/raid1/www/Hosts/bankrupt/TCR_Public/000821.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, August 21, 2000, Vol. 4, No. 163
Headlines
AHERF: Judge McCullough Approves Trustee's Chapter 11 Disclosure Statement
AMERICAN METROCOMM: Case Summary and 3 Largest Unsecured Creditors
APPONLINE.COM: Alan Jacobs Bars Principals from Offices & Hires DSFX
AUREAL INC: Committee Attempts to Slow Down the Sale Train
CHS ELECTRONICS: Application to Employ Clifford Chance as Special Counsel
CLARK MATERIAL: Seeks Extension of Exclusivity to January 12, 2001
COMMERCIAL FINANCIAL: Files a Seventh Motion to Extend Exclusivity
COMMUNICATION TELESYSTEMS: Abandons IPO in Favor of World Access Merger
CONSECO, INC.: Says It'll Have Plenty of Money to Satisfy Maturing Debtload
FINOVA CAPITAL: Moody's Downgrades All Credit Ratings & Continues Review
FRUIT OF THE LOOM: Dreman Value Management Reduces Equity Stake to 4.86%
GENESIS/MULTICARE: Utilities Have Adequate Assurance of Future Payment
GEOTELE.COM: Order Confirms Amended Chapter 11 Plan
HARNISCHFEGER INDUSTRIES: Judge Walsh Approves Modified Mediation Protocol
HEILIG-MEYERS: NYSE May Delist Home Furnishing Company
HOME HEALTH: Extends 365(d)(4) Deadline to November 13, 2000
INTEGRATED HEALTH: Alvarez & Marsal Employed as Restructuring Consultants
INTEGRATED HEALTH: Company Proposes to Forgive $70 Million in Officer Loans
KITTY HAWK: Best AeroNet Offers $22.3 Million to Buy Operating Assets
LAIDLAW, INC.: Cuts-Off Funding For Greyhound Lines
LAMONTS APPAREL: Judge Glover to Review Disclosure Statement September 18
LAROCHE INDUSTRIES: Asks Court to Extend Plan Filing Deadline to January 8
LENOX HEALTHCARE: Intends to File Plan of Reorganization by August 23
LOEWEN GROUP: Balks at American Commercial Bank's Bid for Relief from Stay
MASTER GRAPHICS: U.S. Trustee to Convene Meeting of Creditors on Sept. 8
MONDI OF AMERICA: Seeks Order to Sell $125,000 Worth of Shares in Allmerica
NATIONAL LINK: Fitch Affirms Mortgage Pass-through Certificates Classes
NUTRAMAX PRODUCTS: To Assume Employment Agreement with Richard G. Glass
PARAGON TRADE: Announces Plan To Leave Feminine Care Business
PRIME SUCCESSION: Committee Taps Jeffrey Chanin as Investment Bankers
RELIANCE GROUP: Reliance's A&H Book To Be Purchased by Aon Unit
SABRATEK CORPORATION: Asks for 30-Day Extension of Exclusive Periods
SAFETY-KLEEN: Final Order Entered Approving $100 Million DIP Financing Pact
SCAFFOLD CONNECTION: Creditors Vote to Accept CCAA Plan
SCHEIN PHARMACEUTICAL: Board Votes to Merge with Watson Pharmaceuticals
SUN HEALTHCARE: Motion To Reject Sunbridge Lease At Mountlake Terrace
TOYSMART.COM: Judge Kenner Rejects Sale Procedures Before a Buyer Arrives
TRI VALLEY: Committee Asks For Reconsideration of DIP Financing Order
VENCOR, INC.: Motion To Settle 3 Claims & Implement Settlement Protocol
WORLDCORP, INC.: Completes Liquidation Process, Giving Way to World Airways
* Bond pricing for the week of August 21, 2000
*********
AHERF: Judge McCullough Approves Trustee's Chapter 11 Disclosure Statement
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Judge Bruce McCullough approved a disclosure statement prepared by William
Scharffenberger, the Court-appointed chapter 11 Trustee for troubled
Allegheny Health, Education and Research Foundation in support of a plan to
compromise and settle some $1.45 billion of debt. Bankruptcy Judge
McCullough found that the disclosure statement contains adequate
information to permit AHERF's 10,000 creditors to make an informed decision
about whether they should vote to accept or reject the Trustee's plan.
After creditors cast their ballots, the Trustee will proceed to a
confirmation hearing before Judge McCullough on November 1,
AHERF filed for bankruptcy reorganization under Chapter 11 in July 1998.
The health chain, which controlled 14 hospitals, with Institutions in both
Pittsburgh and Philadelphia.
AMERICAN METROCOMM: Case Summary and 3 Largest Unsecured Creditors
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Debtor: American MetroComm Internet Services Corp.
1615 Poydras Street, No. 1050
New Orleans, Louisiana 70112-1254
Type of Business: The Company, together with its affiliates, is a
Digitally-based Competitive Local Exchange Carrier
(DLEC) headquartered in New Orleans, Louisiana
providing corporate-class, fully integrated voice and
data services in the southeastern United States. The
Company utilizes digital subscriber line (DSL)
technology and unbundled network elements on the "last
mile connection" and the latest soft-witch technologies
to provide local and long-distance services.
Chapter 11 Petition Date: August 16, 2000
Court: District of Delaware
Bankruptcy Case No: 00-03360
Judge: Peter J. Walsh
Debtor's Counsel: Neil B. Glassman, Esq.
Steven M. Yoder, Esq.
Elio Battista, Jr., Esq.
The Bayard Firm
222 Delaware Avenue, Suite 900
P.O. Box 25130
Wilmington, DE 19899
(302) 655-5000
J. Douglas Bacon, Esq.
Josef S. Athanas, Esq.
Timothy A. Barnes, Esq.
Peter P. Knight, Esq.
Latham & Watkins
233 S. Wacker Drive
Chicago, IL 60606
(312) 876-7700
Total Assets: $ 2,709,094
Total Debts : $ 5,037,431
3 Largest Unsecured Creditors
Siemens Financial Services,
Inc. Trade Debt $ 167,525
Overland Corporation Trade Debt $ 144,884
Internet Finance and
Equipment Capital Corp. Trade Debt $ 16,143
APPONLINE.COM: Alan Jacobs Bars Principals from Offices & Hires DSFX
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Alan J. Wax, writing for Newsday, reports that Alan M. Jacobs, the Chapter
11 Trustee appointed to oversee the reorganization of Apponline.com Inc.
and Island Mortgage Network Inc., has barred principals from the companies'
Melville offices. Further, Mr. Jacobs ordered the Company's 57 branches in
20 states to be closed and secured.
In a bankruptcy court hearing, Mr. Jacobs told Judge Dorothy Eisenberg, "I
have represented to the principal officers that they are no longer welcome
on the property and to return company property." Mr. Jacobs advised the
Court that he's retained 21 employees to help him sift through files to
determine what "mortgages exist and money and mortgages that do not exist."
Because company principals assert their Fifth Amendment privilege when
asked any question about company finances, Mr. Jacobs has not found them
helpful to his investigation, Mr. Wax relates.
"Mr. Jacobs has had a very active two-week tenure so far," his lawyer,
Robert Schmidt, Esq., of Kramer Levin Naftalis & Frankel, told the court.
"Now, Mr. Jacobs is performing triage."
The companies' lawyer, Leslie Case, of Gersten, Savage, Kaplowitz &
Fredericks, said in an interview with Mr. Wax, "The principals are willing
to cooperate. [Jacobs] doesn't want it."
AppOnline and Island Mortgage, as previously reported in the TCR filed for
bankruptcy protection under Chapter 11 from creditors on July 19 after the
State Banking Department suspended Island Mortgage's mortgage-broker
license. Creditors alleged that the mortgage banker diverted more than $50
million destined for home buyers.
Late last week, Kenneth Eckstein, Esq., leading the Kramer Levin team
representing the Trustee, advised the Court that Decision Strategies
Fairfax International LLC was retained, subject to Bankruptcy Court
approval, to track the missing money. "It's a major undertaking for the
trustee to get his arms around this case," Mr. Eckstein told the court, Mr.
Wax relates.
AUREAL INC: Committee Attempts to Slow Down the Sale Train
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The Official Committee of Unsecured Creditors of Aureal, Inc. responds to
the motion of Aureal, Inc. for approval of a sale of the debtor's assets.
The Committee does not object to a sale of the debtor's assets, but has
concerns about aspects of the motion, the proposed sale and the marketing
of the debtor's assets.
The Committee states that its comments are preliminary since:
(a) The definitive agreement between the debtor and Guillemot
Corporation is not yet in final form;
(b) The Committee received the bid of Creative Technology Ltd. the day
before this brief was filed, and did not have an opportunity to
meet and discuss that bid; and
(c) On August 8, 2000, the Committee received the Opposition of 3dfx
Interactive, Inc., which indicates that this potential bidder may
not have been contacted about the sale and may have an interest in
making a substantial bid.
The Committee has a problem with the debtor's motion in that it purports to
exclude from the sale 93,000 square feet of space subleased from Lam
Research; the debtor's accounts receivable; and claims of the estate
against third parties, including claims against Creative, which the debtor
believes "are the most valuable assets of the estate."
The Committee claims that the exclusions are erroneous and should be
rejected as the contract an earlier ruling of the court and could prevent
the state from receiving maximum value for its assets.
The Committee states that the current draft of the Guillemot agreement,
containing certain warrants and representations, exposes the estate to
potential liability. Virtually all of the debtor's management and key
technical staff who would have the knowledge relevant to the proposed
representations and warranties are no longer employed by the debtor.
The Committee objects to the description of the Breakup Fee and the payment
of costs and expenses involved in the assumption and assignment of
unidentified executory contracts.
Further, the Committee questions the marketing of the estate assets since
3dfx Interactive, Inc. suggests that it was an obvious target for the
marketing, and was not approached about the sale of the debtor's assets.
The Committee asks that the court not approve the sale procedures until its
concerns are addressed and resolved.
CHS ELECTRONICS: Application to Employ Clifford Chance as Special Counsel
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CHS Electronics, Inc., is the defendant is a lawsuit filed by SiS
International Holdings Limited in the High Court of Hong Kong SAR under
action number HCMP 7341/99, Kenneth D. Murena, Esq., of Tew, Cardenas,
Rebakm Kellogg, Lehman, DeMaria & Tague, L.L.P., tells the U.S. Bankruptcy
Court for the Southern District of Florida, Miami Division.
Campbell John Koreff, Esq., of Clifford Chance, represented CHS before it
filed for chapter 11 protection in April. Prior to the Petition Date,
Clifford Chance received a $10,000 retainer, $9,800 of which was drawn as
of April 4, 2000, with a $28,068 balance due the Firm. For work performed
post-petition, CHS owes another $26,898.
CHS asks the Bankruptcy Court for permission to employ, pursuant to 11
U.S.C. Sec. 327(e) and nunc pro tunc to its Petition Date, Clifford Chance
and Mr. Koreff as special counsel to represent their interests before the
High Court of Hong Kong SAR. The Debtors ask further permission to pay a
$30,000 retainer to Clifford Chance.
CLARK MATERIAL: Seeks Extension of Exclusivity to January 12, 2001
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Clark Material Handling Company, et al., tells the U.S. Bankruptcy Court in
Wilmington, Delaware, that it needs more time to propose a plan of
reorganization and, accordingly, seeks a further extension of its
exclusive periods under Section 1121 of the Bankruptcy Code during which to
file a plan of reorganization and solicit acceptances of that plan.
The Court has scheduled a hearing at 4:00 PM on September 19, 2000 to
consider the Debtors' motion.
While the debtors claim that they have worked diligently to accomplish a
variety of tasks since the Petition Date, including approval of a
"Transition Strategy", and approval of final DIP financing from Congress
Financial Corporation, completion of schedules and statement of financial
affairs, and establishment of a bar date for the filing of proofs of claim,
the debtors must continue to implement the Transitions Strategy and define
their business plan, analyze claims against their estates and explore a
sale of assets prior to formulation of a plan.
The debtors, therefore, seek an order extending the exclusive period during
which only the debtors may file a plan of reorganization by 150 days, to
and including January 12, 2001 and the exclusive period to solicit
acceptances to such plan, to and including March 13, 2001.
COMMERCIAL FINANCIAL: Files a Seventh Motion to Extend Exclusivity
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Commercial Financial Services, Inc. and CF/SPC NGU, Inc., request that the
court enter an order extending for 60 days the periods within which each of
the debtors has the exclusive right to file a plan of orderly liquidation
and solicit acceptances of such plan. Both the Official Committee of
Asset-backed Security holders and the Official Committee of Unsecured
Creditors have no objections to the motion.
One of the fundamental open issues in these cases is whether Section 510(b)
of the Bankruptcy Code requires that ABS claims be subordinated. Resolution
of this issue will determine to a significant degree the nature and extent
of the distributions to be made to ABS and non-ABS claimants under any
plan, and may also determine whether ABS claimants have plan voting rights.
The debtor and the Committees have had several meetings to discuss
settlement. Each of the committees has retained financial consultants to
assist in plan settlement negotiations and/or litigation. The parties have
entered into a confidentiality agreement to govern the exchange of
information pertinent to plan settlement discussions, and have in fact
exchanged substantial amounts of information pursuant to that agreement. As
a result of that information exchange, the work of the financial
consultants and substantial legal analysis by the parties' professionals,
meaningful discussions are indeed under way. The debtor and the Committees
are hopeful that these discussions will lead to a consensual plan. All
parties agree that the additional time requested in this Motion is
reasonably necessary for those efforts to continue without the distraction
of litigation.
Unless the exclusive periods are further extended, each of the Committees
may feel compelled to file its own plan. The result would likely be
continued or increased polarization of the two Committees and their
respective constitutes as well as substantial litigation and attendant
delay and expense.
The additional time is needed because the parties will not complete plan
settlement discussions by the expiration of the current exclusivity
periods.
The debtor seeks a court order extending the debtors' exclusive periods for
filing a Chapter 11 plan until and including October 31, 2000; and
extending the debtors' exclusive periods to solicit acceptances of a
Chapter 11 plan until and including December 31, 2000.
COMMUNICATION TELESYSTEMS: Abandons IPO in Favor of World Access Merger
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Communication Telesystems International d/b/a WORLDxCHANGE has requested
withdrawal of its registration statement previously filed by the company
with the SEC. After filing the statement with the Commission, the company
entered into a definitive Agreement and Plan of Merger dated February 11,
2000 with World Access, Inc., as amended, under which the company will
be acquired by World Access. Accordingly, Communication Telesystems
International no longer intends to undertake the initial public offering
described in the registration statement.
CONSECO, INC.: Says It'll Have Plenty of Money to Satisfy Maturing Debtload
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Conseco, Inc. (NYSE:CNC) issued the following statement:
"We believe that short sellers and other persons have been
disseminating misleading information about Conseco's upcoming debt
maturation. We refer investors to pages 7 and 46 of our Quarterly Report on
Form 10-Q for the quarter ended June 30, 2000, in which we indicated that:
a) Conseco is currently in discussions with its bank lenders with
respect to extension of its debt maturities. Although no agreement
has been reached, management is optimistic that appropriate
extensions can be negotiated.
b) Conseco has embarked on several courses of action with respect to its
Conseco Finance Corp. subsidiary (including asset dispositions and
restructuring of ongoing businesses), as well as an asset
disposition program with respect to certain non-strategic assets at
the parent company level.
"These initiatives are designed to allow Conseco to reduce parent
company debt over time. Conseco believes that the sale of non-strategic
assets and the actions contemplated at Conseco Finance will generate cash
proceeds of approximately $2.0 billion over the next 12 to 15 months.
"Please refer to the 10-Q for additional information."
Headquartered in Carmel, Ind., Conseco is one of middle America's leading
sources for insurance, investment and lending products. Through its
subsidiaries and a nationwide network of distributors, Conseco helps 13
million customers step up to a better, more secure future.
FINOVA CAPITAL: Moody's Downgrades All Credit Ratings & Continues Review
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Moody's has downgraded the ratings of FINOVA Capital Corporation (senior
debt to Ba1, to Not Prime for short-term debt) and its affiliates. The
ratings remain on review for possible further downgrade.
Moody's rating action results from its belief that the stability of
FINOVA's franchise has deteriorated since the company's announcement in May
2000 that it intended to explore strategic alternatives. FINOVA has
restrained its new business activity in order to conserve cash, and as time
passes, it is likely that employees and customers will become progressively
more concerned. This may place the franchise at risk for portfolio
deterioration and run-off and reduced earnings capacity at the firm.
Reviving momentum in the franchise will become increasingly challenging, in
Moody's opinion. Additionally, absent a successful conclusion to the
ongoing strategic process, the company's long-term financial flexibility
remains very limited, although the company has adequate cash-on-hand to
meet near term maturities.
Moody's cited the fact that the market for finance properties and assets
has become less favorable during the last several months. These market
conditions make FINOVA's exploration of its strategic alternatives more
challenging, and therefore the ratings remain on review for possible
further downgrade.
The following ratings were downgraded:
TO FROM
---- ----
* FINOVA Capital Corporation
1) Short-Term Not Prime Prime-3
2) Long-Term Issuer Ba1 Baa2
3) Senior Ba1 Baa2
4) Subordinated Shelf (P)Ba3 (P)Baa3
* FINOVA Finance Trust
1) Preferred Stock "b2" "ba2"
* FINOVA Group Inc.
1) Convertible Subordinated Debt B1 Ba1
2) Cumulative Preferred Stock Shelf (P)"b2" (P)"ba2"
3) Non-Cumulative Preferred Stock Shelf (P)"b3" (P)"ba3"
FINOVA Capital Corporation is a commercial finance company; its operations
are primarily in the United States. At June 30, 2000, FINOVA Capital
Corporation reported total assets of approximately $14 billion. FINOVA
Capital Corporation is a wholly owned subsidiary of FINOVA Group, Inc., and
it is based in Scottsdale, Arizona.
FRUIT OF THE LOOM: Dreman Value Management Reduces Equity Stake to 4.86%
------------------------------------------------------------------------
Dreman Value Management, L.L.C., reports in a regulatory filing that it now
owns 486,855 shares of the common stock of Fruit of the Loom Ltd., with
sole voting thereon, together with 3,249,880 shares over which the firm
holds sole dispositive powers. The total amount owned represent 4.86% of
the outstanding common stock of the company.
GENESIS/MULTICARE: Utilities Have Adequate Assurance of Future Payment
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Genesis Health Ventures, Inc., The MultiCare Companies, Inc., and their
debtor-affiliates sought and obtained an interim and final order
prohibiting Utility Companies from altering, refusing or discontinuing
services on account of pre-petition invoices, considering that
uninterrupted gas, water, electric, telephone and other utility services
will mean severe disruptions to the Debtors' ability to sustain their
operations during the pendency of their Chapter 11 cases.
Prior to the commencement date, GHV's average monthly cost of Utility
Services was approximately $3.2 million. Multicare's average monthly cost
of Utility Services was approximately $1.1 million.
Judge Walsh concurred that the Debtors' payment history with respect to
prepetition utility bills, their demonstrated ability to pay future utility
bills, and the administrative expense priority afforded under sections
503(b) and 507(a)(1) of the Bankruptcy Code, together constitute adequate
assurance of payment for future utility services as described in 11 U.S.C.
Sec. 366, without the need for additional assurance in the form of a
deposit.
The GHV Debtors add that the proposed $250 million DIP financing facility
will provide the Debtors with more than sufficient availability of funds
for the payment of postpetition utility charges and other administrative
expenses.
In the Multicare cases, the Debtors remark that the proposed $50 million
DIP financing facility will be more than sufficient to enable the Debtors
to pay postpetition utility charges. (Genesis/Multicare Bankruptcy News,
Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900)
GEOTELE.COM: Order Confirms Amended Chapter 11 Plan
---------------------------------------------------
By order of Judge Burton R. Lifland, Bankruptcy Court, Southern District of
New York, an order was entered on August 2, 2000 confirming the amended
Chapter 11 plan of reorganization of Geotele.Com, Inc. f/k/a Transco
Research Corporation.
Unsecured creditors, as previously reported in the TCR, see a recovery of 4
cents-on-the-dollar. Now that the company is no longer burdened by debt,
it is hopeful that it can soon resume operations and start deploying a
network of VoIP gateways, which will allow termination of international
Voice traffic.
HARNISCHFEGER INDUSTRIES: Judge Walsh Approves Modified Mediation Protocol
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Various parties objected to Mediation/Arbitration Procedures proposed by
Harnischfeger Industries, Inc., et al., in their on-going chapter 11
reorganization. Judge Walsh entertained the various objections and granted
the proposal with a number of revisions:
The Judge authorizes the Debtors to:
(1) invoke the Mediation/Arbitration Procedures for claims;
(2) Appoint (i) JAMS as Claims Resolution Facilitator and (ii) Judge
Fenning as Claims Resolution Supervisor.
However, the Court's Order provides for revisions with respect to:
(1) Intercompany or Intracompany Claims
The Procedures will not apply to intercompany or intracompany
claims.
(2) Insurance Carriers
The Debtors are not allowed to resolve any claim that involves an
insurance carrier and that is within the insurance policy limits
without notice to the insurance carrier. The revised court order
provides that an insurance carrier be given an opportunity to take
part in the settlement discussions and the opportunity to approve
such settlement in accordance with the terms of the insurance
policy.
Judge Walsh specifies that his order will not govern whether an
insurance coverage exists for or is applicable to any claim, will
not expand an existing insurance coverage, and will not effect the
rights or obligations of either the Debtors or their insurers under
the applicable insurance policies. The Judge specifies that
requirements under the Debtors' insurance policies, insurers'
rights or defenses under such insurance policies, are all expressly
reserved. Judge Walsh makes it clear that the Debtors' "sole
discretion," as the term is used in the Court Order and the
Procedures will not change the Debtor's obligation to cooperate
with insurers and/or to allow insurers to be involved with the
defense and/or approval of insured claims.
(3) U.S. Government or U.S. Agency
The revised order also explicitly states that the Court does not
authorize the Debtors to arbitrate any claim asserted by the U.S.
Government or a U.S. Agency.
(4) UAW and USWA Collective Bargaining, USWA Class Action
Moreover, the Court does not authorize the Debtors to compel
arbitration of any claim governed by dispute resolution mechanisms
under collective bargaining agreements with:
(i) International Union, UAW and
(ii) United Steelworkers of America, AFL-CIO-CLC (USWA).
UAW represents the Debtors' hourly bargaining unit retirees who
retired from the Debtors' Escanaba, Michigan facility, and the
hourly bargaining unit retirees who retired from the Debtors'
Cedar Rapids, Iowa facility. UAW has filed proofs of claim on
behalf of the Escanaba Retirees and the Cedar Rapids Retirees,
their spouses and other qualified dependents for pension and
retiree health and life insurance obligations owed and enforceable
pursuant to various collective bargaining agreements between the
UAW and Harnischfeger Corporation and its predecessors and
successors.
USWA represents active employees of P&H Mining Corp., retirees
formerly employed in New Philadelphia, OH by Joy Technologies,
Inc. and predecessor companies, retirees formerly employed in
Easton, PA, by Joy and/or Ecolaire, Inc., Ecolaire Export FSC,
Inc., Joy Energy Systems, Inc., Joy Environmental Technologies,
Inc., and/or Joy Power Products, Inc., and retirees formerly
employed by Joy Technologies, Inc., Mining Machinery Division,
Claremont Foundry located in Claremont, NH. USWA has filed claims
on behalf of the active employees of P&H and on behalf of certain
employees, their spouses and other qualified dependents. In
addition, USWA, along with class action claimants Donald H.
Maurer, et. al. are parties to a class action lawsuit known as
Donald H. Maurer, et. al. v. Joy Technologies, Inc., Nos. 98-3964
and 98-4029 currently pending in the U.S. Court of Appeals for the
Sixth Circuit. USWA and the Maurer Class have filed claims for
unpaid retiree health benefits which are the subject of the Maurer
lawsuit.
In connection with these collective bargaining agreements, the
Debtors will seek:
(a) agreement with the UAW regarding use of the procedures;
(b) modification of the procedures to accommodate the related
issues covered by collective bargaining.
Whether the Procedures apply to the class action lawsuit known as
Donald H. Maurer, et. Al. v. Joy Technologies, Inc. Nos. 98-3964
and 98-4029 currently pending in the U.S. Court of Appeals for the
Sixth Circuit will be determined after the Sixth Circuit renders
its decision currently under advisement. If the Debtors elect
mediation for the Union CBA Claims, all parties reserve their
rights under applicable law regarding matters that were not
resolved in the mediation.
The Debtors acknowledge that, notwithstanding any provision of the
Bankruptcy Court's Order on Mediation/Arbitration Procedurs, 11
U.S.C. section 1114 governs the Debtors' actions regarding retiree
health benefits to the extent of applicable law.
The Mediation/Arbitration Procedures
The Debtors will have the option to resolve any claim in the Court
according to traditional claims resolution procedures. If the Debtors
object to a claim, they may choose to later refer that claim into the
Procedures, provided that the claim is not of the kind explicitly excluded
from the Procedures, and other requirements of the Court's Order are met.
Under the revised court order, the Procedures will consist of the three
options:
(i) Settlement;
(ii) Mediation; and
(iii) Arbitration (with the option of de novo review by the Court if a
motion is timely filed by the claimant or the Debtors).
The Debtors will have the sole discretion to determine which options (if
any) they will utilize for each claim and in what order. The JAMS Claims
Resolution Facility will administer mediation and arbitration.
Settlement
The Debtors will examine the claim and communicate with the claimant to
resolve the claim without further action of a mediator or arbitrator or
litigation. During such settlement discussions, (a) the creditor will
advise the Debtors of how the creditor prefers to receive notice(s) and to
whom such notice(s) should be sent, and the Debtors will provide the
claimant a copy of the court order if settlement discussions are
unsuccessful.
If the disputed amount does not exceed $100,000 and the settled claim does
not exceed $500,000, the Debtors, in their sole discretion, may agree to
settle such claim.
If the disputed amount exceeds $100,000 but does not exceed $5,000,000 and
the settled claim amount exceeds $500,000, the Debtors, in their
discretion, may agree to settle such claim or cause of action only if they
provide written notice to the U.S. Trustee, the official committees and the
DIP Lender of the terms of the settlement, and such terms are not objected
to in writing by any of these parties within ten days after the date of
such written notice.
If (a) the disputd amount does not exceed $100,000 and (b) the settled
claim does not exceed $500,000, the Debtors have authority to settle the
claim and will file the stipulation with the Court-appointed claims agent.
If the disputed amount exceeds $l00,000 but does not exceed $5,000,000 and
the settled claim amount exceeds $500,000, the Debtors must give notice
and, if no timely objections are received, file a stipulation with the
Court. If the disputed amount is $5,000,000 or more, the Debtors must file
a Rule 9019 motion approving such settlement.
The disputed amount means, for commercial claims, the difference between
the Debtors' books and records and the proposed settlement amount, and for
all other claims, means the Debtors' scheduled amount of the claim and the
proposed settlement amount, and if such claim is not scheduled, then the
disputed amount will be considered zero.
JAMS Claims Resolution Facility
If the Debtors are unable to settle a claim then the Debtors may elect,
upon notice to the claim holder, to refer the claim to either:
(a) Mediation and/or
(b) Arbitration under the JAMS Claims Resolution Facility managed by
Judge Fenning.
Each mediator or arbitrator assigned to a disputed claim will provide the
Debtors and the creditor with an affidavit (unnotarized) under penalty of
perjury stating that person's connections, if any, to the Debtors, the
creditor and any party in interest directly involved in the dispute. If the
Debtors or the creditor object to the mediator or the arbitrator based on:
(a) circumstances indicating a potential lack of neutrality or
(b) subject matter expertise or
(c) the scheduled mediation or arbitration hearing date, then the
complaining party will, no later than ten days after the Mediation
Notice or Arbitration Notice is sent, advise Judge Fenning in
writing, of such complaint and a teleconference scheduled by Judge
Fenning will be held.
If Judge Fenning is a mediator or arbitrator in the matter, then another
qualified person will be appointed by JAMS to act as Claims Resolution
Supervisor to address these preliminary concerns in the matter among the
Debtors, the creditor and Judge Fenning.
At the Teleconference, Judge Fenning will determine whether (a) the
mediation conference or arbitration hearing should be rescheduled and (b)
another JAMS neutral will be appointed to address the claim. If another
JAMS neutral is appointed the parties will be barred from objecting to such
neutral, except with respect to a conflict of interest. For the period
between the date the Procedural Objection is served and the Teleconference,
all time periods are tolled. If a creditor elects to have the mediation or
arbitration occur in Wilmington, Delaware, such election will be made to
Judge Fenning in writing no later than 10 days after the Mediation Notice
or Arbitration Notice is sent and such election will bind the Debtors.
Mediation
If the Debtors elect mediation, JAMS will send written notice scheduling
the mediation session to:
(i) the Debtors,
(ii) the Debtors' bankruptcy counsel,
(iii) Debtors' counsel with respect to the claim (if different than the
Debtors' bankruptcy counsel),
(iv) the claim holder,
(v) the claim holder's counsel (if known to the Debtors) and
(vi) insurance carriers, if required by the relevant insurance policy.
The Mediation Notice will:
(i) identify the mediator;
(ii) schedule the exchange of documents or other evidence that will
summarize the positions of each party;
(iii) identify the format of, and the procedures to be employed during
the mediation;
(iv) describe who should attend;
(v) identify the location of the mediation; and
(vi) describe the effect of a mediated settlement, and will include
exhibits of:
(i) the Court Order on Mediation/Arbitration Procedures;
(ii) the mediator's resume;
(iii) the Mediation Procedures and
(iv) the Debtors' Mediation Letter.
On a monthly basis, the Debtors will provide an accounting of the aggregate
fees known to have been incurred by JAMS to the Harnischfeger Official
Committee of Unsecured Creditors. If such amount exceeds $750,000, the HII
Committee may file a motion seeking to terminate the Procedures. For Beloit
claims referred to mediation, JAMS will send a copy of the Mediation Notice
to the Beloit Official Committee of Unsecured Creditors.
The mediation will (i) be scheduled to occur no sooner than 14 days and not
more than 30 days from the date of the Mediation Notice; and (ii) unless
the creditor elects, that mediation will occur in Wilmington, Delaware,
take place in the Milwaukee, Wisconsin or Pittsburgh, Pennsylvania
metropolitan areas, at the Debtors' option; but mediations may be held at
other locations if the Debtors so determine. The mediation will not last
more than one business day, unless in the mediator's judgment, additional
mediation would likely be fruitful.
JAMS' mediation procedures will be used. If a change in Mediation
Procedures from that submitted with the motion that is made, which
materially or adversely affects the rights of the parties, the Debtor will
file the revised mediation procedures with the Court and serve them on
counsel to the official committees and the U.S. Trustee. If no objection is
received ten business days after notice is given, the revised mediation
procedures will be effective eleven business days after the notice is
served.
If a settlement is reached at the mediation, then a stipulation will be
entered into. The stipulation must include a certification by the mediator
that the settlement is not unfair and complies with the standards under
Rule 9019 of the Federal Rules of Bankruptcy Procedure. Such certification
will constitute a rebuttable presumption that the settlement complies with
Rule 9019. The Debtors will file the stipulation with the Court and serve
it on the Debit Committee and the HII Committee. The stipulation will
become effective if neiher committee objects within 10 business days of
service of the stipulation.
If either party or the mediator report in writing to the Claims Resolution
Supervisor that the mediation is unlikely to result in a mediated
settlement, then the claim may, at the Debtors' option, proceed to
arbitration. When a claim is referred to arbitration, the neutral that
acted as mediator may act as the arbitrator if all parties to the mediation
agree in writing. However, if the mediator determines that the Debtor or
holder of a claim that is referred to mediation failed to comply with the
document exchange or other requirements set forth in the Mediation Notice,
then the claim will be immediately referred to arbitration; provided that
within 14 days of the mediation, the Debtors may elect to have the claim
resolved by the Court.
Arbitration
The Debtors may elect to also have a claim resolved by an arbitrator
without first referring the claim to mediation or to refer a claim to
arbitration after mediation occurs.
If a claim is referred to arbitration JAMS will send written notice
scheduling the arbitration:
(i) to the Debtors,
(ii) Debtors' bankruptcy counsel,
(iii) Debtors' counsel with respect to the claim (if different than the
Debtors' bankruptcy counsel),
(iv) the claim holder, (v) claim holder's counsel (if known to the
Debtors) and
(vi) insurance carriers, if required by the relevant insurance policy
(the "Arbitration Notice").
The Arbitration Notice shall:
(i) identify the arbitrator;
(ii) schedule the exchange of documents or other evidence that will
summarize the positions of each party;
(iii) identify the format of, and the procedures to be employed
during the arbitration;
(iv) describe who should attend;
(v) identify the location of the arbitration; and
(vi) describe the effect of the Arbitration.
The Arbitration Notice will include exhibits of:
(i) the court order on Mediation/Arbitration Procedures;
(ii) the arbitrator's resume;
(iii) the Arbitration Procedures; and
(iv) the Debtors' Arbitration Letter.
On a monthly basis, the Debtors will provide an accounting of the aggregate
fees known to have been incurred by JAMS to the HII Committee. If such
amount exceeds $750,000, the HII Committee may file a motion seeking to
terminate the Procedures. For Beloit claims referred to arbitration, JAMS
will send a copy of the Arbitration Notice to the Beloit Committee.
The arbitration will (i) be scheduled to occur no sooner than 14 days and
not more than 30 days from the date of the Arbitration Notice and (ii)
unless the creditor elects that the arbitration will occur in Wilmington,
Delaware within the time frame as described under Settlement, it will take
place in the Milwaukee, Wisconsin or Pittsburgh, Pennsylvania metropolitan
areas, at the Debtors' option. The arbitrator may extend deadlines if
necessary, but extensions will not be more than 14 days for each deadline.
The documents required for the arbitration must be submitted by the
creditor and the relevant Debtor to the arbitrator no later than the latter
of (i) ten business days after the Arbitration Notice is sent or (ii) ten
days before the date of the arbitration hearing. The arbitrator will issue
a statement(s) of issue and preliminary ruling no later than two business
days prior to the date of the arbitration. After issuance of the
statement(s) of issue and preliminary ruling, the arbitrator can conduct a
telephone conference to clarify the statement(s) of issue and preliminary
ruling. If the parties stipulate to the statement(s) of issue and
preliminary ruling, then it will become the binding determination of the
claim. If the parties do not stipulate to the statement(s) of issue and
preliminary ruling, then the scheduled arbitration will proceed as planned.
At the arbitration, the arbitrator is not bound by the statement(s) of
issue and preliminary ruling and may issue an award that differs from the
statement(s) of issue and preliminary ruling.
The arbitration procedure will be conducted in accordance with JAMS' Claims
Resolution Facility Arbitration Procedures. If a change that materially or
adversely affects the rights of parties is made the Debtors will file the
revised arbitration procedures with the Court and serve them on counsel to
the official committees and the U.S. Trustee. If no objection is received
ten business days after notice is given, the revised arbitration procedures
will be effective eleven business days after the notice is served.
The arbitration will (i) estimate the claim pursuant to section 502(c) of
the Bankruptcy Code and (ii) establish the amount and other characteristics
of priority, secured, unsecured etc.) of the claim for all purposes,
including voting and distribution purposes.
The arbitration will be non-binding, unless the parties elect to be bound
by the determination before the arbitration begins. The arbitrator is
authorized to enter sanctions against any party.
De Novo Review
If a creditor elects to be bound by the arbitration, then the Debtors will
be bound by the arbitration and will not file a motion for de novo review.
Otherwise, each party will have 14 days to file with the Bankruptcy Court a
motion for de novo review by the court unless the creditor previously
elected to be bound by the arbitration determination. All parties maintain
their rights under applicable law regarding venue and jurisdiction. The
motion must be served by the party seeking de novo review upon:
(i) the Debtors,
(ii) the Debtors' bankruptcy counsel,
(iii) the Debtors' counsel with respect to the claim (if different than
the Debtors' bankruptcy counsel),
(iv) the United States Trustee,
(v) counsel to the Official Committee of Unsecured Creditors,
(vi) counsel to the Debtors' debtor-in-possession lender,
(vii) counsel to the Official Committee of Equity Security Holders,
(viii) counsel to the Beloit Committee,
(ix) the claimant, and
(x) the claimant's counsel (if known).
The parties may agree by stipulation to limit the scope of de novo review,
The Debtors reserve the right to request that the Court, separate from the
review, estimate the claim pursuant to section 502(c) of the Bankruptcy
Code. All evidence rules governing de novo review will be governed by
Proposed Local Rule 9019.2(f). The Court will determine what further
evidence and proceedings are required under the circumstances.
If neither party timely files such a motion, the arbitrator's award will
become final and binding, and the Debtors shall file the arbitrator's award
with the Court fifteen days after the arbitrator's award is rendered. If a
motion for de novo review is timely filed, then the Debtors will file the
arbitration award under seal and the contents will not be known to any
judge who might be assigned to the matter until the Court has entered a
final judgment in the action or the action has otherwise terminated.
However, for claims defined in 28 U.S.C. section 157(b)(5), the Debtors may
file a statement of estimated values, and such values will be used as
estimated values for voting purposes, pursuant to Bankruptcy Rule 3018(a).
(Harnischfeger Bankruptcy News, Issue No. 25; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
HEILIG-MEYERS: NYSE May Delist Home Furnishing Company
------------------------------------------------------
The New York Stock Exchange is reviewing the continued listing status of
the Common Stock of Heilig-Meyers Company--ticker symbol HMY. The NYSE did
not open trading on Wednesday, August 16, 2000 due to the Company's
announcement that the Company and certain of its subsidiaries have filed
voluntary petitions for reorganization under Chapter 11 of the Bankruptcy
Code.
The NYSE will continue the trading halt of the Company's Common Stock until
such time as the NYSE has completed its evaluation of the continued listing
status of the security. Upon completion of that review the NYSE may resume
trading with the new ticker symbol "QHMY" and continue to monitor events at
the Company or move forward with suspension and delisting procedures.
The NYSE noted that it may, at any time, suspend a security if it believes
continued dealings in the security on the NYSE are not advisable.
HOME HEALTH: Extends 365(d)(4) Deadline to November 13, 2000
------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of Delaware, Home
Health Corporation of America, Inc., et al., obtained an extension of time
within which the Company may assume or reject unexpired non-residential
real property leases, for an additional 90 days -- until November 13, 2000.
INTEGRATED HEALTH: Alvarez & Marsal Employed as Restructuring Consultants
-------------------------------------------------------------------------
Integrated Health Services, Inc., seeks Bankruptcy Court authority from
Judge Walrath in Wilmington, Delaware, for authority to employ and retain
Alvarez & Marsal, Inc., as their restructuring consultants in accordance
with the terms of a retention letter agreement among the Debtors, A&M and
Joseph A. Bondi, a Managing Director of A&M. Pursuant to the Letter
Agreement, A&M will make available to the Debtors the services of Joseph A.
Bondi to serve as Chief Restructuring Officer and upon the anticipated
departure of IHS' current Chief Executive Officer, to serve as Chief
Executive Officer.
In the event the CEO Agreement is closed with the Court's approval, Mr.
Bondi will be appointed as the Chief Executive Officer by the IHS Board of
Directors at its next scheduled meeting. In the event the CEO Agreement has
not been closed, the Board will appoint at the meeting Mr. Bondi (i) as
Chief Restructuring Officer until the CEO Agreement is closed; and (ii) as
Chief Executive Officer effective immediately upon court approval of the
CEO Agreement. Mr. Bondi will report directly to the Current CEO and the
Board until he becomes the Chief Executive Officer, after which he will
report directly to the Board.
The Debtors tell the Judge that "at the insistence of and in consultation
with the Creditors' Committee", they have determined, "with the strong
urging of the Committee", to enter into the Letter Agreement because of
A&M's expertise and experience generally in providing financial and
operating services to financially troubled companies, and because the
Debtors and the Committee believe that Mr. Bondi is well qualified to fill
the vacancy created by the departure of the Current CEO and President, Dr.
Robert Elkins.
As set forth in his Affidavit, Joseph A. Bondi specializes in working with
underperforming and troubled companies and has had major engagements in
communications, healthcare, retailing and education. As an employee of A&M,
Mr. Bondi has served as Chief Restructuring Officer of Iridium Operating
LLC, Chairman Restructuring of MobileMedia Inc., CEO of Phillips Colleges,
Inc., and Senior Vice President -- Chief Administrative Officer of Phar-
Mor, Inc, and Republic Health Corporation (renamed OrNda Healthcorp) and as
a Director of Republic Health Corporation.
Upon approval of this Application, Mr. Bondi will work with the Debtors'
senior management and provide assistance in:
(1) preparation of a revised operating plan and cash flow forecast and
present such plan and forecast to the Board and the Debtors'
creditors;
(2) identification of cost reduction opportunities related to the
Debtors;
(3) addressing financing issues, including the preparation of reports,
and communications generally with the Debtors' shareholders and
creditors;
(4) development of the Debtors' plan of reorganization; and
(5) other activities as are approved by the Board.
A&M proposes to staff this assignment with three to four people, including
Mr. Bondi, who will devote substantially full-time to this engagement,
while providing minimal services to another A&M client, Iridium Operating
LLC.
As compensation for its services, A&M proposes:
(1) to charge the Debtors a monthly fee of $275,000;
(2) reimbursement for reasonable out-of-pocket expenses;
(3) reimbursement for the reasonable fees and expenses of its counsel
incurred in connection with the preparation, negotiation and
approval of the Letter Agreement;
(4) incentive compensation payable promptly following the confirmation
of the Debtors' plan of reorganization consisting of,
(a) an Earnings Bonus in an amount of not less than $2 million with
increase based upon a percentage of the increase in Debtors'
EBITDA as measured at confirmation, and in the event assets are
sold prior to confirmation, portions of the Earnings Bonus will
become payable upon such sales based upon the EBITDA of the
assets sold; and
(b) a Plan Bonus of $500,000 if a plan is confirmed prior to
September 1, 2001, and after September 1, 2001 the amount of
the Bonus will be reduced at a rate of $83,333 per month, pro
rated on a daily basis, with no Plan Bonus payable subsequent
to February 28, 2002.
The Debtors note in their Application that A&M's professionals generally do
not maintain detailed time records of the work performed for its clients as
required by the fee and expense guidelines promulgated by the Office of the
United States Trustee. A&M has asked the Debtors to request that A&M not be
required to maintain time records. A&M believes that this request is
reasonable since A&M is seeking to be compensated on a flat fee and
transactional basis rather than billing on an hourly basis. The Debtors
have included this request accordingly on the order form they prepare for
the Court's approval.
The Debtors have agreed to indemnify A&M, its shareholders, employees,
agents and representatives from and against any losses, claims, damages,
liabilities, penalties, obligations and expenses related to, based upon or
arising out of their performance of their obligations under the Letter
Agreement, other than arising out of the indemnified party's gross
negligence or willful misconduct.
In addition, the Debtors have agreed to indemnify Mr. Bondi for all acts
performed as an officer to the maximum extent permitted by law.
The Debtors submit that to the best of their knowledge, Mr. Joseph A. Bondi
does not hold or represent an interest adverse to the Debtors' estates.
Moreover, the employment of A&M is necessary and in the best interest of
the Debtors and their estates. (Integrated Health Bankruptcy News, Issue
No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900)
INTEGRATED HEALTH: Company Proposes to Forgive $70 Million in Officer Loans
---------------------------------------------------------------------------
Joseph A. Bondi of the turnaround consulting firm of Alvarez & Marsal,
Inc., has been named as the Chief Restructuring Officer of Integrated
Health Services Inc. In connection with this appointment, Robert N.
Elkins,
a founder of IHS, has agreed to step down as Chairman, CEO and President
upon approval by the U.S. Bankruptcy Court for the District of Delaware of
an agreement between Dr. Elkins and IHS. At such time, Mr. Bondi will be
named as CEO.
Mr. Bondi and Alvarez & Marsal, Inc. have extensive experience in the
field of restructuring and reorganization. Mr. Bondi's prior experience
includes serving as Chairman-Restructuring of MobilMedia, Inc., Chief
Restructuring Officer of Iridium LLC and Senior Vice President of Republic
Health Corporation.
If Dr. Elkins' agreement is approved by the Bankruptcy Court, Dr. Elkins
will resign as an officer and director of the company and surrender to the
company his equity interests in IHS, Dr. Elkins will become a consultant to
the company, and the company will forgive the repayment of loans made to
Dr. Elkins, make certain payments to Dr. Elkins and release Dr. Elkins
from certain potential claims. In addition, certain loans made by the
company to its senior executives will automatically be forgiven. As a
result, the company will incur a charge of approximately $70 million (of
which approximately $10 million relates to loans to senior executives) in
the quarter in which the agreement is approved by the Bankruptcy Court.
KITTY HAWK: Best AeroNet Offers $22.3 Million to Buy Operating Assets
---------------------------------------------------------------------
Kitty Hawk, Inc., et al seeks a court order authorizing the debtors to sell
certain assets to Best AeroNet Aviation Services, Ltd., Buyer.
The assets included in the sale:
a) KH Charters
all operating assets and its airline certificates
b) OK Turbines
all operating assets
c) KH International
leasehold at Ypsilanti airport and furniture (which is integrated
with Kalitta temporary sub-lease of and debtors' rights to put the
same property)
The assets do not include:
a) Cash
b) Receivables
c) Causes of action, including Bankruptcy Code Chapter 5 causes of
action remain with the debtors.
The purchase price for the assets is $22,375,500. Closing of the sale is
scheduled for October 15, 2000. The terms and conditions of the sale are
described in the Purchase and Sale Agreement. The debtors state that the
agreement is the highest and best offer received by KH Charters, OK
Turbines and KH International for the purchase of the Assets. In the
debtors' business judgment, the consummation of this Agreement is in the
best interests of the debtors' estate and its creditors and should be
authorized by this Court.
LAIDLAW, INC.: Cuts-Off Funding For Greyhound Lines
---------------------------------------------------
Financially challenged Laidlaw Inc., will cut off funding subsidiary
Greyhound Lines Inc., starting Aug. 1, as stated in its quarterly filing
with SEC picked-up by a Dow Jones reporter,. Laidlaw told Greyhound that
funding will now only be the cash gained from its operations. "As a
result, the company may not be able to realize its assets and settle its
liabilities in the normal course of operations," Greyhound said in its SEC
filing. Greyhound has been authorized by the Burlington-based Laidlaw to
seek funding elsewhere, but is pessimistic that it can secure funds
quickly. The SEC filing also stated that Greyhound recently ordered 90
coaches from Motor Coach Industries Inc., amounting to $27.5 million, and
that bill will come due in December.
Parent company, Laidlaw is a holding company for providers of school and
intercity bus transportation, municipal transit, patient transportation and
emergency department management services.
LAMONTS APPAREL: Judge Glover to Review Disclosure Statement September 18
-------------------------------------------------------------------------
There will be a hearing on the approval of the "Disclosure Statement Re
Debtor's Chapter 11 plan" of Lamonts Apparel, Inc. on September 18, 2000 at
11:00 AM before the Honorable Thomas T. Glover, US Bankruptcy Judge,
Western District of Washington at Seattle. The purpose of the hearing will
be to determine whether the disclosure Statement contains information of a
kind, and in sufficient detail that would enable a hypothetical reasonable
investor typical of holders of claims or interests of the relevant class to
make an informed judgment about the plan.
Objections to the Disclosure Statement must be filed with the Court and
served so that they are received by the Notice Parties no later than five
court days prior to the Hearing:
* Lamonts Apparel Inc. 12413 Willow Road NE, Kirkland, WA, Debbie
Brownfield (the debtor)
* Ryan, Swanson & Cleveland PLLC 1201 Third avenue, Suite 3400,
Seattle, WA, Richard J. Hyatt, Esq. (local bankruptcy counsel for the
debtor)
* Office of the United States Trustee - 1200 6th Avenue Ste. 600,
Seattle, WA, Jill Lunn
* Preston, Gates & Ellis LLC, 701 5th Avenue, Suite 5000, Seattle, WA,
Mark C. Paben, (local bankruptcy counsel for the Committee of Creditors
Holding Unsecured Claims)
* Merkle Siegel & Friedrichsen, PC 1325 Fourth Avenue, Suite 940,
Seattle, WA, Daniel R. Merkle (local bankruptcy counsel for Fleet Retail
Finance, Inc.)
LAROCHE INDUSTRIES: Asks Court to Extend Plan Filing Deadline to January 8
--------------------------------------------------------------------------
Laroche Industries, Inc. and Laroche Fortier, Inc. seek an extension of the
debtors' exclusive periods in which to file a Chapter 11 plan and solicit
votes thereon.
A hearing to consider the motion will be held on August 31, 2000 at 12:45
PM before the Honorable Joseph J. Farnan, Jr. at the US District Court, 844
King Street, Wilmington, DE.
The debtors seek an extension of the Exclusive Filing Period from September
1, 2000 through and including January 8, 2001. The debtors also seek an
extension of the Exclusive Solicitation Period within which the debtors
maintain the exclusive right to solicit votes on such a plan through and
including March 9, 2001.
The debtors seek to extend the periods to avoid premature formulation of a
Chapter 11 plan and to ensure that the formulated plan takes into account
the interests of both debtors, their creditors and their estates. The
debtor claims that the size and complexity of the cases justify the
extensions. The debtor also claims that its progress in the cases justify
the extensions.
The debtors have settled a patent infringement claim of approximately $116
million, obtained authorization to sell its Granite City distribution
facility for $1.5 million, retained professionals, prepared schedules and
statements of financial affairs, among other things.
LENOX HEALTHCARE: Intends to File Plan of Reorganization by August 23
---------------------------------------------------------------------
In a stack of pleadings and papers presented to the U.S. Bankruptcy Court
for the District of Delaware last week, Mark S. Chehi, Esq., of Skadden,
Arps, Slate, Meagher & Flom LLP, discloses that Lenox Healthcare, Inc., and
its debtor-affiliates intend to file a joint plan of reorganization on or
before August 23, 2000. That plan will be premised on a transaction with
Impala Partners, LLP. Mr. Chehi indicates that the Debtors are negotiating
and finalizing a definitive agreement that will govern the Impala
Transaction.
Although Lenox will file a plan on or before August 23, it will be
impossible for the Debtors to file a comprehensive or meaningful disclosre
statement the same day. Mr. Chehi tells Judge Walrath that the Court can
expect to see a disclosure statement no later than September 3.
Lenox is the nation's third-largest privately-held provider of long-term
healthcare services, operating 42 facilities that provide care to 4,500
residents.
LOEWEN GROUP: Balks at American Commercial Bank's Bid for Relief from Stay
--------------------------------------------------------------------------
The Loewen Group, Inc., and its debtor-affiliates tell Judge Walsh that
American Commercial Bank's motion for relief from automatic stay in order
to foreclose on Property owned by Debtor Conejo Mountain Memorial Park
should be denied.
With a significant equity cushion, as the Bank acknowledges, ACB is
adequately protected, the Debtors assert.
Cessation of payment, the Debtors argue, is not cause for relief because
upon the commencement of a bankruptcy case, a debtor is prohibited from
making payments on prepetition obligations, unless pursuant to a confirmed
plan of reorganization or other order of the court. If such a definition
of "cause" were accepted, debtors would have no protection against actions
brought by their secured creditors, the Debtors tell Judge Walsh. In the
current case, if ACB's request were entertained, other parties to secured
promissory notes with the Debtors will likely make similar request, which
would derail the Debtors' reorganization efforts either by stripping the
Debtors of their businesses and property through foreclosure actions, or
draining their financial resources through adequate protection payments,
the Debtors tell the Judge.
With regard to the Bank's allegations of fraud and bad faith, the Debtors
refute that these are unsupported by evidence. In transferring funds to
LGII, CMMP is following, pursuant to the Court's Cash Management Order,
the Debtors' centralized cash management system which enables the Debtors
to tightly monitor and control funds and substantially reduces
administrative expenses. The Debtors also iterate that they filed their
chapter 11 petitions in order to be afforded the protections of the
Bankruptcy Code while they restructure their businesses, a process that is
well underway.
The Debtors direct the Court's attention to black-letter bankruptcy law
that the burden of proof on a motion to lift or modify the automatic stay
is a shifting one. Section 362(d)(1) of the Bankruptcy Code requires an
initial showing of cause by the movants, while Section 362(g) places the
burden of proof on the debtor for all issues other than the debtor's
equity in property. In this regard, the Debtors contend that the Bank has
utterly failed to carry its burden of establishing that cause exists for
relief from the automatic stay under section 362(d)(1) or section
362(d)(2) of the Bankruptcy Code, or that its interests are not adequately
protected. (Loewen Bankruptcy News, Issue No. 25; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
MASTER GRAPHICS: U.S. Trustee to Convene Meeting of Creditors on Sept. 8
------------------------------------------------------------------------
On July 7, 2000, Master Graphics, Inc. et la. Filed voluntary petitions for
relief under chapter 11 of the US Code. The United States Trustee for
Region III will convene a meeting of the Debtors' creditors, pursuant to 11
U.S.C. Sec. 341(a) at 11:30 a.m. on September 8, 2000, at 844 King street,
Room 2313, in Wilmington, Delaware. Counsel for the Debtors are John Wm.
Butler, Jr., Esq., Skadden Arps, Slate, Meagher & Flom (Illinois) and Mark
S. Chehi, Esq., of Skadden Arps, Slate, Meagher & Flom (Delaware).
MONDI OF AMERICA: Seeks Order to Sell $125,000 Worth of Shares in Allmerica
---------------------------------------------------------------------------
Mondi of America, Inc. and its affiliates seek a court order authorizing
the sale of their 2,116 shares of Allmerica Financial Corporation common
stock, and compelling Equiserve, LP, transfer agent, to issue a replacement
stock certificate to the debtors to replace a lost certificate with respect
to the 2,116 shares that constitute property of these estates. The current
market value of the shares that Mondi America owns is in excess of
$125,000.
Given the terms of the debtors plan, the debtors must convert substantially
all of their assets into cash.
NATIONAL LINK: Fitch Affirms Mortgage Pass-through Certificates Classes
-----------------------------------------------------------------------
NationsLink Funding Corp., commercial mortgage pass-through certificates,
Series 1996-1, $17.4 million Class A-1, $96.8 million Class A-2, $51.6
million Class A-3 and interest-only Class X are affirmed at `AAA` by Fitch.
In addition, the following classes are also affirmed:
-- the $16.1 million Class B at `AA+`,
-- the $19.4 million Class C at `AA-`,
-- the $17.7 million Class D at `BBB+`,
-- the $14.5 million Class E at `BBB-`,
-- the $10.5 million Class F at `BB`,
-- the $5.6 million Class G at `BB-`and
-- the $9.7 million Class H at `B`.
The $9.7 million Class UR is not rated by Fitch. The rating affirmations
follow Fitch`s annual review of this transaction, which closed in May 1996.
The certificates are currently collateralized by 79 multifamily and
commercial loans. By outstanding balance, the pool consists of multifamily
(75%), retail (15%), health care (5%), industrial (2%) and office (1%)
properties. The properties are located in 28 states, with concentrations in
Texas (13%), Florida (12%), Tennessee (9%), Ohio (9%) and Georgia (9%).
As of the July 2000 distribution date, the transaction`s aggregate
principal balance has decreased 17% to $268.7 million from $322.6 million
at issuance. All of the remaining loans are current and no loans are
specially serviced. The master servicer, CapMark Services, L.P., collected
operating statements for 100% of the loans remaining in the pool for year-
end 1999. The year-end 1999 weighted-average debt service coverage ratio
(DSCR) for the loans remaining in the pool is a 1.67 times (x), compared to
a 1.60x as of year-end 1998 and 1.45x at issuance. Four loans, comprising
4.3% of the pool`s outstanding collateral balance, have a DSCR below 1.0x
for year-end 1999. In addition, eight other loans, comprising 4% of the
outstanding collateral balance, reported a 1999 DSCR that decreased more
than 25% or more from year-end 1998.
A stress scenario was run in which 12 loans, representing 8.3% of the pool
were assumed to default at various loss rates. All 12 loans, while current,
have shown a significant decline in net operating income from issuance
resulting in low DSCR. Even under these stress scenarios, subordination
levels remained sufficient to affirm ratings.
NUTRAMAX PRODUCTS: To Assume Employment Agreement with Richard G. Glass
-----------------------------------------------------------------------
Nutramax Products, Inc. et al., seeks authority to assume an Employment
Agreement with Mr. Richard G. Glass, providing that he will hold the
position of CEO for a period of at least four years. The Employment
Agreement was filed under seal, and the motion does not reveal his pay or
benefits. Glass will receive, as part of the agreement, on or before
August 25, 2000, an irrevocable letter of credit to secure the debtors'
obligations under the Employment Agreement.
PARAGON TRADE: Announces Plan To Leave Feminine Care Business
-------------------------------------------------------------
Paragon Trade Brands, Inc. (OTC Bulletin Board: PGTR) announced it
plans to exit the feminine care business. The Company anticipates
completing this process by year-end and is in discussions with several
interested purchasers. The orderly transition from this business will
enable the Company to focus its resources on the continued growth and
expansion of its core diaper and pant businesses.
Commenting on the decision Chairman and Chief Executive Officer Michael
Riordan noted, "Since emerging from Chapter 11 earlier this year Paragon's
primary focus has been on growing our business and returning it to
profitability as well as servicing our customers' needs. Thanks largely to
the outstanding performance of our diaper and pant product lines we have
recorded significant increases in revenues and cashflow and have achieved a
major turn around.
"A recent in depth review of our business has resulted in our determination
that our feminine care business does not fit into our future core
strategies. The decision to exit this business is an extremely difficult
one, particularly in light of the efforts of our employees at our Gaffney,
South Carolina facility as well as the tremendous support of customers.
However, I am confident that the best way for us to excel and to grow
shareholder value is by narrowing our focus and becoming the best possible
supplier of store brand diapers and pants to our retail customers. Focusing
our energies, technology and capital resources exclusively on our core
businesses will help us achieve that status."
Paragon Trade Brands is the leading manufacturer of store brand infant
disposable diapers and training pants in North America. Paragon
manufactures a line of premium and economy diapers and training pants,
which are distributed throughout North America through grocery and food
stores, mass merchandisers, warehouse clubs and drug stores that market the
products under their own store brand names. Through its international joint
ventures, Paragon is also a leading supplier of infant disposable diapers
and other absorbent personal care products in Mexico, Argentina, Brazil and
China.
PRIME SUCCESSION: Committee Taps Jeffrey Chanin as Investment Bankers
---------------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the chapter 11
cases commenced by Prime Succession, Inc., et al., applies to employ and
retain Jeffrey Chanin and Company LLC as its investment bankers.
As more fully described in an Engagement Letter, the services to be
provided by Chanin in the chapter 11 cases include, but are not limited to,
assisting the Committee in developing, evaluating, structuring and
negotiating the terms and conditions of a restructuring plan.
Chanin expects the debtors to pay the following fees:
a) A monthly financial advisory fee in the amount of $75,000 per month,
beginning July 12, 2000.
b) A transaction fee of $500,000 upon completion of the Transaction, as
defined in the Engagement Letter; and
c) Reimbursement of reasonable expenses.
RELIANCE GROUP: Reliance's A&H Book To Be Purchased by Aon Unit
---------------------------------------------------------------
Reliance Group Holdings, Inc. (NYSE: REL) has reached an agreement in
principle with Combined Insurance Company of America, a life and health
insurance subsidiary of Aon Corporation (NYSE: AOC), for the purchase of
Reliance's Accident & Health (A&H) book of business. The purchase is
subject to the negotiation and execution of definitive agreements, as well
as customary regulatory approvals.
Reliance's senior vice president of A&H, Penny Stroud, said, "This is very
positive news for our policyholders and insurance brokers. They have been
extremely supportive over the past few months, and we are pleased that
Combined Insurance will be able to fulfill their accident and health
insurance needs."
This transaction encompasses Reliance's university health insurance
business; employer stop-loss coverage; short-term, individual and global
medical insurance; dental coverage; group accident (AD&D); student accident
(grades K-12); and high-limit disability insurance business. In 1999, A&H
represented less than 10% of Reliance's net premiums written.
The parties intend that substantially all of Reliance's A&H business will
be assumed by Combined Insurance Company effective August 1, 2000 with some
limited exceptions to the effective date. Combined Insurance Company is
rated "A" (Excellent) by A.M. Best Company.
Steve Lippai, executive vice president of Combined Insurance, commented,
"We look forward to gaining some additional product expertise and to
developing new client relationships."
Terry Van Gilder, president and chief executive officer of Reliance
Insurance, added, "Combined Insurance Company has an excellent reputation
for client service and is a leading provider of A&H insurance products. Ms.
Stroud and her team of A&H professionals look forward to joining Combined
Insurance to ensure the smooth transition of business."
SABRATEK CORPORATION: Asks for 30-Day Extension of Exclusive Periods
--------------------------------------------------------------------
Sabratek Corporation, et al., seeks court authority to extend the periods
during which the debtors have the exclusive right to file a plan of
reorganization and to solicit acceptances thereto.
The debtors seek an extension of the period during which the debtors have
the exclusive right to file plan 30 days to September 13, 2000 and the
debtors seek an extension of the exclusive period to obtain acceptances of
any filed plan until November 14, 2000.
The debtors have already made substantial progress in these cases and have
forwarded a draft Plan of Liquidation and a draft Disclosure Statement to
various interested parties, including the Creditors' Committee. The debtors
request additional time to prepare the plan in a consensual manner with the
Creditors' Committee. While this will not be a joint plan, the debtors wish
to address concerns of the Committee prior to filing the plan with the
court.
The debtors are now focusing on the sale of GDS Technology, Inc. and the
formation of a plan of liquidation and a Disclosure Statement acceptable to
the Creditors' Committee. With the additional time, the debtors expect to
complete the sale of GDS Technology, Inc.'s assets and to address the
Creditors' Committee's concerns regarding the proposed Plan of Liquidation
and Disclosure Statement.
SAFETY-KLEEN: Final Order Entered Approving $100 Million DIP Financing Pact
---------------------------------------------------------------------------
Judge Walsh entered a Final Order authorizing Safety-Kleen Corp., and its
debtor-affiliates, to borrow up to $100,000,000 (inclusive of $35,000,000
to back letters of credit) under the terms of the Debtor-in-Possession
Financing Facility arranged by Toronto Dominion (Texas), Inc.
Judge Walsh makes it clear in his Final Order that the Court makes no
finding with respect to the value of the Prepetition Collateral as of the
Petition Date or any date subsequent thereto. Additionally, no funds
drawn under the DIP Facility or otherwise constituting the Lenders' cash
collateral may be used to formally object to or formally contest in any
manner, or raise any defenses to, the amount, validity, perfection,
priority, extent or enforceability of the Prepetition Lenders' liens or to
formally assert any claims or causes of action against the Prepetition
Lenders.
Judge Walsh declined to grant the DIP Lenders a lien on any recoveries by
the Debtors' Estates (or a representative of the Debtors' Estates) on
account of avoidance actions under Chapter 5 of the Bankruptcy Code.
Proceeds of those recoveries, if any, will be unencumbered and will be for
the benefit of the Debtors' unsecured creditors.
With respect to payment of the DIP Lenders' Professional Fees, the Debtors
and the Committee have the right to review and object to the
reasonableness of those fees and expenses.
The Final DIP Order provides that the Committee reserves and has the right
at any time prior to a disclosure statement hearing in the Debtors'
chapter 11 cases to seek (i) a determination by the Court that the
Prepetition Agent and the Prepetition Lenders are not entitled to some or
all of the adequate protection provided or contemplated by the DIP
Financing Agreement and (ii) recharacterization, reallocation,
disgorgement or other appropriate relief as a result of any such
determination. (Safety-Kleen Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
SCAFFOLD CONNECTION: Creditors Vote to Accept CCAA Plan
-------------------------------------------------------
CFO Darin Coutu announced that creditors of Scaffold Connection Corp.
approved the plan to put the Edmonton-based back on its feet. The plan,
which awaits approval from shareholders and the Canadian court, states
scheduled deferred payments on principal until next year. "We've worked
hard with creditors to put forth a plan which would be acceptable," said
Coutu. "We're looking forward to the next stage."
Scaffold Connection was placed under Companies Creditors' Arrangement
Act protection Dec. 23. Scaffold restated its 1998 bottom line as a $14.2-
million loss, a whopping $17.8-million turnaround from a reported $3.6-
million profit.
SCHEIN PHARMACEUTICAL: Board Votes to Merge with Watson Pharmaceuticals
-----------------------------------------------------------------------
The boards of directors of Watson Pharmaceuticals, Inc. and Schein
Pharmaceutical, Inc. have unanimously approved a merger combining Watson
and Schein.
If the merger is completed, each outstanding share of Schein common stock,
other than ineligible and dissenting shares (if applicable), will be
converted into the right to receive a fraction of a share of Watson common
stock. The fraction of a share of Watson common stock into which each share
of Schein common stock will be converted will be based on the average
closing price of a share of Watson common stock on the New York Stock
Exchange for a ten trading day period. The ten trading day period will end
on the trading day two trading days prior to the date of the special
meeting of the Schein stockholders called to approve and adopt the merger
agreement.
If the average closing price of a share of Watson common stock is between
$44.61 and $54.52, the value of the merger consideration per share of
Schein common stock will be $23.00. The value of the merger consideration
per share of Schein common stock will be increased proportionately above
$23.00, if the average closing price of a share of Watson common stock is
greater than $54.52 per share, up to a maximum value of $26.50 per share of
Schein common stock where the average closing price of a share of Watson
common stock is $62.82 or higher. Conversely, the value of the merger
consideration will be decreased proportionately below $23.00, if the
average closing price of a share of Watson common stock is less than $44.61
down to a minimum value of $19.50 per share of Schein common stock where
the average closing price of a share of Watson common stock is $37.82 or
lower. At this minimum value of $19.50 per share of Schein common stock,
Watson would have the option to pay the entire merger consideration in
cash, in stock or in a mix of cash and stock.
The Watson common stock is listed on the New York Stock Exchange under the
symbol "WPI."
Stockholders will be asked to vote upon the merger at a special meeting of
Schein stockholders to be held on August 28, 2000 at 9:00 a.m., local time,
at Schein's headquarters, located at 100 Campus Drive, Florham Park, New
Jersey. The holders of a majority of the outstanding shares of Schein
common stock must approve the merger. Only stockholders who held shares of
Schein common stock at the close of business on July 25, 2000 are entitled
to vote at the special meeting.
SUN HEALTHCARE: Motion To Reject Sunbridge Lease At Mountlake Terrace
---------------------------------------------------------------------
To dispose of a non-profitable long term care facility commonly known as
the SunBridge Residential Treatment Center at Mountlake Terrace, Washington
where treatment is provided to residents suffering from neurological and
behavioral disorder, the Debtors sought and obtained court approval for
SunBridge Healthcare Corporation to:
(1) reject the Facility Lease and related documents which will enable
the Debtors to realize annual rent savings of approximately
$615,405.
(2) enter into a Lease Termination Agreement under which the Landlord
will waive its claim for rejection damages against all the Debtors,
which is estimated to be over $4.3 million.
(3) reject the Medicare and Medicaid Provider Agreements pursuant to
closure of the Facility and the transfer of all residents to other
facilities as of December 31, 1999, so that any prepetition claims
in this regard will be treated as unsecured claims, rather than as
administrative claims as will be the case if SunBridge were able to
assume and assign the Provider Agreements.
(4) reject Residence Leases which are mouth to mouth leases to third
parties for three houses on the Facilities' property, and to which
SunBridge has given notice of termination whereby residents were to
have vacated by July 1, 2000.
The Lease Termination Agreement provides for:
(1) Mutual release of liability except with respect to Pre-Petition
Taxes in the amount of $7,490;
(2) Effective Date for the Termination of the Lease to be the date of
the Court's final order granting the Motion;
(3) Termination of SunBridge's right to possession of the Facility
automatically on the Effective Date;
(4) SunBridge to give notice and take further action required under
Washington law to cause the Residence Leases to be terminated on
the Effective Date or as soon as possible as provided by any
statutory or contractual for the Notice Period;
(5) SunBridge to ensure that the occupants of the Residence Leases
vacate the premises prior to the later of the Effective Date or the
end of the Notice Period or as soon as reasonably possible in the
event SunBridge is required to commence legal actions to evict any
or all of the occupants of the Residence Leases;
(6) SunBridge to reject the Residence Leases under section 365 of the
Bankruptcy Code as of the later of the Effective Date or the end of
the Notice Period;
(7) SunBridge to fulfill, prior to the Effective Date, all of the non-
operational obligations imposed on it under the Lease, including
payment of the rent due under the Lease and the obligation to
maintain and repair the Facility provided this does not involve a
capital expenditure in excess of $l0,000.
(Sun Healthcare Bankruptcy News, Issue No. 13; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
TOYSMART.COM: Judge Kenner Rejects Sale Procedures Before a Buyer Arrives
-------------------------------------------------------------------------
U.S. Bankruptcy Judge Carol Kenner declined -- before a buyer is even named
-- to place conditions on the sale of Toysmart.com's 250,000-person
customer list. Attorney Christopher J. Panos, representing creditors of
the defunct toy retailer, argued that the judge shouldn't set conditions
before a buyer would name itself, according to a report from the Associated
Press.
"We're back to where we started," Toysmart.com lawyer Harry Murphy, Esq.,
told the AP. "We've got to find a buyer and then we've got to deal with
the objections."
The proposed sale of the Waltham-based company's customer list, which
contains names and other information on about 250,000 people, has sparked
criticism both from the Federal Trade Commission and nearly every state
attorney general. Toysmart.com proposed a set of sale procedures in which
these governmental objections could be dealt with in advance of a buyer's
arrival.
TRI VALLEY: Committee Asks For Reconsideration of DIP Financing Order
---------------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Tri-Valley Growers
Chapter 11 case asks the court to reconsider its order approving
postpetition financing.
Shortly after the Petition Date, Development Specialists, Inc., and
its management specialist William A. Brandt, Jr. were approved by the court
as "responsible natural person."
According to the Committee, at the Final Hearing for postpetition
financing, "in essence threatened that if the Final Order was not approved,
the debtor would cease all operations that day." Therefore, according to
the Committee, the court approved the financing, despite the Committee's
objections.
The Committee states that with the entry of the Final Order, a liquidating
plan was essentially confirmed, with all proceeds to be paid to secured
creditors. Any action that interferes with this liquidation is an event of
Default under the DIP facility. This liquidating plan required the
appointment of a receiver (DSI) whose presence as management of the debtor
was itself a condition demanded by the secured creditors.
The Committee claims that even if DSI desires to act in the best interests
of the unsecured creditors, the DIP Facility is so specific that it
controls every action that DSI can take during the case. And finally, the
committee claims that all of these controls are illegal, and the Committee
references a list of specific objections to improper or erroneous
provisions in the Final Order.
VENCOR, INC.: Motion To Settle 3 Claims & Implement Settlement Protocol
-----------------------------------------------------------------------
Vencor, Inc., asks Judge Walrath to approve (A) three Proposed Settlements
in respect of claims for which Vencor is a plaintiff, two of which are with
insurers, one is related to medical cost for a deceased, (B) Settlement
Procedures to resolve certain claims and controversies that arise in the
ordinary course of operations.
A. The Proposed Settlements
(1) Vencor Hospital East, Inc. D/B/A Vencor Hospital-Greensboro vs.
Smithfield Foods, Inc. and Smithfield Foods Health Care Program,
Civil Action File No.: 1:99CV00753, M.D.N.C. The insurer in this
matter denied benefits claiming that the patient's use of non-
prescription drugs allegedly caused her medical condition. Vencor
filed suit against the insurance company on September 1, 1999 in
Federal Court in the Middle District of North Carolina, claiming
damages in the amount of $665,392 for health care services provided to
the patient. Vencor and the insurer agree that the insurer will pay $
195,170.
(2) Estate of James Cecil McElroy, Cause No. P-99-16770, County Court at
Law Number Two, Johnson County, Texas. On September 23, 1999 the
dependent administrator appointed by the Texas Probate Court for the
decedent's estate denied Vencor's claim for $159,675 in respect of
health-care services provided to the decedent. The decedent's family
and the dependent administrator of the deceased continue to maintain
that amounts billed for services rendered to the decedent are in
excess of reasonable and customary charges for such services. Vencor
maintains that the charges for the services provided were reasonable
and customary. After lengthy negotiations, the parties agree that the
dependent administrator will pay Vencor $85,000.
(3) Vencor Hospitals Limited Partnership vs. The Prudential Insurance
Company of America, Case No.: H-99-2767, S.D.T.X. Houston Division.
The insurer in this matter denied benefits claiming that the hospital
care received by the insured in this matter was not medically
necessary, and that the insured should have been cared for in a less
expensive nursing home setting. The Debtors denied such defense. The
amount in dispute is $104,403. Vencor and the insurer agreed to
participate in non-binding mediation of Vencor's claim. The mediation
resulted in a proposed settlement of $50,000 to be paid to the
Debtors. Vencor and the insurer are prepared to settle for that
amount.
B. Settlement Procedures
Vencor believes that claims will continue to arise as the Debtors continue
to operate their businesses. To settle these Ordinary Course Claims
efficiently, the Debtor propose Procedures whereby:
(1) Employees may attempt to settle Ordinary Course Claims without further
hearing or notice to the Court or other parties in interest;
(2) No individual Ordinary Course Claim that is originally greater than
$1 million will be settled without further court approval, and the
aggregate amount of Ordinary Course Claims settled pursuant to these
Settlement Procedures will not be more than $15 million without
further court approval.
(3) If further court approval is sought, then the Debtors will notify
counsel to and the agent for the DIP lenders, and counsel to the
Committee in writing.
(4) At the end of any calendar month in which the Debtors have settled
pursuant to these Procedures one or more Ordinary Course Claims
originally greater than $500,000, the Debtors will notify counsel to
and the agent for the DIP lenders of the number of claims and the
respective of each claim settled during that calendar month.
(5) The entry by the Debtors into settlement, mediation or compromise
negotiations does not constitute a waiver of the automatic stay
applicable to judicial, administrative or other actions or
proceedings against the Debtors pursuant to Section 362 of the
Bankruptcy Code.
(6) These Settlement Procedures will not apply to any compromise and
settlement of an Ordinary Course Claim that involves an "insider," as
that term is defined in Section 101(31) of the Bankruptcy Code.
(Vencor Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
WORLDCORP, INC.: Completes Liquidation Process, Giving Way to World Airways
---------------------------------------------------------------------------
World Airways, Inc. (Nasdaq: WLDA) announced that the liquidation of its
former parent, WorldCorp, Inc. was now complete.
The Company said that the impact of the liquidation was:
* The remaining 1.9 million WLDA shares owned by WorldCorp have
been distributed to various creditors of WorldCorp.
* One of WorldCorp's creditors sold approximately 700,000 of those
shares to a group of Company Directors and management led by
Hollis L. Harris, World Airways Chairman and Chief Executive
Officer.
* Directors, officers, and employees now own approximately 45
percent of the Company's outstanding Common Stock.
* There are no longer any directors representing WorldCorp on the
World Airways Board of Directors.
Mr. Harris said, "I am pleased that we were able to acquire a number of the
Company shares being distributed. I am also glad that WorldCorp's
bankruptcy proceedings are now fully behind us. It will eliminate a
significant distraction for our management and end confusion that has
existed in the market-place since WorldCorp filed for bankruptcy protection
in February 1999."
Utilizing a well-maintained fleet of international range, widebody
aircraft, World Airways has an enviable record of safety, reliability and
customer service spanning 52 years. The Company is a U.S. certificated air
carrier providing customized transportation services for major
international passenger and cargo carriers, the United States military and
international leisure tour operators. Recognized for its modern aircraft,
flexibility and ability to provide superior service, World Airways meets
the needs of businesses and governments around the globe.
* Bond pricing for the week of August 21, 2000
----------------------------------------------
Data is supplied by DLS Capital Partners, Inc.
Following are indicated prices for selected issues:
Acme Metal 10 7/8 '07 13 - 15 (f)
Advantica 11 1/2 '08 67 - 69
Asia Pulp & Paper 11 3/4 '05 67 - 69
Conseco 9 '06 66 - 67
E & S Holdings 10 3/8 '06 40 - 43
Fruit of the Loom 6 1/2 '03 50 - 52 (f)
Genesis Health 9 3/4 '05 9 - 11 (f)
Globalstar 11 1/4 '04 25 - 27
GST Telecom 13 1/4 '07 48 - 51 (f)
Iridium 14 '05 4 - 5 (f)
Loewen 7.20 '03 33 - 35 (f)
Paging Network 10 1/8 '07 38 - 40 (f)
Revlon 8 5/8 '08 51 - 53
Service Merchandise 9 '04 7 - 9 (f)
Trump Atlantic 11 1/4 '06 71 - 73
TWA 11 3/8 '06 38 - 40
*********
Bond pricing, appearing in each Monday's edition of the TCR, is provided by
DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each Wednesday's
edition of the TCR. Submissions about insolvency-related conferences are
encouraged. Send announcements to conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of interest
to troubled company professionals. All titles available from Amazon.com --
go to http://www.amazon.com/exec/obidos/ASIN/189312214X/internetbankrupt--
or through your local bookstore.
For copies of court documents filed in the District of Delaware, please
contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents
filed in cases pending outside the District of Delaware, contact Ken Troubh
at Nationwide Research & Consulting at 207/791-2852.
*********
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, Ronald Ladia, Zenar Andal, and Grace
Samson, Editors.
Copyright 2000. All rights reserved. ISSN 1520-9474.
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