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/raid1/www/Hosts/bankrupt/TCR_Public/001009.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, October 9, 2000, Vol. 4, No. 197 Headlines BOO.COM: Defunct Internet Site Slated To Re-Launch on October 30, 2000 CHIPSHOT.COM: California-based Golf E-Tailer Files Chapter 11 in San Jose CITY BREWING: Judge Perlich May Put Brewery Up for Auction CMS ENERGY: Moody's Places Debt Securities Ratings On Review For Downgrade CREDITRUST: Merges With NCO Group and Shareholders Will Receive $17-$20M DRYPERS CORP: Moody's Downgrades 10.25% Senior Unsecured Notes To Ca Rating ELDER-BEERMAN: For September, Total Sales Up but Comp Store Sales Down FACTORY DIRECT: Faces Complaints, Store Closures and Considering Bankruptcy FIRST ALLIANCE: Faces Seven-Count Complaint from Federal Trace Commission FRUIT OF THE LOOM: Court to Consider if Pro Player Fraud Will Go Forward GC COMPANIES: Summit Park 6 Cinema in Wheatfield Suffers Closing Ripple GE CAPITAL: Fitch Cuts Rating On Home Equity Loan Pass-Through Certificates GENESIS/MULTICARE: MultiCare Committee Seeks To Employ Chanin As Advisor GENOIL INC: Subsidiary, CE(3) Technologies, Placed into Receivership GLOBAL OCEAN: Disclosure Statement for New Plan to be Considered on Oct. 30 GRAHAM FIELD: Judge Walrath Extends Exclusive Period through Nov. 6 GRAND UNION: Case Summary and 20 Largest Unsecured Creditors GREATE BAY: Modified 5th Amended Plan of Reorganization Takes Effect HARNISCHFEGER INDUSTRIES: Beloit Committee Employs Morris as Local Counsel JOAN & DAVID: New England Development Offers $16MM+ for Retailers Assets LOEWEN GROUP: Debtors Suspect Former Operator Didn't File Tax Returns ORBCOMM GLOBAL: Sale of Vantage Tracking Unit To Raise Cash OWENS CORNING: Fitch Downgrades Senior Ratings To D After Bankruptcy Filing OWENS CORNING: Moody's Junks All Ratings After Chapter 11 Bankruptcy Filing PSEUDO PROGRAMS: Seeks Court Approval for Employee Retention Bonus Program REALTY WORLD: Real Estate Broker Files Chapter 11 in Santa Ana, Ca. SAFETY-KLEEN: Applies to Employ Zevnik Horton As Special Insurance Counsel TOKHEIM CORPORATION: Delaware Court Confirms Prepackaged Financial Plan TOMAHAWK II: Case Summary and 20 Largest Unsecured Creditors VENCOR, INC.: Agrees to Lift Stay for Wrongful Death Claimants * Bond pricing for the week of October 9, 2000 ********* BOO.COM: Defunct Internet Site Slated To Re-Launch on October 30, 2000 ---------------------------------------------------------------------- boo.com will be back in action on Monday, 30 October 2000. The new boo.com will be one of the first sites to harness the power of the Internet to create an online community of people who are passionate about style for every aspect of their lives. This powerful, trend-setting, youthful 18-to-30-year-old demographic group will have the ability, through the medium of boo.com, to create and drive style trends through near real-time postings on boo.com's message boards, chat rooms, surveys and polls -- the boo.com "community." "The premise of the new boo.com is an unbelievably exciting one," says Kate Buggeln, President of boo.com. "Visitors will be able to use boo.com as the medium to identify, mold and drive trends organically." Buggeln continues: "In recent months, we've had on- and off-line conversations with past and future boo.com visitors. It is clear that the boo.com community thrives on the exchange of dialogue about individual style and opinion. On the new boo.com this will allow for the evolution of trends and ideas in the world of fashion and lifestyle. We're creating a virtual party where the famous, infamous and anonymous can interact with impunity." boo.com items will be featured on the site in the following classifications: walk, wear, adorn, care, give and play. Chosen by boo.com's Global Style Director with suggestions from the network of boo.com style-scouts and style-hunters, the assortment will contain approximately 250 items. The boo.com community can purchase these items through links to e-commerce sites that sell these products. Each week, the product selection will evolve, with new boo.com items appearing. In addition, hyper-links to an elite selection of boo-tiques will add an additional 50 to 60 items for shoppers to choose from. Style icon, Miss boo will be returning to her post as virtual shopping assistant, providing kicky, irreverent product commentary in related dialogue boxes consumers will see when perusing each item. In addition, Miss boo will regularly post entries to her online diary, describing the places she's been, the things she's seen and the products she's bought. boo.com intends to generate revenues through advertising, product sales and licensing and eventual data aggregation (B-to-B). Advertising opportunities include sponsorship of specific pages, product launches and community sections (Miss boo's diary) reaching boo.com's highly desirable demographic groups. Capitalizing on the desirable boo.com name, private label merchandise will be developed through partnerships with designers, manufacturers and specialty retailers, addressing the trends originating on boo.com and boo.com user preference. The boo.com name will also be licensed for the purpose of producing fashion merchandise to be sold directly to the user community and off-line in specialty shops. boo.com is a division of fashionmall.com, Inc. (Nasdaq: FASH), having been acquired in June 2000, upon the original boo.com's liquidation. fashionmall.com, Inc. operates vertical portals focused on fashion, accessories, footwear, beauty and related lifestyle products, and generates revenue through advertising, sponsorship and slotting fees. Established in 1994, the firm's properties include http://www.boo.com, http://www.fashionmall.com,http://www.outletmall.comand http://www.styleexperts.com. CHIPSHOT.COM: California-based Golf E-Tailer Files Chapter 11 in San Jose ------------------------------------------------------------------------- After experiencing a cash infusion months ago, Golf e-tailer Chipshot.com has filed for bankruptcy protection under Chapter 11, PGA.com reports. The company filed on Sept. 28 in the U.S. Bankruptcy Court for the Northern District of California in San Jose. The Sunnyvale, Calif.-based Chipshot.com sells its own line of custom-fit clubs together with branded equipment and clothing. For more information visit the Web site at http://www.chipshot.com. CITY BREWING: Judge Perlich May Put Brewery Up for Auction ---------------------------------------------------------- In a recent court hearing, The Associated Press reports, Judge John Perlich ruled that the financially challenged City Brewery could be nearing foreclosure. The brewery was in default of a $4.5 million loan from Congress Financial of Chicago in August. Perlich found that the redemption period was waived upon renegotiating terms of the loan with Congress. Perlich was dissatisfied with the contract, "not the most brilliantly drafted document in the world, but it's not my job to redraft it or run the brewery or save jobs." Brewery President Randy Smith said, local investors are almost done negotiating with creditors to buy the brewery. Mr. Smith added, that the group preferred to acquire it directly from Congress. CMS ENERGY: Moody's Places Debt Securities Ratings On Review For Downgrade -------------------------------------------------------------------------- Moody's Investors Service is commencing a review for possible downgrade of CMS Energy Corporation's debt securities ratings (senior unsecured Ba3). In addition Moody's is assigning a Ba3 rating to the company's anticipated offering of $350 million in senior notes and incorporating that issue in the review. CMS has just announced two major initiatives to raise cash to reduce its substantial debt burden, a stock sale and an initial public offering of 50% of its oil and gas subsidiary. While the company expects proceeds from these initiatives to reach $800 million and intends to use the proceeds to reduce parent level balance sheet debt, the double-digit earnings growth objective, articulated by the company and which forms the underlying foundation for its business strategy, could continue to hamper its financial balance sheet restructuring efforts longer term. At June 30, 2000, approximately $4.2 billion of CMS's consolidated debt of $7.9 billion was held at the parent level. Debt-like hybrid preferred securities bring the total of parent fixed income obligations to $5 billion. As the company's expansion strategies have been implemented, Moody's has expressed concern over CMS's reliance on debt financing at the parent company level and the debt's relatively short tenors. CMS's exposure to rollover risk has risen as the highly-leveraged, large investments of recent years have not met financial objectives. A substantially drawn $1 billion bank facility matures in June, and the coverage ratio that measures parent liquidity has been very tight over several quarters. The parent's principal sources of liquidity beyond additional borrowings are the dividend flows from its subsidiaries, followed by deferral of the hybrid preferred dividends. The review will focus on CMS's ability to execute its stated initiatives, whether their effect will be sufficient to reverse the shrinking liquidity at the parent, and how the pressures of the company's debt burden will be reduced beyond these first steps. The parent's payments of financial instrument obligations, interest payments and dividends, exceeded dividends received from subsidiaries in 1999 by $100 million. Through the first six months of 2000, the ongoing investment and the need to fund this gap absorbed all the proceeds from an asset sales program that was first announced in October 1999 and later expanded in February 2000. According to the second quarter 10-Q, proceeds of the program were $860 million by August, although parent debt at the end of the second quarter was virtually unchanged from year-end 1999. The review will examine how CMS will apply the proceeds of future asset sales to debt reduction and still meet a smaller, but still substantial non-utility capital budget. Moody's focuses much less on consolidated ratios as they can mask liquidity issues at the parent. CMS announced its first major plan to address its parent financial leverage burden in October 1999 and a second plan in February. It has a history of not meeting consolidated leverage reduction targets, including those established as recently as February. The company has evaluated a variety of alternatives, none of which is without drawbacks. Moody's views those chosen as the most advantageous among the choices, but they may not be sufficient to arrest the decline from a Ba3 profile. However, by incorporating an equity sale the company has replaced the senior cash obligation of interest with a smaller secondary dividend obligation. Nonetheless the stock sale limits the company's ability to use a dividend reduction as a means to conserve internal cash over the foreseeable future. The company seemed to have been willing to take this difficult measure as Moody's had assumed when the February plan was announced, but has clearly backed off this alternative. The outlook on Consumers Energy ratings, senior secured at Baa3, has been changed to stable to reflect concern for the insulation of Consumers from the liquidity challenges of the parent. Nonetheless, the Federal Power Act does generally limit the ability to upstream Consumers' capital from retained earnings. Additionally, the company has stated it does not intend to substantially leverage Consumers. Moody's believes that if a more aggressive financing strategy then that currently indicated by Consumers were introduced, restructuring efforts would be significantly hampered. Moody's also placed a negative outlook on the Baa3 rated senior unsecured debt of the company's other major subsidiary, Panhandle Eastern Pipe Line. While Panhandle's debtholders continue to benefit from covenants in its indenture which require minimum interest coverage and capitalization tests, Panhandle has increased the amount of cash advances it sends to CMS Capital, the parent's financing conduit, in addition to its payment of regular dividends to CMS directly. CMS is managing availability on its bank facility to assure that subsidiary advances, which are subject to 1 day recall, are adequately covered. Moody's will continue to evaluate the degree of firm insulation that the operating subsidiaries might have from the parent company's cash requirements. CMS Energy Corporation is a utility holding company based in Dearborn, Michigan. Its primary operating subsidiaries are Consumers Energy, a regulated utility serving electric and gas customers in western Michigan, and Panhandle Eastern Pipe Line, an interstate natural gas pipeline system stretching from the Gulf coast through the upper Midwest. CREDITRUST: Merges With NCO Group and Shareholders Will Receive $17-$20M ------------------------------------------------------------------------ NCO Group Inc. (Nasdaq: NCOG), a leading provider of accounts receivable management services, announced that it plans to create a separate public company that will focus on the purchase and management of delinquent accounts receivable portfolios. The new company will be called NCO Portfolio Management, Inc. (proposed symbol "NCOP"). NCO Group, Inc. also announced that NCO Portfolio Management, Inc. has entered into an agreement to acquire Creditrust Corporation (Nasdaq: CRDTQ), an information-based purchaser, collector and manager of delinquent accounts receivable portfolios. Under the terms of the agreement, Creditrust shareholders will receive approximately $17-$20 million dollars in NCO Portfolio Management, Inc. stock, subject to certain adjustments that may occur as a result of the resolution of Creditrust's bankruptcy. Additionally, NCOG will be the exclusive servicer of the portfolios owned and managed by NCO Portfolio Management, Inc. through its servicing subsidiary, NCO Financial Systems, Inc. Michael J. Barrist, NCOG's Chairman and CEO, stated, "NCOG's dominant position in the accounts receivable outsourcing marketplace allows us access to many debt purchase opportunities. When this advantage is combined with the advantage provided by having the largest collection infrastructure in the world, you create a business model that is only constrained by experience and capital. We began expanding our presence in the purchased accounts receivable marketplace approximately 18 months ago and committed to our investors that we would not exceed $25 million of capital invested in the debt purchase market. To date, our experience has been extremely successful. "We have spent several months analyzing strategic alternatives that would allow us to expand this business without deviating from our invested capital limit. Creditrust brings an established portfolio, as well as a skilled workforce to this transaction and it allows us to create the perfect vehicle to move forward in this business. New investors will have the opportunity to allocate their investment between a business services company and a company that purchases delinquent accounts receivable portfolios. Our existing NCOG shareholders will benefit from the accretion of the additional servicing revenue opportunities as well as NCOG's ownership interest in the new company." Joseph K. Rensin, Creditrust's Chairman and CEO said, "Creditrust's experience in the accounts receivable purchasing market and its significant account base will be able to grow and fully develop under this new arrangement. We believe that our shareholders, employees, lenders, and creditors will be the beneficiaries of this transaction." Highlights of the proposed transactions, which are subject to several contingencies including resolution of the Creditrust bankruptcy, are expected to be as follows: -- The new company will be named NCO Portfolio Management, Inc. -- The proposed ticker symbol for the new entity will be NCOP. -- Upon closing the acquisition, NCOG will own approximately 55 to 60 percent of the new entity for a capital investment of $25.0 million. -- Existing Creditrust shareholders will receive fully registered shares in the new company in a tax-free exchange. The new company will utilize a bankruptcy exemption that will allow it to avoid the time, expense, and uncertainty of an initial public offering. -- A condition of the acquisition is that the new company will obtain its own financing. A portion of this financing will be utilized to fund the Creditrust plan of reorganization, and the remainder will be utilized for the purchase of additional delinquent accounts receivable portfolios and general working capital. -- The acquisition will not create goodwill on the books of NCO Portfolio Management, Inc. or NCOG. -- The new company will have a five-member board of directors, with NCO Group appointing three of the directors. Michael J. Barrist will be chairman, CEO and interim president of the company. -- As a condition of the transaction, Creditrust must obtain bankruptcy court approval of its merger agreement with NCO Portfolio Management and its plan of reorganization. The plan requires settlement of any claims and disputes with its securitized bondholders, settlement of outstanding litigation, and provides for the payment of its unsecured creditors in full. -- As a condition of the transaction, NCOG, through its servicing subsidiary NCO Financial Systems, Inc., will enter into a ten year contract with NCO Portfolio Management whereby NCOG will be the exclusive servicer of all portfolios owned and managed by NCO Portfolio Management, Inc., including all portfolios currently serviced by Creditrust, and NCOG will refer all purchase opportunities in the U.S. to NCO Portfolio Management, Inc. NCOG, through its servicing subsidiary NCO Financial Systems, Inc., will offer employment to the majority of Creditrust employees. -- The new company will maintain a small infrastructure to underwrite, purchase and manage its portfolios. -- Other contingencies include approval by NCOG's lender and required governmental approvals including Hart-Scott-Rodino. DRYPERS CORP: Moody's Downgrades 10.25% Senior Unsecured Notes To Ca Rating --------------------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Drypers Corporation's $145 million of 10.25% senior unsecured notes, due 2007 to Ca from Caa1. Concurrently, Moody's lowered the company's senior implied rating to Caa1 from B3. The ratings outlook remains negative. The ratings action follows Drypers' likely default under its credit agreement stemming from its failure to make licensing payment to the Proctor & Gamble Company (P&G) as required under current licensing agreements, as alleged in one of two lawsuits filed by P&G against Drypers. The other lawsuit alleges that Drypers infringed on patents owned by P&G. In addition, management also expects that poor operating performance in the third quarter will result in financial covenant defaults under the company's credit facilities. As a result of these issues, the company is consulting with an investment bank to explore strategies to deal with current liquidity problems, which could potentially include a court- supervised financial restructuring of the company. Total debt of approximately $218 million and EBITA of $23 million for the LTM ended June 30, 2000 results in a Debt-to-EBITA of 9.5 times (6.7x Debt- to-EBITDA). The ratings outlook is negative pending the outcome of a restructuring and its potential effect on note holders; the current ratings take into account the potential for losses. Headquartered in Houston, Texas, Drypers Corporation manufactures and markets disposable baby diapers, training pants, and pre-moistened baby wipes. ELDER-BEERMAN: For September, Total Sales Up but Comp Store Sales Down ---------------------------------------------------------------------- The Elder-Beerman Stores Corp. (Nasdaq:EBSC) announced its sales results for the five-week period ended September 30, 2000. September total department store sales increased 0.4 percent to $55.9 million compared to the same period last year. On a comparable store basis, sales for Elder-Beerman department stores decreased 1.8 percent versus the same period last year. The best performing businesses in September were ladies' coats, cosmetics, denim in all categories of business and furniture. The nation's ninth largest independent department store chain, The Elder- Beerman Stores Corp. is headquartered in Dayton, Ohio and operates 62 stores in Ohio, West Virginia, Indiana, Michigan, Illinois, Kentucky, Wisconsin and Pennsylvania, and has announced the November 2000 opening of a new store in Jasper, Indiana. Elder-Beerman also operates two furniture superstores. (dollars in millions) SEPTEMBER(a) ------------------------------------------ 2000 1999 Total Comparable Sales Sales Sales Sales (unaudited) Change(b) Change ----- ----- --------- ---------- The Elder-Beerman Stores Corp. $55.9 $55.7 0.4% (1.8%) (dollars in millions) YEAR TO DATE(a) ------------------------------------------ 2000 1999 Total Comparable Sales Sales Sales Sales (unaudited) Change(b) Change ----- ----- --------- ---------- The Elder-Beerman Stores Corp. $376.7 $370.0 1.8% (1.1%) (a) All sales figures exclude leased department sales. (b) Percentages may not correspond to the sales figures shown due to rounding of sales figures. FACTORY DIRECT: Faces Complaints, Store Closures and Considering Bankruptcy --------------------------------------------------------------------------- Sarasota flooring firm Factory Direct Interiors, closed all of its stores and in considering filing for bankruptcy protection under Chapter 11, The Herald-Tribune reports. President John Linneman says he isn't planning to reopen and will complete pending contracts. Factory, which faces nearly 300 complaints, is currently under investigation conducted by Stephen Iglesias, an assistant attorney general of Economic Crimes Division. Factory's attorney, Andre Perron, denies that the investigation was the cause of the bankruptcy and announced: "Factory Direct Interiors, as a result of supply problems and adverse publicity based on unwarranted claims, has elected to seek protection under United States bankruptcy laws. Factory Direct Interiors will make every effort to respond to its customers at the earliest possible time." Factory Director has 12 stores from Tampa to Fort Myers. The company's corporate headquarters is at 1507 Mango Ave. in Sarasota. Factory Direct has two stores in Sarasota, one in Bradenton, one in Venice and one in Port Charlotte. FIRST ALLIANCE: Faces Seven-Count Complaint from Federal Trace Commission ------------------------------------------------------------------------- First Alliance Corp., has been charged by U.S. regulators with deceiving home-equity loan borrowers. The Federal Trade Commission filed a seven- count complaint in U.S. District Court in Santa Ana, charging First Alliance with violating the Truth in Lending Act and the Federal Trade Commission Act. The FTC also named First Alliance Mortgage Co., a Minnesota-based subsidiary. The agency alleges First Alliance used direct mail and telephone calls to target customers with poor credit histories who might have trouble getting conventional home financing. The company failed to give them accurate information about the costs and terms of their loans, according to the documents. (New Generation Research, Inc., 05-Oct-00) FRUIT OF THE LOOM: Court to Consider if Pro Player Fraud Will Go Forward ----------------------------------------------------------------------- Ki Young Lee was the majority shareholder in Daniel Young Inc., a privately held sportswear apparel firm. Its success drew the attention of Fruit of the Loom, which purchased Daniel Young for $42,500,000 on August 5, 1995. Mr. Lee received $25,500,000. Fruit of the Loom changed the name of the business to Pro Player. According to Robert J. Dehney, Esq., of Morris, Nichols, Arsht & Tunnell, Pro Player agreed to pay Mr. Lee up to $15,700,000 if Pro Player reached predetermined sales and earnings targets. Debtors' obligation to Mr. Lee, if earned, was secured by an irrevocable letter of credit for $10,000,000 (No.L152581) from the Bank of Nova Scotia. It provided for two separate draws of $5,000,000 each. For 1998, Mr. Lee says he performed all material obligations and the Pro Player division achieved the targets necessary for a bonus payment. Fruit of the Loom, Mr. Lee charges, without notice, locked Mr. Lee out of his office in August and terminated him for cause in September. Mr. Lee claims he is owed the bonus payment. On October 8, 1998, Pro Player filed suit in U.S. District Court in New Jersey against several defendants, including Mr. Lee, alleging fraud, misrepresentation, breach of fiduciary duty and violation of the Federal Racketeering Influenced and Corrupt Organizations Act. On July 24, 1999, Mr. Lee attempted to draw on the letter of credit for $5,000,000. On July 28, the New Jersey District Court placed a temporary restraining order on Mr. Lee prohibiting the draw. At an August 6 hearing in front of Judge Dennis M. Cavanaugh, the parties consented to a new restraining order with the understanding that expedited discovery was available to Mr. Lee and Fruit of the Loom would extend the letter of credit. However, on December 29, 1999, Fruit of the Loom filed for bankruptcy without notice. Mr. Dehney alleges that Fruit of the Loom "stood mute" as Judge Cavanaugh scheduled the next hearing date for January 20, 2000. The Judge cancelled the scheduled hearing until resolution of the bankruptcy proceedings. Mr. Lee appealed the decision but was tossed aside like a worn sock. District Judge William G. Bassler held that: (i) further actions against Debtor are stayed while FTL's reorganization proceeds in Bankruptcy Court; (ii) Mr. Lee's motion to dissolve the restraining order is denied; and (iii) the Debtors' action against Mr. Lee may proceed. Mr. Lee requests an order from Judge Walsh granting him relief from the automatic stay to continue litigating his claims against FTL. Mr. Lee does not seek relief to execute on any property of Debtor or their estate in the event that judgment in the action is granted in his favor. Mr. Dehney argues that since Fruit of the Loom has taken action against Mr. Lee while simultaneously proceeding with the reorganization process, the firm is not concerned nor burdened by pursuit of dual legal matters. In re Pursuit Athletic Footwear, 193 B.R. at 718-719. In addition, permitting Fruit of the Loom to pursue its case while prohibiting Mr. Lee from doing so allows Debtor to use the Bankruptcy Court as both sword and shield. "Where a debtor seeks affirmative relief on a plaintiff in a lawsuit then invokes the protection of the automatic stay on a counterclaim, the situation warrants very careful scrutiny." First National Bank of Boston v. Overmyer, 32 B.R. 597, 601 (Bankr. S.D.N.Y. 1983). Considering the parties' arguments, Judge Walsh granted Mr. Lee's request for modification of the stay. No sooner was that ruling issued, and the Debtors returned to Court saying that Mr. Lee had other tricks up his sleeve. The Debtors state that there now significant confusion among the parties regarding the relief granted by Judge Walsh to Mr. Lee. Since the hearing, Mr. Lee has argued that the previously granted relief should be expanded beyond that anticipated by Fruit of the Loom. J. Kate Stickles Esq., at Saul, Ewing, Remick & Saul, reminds Judge Walsh that her client consented to actions towards judgment but not to any "attempt to collect against the assets or property of the estate." (Hearing Tr. 72 and 73). For example, Mr. Lee asserts that he should be granted priority interest to Fruit of the Loom funds deposited in the Court of Registry at the New Jersey District Court, senior to all other pre-petition creditors. He also wants to exercise interim remedies against the funds before any determination of entitlement or distribution is made. Ms. Stickles argues that the funds are the property of Fruit of the Loom and subject to exclusive jurisdiction of the Bankruptcy Court. Mr. Lee's prior motions expressly disclaimed interest in exerting control over the estate. The previous Court ruling granted only limited relief to Mr. Lee. Neither Debtor nor the Court contemplated that Mr. Lee would attempt to execute against the funds held in the Court of Registry. The Debtors make it clear to Judge Walsh that they consent to an order granting relief from the automatic stay, enabling Mr. Lee to prosecute his counterclaims. However, they also want it made clear that Mr. Lee is enjoined from executing against the funds held in the Court Registry. If this is not made clear, Ms. Stickles postulates, Mr. Lee will try to step in front of other creditors and remove value from the estate. (Fruit of the Loom Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) GC COMPANIES: Summit Park 6 Cinema in Wheatfield Suffers Closing Ripple ----------------------------------------------------------------------- After recently closing 24 unprofitable theaters, General Cinema Corp. closes its Summit Park 6 Cinema in Wheatfield, considered thrice in two years, The Buffalo News reports. Aside from notifying SEC that the theatre chain eyes several options, filing for bankruptcy protection was one of it. "We announced that we were looking to close or sell some locations," said Brian Callaghan, a Boston-based spokesman for the theater chain. "Competition has been tough on everyone with the megaplex building boom that we've seen over the past five years." Summit Park opened initially started with opening up two screens back in 1973. The complex had six screens in 1985. There are three full-time and 16 part-time workers. Callaghan added, that one full-time employee will be relocated to another location. GE CAPITAL: Fitch Cuts Rating On Home Equity Loan Pass-Through Certificates --------------------------------------------------------------------------- Fitch lowers the ratings of the following GE Capital Mortgage Services, Inc., home equity loan pass-through certificates: -- Series 1996-HE4 class B2 from 'BB' Rating Watch Negative to 'CCC' Rating Watch Negative. -- Series 1997-HE1 class B2 from 'BBB' Rating Watch Negative to 'CCC' Rating Watch Negative and class B3 from 'B' Rating Watch Negative to 'D'. -- Series 1997-HE2 class B3 from 'B' Rating Watch Negative to 'CCC' Rating Watch Negative. -- Series 1997-HE4 class B4 from 'B' to 'CCC' Rating Watch Negative. In addition the following classes are put on Rating Watch Negative: -- 1996-HE4 class B1, 1997-HE1 class B1, 1997-HE2 class B2 and 1997-HE4 class B3 Original credit enhancement levels for the 1996-HE4 certificates were 3.00% and 1.75% for the classes B1 and B2, respectively. As of the September remittance period, the credit enhancement levels were 3.45% and 0.16% for the classes B1 and B2, respectively. Cumulative losses on the underlying collateral equal to $3,326,331, or 1.51% of the original collateral balance. Original credit enhancement levels for the 1997-HE1 certificates were 3.00%, 1.75% and 1.10% for the classes B1, B2 and B3, respectively. As of the September remittance period, the credit enhancement levels were 3.85%, 0.93% and 0.00% for the classes B1, B2 and B3, respectively. Cumulative losses on the underlying collateral equal to $2,348,216, or 1.19% of the original collateral balance. Original credit enhancement levels for the 1997-HE2 certificates were 2.50% and 1.50% for the classes B2 and B3, respectively. As of the September remittance period, the credit enhancement levels were 2.92% and 0.51% for the classes B2 and B3, respectively. Cumulative losses on the underlying collateral equal to $2,936,116, or 1.20% of the original collateral balance. Original credit enhancement levels for the 1997-HE4 certificates were 1.50% and 0.75% for the classes B3 and B4, respectively. As of the September remittance period, the credit enhancement levels were 1.94% and 0.54% for the classes B3 and B4, respectively. Cumulative losses on the underlying collateral equal to $792,467, or 0.43% of the original collateral balance. Fitch's rating actions reflect the likelihood of loss to the referenced classes, given the performance to date and the outstanding 90+ day delinquent loans, including loans in foreclosure and REO. Fitch will continue to closely monitor the performance of these transactions. GENESIS/MULTICARE: MultiCare Committee Seeks To Employ Chanin As Advisor ------------------------------------------------------------------------ The Official Committee of Unsecured Creditors of The MultiCare Companies, Inc., sought and obtained the Court's authority to retain Chanin Capital Partners as its financial advisors, pursuant to 11 U.S.C. Sections 328 and 1103(a) of the Bankruptcy Code, and Rule 2014 of the Bankruptcy Rules. The Committee submits that it needs a financial advisor to assist it in the evaluation of the Debtors' businesses during these Chapter 11 cases and Chanin has been selected for its experience and expertise in providing financial advisory services in chapter 11 cases, and its familiarity with the Debtors' business. The Committee believes that Chanin is well qualified and uniquely able to provide financial advisory services to them in the Multicare cases in an efficient manner. Chanin will provide the Committee with financial advisory services including: (1) Analysis of the Debtors' operations, business strategy, and competition in each of its relevant markets as well as an analysis of the industry dynamics affecting the Debtors; (2) Analysis of the Debtors' financial condition, business plans, operating forecasts, management, and the prospects of its future performance; (3) Financial valuation of the ongoing operations of the Debtors; (4) Assistance in developing, evaluating, structuring and negotiating the terms and conditions of a potential recapitalization, including the value of the securities, if any, that may be issued to the Committee under a plan of reorganization; (5) Analysis of potential divestitures of the Company's operations; and (6) Other and further financial advisory services with respect to the Debtors, including valuation, general restructuring and advice with respect to financial, business and economic issues, as may arise during the course of the Multicare Chapter 11 cases as requested by the Committee. As set forth in the Declaration of Senior Vice President at Chanin, Mr. Eric Scroggins, Chanin was engaged by the prospective Debtors to represent an ad-hoc committee consisting of four holders of Multicare's 9% Senior Subordinated Notes due 2007 in connection with restructuring negotiations with the Debtors. Chanin and the Ad-hoc Committee have agreed that, effective July 11, 2000, the Firm will no longer represent it in this matter but will represent only the Committee. In connection with the Debtors' engagement of Chanin to represent the Ad-hoc Committee, the Debtors had agreed to pay Chanin's fees and expenses in connection with this representation. Chanin incurred $250,000 in fees and $21,583.36 in expenses representing the Ad-hoc Committee. Prior to the commencement of these cases, the Debtors paid Chanin these amounts in full. As disclosed in the Scroggins Declaration and as set forth above, Chanin or its professionals may have from time to time provided and may continue to provide various services to certain of the Debtors' creditors or other parties in interest in matters unrelated to these Chapter 11 cases. The Committee submits that these matters have no bearing on the services for which Chanin is to be retained in these cases. The Committee submits that Chanin has no connection with, and holds no interest adverse to, the Debtors, their estates, their creditors, or any party in interest, or their respective attorneys. Chanin will be paid a Monthly Advisory Fee of $100,000. In addition, Chanin will receive a restructuring transaction fee of $625,000, payable on, and subject to, the effective date of a plan of reorganization. Fifty percent of the Monthly Advisory Fees paid after the ninth month following July 11, 2000 will be credited to the Transaction Fee. In addition, Chanin will seek reimbursement for reasonable expenses. Chanin has advised the Committee that investment banking firms do not as a general practice keep detailed time records similar to those customarily kept by attorneys, and represents that it does not have the systems and procedures in place to follow the timekeeping practices generally followed by attorneys who regularly practice before this Coup. Nevertheless, as the United States Trustee has proposed with respect to Chanin in another case pending in this District, Chanin has agreed to provide time records in a streamlined or summary format, which shall set forth a description of the services rendered by each professional and the aggregate amount of time spent by such individual in rendering services to or on behalf of the Committee. (Genesis/Multicare Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENOIL INC: Subsidiary, CE(3) Technologies, Placed into Receivership -------------------------------------------------------------------- Genoil Inc. (CDNX:GNO) announces that CE(3) Technologies Inc., a wholly- owned subsidiary of Genoil, has been placed in receivership by the Court of Queen's Bench in Edmonton, Alberta as a result of debt owing by CE(3) to its trade creditors. PriceWaterhouseCoopers has been appointed receiver. Genoil continues to carry on business as usual and is a secured creditor of CE(3). Genoil also announces that it has completed the issuance of nine million common shares of Genoil to former shareholders of CE(3). This transaction was previously announced by press release dated June 12, 2000 and received final approval from the CDNX on September 28, 2000. The Canadian Venture Exchange has neither approved nor disapproved the information contained herein. GLOBAL OCEAN: Disclosure Statement for New Plan to be Considered on Oct. 30 --------------------------------------------------------------------------- Global Ocean Carriers Limited (OTC Bulletin Board: GLOC) announced that an expedited schedule has been set for the Company's emergence from its reorganization cases. Global has filed a new Plan of Reorganization that addresses the issues raised in the Court's earlier opinion and, in fact, offers Noteholders more than the Court found to be fair. The Court has fixed October 30, 2000 for a hearing on the Disclosure Statement for Global's revised Plan of Reorganization and has set December 15, 2000 as the date for a hearing on confirmation of this Plan. Between October 30 and December 15 the revised Plan and the Disclosure Statement, once approved, will be submitted to the holders of Global's 10-1/4% Senior Notes for their consideration and approval. In these circumstances, the Company believes that, if the Plan is confirmed as expected, distributions can be made to Noteholders by December 31, 2000. Global's earlier plan of reorganization has been approved by the holders of almost $100 million of the Notes. In order to expedite the process, Global agreed to waive its exclusivity and to allow an objecting creditor to file a competing plan and disclosure statement by October 13. In return, the creditor had to waive certain of its objections to Global's new Plan. The substance of this competing plan remains sketchy and its proponent's ability to secure any necessary contractual arrangements are speculative at this time. The hearing on the objections to this competing plan is also scheduled for October 30. GRAHAM FIELD: Judge Walrath Extends Exclusive Period through Nov. 6 -------------------------------------------------------------------- With the consent of its official unsecured creditors' committee, Graham- Field Health Products Inc. has received a 75-day extension of the exclusive periods during which other parties are prohibited from filing competing Chapter 11 plans. U.S. Bankruptcy Judge Mary F. Walrath extended the exclusive period during which only Graham-Field can file a Chapter 11 plan through Nov. 6. If the Bay Shore, N.Y.-based health-care product manufacturer files a plan by Nov. 6, other parties would be further prohibited from filing a plan through Jan. 5, 2001, to allow the company time to solicit plan votes.(ABI, 05-oct-00) GRAND UNION: Case Summary and 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Grand Union Company, The 201 Willowbrook Boulevard Wayne, NJ 07470-0966 Type of Business: Operates 216 retail food stores for six Northeastern areas. Chapter 11 Petition Date: October 2, 2000 Court: District of New Jersey Bankruptcy Case No.: 00-02961 Debtor's Counsel: Howard Greenberg, Esq. Stephen B. Ravin, Esq. Ravin, Greenberg & Marks, P.A. 101 Eisenhower Parkway Roseland, NJ 07068 and Weil, Gotshal & Manges, LLP 767 Fifth Avenue New York, NY 10353 Total Assets: $ 749,535,000 Total Debts: $ 803,995,000 20 Largest Unsecured Creditors: C&S Wholesalers Old Ferry Road Bradleborro, VT 05301 Greg Raven (802) 257-4371 $ 7,800,000 Amerisource 100 Friar Lane Thorofare, NJ 8086 Lori McFaden (856) 848-3400 $ 2,500,000 Jack Pattridge 7745 Oyster Bay Lane Cincinnati, OH 45244 (513) 527-4446 $ 1,900,000 Coca-Cola 3 Skyline Drive Hawthorne, NY 10532 Kevin Gallagher Tel:(914) 789-1722 Fax:(914) 789-1743 $ 1,293,000 Kraft General Foods 65 Jackson Drive Cranford, NJ 07016 Doreen Lenanzi Tel:(800) 482-4523x7833 Fax:(908) 709-7863 $ 1,292,227 Edys Grand Ice Cream 301 Roundhill Drive Rockaway, NJ 07866 Nick Barrone Tel:(973) 627-882 Fax:(973) 627-7003 $ 1,240,012 Wayne Harris 1110 Fagine Run New Richmond, OH 45157 Wayne Harris (727) 395-7225 $ 1,000,000 Gourmet Award Foods 4294 Albany Street PO Box 12579 Albany, NY 12212-2579 Steve Melshenke (518) 456-1888 $ 853,466 Nabisco Biscuit Co. 355 Clearview Avenue Edison, NJ 08818 Mike Vanbezooil Tel:(732) 255-9300 Fax:(732) 505-0791 $ 710,775 Pepsi Cola 700 Anderson Hill Road Purchase, NY 10577 Kim McCabe Tel:(914) 253-2701 Fax:(917) 249-8216 $ 663,758 General Mills 1427 Marielle Drive Washington, PA 18976 Thomas Molchan Tel:(800) 543-1243x629 Fax:(215) 343-1816 $ 650,439 ETD 7052 Grand Blvd., Suite 120 Houston, TX 77054 Ken Stalling Tel:(800) 892-3055 Fax:(713) 748-2430 $ 623,577 The Coca-Cola Bkg. Co. of NY PO Box 4108 Boston, MA 02211 Kevin Gallagher Tel:(914) 789-1724 Fax:(914) 789-1743 $ 604,750 Heritage Mint Ltd. PO Box 13750 Scottsdale, AZ 85267 Jeff Wright Tel:(480) 860-1300 Fax:(480) 860-8174 $ 572,506 RR Donnelly Receivables Inc. PO Box 13654 Newark, NJ 07188 Steve Margolia Tel:(212) 503-1453 Fax:(212) 503-1344 $ 551,185 Hudson County News Co. 1305 Paterson Plank Road North Bergen, NJ 07047 Ronald Clark Tel:(201) 867-3500x214 Fax:(201) 617-7334 $ 527,692 Pepsi Cola Albany Bottling Co. 700 Anderson Hill Road Purchase, NY 10577 Kim McCabe Tel:(914) 253-2701 Fax:(917) 249-8210 $ 487,717 Pepperidge farms Inc. 26 Raleigh Road Edison, NJ 08817 Laurie Madison Tel:(732) 985-0097 Fax:(732) 777-3285 $ 445,627 Sun Diamond Growers Of California 503A Hertage Hills Somera, NY 10589 Rich Doyle Tel:(914) 276-2680 Fax:(914) 276-3985 $ 442,841 Crowley Foods Inc. PO Box 6490 55 Commerce Ave. Albany, NY 12206 Ron Gaidusck Tel:(518) 482-4474 Fax:(518) 482-4992 $ 438,427 GREATE BAY: Modified 5th Amended Plan of Reorganization Takes Effect -------------------------------------------------------------------- According to U.S. Bankruptcy Court dockets, the Modified Fifth Amended Joint Plan of Reorganization proposed by Greate Bay Hotel and Casino, Inc.'s official committee of unsecured creditors and The High River Parties is now effective. As a result, the Company, which has been operating under Chapter 11 protection since January 5, 1998, has emerged from Chapter 11 protection. (New Generation Research, Inc. 05-Oct-00) HARNISCHFEGER INDUSTRIES: Beloit Committee Employs Morris as Local Counsel -------------------------------------------------------------------------- Pursuant to 11 U.S.C. Sec. 1103, Judge Walsh approved an Application by the Official Committee of Unsecured Creditors of Beloit Corporation to retain the law firm of Morris, Nichols, Arsht & Tunnell as its local counsel in the Debtors' chapter 11 cases. The principal attorneys currently designated to represent the Beloit Committee, and their customary hourly rates, are: Robert J. Dehney, Esq. $ 340 Derek C. Abbott, Esq. 260 Jason W. Staib, Esq. 180 Morris Nichols will be cautious, Mr. Dehney assures the Court, to avoid duplicating services performed by Stroock & Stroock & Lavan, serving as lead counsel to the Beloit Committee. Mr. Dehney discloses that Morris Nichols represented ABS Pumps International AB, Mitsubishi Heavy Industries, Ltd., Sanwa Bank Limited, Cellier Groupe, SA, Ing. S. Maule & C. S.p.A., Ross Alltman, Scott Baker and Mark Radinger in connection with the Debtors' chapter 11 cases. Those engagements have concluded. In matters unrelated to the Debtors' cases, Mr. Dehney discloses that his Firm represents The Chase Manhattan Bank, Northwood Capital Funding, Blue Ridge Investments, LLC, Cigna Corporation, NationsRent, Drummond Company, Inc., and United Parcel Service. Mr. Dehney is confident that his Firm does not hold any interest adverse to the Debtors' estates, their creditors or the members of the Beloit Committee and is disinterested within the meaning of 11 U.S.C. Sec. 101(14). (Harnischfeger Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) JOAN & DAVID: New England Development Offers $16MM+ for Retailers Assets ------------------------------------------------------------------------ Newmark Retail Financial Advisors LLC announced the execution of a "stalking horse" contract and Bankruptcy Court approval of an auction for the sale of substantially all of the assets of joan and david helpern incorporated, including the Joan & David retail boutiques and outlets, concession arrangements, inventory and international trademarks, to New England Development Leasing, LLC, for $16.0 million in cash and the assumption of certain liabilities. As the Company's financial and restructuring advisor, Newmark arranged and structured the sale, subject to higher or better offers and Bankruptcy Court approval, and will continue to solicit offers culminating in an auction that will take place on Thursday, October 12, 2000 at 10 a.m. in the law offices of Hahn & Hessen, LLP in New York City. The stalking horse contract represents the culmination of a six-month effort to restructure the Company's operations, assets and liabilities and position it for sale. The Company filed its Chapter 11 petition March 9th of this year in the Bankruptcy Court for the Southern District of New York. Joan and David, the prominent designer, retailer and wholesaler of luxury women's footwear, apparel and accessories internationally, is currently owned by its founders Joan Helpern, David Helpern, Sr., and members of the Helpern family. Joan & David operates (and distributes merchandise under its name) through 60 locations throughout the United States, Europe and Asia. NED is an affiliate of, and controlled by, New England Development Company one of the largest real estate development companies in New England. The principals of the company are Stephen R. Karp, CEO, and Steven S. Fischman, President. Over the past ten years NEDC developed, owned and managed the largest portfolio of regional malls in New England, the majority of which were sold in 1999. NEDC is currently developing several mixed-use projects in New England and other locations in the Northeast. In the interest of diversifying, the principals of NEDC have also been significant investors in other businesses including retail. Messrs. Karp and Fischman founded Lidds, Inc. which is a chain of approximately 275 mall-based retail stores, and they are the founders and lead investors in MarketPlace Development, which does retail development at airports, including Philadelphia, LaGuardia and San Francisco. The transactions embodied in the NEC Agreements present a significant opportunity to further their objectives of diversification. Joan & David presents a unique opportunity to a perspective purchaser interested in extending an existing retail and wholesale base, capitalizing on a coveted and established brand name, expanding the Company's reach by establishing new collections, seeking licensing opportunities in several key categories, pursuing a high end e-commerce strategy, accessing skilled manufacturing capacity and acquiring an international portfolio of leasehold interests and concession arrangements. LOEWEN GROUP: Debtors Suspect Former Operator Didn't File Tax Returns --------------------------------------------------------------------- In December 1996, Loewen Group International, Inc., purchased from the Hughes Family all the outstanding stock of certain funeral home and cemetery companies: * Hughes Southlands Funeral Home, Inc.; * Ed C. Smith & Bros. Inc.; * Dudley M. Hughes Funeral Home, Inc.; * Dudley M. Hughes Funeral Home - North Chapel, Inc.; and * Crown Hill Memorial Park, Inc. With regard to the filing of wage reports and employment tax returns for the calendar year 1996, the parties agreed that LGII would be responsible for the period December 3, 1996 to December 31, 1996, the period during which LGII owned the Acquired Companies, while the Hughes Family would be responsible for the period prior to December 3, 1996. In 1997, LGII filed with the Social Security Administration and the Internal Revenue Service wage reports and employment tax returns, the Debtors tell Judge Walsh. However, several months ago, the Debtors received notices from the Internal Revenue Service that certain wage reports for the Acquired Companies for the 1996 tax year did not match the amounts on the employment tax returns for that same period. In particular, the IRS Notices indicate that (a) the amounts reported to the Social Security Administration on Form W-3 and (b) the transmittal of income and tax statements to the IRS for the tax period 1996 are less than the amounts reported on the respective employers federal tax returns (Form 941, 942, 943, 945 or Schedule H). These reported amounts did not match because the Hughes Family did not do their part on filing the necessary Forms W-2 and wage and tax statements for January through November 1996, the Debtors tell the Judge. Faced with potential significant penalties if they do not respond to the IRS Notices, the Debtors say they attempted to obtain the necessary records from the Hughes Family but in vain. The Debtors then tried it with Mr. James Samson, the accountant for the Acquired Companies during 1996 and now apparently accountant for the Hughes Family and got words from Mr. Samson that the Hughes Family would provide the records if the Debtors made it "worth their while." The Debtors saw in the Hughes Family an attempt to inappropriately make use of their possession of these documents as leverage to seek compensation from the Debtors or payment on their alleged prepetition claims. In the circumstance, the Debtors ask Judge Walsh to compel the production of the documents concerned and to authorize the Debtors' counsel to issue subpoenas for this purpose. (Loewen Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) ORBCOMM GLOBAL: Sale of Vantage Tracking Unit To Raise Cash ----------------------------------------------------------- Orbcomm Global, L.P., which filed for Chapter 11 in Delaware, is considering a sale of its Vantage Tracking unit to aid its bankruptcy reorganization, Global Positioning & Navigation News reports. "We have a number of offers to invest in Vantage and potentially even to sell Vantage," says Obcomm CEO Scott Webster. "My expectation is that, within the family or outside it, they'll have more resources available to them than they ever had before." Orbcomm deals with development, construction and operation of a low-Earth orbit satellite-based system to provide worldwide data communication services. The company listed in its bankruptcy filing $403 million of assets over a $258 million debt. OWENS CORNING: Fitch Downgrades Senior Ratings To D After Bankruptcy Filing --------------------------------------------------------------------------- Fitch has downgraded the senior unsecured rating of Owens Corning (NYSE- OWC) from `BB` to `D` and its MIPS rating from `B+` to `D` reflecting the company`s announcement that it has voluntarily filed for reorganization under Chapter 11 of the U.S. bankruptcy code as a means of addressing its asbestos liabilities. Approximately $1.7 billion of securities are affected. The rating action recognizes that Owens Corning will not make interest payments on its unsecured obligations during the bankruptcy proceedings, as well as the fact that given the nature of the company`s obligations, recovery analysis would be highly speculative. As outlined in Fitch`s press release dated August 7, 2000, asbestos obligations have represented an increasingly meaningful determinant of OWC`s credity quality and ratings have been largely event driven. The company has reserved roughly $2.4 billion for asbestos claim payments within its National Settlement Program (NSP), under which payment caps had been set for the next five years to manage cash outflows. However, underlying developments surrounding asbestos liabilities have continued to be negative, both with new cases (within and outside the NSP) and the cost per case exceeding expectations and forcing OWC to continuously revise reserve levels. OWENS CORNING: Moody's Junks All Ratings After Chapter 11 Bankruptcy Filing --------------------------------------------------------------------------- Moody's Investors Service downgraded the debt ratings of Owens Corning, senior to Ca. The rating action follows Owens Corning's announcement that it had filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy code as a means to help it cope with asbestos-related liabilities. The ratings downgraded are: a) Owens Corning -- senior unsecured debentures, eurobonds, medium term notes and IRB's to Ca from Ba2; shelf registration for senior unsecured debentures to (P)Ca from (P)Ba2 b) Owens Corning Capital II and III - shelf registration for preferred stock to (P)"c" from (P)"b1" c) Owens-Corning Capital L.L.C. - Monthly Income Preferred Securities to "c" from "b1" d) Owens-Corning Funding B.V. - senior unsecured debt to Ca from Ba2 Today, in response to demands placed upon the company by growing asbestos liabilities, Owens Corning voluntarily filed for bankruptcy protection. The company has obtained a $500 million debtor-in-possession financing commitment from Bank of America to enhance liquidity during the reorganization process. The filing results from increasing asbestos claims, as reflected in the June 2000 increase of $1 billion to projected liabilities. While deteriorating market conditions for building products and escalating raw materials costs have adversely affected the company's performance, the provision for asbestos litigation claims during the second quarter was a primary factor leading to the company's reported loss of $377 million for the first half of 2000. Nevertheless, because of the continued growth of asbestos claims during the year, the company has pursued the use of the Chapter 11 filing to enable it to address these liabilities. Owens Corning, based in Toledo, Ohio, had annual revenues of approximately $5 billion in 1999. PSEUDO PROGRAMS: Seeks Court Approval for Employee Retention Bonus Program -------------------------------------------------------------------------- Pseudo Programs, Inc., which filed for Chapter 11 in New York on Oct. 3, seeks bankruptcy court's approval for an employee retention bonus program needed to hold its 4 key employees at bay. Pseudo added that these employees leaving might trigger more defections and the employees are "almost impossible to replace because experienced candidates will find unattractive the prospect of working for a Chapter 11 company that is in the process of liquidating its assets." The program states that payments added to the salary, are given in lump sums at the end of the employment term agreed. In the event of the filing, the bankruptcy court still has its say on it. REALTY WORLD: Real Estate Broker Files Chapter 11 in Santa Ana, Ca. ------------------------------------------------------------------- Realty World America Inc., a large North American real estate brokerage network, filed for bankruptcy Wednesday in Santa Ana, CA. The company operates a network of approximately 450 franchised brokerage offices nationwide and in Mexico. The Chapter 11 filing was an attempt to avoid immediate payment of a $631,000 judgment ordered against it in a breach-of- contract lawsuit in Northern California. Realty World said it is a profitable company and will file a reorganization plan within 120 days. (New Generation Research, Inc. 05-Oct-00) SAFETY-KLEEN: Applies to Employ Zevnik Horton As Special Insurance Counsel ------------------------------------------------------------------------- Safety-Kleen Corp. applies to retain, pursuant to 11 U.S.C Secs. 327(e) and 329, Zevnik, Horton, Guibord, McGovern, Palmer & Fognani, L.L.P., as special insurance litigation counsel to represent the Company in connection with: (a) Recovery efforts related to the insurance recovery project for non-product-liability environmental, toxic tort and similar or related claims, losses and liabilities; and (b) Recovery efforts related to the insurance recovery project for product liability toxic tort and similar or related claims, losses and liabilities, including: (1) analysis and advice in connection with SKC's solvent-related product liability suits, claims and losses, and (2) efforts to collect from various insurance carriers sums owed to SKC under various insurance contracts as a result of sums paid or incurred by SKC in connection with product liability toxic tort and similar or related claims, losses and liabilities. Gregory M. Cork, Esq., a member of Zevnik Horton, leads the engagement from the Firm's Washington, D.C., office. For the Solvent Product Liability Insurance Recovery Project, Zevnik Horton will seek compensation for the services of each attorney and paraprofessional acting on behalf of the Debtors in these chapter 11 cases at their customary hourly rates: Paul A. Zevnik $350 Jonathan L. Osborne $300 Michael John Miguel $275 John W. Roberts $275 James Schad $150 E. Tracy Brown $150 However, should settlement efforts with certain American International Group member insurance carriers, including The Insurance Company of the State of Pennsylvania, concerning certain product liability toxic tort litigation be unsuccessful, or should SKC otherwise determine that the insurance recovery aspects of the Solvent Product Liability Insurance Recovery Project may be resolved only through litigation and should SKC further determine that it prefers a contingent or risk-based fee arrangement, rather than a fee arrangement based solely on hours expended, then, upon commencement of said litigation and election by SKC, in conjunction with the solvent product liability insurance recovery project (i) Zevnik Horton will expect payment only for its expenses and disbursements, and (ii) legal fees will be payable only in the event SKC receives a solvent-related product liability insurance recovery in which case the contingent fee percentage of "recoveries" is 12.5%. In connection with the Environmental Insurance Recovery Project, legal fees are payable only in the event SKC receives an environmental insurance recovery in which case the contingent fee percentage of "recoveries" is 6.25%. Anticipating resistance to the contingency fee arrangements by the United States Trustee or some other party-in-interest, David S. Kurtz, Esq., and J. Gregory St. Clair, Esq., of Skadden, Arps, Slate, Meagher & Flom LLP, remind the Court that Section 328 of the Bankruptcy Code provides that a debtor-in-possession may employ a professional person "on any reasonable terms and conditions of employment, including on a retainer, on an hourly basis, or on a contingent fee basis." Messrs. Kurtz and St. Clair direct Judge Walsh's attention to In re Malcon Developers, Inc., 138 B.R. 677 (Bankr. N.D.N.Y. 1992) (permissibility of contingent fee arrangements is "clearly and unambiguously spelled out" by Bankruptcy Code Sec. 328(a)); In re Benassi, 72 B.R. 44, 47 (D. Minn. 1987) (noting that section 328(a) reflects Congressional policy of enabling debtors to obtain competent and efficient representation). As bankruptcy courts have frequently recognized, Messrs. Kurtz and St. Clair continue, contingent fee arrangements are particularly appropriate where it is necessary for the professional to bear the risk of an adverse result, and where it is unlikely that any professionals would be willing to be retained in the absence of a contingent fee arrangement. See Malcon Developers at 680 (noting that where attorney assumed significant financial risk in order to represent debtor, contingent fee was appropriate). In addition, where a contingent fee arrangement is approved in advance as fair and reasonable, it is not necessary that the court perform a quantum meruit or lodestar analysis prior to awarding the professional its fees. See, e.g., In re Ross, 94 B.R. 210 (M.D. Ga. 1988) (holding that bankruptcy court erred in denying attorney contingent fees based on fact that litigation concluded more quickly then expected; noting that reasonableness of contingent fee is determined as of the time of retention). (Safety-Kleen Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) TOKHEIM CORPORATION: Delaware Court Confirms Prepackaged Financial Plan ----------------------------------------------------------------------- Tokheim Corporation (OTCBB:TOKM) announced that its previously announced prepackaged financial restructuring plan under Chapter 11 has been confirmed by the United States Bankruptcy Court for the District of Delaware. Confirmation comes only 38 days after Tokheim filed its prepackaged restructuring plan with the Court. Douglas K. Pinner, Chairman, President and Chief Executive Officer, stated: "This is the most important date in the life of the new Tokheim Corporation. The restructuring and recapitalization has significantly reduced the outstanding debt of the old Company and has provided $48 million in new credit facilities. With the restructuring behind us, the new Tokheim is now positioned to capitalize on its technological superiority and thus reinforce its leadership position in the industry. "We are very appreciative of the strong support provided by our customers, suppliers, employees and advisors throughout the restructuring period, which has enabled the Company's prepackaged restructuring plan to be confirmed on an accelerated timetable. We believe we will demonstrate that such support was fully warranted by maintaining and enhancing our strong business and market leadership position going forward." The Company's current management will continue to lead the newly reorganized company. A new Board of Directors will be announced shortly with Douglas K. Pinner, President and Chief Executive Officer, continuing to serve as Chairman of the Board. Cancellation of existing common stock and distribution of warrants to previous shareholders and distributions of new common stock to bondholders, as outlined in the Plan of Reorganization, are expected to begin shortly. Tokheim, based in Fort Wayne, Indiana is the world's largest producer of petroleum dispensing devices. Tokheim Corporation manufactures and services electronic and mechanical petroleum dispensing systems. These systems include petroleum dispensers and pumps, retail automation systems (such as point-of-sale systems), dispenser payment or "pay-at-the-pump" terminals, replacement parts, and upgrade kits. TOMAHAWK II: Case Summary and 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: TomaHawk II, Inc. 8315 Century Park Court Suite 200 San Diego, CA 92123 Type of Business: Document imaging and conversion, engineering design services. Chapter 11 Petition Date: September 11, 2000 Court: Southern District of California Bankruptcy Case No.: 00-08940 Judge: Peter Bowie Debtor's Counsel: Eric A. Nyberg Kornfield, Paul & Nyberg, P.C. 1999 Harrison Street, Suite 800 Oakland, CA 94612-3525 (510) 763-1000 Total Assets: $ 1,678,137 Total Debts : $ 9,391,656 20 Largest Unsecured Creditors Bank of America, NT and SA Mike Staunton 231 So. LaSalle St. Chicago, IL 60697 (312) 825-8452 Loan $ 893,645 Baker and McKenzie Jonathan Kitchen Two Embarcadero Center 24th Floor San Francisco, CA 94111-3909 (415) 381-3000 Legal Fees $ 467,707 Business Software Alliance Paul Mori 1150-18th St. NW Washington, DC 20036 (415) 381-4161 Settlement claim $ 329,886 Finova Capital Corporation 115 West Century Rd. Paramus, NJ 07652 (201) 634-3300 Machine Financing $ 299,657 UCAR Composites Trade Debt $ 227,878 Payrolling.com Payroll services $ 196,565 Ernst and Young Accounting fees $ 141,834 Baker and McKenzie $ 95,820 Finova Capital Corporation Machine financing $ 90,069 TSI Pvt. Ltd. Trade Debt $ 87,111 Peak Technical Svcs., Inc. Trade Debt $ 63,991 MRC PersonPower, Inc. Payroll services $ 57,036 Savar Consulting Payroll services $ 42,010 Savar Consulting Payroll services $ 42,000 Machining Time Savers, Inc. Trade Debt/financing $ 34,737 Oce' Credit Corp. Dept. 1570 $ 33,956 Machining Time Savers, Inc. Trade Debt $ 32,176 Hamann Property Management Mfg. Div. rent $ 31,771 Per-Se Technology, Inc. Corporate office ren $ 31,607 Roband International, Inc. Trade Debt $ 30,175 VENCOR, INC.: Agrees to Lift Stay for Wrongful Death Claimants -------------------------------------------------------------- The Debtors consent to modification of the automatic stay to permit the plaintiffs to prosecute their claims against the Debtors to final judgment in the action captioned, Doris Williams, individually and as surviving spouse of Raymond O. Williams, Jr., Kay Williams Pope and Robert D. Williams, as surviving children of Raymond O. Williams, Jr. v. Primacy Healthcare and Rehabilitation Center, et al., Case No. CT-000051-00, pending before Division 6, in the Circuit Court of Tennessee for the 30th Judicial District at Memphis, for negligence and wrongful death. The Debtors have determined that there is an insurance policy in favor of the Debtors relating to the allegations made by the plaintiffs. The utomatic stay is lifted to permit the plaintiffs to collect any judgment in respect of any recovery of damages and to continue to assert an unsecured prepetition claim against the Debtors, solely for the portion of such judgment that cannot be satisfied by available insurance proceeds. The Debtors agree that any settlement of the underlying action will include a general release of the plaintiff. (Vencor Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) * Bond pricing for the week of October 9, 2000 ---------------------------------------------- Data is supplied by DLS Capital Partners, Inc. Following are indicated prices for selected issues: AMC Ent 9 1/2 '11 46 - 48 Amresco 9 7/8 '05 42 - 44 Advantica 11 1/4 '08 52 - 54 Asia Pulp & Paper 11 3/4 '05 47 - 52 Carmike Cinema 9 3/8 '09 26 - 28(f) Conseco 9 '06 71 - 72 Fruit of the Loom 6 1/2 '03 53 - 55(f) Genesis Health 9 3/4 '05 4 - 6 (f) Globalstar 11 1/4 '04 29 - 31 Loewen 7.20 '03 38 - 42(f) Oakwood Home 7 7/8 '04 35 - 38 Owens Corning 7 1/2 '05 42 - 44 Paging Network 10 1/8 '07 31 - 33(f) Pillowtex 10 '06 18 - 20 Revlon 8 5/8 '08 58 - 59 Service Merchandise 9 '04 6 - 8 (f) Trump Atlantic 11 1/4 '06 68 - 70 TWA 11 3/8 '06 36 - 37 ********* 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. 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 * * *