New Houston Bankruptcy Judge appointed

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Well-known bankruptcy litigation specialist Jeff Bohm of Austin has been appointed as the new bankruptcy judge for the the United States Bankruptcy Court for the Southern District of Texas, Houston Division. Jeff replaces William Greendyke, who resigned effective June 1 to join Houston-based Fulbright & Jaworski.
I have known Jeff for a long time and been involved in several cases with him over the years. He is an outstanding lawyer and will make a fine bankruptcy judge. Although Jeff has been practicing for 20 years and has been a partner at Austin-based McGinniss, Lochridge for 15 years, Jeff’s background is interesting in that he did not go directly to law school after undergraduate school. Rather, he chose to work for several years for a large bank in Houston in a variety of positions. I believe that this background is a part of the reason why Jeff has an unusual depth of perspective regarding financial and insolvency-related disputes, and also why he developed a resolution-oriented style of lawyering in his practice (I have found that lawyers who were formerly clients tend to prefer this style). Although an effective litigator, Jeff has always had a refreshing knack for resolving legal disputes in the most efficient and reasonable manner possible under the circumstances.
Jeff joins what has become a powerhouse group of bankruptcy judges in the Southern District of Texas. As noted earlier here, outstanding Houston bankruptcy lawyer Marvin Isgur joined chief Bankruptcy Judge Karen Brown and Bankruptcy Judges Wesley Steen and Letitia Clark on the Houston bankruptcy bench earlier this year. With the additions of Judges Isgur and Bohm, the Houston bankruptcy judges are one of the strongest groups of bankruptcy judges in any one federal district in the country.

Stros lose to DBacks

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The Stros dropped two games at home to the National League’s worst team as the Diamondbacks held on for a 6-4 win on Thursday afternoon at the Juice Box. The Stros go to Cincy 14Ω games behind NL Central-leading Cards and 5Ω games behind the Padres for the NL Wild Card playoff spot.
The crowd of nearly 40,000 booed the Stros lustily throughout the game, particularly starter Tim Redding, who again struggled with his control. Redding gave up six runs on nine hits in 5 2/3 innings, while walking two, both in the DBacks’ 3 run first inning. After his rough start, Redding recovered to retire 12 of the next 13, but started to unravel in the fifth. After giving up a double, Adam Everett made a key throwing error on an infield hit by Gonzo, and then Hillenbrand followed with a two run dinger. Those three unearned runs pushed the DBacks’ lead to 6-1.
All of that went over about like a turd in the punchbowl with the Juice Box crowd.
The Stros had nine hits — including two doubles and a yak by Bidg — but could never put together the big inning against the DBacks’ rookie starter to pull even. Bidg’s first double was the 544th double of his remarkable career, moving him past Tony Gwynn for 19th all-time in the majors. His double in the fifth allowed Bidg to pass Reggie Jackson for 70th on the career hits list. It was Bidg’s 2,586th.
Pete Munro pitches for the Stros against the Reds in the first game of their weekend series on Friday in Cincy. Although the Reds can flat out bash the ball, their pitching is even worse than the DBacks. So, this series ought to be another good opportunity for the Stros to pad their hitting statistics. That means that they will probably score five runs total in the three games. That’s the kind of season it’s been.

The prison of radical Islam

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In this Opinion Journal.com piece, Danielle Crittenden reviews a new book — “Inside the Kingdom” — by Osama Bin Ladin’s former sister-in-law, Carmen bin Ladin.
Inasmuch as women of radical Islamic families risk severe punishment for speaking out, first person accounts of life in this culture are rare. As Ms. Crittendon notes, Ms. Bin Ladin is not a distant relative seeking to cash in on her the Bin Ladin family’s notoriety. Rather, her story is arguably the most vivid account yet to appear in the West of the oppressive lives of Saudi women:

Carmen’s life in Saudi Arabia began when her car pulled up to Yeslam’s mother’s compound outside Jeddah. In the mid-1970s, the town was still not much more than a donkey crossroads in the middle of the desert. If winds weren’t whipping up the sand in blinding funnels, the sun was scorching down with unbearable heat. Shrouded in her unfamiliar and suffocating black robes, Carmen entered what sounds like a luridly decorated marble tomb. From then on, she was no longer free.
Each day, Yeslam vanished to work. Carmen and her young daughter passed the hours in the company of his mother and sister. Rarely could she leave the house–rarely, even, did she see sunlight. Courtyards had to be cleared of male servants before she could poke her head outside; she was not even permitted to cross the street alone to visit a relative. When she did venture out, she had to wear a choking abaya and thick socks to hide her ankles. “It was like carrying a jail on your back,” she writes.
Nor was she much freer inside the house. She could not listen to music, pick up an uncensored book or newspaper, or watch anything on television but a dour man reading the Quran. Nor could she absorb herself in household tasks. These were left to foreign servants, including the care of children.
Carmen was horrified by the effects of this isolation and uselessness. “The Bin Laden women were like pets kept by their husbands;. . . .Occasionally they were patted on the head and given presents; sometimes they were taken out, mostly to each other’s houses;. . . .I never once saw one of my sisters-in-law pick up a book. These women never met with men other than their husbands, and never talked about larger issues even with the men they had married. They had nothing to say.”

Read the whole piece.

Revising “The Deal”

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Rich Karlgaard is the publisher of Forbes magazine. In this Wall Street Journal ($) column, Mr. Karlgaard examines what has gone wrong at Microsoft and what Bill Gates is doing to try and fix it:

Today Microsoft is struggling to figure out what attracts and motivates the most talented employees within capitalism’s free-agent system. The company had no such problem figuring that out in the 1980s and ’90s. Microsoft CEO Steve Ballmer liked to call the old motivational carrot “The Deal.” That arrangement worked like this: Come and work for Microsoft. Make do with a so-so salary but partake lavishly of options. Sure, you might be forced to grind away on 80-hour weeks for six or seven years. But you’ll change the world and get rich — wildly rich.
Microsoft’s stock has been flat since 1999. The Deal is broken. Not only that, but most of today’s change-the-world projects in computing live outside of Microsoft. These include open-source software, search engines, Web services, Flash video, WiFi, iPods, etc. For reasons of pay and excitement, Microsoft is losing its grip on a new generation of IQ.

Then, Mr. Karlgaard notes that the fortunes of companies in the technology world can changes just as fast as the technologies that they sell:

Digital Equipment Corporation reached its peak market value in 1988 but four years later sold to Compaq for a tenth the price. IBM was a titan throughout the 1980s yet nearly went bankrupt in 1992, before Lou Gerstner stepped in. At both IBM and DEC, the stellar 1980s financial results were lagging indicators of future vitality. The leading indicator was the flow of talent. By the late 1980s, even as DEC and IBM were at the peak of their financial powers, they already had lost the war for young IQ. The bright and bold were flocking to the new personal computer industry.
It’s hard to believe, but Microsoft, in 2004, has become a company run by gray hairs. Mr. Gates and Mr. Ballmer will turn 50 in the next 20 months. Older yet, with snowy white hair, is Jim Allchin, who directs the future of the company’s crown jewel, the Windows operating system . . .

In this context, Mr. Karlgaard suggests that the true purpose of Microsoft’s recent stock buyback program and dividend announcement is actually to reinvigorate “the Deal:”

My guess is that outside investors were not Microsoft’s primary audience for last week’s announcement of a one-time $32 billion dividend payment, a $30 billion stock buyback, and a doubling of the annual dividend payment. No, this move was done to rally employee shareholders and future employee shareholders. Microsoft needs a way to attract and keep future Bill Gateses and Steve Ballmers. It needs to revive The Deal.
A year ago, Microsoft announced it had removed the heart of The Deal — stock options — in favor of restricted grants. An army of Microsoftologists parsed the move for deeper meaning. One analysis had it that Microsoft was merely acknowledging what Mr. Gates’s good friend Mr. Buffett had asserted — that the early 2000s would produce lousy returns in the stock market. If that turned out to be true, stock options would only disappoint employees, lead to bad morale at Microsoft and make it harder to recruit.
In retrospect, maybe Microsoft should have been more optimistic about the stock market. It might have joined Intel, Cisco and others in the battle to keep stock options. But Microsoft didn’t do that, and since there are no longer options for employees, only share reward — paying a higher dividend — is available as an incentive for high-IQ employees.
It’s not The Deal, but it’s a start.

The Rocket rocks on

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The Rocket pitched seven innings of five hit ball as the Stros continued their domination of the hapless DBacks by winning 6-1 in the third game of their four game series on Wednesday night at the Juice Box.
As usual, Clemens was reliable, striking out eight while giving up only one run. JK and Bags whacked yaks again, while the Stros continued to improve their hitting statistics against the DBacks pitchers not named Johnson or Webb.
Tim Redding takes the hill tomorrow in the Businessman’s Special against Lance Cormier, who has a 14+ ERA. The Stros then take off to Cincy for a weekend series before returning home next week to face the Braves and the Expos.

More Medical Center political strife

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Daniel Arnold, a member of the Baylor College of Medicine board of trustees and the former chairman of that board, has sent the full board a July 14 letter calling for Baylor President Dr. Peter Traber to be fired for failed leadership. Mr. Arnold’s letter states that Traber’s management of Baylor is “deleterious” and “divisive,” and that “his lack of realistic vision and fundamental errors in judgment” are not what Baylor needs in a leader. Here is the Houston Chronicle article on this latest Medical Center dustup. The letter is expected to be discussed today at a meeting of the 48-member board.
Corby Robertson, the current chairman of the Baylor board, told the Chronicle that he believes that Dr. Traber has the board’s support
Mr. Arnold sent his letter amid the recent political fallout over the split of the long teaching relationship between Baylor and The Methodist Hospital (earlier posts here). The institutions have been in open conflict since deciding to sever their 50-year relationship in which Methodist served as the teaching hospital for Baylor students and residents. Last week, Baylor threatened legal action against Methodist if the hospital does not cease actions that Baylor alleges are interfering with Baylor’s operations, including Methodist’s “aggressive recruiting” of Baylor faculty members.
Mr. Arnold was the Baylor board chairman who butted heads with popular Baylor faculty member and president, Dr. Ralph Feigin. In that conflict, Mr. Arnold attempted to force Dr. Feigin to choose between the presidency and his other job as physician-in-chief at Texas Children’s Hospital. Dr. Feigin subsequently announced he was stepping down, only to have the decision overturned a month later after key faculty and trustees objected. Dr. Traber replaced Dr. Feigin in March, 2003 when Dr. Feigin resigned at the age of 65.
Update: The Baylor board voted unanimously (with one abstention) to support Dr. Traber.

Enron objects to employee settlement

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Setting up a potential jurisdictional battle between two federal courts, Enron Corp. filed an objection in U.S. Bankruptcy Court in Manhattan yesterday seeking to block a settlement payment of the $85 million in insurance proceeds to approximately 20,000 current and former Enron employees that is emanating out of pending litigation in the U.S. District Court for the Southern District of Texas. Here is an earlier post on the proposed settlement.
Enron employees lost hundreds of millions of dollars when the Enron stock in their 401(k) plan became worthless as the company spiraled into bankruptcy in late 2001. After they sued Enron in 2002, U.S. District Judge Melinda Harmon in Houston approved the tentative settlement to the former Enron retirement-plan participants earlier this summer. The final hearing on the proposed settlement is scheduled for Aug. 19.
The settlement, which would be the largest to date for a case involving company stock in retirement plans, would be largely paid by Associated Electric & Gas Insurance Services Ltd. and Federal Insurance Co. Enron had $85 million in liability insurance to cover company employees who were acting as fiduciaries.
In pleadings filed with the Enron bankruptcy court in New York, Enron and its creditors argue the money is an asset of the bankruptcy estate and the bankruptcy court should decide who gets it. Enron and many of its creditors have previously filed pleadings in the bankruptcy case asserting that the employees’ claims should be subordinate to all other creditors.

Stros pound DBacks

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Roy O pitched seven shutout innings and Adam Everett cranked two solo yaks as the Stros downed the Diamondbacks, 10-3 on Tuesday night at the Juice Box.
Oswalt was masterful as he struck out five while giving up only two hits and walk during his seven innings. The DBacks jumped on Kirk Bullinger for their three runs in the eighth, but Chad Harville finally pitched a decent inning in throwing a scoreless ninth.
The Stros’ hitters had extended batting practice against the DBacks’ Edgar Gonzalez and Steve Sparks as they pounded 12 hits, including Everetts’ two yaks, JK‘s two run shot, and Bags‘ three run tater. Morgan Ensberg chipped in with a couple of doubles as he continues his long road to a respectable OPS.
The Stros are looking good again tomorrow night as the Rocket takes the hill against ex-Texas Aggie Casey Fossum (6.17 ERA). Isn’t it nice getting the DBacks when Randy Johnson is not pitching?

More on Houston’s light rail boondoggle

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Following this earlier post on the economic absurdity of light rail systems, Randal O’Toole, one of the economists over at The Commons, cites the Houston light rail system as one example why cities such as Denver and Austin should reject such systems:

Houston opened a 7.5-mile light-rail line in its downtown on January 1. It has so far caused more than 50 collisions with autos or pedestrians (including a few during testing before January 1). While the transit agency blames bad auto drivers, the accident rate is twenty times the national average for light-rail lines.

Mr. O’Toole notes other economic disasters involving rail systems in other cities, and then aptly summarizes as follows:

The push for rail transit comes from construction companies that seek to soak the taxpayers building it, downtown property owners who hope to enhance the value of their properties, anti-auto environmentalists who view congestion with schadenfreude, and collectivists who think we would be better off in collective transit than private autos. None of these reasons are very appealing so they cloak their goals behind specious claims that rails will reduce traffic congestion and air pollution, something that rail transit has never done.

Amen.

Mike Tyson, Debtor-in-Possession

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Former heavyweight champion boxer Mike Tyson is currently a debtor-in-possession in a chapter 11 bankruptcy case. This NY Times article outlines Tyson’s plan of reorganization, which is based on the income stream that Mr. Tyson supposedly will generate from fighting an unusually aggressive schedule on pay-for-view television:

The reorganization assumes that Tyson (50-4) will fight five times through November 2005 (with dispensation to stretch the fights out over two more years, when he’ll be 41), an extraordinary amount of work for a boxer who has not fought in 17 months and has not beaten a great opponent since Ronald Reagan was in his second term.
The reorganization requires that after keeping $2 million from each fight, Tyson must pay into a reorganization trust fund 50 percent of the after-tax proceeds from his bouts, or $19 million, to pay his taxes and his former wife Monica Turner.
Tyson’s first payment to the trust fund, $890,000, . . . is due next month. He must then pay the fund $4.9 million in each of the quarters ending Jan. 31 and April 30, 2005, followed by a payment of $3.7 million in the quarter ending October 31, 2005, and $4.6 million in the quarter ending January 31, 2006.
The plan does not state what will happen if he does not make the payments.

I can answer that one: Liquidation, which is where Tyson should probably be anyway.
It also turns out that Mr. Tyson has settled matters with his former promoter, Don King:

The best news for his finances is the $14 million that will come from the recent settlement of the $100 million federal lawsuit he filed in 1998 that alleged financial fraud against Don King, his former promoter.
King will pay Tyson $8 million soon after the reorganization plan goes into effect, $3 million plus interest in January 2005 and $3 million plus interest in January 2006.
For all the money that Tyson charged that King had siphoned off, he will get none of it; all of it will go for debts.

Meanwhile, those pesky chapter 11 operating reports provide some interesting information on Mr. Tyson’s current life:

According to the monthly financial reports Tyson files with the bankruptcy court, his personal earnings in February, $26.54, were overwhelmed by $67,960 in personal expenses. In March, his income improved to $15,127, while his expenses fell to $25,389. And in April, his income soared to $125,055 and his expenses rose again, to $62,589.

Mike Tyson is not a particularly good fighter anymore. Nevertheless, just as many people watch NASCAR events to see the crashes, many folks will tune into a Tyson fight in order to see the inevitable meltdown of Tyson in living color. About when you think the fight game has gone as low as it can go, people leeching off of Tyson push it even lower. Only in America.