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WHEN FLIERS BENEFIT FROM AIRLINE BANKRUPTCY Does an airline in bankruptcy court offer better customer service? It seems so to Sharon Miller, who recently flew from Boston to Anchorage on United Airlines, the New York Times reported today. Miller had sworn off traveling on United several years ago because of what she called the consistent rudeness of its employees. Enticed by an inexpensive fare, though, she decided to give it another try. "It was like flying on a different airline," she said. "The flight attendants were friendly and the service was efficient." Customer service, so the conventional wisdom goes, is the first casualty of an airline bankruptcy filing. And for certain airlines, notably those with intractable labor disputes, that may still be the case. But it is no longer universally true. For some airlines, entering a bankruptcy proceeding can be a turning point in the way they treat customers, particularly business travelers, their most lucrative passengers. "A bankrupt airline is anxious not to lose customers, especially business travelers, and may be wary of cutting service below competitors' levels for fear of confirming passenger suspicions that the company is not long for this world," said Philip Baggaley, a senior airline credit analyst at Standard & Poor's. A look at the troubled airlines' customer service rankings suggests that even when salaries are being cut and worker morale is hitting bottom, an airline that is reorganizing is often able to keep its act together surprisingly well. Click here for the full story. SOME FORECASTERS SEE SIGNS OF COOLING OFF IN 2006 Economic growth slowed late last year, fueling a debate over whether higher interest rates, higher energy costs and a cooling housing market will dampen U.S. expansion this year, the Wall Street Journal reported today. Largely because consumer spending slowed to a near halt in the fourth quarter last year, overall economic growth fell below a 3 percent annual rate, economists estimate, after 10 quarters of averaging about 4 percent. Many attribute the fourth-quarter slowdown to temporary factors, and the consensus estimate for growth this year is a still-solid 3.4 percent, according to the publication Blue Chip Economic Indicators. But a handful of forecasters see a marked slowdown in the works, predicting that economic growth will fall this year to its lowest rate since 2002, pushing up unemployment. The Federal Reserve is determined to see economic growth of slightly more than 3 percent and will raise rates until that goal is achieved, says Ed Hyman, chief economist at ISI Group, a research firm in New York. Click here for the full story. ARE GM RUMORS HURTING SALES? Even as the world's largest automaker insists it has no plans to file for bankruptcy protection, a loss of nearly $4 billion in the first nine months of 2005 has fueled rumors to the contrary, according to a Wall Street Journal article today. Cognizant that a recent study shows that almost 75 percent of Americans wouldn't buy a car from a bankrupt company, Mark LaNeve, GM's vice president of North American marketing and sales, envisions salespeople at competing dealerships telling customers they'd be crazy to consider a GM vehicle because the company might not be able to honor its warranty. "As much as I hate to do this, we're probably going to have to do something proactively on the marketing side just to address that issue," he says. LaNeve says that he doesn't want to trumpet a defensive message that is the equivalent of "GM isn't dead yet," but he is struggling to come up with something that will "get America rooting for us again." Click here for the full story. SPOTTY CHAPTER 13 SCHEDULES BRING DEBTOR’S LAWYER ETHICS CENSURE The ethics prosecution of one of New Jersey's busiest bankruptcy lawyers, Eric Clayman, raises the question of whether it's common practice—or used to be—for bankruptcy lawyers to be less than candid in chapter 13 petitions, the New Jersey Law Journal reported today. The Disciplinary Review Board (DRB) voted 5-2 to censure Clayman, of Audubon's Jenkins & Clayman, for trying to get more favorable treatment for a client by filing a chapter 13 petition that misrepresented and omitted facts. That violated rules requiring candor to courts, the DRB said in a Dec. 28 ruling. Two dissenters would have gone further and suspended him for three months. Clayman's defense: He was merely following acceptable standards that govern bankruptcy practice. The District Ethics Committee that heard the case agreed with him and dismissed the charges, saying Clayman was sloppy but had no evil intent. The DRB got involved only because the Office of Attorney Ethics jumped in and appealed that dismissal. According to the DRB, Clayman's client, stockbroker Henry Lubaczewski, filed a chapter 13 petition in 1998 to discharge a $404,000 debt to Advest Inc., a former employer. Advest loaned the money to Lubaczewski as an incentive to join the company and the loan was to be forgiven if he remained in its employ for a certain period. But he left after three months, and when Advest asked for the money, he said he had already spent it. On the schedule "F" that Clayman filed for Lubaczewski, the Advest loan and alimony to his ex-wife were listed as having zero balances. But upon closer scrutiny by Advest and Isabel Balboa, the chapter 13 standing trustee, it turned out that "zero" was wrong by several hundred thousand dollars in both categories and that a number of other debts weren't listed. The matter was converted to chapter 7 liquidation. After an inquiry, U.S. Bankruptcy Judge Gloria Burns reprimanded Clayman, imposed a $1,500 sanction to offset the trustee's costs and referred the matter to disciplinary authorities. Click here for the full story. (Free login required).