding the company of $750,000 to settle a lawsuit by his former fiancee. The criminal case against Mr. Frame is pending in U.S. District Court in Houston.
Seitel emerged earlier this year from a chapter 11 case that was commenced in 2003 several months after Mr. Frame had been terminated as CEO amidst revelations of Mr. Frame’s use of corporate assets for personal purposes and accounting issues regarding the value of Seitel’s primary asset, which is its library of geophysical seismic data. The indictment against Mr. Frame consists of two counts of mail fraud, two counts of wire fraud, money laundering and making a false statement to the Securities and Exchange Commission.
Mr. Frame is accused of using $750,000 from Seitel without Board of Directors’ authorization to settle a lawsuit that his former fiancee brought against him. The colorful allegations in that lawsuit asserted that Mr. Frame took back $1 million in gifts that he had given his former fiancee, including sable, lynx and chinchilla jackets, expensive jewelry and two wedding dresses, and that Seitel was responsible for Mr. Frame’s alleged wrongdoing as well. In addition to the settlement with his former fiancee, the SEC has also alleged in a civil complaint that Mr. Frame used Seitel funds without Board approval to race a Ferrari and to install an expensive security system in his tony River Oaks home.
After Seitel’s reorganization, Mellon Financial holds a 21.8% stake in the company, and ValueAct Capital owns a 12.3% stake. Shares of Seitel closed Tuesday at $1.07.
Enron Task Force prosecutors are investigating whether Linda Lay, the wife of Enron’s former Chairman and CEO, Kenneth L. Lay, engaged in illegal insider trading by selling Enron stock days before Enron filed its chapter 11 case on December 2, 2001.
The particular sale in question involved 500,000 shares of Enron stock that was sold through a Lay family foundation. The foundation proceeded to distribute the $1.2 million in sales proceeds to various charitable organizations.
The investigation of Mrs. Lay is a part of the Task Force’s scrutiny of the Lays’ actions during the weeks immediately preceding the filing of Enron’s bankruptcy case. Sources close to the case indicate that other transactions that have not yet been publicly disclosed are also a focus of that investigation.
Mr. Lay’s lawyer, Michael Ramsey of Houston, responded to the embarrassing disclosure by publicly criticizing the Task Force’s motives and alleging that the disclosure is simply the latest ploy by the government to to bring pressure against Mr. Lay to plead guilty. “This is the last gasp of a dying prosecution,” Mr. Ramsey said. “This is an attempt at extortion. If I tried something like this, I would be indicted.”
Don’t give this bunch of prosecutors any ideas, Mike.
The investigation of Mrs. Lay is focusing on a sale that she placed on behalf of the foundation on the morning of Nov. 28, 2001. That morning, Mrs. Lay apparently placed an order for the foundation to sell its Enron shares sometime between 10 and 10:20 a.m. At 10:30 a.m. that morning, Dynegy and Enron issued press releases informing the public that Dynegy was calling off its proposed purchase and merger with Enron. The news hammered the value of Enron shares as they sunk by more than $1.50 a share almost immediately after the press releases and closed at $.60 per share by the end of the day. The foundation sold its shares at a price of $2.38, which generated proceeds of about $1.2 million. Had the sale occurred the next day, it would have generated about $300,000.
As noted above, this transaction is only one of several others in which the Lays engaged that the Task Force is currently examining that could result in an indictment of Mrs. Lay and additional counts against Mr. Lay. Public disclosure of the other transactions being investigated would be just as embarrassing for the Lays as this one. The Task Force is putting the pressure on Mr. Lay to turn on his co-defendants in his pending criminal case — former Enron CEO and COO Jeffrey Skilling and former Enron chief accountant Richard Causey — and the level of that pressure will continue to increase over the next several months.
Lest anyone think that the Big Tuna is in any hot water with Dallas Cowboys’ owner Jerry Jones over the rather pathetic turn in the Cowboys’ season, Reid Slaughter of the Frontburner makes a persuasive case to the contrary:
THE $300 MILLION FOOTBALL GAME
This morning, as Cowboys fans reach for the Prozac to stave off another post-game grief hangover, you have to wonder: just how HUGE was that thrilling October 31 win over the Detroit Lions at Texas Stadium? It put the ‘Boys at 3-4 on the season, and you had the feeling that somehow the home team might pull out a decent season. So, let’s go to the polls Nov. 2 and give our gridiron warriors a nice new stadium to play in.
Then come the next two games. Absolute, total butt-kickings. Humiliation. On TV, many shots of Jerry Jones up in the owner’s booth, arms folded, stroking his chin with that “What the hell is wrong with us?” look on his face. I don’t know about you, but such scenes do not inspire me to ante up half of $600 million to make that man richer.
During last night’s 49-21 loss to the Eagles, John Madden said of a disconsolate Bill Parcells, “Sometimes you just need a win.” At no time was the more true than Oct. 31. And The Tuna delivered a whopper for his boss.
I regularly read an interesting blog called The Diplomad, which is authored by several Republican U.S. Foreign Service officers who describe themselves as being “in an institution (State Department)in which being a Republican can be bad for your career — even with a Republican President!”
In this recent post, the Diplomad passes along an analysis of Colin Powell’s tenure at the State Department from a former Foreign Service Officer. It’s an interesting and balanced piece, and I recommend that you give it a look, along with this interesting blog.
This London Telegraph article reports the following soothing news for former listerners of Houston’s KLOL-FM:
Eric Clapton has astounded the music world by finally agreeing to reform Cream, rock’s first supergroup, 36 years after they split up at the height of their worldwide fame.
John Mayall, the veteran leader of the Bluesbreakers, the British band from which Clapton defected to create Cream in 1966, said yesterday: “I’m amazed. But Eric is always doing something unexpected. He moves in so many directions, always out front with his music.”
Sources close to the musicians said that reunion plans were under way, with Clapton, 59, Jack Bruce, 61, and Ginger Baker, 65, talking of “probably two gigs, or maybe more” at the Royal Albert Hall in May, although that venue, where Clapton staged his traditional blues stint this spring, has yet to be booked.
“A reunion of Cream would be a classic show,” Mayall went on to say. “The band was so influential. They helped pave the way for me in America. The Beatles were first. The Rolling Stones were next. Then there was Cream. I had my first US tour in 1968, and moved there a year later.”
Cream members are staying silent at the moment about their plans. A spokesman for Clapton said that he had no comment. Bruce was on holiday, and there was no reply from Baker’s farm in South Africa, where he raises polo ponies.
Following on this earlier post regarding Judge Richard Posner’s criticism of law review articles, Judge Posner and Randy Kozel debate the issue over at Legal Affairs this week. Hat tip to The Volokh Conspiracy for the link to this interesting disussion.
Professor Ribstein provides a nice endorsement for 5th Circuit Judge Edith H. Jones of Houston as the next Associate Justice for the U.S. Supreme Court, and I wholeheartedly concur.
Judge Jones is widely recognized as an outstanding jurist and one of the nation?s leading experts on bankruptcy law. A 1974 graduate of the University of Texas Law School, Judge Jones served as an editor of the Texas Law Review and, upon graduation, she joined the law firm of Andrews, Kurth, Campbell & Jones, L.L.P. (now Andrews & Kurth, L.L.P.), where she was the first woman to make partner in the history of the firm. While at Andrews & Kurth, Judge Jones became involved in the small but emerging Texas Republican Party and, in so doing, created her strong political ties with the Bush Family.
Judge Jones was nominated by President Reagan to become a judge on the Fifth Circuit, and she was confirmed by the U.S. Senate on April 3, 1985. During her almost 20 years on the bench, Judge Jones has written nearly six hundred opinions and she has served as a member of the Advisory Committee on Bankruptcy Rules for the Judicial Conference of the United States and the National Bankruptcy Review Commission. Judge Jones has also authored or coauthored more than 15 publications on the topics of bankruptcy law, mass tort litigation, arbitration, religion and the law, judicial workloads, and the judicial selection process. When Justice William J. Brennan, Jr. resigned from the Supreme Court in 1990, President George H.W. Bush considered Judge Jones for the Supreme Court before he ultimately nominated Justice David H. Souter to replace Justice Brennan.
If Judge Jones is nominated, then there is little question that opposition to her candidacy will coalesce arround her recent concurring opinion in McCorvey v. Hill, No. 03-10711 (5th Cir. Sept. 17, 2004). In that opinion, Judge Jones wrote both a panel opinion turning aside a new challenge to abortion rights by the original “Jane Roe” — Norma McCorvey — and a passionate concurring opinion in which she recommends that the Supreme Court reconsider its controversial decision in Roe v. Wade.
Although she was the original plaintiff in Roe, Norma McCorvey has since become an anti-abortion activist. In that role, she began a new challenge to Roe in U.S. District Court in June 2003. McCorvey filed a Rule 60(b) motion, which allows a federal court to relieve a party from an earlier judgment under certain limited circumstances.
In the District Court case, McCorvey’s lawyers offered more than 5,000 pages of affidavits and other written evidence in seeking to undermine the foundation of the decision in Roe v. Wade. Included among the materials were 1,000 affidavits from women who had had abortions expressing regret over their choice. The District Court summarily denied the motion on the grounds that it was simply too late to revisit the original judgment.
The appeal of that decision went to the Fifth Circuit and oral argument on the appeal was scheduled for this past February. However, oral argument was cancelled and the Fifth Circuit panel promptly issued its decision, which was written by Judge Jones. The panel decision upheld the District Court’s denial of McCorvey’s motion, but not on the finding that she was pursuing her case too late. Rather, the panel held that the controversy had become moot — inasmuch as Texas no longer seeks to criminalize abortion after Roe, the panel reasoned that there is no current controversy giving a court power to decide McCorvey’s motion.
However, attached to the panel’s rather straightforward opinion is Judge Jones’ separate concurring opinion (it is somewhat unusual that the author of the panel’s opinion also writes a concurring opinion, but not unheard of). In her concurring opinion, Judge Jones points out that the evidence supporting McCorvey’s motion “goes to the heart of the balance Roe struck between the choice of a mother and the life of her unborn child.” Judge Jones also notes that the evidence suggests that women may suffer for years after an abortion, that several other Supreme Court assumptions in Roe are probably wrong, and that new medical science suggests how much pain a fetus suffers:
“In sum, if courts were to delve into the facts underlying Roe‘s balancing scheme with present-day knowledge, they might conclude that the woman’s ‘choice’ is far more risky and less beneficial, and the child’s sentience far more advanced, than the Roe Court knew.”
Nevertheless, Judge Jones goes on to point out that the Supreme Court’s decision in Roe to constitutionalize abortion policy has had the consequence of creating a situation in which the Supreme Court likely will not be able to re-examine the factual assumptions of Roe in the context of a court record because no ‘live’ controversy can arise over the issues involved. As Judge Jones notes, “the Court’s constitutional decisionmaking leaves our nation in a position of willful blindness to evolving knowledge. . .”
Opinions such as this may make Judge Jones politically untenable for the Supreme Court confirmation process. But change does not come easily, and here’s hoping that the Bush Administration has the political courage to nominate this independent thinker to our country’s highest court.