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/raid1/www/Hosts/bankrupt/TCR_Public/010109.MBX T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, January 9, 2001, Vol. 5, No. 6 Headlines ANN & HOPE: Discount Retailer Closing 4 Massachusetts Stores AMERICAN EQUITIES: Case Summary & 20 Largest Unsecured Creditors ARMSTRONG WORLD: Creditors Convene in Wilmington on Jan. 27 CENTENNIAL COAL: Committee Taps Bifferato as Counsel CORAM HEALTHCARE: Seeks Extension of Time to Assume & Reject Leases FOODLINE.COM INC: Case Summary & List of Creditors FRUIT OF THE LOOM: Signs Multi-Million Dollar Contract With IBSS G-I HOLDINGS: Files Chapter 11 Case to Resolve Asbestos Claims G-I HOLDINGS: Case Summary GORGES HOLDING: Committee Applies to Retain Akin Gump as Counsel HARNISCHFEGER: Equity Committee Wants to Continue Goldin's Engagement HEILIG-MEYERS: Selling $99 Million of Receivables for $32 Million ICG COMMUNICATIONS: $30K Per Month OK for Ordinary Course Professionals IMPERIAL HOME: Disclosure Statement Hearing Set for Jan. 31 INTEGRATED HEALTH: Rejects LTC/Symphony Lease for Maine Center JUMBOSPORTS: Sells Little Rock Property for $1,245,000 LAIDLAW, INC.: Restructuring Will Occur at Parent Company Level LERNOUT & HAUSPIE: To Lay Off 800 Workers This Week LERNOUT & HAUSPIE: Luc Despins Tells Court Assets Buyers Have Surfaced LERNOUT & HAUSPIE: Morris Nichols Serving as Local Delaware Counsel LIDS CORPORATION: Case Summary & 20 Largest Unsecured Creditors LOGOATHLETIC: Asks for Extension of Lease Decision Period to May 8 METAL MANAGEMENT: Committee Retains Milbank Tweed as Lead Counsel MKPP, LLC: Case Dismissed NY TIMES: Will Cut 69 Jobs at its Internet Unit OWENS-CORNING: Asbestos Committee Hires Caplin as Lead Counsel PILLOWTEX: Employs KPMG as Auditors & Tax Advisors RECYCLING INDUSTRIES: Judge Brooks Enters Order of Dismissal SAFETY-KLEEN: Assumes & Rejects Agreements with Emmert Development SCIENTIFIC MEASUREMENT: Seeks Protection Under Chapter 7 SGSM ACQUISITION: Plan Confirmed on December 27 SHAMAN PHARMACEUTICALS: Files Chapter 11 Petition in California SUN HEALTHCARE: Court Approves Sale of U.K. Unit to Management SUN HEALTHCARE: Rejecting Six Useless Office Leases TWA INC.: Filing "Chapter 33" Petition Tomorrow UNIVERSAL BROADBAND: Extending Time to Assume/Reject Leases by 60 Days VIDEO UPDATE INC: Seeks Extension of Exclusivity to April 20 ********* ANN & HOPE: Discount Retailer Closing 4 Massachusetts Stores ------------------------------------------------------------ Discount retailer Ann & Hope Inc. plans to close four of its Massachusetts stores and lay off 1,400 workers in Massachusetts and Rhode Island, according to the Associated Press. The company also will scale back its remaining two stores - in Cumberland, R.I. and Warwick, R.I. - to transform those locations to outlet-style shopping. Ann & Hope also runs 13 CFO Fashion Outlet stores, 10 Kid's Outlet stores and two Curtain & Bath Stores in Rhode Island and Massachusetts. None of those stores will be affected. Ann & Hope spokesman Steven Maurano said the company decided to restructure after years of declining profits, with this year being the worst. "I think they decided to move now because they didn't see the trend turning around at all," Maurano said. "They're able to pay all their suppliers and to take care of their people as best they can instead of having to declare bankruptcy." The company maintains plans to open seven additional outlet stores and a garden shop in the next six months using the proceeds of the sale of its Massachusetts stores, Maurano said. Eastern Development Co., of Woburn, Mass., has agreed to buy the properties. (ABI -5-Jan-2001) AMERICAN EQUITIES: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtors: American Equities Group, L.P. American Equities Income Fund, Inc. 80 East Route 4, Suite 202 Paramus, NJ 07652 Type of Business: Finance servicing Chapter 11 Petition Date: January 3, 2001 Bankruptcy Case Nos.: 01-40011-BRL and 01-40012-BRL Court: Southern District of New York Judge: Burton R. Lifland Debtors' Counsel: Warren R. Graham, Esq. Warshaw Burnstein Cohen Schlesinger & Kuh, LLP 555 Fifth Avenue New York, NY 10017 (212) 984-7708 Fax : (212) 972-9150 E-mail: wbcsk@pipeline.com Fund Group ---- ----- Total Assets: $9,136,171 $211,147 Total Liabilities: $13,561,729 0 Fund's 20 Largest Unsecured Creditors: Creditor Claim Amount -------- ------------ Kathryn C. Cochran $200,000 Robert R. Delwiche $170,000 Ellsworth McSweeney $150,166 Marilyn D. Maline Trust $128,118 Albert W. & Helen Smith $123,000 Thelma E. Radcliffe $122,957 Daniel H. & Jean A. Simot $120,667 William Scott $118,000 Harry Schwartz $114,871 F. Carlos & Elena L. Batar $112,443 Lloyd O. Werch $100,000 Joaquin Sueiro $100,000 Charlie & Toni Perry $100,000 Harold Parks Rentals, Inc. $100,000 Mildred Moorehead $100,000 Helen N. Fayne Revocable Trust $100,000 Jack E. Dobrovolny $90,000 Terry & Sharon Choate $80,000 Lynn Krauthamer $76,000 Eleanor S. Hudson $76,000 ARMSTRONG WORLD: Creditors Convene in Wilmington on Jan. 27 ----------------------------------------------------------- On December 6, 2000, Armstrong World Industries, Inc. and its affiliates filed voluntary petitions for relief under Chapter 11 of the US Code. A meeting of creditors will be held on January 26, 2001 at 11:30 a.m. at the Sheraton Suites, Delaware Ballroom One, 422 Delaware Avenue, 2nd Floor, Wilmington. Counsel for the debtors are Stephen A. Karotkin, Esq., Debra A. Dandeneau, Esq., of Weil Gotshal & Manges, LLP (New York and Miami, respectively) and Mark D. Collins, Esq., of Richards, Layton & Finger, PA, Wilmington, Delaware. CENTENNIAL COAL: Committee Taps Bifferato as Counsel ---------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Centennial Coal, Inc.'s chapter 11 cases applies to retain the firm of Bifferato, Bifferato & Gentilotti as their counsel. The firm is expected to render the following legal services: * Advising the Committee or Liquidating Agent as to its rights and duties; * Investigating the actions of the debtors and the assets and liabilities of their estates; * Performing such services as are in the interests of the debtors' unsecured creditors and Liquidating Agent; and * Filing and serving complaints for avoidance of certain preferential transfers. Ian Connor Bifferato, Esq., director of the firm, advises the Court that the Firm's current standard hourly rates for attorneys and paralegals range from $250 per hour to $90 per hour. CORAM HEALTHCARE: Seeks Extension of Time to Assume & Reject Leases ------------------------------------------------------------------- Coram Healthcare Corp. and Coram, Inc., seek an order extending their time to assume or reject unexpired leases of nonresidential real property for an additional 120 days, until May 4, 2001. A hearing on the motion will be convened before the Honorable Mary F. Walrath, US Bankruptcy Court Judge for the District of Delaware, Wilmington on January 25, 2001 at 10:30 AM. The debtors state that this case is a large, complex case involving both a large number of leases and numerous other pressing matters. The unexpired leases are an important asset of the estates and would be central to the debtors' current business plan which is premised upon a reorganization around the Coram entity. At the December 28, 2000 hearing, the court ordered a 90-day period where no plan of reorganization could be proposed by either the debtors or any other party-in-interest. The debtors will need time to consider each lease and its value to the debtors. FOODLINE.COM INC: Case Summary & List of Creditors -------------------------------------------------- Debtor: Foodline.com, Inc. 244 West 74th Street Apt. 4C New York, NY 10023 Type of Business: Provides restaurant information and reservation solutions to consumers Chapter 7 Petition Date: December 29, 2000 Court: Southern District of New York Judge: Robert E. Gerber Debtor's Counsel: Ted A. Berkowitz, Esq. Farrell Fritz, P.C. EAB Plaza 14th Floor West Tower Uniondale, NY 11556 516-227-0647 Fax: 516-227-0777 E-mail: tberkowitz@farrellfritz.com Estimated Assets: $1,000,001 to $10 million Estimated Debts: $1,000,001 to $10 million Creditors: Aetna US Healthcareaetna/Middletown P.O. Box 70937 Chicago, IL 60673-0937 American Express Suite 0001 Chicago, IL 60679-0001 Boston Bean One Bryant Street Woburn, Massachusetts 01801 Cablevision Of Boston P.O. Box 9227 Chelsea, Massachusetts 02150-9227 Cybersource Cybersource Corporation 1295 Charleston Road Mountain View, California 94043 FRUIT OF THE LOOM: Signs Multi-Million Dollar Contract With IBSS ---------------------------------------------------------------- Integrated Business Systems & Services, Inc. Columbia, South Carolina, announced that after a thorough evaluation of manufacturing technologies, Fruit of the Loom has selected IBSS' Synapse Manufacturing software for data collection at its manufacturing locations. Fruit of the Loom expects the implementation of the pilot location to be completed in the next several months. "IBSS continues to receive acceptance of its Synapse technology in the market place," said Harry Langley, President and CEO of IBSS. "Being selected by Fruit of the Loom further demonstrates the enormous acceptance of Synapse among major corporations. The new contract with Fruit of the Loom is a milestone for IBSS as its entrance into the Fortune 500 market. During this year, IBSS has announced a series of significant Synapse agreements including Brain North America, Lifestyle Furnishings International, ASP*n and WilCam Systems that validate the Synapse technology for the marketplace and reinforce IBSS' capacity to capture sales from multiple revenue licensing streams." IBSS' Synapse software has been applied throughout the manufacturing industry including the apparel market. Fruit of the Loom is a fully integrated manufacturer, performing most of its own yarn spinning, knitting, cloth finishing, cutting, sewing and packaging. (Fruit of the Loom Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) G-I HOLDINGS: Files Chapter 11 Case to Resolve Asbestos Claims -------------------------------------------------------------- G-I Holdings, Inc., filed a voluntary petition in the U.S. Bankruptcy Court for the District of New Jersey in Newark, New Jersey on Friday, January 5, 2001, to resolve asbestos liability claims against the Company in a reorganization under Chapter 11 of the U.S. Bankruptcy Court. G-I, the successor to GAF Corporation as a result of a merger, is a privately-held holding company, and its only operating subsidiary, Building Materials Corporation of America, is not included in the filing. G-I's asbestos liability arose in connection with a 1967 acquisition of Ruberoid Company, which included at the time a small, non-core business which produced an asbestos insulation product, Calcilite. The United States Navy requested Ruberoid during World War II to develop this product for use as an insulation material in its ships. After the United Stated Public Health Service concluded that Calcilite was safe, Ruberoid supplied the product to Naval shipyards pursuant to requisition in accordance with Government specifications, and a substantial portion of the Company's total Calcilite sales were made to the United States Government. After publication in the late 60's of medical studies concerning the dangers of asbestos, the Company closed its Calcilite operation and has not produced these products for 30 years. Since the 1970's, G-I has paid out, as a result of the Ruberoid acquisition, whose asbestos insulation business had profits over a 30- year period of $1 million and sales of $35 million, in connection with over 500,000 personal injury claims filed against the Company, more than $1.5 billion in claims and expenses, a substantial portion of which has gone to legal fees and people who have had no asbestos-related impairment. Commenting on the announcement, Richard A. Weinberg, Chief Executive Officer and General Counsel of G-I, said, "Today's action was taken only after every effort was made by the Company to responsibly resolve its asbestos liabilities. While our overriding objective has always been to compensate deserving asbestos victims that have been injured as a result of Ruberoid's products, there is simply not enough money in the world to make substantial payments as well as to the almost limitless population of those who have in the past been exposed to asbestos but who have no asbestos-related injury. In this latter connection, it has been estimated that as many as 85% of all current asbestos personal injury claimants have no asbestos-related impairment." Mr. Weinberg attributed the necessity of the filing to, "The sharp, unforeseen increase in the number of claims asserted, the dramatic escalation in settlement demands, the inability of the tort system to resolve such claims in a fair and orderly manner, and the recent rash of asbestos-related bankruptcies which has increased the pressure on remaining defendants to cover the share of payments formerly made by bankrupt defendants, together with lower than expected financial results over the past year from the Company's operating subsidiary." G-I HOLDINGS: Case Summary -------------------------- Debtor: G-I Holdings, Inc. 1361 Alps Road Wayne, NJ 07470 Type of Business: G-I is a privately-held holding company and the successor to GAF Corporation, one of the United States' oldest sources for commercial and residential roofing material. The Company's estimated 3,500 employees generate $1.1 billion in annual revenues, according to Forbes Private 500 ranking data. Chapter 11 Petition Date: January 5, 2001 Bankruptcy Case No.: 01-30135 Court: District of New Jersey (Newark) Judge: Chief Judge Rosemary Gambardella Debtor's Counsel: Dennis J. O'Grady, Esq. Riker, Danzig, Scherer, Hyland One Speedwell Ave, HQ Plaza PO Box 1981 Morristown, NJ 07962-1981 973-538-0800 GORGES HOLDING: Committee Applies to Retain Akin Gump as Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of Gorges Holding Corporation and Gorges/Quik-To-Fix Foods, Inc. filed an application for an order authorizing the retention and employment of Akin, Gump, Strauss, Hauser & Feld as counsel to the Committee. The professional services which Akin Gump may be called upon to render to the Committee include: * Advising the Committee with respect to its rights, obligations, powers and duties pursuant to the Bankruptcy Code and Bankruptcy Rules; * Assisting in the examination of the debtors' affairs and review of the debtors' assets and operations; * Advising the Committee and representing it with respect to all proposals and pleadings; * Assisting the Committee in negotiations and consultations with the debtors and other parties-in-interest with respect to overall administration of the debtors' Chapter 11 cases; * Advising and representing the Committee with respect to any plans of reorganization or asset dispositions proposed in these cases; * Attending court proceedings, drafting pleadings and generally advocating positions which further the interest of the creditors represented by the Committee; and * Performing such other services as are requested by the Committee. The standard hourly rates for the principal attorneys and paralegal designated to represent the Committee range from $185 per hour to $500 per hour. The Committee also filed an application for an order approving the retention of Wilmington-based Cozen & O'Connor as its Local Counsel. HARNISCHFEGER: Equity Committee Wants to Continue Goldin's Engagement --------------------------------------------------------------------- The Official Committee of Equity Security Holders appointed in Harnischfeger's chapter 11 cases tells the Court that it needs to continue to utilize the services of Goldin because based on Goldin's preliminary valuation analysis which suggests that the enterprise value of reorganized HII is greater than the Debtors' current estimates of claims against HII, the Committee believes that is has a fiduciary duty to Shareholders to oppose confirmation of a plan for HII that would pay nothing to Shareholders. However, Goldin has not finalized this analysis due to alleged delays in getting necessary data from HII. If not extended, Goldin's retention should have expired on December 20, 2000, pursuant to a three-month retention of Goldin for the limited purpose of advising the valuation of the reorganized Debtors. As previously reported, the Equity Committee's initial application for the employment of Goldin Associates, L.L.C. as its financial adviser met with objections. The Debtors, the HII Creditors' Committee and the Beloit Creditors' Committee objected to the application on the ground that the administrative expense associated with such employment was not warranted because thy had concluded that there would be insufficient value in the reorganized Debtors for a distribution to the holders of equity security holders in HII (the Shareholders) under a plan of reorganization. Negotiations followed and the parties agreed and obtained the Court's approval for the three-month retention of Goldin by the Equity Committee. In this application, the Equity Committee seeks to extend Goldin's retention through the completion of the plan confirmation proceedings so that Goldin can: (a) finalize its valuation analysis; and (b) assist the Equity Committee in (i) formulating the terms of an appropriate distribution to Shareholders under a plan of reorganization for HII; (ii) negotiating with the Debtors and the Creditors' Committees to reach a consensus regarding such distribution; and (iii) if necessary, preparing for and participating in a contested confirmation hearing on valuation issues, including providing expert witness testimony by Goldin. The Equity Committee proposes to pay Goldin, as before, a monthly fee of $54,000, plus reasonable out of pocket expenses notwithstanding the expansion in the scope of Goldin's work. Goldin will continue to file monthly fee applications in accordance with applicable orders in these cases. The Equity Committee represents that, based on the supplemental affidavit of Managing Director of Goldin, Seymour Preston, Jr., Goldin is disinterested with respect to its role as financial advisor to the Equity Committee, and Goldin does not represent or hold an adverse interest to the Debtors' estates with respect to such role. In his supplemental affidavit, Mr. Preston reports on Goldin's prior connections with the Debtors and other parties in interest in the Debtors' chapter 11 cases: * General Electric and affiliates: A division of General Electric (Aircraft Engines) is chair of the creditors committee in the Tower Air bankruptcy. Goldin is financial advisor to the debtor. In its capacity as trustee in the bankruptcy of Power Company of America, Goldin enforced General Electric Capital Corp.'s obligation to contribute additional equity to the estate and has challenged GECC's assertion that its claim for recovery of its investment is a creditor's claim rather than an equity stakeholder's; * Mayer Brown & Platt: MBP is counsel to Harrison J. Goldin, the Senior Managing Director of Goldin, in his capacity as liquidating trustee of the estates of Pegasus Gold Inc. and Pegasus Gold Corporation; * Bank of New York & Citibank and affiliates: Representatives of these two institutions (BNY as indenture trustee; Citibank as agent) are the oversight committee to which Goldin reports Its activities respecting the liquidation of the Pegasus estates; * Various banks, including ABN AMRO, Citibank, First Chicago and others, are beneficiaries of trusts administered by Goldin in connection with the Pegasus liquidation. These banks, other institutions and entities listed may also be beneficiaries of other trusts administered by the firm. * Arthur Andersen: In its capacity as trustee in the bankruptcy case of Power Company of America, Goldin has hired Arthur Andersen to perform certain tax accounting work and preparation of tax returns. On the other hand, Goldin may assert claims against this accounting firm as the former auditor of Power Company of America. In its capacity as Plan Administrator for First interregional Advisors, Goldin has retained Arthur Andersen to provide accounting and tax preparation services. * Fleet Bank: An affiliate of Fleet Bank is a secured lender against and/or lessor of aircraft and engines of/to Tower Air. Goldin is financial advisor to Tower Air in its bankruptcy proceeding. Goldin is advisor to a private manufacturer and its owner; Fleet Financial (a unit of Fleet) is a senior secured creditor of the Company. Moreover, Goldin is advisor to a consumer products company which has in its bank lending group a number of banks which are also in Debtors' bank lending group. Mr. Preston covenants that Goldin will not accept any engagement or perform any service for any entity or person other than the Committee in these cases. Goldin will, however, continue to provide professional services to entities or persons that may be parties in interest in these chapter 11 cases, provided, however, that such services do not relate to, or have any direct connection with, these chapter 11 cases. Mr. Preston assures that Goldin will use reasonable efforts to identify any new relevant facts or relationships which could materially affect the statements set forth in his Affidavit, and if such facts or relationships arise, Goldin will promptly file a supplemental affidavit as Bankruptcy Rule 2014(a) requires. (Harnischfeger Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) HEILIG-MEYERS: Selling $99 Million of Receivables for $32 Million ----------------------------------------------------------------- Heilig-Meyers Co. (HMYRQ) is seeking bankruptcy court authorization to sell about $99 million in customer receivables to WCIC Furniture Inc. for $31.8 million, subject to higher bids. The customer receivables have suffered a "significant degradation in value" since the petition date, the home furnishings retailer said. The customer receivables are from installment sale agreements the home furnishings retailer provided to certain customers. These receivables were not included among the installment sale contracts transferred to a securitization master trust in exchange for various classes of asset-backed certificates, which were then sold to investors. (ABI and Federal Filings, Inc. 05-Jan-2001) ICG COMMUNICATIONS: $30K Per Month OK for Ordinary Course Professionals ----------------------------------------------------------------------- ICG Communications sought and obtained an Order authorizing them to employ and retain professionals utilized by the Debtors in the ordinary course of their business. The Debtors customarily retain the services of various attorneys, accountants, tax professionals, and other professionals to represent them in matters arising in the ordinary course of their business. These include legislative counsel, shareholder suits counsel, regulatory counsel, litigation counsel, database consultants, CA regulatory counsel, tax preparation consultants, industry organization counsel, tariff and regulatory compliance consultants, real estate counsel, auditors, immigration counsel, governmental counsel, public utilities counsel, employment litigation counsel, systems and database consultants, intercompany lease advisors, vendor invoice consultants, administrative agencies counsel, SEC and financial document printers, employee benefits, securities law and corporate counsel. By this Motion the Debtors sought authority to retain these professionals without the necessity of a separate, formal retention application approved by the Court for each ordinary course professional, and to compensate the ordinary course professionals for postpetition services rendered, subject to certain limits, without the necessary of additional court approval. Consistent with the dimensions of these cases and the geographic diversity of the Debtors' businesses, the Debtors also requested that they be permitted to employ and retain the ordinary course professionals on terms substantially similar to those in effect prior to the Petition Dates. In addition, the Debtors are required by state and local laws to retain local counsel wherever they provide telecommunications services; accordingly the list of ordinary course professionals contains a large number of professionals who serve as local regulatory counsel to the Debtors. The Debtors proposed that they be permitted to pay, without formal application, all of the interim fees and disbursements to each of the ordinary course professionals upon the submission to the Debtors of an appropriate invoice setting forth in in reasonable detail the nature of the services rendered after the Petition Dates, provided that such interim fees and disbursements do not exceed a total of $30,000 per month per ordinary course professional, and no more than $300,000 per ordinary course professional for the entire case. However, at this time the Debtors believe that two ordinary course professionals may exceed the limit of $40,000 per month and $300,000 per case limit. Dickstein, Shapiro, Morin & Oshinsky is involved in several major telecommunications regulatory matters which are vital to the continuation of the Debtors' operations. KPMB LLP provides independent auditing and accounting services to the Debtors on a semi-annual basis. The Debtors estimate that the retention of these professionals will average over $30,000 per month. However, the Debtors asserted that the services of these professionals are beneficial - indeed critical - to the Debtors' operations and should be approved subject to separate monthly and per case limits. Specifically, the Debtors propose that the ordinary course professionals be subject to a monthly limit of $50,000 and a $500,000 limit for the entire case. If any particular professional's fees exceeded these limits, payments to that particular professional would become subject to judicial approval under an application for an allowance of compensation and reimbursement of expenses. To meet the Code's requirements of disclosure, the Debtors proposed that each ordinary course professional who is an attorney be required to file with the Court and serve upon the United States Trustee, counsel to any official committees appointed in these cases, counsel to the Debtors' prepetition and postpetition lenders, and Skadden Arps an affidavit of proposed professional and disclosure statements within 30 days of the date of entry of the Order granting this Motion. (ICG Communications Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service., Inc. 609/392-0900) IMPERIAL HOME: Disclosure Statement Hearing Set for Jan. 31 ----------------------------------------------------------- The Imperial Home Decor Group, Inc., et al. filed a Joint Plan of Reorganization on December 18, 2000. The debtor seeks approval of its Disclosure Statement and approval of the procedures for solicitation and tabulation of votes to accept or reject the plan, including the form of ballots, and contents of the proposed solicitation procedures. A hearing to consider the relief will be held before the Honorable Mary F. Walrath, US Bankruptcy Judge at 2:00 PM on January 31, 2001. INTEGRATED HEALTH: Rejects LTC/Symphony Lease for Maine Center ------------------------------------------------------------------- Integrated Health Services, Inc., sought and obtained the Court's authority to reject another of the LTC/Symphony Leases -- the lease between James G. Dubay and Lori A. Dubay, d/b/a Dubay Rental Properties and Maine Head Trauma Center, Inc. d/b/a Maine Center for Integrated Rehab and located at 31 Main Street, Orono, Maine 04473. The basic monthly rental is $1,850. The subject property is specially set up for operating a medical office and/or rehabilitation center. The Debtors do not believe that the level of business in the surrounding area is sufficient to maintain an office in that location. Moreover, the Debtors do not believe that the Lease could be sublet or assigned on advantageous terms. Therefore, the Debtors have determined that the lease should be rejected. Mr. Daniel Booth, Vice President in charge of Finance of Integrated Health Services, Inc., submits in his affidavit that the Debtors have thoroughly reviewed the Lease and have determined that in the interest of efficiency and consolidation, the property no longer provides a benefit to the Debtors. Mr. Booth believes that the rejection of the Lease is a prudent and proper exercise of business judgment, and is in the best interests of the Debtors' estates and their creditors. (Integrated Health Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) JUMBOSPORTS: Sells Little Rock Property for $1,245,000 ------------------------------------------------------ Judge C. Timothy Corcoran III entered an order on December 22, 2000 approving the sale of certain property located at 6301 S. University Avenue in the City of Little Rock, Arkansas. The purchase price for the property is $1,245,000. The purchaser is Landers Auto Sales. LAIDLAW, INC.: Restructuring Will Occur at Parent Company Level --------------------------------------------------------------- In a conference call held Friday morning, Laidlaw Inc. (TSE:LDM) advised investors that its consolidated liquidity is currently in excess of US$250 million as a result of (A) cash-on-hand, (B) availability of $100 million under the bridge facility established with the Canadian Imperial Bank of Commerce, as agent, and (C) over $50 million available under the separate $125 million facility established for Greyhound Lines Inc. with Foothill Capital Corporation. In the course of that conference call, the Company said that it could not discuss a long list of items, including (1) the status of debt restructuring negotiations with bondholders, (2) the timing for any filing of an in-court restructuring proceeding, or (3) details about valuation of the Company. The core operating business, the Company stressed, are solid, having generated $397 million of EBITDA in fiscal 2000. Steve Cooper explained that the Greyhound Financing and CIBC-led Bridge Financing Facilities lay the foundation to wall-off the day-to-day operations from the parent company's liquidity strains and other woes. That walling-off is designed to preserve stakeholder value, Mr. Cooper continued, and to permit a restructuring to take place at the parent company level with a fewer number of stakeholders, without disruption to the operating entities, and avert a free-fall bankruptcy filing. Laidlaw Inc. is a holding company for North America's largest provider of school and intercity bus transportation, municipal transit, patient transportation and emergency department management services. LERNOUT & HAUSPIE: To Lay Off 800 Workers This Week --------------------------------------------------- This week, Lernout & Hauspie Speech Products NV (L&H) of Belgium will immediately lay off 800 of its workers. This is the first phase of a 20 percent cut in its work force. This will save the company and its non- debtor affiliates nearly $21.9 million in payroll and related expenses. John Duerden, L&H's chief executive officer said Friday that there was no other option but to lay off workers since the company had to start its recovery plan, Reuters reports. According to court papers obtained by Reuters, L& H's proprietary and confidential information will be protected by immediately removing terminated workers from the premises upon notice and protects L&H from fines, penalties and employee litigation. On January 5, a Belgian commercial court granted L&H a concordat which provides it bankruptcy protection similar to that obtained in U.S. court on November 29, 2000 for L&H and two U.S. units, Dictaphone and Dragon systems now known as L&H Holdings, Reuters reports. L&H is composed of 70 corporations worldwide, but the majority of its assets and earnings are in the United States because of last year's acquisition of Dictaphone and Dragon. LERNOUT & HAUSPIE: Luc Despins Tells Court Assets Buyers Have Surfaced ---------------------------------------------------------------------- An attorney for Lernout & Hauspie Speech Products N.V. told Judge Wizmur last week that the Belgian developer of voice recognition technology has received expressions of interest regarding the purchase of certain L&H assets, according to a Reuters report. When the judge asked attorney Luc Despin what the value of the company's assets and liabilities is, he said he would provide the figures off-the-record, but was reluctant to do so in open court with a reporter present. "The problem is that if we want to sell the businesses," revealing their value would affect L&H's negotiating strategy, Despin said. He did, however, tell Wizmur that "L&H has received an expression of interest to acquire Mendez," the Belgian/French translation subsidiary of L&H which Despin said was valued at more than $150 million. Other assets being considered include an unidentified L&H business unit that Despin said was worth in excess of $150 million and the company's Medical Solutions Inc. subsidiary, a U.S. holding company for medical transcription services acquired by L&H in May for about $60 million. A sale of the Melbourne, Fla., manufacturing plant of L&H's Dictaphone Corp. subsidiary was also a possibility, Despin said. Final approval of L&H's proposed $35 million debtor-in-possession (DIP) facility from General Electric Co.'s GECC financing arm was postponed until a Jan. 18 hearing at Despin's request. L&H and two U.S. units, Dictaphone Corp. and the former Dragon Systems Inc., filed for chapter 11 bankruptcy protection in Delaware on Nov. 29. (ABI 05-Jan-2001) LERNOUT & HAUSPIE: Morris Nichols Serving as Local Delaware Counsel ------------------------------------------------------------------- Lernout & Hauspie Speech Products and Dictaphone Corporation obtained authority from Judge Wizmur to employ the Wilmington, Delaware, law firm of Morris, Nichols, Arsht & Tunnell to act for these estates as local counsel. Prior to the commencement of these cases, the Debtors sought the services of Morris, Nichols, with respect to, among other things, advice regarding, and the preparation for, the commencement and prosecution of one or more cases under Chapter 11 of the Bankruptcy Code concerning the Debtors. The proposed post-petition services of the firm are: (a) Perform all necessary services as the Debtors' counsel, including, without limitation, providing the Debtors with advice, representing the Debtors, and preparing all necessary documents on behalf of the debtors, in the areas of corporate law, real estate, employee benefits, business and commercial litigation tax, debt restructuring, bankruptcy and asset dispositions; (b) Take all necessary actions to protect and preserve the Debtors' estates during the pendency of their Chapter 11 cases, including the prosecution of actions by the Debtors, the defense of any actions commenced against the Debtors, negotiations concerning all litigation in which the Debtors are involved, and objecting to claims filed against the estates; (c) Prepare on behalf of the Debtors, as debtors in possession, all necessary motions, applications, answers, orders, reports and papers in connection with the administration of these Chapter 11 cases; (d) Counsel the Debtors with regard to their rights and obligations as debtors in possession; and (e) Perform all other necessary legal services. The attorneys with primary responsibility for appearing in these cases and their current hourly rates are: Robert J. Dehney, Partner $ 340 Michael G. Busenkell, Associate $ 190 Jason W. Staib, Associate $ 180 These rates are subject to periodic adjustments to reflect economic and other conditions. Other attorneys and paralegals may from time to time serve the Debtors in connection with these cases. Mr. Robert J. Dehney has averred to the Court that neither Morris, Nichols, any partner, counsel, or associate, nor he represent any interest adverse to the Debtors, as a Debtor in Possession herein, or to their estates in the matters upon which the firm is to be engaged. Mr. Dehney further averred that the firm has not received any payment from the Debtors during the year prior to the Petition Dates. While the firm represents parties in interest to these estates such as Centennial Technologies I, Pitney Bowes, Novell, Inc., Excalibur Technologies N.V., and IRIS, none of these representations involve any issue affecting these estates in bankruptcy. (L&H/Dictaphone Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc. 609/392-0900) LIDS CORPORATION: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Lids Corporation 60 Glacier Drive Westwood, MA 02090 Type of Business: Hat retailing Chapter 11 Petition Date: January 4, 2001 Court: District of Delaware Debtor's Counsel: Michael Lastowski, Esq. Duane, Morris & Hecksher 1201 Orange Street Suite 1001 Wilmington, DE 19801 (302) 571-5550 Estimated Assets: $10 to $50 million Estimated Debts: $10 to $50 million 20 Largest Unsecured Creditors: Zephyr Graf-X Trade Debt $5,484,744 Twins Enterprises, Inc. Trade Debt $3,781,757 New Era Cap Co., Inc. Trade Debt $2,487,309 Logo Athletic Incorp. Headwear Trade Debt $2,436,904 Agron, Inc. Trade Debt $1,784,348 Nike USA Inc. Trade Debt $876,131 Nike Team Sports Trade Debt $576,456 BSW Headworks, Inc. Trade Debt $424,447 Datavantage Trade Debt $249,132 Interworld Corporation Trade Debt $217,903 Kangol Headwear, Inc. Trade Debt $191,855 Fort Point Partners Trade Debt $142,695 RGIS Inventory Specialists Trade Debt $135,908 Mike Doukas Trade Debt $120,000 Ontario Store Fixtures Trade Debt $119,280 Perfect Curve, Inc. Trade Debt $100,504 American Needle Trade Debt $97,974 Agentry Staffing Services, Inc. Trade Debt $84,653 Adcom Express Trade Debt $83,581 HMS HOST (486) Trade Debt $80,000 LOGOATHLETIC: Asks for Extension of Lease Decision Period to May 8 ------------------------------------------------------------------ LogoAthletic, Inc. f/k/a TKS Acquisition Inc. and LogoAthletic of Nevada, Inc. d/b/a Collegiate Graphics seeks an order extending time to assume or reject unexpired leases of nonresidential real property pursuant to ll USC Section 365(d)(4). A hearing on the motion will be held before the Honorable Mary F. Walrath on January 26, 2001. The debtors seek an order extending the period of time within which they must assume or reject the unexpired leases until the earlier of May 8, 2001 and the effective date of the plan of reorganization of the affected debtor. The debtors state that the case is large and complex, involving a large number of creditors and numerous more pressing matters. The unexpired leases are an important asset of the estate and are likely to be central to any plan of reorganization which provides for the debtors' continued operation as a going concern. In the event that a plan is not confirmed effective or if approval of the plan is substantially delayed and the business of the debtors erodes, the debtors will need time to consider again each lease and its value to any different plan of reorganization. METAL MANAGEMENT: Committee Retains Milbank Tweed as Lead Counsel ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of Metal Management, Inc., seeks court authority to retain and employ Milbank, Tweed, Hadley & McCloy LLP as its lead counsel in the Debtors' chapter 11 restructuring. By separate applications the Committee has also applied to retain Morris, Nichols, Arsht & Tunnell as its Delaware counsel and CIBC World Markets as its financial advisor. Among other services, Milbank will: * Advise the Committee with respect to its rights, powers and duties in these cases; * Assist and advise the Committee in its consultations with the debtors relative to the administration of these cases; * Assist the Committee in analyzing the claims of the debtors' creditors and in negotiating with such creditors; * Assist with the Committee's investigation of the acts, conduct, assets, liabilities and financial condition of the debtors and of the operation of the debtors' business; * Assist the Committee in its analysis of, and negotiations with the debtors or any third party concerning matters related to, among other things, the terms of a plan or plans of reorganization for the debtors; * Assist and advise the Committee with respect to its communications with the general creditor body regarding significant matters in these cases; * Review and analyze all applications, orders, statements of operations and schedules filed with the court and advise the Committee as to their propriety; * Assist the Committee in evaluating and pursuing if necessary , claims and courses of action against the debtors' prepetition lenders; * Assist the Committee in preparing pleadings and applications as may be necessary in furtherance of the Committee's interests and objectives; * Represent the Committee at all hearings and other proceedings; and * Perform such other legal services as may be required and are deemed to be in the interest of the Committee. The principal attorneys and paralegals and their standard hourly rates are as follows: Robert Jay Moore $540 per hour Fred Neufeld $375 per hour Mathew McDonald $330 per hour Scott Gautier $310 per hour Patricia Naegely $145 per hour MKPP, LLC: Case Dismissed ------------------------- On December 27, 2000 an order of dismissal was entered by the Honorable Prudence Carter Beatty in the Chapter 11 case of MKPP, LLC. MKPP filed for chapter 11 protection in the Southern District of New York on July 26, 2000, listing $6.7 million in assets and $1.5 million in debts. NY TIMES: Will Cut 69 Jobs at its Internet Unit ----------------------------------------------- Due to the slowing growth of online advertising in New York Times' unit, New York Times Digital, the media company said on Sunday, January 7, that it will lay off 69 of Digital's employees on January 8, 2001, Reuters reports. The cuts will affect workers at all levels in the online unit's offices in Boston, Cambridge, Mass., Santa Rosa, Calif., and New York. The reductions' goal is to make Times Digital profitable in cash-flow terms by 2002. The Times Co. is the second big old-media group to outline job reductions among online workers in four days. OWENS-CORNING: Asbestos Committee Hires Caplin as Lead Counsel -------------------------------------------------------------- The Official Committee of Asbestos Claimants of Owens Corning and its subsidiaries, has applied for judicial authority to employ the Washington, DC, and New York law firm of Caplin & Drysdale, Chartered, as their lead attorneys in these Chapter 11 cases and all related matters retroactively to the Petition Dates to assist the Committee in carrying out its official functions. The Committee activities and the services of its counsel in the foreseeable future are expected to include, inter alia, the following responsibilities: (a) Assisting and advising the Committee in its consultations with the Debtors and other committees relative to the overall administration of the estates; (b) Representing the Committee at hearings to be held before this Court and communicating with the Committee regarding the matters heard and issues raised as well as the decisions and considerations of this Court; (c) Assisting and advising the Committee in its examination and analysis of the Debtors' conduct and financial affairs; (d) Reviewing and analyzing all applications, orders, operating reports, schedules and statements of financial affairs filed and to be filed with this Court by the Debtors or other interested parties in this case; (e) Advising the Committee as to the necessity and propriety of the foregoing and their impact upon the rights of asbestos-health related claimants, and upon the case generally; (f) After consultation with and approval of the Committee or its designee(s), consenting to appropriate orders on its behalf or otherwise objecting thereto; (g) Assisting the Committee in preparing appropriate legal pleadings and proposed orders as may be required in support of positions taken by the Committee and preparing witnesses and reviewing documents relevant thereto; (h) Coordinating the receipt and dissemination of information prepared by and received from the Debtors' independent certified accountants or other professionals retained by it as well as such information as may be received from independent professionals engaged by the Committee and other committees, as applicable; (i) Assisting the Committee in the solicitation and filing with the Court of acceptances or rejections of any proposed plan or plans of reorganization; (j) Assisting and advising the Committee with regard to communications to the asbestos-related claimants regarding the Committee's efforts, progress and recommendations with respect to matters arising in the case as well as any proposed plan of reorganization; and (k) Assisting the Committee generally by providing such other services as may be in the best interest of the creditors represented by the Committee. The attorneys and paralegals proposed to represent the Committee, and their hourly rates, are as follows: Elihu Inselbuch $ 630 Peter Van N. Lockwood $ 500 Julie W. Davis $ 365 Trevor W. Swett $ 360 Nathan D. Finch $ 290 Rita C. Tobin $ 265 Kimberly N. Brown $ 265 Kris Bess $ 160 Robert C. Spohn (paralegal) $ 135 Elyssa J. Strug (paralegal) $ 125 Sean O'Connell (paralegal) $ 115 This listing is not exclusive, and other professionals may perform services for the Committee. The Committee has requested that the firm's employment be authorized retroactively to the Petition Dates as the firm had to begin work for the Committee immediately upon the filing. Elihu Inselbuch, on behalf of Caplin and Drysdale, disclosed that the firm presently represents Canadian Imperial Bank of Commerce, Citibank, N.A., and Toronto Dominion Bank, all of which are unsecured creditors of these Debtors, and Fleet National Bank, a member of the general unsecured creditors' committee, and other general creditors such as Johnson Matthey & Co. and ExxonUSA in tax matters unrelated to these Chapter 11 cases, and which therefore create no actual conflict of interest for the firm or the Committee. (Owens-Corning Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) PILLOWTEX: Employs KPMG as Auditors & Tax Advisors -------------------------------------------------- Pillowtex Corporation asks Judge Robinson to authorize its employment of KPMG LLP, the United States member firm of KPMG LLP International, a Swiss association, as independent auditors and tax, accounting and compensation advisors in these Chapter 11 cases retroactively effective as of the Petition Date. The Debtors and KPMG intend to enter into an engagement letter which described the services KPMG anticipates performing for the Debtors, and the terms and conditions of KPMG's proposed engagement. Specifically, KPMG will provide these services: (a) Independent Auditing and Reporting Services (i) auditing and reviewing the Debtors' financial statements as may be required from time to time; (ii) advising the Debtors regarding the proper accounting treatment of postpetition events; (iii) assisting with the preparation and filing of the Debtors' financial statements and disclosure documents required by the Securities and Exchange Commission; (iv) assisting with the preparation and filing of the Debtors' registration statements required by the Securities and Exchange Commission in relation to debt and equity offerings; and performing other auditing and reporting services as the Debtors may request in these chapter II cases. (b) Tax Advisory Service (i) assisting with the preparation and filing of the Debtors' tax returns; (ii) assisting with the Debtors' tax planning, including estimating net operating loss carryforwards, international taxes, and state and local taxes; (iii) assisting the Debtors with issues related to transaction taxes, such as state and local sales and use taxes; (iv) assisting with tax matters related to the Debtors' pension plans; (v) assisting the Debtors with issues related to real and personal property tax matters; (vi) assisting the Debtors with any existing or future IRS, state or local tax examinations, and (vii) providing other consulting, planning or analysis regarding tax issues as the Debtors may request in these chapter 11 cases. (c) Accounting and Compensation Services (i) assisting the Debtors with the preparation of reports or filings as required by the United States Trustee or the Court, including but not limited to the Schedules of Assets and Liabilities, Statements of Financial Affairs and monthly operating reports; (ii) assisting the Debtors with the preparation of financial information for distribution to creditors and other parties in interest, including analyses of cash receipts and disbursements, financial statement items and proposed transactions for which Court approval is sought; (iii) assisting the Debtors with the implementation of debtor in possession accounting procedures as required by the Bankruptcy Code and generally accepted accounting principles; (iv) evaluating and advising on the Debtors' potential employee retention and severance plans; (v) assisting the Debtors with the preparation of documents in connection with confirmation of a plan of reorganization, including financial and other information contained in any plan of reorganization and disclosure statement; (vi) assisting with claims resolution procedures, including analysis of creditors' claims by type and entity and maintenance of a claims database; and (vii) performing such other accounting and compensation services as the Debtors may request in these Chapter 11 cases. Prior to the Petition Date, on or about November 10, 2000, the Debtors paid to KPMG a retainer of $100,000 for services rendered or to be rendered. The retainer has been and will be applied on account of fees incurred and to be incurred in providing services to the Debtors in contemplation of, and in connection with, these Chapter 11 cases. On November 13, 2000, KPMG applied $100,000 of the retainer as payment for fees incurred or expected to be incurred for the period through and including November 13, 2000. Accordingly as of the Petition Date none of the retainer remains unapplied. In addition to providing KPMG with the retainer, the Debtors made the following payments to KPMG during the year immediately preceding the Petition Date: Date of Payment Amount of Payment --------------- ----------------- Nov 9, 1999 $ 405,000 Dec 1999 $ 254,450 Jan 2000 $ 86,880 Feb 2000 $ 300,000 Mar 2000 $ 147,540 May 2000 $ 2,619 June 2000 $ 16,700 Nov 2000 $ 110,900 Accordingly, including the applied portion of the retainer described above the Debtors made payments to KPMG aggregating $1,424,089 during the year immediately preceding the Petition Date on account of fees and expenses incurred by KPMG on matters relating to the Debtors. Mr. Thomas D. Bibby, on behalf of KPMG, averred to the Court that the firm was a disinterested party within the meaning of the Bankruptcy Code and did not represent any interest adverse to the estate on the matters upon which employment is sought. However, the following parties having an interest in these estates were or are clients of KPMG: E. W. Blanch Holdings, Inc.; Guilford Mills, Inc.; Madden Securities Corporation; Mercantile Bank and Trust; State Street Bank & Trust Co.; U. S. Bank Trust, N.A.; Philadelphia Economic Development Financial Authority; The Industrial Development Board of the City of Phenix City, Alabama; E. I. DuPont de Nemours & Co.,; Credit Suisse First Boston; J. C. Penney Co. Inc.; State Farm Insurance Co.; Wal-Mart Stores, Inc., Bank Austria Creditanstalt Corporate Finance, Inc.; BankBoston, N.A.; Bank One, Texas, N.A.; Ban, Polska Kasa Opieki, S.A. New York Branch; Bankers Trust; Chase Manhattan; and others. However, the firm did not and does not represent these parties in any matters affecting or adverse to the Debtors or these estates in the matters for which employment approval is sought. KPMG estimated that the fees for the services described above will be $475,000, plus out-of-pocket expenses. (Pillowtex Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) PSINET, INC.: Baird Analyst Sees a Bankruptcy Filing in His Crystal Ball ------------------------------------------------------------------------ After overextending its credit and losing money faster than expected, there is speculation on Wall Street that the web infrastructure company, PSINet Inc., is headed for bankruptcy, according to a newswire report. Through the first nine months of 2000, PSINet lost 21 cents per share or $40.7 million in Ebitda, while its net losses for that period were nearly $1.8 billion. "Bankruptcy probably makes the most sense," said Dan Renouard, an analyst with Robert W. Baird & Co. of Milwaukee. "One of the problems is that we've gotten indications that their core business is deteriorating much more rapidly than they probably would have thought. So even selling assets at this point may be too late." Robert Leahy, a PSINet spokesman, declined to comment on suggestions the company may be headed for bankruptcy. The company will announce a divestiture plan when it releases fourth-quarter financial statements in February, he said. The Ashburn, Va.-based company's troubles emerged late in the summer after it paid $2 billion in stock for the consulting business, Metamor Worldwide Inc. of Houston. The integration of the two companies was a disaster, and in November PSINet warned investors of a larger than expected loss for the third quarter. The deal was supposed to bring in as much as $1 billion in revenues, but instead has cost the company millions of dollars. (ABI 05-Jan-2001) RECYCLING INDUSTRIES: Judge Brooks Enters Order of Dismissal ------------------------------------------------------------ An order dismissing the chapter 11 cases filed by Recycling Industries, Inc. aka Alfa Industries, Inc. and Environmental Recovery Systems, Inc. was entered on December 6, 2000 by Judge Sidney B. Brooks, US Bankruptcy Court, District of Colorado. SAFETY-KLEEN: Assumes & Rejects Agreements with Emmert Development ------------------------------------------------------------------ Safety-Kleen Corp. brings a motion before Judge Walsh seeking authority for SK Systems to: (a) assume a settlement and release agreement dated November 3, 1999; (b) reject a month-to-month lease of real property located at 11843 S.W. Highway 212, Clackamas, Oregon with Emmert Development; and (iii) assume an access agreement dated January 9, 1999. The Oregon property consists of 3000 square feet of warehouse space, including 412 square feet of office area and 144 feet of fenced storage area. The initial lease term was for five years and expired in April of 1993. Upon expiration of the initial lease term, environmental issues were discovered requiring investigation and potential clean-up. At the time Emmert stated it expected SK to turn over a "clean" property. SK Systems agreed to continue leasing the Oregon property on a month-to- month basis, during which time the Debtors commenced remedial action for hazardous substance releases allegedly caused by SK Systems. In 1996 Systems and Emmert entered into an access agreement under which the Debtors would have access to all of Emmert's property in Clackamas, including the leased property, to allow the Debtors to conduct environmental testing, take soil borings, install monitoring wells, and perform additional remediation as needed. SK Systems commenced the remedial action at the Oregon property under the oversight of the Oregon Department of Environmental Quality. In 1998, Emmert individually and as Emmert International filed a lawsuit against Safety-Kleen Corporation to recover damages arising from an alleged release of hazardous substances by Corporation onto the Oregon property. Concurrently, SK Systems requested that the Oregon DEQ issue a letter of no further action stating that Systems had taken all necessary remedial action for any hazardous contamination it might have caused at the Oregon property and determining that any remaining contamination in the soil and groundwater originated from sources other than SK Systems. DEQ declined to issue such a letter and concluded that there was not sufficient information to shift the responsibility away from Systems to any other party. In order to reach a global settlement with Emmert and all related entities, SK Systems and Emmert entered into a Settlement Agreement. The Settlement Agreement requires that SK Systems perform remedial action at the Oregon property until DEQ issues a letter of satisfactory completion of remediation. In order to limit the costs of remediation, SK Systems and Emmert agreed Emmert would limit the use of the Oregon property's groundwater to prohibit any use other than to provide necessary water for lawns, bushes, flowers and trees on the Oregon property and place a deed restriction on the Oregon property reflecting that limitation. In connection with this limitation of use, SK Systems agreed to make payments in the amount of $240,000 to pay part of the costs of connecting the property to a public water service, thereby minimizing the effect of the limitation on water usage and deed restriction by providing an adequate water supply to the Oregon property for drinking and other purposes. To date, $45,000 of the $240,000 has been paid. SK Systems also paid $60,000 when the Emmert lawsuit was dismissed with prejudice in 1999. The Debtors proposed to assume the Settlement Agreement, which would require that the Debtors pay Emmert $95,000 within fifteen days after a contractor breaks ground for the public service water connection. An additional $100,000 will be paid to Emmert within fifteen days of completion of the public water service connection. In turn, Emmert will place deed restrictions on the Oregon property. Even though the Settlement Agreement provided that the public water supply had to be in place by August 31, 2000, the Debtors and Emmert have agreed to extend that date to April 1, 2001, and Judge Walsh expressly incorporated this extension in his Order. During this time Emmert must use its best efforts to have the water service connection completed. The Debtors advised Judge Walsh that they believe that DEQ will issue a letter of satisfactory completion when the public service water connection is completed with subsequent monitoring by the Debtors. The cost of such monitoring will be approximately $60,000 per year for two years. Without approval of this agreement, the Debtors believe DEQ will require continued remediation, which would entail additional monitoring for ten years, risk assessment to select an appropriate remedial plan, operation and maintenance of a remedial system, and confirmation sampling and preparation of closure documents at a cost the Debtors estimate to be in excess of $1,000,000. In addition, the Debtors would incur internal administrative expenses associated with regulatory oversight of the Oregon Property and would continue to incur expenses associated with supplying drinking and other water to the Oregon property. On this basis, the Court found that granting the requested relief was in the best interests of the Debtors and their estates. (Safety-Kleen Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) SCIENTIFIC MEASUREMENT: Seeks Protection Under Chapter 7 -------------------------------------------------------- Scientific Measurement Systems, Inc. announced January 5, 2001 that it filed for bankruptcy Chapter 7 of the U.S. Bankruptcy Code on December 21, 2000. On December 18, 2000, the Austin, Texas-based company's Board of Directors announced that the company has filed for protection from its creditors under provisions of the Federal Bankruptcy Code. In all events, the Company has formally ceased operation and a trustee has been appointed to liquidate its assets. At April 30, 2000, the Company's balance sheet showed $642,000 in assets and $1.3 million in liabilities. "The Company experienced a very difficult year with very little new revenue over the most recent quarters," said Tom Prud'homme. "In fact the industrial CT industry as a whole appears to have been in a down turn over the last year," he added. "Additional efforts to develop a strategic service based relationship with a new European user for the Company's technology were being vigorously pursued until mid-November when discussions were suddenly terminated. This new application seemed to hold considerable promise with the organization in question, but that large prospective partner ultimately concluded that it could not commit, invest in, or acquire, a small Austin-based technology firm." SMS has been a publicly traded company traded on the OTC Bulletin Board under the symbol SCMS. SGSM ACQUISITION: Plan Confirmed on December 27 ----------------------------------------------- The Second Amended Chapter 11 plan filed by SGSM Acquisition Company, LLC was confirmed by order of the US Bankruptcy Court, Eastern District of Louisiana on December 27, 2000, Thomas M. Brahney III, Judge. SHAMAN PHARMACEUTICALS: Files Chapter 11 Petition in California --------------------------------------------------------------- Shaman Pharmaceuticals, Inc. (OTCBB:SHPH) has voluntarily filed a Chapter 11 reorganization petition for protection under Federal Bankruptcy law in the United States Bankruptcy Court, Northern District of California. The San Francisco-based company's decision to seek protection was taken because the company believes that a bankruptcy reorganization provided the best means of maximizing the value of its real estate lease and intellectual property for the benefit of its creditors and shareholders. During the bankruptcy proceeding, Shaman will continue to operate as a debtor in possession, and anticipates promptly filing a plan of reorganization to restructure its debts. The company has engaged Roth Capital Partners to assist with the sale or licensing of certain of its key assets, including discontinued pharmaceutical products. The timing of the bankruptcy filing was imposed by several factors, including the need to preserve the value of the company's below-market lease which may be assigned in bankruptcy to generate substantial funds for the Company and to provide clear title to buyers or licensees of certain key intellectual property assets of the company. Despite the filing, Shaman will continue to sell its products. Normal Stool Formula (NSF) will be sold in the near term through General Nutrition Centers (GNC) under a signed contract with GNC to market NSF as an anti-diarrheal product to health food and specialty store channels. NSF and NSF-IB will also continue to be sold through the Internet at http://www.NSFIB.comand at 800/987-9920, as well as through specific retail operations such as The Medicine Shoppe Pharmacies and other smaller retail pharmacies. SUN HEALTHCARE: Judge Walrath Approves Sale of U.K. Unit to Management ---------------------------------------------------------------------- Sun Healthcare Group Inc., one of several large U.S. health care providers scrambling to emerge from chapter 11, obtained court approval last week to sell its British unit, Sun BV, to the subsidiary's own management in an effort to bypass some $300 million in claims against the subsidiary, which is also bankrupt, according to a newswire report. The deal will wipe out an inter-company debt of $27 million that Sun BV owes the parent company. It also will limit the claims of $261 million from Principal Healthcare Finance Ltd. and $33 million from Red Mountain Funding LLC that Sun Healthcare was exposed to as 100 percent owner of Sun BV. Judge Mary Walrath approved the sale and also granted the company a 60- day extension of its deadline to craft a reorganization plan as Sun Healthcare continues to sell units. The company expects to close the sale this month of its money-losing medical supply subsidiary for about $20.1 million in cash and inventory to privately held Medline Industries Inc. of Mundelein, Ill. Subsidiary SunChoice Medical Supply will be sold for $6 million in cash, about $7.8 million for its inventory and $6.3 million for accounts receivable. The Albuquerque-based Sun Healthcare filed for chapter 11 in the U.S. Bankruptcy Court in Wilmington, Del., on Oct. 14, 1999. At that time, the company listed $1.8 billion in assets and $2.1 billion in liabilities. (ABI 05-Jan-2001) SUN HEALTHCARE: Rejecting Six Useless Office Leases --------------------------------------------------- Sun Healthcare Group seeks authorization pursuant to section 365(a) of the Bankruptcy Code to reject six nonresidential real property leases related to office spaces which have been vacated and for which the keys were surrendered to the landlords. After entering into the leases, the Debtors encountered significant liquidity problems which eventually led to the commencement of the bankruptcy cases. As a result, the Debtors determined that the leases are not necessary for their continued operations and do not have sufficient value to warrant their continuing administrative costs. After reviewing the terms of the leases and the locations of the leased premises, contacting local real estate brokers and/or analyzing the lease terms of comparable premises within the same geographic vicinity, the Debtors believe that the costs associated with marketing the leases, in addition to any cure amounts that would be required to be paid pursuant to section 365(d)(3) of the Bankruptcy Code, would be significantly greater than any potential value that might be realized by any future sale or sublease. By rejecting the leases, the Debtors anticipate that the estates of Sun will save approximately $307,755 in future rent obligations. The Debtors estimate that lease rejection damages will amount to approximately $152,350. Accordingly, the Debtors have determined in the exercise of their business judgment that such Leases should be rejected. The properties related to the leases are: Property Address Lessor ---------------- ------ 61 Nicholas Road Russell F. Doucette Framingham, MA Trustee of Liberty Trust 310 N. Wilmot Daniel and Rae Ann Jacob Suite 312 Tucson, AZ 85711 512 Mayfield St. Henderson Enterprises Summerville, SC 29485 7263 Sawmill Road Millco Properties Suite A-1 Miller Investments Dublin, OH 11552 Knott St. D & H Investments C-1,C-2 Garden Grove, CA 1000 Route 9 1000 Woodbridge Associates Suite 204 Woodbridge, NJ 08095 (Sun Healthcare Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) TWA INC.: Filing "Chapter 33" Petition Tomorrow ----------------------------------------------- American Airlines Inc. is said to announce plans to buy financially troubled Trans World Airlines Inc. At the same time it has reached an agreement to buy 49 percent of DC Air, the airline being created by Black Entertainment Television founder Robert Johnson, and is close to a deal with United Airlines Inc. to jointly operate the US Airways Shuttle on routes from Washington to New York and Boston. All three deals are said to be made public on January 10 2001, the Washington Post reports. The moves, whose cost figures were not available as of January 7, are part of a deal to address federal antitrust concerns about United's proposed merger with US Airways Group Inc. and improve American's position in the United States, the Post said. American's plan to buy TWA would make its size comparable to that of the United and US Airways planned merger. The acquisition of TWA's St. Louis operation, one of the nation's smoothest flowing hubs, will give American a much-needed third mid-continent hub along with Chicago O'Hare International Airport and Dallas-Fort Worth International Airport. St. Louis-based airline TWA, as part of the deal, will file for Chapter 11 bankruptcy protection from its creditors tomorrow, after which, American will buy all TWA assets and retain the latter's workforce. American, however, does not intend to use TWA's name. TWA officials refused to comment on the purchase while other airline industry officials would not speak for attribution, the Post relates. UNIVERSAL BROADBAND: Extending Time to Assume/Reject Leases by 60 Days ---------------------------------------------------------------------- Universal Broadband Networks, Inc. seeks a 60 day extension of the deadline for the assumption or rejection of unexpired real property leases, The debtor believes that cause exists for the extension of time to assume or reject its unexpired leases. The debtor is in the process of negotiating a potential sale o fits Salt Lake City operations, and if successful, the sale would include the leases. However, if the sale fails to close, then these leases may have no benefit tot he estate. Therefore, the debtor believes it would be premature a this time to assume or reject these leases. With respect to the Park Newport Leases, the debtor believes that it would be premature to assume or reject such leases in light of continued discussions between the debtor and the Committee regarding the direction of this case and the extent and scope of Mr. Sternberg's involvement in connection with the management of the debtor. VIDEO UPDATE INC: Seeks Extension of Exclusivity to April 20 ------------------------------------------------------------ Video Update, Inc., et al. seeks entry of an order extending their exclusive periods to file a plan of reorganization and solicit acceptances thereto for approximately 90 days, through and including April 20, 2001 and June 22,2001, respectively. Since the Petition Date, the debtors have focused their attention on stabilizing and streamlining operations, rejecting burdensome leases and closing underperforming stores. By the end of December 2000, the debtors will have closed more than 100 unprofitable stores and disposed of a like number of leases. In addition, the debtors have streamlined operations, making personnel and other cuts to save $2.4 million annually. However, the debtors have not yet had a meaningful opportunity to begin formulating or negotiating the terms of a Chapter 11 plan, and consequently seek a 90 day extension of their exclusivity periods. ********* 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 USA, and Beard Group, Inc., Washington, DC USA. Debra Brennan, Yvonne L. Metzler, May Guangko, Aileen Quijano, Peter A. Chapman, Editors. Copyright 2001. All rights reserved. ISSN: 1520-9474. 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