The Detroit Free Press said of Orr’s 45-day report:

Detroit will finish its current budget year with a $162-million cash-flow shortfall and doubts about the financial health of its pension funds, according to a new report by the city’s emergency manager that lays out the financial free fall in stark detail.

The report, mandated by the state after an emergency manager’s first 45 days in office, confirms a city in desperate shape, with costs for retiree benefits eating up a third of its budget and public services suffering as Detroit’s revenues and population shrink each year. That has led to deferment of payments and an accumulated deficit that would exceed $600 million were it not for borrowing practices the city has used to cover shortfalls.

A city that has taken out loans and moved money between funding sources “has effectively exhausted its ability to borrow,” said Kevyn Orr’s report to the state Department of Treasury.

The company, based in Nashville, Tenn., said it would continue normal operations while it proceeds through the bankruptcy process. The company employs about 650 people at its corporate offices, manufacturing plant and 96 company-owned retail outlets.

Oreck is owned by Black Diamond Capital Management, an asset management firm, and it moved to Nashville from New Orleans following Hurricane Katrina in 2005.

The company said it will borrow $11 million through debtor-in-possession financing to maintain its operations. While the company may reach an agreement to sell its assets in the next few days, the firm noted that if such a deal is not made, “it is possible that a liquidation and wind down of the Debtors may ensue.”

Oreck’s vacuum cleaners were pitched heavily by direct mail and in TV infomercials beginning in the 1970s. The company was founded by David Oreck in 1963, and its vacuum cleaner was based on a design it acquired from Whirlpool.

The U.S. Department of Justice (DOJ) announced late on Thursday that it filed suit against Chemed and against its hospice subsidiaries. The subsidiaries being sued are Vitas Hospice Services and Vitas Healthcare, with the allegations being over false Medicare billings for hospice services.

Investors need to tread softly here because this could turn into criminal situation if the allegations are proven. The DOJ alleges that Vitas:

…knowingly submitted or caused the submission of false claims to Medicare for crisis care services that were not necessary, not actually provided, or not performed in accordance with Medicare requirements.

Another instance is even worse if it is true. The DOJ said:

In addition, the government’s complaint alleges that Chemed and Vitas knowingly submitted or caused the submission of false claims for hospice care for patients who were not terminally ill.

Shareholders are reacting to claims that Chemed and Vitas violated the False Claims Act and that the companies misspent tens of millions of taxpayer dollars. If proven, that goes well beyond just civil penalties for the executives who participated. Shareholders do need to know that the DOJ ended its release by saying, “The claims asserted against Chemed and Vitas are allegations only, and there has been no determination of liability.”

The DOJ said:

The companies allegedly paid bonuses to staff based on the number of patients enrolled in the program and based on patients who were admitted for longer lengths of stay, and took adverse employment actions against marketing representatives who did not meet monthly hospice admissions goals.”

Vitas is the largest for-profit hospice chain in the United States, with hospice services in 18 states. Chemed acquired Vitas back in 2004. Chemed’s shares are down 18% at $66.60, and the 2 million shares traded before noon are already more than 10 times the 150,000 or so shares traded on an average day. After the drop, Chemed is worth only about $1.23 billion, and its 52-week trading range is $54.06 to $82.00.

AMR lost money if you count all of the items and we expect those items to continue while it proceeds through reorganization and through a merger. The $8 million profit reported in the quarter does not include reorganization and special items. Still, this is the company’s first time to report a profit during the first quarter of any year going back to 2007. The GAAP operating profit was $52 million in the quarter.

AMR is proving that bankruptcy really did help to drive down the costs. AMR has lowered its wages and has reorganized most of its debt. Its consolidated unit costs outside of fuel and special items improved by 3.2% from this quarter a year earlier. Despite being in bankruptcy, American managed to still take delivery of 12 new aircraft in the first quarter and it is projecting to take delivery of 53 planes this year.

Investors have also received an update as the company said that it filed its Plan of Reorganization and Disclosure Statement on April 15 and its hearing is currently slated for June 4. The bankrupt airline also filed on the same day with the Securities and Exchange Commission to proceed with the planned merger with U.S. Airways.

The cash balances are almost unbelievable when you consider that AMR is in bankruptcy. The prodigal son must truly be protected. AMR ended the first quarter with roughly $5.1 billion in cash and short-term investments, with restricted cash balance included in there of $853 million. That compares to a year ago when AMR showed $5.6 billion in cash and equivalents which included restricted cash of $771 million.

On the merger, AMR contends that the combined equity value as of now would be about $11 billion. Be advised that the calculation was based upon the share price of U.S. Airways on February 13, 2013 at $14.66, while today’s share price even after a 2% drop is $16.21.

You truly saw an unusual bankruptcy procedure here. AMR’s Reorganization offers the potential for a full recovery for creditors and the common stockholders are set to receive at least 3.5% of the aggregate diluted common stock of the combined airline. Usually the creditors take a large haircut and the common stockholders get hosed much worse or wiped out entirely.

AMR shares are still OTC and are down 1.7% at $3.90 against a 52-week range of $0.36 to $4.52. U.S. Airways shares are down 2% at $16.21. We are not offering combined projections for sales and earnings of the post-merger AMR/USAir but chances are high that they will be profitable, with lower operating costs, lower capacity, and of course higher ticket prices for you and me.

The AMR (AAMRQ) chart below from stockcharts.com is rather impressive when you consider that this company is in bankruptcy.

The severance package for CEO Tim Horton was opposed by a federal bankruptcy trustee. AMR argued that the pay would be made after the reorganization and would consist of half cash and half stock in a new company formed from AMR’s merger with US Airways Group Inc. (NYSE: LCC).

The court rejected AMR’s argument because the company was asking to make the payment some six months before the merger occurs. The judge did say that if the merged company wants to make the payment after the merger is complete it may do do. This is the same judge who gave his approval to the merger between the two airlines.

As part of the merger with US Air, Horton will remain with the merged company as non-executive chairman of the board until next spring.

The Fisker Karma is a sleek car that looks something in between a sedan and a futuristic sports car. While many of the more mass market electric and hybrid cars are so ugly that you wonder if they deter environmentally friendly consumers, the Karma is truly a good looking car. The problem is that Fisker has been troubled from nearly the start and now it looks like it is about to implode.

Tesla had many pre-orders and now the company has even gone on to embark on a lease or lease-to-buy effort with the same depreciation scale as the Mercedes S class. Fisker was never so lucky and management has been lacking here to say the least. Oh, and the company is going to have an ever harder time ahead with bad PR as the taxpayer is likely going to be on the hook here.

Fisker has what looks to be a total of $192 million in loans from the Department of Energy under the Advanced Technology Vehicles Manufacturing Loan Program. We don’t have an exact figure of what is due this month, but the company has furloughed employees and has a loan repayment due in late April. Fisker has even warned that it may seek bankruptcy protection if it cannot secure financing.

To make matters worse, the company has sold only close to 2,000 cars and it has reportedly not even built a car since last July. If you have followed the Fisker saga here, its primary battery supplier is A123 Systems and A123 did such a great job of managing itself that it went bankrupt and was acquired by the Wanxiang Group in China.

Even hiring the former Chrysler president Tom Lasorda last year did not help. He left the company just after a few months and the story was that he did not think the mess could be cleaned up there. Oh, and the founder Henrik Fisker has stepped down as Chairman due to differences with management’s strategy after a DOE loan freeze and talks to sell a majority stake to Chinese bidders.

Can you imagine spending $105,000 to $110,000 for a car that is likely to not be on the road for very long? What were people thinking when they bought these cars? Maybe the hope was that the Karma would get a Delorian-like comeback as a time machine car in the movies. At least Tesla was full of orders before they started production.

The Tesla Model S sedan has now exceeded sales of 4,750 units and the company is currently profitable. The company’s latest release shows that it has delivered almost 10,000 electric vehicles to customers in 31 countries.

Tesla now has an easy way for buyers to know how they will proceed forward. Fisker buyers now have to not only wonder what they were thinking when they bought the car, but how they will resell the cars down the road (out of their garage). AutoTrader.com currently has 74 listings in the U.S. for used Fisker cars, with the lowest price for a 2012 model being about $69,000 for the car with less than 7,000 miles on it. Imagine how low those prices will get after this year if there are no Fiskers made again.

Fisker is shaping up to be a very costly consumer experiment. With the taxpayer being on the hook, Fisker is turning out to be for electric vehicles what Solyndra was for solar.

U.S. Bankruptcy Judge Christopher Klein is set to rule on whether Stockton can use bankruptcy to abandon its obligations to the California Public Employees’ Retirement System, to which its owes $900 million. The long-time covenants between cities and their employees could be broken as they never have been. Municipal jobs, once considered both safe and an excellent means to a good retirement, will be at risk in a growing number of cities that lost tax revenue during the recession, as they continued to spend and borrow money from the capital markets. In a stroke of irony, the investors that supported these cities may take huge losses themselves.

A number of cities might have gone bankrupt in the recent past. That list would include both Flint and Pontiac in Michigan, which were deserted by the auto industry as sales crumbled and plants moved to areas with more modern facilities and further from the UAW headquarters. And there were the jobs that moved to Mexico and other lower wage markets. Both cities were assigned emergency managers by the state of Michigan that were given dictator-like power. Whether the actions were preferable to bankruptcy will be argued for years.

Bankruptcies at airlines and automotive companies at least provide firms that could be profitable a chance to rebalance obligations. AMR and General Motors Co. (NYSE: GM) make money now. The same will not hold true for cities like Detroit and Stockton. Without access to money for infrastructure, police and fire departments, there is no reason for businesses and those residents who can afford to flee to ever come back.

Bankruptcy, which often allows for the resurrection of companies, can do just the opposite for cities. The companies can draw new life; the cities just become toxic.

Now the $51 million is less than 10% of the amount that Suntech needed to avoid bankruptcy, but there is little question that the CDB could have come up with the money if it had wanted to. The bank funded the Three Gorges dam project, so a few hundred million is not a huge problem.

There are probably a couple of reasons — besides the cost — that Suntech was cut loose and ReneSola was not. First, Suntech’s founder and former CEO was determined to keep the government out of Suntech’s business. He lost that round when the company’s board replaced him.

Second, and perhaps more important, Suntech is a showcase for non-Chinese investors. The image that the central government wants to project is that it takes a hands-off approach to publicly traded businesses. What better way to emphasize that than to let one of the country’s most highly touted companies go down? If the government will not intervene to save Suntech, then it will not put its thumb on the scales for any other firm. Except, now, ReneSola, and who knows which other firms in the future.

ReneSola’s shares are up more than 3% today, at $1.66 in a 52-week range of $1.08 to $2.65.

J.P. Morgan has released its claims on $417 million in MF Global funds that had been returned to the bankruptcy trustee. The big bank also kicked in $100 million in added funds to pay MF Global’s customers and will return $29 million related to obligations it had incurred under an MF Global credit facility.

The $600 million repayment for customers who used foreign exchanges has been delayed by differences between U.S. and U.K. bankruptcy laws.

Alas, all $1.6 billion is unlikely to be returned to MF Global’s customers. According to the trustee, if the deal announced yesterday is approved, U.S. customers of MF Global could receive “several percentage points” more than 93% of what is owed to them. Customers who used foreign exchanges can look for repayment totaling several points above a range of 75% to 82%.

The company said that in the event the Chinese court approves the banks’ petition, Suntech will still be able to meet its committed orders from other facilities in Wuxi, Shanghai, and Luoyang. The company’s CEO said:

While we evaluate restructuring initiatives and strategic alternatives, we are committed to continuing to provide high-quality solar products to our global customer base. During this period, we will continue to work closely with all of our stakeholders and take the necessary steps to put Suntech back on track for growth.

Growth? This guy has been standing out in the sun too long. Suntech is toast. The Wuxi subsidiary is the company’s main operation, and while Suntech may believe it will be able to continue production at its other plants, the company might wish to consider what it will do if and when customers cancel these orders.

Shares have fallen more than 28% this morning to $0.41 and are on their way to zero. It is just a matter of time.