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/raid1/www/Hosts/bankrupt/TCR_Public/000421.MBXT R O U B L E D C O M P A N Y R E P O R T E R Friday, April 21, 2000, Vol. 4, No. 79 Headlines AIR CANADA: Extended Protection From Creditors AMERICAN PAD & PAPER: Agrees to Sell Its Creative Card Division BOSTON CHICKEN: Seventh Motion For Amendment to DIP Facility COLORADO GREENHOUSE: Seeks To Terminate Exclusivity COMMERCIAL FINANCIAL: Attorneys Appointed For Committee COSTILLA ENERGY: Seeks To Extend Exclusivity DEVLIEG BULLARD: Order Grants Extension of Exclusive Periods DIAGNOSTIC HEALTH: Emergency Motion For Time To File Schedules EAGLE FOOD: Order Authorizes Employ of Retail Consulting Services EAGLE FOOD: Order Grants Time to File Schedules and Statements FAMILY SNACKS INC: Guy's Purchaser To Close Fort Wayne Factory GENCOR: Involuntary Petition a Possibility JUMBOSPORTS: Orders Grant Motions To Sell Real Property KNOLL LUMBER: Files for Chapter 11 Protection LAMONTS APPAREL: Hearing on Motion Extending Exclusivity LOTTOWORLD INC: Motion For Final Decree Closing Case MANHATTAN INVESTMENT: Receiver Files Bankruptcy Petition MATTHEWS STUDIO: Withdraws Nasdaq De-Listing Appeal MEDPARTNERS PROVIDER: Court Extends Date To Assume, Reject Leases MICHAEL PETROLEUM: Agrees To Accept Bid PENNCORP FINANCIAL: Hearing To Approve Disclosure Statement PRIMARY HEALTH SYSTEMS: Order Schedules Sale of Assets STYLESITE MARKETING: Order Authorizes Sale of Ecology Kids SYSTEMSOFT: Plan Distribution Status TEU HOLDINGS: Meeting of Creditors WHITE'S FINE FURNITURE: Files For Bankruptcy Protection BOND PRICING For Week of April 17, 2000 ********* AIR CANADA: Extended Protection From Creditors ---------------------------------------------- The Calgary Herald reports on April 20, 2000, that a court extended protection from creditors to Air Canada's newly acquired Canadian Airlines Corp. unit so it can keep working to restructure its heavy debt load. Calgary- based Canadian, purchased by rival Air Canada early this year, said it now has until June 5 to come up with a plan to restructure $3.5 billion of aircraft leases and debt. The company, assets are reportedly valued at just $3 billion, meaning creditors will be forced to take cuts in the value of their leases and rates of interest they are paid. "Canadian Airlines continues to make progress in its discussions with creditors concerning the restructuring of its debt and other obligations," the company said in a brief statement issued late Wednesday. Its executives said last month creditors, representing 80 per cent of the debt, had agreed to a deal. But a group of U.S. bondholders subsequently tried to have the court secure the assets backing the securities. The application was denied, in favour of granting Canadian the stay of proceedings under Canada's Companies Creditors Arrangement Act, which is similar to Chapter 11 in the United States. AMERICAN PAD & PAPER: Agrees to Sell Its Creative Card Division --------------------------------------------------------------- American Pad & Paper Company (OTCBB:AMPP) (AP&P) announced today that it has signed a definitive agreement with Taylor Corporation for the purchase of AP&P's Creative Card Division located in Chicago. The sale is subject to final court approval and a motion has been filed with the Delaware Bankruptcy Court to review the proposed sale. The sale approval hearing is scheduled for April 28, 2000, with closing anticipated to occur within 10 days following court approval. Terms of the pending transaction were not disclosed. "The sale of Creative Card would be our first significant asset sale this year and the proceeds will be used to reduce our debt," said James W. Swent III, Chief Executive Officer. "The previously announced sale process for the Williamhouse division continues to move forward, and is anticipated to be completed around mid-year 2000. AP&P is actively marketing its other major business units including AMPAD and Forms to maximize the value of the Company for all stakeholders." "Creative Card and its Century Greetings brand are well-known in their respective distribution channels and their products are highly regarded by consumers," said John Schmitt, President of the Taylor Corporation Imprinting Group. "We look forward to adding Creative Card as a Taylor Corporation Company and believe this acquisition will provide opportunities for additional growth both for Creative Card and our related companies." "Creative Card will continue to be based in Chicago and will continue to service its existing customer base," added Schmitt. "Customers can be confident that their needs will be met for the 2000 season and in the future." Creative Card is a nationally recognized market leader in providing premium quality holiday greeting cards, all-occasion cards, social and business announcements, and pre-printed papers for desktop publishing. Taylor Corporation is a privately held company based in Mankato, Minn., and, together with its affiliated companies, facilitates the operation of autonomous marketing and printing companies throughout North America, Europe and Australia. American Pad & Paper Co., which invented the legal pad in 1888, is a leading manufacturer and marketer of paper-based office products in North America. Product offerings include envelopes, writing pads, file folders, machine papers, greeting cards and other office products. The key operating divisions of the Company are Williamhouse, AMPAD, and Creative Card. Company revenues in 1999 were $573 million. BOSTON CHICKEN: Seventh Motion For Amendment to DIP Facility ------------------------------------------------------------ According to its original terms, the DIP Credit Facility expires on April 4, 2000, when the entire amount then drawn would be due and owing in full, and would constitute a secured expense of administration of the Chapter 11 estates of Boston Chicken. In the event this happens, the Debtors will not have funds available on April 4 to pay the DIP loan. To allow continuation of the DIP Credit Facility, which is essential to the continued operation of the Debtors' business, and to the confirmation of the Debtors' plan of reorganization, the Debtors have obtained preliminary agreement from respective agents for their secured lenders, subject to appropriate approvals, to the extension of the term of the DIP Creidt Facility to June 30, 2000. Other amendments include: (1) Ratification and Incorporation of Existing DIP Credit Agreement and Other Loan; (2) Waiver by Agents and Lenders of any Default caused by Borrower's failure to comply with any of the Minimum System EBITDAL Covenants under the Existing DIP Credit Agreement; (3) Provision under Section 1.3(b)(Mandatory Prepayments: ENBC Stock Proceeds) for principal prepayments by or for the benefit of Boston West or Platinum Rotisserie to Borrowers; (4) Specification in Section 1.3(c)(Application of Mandatory Prepayments: Reduction of Commitments) of no reduction of the Revolving Loan Commitment upon the payment of the Escrowed Platinum Proceeds; (5) The Availability Reserve to be as follows: Availability Period Reserve Amount ------ -------------- Week ending 3/26/00 $ 8,000,000 Week ending 4/2/00 $ 8,500,000 Week ending 4/9/00 $10,500,000 Week ending 4/16/00 $ 9,500,000 Week ending 4/23/00 $ 5,000,000 Week ending 4/30/00 $ 5,000,000 Week ending 5/7/00 $ 5,000,000 Week ending 5/14/00 $ 5,000,000 Week ending 5/21/00 $ 5,000,000 Week ending 5/28/00 $ 5,000,000 Week ending 6/4/00 $ 5,000,000 Week ending 6/11/00 $ 5,000,000 Week ending 6/18/00 $ 7,000,000 Week ending 6/25/00 $ 5,000,000 Week ending 7/2/00 $ 6,500,000 (6) Minimum Company Operated Store EBITDA to be as follows: Mimimum Company Rolling Period Ending With Operated Store Retail Period EBITDA (in millions) ---------------------------- -------------------- 1 ending on January 16, 2000 NA 2 ending on February 13, 2000 NA 3 ending on March 12, 2000 $26.0 4 ending on April 9, 2000 $28.0 5 ending on May 7, 2000 $29.1 6 ending on June 4, 2000 $31.4 7 ending on July 2, 2000 $31.9 If, as of June 15, 2000, Borrowers' plan of reorganization has not become effective and is not reasonably likely to become effective by June 30, 2000, Lenders and Borrowers agree that they will confer in good faith regarding a possible further extension of the Commitment Termination Date for such period of time as is acceptable to Lenders and Borrowers. General Electric Capital Corporation continues to serve as the Administrative Agent; Bank Of America, N.A. continues to serve as the Collateral Agent. The Debtors believe that the amendments are in the best interests of the estates and their creditors, and accordingly asked the court to approve Amendment No. 7 to Debtor in Possession Credit Agreement. The court ordered that in the event no written objection were received by 4:00 p.m., March 31, 2000, the amendments would take effect after that date. As of April 3, 2000 there were no such objections. (Boston Chicken Bankruptcy News Issue 22; Bankruptcy Creditors' Services Inc.) COLORADO GREENHOUSE: Seeks To Terminate Exclusivity --------------------------------------------------- The exclusive period for the filing of a plan provided by 11 USC section 1121 for Colorado Greenhouse Holdings, Inc., and affiliated debtors is terminated by order entered on April 3, 2000 by the Honorable Marcia S. Krieger, US Bankruptcy Judge, District of Colorado. COMMERCIAL FINANCIAL: Attorneys Appointed For Committee ------------------------------------------------------- By order of the Honorable Dana L. Rasure, US Bankruptcy Court, Northern District of Oklahoma, entered on April 4, 2000, the Creditors Committee of Commercial Financial Services Inc. is authorized to employ and retain the Glass Law Firm PC as its Tulsa legal counsel in the case, effective April 1, 2000. COSTILLA ENERGY: Seeks To Extend Exclusivity -------------------------------------------- The debtor, Costilla Energy, Inc. seeks to extend its period of exclusivity to solicit acceptances of its Chapter 11 plan or reorganization through July 31, 2000. On March 31, 2000, the debtor received a favorable bid for the purchase of the debtor's gas and oil assets. If the negotiations are productive and result in an asset purchase agreement, the debtor will amend its disclosure statement and plan. DEVLIEG BULLARD: Order Grants Extension of Exclusive Periods ------------------------------------------------------------ The third motion of Devlieg-Bullard, Inc. to extend exclusive periods to file a plan of reorganization and obtain acceptance thereof was granted by order entered on April 4. 2000 by Judge Marilyn Shea-Stonum. The debtor shall have the exclusive right to file a plan of reorganization up to and including June 30, 2000. The debtor shall have the exclusive right to solicit acceptances of its plan up to and including August 31, 2000. DIAGNOSTIC HEALTH: Emergency Motion For Time To File Schedules -------------------------------------------------------------- The debtors, Diagnostic Health Services, Inc., et al. seek a court order granting an extension of time to file schedules of assets and liabilities, statement of financial affairs, schedule of executory contracts and unexpired leases. The debtors are seeking an additional 21 days beyond the 15-day deadline, to and including April 25, 2000. The debtors state that their cases are large and complex, and that their employees must gather documents relating to hundreds of service contracts, leases, and independent contractor agreements, while they are also busy attempting to stabilize business operations during the initial postpetition period. EAGLE FOOD: Order Authorizes Employ of Retail Consulting Services ----------------------------------------------------------------- By court order entered on April 5, 2000, the US district Court for the District of Delaware entered an order authorizing the debtor, Eagle Food Centers, Inc. to employ and retain the firm of Retail Consulting Services, Inc. as their real estate consultants. EAGLE FOOD: Order Grants Time to File Schedules and Statements -------------------------------------------------------------- The debtor, Eagle Food Centers, Inc., was granted an additional twenty-day extension of time period for filing a schedule of assets and liabilities, a statement of financial affairs, a schedule of current income and expenditures, a statement of executory contracts and unexpired leases, and a list of equity security holders. The deadline is extended through and including May 4, 2000. FAMILY SNACKS INC: Guy's Purchaser To Close Fort Wayne Factory -------------------------------------------------------------- THE KANSAS CITY STAR reports on April 19, 2000, that General Products and Services, which acquired Guy's Foods last month, announced that it would close its Fort Wayne, Ind., snack food factory and consolidate the operation with the Guy's plant in Liberty. Family Snacks Inc., which operates Guy's, filed for Chapter 11 bankruptcy protection Feb. 14 after losing $5.75 million over the previous 16 months. General Products received bankruptcy court approval last month to acquire the assets of Guy's Foods after outbidding several other businesses. The purchaser agreed to assume $14 million in Guy's debt. Guy's Acquisition Co. LLC, which was set up by General Products to buy the assets, will be merged with General Products at the end of the month. The merged company will be known as General Products & Services LLC. GENCOR: Involuntary Petition a Possibility ------------------------------------------ In a report in THE ORLANDO SENTINEL on April 20, 2000, it was reported that if six of its lenders are successful, Gencor will be forced into involuntary bankruptcy. The creditors filed a petition two weeks ago, claiming they were owed $53 million. Gencor officials have said they will fight the move, insisting that the Orlando company is profitable. Gencor makes highway- construction equipment and other types of heavy machinery. Gencor has until the end of April to respond to the involuntary bankruptcy petition. Gencor chief executive E.J. Elliott said last week that the audits will be completed by the end of May. Soon after that time, he said, financial information will be released. He confirmed that Gencor has not paid its lenders for about a year. He said the company was trying to negotiate new terms. JUMBOSPORTS: Orders Grant Motions To Sell Real Property ------------------------------------------------------- The US Bankruptcy Court, Middle District of Florida, Tampa Division entered orders on April 4, 2000, approving the following sales of real property: Memphis Tennessee to Ashkenazy Acquisition Corp. 3650 Boston Road, Lexington, Kentucky to Royce G. Pulliam M&A, LLC for a total purchase price of $2 million Dallas, Texas (Central) To Trammell Crow-BTS, Inc. Clearwater, Florida to Pinellas County, Lafayette, Louisisana to Michael G. Hamner KNOLL LUMBER: Files For Chapter 11 Protection --------------------------------------------- According to an article in Puget Sound Business Journal On March 17, 2000, hardware retailer Knoll Lumber & hardware Co. Inc. of Monroe filed for Chapter 11 protection. The 55-year-old Knoll fisted assets of between $500,000 and $1 million and liabilities of between $1 million and $10 million. From peak sales of $36 million at four stores in 1997, the company shrank rapidly to a single location and $9 million in sales last year. Knoll's main supplier, Builder Marts of America in Greenville, S.C., is suing Knoll for an amount variously listed in the court documents as $687,000 and $1 million. Knoll attorney James Day said the exact amount is still being determined. The dispute involves product purchased from Builder Marts by Knoll in recent months, Day said. The state Department of Revenue is suing Knoll for $247,000 in uncollected taxes. LAMONTS APPAREL: Hearing on Motion Extending Exclusivity -------------------------------------------------------- Lamonts Apparel, Inc., the debtor, will be filing a motion for an order extending plan exclusivity. A hearing on the motion is scheduled for April 21, 2000 at 9:30 AM. The motion seeks to extend the time periods within which only the debtor may file a plan of reorganization under 11 USC Section 1121(b) and 1121(c)(2) through August 3, 2000 and within which the debtor may secure acceptances of such plan under 11 USC section 1121(c)(3) through October 2, 2000. The Official Committee of Unsecured Creditors supports the motion. LOTTOWORLD INC: Motion For Final Decree Closing Case ---------------------------------------------------- Lottoworld Inc's second amended plan of reorganization, as modified was confirmed pursuant to order of the US Bankruptcy Court Middle District of Florida, on September 7, 1999. All distributions under the plan have been made and the debtor asks that the court enter a final decree clsing the case. MANHATTAN INVESTMENT: Receiver Files Chapter 11 Petition -------------------------------------------------------- The Derivatives Litigation Reporter states in an article published on April 3, 2000 that the court-appointed receiver for a British Virgin Islands-based hedge fund, Manhattan Investment Fund Ltd., filed a petition for Chapter 11 bankruptcy. According to the report, the SEC filed a civil fraud action in January against the fund and its president, Michael W. Berger, in U.S. District Court for the Southern District of New York. The suit alleges the fund had undisclosed trading losses of $300 million, and now has assets of only $50 million. The Manhattan fund was designed to permit foreign investors or tax exempt U.S. investors (such as pension funds and trusts) to participate in the fund's capital appreciation strategy by short- selling Internet company securities. MATTHEWS STUDIO: Withdraws Nasdaq De-Listing Appeal --------------------------------------------------- Matthews Studio Equipment Group (Nasdaq:MATTQ), an international single-source provider of professional equipment to the entertainment industry and currently involved in a voluntary Chapter 11 case announced that it had informed the Nasdaq Listing Qualifications Panel of its decision to withdraw its appeal of Nasdaq's proposed delisting of the Company's common stock from the Nasdaq SmallCap market. The Company expects that it's stock, which has been suspended from trading since March 29, 2000 will be promptly delisted from the Nasdaq SmallCap market. Matthews is currently working with market makers in its stock to secure Nasdaq permission to have its stock trade publicly in the over-the-counter market on the Nasdaq Bulletin Board and/or in the pink sheets published by the National Quotations Bureau. Matthews Studio Group supplies traditional lighting, grip, transportation, generators, camera equipment, professional video and audio equipment, automated lighting and complete theatrical equipment and supplies to entertainment producers through its worldwide distribution network. MEDPARTNERS PROVIDER: Court Extends Date To Assume, Reject Leases ----------------------------------------------------------------- The Honorable Barry Russell, US Bankruptcy Judge, Central District of California, Los Angeles Division, entered an order on April 3, 2000, granting the motion of the debtor extending the the date by which the debtor must assume or reject any and all unexpired leases of non-residential real property through and including June 6, 2000. MICHAEL PETROLEUM: Agrees To Accept Bid --------------------------------------- According to a report in The Daily Bankruptcy Review, April 19, 2000, (ABI 19-Apr-00) Michael Petroleum Corp. and its creditors committee agreed to accept a $104 million stalking horse bid for substantially all of the company's assets from prospective purchasers, El Paso Energy Corp. and EnCap Energy Advisors LLC. PENNCORP FINANCIAL: Hearing To Approve Disclosure Statement ----------------------------------------------------------- On April 5, 2000, the debtor, PennCorp Financial Group, Inc. filed a proposed plan of reorganization and a proposed disclosure statement. A hearing to consider approval of the Disclosure Statement will be held before the Honorable Peter J. Walsh, US Bankrupt Court, District of Delaware, 824 Market Street, Sixth Floor, Wilmington, Delaware on April 25, 2000 at 11:30 AM. PRIMARY HEALTH SYSTEMS: Order Schedules Sale of Assets ------------------------------------------------------ The court has directed Primary Health Systems, Inc. and its affiliated debtors to conduct a public sale of assets and has established certain bidding procedures to be utilized. By order entered on March 31, 2000, the US Bankruptcy Court for the District of Delaware denied the motion of the debtors, Primary Health Systems, Inc. seeking approval of the sale of The Integrated Medical Campus, St. Michael Hospital and Mt. Sinai- East Hospital to The Cleveland Clinic Foundation, as buyer, for the aggregate cash price of $62,650,000. The assets shall be offered for sale in whole or in lots at a public sale to be held at 10:00 AM, May 12, 2000, at the office of Young, Conaway, Stargatt & Taylor LLP, Wilmington Trust Center, Eleventh Floor, Rodney Square North, Wilmington, Delaware. A hearing shall be held by the court on 4:00 PM on May 4, 2000 to consider possible approval of the sale. Competing Bids must be equal to at least $65,150,000. Each successive competing bid for all of the assets shall be in increments of net consideration to the sellers of not less than $1 million in each successive round of bidding and each successive competing bid for anything less than all the assets shall be in increments of $100,000. STYLESITE MARKETING: Order Authorizes Sale of Ecology Kids ---------------------------------------------------------- By order entered on March 29, 2000, the Honorable Stuart M. Bernstein, US Bankruptcy Court, Southern District of New York, entered an order approving the sale of Ecology Kids, Inc. to the highest bidder, First Source Financial LLP, for a purchase price of $1.5 million. SYSTEMSOFT: Plan Distribution Status ------------------------------------ The Turstee of the Crediotr Trust, Donald F. Farrell, Jr. reports that a Second Amended Plan of Reorganization filed by SystemSoft Corporation was approved by the US Bankruptcy Court on February 22, 2000. The court order approving the plan became final as of March 6, 2000 and a closing of the transfer of ownership of the corporation Rocket Software occurred shortly thereafter. A creditor's trust has been established to accomplish the resolution of pre-petition claims against SystemSoft, to liquidate remaining assets transferred to the Trust pursuant to the plan, and to accomplish a distribution to unsecured pre- petition creditors. The assets transferred to the trust include the initial cash payment from Rocket Software in the amount of $1.6 million, rights to any and all so-called "avoidance actions": which include preference recoveries and fraudulent conveyance recoveries, the right to receive 40% of any net recovery of the SystemSoft claim against Microsoft Corporation and the right to purse potential claims against PriceWaterhouseCoopers, SystemSoft's former accounting firm. The claims filed by former directors and officers aggregate approximately $800 million. A revised settlement of $250,000 was approved by the court. TEU HOLDINGS: Meeting of Creditors ---------------------------------- A chapter 11 bankruptcy case concerning TEU Holdings, Inc. was filed on February 23, 2000. The attorney for the debtor is David W. Carickhoff, Jr., Cozen and O'Connor, Chase Manhattan Centre, 1201 N. Market Street, Suite 1400, Wilmington, DE 19801 - tel. (302)295-2077. A meeting of creditors is set for April 14, 200, 1:00 PM, 844 King Street, Room 2313, Wilmington, DE. WHITE'S FINE FURNITURE: Files For Bankruptcy Protection ------------------------------------------------------- The Columbus Dispatch reports on April 19, 2000, that White's Fine Furniture, the oldest locally owned furniture retailer in central Ohio, filed for Chapter 11 bankruptcy-court protection Monday. The 55-year-old business has full-service stores at Easton Town Center and Tuttle Crossing Shopping Center. White's also operates a clearance store at its warehouse in Reynoldsburg. A formal reorganization plan is expected to be filed in bankruptcy court within two months. Court documents show White's with assets of $ 2.8 million and liabilities of more than $ 4 million. BOND PRICING For Week of April 17, 2000 ======================================= DLS Capital Partners, Inc., bond pricing for week of April 17, 2000 Following are indicated prices for selected issues: Acme Metal 10 7/8 '07 11 - 14 (f) Ameriserve 8 7/8 '06 8 - 10 (f) Asia Pulp & Paper 11 3/4 '05 82 - 83 Conseco 9 '06 70 - 71 E & S Holdings 10 3/8 '06 35 - 37 Fruit of the Loom 6 1/2 '03 37 - 39 (f) Genesis Health 9 3/4 '05 12 - 14 (f) Geneva Steel 11 1/8 '01 20 - 21 (f) Globalstar 11 1/4 '04 34 - 36 Iridium 14 '05 3 - 4 (f) Loewen 7.20 '03 36 - 40 (f) Paging Network 10 1/8 '07 52 - 54 (f) Pathmark 11 5/8 '02 28 - 32 Pillowtex 10 '06 38 - 42 Revlon 8 5/8 '08 49 - 51 Rite Aid 6.70 '01 72 - 74 Service Merchandise 9 '04 10 - 11 (f) Trump Atlantic 11 1/2 '06 67 - 69 TWA 11 3/8 '06 28 - 30 Vencor 9 7/8 '08 18 - 20 (f) ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. Debra Brennan, Yvonne L. Metzler, Edem Alfeche and Ronald Ladia, Editors. Copyright 2000. All rights reserved. ISSN 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *