/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/010814.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, August 14, 2001, Vol. 5, No. 158 Headlines 360NETWORKS INC.: Seeks To Employ Ordinary Course Professionals 360NETWORKS: Will Report Second Quarter Results by September 15 AARO BROADBAND: Needs To Raise Capital To Sustain Operations AMERICAN AIRCARRIERS: Has Until Sept. 28 To Solicit Plan Votes AMF BOWLING: Asks Court For More Time to Make Lease Decisions BIG V: Court Ruling Upholds Wakefern Stockholders' Agreement BRIDGE INFORMATION: Contractors Move To Enforce Mechanic's Liens COMDISCO INC.: Proposes Procedures In Assigning Contracts COMDISCO: Bidding Procedures For Availability Solutions Okayed COVAD COMM.: Reon Broadband Offers Free Connections to Customers EDWARDS THEATRES: Plan Confirmation Hearing Set For September 19 EDWARDS THEATRES: Summary of Second Amended Chapter 11 Plan EERIE WORLD: Selling All Assets To Eerie World Acquisition ERD WASTE: Moves To Dismiss Case FINOVA GROUP: Court Okays Amended Berkshire/Leucadia Agreements FINOVA GROUP: Court Confirms Reorganization Plan FOCAL COMM.: Fitch Cuts And Puts Ratings On Watch Negative FURRS SUPERMARKET: Fleming Opts Not to Acquire Four More Stores ICG COMM.: Asks Court To Extend Exclusive Period To December 10 GRAHAM-FIELD: Seeks Court Approval for Bay Shore Property Sale INTERACTIVE NETWORK: Perkins Capital Reports 16.9% Equity Stake INTERVISUAL BOOKS: Nasdaq Delists Shares ISTAR FINANCIAL: Fitch Rates Senior Unsecured Notes At BB+ LOEHMANN'S HOLDINGS: Stockholders' Meeting Set For September 21 LOEWEN GROUP: Wants Wachovia Bank to Return Collateral LOEWEN GROUP: Reports Second Quarter 2001 Operating Results LTV CORP.: Copperweld Promotes 3 Heads For Tubular Product Group MARINER: Moves To Ratify NHP Lease Portfolio Settlement MORRIS MATERIAL: Delaware Court Confirms Chapter 11 Plan MOSLER INC.: BVI Offers Support to Former Customers & Employees NETSOL INTERNATIONAL: Cary G. Burch Resigns From Board OWENS CORNING: Court Approves Settlement Agreement With CARLY POLAROID CORP.: Receives One-Month Extension of Bank Waivers PSA INC: Court Approves First Amended Disclosure Statement PSA INC: Court Stretches Lease Decision Period Through August 31 RELIANCE: Rehabilitator Moves To Remand Commonwealth Actions RHYTHMS NETCONNECTIONS: Cuts Jobs & Halts Service For 31 Days STELLEX TECHNOLOGIES: Wants More Time To Solicit Votes For Plan TANDYCRAFTS INC: Names Jeff Pecora As New President For Pinnacle TRISTAR CORPORATION: Files For Chapter 11 Protection TRISTAR CORP.: Case Summary & 20 Largest Unsecured Creditors VLASIC FOODS: Paying Prepetition Shipping-Related Claims WHEELING-PITTSBURGH: Settles Disputes With Trustees For IRBs WINSTAR COMM.: Court Approves Interim Compensation Procedures ********* 360NETWORKS INC.: Seeks To Employ Ordinary Course Professionals --------------------------------------------------------------- 360networks inc. desires to continue the employment of professionals used in their ordinary course of business. Such services include legal services regarding specialized areas of law, accounting, and other matters requiring professional expertise. Alan J. Lipkin, Esq., at Willkie Farr & Gallagher, in New York, explains that it would be impractical and inefficient for the Debtors to submit individual applications and proposed retention orders for each Ordinary Course Professional. Moreover, Mr. Lipkin adds, continuing to employ Ordinary Course Professionals would enable the Debtors to carry out their normal business activities without the disruption from terminating their relationships with the Ordinary Course Professionals and locating, retaining, and familiarizing other competent professionals. Mr. Lipkin emphasizes that these Ordinary Course Professionals will not be involved in the administration of these cases, but will provide services concerning the Debtors' ongoing business operations: (1) Cline, Williams, Wright, Johnson & Oldfather, L.L.P. (2) Davis Wright Tremaine LLP (3) Davis Graham & Stubbs LLP (4) Law Office of Herman Fitzgerald (5) Troutman Sanders Mays & Valentine (6) Smith Katzenstein & Furlow (7) SPM Law, LLP (8) Blumenfield & Cohen The Debtors also seek the right to retain additional Ordinary Course Professionals as the need arises. In that event, Mr. Lipkin says, the Debtors will file a notice with the Court stating their intention to employ additional Ordinary Course Professionals and will serve a copy of the notice to: (a) the Office of the United States Trustee; (b) counsel to the agents under the Debtors' pre-petition working facility; (c) counsel to the Official Committee of Unsecured Creditors; and (d) all other parties that have filed a notice of appearance in these cases. If no objections are filed within 15 days of service, the Debtors request that the retention of the additional Ordinary Course Professional(s) be deemed approved by the Court without the need for a hearing or further order. Within 30 days of the entry of an order granting the application or the engagement of an Ordinary Course Professional by the Debtors, Mr. Lipkin relates, such professional would serve upon the Office of the United States Trustee and the Debtors and file with the Court: (a) an affidavit certifying that such professional does not represent or hold any interest adverse to the Debtors or their estates with respect to the matter on which such professional is to be employed; and (b) a completed retention questionnaire. Mr. Lipkin tells Judge Gropper that each Ordinary Course Professional would be paid 100% of the fees and disbursements incurred, without prior application to the Court, up to the lesser of: (a) $25,000 per month on a cumulative basis per Ordinary Course Professional, or (b) $300,000 per month, in the aggregate, for all Ordinary Course Professionals. If an Ordinary Course Professional seeks more than $25,000 per month on a cumulative basis, then that professional would be required to file a fee application for the full amount of its fees. Creditors' Committee Objects The Official Committee of Unsecured Creditors contends that the motion should be denied because the Debtors propose to: (a) hire certain ordinary course professionals without adequately explaining the need therefor, and (b) pay such professionals up to $3,600,000 per year, in the aggregate, without any review by the Court, or any other entity, for reasonableness. According to the Committee, the Debtors should not be permitted to saddle their estates with these types of obligations without making an adequate showing that such services are actually needed. Assuming that the Committee finds such professionals necessary, Norman N. Kinel, Esq., at Sidley Austin Brown & Wood, argues, the dollar amounts to be authorized should be significantly reduced. The Committee believes that the monthly cost to employ the Ordinary Course Professionals is too high given the Debtors' financial projections in these cases. Given the predictions that the Debtors have made regarding the availability of a distribution to unsecured creditors in these cases, the Committee asserts that it is inappropriate to approve the motion based on the scant information provided. (360 Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) 360NETWORKS: Will Report Second Quarter Results by September 15 --------------------------------------------------------------- 360networks announced the company expects to file its second quarter 2001 financial statements and the related management's discussion and analysis by September 15, 2001. The company has determined it will be unable to complete all the work necessary to finalize the financial report for the six months ended June 30, 2001 by the prescribed due date of August 29. The delay is a result of the additional requirements created by 360networks seeking creditor protection and the decrease in finance personnel due to its workforce reduction. 360networks intends to comply with the provisions of the Alternate Information Guidelines contained in the Ontario Securities Commission Policy 57-603, including issuing a default status report every two weeks until the second quarter 2001 results are issued. About 360networks 360networks offers optical network services to telecommunications and data-centric organizations in North America. The company's fiber optic network includes terrestrial segments and undersea cables in North America and South America. On June 28, 2001, the company and several of its operating subsidiaries filed for protection under the Companies' Creditors Arrangement Act (CCAA) in the Supreme Court of British Columbia. The company's principal U.S. subsidiary, 360networks (USA) inc. and 22 of its affiliates concurrently filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. The company has also instituted insolvency proceedings in Europe. For more information about 360networks, visit http://www.360.net AARO BROADBAND: Needs To Raise Capital To Sustain Operations ------------------------------------------------------------ Aaro Broadband Wireless Communications Inc.'s main activities have consisted of acquisitions of building access rights, hiring management and other key personnel, raising of funds, development of operating systems and purchase and deployment of equipment and network. Since May 1, 2000, the Company has initiated commercial service using its fixed wireless broadband technology in three cities. The Company's losses, as well as negative operating cash flow, have been significant to date, and management expects both to continue until the Company can generate a customer base through the combined efforts of direct sales and distributorships that will generate revenues to fund operating expenses. After the Company initiates service in its market areas, management expects to have positive operating margins by increasing the number of customers, and selling additional capacity or services without significantly increasing related capital expenditures or operating costs. The Company's ability to generate positive cash flow will depend on capital expenditures in new market areas, competition in current market areas and any potential adverse regulatory developments. Part of the Company's strategy is to utilize a distributorship network to expand the customer base and achieve greater market penetration more rapidly. Management believes that by implementing this strategy, the Company can capitalize on distributors' familiarity with their market area, customer affiliations, financial strength and their experienced personnel and minimize the Company's requirements for incremental expenditures. The planned expansion of the Company's business will require significant capital to fund capital expenditures, working capital needs, debt service and the cash flow deficits generated by operating losses and current cash balances will not be sufficient to fund the current business plan. As a consequence, the Company is currently seeking additional debt and/or equity financing as well as distributorship arrangements to fund liquidity needs. In the event that the Company is unable to obtain additional funds or to obtain funds on acceptable terms or in sufficient amounts, the Company will be required to delay the development of its network or take other actions. This could have a material adverse effect on the Company's business, operating results and financial condition and ability to achieve sufficient cash flow to service debt requirements and meet operating expenditures. In view of the matters described in the preceding paragraph, recoverability of a major portion of the company's recorded asset amounts is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financing requirements on a continuing basis, to obtain additional financing and to succeed in its future operations. The company's financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. AMERICAN AIRCARRIERS: Has Until Sept. 28 To Solicit Plan Votes -------------------------------------------------------------- By order of the U.S. Bankruptcy Court, District of Delaware, entered on July 31, 2001, American Aircarriers Support, Inc., et al. was granted an extension of its exclusive proposal period from June 29, 2001 through July 30, 2001. The exclusive solicitation period is extended from August 29, 2001 through September 28, 2001. AMF BOWLING: Asks Court For More Time to Make Lease Decisions ------------------------------------------------------------- AMF Bowling Worldwide, Inc. seeks an order extending the deadline by which they are required to decide whether to assume or reject their unexpired leases of non-residential real property. The Debtors ask for an extension through and including January 2, 2002. As of the Petition date, the Debtors are parties to over 179 Unexpired Leases of Non-Residential Real Property. Dion W. Hayes, Esq., at McGuireWoods LLP, in Richmond, Virginia, explains that the decision to assume or reject the Debtors' unexpired leases will play a crucial role in the reorganization process and future business plan. Thus, Mr. Hayes contends, the Debtors should not be forced to make these decisions until they have had a reasonable opportunity to stabilize their post-petition operations. Otherwise, Mr. Hayes says, the Debtors might risk the inadvertent rejection of a valuable lease or the premature assumption of an undesirable one with attendant administrative expense obligations. Given the importance of the unexpired leases to the Debtors' continued operations and the significance of the issues that the Debtors must consider in deciding whether to assume or reject the Unexpired Leases, Mr. Hayes argues that it would be impossible for the Debtors to make a reasoned decision within the initial 60-day period. So, Mr. Hayes explains, the Debtors need more time to focus their efforts on the negotiation of the business terms of the consensual plan of reorganization with major creditors. In connection with these negotiations, Mr. Hayes tells the Court, the Debtors will be carefully considering how each of the unexpired leases will contribute to their overall business enterprises and their ability to consummate any plan of reorganization that may be proposed. Mr. Hayes assures Judge Tice that the Debtors have the necessary financial resources and intend to perform timely all of their obligations under the remaining unexpired leases as to the extent required by section 365(d)(3) of the Bankruptcy Code. Objections (A) Bailey Charles L. Bailey and Kathryn Bailey object to the Debtor's motion to extend the Assumption/Rejection Period. Theodore I. Brenner, Esq., at Brenner, Evans & Yoffy, in Richmond, Virginia, relates that Bailey and AMF Bowling, Inc. are parties to lease agreement of a certain real property situated in the Town of Bland, Gasconade County, Missouri (the Bland Property). According to Mr. Brenner, the Bland Property is one of the leases specifically identified in the Debtors' motion. AMF Bowling, Inc., the lessee for the Bland Property, is not a debtor in this action, Mr. Brenner argues. For that reason, Mr. Brenner contends, AMF Bowling, Inc. has no standing to pray for the relief requested in the Debtors' pending motion. (B) Herricks Fore Plan, Inc. Herricks Fore Plan, Inc. is the landlord of AMF Bowling Centers, Inc. for premises located at 69-10 34th Avenue, Woodside, New York 11803, known as "CTR No. 210". Herricks objects to the Debtors' motion because they believe the 120-day extension sought is "inappropriate and unwarranted". Lara P. Emouna, Esq., at Gleich, Siegel & Farkas, in Great Neck, New York, informs the Court that Herricks would consent to a short period, like an extension of 60 to 90 days. Ms. Emouna argues that such a long extension is contrary to the mandate of the 1984 Code Amendments to Section 365(d)(4). According to Ms. Emouna, the Court should not only consider the size and complexity of the bankruptcy estate but would the mandate of Section 365(d)(4). Ms. Emouna appeals to Judge Tice to also consider the hardship foisted upon landlords as a result of the bankruptcy and their need to not be left indefinitely on "tender hooks" as to their leases. (C) Kimco Realty Corporation, MC Corp., and Kimsward Kimco Realty Corporation, MC Corp., and Kimsward are landlords to the Debtors with respect to certain non-residential property located at San Antonio, Texas and Hamden, Connecticut. The Landlords want the Court to deny the Debtors' motion or shorten the period for extension. Section 365(d)(4) of the Bankruptcy Code provides that a debtor must move to assume or reject an unexpired lease of non- residential property within 60 days after the order for relief or the lease will be deemed rejected. According to Neil E. Herman, counsel for the landlords, this section clearly intends to provide the commercial real property lessor with special rights and bestows a certain degree of certainty and protection by: (i) placing the burden squarely upon the debtors to demonstrate "cause" prior to any extension, no matter how short in duration, and (ii) fixing an early, certain date (60 days) for assumption or rejection. But Mr. Herman contends that the Debtors' request for an extraordinary length of time to make assumption/rejection decisions is contrary to this bankruptcy provision. Mr. Herman argues that, "there is no factual basis whatsoever for granting the extraordinary relief sought". Mr. Herman reminds the Court that the Debtors failed to submit a sworn affidavit of an officer, employee or agent of the Debtors. Thus, Mr. Herman says, an open-ended extension cannot be factually justified on the basis of unsworn averments of counsel. Like Herricks, the landlords are amenable to a 60 or 90-day extension. (D) Eflow Investment Trust II M&W Bowling Corporation and Eflow Investment Trust II are parties to a lease agreement dated November 1957. Under the agreement, Eflow agreed to construct a building to M&W's specifications on a property owned by Eflow, which is located at 1523 West San Carlos, San Jose, California. Eflow also agreed to rent this building to M&W. American Recreation Centers Inc. is the successor-in-interest to M&W's rights and obligations under the Lease. American Recreation Centers Inc. is a California corporation and one of the Debtors. The Debtor currently operates an AMF Fiesta Lanes bowling center in the building. The current term of the lease is scheduled to expire on year 2013. David R. Ruby, Esq., on behalf of Bernard M. Wolfe who is trustee and attorney-in-fact for the Eflow Investment Trust II, discloses that the Debtor is in default under numerous provisions of the Lease: (1) The Debtor is in default in the payment of its percentage rent obligations. The Debtor's rent is based on a base rate plus a percentage of gross income. (2) The Debtor is in default in its obligations to operate the 250-seat restaurant business on the premises. The restaurant currently is vacant (which exacerbates the Debtors' inability to generate income from the bowling center operations). (3) The Debtor is in default for failure to maintain the premises in good repair as evidenced by, among other things, dead shrubs and other landscaping problems, numerous potholes in the parking lot and the crumbling building facade. (4) The Debtor is in default for failure to provide financial statements prepared by a CPA indicating gross income -- for the past three years. In addition, Mr. Ruby claims, there are reports of drug and prostitution activities behind the building. "The lease currently does not generate any more income to the Lessor (Eflow) on a dollar for dollar basis than it did when the lease commenced in 1958, as the restaurant is closed and the bowling alley and the premises are in utter disrepair," Mr. Ruby tells the Court. Mr. Ruby argues that the Debtor's apparent disregard and contempt for both the condition of the premises and the volume of the business that is generated therein constitutes a breach by the Debtor. According to Mr. Ruby, the Debtor has an implied duty of good faith and fair dealing to Eflow. The Debtor's neglect, Mr. Ruby notes, has caused Eflow to suffer damages from the lack of percentage rent paid under the lease. Mr. Ruby informs Judge Tice that the premises is now zoned as a planned development or high-density residential area. Thus, Mr. Ruby notes, the Debtor's bowling center is no longer compatible with the current use of the surrounding properties. According to Mr. Ruby, all these problems were brought to the attention of the Debtor by written correspondence in 1998, 1999 and 2000. But the Debtor responded in silence. Mr. Ruby says the Lessor was preparing to initiate unlawful detainer proceedings when the Debtor filed its bankruptcy case early this month, preventing the Lessor to pursue its legal action. Mr. Ruby reveals that the Lessor currently has a contract to sell the premises to a third party. However, the buyer is too impatient to wait until January 2, 2002 for the Debtor to determine whether it wants to assume or reject the lease. For this reason, Mr. Ruby explains, the Lessor will be prejudiced if the sale falls through because of unnecessary delays in accepting or rejecting the lease. Mr. Ruby also notes that the Debtor is required to pay property taxes for the premises. Under California law, Mr. Ruby explains, property values are assessed based on the purchase price of the property, not the current market value. So if the Debtor insists to delay their decision on this lease, Mr. Ruby warns, the property taxes will likely increase more than tenfold, placing an extreme burden on the Debtor and the bankruptcy estate. The Lessor objects to the Debtor's motion on the grounds that the Debtor is in violation of numerous, substantive violations under the lease. Mr. Ruby adds the Debtor has failed to maintain the 44-year old premises and grounds that it is no longer profitable for their business. If the Debtor will improve and repair the premises, Mr. Ruby says, it would cost them over $250,000. Therefore, Mr. Ruby concludes, it is unlikely for the Debtor to operate its bowling center profitably. At the same time, Mr. Ruby notes, no third party would probably be interested in buying the lease. Thus, Mr. Ruby says, the Debtor will likely reject this lease due to: (i) the prohibitive costs for deferred maintenance and capital improvements, (ii) the requirement for occupancy and operation of the restaurant, (iii) anticipated costs of litigation with Lessor over the numerous breaches under the lease, (iv) increased property taxes upon sale of the premises to a third party, and (v) the property's incompatibility with current land use issues. So, Mr. Ruby argues, there is simply no reason for the Debtor to delay in rejecting the lease since it is not integral to their future business plans or reorganization efforts. For all these reasons, Bernard M. Wolfe prays that the Debtor's motion be denied. Mr. Wolf asks the Court to require the Debtor to decide whether it will assume or reject the lease within the original 60-day time frame. (AMF Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) BIG V: Court Ruling Upholds Wakefern Stockholders' Agreement ------------------------------------------------------------ On August 9, 2001, U.S. Bankruptcy Court, Judge Raymond T. Lyons ruled in favor of Wakefern Food Corporation in a lawsuit filed by Big V Supermarkets, seeking a declaratory judgment that would allow it to leave the Wakefern cooperative without compensating the cooperative for volume that would be lost because of its withdrawal. "We are delighted with the Court's ruling," stated Thomas P. Infusino, Chairman of the Board, Wakefern Food Corporation. "Judge Lyons's decision upheld our position that Big V's withdrawal from the cooperative triggered a payment obligation under the Wakefern members' Stockholders' Agreement. Big V sought to leave the cooperative and avoid making the withdrawal payment despite the benefits of membership in Wakefern that enabled Big V to grow from a single store to a 32 store chain." Wakefern estimates that Big V's withdrawal liability is in excess of $280 million. The Court's decision follows a two-week trial, in which Wakefern presented conclusive evidence -- including key admissions from Big V -- that the Wakefern Stockholders' Agreement is a long- term supply agreement which bars members from leaving the cooperative without making a withdrawal payment. Judge Lyons agreed, holding that this was the clear intent of the parties. He further held that the implied covenant of good faith and fair dealing prevented Big V from leaving the cooperative without making a withdrawal payment. Judge Lyons also found that Big V's efforts to leave Wakefern for a new supplier was one step in a series of transactions leading to the sale of Big V. Under the Stockholders' Agreement, Big V incurs withdrawal liability in the event of a sale in a single transaction or a series of transactions. "Wakefern is a cooperative that was organized nearly 50 years ago to provide the benefits of large-scale purchasing power to its independent members. The success of the cooperative depends on continued high volume purchases from a committed membership base," said Dean Janeway, Wakefern's President. "Judge Lyons's ruling upholds our way of doing business, and we look forward to the continued growth and success of our members under the ShopRite(R) banner," he continued. In November 2000, Big V Supermarkets filed for chapter 11 Bankruptcy protection. Big V operates 32 ShopRite(R) stores in three states and is the largest member of the Wakefern cooperative. Wakefern Food Corporation is a retailer-owned cooperative and the wholesale merchandising and distribution arm for ShopRite(R) supermarkets. The 41 Wakefern members operate approximately 200 stores under the ShopRite(R) name and are located throughout New Jersey, New York, Pennsylvania, Connecticut and Delaware. BRIDGE INFORMATION: Contractors Move To Enforce Mechanic's Liens ---------------------------------------------------------------- Various contractors who performed pre-petition construction work on Bridge Information Systems, Inc.'s Missouri Data Center and Office Park Buildings commenced adversary proceedings to obtain declarations from the Bankruptcy Court that their mechanic's liens against the Debtors' Properties are valid and enforceable. (A) Data Center Building Bridge Data Company owns a property located at 587 James S. McDonnell Boulevard in Hazelwood, Missouri popularly known as the Data Center Building. (1) Siemens Building Technologies, Inc. Siemens provided labor, material and equipment to furnish and install an automated environmental energy management system on the Data Center Building. Siemens work was furnished under contract with Burr Computer Environments, Inc. as original contractor. The total reasonable value of Siemens lienable and unpaid work is $139,578.20 plus interest. (2) Jacobsmeyer-Mauldin Construction Jacobsmeyer provided structural concrete, labor, materials, equipment, supervision and other related work on the Data Center Building. Jacobsmeyer's work was furnished under contract with Smith Commercial Contracting, Inc. as original contractor. The total reasonable value of Jacobsmeyer's lienable and unpaid work is $181,835.31 plus interest. (3) Murphy Company Murphy Company provided HVAC and plumbing labor, materials, equipment, supervision, and other related work on the Data Center Building. Murphy's work was furnished under contract with Burr Computer Environments, Inc., as original contractor. Murphy had separate contracts for HVAC work and for Plumbing work. The total reasonable value of Murphy's lienable and unpaid work is, $590,862.82, plus interest. Murphy's proofs of claim reflect the total principal amount of all of Murphy's mechanic's liens plus interest accrued up to May 1, 2001, which is $664,049.77 - the sum of $608,030.38 for the HVAC lien and $55,019.39 for the Plumbing lien. (4) Sachs Electric Company Sachs provided electrical labor, materials, equipment, supervision and other related work on the Data Center Building. Sachs' work was furnished under contract with Burr Computer Environments, Inc., and Pillar, Inc., as original contractors. Sachs' proof of claim against the Data Center Building is $2,198,668.60 (B) Office Parkway Buildings (1) McCarthy Building Companies, Inc. McCarthy provided valuable labor, materials, equipment, supervision and other related work on and to properties owned by Bridge Information Systems America, Inc., located at 700 and 788 Office Parkway in Creve Coeur, Missouri. McCarthy's work was furnished under contract with Bridge Information Systems, Inc. The total reasonable value of McCarthy's lienable and unpaid work is $454,057.91, plus interest. McCarthy's proofs of claim reflects the total principal amount of all of McCarthy's mechanic's liens filed against the Debtor's Properties, plus interest accrued up to May 1, 2001, which is $461,655.66 -- the sum of $458,417.67 Building 700 lien and $3,237.99 Building 788 lien. (2) Sachs Electric Company Sachs provided valuable electrical labor, materials, equipment, supervision and other related work on: Property Debtor/Owner -------- ------------ 717 Office Parkway Bridge Information Systems, Creve Coeur, Missouri 63141 Inc. 700 Office Parkway Bridge Information Systems Creve Coeur, Missouri 63141 America, Inc. 744 Office Parkway Bridge Information Systems Creve Coeur, Missouri 63141 America, Inc. 788 Office Parkway Bridge Information Systems Creve Coeur, Missouri 63141 America, Inc. 795 Office Parkway Bridge Information Systems Creve Coeur, Missouri 63141 America, Inc. Sachs' work was furnished under contract with Bridge Information Systems, Inc.; Pillar, Inc.; Air Masters Corporation, Collins & Hermann, Inc.; and Hughes Supply, Inc. The total reasonable value of Sachs' lienable and unpaid work is $2,616,145.62, plus interest. Sachs' proofs of claim reflects the total principal amount of all of Sachs' mechanics liens filed against the Office Parkway Buildings, plus interest accrued up to May 1, 2001, which is $478,733.41 - the sum of $93,584.37 for Bridge Information Systems, Inc. lien and $385,149.04 for Bridge Information Systems America, Inc. lien. * * * In separate adversary complaints, these Contractors request the Court to declare their mechanic's liens against Debtors' Properties as valid and enforceable. The Contractors assert they performed all of their work properly and free from defects. According to the Contractors, the Debtors' properties and improvements were directly benefited since their work became part of the Debtors' Properties. The Contractors assure the Court that they already gave all statutory notices required as a condition to the filing and enforcing of its statement of mechanic's lien against Debtor's Property. This included the timely and proper service of an Amended Notice of Claim of Mechanic's Lien served on the registered agents of the Debtor. The Contractors also claim they timely filed their Statements of Mechanic's Lien against the Debtors' Properties in the Office of the Clerk of the Circuit Court of St. Louis County, Missouri within six months of the last date upon which they provided work under that account for the project and at least 10 days after they provided the required statutory notices. The Contractors also filed a Notice and Amended Notice to Continue Perfection of a Lien in this matter. Then they assert that their mechanic's liens against the Debtors' Properties are properly perfected. Under the so-called "first spade rule" applicable to Missouri mechanic's liens, the Contractors' mechanic's lien relates back to the first date upon which any visible project work was commenced on the Property upon which the mechanic's lien attaches. According to the Contractors, the Project "start date" took place prior to February 15, 2001 while the Mechanic's Lien relates back to a date preceding February 15, 2001. Contractor Lien Project Start Date ---------- ---- ------------------ Siemens Automated Environmental 01/04/00 Energy Management System Jacobsmeyer Structural Concrete Work 09/99 Murphy HVAC 09/99 Plumbing 09/99 McCarthy Building 700 04/99 Building 788 04/99 The Contractors filed their proofs of claim in this bankruptcy proceeding for the Mechanic's Lien against the Debtors' Properties last May 2001. To date, the Contractors note, no objections have been filed against their proofs of claim. Thus, pursuant to Federal Rule of Bankruptcy Procedure 3001(f), the Contractors contend that the Court should presume their proofs of claim as valid. The Contractors further maintained that pursuant to 11 U.S.C. section 506(b), they are entitled to accruing interest on its prior perfected Mechanic's Lien claims. Under Missouri law, the Contractors assert, the "first spade rule" also applies with respect to the priority among certain liens. The "first spade rule" provides that, "the lien for work and materials shall be preferred to all other encumbrances, which may be attached to or upon such buildings, bridges or other improvements, or the ground, or either of them, subsequent to the commencement of such buildings or improvements". With the exception of the property located at 717 Office Parkway, Sachs contends that its mechanic's liens are prior to any other recorded interest in the properties. According to Sachs, the property located at 717 Office Parkway have three deeds of trust that were recorded before there was visible work on the property: Grantee Amount Date Recorded ------- ------ ------------- The Travelers Insurance $7,200,000 09/30/85 The Travelers Insurance $2,250,000 09/30/85 United Services Life $4,500,000 01/31/94 Insurance Company But Sachs is not aware of the current status of these three deeds of trust. The Contractors remind the Court of the Reuters Sale Order, which provides that a segregated fund is being maintained in an interest-bearing account for the payment of: (a) Siemens' mechanic's lien in the amount of $139,579.20 (b) Jacobsmeyer's mechanic's lien in the amount of $207,600.16 (c) Murphy's mechanic's lien in the amount of $730,454.75 (d) McCarthy's mechanic's lien in the amount of $507,821.23 (e) Sachs' mechanic's lien in the amount of $2,945,142.50 But the payment is only made upon a determination of the validity, priority, force, effect, extent and/or value of the Contractors' mechanic's liens. This is why the Contractors want the Court to declare their mechanic's liens as valid, enforceable, and prior to all other encumbrances. The Contractors also want the Court to order that these trust funds be paid directly to them immediately upon the closing of the Reuters Sale. Siemens also requests that a judgement be entered against Burr Computer Environments, Inc. in the principal sum of $139,578.20 plus interest at the statutory rate from May 1, 2001 and its costs and fees incurred herein, * * * Some Defendants Respond (A) Harris Trust and Savings Bank Harris Trust and Savings Bank, as administrative agent under the Second Amended and Restated Credit Agreement, claims an interest: (i) in the Office Parkway Building 788 by virtue of a Deed of Trust recorded in July 2000; and (ii) in the Data Center Building by virtue of a Deed of Trust executed by Bridge Data Company to Steven D. Korenblat, Trustee for Harris Trust and Savings Bank recorded July 2000 in Book 1264, Page 186 in the office of the St. Louis County Recorder of Deeds. Norman W. Pressman, Esq., at Goldstein & Pressman, explains that Harris is still in the process of evaluating the claims of Jacobsmeyer, McCarthy, Murphy and Sachs. Thus, Mr. Pressman says, Harris reserves its right to make any objection to the proofs of claim if it deems appropriate. Mr. Pressman also argues that the Reuters Sale has not occurred, therefore, Harris denies that Jacobsmeyer, McCarthy, Murphy and Sachs are entitled (at this time) to have any such amount segregated for its benefit. Harris requests the Court to deny the relief requested by Jacobsmeyer, McCarthy, Murphy and Sachs. (B) State Farm Life Insurance Company State Farm Life Insurance Company asserts that its deed of trust on Office Parkway Building 700 has priority over and is superior to any interest, which McCarthy and Sachs may assert in the form of a mechanic's lien upon the property. State Farm prays that the adversary complaints filed by McCarthy and Sachs be dismissed. But if the Court declares that McCarthy and Sachs have valid and enforceable mechanic's liens which is deemed perfected against the property, State Farm requests the Court to also declare that the lien established in favor of State Farm pursuant to its deed of trust upon said property is superior to the mechanic's lien of McCarthy and Sachs. (C) Travelers Insurance Travelers informs the Court that it no longer possesses, maintains or asserts an interest in or to 717 Office Parkway. As long as its proof of claim against the bankruptcy estate of Bridge Information Systems is not compromised, Travelers does not object to Sachs' request for relief in this adversary proceeding. (Bridge Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) COMDISCO INC.: Proposes Procedures In Assigning Contracts --------------------------------------------------------- Once the Successful Bidder(s) for Comdisco, Inc.'s Leasing Business are determined, many executory contracts and unexpired leases will have to be assumed and assigned. The Debtors propose to implement these procedures in connection with the assumption and assignment of their contracts and leases: 1) Within ten (10) business days after entry of an order approving the Bidding Procedures, the Debtors will file a notice (the "Cure Notice"), substantially in the form attached hereto as Exhibit E, with the Court and serve such Notice on each non-debtor party to those executory contracts and unexpired leases that the Debtors' determine, in the exercise of their business judgment, are necessary to maximize value of any proposed transaction(s). 2) The Cure Notice shall state the cure amounts that the Debtors believe are necessary to assume such contracts and leases pursuant to section 365 of the Bankruptcy Code (the "Cure Amount") and notify the non-debtor party that such party's contract or lease may be assumed and assigned to a purchaser of the Debtors' Leasing Assets to be identified at the conclusion of the Auction. The Cure Notice shall set a deadline by which the non-debtor party shall file an objection to the Cure Amount and shall set a hearing (the "Cure Hearing") to determine any objections to the Cure Amount. In this Motion, the Debtors request that the Court set the deadline to object to any Cure Amount at 10 days after service of such notice. 3) Within two (2) business days after conclusion of the Auction, the Debtors shall file a notice (the "Assumption Notice"), substantially in the form attached hereto as Exhibit F, that identifies the Successful Bidder(s) and describes the basis for the Debtors' belief that there is adequate assurance of the Successful Bidder(s)' future performance under such Assigned Contracts. The Assumption Notice shall set a deadline by which the non-debtor party to an Assigned Contract shall file any objections to the assumption and assignment (the "Assignment Objection Deadline"). At the Sale Hearing, the Debtors plan to request entry of an order requesting approval of the assumption and assignment of any Assigned Contracts to the Successful Purchaser(s). (Comdisco Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) COMDISCO: Bidding Procedures For Availability Solutions Okayed -------------------------------------------------------------- Comdisco, Inc. (NYSE: CDO) announced that the U.S. Bankruptcy Court for the Northern District of Illinois approved consensual bidding procedures proposed by the Company related to the proposed sale of Comdisco's Availability Solutions (Technology Services) business to Hewlett-Packard Company. The bidding procedures were supported by the Company's Official Committee of Unsecured Creditors and several prospective bidders that had earlier filed objections to the bidding procedures. Among other matters, the Court accepted Comdisco's proposed bid deadline of September 30, 2001 and auction date of October 11, 2001 for competitive bidding to determine whether a higher or otherwise better offer should be considered, and set October 23, 2001 as the sale hearing date to consider approval of the Hewlett-Packard or alternative transaction. In the event that the Court approves the proposed sale to Hewlett-Packard, the transaction is scheduled to close on November 16, 2001, approximately thirty days later than the original closing deadline. As announced on July 16, 2001, Comdisco has reached a definitive agreement to sell this business to Hewlett-Packard Company for $610 million. Norm Blake, Chairman and Chief Executive Officer, said: "We are pleased that the bankruptcy court and our creditor representatives are continuing to be supportive of our efforts to move Comdisco through the reorganization process in an efficient and effective manner. Just three weeks into our reorganization cases, approval of the bidding procedures for the sale of the Availability Solutions business is an important milestone for the company, as well as our customers, employees and business partners." Simultaneously with entering into the agreement with Hewlett- Packard on July 16, Comdisco, Inc. and 50 domestic U.S. subsidiaries filed voluntary petitions for relief under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Illinois. The filing will allow the company to provide for an orderly sale of its services business, while resolving short-term liquidity issues and enabling the company to reorganize on a sound financial basis to support its ongoing businesses. The Bankruptcy Court also considered and granted all relief requested by Comdisco at an omnibus hearing on nineteen other separate matters. Among the matters receiving approval were: * Comdisco's employee retention, incentive and severance programs for all of its employees (the Company's programs for certain senior management employees and its emergence program will be considered at the August 23, 2001 omnibus hearing previously scheduled by the Bankruptcy Court); * Continuation of Comdisco's full-scale ordinary course business operations in its Leasing, Services and Ventures business units including authority to pay certain prepetition claims, sell and lease assets, and manage loan portfolios; * Continuation of Comdisco's worldwide cash management program and practices including the continuation of intercompany transactions with non-debtor affiliates and waiver of bankruptcy investment and deposit requirements; * Continuation of interim authority to borrow up to $200 million on the Company's $600 million debtor-in-possession financing facility (with final approval for the entire facility scheduled for the August 23, 2001 omnibus hearing); * Continuation of the wind-down of the Company's former Prism business unit including the rejection of certain real property leases and authority to divest assets; * Establishment of adequate assurance arrangements and procedures for utilities providing services to Comdisco; and * Retention of Comdisco's financial and legal advisors for the Company's chapter 11 reorganization cases. "The combined effect of receiving final approval for continuation of Comdisco's worldwide cash management system and practices together with continuation of our full-scale ordinary course business practices in all of our business units completes a very successful launch of our reorganization cases for our Services, Leasing and Ventures businesses," said Mr. Blake. "We are especially gratified that the extraordinary efforts of our employees has been recognized through the approval of competitive and appropriate retention, incentive and severance programs." Comdisco's operations located outside of the United States were not included in the chapter 11 reorganization cases. All of Comdisco's businesses, including those that filed for chapter 11, are conducting normal operations. Comdisco is continuing to pursue other strategic alternatives to create value for its stakeholders, including evaluating the possible sale of certain of its leasing assets to several interested buyers. The company intends to reorganize its remaining businesses, including Comdisco Ventures, on a "fast-track" basis and has targeted emergence from chapter 11 during early 2002. About Comdisco Comdisco -- http://www.comdisco.com-- provides technology services worldwide to help its customers maximize technology functionality, predictability and availability, while freeing them from the complexity of managing their technology. The Rosemont, (IL) company offers a complete suite of information technology services including business continuity, managed web hosting, storage and IT Control and Predictability Solutions(SM). Comdisco offers leasing to key vertical industries, including semiconductor manufacturing and electronic assembly, healthcare, telecommunications, pharmaceutical, biotechnology and manufacturing. Through its Ventures division, Comdisco provides equipment leasing and other financing and services to venture capital backed companies. COVAD COMM.: Reon Broadband Offers Free Connections to Customers ---------------------------------------------------------------- REON(R) Broadband Corp. announced it will offer free installation of its high-speed broadband services to existing Covad customers* in the wake of Covad's announcement that it will reorganize under Chapter 11 of the U.S. Bankruptcy code. REON, New England's leading provider of in-building broadband solutions to multi-tenant commercial properties, as well as high speed private line communications services, will waive all installation charges and provide special operations assistance to customers. REON has successfully converted customers from former DSL providers, including HarvardNet, Vitts and Rythyms Net Connections. REON can convert Covad customers from their existing DSL service to REON's private line T1 network in a short period of time, and provide complete service and support offerings to buildings already provisioned with REON's network backbone. REON currently has its broadband infrastructure in more than 100 commercial office buildings in 58 communities throughout New England. Through REON's website, http://www.reonbroadband.com, business owners can see if their building - or a building in their immediate vicinity - is lit with REON's broadband services which, include Internet access, Web hosting and e-mail, and network security. REON, through its innovative deployment of building-based broadband and voice services, is reaching typically underserved business districts with high-speed (T1) Internet connectivity and related Internet offerings. By establishing connectivity to these buildings, REON is also creating a community point-of presence (PoP) which means that both the wired building and those around it can easily be connected to the same high-speed switch, creating economies of scale that enable businesses and communities to advance technologically. REON's Broadband Services REON Broadband provides property owners and tenants with a single-point of contact in their building for high-speed Internet access services, data back-up and off-site storage, network security, and many other advanced communication services that the company offers as part of its Building Local Exchange Carrier (BLEC(R)) broadband program. At no cost to the property owner, REON invests in rewiring properties with a gigabit Ethernet wiring system capable of delivering advanced communication services. In addition, by leveraging strategic relationships with Riverstone Networks (NASD: RSTN), Juniper Networks (NASD: JNPR), and NetScreen, REON installs a secure, IP-enabled, broadband solution that includes dedicated high-speed Internet access and many other Internet related services. REON has established relationships with over 75 commercial real estate property owners and management firms representing more than 450 properties throughout New England (Mass., N.H., Vt., R.I., Conn., and Maine). Business owners in the communities REON serves can also benefit from REON's services. REON Broadband has created "High Speed Zones"(TM) in the communities it serves, whereby business outside of the multi-tenanted buildings REON serves can receive REON services. About REON Broadband Corporation REON Broadband Corporation is a building-centric network service provider headquartered in Marlboro, Mass. REON, "Real Estate On Net", was formed by a group of real estate and telecommunications professionals to deliver advanced telecommunication and data services to multi-tenanted commercial buildings throughout New England. REON, through its Building Local Exchange Carrier (BLEC) program, offers tenants always-on high-speed Internet access, network security, data storage and additional services. For more information on the company and its services please visit http://www.reonbroadband.com EDWARDS THEATRES: Plan Confirmation Hearing Set For September 19 ---------------------------------------------------------------- The hearing to consider confirmation of the second amended plan of Edwards Theatres Circuit, Inc. and its affiliated debtors will be held on September 19, 2001 at 10:00 AM before the Honorable Lynne Riddle, U.S. Bankruptcy Court, Central District of California, Santa Ana Division. EDWARDS THEATRES: Summary of Second Amended Chapter 11 Plan ----------------------------------------------------------- The principal provisions of the plan are summarized as follows: * Subject to the Investor Group Adjustment, an equity infusion by the Investor Group (Anschutz and OCM) in an amount equal to approximately $56 million; * Restructuring the Allowed Lender Group, (Bank of America and lenders that are parties to the Credit Agreement) Secured Claim; * Subject to the Investor Group Adjustment, restructuring the remaining $9 million in bank debt held by the Investor Group into the Investor Group Unsecured Subordinated Note; * Substantial consolidation of the debtors; * Merger of CAMCO into New Edwards; * Dissolution of the emerging debtors and vesting of all of the merging debtors' assets and liabilities into New Edwards, which shall be 51% owned by the Investor Group and 49% owned by holders of Class 6 interests, subject to equity reduction, which reduces the percentage of equity held by Class 6 interests. * Non-merging debtors will become wholly owned subsidiaries of New Edwards. * Assumption of the Studio Contracts and the Core Theatre Leases. Depending whether the plan is a consensual plan or a cramdown plan, holders of general unsecured claims will receive either cash or a consensual plan note or a cramdown plan unsecured note. The debtors estimate that general unsecured claims total $52 million. EERIE WORLD: Selling All Assets To Eerie World Acquisition ---------------------------------------------------------- Pursuant to the order of the US Bankruptcy Court, Southern District of New York, dated July 30, 2001, a hearing will be held on September 12, 2001 before the Honorable Cornelius Blackshear, to consider the motion of Eerie World Entertainment, LLC, debtor, for entry of an order approving the terms of a sale of substantially all of the debtor's assets to Eerie World Acquisition LLC and authorizing the debtor to sell substantially all of its assets including 100% equity interest in Jekyll & Hyde Club New York, LLC,1409 Avenue of the Americas, New York, NY and various trademarks associated with the restaurant for a price of $1,750,000. The debtor will consider higher or better offers for the assets with the initial higher or better offer to be not less than $1,775,000 with bidding thereafter to be in increments of not less than $25,000. Proceeds from the sale of the assets shall be utilized to fund a plan of liquidation. ERD WASTE: Moves To Dismiss Case -------------------------------- A motion to dismiss the case was filed by Jack M. Zackin for the debtor, ERD Waste Corp. A hearing will be held by the Honorable Kathryn C. Ferguson on September 5, 2001, Trenton, NJ to determine whether there is cause for dismissal. FINOVA GROUP: Court Okays Amended Berkshire/Leucadia Agreements --------------------------------------------------------------- Upon consideration of The FINOVA Group, Inc.'s motion as well as objections and responses, including the support of the Equity Committee for approval of the Amendment, Judge Walsh issued an order granting the motion in all respects and ordered that any objections to the motion that were not withdrawn or settled are overruled. The Official Committee of Equity Security Holders of FINOVA, through its counsel Anderson Kill & Olick, P.C. and Rosenthal, Monhait, Gross & Goddess, P.A., told the Court that it generally supports the Berkadia Plan. The Equity Committee takes the position that while certain provisions in the Plan are objectionable and both material and significant in order of magnitude, these are confirmation issues that, the Committee hopes, will be resolved before the confirmation hearing. With respect to objectionable issues in the Plan, the Equity Committee believes that the provisions in the Plan for corporate governance of the reorganized Debtors are inadequate and objectionable insofar as they do not provide any role for the participation of the Equity Committee's constituency in the ongoing governance of the reorganized Debtors. The Equity Committee also believes that the ultimate aggregate value of the equity interests in the reorganized Debtors is understated because, among other things, loan loss reserves are overly conservative and also because the financial projections do not attribute any enterprise value to the Debtors' business over and above their tangible asset value. Nevertheless, the Equity Committee acknowledges that these understatements are subject to interpretation and opinion. The Equity Committee also acknowledges that, under the terms of the Plan, the equity constituency will benefit from any future enhancements in equity value by virtue of receiving approximately half of the equity of the reorganized Debtors, regardless of any current valuations. The Equity Committee believes that a possible solution to both of the issues of its concern could be an enhanced role, albeit still a minority one, for the Equity Committee's constituency in determining and influencing the future corporate governance of the reorganized Debtors. In this regard, the Equity Committee is in discussions with the Debtors and is optimistic of reaching an agreement with them prior to the hearing on confirmation of the Plan. (Finova Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) FINOVA GROUP: Court Confirms Reorganization Plan ------------------------------------------------ The FINOVA Group Inc. (NYSE: FNV) announced that the U.S. Bankruptcy Court for the District of Delaware has confirmed its Joint Plan of Reorganization. In connection with the Plan, Berkadia LLC, an entity jointly owned by Berkshire Hathaway Inc. and Leucadia National Corporation, has committed to lend $6 billion to FINOVA Capital Corporation. The proceeds of the loan, together with cash on hand, will be used to make cash payments to creditors in accordance with the Plan. In addition, through the issuance of common shares, Berkadia will receive a 50% ownership interest in FINOVA. The Court confirmation is expected to result in consummation of the Berkadia loan and other features of the Plan prior to the August 31, 2001 expiration of the Berkadia commitment. The FINOVA Group Inc., through its principal operating subsidiary, FINOVA Capital Corporation, is a financial services company. FINOVA is headquartered in Scottsdale, Arizona. For more information, visit the company's website at http://www.finova.com FOCAL COMM.: Fitch Cuts And Puts Ratings On Watch Negative ---------------------------------------------------------- Fitch downgraded Focal Communications' senior secured rating to 'B' from 'B+' and senior unsecured rating to 'CCC+' from 'B' and has assigned a Rating Watch Negative. The Negative Rating Watch will be resolved when the company closes the transactions surrounding its recently announced recapitalization, meeting the necessary requirements to receive the $100 million secured convertible note and $50 million convertible preferred stock from existing private equity investors. Focal is required to convert 50% of its debt into equity and obtain waivers from its banks to increase the amount of secured debt outstanding. The secured debt will replace the amount available under its current bank facility and will be senior to the unsecured bondholders but subordinate to the bank creditors. Thus far, the company has received strong indications from bondholders owning $280 million of notes that they would agree to the conversion. If the company does not close on these transactions, the ratings will likely fall to a single-C level to reflect the high probability of bankruptcy. The current ratings incorporate a successful execution of the recently announced restructuring plan. The downgrade reflects the approximate one-year delay in the improvement in its credit protection measures, pro forma its restructuring announcement and the increased debt and SG&A expenses associated with the launch of its new markets and data services. The company will reach Fitch's 2001 EBITDA target in the latter part of 2002. The successful execution of this financing should fill Focal's funding gap, strengthening its currently weak position within its rating category and allow Fitch to affirm the ratings. Upon the initial assignment of the rating, Fitch had expected Focal's senior secured debt as a percentage of total debt to remain less than 20%. The inability of the company to access the public and private equity markets has caused Focal to increase its reliance on secured debt. The increased secured debt coupled with the current vastly lower asset recovery values in the telecommunications sector warrants a two notch differential between Focal's senior secured and unsecured ratings. Since the initial rating was assigned, recovery values have fallen dramatically. Focal is the only competitive local exchange carrier (CLEC) that solely targets large business customers, generating robust revenue per salesperson and below average monthly churn. In addition, Focal has successfully managed to decrease its exposure to reciprocal compensation, increasing its corporate and value-added reseller (VAR) customer base. As of June 30, 2001, 50% of its lines were sold to Internet Service Providers (ISP) compared to approximately 70% in 2000. Fitch expects Focal's telecom customer revenue to account for approximately 70% of its future revenue growth. The company states that it only needs to acquire an approximate 1% market share to breakeven in a market. This reality exhibits the inherent advantage that the CLECs have since the local exchange market is so large, and growing with the demand of data products. FURRS SUPERMARKET: Fleming Opts Not to Acquire Four More Stores --------------------------------------------------------------- Steve Mortensen, President and COO of Furrs Supermarkets, announced that four additional Furrs Supermarkets locations will be not be acquired as part of Furrs' purchase agreement with Fleming Companies, Inc. The following stores are scheduled to be closed on Aug. 17, 2001: So:Lo, 4001 East Main Street, Farmington, N.M. Furrs, 2513 North Main, Roswell, N.M. Furrs, 4340 West Illinois/Midland Dr., Midland, TX Furrs, 1590 George Dieter/Vista del Sol, El Paso, TX Under the collective bargaining agreement, Furrs employees will be offered the option of relocation to another store where available -- based on seniority -- or a severance package. "We were unable to find buyers for these additional store locations," Mortensen said. "We understand and regret that these necessary closures are difficult for our employees, and the communities we serve. "Our employees have shown tremendous professionalism during these tough times," he added. On June 29, the U.S. Bankruptcy Court approved the purchase by Fleming of 66 Furrs Supermarkets locations in New Mexico and West Texas. Under the agreement, Fleming could choose not to acquire up to 27 stores from the final transaction. The purchase price of $57 million included all real estate, equipment leases, contracts and licenses. Furrs inventory was also purchased for an additional $50 million. ICG COMM.: Asks Court To Extend Exclusive Period To December 10 --------------------------------------------------------------- ICG Communications, Inc. asks Judge Walsh for a second extension of the time within which they have the exclusive right to file a plan and solicit acceptances of that plan. It is impossible, ICG says, for the Debtors or any other party-in-interest to propose a confirmable plan at this early stage of the chapter 11 process. Specifically, the Debtors ask that their exclusive period during which to propose and file a plan of reorganization be extended through and including December 10, 2001, and that they be granted concomitant extension of their exclusive solicitation period through February 8, 2002. David S. Kurtz, Esq., at Skadden, Arps, Slate, Meagher & Flom, argues that the exclusive periods are intended to afford chapter 11 debtors full and fair opportunities to rehabilitate their businesses and to negotiate and propose a reorganization plan without the deterioration and disruption of their business that might be caused by the filing of competing plans of reorganization by nondebtor parties. Although ICG has made significant progress toward rehabilitation since the Petition Date, given the complexity of their cases, the Debtors seek a further, four-month extension of their exclusive periods to afford them additional time to formulate, negotiate, and file a plan and solicit acceptances of that plan. The Debtors point out that they are one of the largest telecommunications companies in the United States, and were one of the largest cases filed in 2000. As of year-end 1999, the Debtors had over 10,000 business customers and approximately 550 internet service providers. Clearly the sheer size of the Debtors' cases and concomitant difficulty in finalizing a going- forward business plan and negotiating a reorganization plan constitutes cause to further extend the exclusivity periods. A four-month extension is described as a "modest" request under the circumstances. The Debtors assure Judge Walsh they have begun negotiating a plan with the Committees and are hopeful that a plan will be completed within the requested additional time. In that context, the Debtors have recently completed a thorough analysis of complex intercompany claims and issues, and have provided this analysis to the Committees. Reaching consensus on these issues is described as key to any plan in these cases that can be consensual. The Committees' review of these issues is ongoing. In addition, the Debtors have largely completed their long-term business plan and have shared that with the Committees. The Debtors tell Judge Walsh they are currently engaged in attempting to secure exit financing to fund their long-term business plan. Successful completion of these efforts, together with a resolution of the intercompany claims noted above, will enable the Debtors to proceed to draft, file and prosecute a reorganization plan, and emerge from chapter 11. Since the Petition Date, the Debtors have labored tirelessly to work with and assure their vendors and customers, among others, that the Debtors fully intend to meet their ongoing business commitments during these cases. Similarly, the Debtors have gone to great lengths to cooperate with their various creditor constituencies in efforts to maximize the value of the estates for the benefit of creditors. A further extension of these exclusivity periods will facilitate these efforts by affording the Debtors time needed to formulate and finalize a plan that fairly and efficiently treats the claims of the estates' creditors and provides for the greatest possible distributions of value on account of those claims. In contrast, termination of the exclusivity periods and the uncertainty that would result from the prospect of competing reorganization plans undoubtedly would result in lesser values available for distribution to creditors. Finally, the requested extensions will not prejudice the interests of any creditors; the Debtors have timely met, and continue to timely meet, their postpetition obligations in these cases. This fact, alone, strongly militates in favor of the Court's granting the requested extension. (ICG Communications Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) GRAHAM-FIELD: Seeks Court Approval for Bay Shore Property Sale -------------------------------------------------------------- Graham-Field Health Products, Inc. seek approval of procedures for the sale of real property located at 81 Spence Street in Bay Shore, New York, scheduling an auction and a further hearing to approve the sale. Earlier this year the debtors relocated their corporate headquarters at the Bay Shore Facility to their existing facility in Atlanta, Georgia. The debtors employed Keen Realty, LLC as their exclusive real estate broker for the sale. As a result of Keen's efforts, the debtors received five written offers to purchase the Bay Shore Facility. The Debtors determined that the offer for $4.85 million by Duro Dyne Spence LLC was the highest and best offer. The bid is subject to higher and better bids, which must6 be received by the Bid Deadline of 4:00 PM, September 14, 2001. Each initial competing bid must provide for aggregate gross consideration having a value equal to the purchase price as set forth in the Duro Dyne Purchase Agreement plus $145,500. Successive competing bids shall be in increments of aggregate gross consideration to the seller of no less than $25,000 in each successive round of bidding. The debtors seek court approval for a sale approval hearing on September 21, 2001. The debtors also seek court approval of payment of a break-up fee to Duro Dyne in the amount of $120,000 if a competing bid is approved or the purchase agreement is terminated pursuant to certain conditions. Counsel to the debtors are Janet Weiss, Gibson, Dunn & Crutcher LLP, New York, NY and Pauline Morgan, Young Conaway Stargatt & Taylor LLP, Wilmington, DE. INTERACTIVE NETWORK: Perkins Capital Reports 16.9% Equity Stake --------------------------------------------------------------- Investment adviser Perkins Capital Management has reported beneficial ownership of an aggregate of 7,269,000 shares of the common stock of Interactive Network, Inc., representing 16.9% of the outstanding common stock of that Company. Perkins Capital has sole voting power over 2,344,500 of the shares and sole dispositive power over the aggregate 7,269,000 shares. (This includes 2,648,000 common equivalents, 2,985,000 warrants exercisable within 60 days and 800,000 shares convertible as 1 for 2 (or 1,600,000) of a Convertible Note). INTERVISUAL BOOKS: Nasdaq Delists Shares ---------------------------------------- Intervisual Books, Inc. (IBI) (NASDAQ: IVBK) received notification from Nasdaq that its common stock would be delisted from the Nasdaq SmallCap Market effective with the opening of business on Aug. 13, 2001. IBI expects that its common stock will be immediately eligible to trade on the NASD-regulated OTC Bulletin Board. IBI is evaluating its options and is considering an appeal of this decision. ISTAR FINANCIAL: Fitch Rates Senior Unsecured Notes At BB+ ---------------------------------------------------------- Fitch assigns its 'BB+' rating to iStar Financial Inc.'s (SFI) $350 million issuance of 8.75% senior unsecured notes maturing in July. The Rating Outlook is Positive. The ratings and Outlooks reflect the company's sound operating performance over the last 18 months, continued prudence in managing interest rate and refinance risks, the benefits afforded SFI through TriNet's still largely unencumbered portfolio of Credit Tenant Lease assets and extending lease maturities (8.4 years vs. 5.6 years at Dec. 31, 1999). In addition, Fitch believes management's willingness to pursue an unsecured debt offering at SFI despite access to less expensive sources of secured funding is consistent with its desire to further improve the capital structure, and achieve investment grade status. These rating positives are weighed against challenges which include an asset base that remains largely untested through an adverse economic cycle, an appetite for relatively large exposures, ability to further the capital structure toward a better balance between secured and unsecured sources of capital, significance of preferred stock in the capital structure (28% as of June 30, 2001), ability to manage the pressures of public ownership over a meaningful period, and willingness to maintain acceptable levels of unencumbered asset and debt service coverage at the subsidiary and consolidated level. Should the company's operating performance suffer or progress on the evolution of its capital structure stall, there could be pressure to further distinguish between the company's preferred stock rating, given its significance in the capital structure, and SFI's senior unsecured securities. Headquartered in New York City, SFI provides structured financing to private and corporate owners of high quality real estate nationwide. As of June 30, 2001 Loans and other lending investments totaled $2.3 billion and real estate subject to operating leases totaled $1.6 billion. LOEHMANN'S HOLDINGS: Stockholders' Meeting Set For September 21 --------------------------------------------------------------- The Annual Meeting of the Stockholders of Loehmann's Holdings, Inc., a Delaware corporation, will be held at the offices of the Company at 09:00 a.m., September 21, 2001 to consider and vote on the following matters: (1) The election of seven (7) directors to serve on the Company's Board of Directors until the next annual meeting of stockholders and until the election and qualification of their respective successors; (2) The amendment of the Company's Amended and Restated Certificate of Incorporation to authorize the issuance of Preferred Stock. (3) The adoption of the Company's 2001 Stock Option Plan. (4) The ratification of the appointment of Ernst & Young LLP as the Company's independent accountants for the fiscal year ending February 2, 2002; (5) The transaction of such other business as may properly come before the meeting or any adjournments thereof. Only stockholders of record on the close of business on August 20, 2001 are entitled to notice of and to vote at the Annual Meeting or any adjournments or postponements thereof. LOEWEN GROUP: Wants Wachovia Bank to Return Collateral ------------------------------------------------------ Prior to the petition date, Wachovia Bank, N.A. issued on behalf of Loewen Group Acquisition Corp. (LGAC) six letters of credit in the aggregate maximum face amount of $4,750,000. At the time that certain of the Letters of Credit were originally issued, LGAC and Wachovia entered into a Collateral Assignment of Deposit dated as of June 13, 1997 to secure LGAC's obligations to Wachovia in respect of the Letters of Credit. Pursuant to the Collateral Assignment, LGAC pledged to Wachovia, as security for LGAC's reimbursement obligations to Wachovia in respect of the Letters of Credit: (a) funds in the amount of $450,000 to be deposited in a deposit account maintained at Wachovia in the name of LGAC (the Collateral Account); (b) any additional funds deposited in the Collateral Account; (c) all interest, if any, earned on the funds deposited in the Collateral Account. The Collateral Assignment also contemplated the deposit of additional amounts in the Collateral Account and the pledge by LGAC of such additional deposits, plus interest, if any, earned thereon. Following the initial deposit of $450,000, LGAC requested that Wachovia issue additional Letters of Credit, and LGAC made additional corresponding deposits into the Collateral Account. After the petition date, the parties sought and obtained the Court's approval of a Stipulation and Agreed Order, dated December 28, 1999, which provides for the modification of the automatic stay to permit Wachovia to utilize the Collateral to satisfy LGAC's obligations under the Letters of Credit and to retain the unapplied portions of the Collateral. The Stipulation and Agreed Order also contains provisions for LGAC to seek the return of that portion of the Collateral that is allocated to the Undrawn Letters of Credit that have expired. As of the date of the Stipulation and Agreed Order, Wachovia had honored draws made by the beneficiaries under the four Letters of Credit numbered LC870-087399, LC870-087542, LC870-093079 and LC87O-093652. Wachovia had not honored draws on the two Letters of Credit numbered LC870-088639 and LC870-091239. The Debtors have been advised that each of the Letters of Credit, including the Undrawn Letters of Credit, has expired without any further draws, and Wachovia thus has no further liability or obligations. Accordingly, the Debtors want the return of the Collateral pursuant to the Stipulation and Agreed Order, which states, in paragraph (f) as follows: "If LGAC believes that Wachovia has no further liability and obligations under a specific Undrawn Letter of Credit because such Letter of Credit has expired without having been drawn, then LGAC may make a written request to Wachovia for the return to LGAC of that portion of the Collateral that is allocated to such Letter of Credit ... If Wachovia agrees, in its sole and absolute discretion, that Wachovia has no further liability and obligations under that specific Undrawn Letter of Credit, then Wachovia is required to return to LGAC that portion of the Collateral that is allocated to such Letter of Credit not later than 10 business days after delivery of LGAC's written request. If, within 10 business days after delivery of LGAC's written request, Wachovia has not returned the allocated portion of the Collateral as requested, then LGAC may file a motion requesting the entry of an order (an "Expiry Order") determining that: (i) such Letter of Credit has expired; and (ii) Wachovia has no further liability or obligation under the Undrawn Letter of Credit in question and directing Wachovia to return the allocated portion of the Collateral to LGAC. If an Expiry Order is entered, then within five business days after the date on which such Expiry Order becomes a final and nonappealable order, Wachovia shall return to LGAC the Collateral that is allocated to the Letter of Credit that is the subject of the Expiry Order. In no event shall LGAC or any other Debtor seek entry of an order directing Wachovia to return any greater portion of the Collateral than is allocated to the Undrawn Letter of Credit in question, less any Step Down Amounts already returned by Wachovia to LGAC." In April 2001, the Debtors indicated to Wachovia that the Undrawn Letters of Credit had expired and requested that Wachovia return the Collateral then remaining in the Collateral Account, in the amount of $2,145,187.83. Wachovia responded by indicating that it would remit $465,187.83 of the Collateral upon receipt of wiring instructions and return the remaining balance of $1,680,000.00 upon the Debtors obtaining an order of the Court stating that stating that Wachovia has no further obligations with respect to the Letters of Credit. The $465,187.83 portion of the Collateral has since been remitted to the Debtors. Wachovia continues to hold the remaining balance of $1,680,000.00 in the Collateral Account, together with any interest or income earned on those funds (collectively, the "Remaining Collateral"). On June 29, 2001, counsel to the Debtors sent a letter to counsel to Wachovia requesting that Wachovia return to LGAC all of the Collateral not previously returned and advising counsel that, if Wachovia failed to return the Remaining Collateral within 10 business days, LGAC intended to file a motion with the Court with respect to the Remaining Collateral. On July 10, 2001, counsel to Wachovia sent to counsel to the Debtors a responsive letter declining to return any of the Collateral held by it until the Debtors obtain an order of the Court relieving Wachovia of liability under the Letters of Credit. Accordingly, LGAC moves the Court for the entry of an order: (i) determining that certain letters of credit issued by Wachovia Bank, N.A. have expired and that Wachovia has no further liability or obligations under those letters of credit; (ii) directing Wachovia to return to LGAC any remaining collateral securing LGAC's reimbursement obligations in respect of the letters of credit; and (iii) deeming proof of claim number 4323 filed by Wachovia on December 13, 1999 with respect to such reimbursement obligations, withdrawn with prejudice. (Loewen Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 609/392-0900) LOEWEN GROUP: Reports Second Quarter 2001 Operating Results ----------------------------------------------------------- The Loewen Group Inc. announced its results for the second quarter ended June 30, 2001. Second quarter revenues were $204.2 million, down $14.7 million from the prior year, reflecting primarily the reduction of 280 locations due to the Company's ongoing disposition program. Earnings from operations were $17.3 million in 2001, compared to $23.5 million last year, before impairment provisions of $139.4 million and $92.0 million, respectively. The net loss for the second quarter was $116.7 million, compared to net loss of $76.3 million in 2000. The Company's cash position increased during the quarter by $24.7 million to $220.4 million at the end of the second quarter. Funerals performed on a same store basis in the second quarter were up 0.8 percent over the prior year comparable period. This showed substantial improvement from the first quarter 2001, in which calls had declined 3.7 percent compared to the prior year. For the six months ended June 30, 2001, funerals performed on a same store basis declined 1.6 percent compared to the prior year comparable period. On a same store basis, the total average revenue per funeral service in the second quarter was 2.5 percent ahead of the prior year comparable period, and this brought the year-to-date performance to be 1.0 percent ahead of the prior year. Cemetery volume in the second quarter, both at-need and pre- need, continued below last year's levels, due to the impacts of dispositions and the change in commission structure in the second quarter of 2000. The Company's efforts to rebuild its cemetery sales force have been slower than planned and have also contributed to the sales declines versus prior years. Paul A. Houston, President and CEO, commenting on the Company's operations, stated: "Performance in the funeral side of the business was encouraging in the second quarter. Despite the continuing distraction of the reorganization process, same store call volumes and average call revenue both improved over the first quarter. On the cemetery side of the business, I am disappointed at the pace of the rebuilding process of our cemetery revenues and this continues to be a key ongoing focus." Disposition Program The Company's program to divest non-strategic assets continues to proceed at a satisfactory pace. During the quarter ended June 30, 2001, the Company sold 45 properties and received sales proceeds of approximately $23 million. Since the inception of the disposition program, transactions involving approximately 350 properties and approximately $136 million in sales proceeds have been either completed, approved by the Bankruptcy Court or have been signed and submitted for approval. In addition, on August 1, 2001, the Company entered into a contract to sell all of its interests in relation to 29 cemeteries in the state of Michigan. If this transaction is consummated, consideration to the Company will include, among other things, a payment of $23.4 million. Closing of the Michigan cemetery transaction is subject to a number of conditions, including U.S. Bankruptcy Court approval. Reorganization Progress As earlier reported, the U.S. Bankruptcy Court has scheduled, for August 16, 2001, a hearing on the adequacy of the Disclosure Statement related to the Company's Third Amended Plan of Reorganization, as it may be amended prior to that date. At that hearing, the Company will ask the Court to approve the Disclosure Statement and permit the Company to submit the Plan to a vote of creditors. A number of creditors have filed objections to the Disclosure Statement and the Company's proposed voting procedures. Some of those objections are technical in nature; others appear to reflect disagreement with the treatment of certain classes of claims under the Plan. The Company also anticipates substantial creditor support for the Plan and Disclosure Statement. The positions of the various creditor groups, along with the Company's responses, will be considered at the August 16th hearing. The Court has also tentatively set a hearing for November 27-29, 2001, to consider confirmation of the Plan, subject to the Plan's going to a vote of the creditors promptly following the August 16th hearing and receiving the required favorable vote. The Company anticipates that, prior to the August 16th hearing, it will be filing a further amendment to the Plan and Disclosure Statement incorporating, among other things, updated financial data, the results of further negotiations with key creditor groups concerning the terms of the debt to be distributed to secured creditors under the Plan and other matters, and further claims resolution activities. John S. Lacey, Chairman of the Board, commented: "While the reorganization process is taking longer than we would like, we continue to use the time productively to strengthen our corporate structure, clean up our balance sheet and complete our asset dispositions. Looking ahead, we are encouraged by the Disclosure Statement hearing on August 16th, and the Court setting aside November 27-29 for a potential confirmation hearing. While we anticipate that there will be those objecting to our Plan on the 16th for the purposes of advancing their particular agendas, we have, however, had comprehensive discussions with the secured creditors, the Official Unsecured Creditors' Committee and the Blackstone Group, regarding the structure and conditions of the distribution to creditors included in the planned amended Disclosure Statement. It is my understanding that we will receive the necessary support from these groups, if the Court allows us to take the Plan as presently filed to a vote after August 16th." Basis of Presentation The Company's attached interim consolidated statements of operations and deficit, balance sheets and statements of cash flow have been prepared on a "going concern" basis in accordance with Canadian generally accepted accounting principles. The going concern basis of presentation assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. As a result of the creditor protection proceedings and circumstances relating to this event, including the Company's debt structure, recent losses, cash flow and restrictions thereon, such realization of assets and discharge of liabilities are subject to significant uncertainty. The interim consolidated financial statements do not reflect adjustments that would be necessary if the going concern basis was not appropriate. If the going concern basis was not appropriate for these interim consolidated financial statements, then significant adjustments would be necessary in the carrying value of assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used. Additionally, the amounts reported could materially change as part of a plan of reorganization, since the reported amounts in these interim consolidated financial statements do not give effect to all adjustments to the carrying value of the underlying assets or amounts of liabilities that may ultimately result. The appropriateness of the going concern basis is dependent upon, among other things, confirmation of a plan of reorganization, future profitable operations, and the ability to generate sufficient cash from operations and other financing arrangements to meet obligations. The U.S. Securities and Exchange Commission's Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"), was required to be implemented for U.S. generally accepted accounting principles in the fourth quarter of 2000, with effect from January 1, 2000. For U.S. generally accepted accounting principles, the Company has implemented SAB 101, on a prospective basis, for pre-need sales contracts consummated on or after January 1, 2001, but has not yet recognized the cumulative effect of the adoption of SAB 101 for pre-need sales contracts consummated prior to January 1, 2001, as a result of the Company's ongoing reorganization proceedings. Based in Toronto, The Loewen Group Inc. currently owns or operates approximately 950 funeral homes and 325 cemeteries across the United States, Canada, and the United Kingdom. The Company employs approximately 11,000 people and derives approximately 90 percent of its revenue from its U.S. operations. Discussion Of Operating Results Three Months Ended June 30, 2001 Funeral home revenues were $130.8 million, a decrease of 6.2 percent from $139.5 million in the second quarter of 2000. On a same store basis, the number of funerals performed was up 0.8 percent compared with the second quarter of 2000. The Company experienced same store average revenue per funeral service during the quarter that was 2.5 percent higher than that of 2000. Overall funeral home operating margin in the second quarter of 2001 was 25.6 percent compared with 27.7 percent in the same quarter in 2000, reflecting, the Company believes, the effects of lower revenues, partially due to dispositions in the fourth quarter 2000 and first and second quarters of 2001, and less than proportional location cost reductions. The Company performed approximately 35,000 funeral services during the second quarter of 2001, compared to 37,400 in the same period a year earlier. Second quarter cemetery revenues were down 14.8 percent to $47.0 million, compared with $55.1 million in the same quarter in 2000. This continues to reflect changes to the Company's commission structure and pre-need sales, as well as the impacts of dispositions in the fourth quarter 2000 and first and second quarters of 2001. Cemetery operating margin was $8.3 million for the quarter compared with $12.7 million for the same period last year. Cash flow was $2.9 million for the quarter, compared to $17.0 million for the same period last year. General and administrative expenses were reduced by $1.1 million, or 6.2 percent, in the second quarter of 2001, from the same period in 2000, as part of a continuing program to operate more efficiently. An asset impairment provision of $139.4 million was recorded during the quarter, of which $131.2 million related to an agreement reached to sell a group of 29 cemeteries in the state of Michigan, which were not included in the previously-announced program to dispose of locations that are considered non- strategic assets. The remaining impairment provision of $8.2 million resulted from eight additional properties not included in the locations previously identified for disposal, as well as adjustments to estimated proceeds for existing properties held for sale. The Company incurred $10.3 million in reorganization costs during the quarter arising from expenses related to the June 1, 1999 filings under Chapter 11 of the U.S. Bankruptcy Code and under the Canadian Companies' Creditors Arrangement Act. Six Months Ended June 30, 2001 Funeral home revenues were $274.5 million, a decrease of 8.7 percent from $300.6 million in 2000. On a same store basis, the number of funerals performed was down 1.6 percent compared with 2000. The Company experienced same store average revenue per funeral service during 2001 that was 1.0 percent higher than that of 2000. Overall funeral home operating margin in 2001 was 27.1 percent compared with 31.1 percent in 2000, reflecting, the Company believes, the effects of lower revenues, partially due to dispositions in the fourth quarter 2000 and first and second quarters of 2001, and less than proportional location cost reductions. The Company performed approximately 74,300 funeral services during 2001, compared to 80,900 in the same period a year earlier. Cemetery revenues were down 25.4 percent to $94.3 million, compared with $126.4 million in 2000. This continues to reflect changes to the Company's commission structure and pre-need sales, as well as the impacts of dispositions in the fourth quarter 2000 and first and second quarters of 2001. Cemetery operating margin was $17.7 million in 2001, compared with $32.3 million for the same period last year. Cash flow was $13.1 million in 2001, compared to $33.9 million for the same period last year. General and administrative expenses were reduced by $3.3 million, or 9.1 percent, in 2001, from the same period in 2000, as part of a continuing program to operate more efficiently. An asset impairment provision of $157.3 million was recorded during 2001, of which approximately $143.0 million resulted from two groups of properties that were not included in the previously-announced program to dispose of locations that are considered non-strategic assets. Of these, $131.2 million related to an agreement to sell a group of 29 cemeteries in the state of Michigan. The remaining impairment provision resulted from several additional properties not included in the locations previously identified for disposal, as well as adjustments to estimated proceeds for existing properties held for sale. The Company incurred $20.1 million in reorganization costs arising from expenses related to the June 1, 1999 filings under Chapter 11 of the U.S. Bankruptcy Code and under the Canadian Companies' Creditors Arrangement Act. LTV CORP.: Copperweld Promotes 3 Heads For Tubular Product Group ---------------------------------------------------------------- LTV Copperweld announced the promotion of three executives to head the principal units of its Tubular Products Group. The promotions highlight a revised organizational structure designed to better enable the group's individual businesses to achieve their specific growth and improvement initiatives. The three units are the Mechanical Group, headed by David M. Coppock; the U.S. Structural Group, David W. Seeger; and the Canadian Tubular Group, David F. Thomas. All of the executives hold the title of Vice President and General Manager and report to David S. Mitch, Executive Vice President, Tubular Products Group. In their new positions, they will be responsible for both the operations and marketing activities of their groups. Mr. Coppock has 25 years of experience in the tube industry, the last 12 with LTV Copperweld and a predecessor. Most recently he held operational responsibility for the Mechanical Group as a Senior Vice President. He holds a BA degree in economics from Penn State University and an MA degree in psychology from West Georgia University. Mr. Seeger has 13 years of managerial experience in the tube industry, the last eight with LTV Copperweld and a predecessor. He holds a Bachelor's degree from Michigan State University and an MBA from Loyola University. His most recent position was Vice President Operations, Structural Tubing USA. Mr. Thomas has been with LTV Copperweld and its predecessors since 1980. Most recently he served as Vice President Operations of the Canadian Structural Group. He holds a diploma in industrial engineering and a Bachelor of Technology Degree from Ryerson Polytechnic University. LTV Copperweld is the largest producer of steel tubular products in North America, with 19 manufacturing plants in the United States and Canada. It is also the world's largest manufacturer of bimetallic wire products at three plants in the U.S. and the United Kingdom. A unit of LTV Corporation, LTV Copperweld is headquartered in Pittsburgh and employs 3,600 people. MARINER: Moves To Ratify NHP Lease Portfolio Settlement ------------------------------------------------------- After over a year's negotiations, Mariner Post-Acute Network, Inc. reached agreements with Nationwide Health Properties, Inc. and NH Texas Properties Limited Partnership (collectively, NHP) to restructure the NHP Lease Portfolio. Pursuant to the Agreements, the Debtors will (a) reject Leases pertaining to 11 Facilities in Texas and transition operations of the Rejected Facilities, (b) assume 2 Leases pertaining to real property in Illinois and 2 Leases relating to real property in California, as modified by the Master Addendum, (c) assume and assign the Gilroy Sublease regarding real property in California, and (d) settle certain related claims and matters. Accordingly, Debtors Mariner Post-Acute Network, Inc. ("MPAN"), Living Centers of Texas, Inc., GranCare, Inc., GCI Palm Court, Inc. and Evergreen HealthCare Ltd, L.P. move the Court for an order: (1) approving the "Settlement Agreement Re NHP Lease Portfolio" by and among the Debtors, Nationwide Health Properties, Inc., and NH Texas Properties Limited Partnership (NHP), including (a) approving LCT's transition of operations at each of the Rejected Facilities, on terms and conditions that are not materially different from those set forth in the proposed form of "Operations Transfer Agreement" (the OTA) to be entered into by and among NHP Texas, its replacement operators, and LCT with respect to each of the Rejected Facilities; (Separate operations transfer agreements will be entered into with each of the eleven new operators of the Rejected Facilities. Therefore, LCT requests authority to enter into an operations transfer agreement as to each of the Rejected Facilities which will provide for a transition on terms substantially identical to those contained in the OTA. The terms of the OTA are substantially similar to those that have been previously approved by the Court in the MPAN.) (b) approving the Debtors' entry into the "Revised and Restated Master Addendum to Leases," by and among Nationwide, as lessor, and GranCare, GCI, and Evergreen, as tenants, under the facility leases being assumed, (c) approving MPAN's entry into the "Guaranty of Leases" in favor of Nationwide relating to the Assumed Leases, (2) authorizing the assumption and assignment of the Medicare provider agreements between LCT and the Health Care Financing Administration ("HCFA") relating to the Rejected Facilities; (3) authorizing the assumption and assignment of the Gilroy sublease agreement, and (4) granting related relief. In the exercise of their business judgment, the Debtors determined that the comprehensive restructuring of the NHP Lease Portfolio as requested provides them with the best course of action with respect to each of the NHP Leases and the NHP Lease Portfolio as a whole. Complicating the Debtors determination were NHP's contentions that (1) the NHP Leases had been terminated prepetition, (2) the single lease structure of the Texas Lease prevented LCT from picking and choosing for purposes of assumption and rejection among the Facilities subject to the Texas Lease, and (3) the existence of cross-default provisions in most of the NHP Leases limited the Debtors' ability to reject certain of the NHP Leases while assuming others. Among other things, the NHP Settlement enables the Debtors to retain certain of the NHP Leases and divest themselves of others. The Facilities subject to Rejected Texas Leases are: Facility/Location Debtor ----------------- ------ Allenbrook Health Care Living Centers of Texas, Inc. Center/Baytown, Texas Green Acres Convalescent Living Centers of Texas, Inc. Center/Baytown, Texas Green Acres Convalescent Living Centers of Texas, Inc. Center/Center, Texas Green Acres Convalescent Living Centers of Texas, Inc. Center/Humble, Texas Green Acres Convalescent Living Centers of Texas, Inc. Center/Huntsville, Texas Heritage House/ Living Centers of Texas, Inc. Eagle Lake, Texas Castle Manor/ Living Centers of Texas, Inc. Garland, Texas Beechnut Manor/ Living Centers of Texas, Inc. Houston, Texas Oak Manor/ Living Centers of Texas, Inc. Nacogdoches, Texas Broadway Lodge/ Living Centers of Texas, Inc. San Antonio, Texas San Antonio Convalescent Living Centers of Texas, Inc. Center/San Antonio, TX The Texas Lease, between LCT and NHP, arose on September 27, 1990 and have a remaining term through September 30, 2004. The following leases/sublease will be assumed: (1) the California Driftwood Lease relating to real property commonly known as Driftwood Manor-Hayward, Driftwood Manor- San Jose (Almaden Health and Rehabilitation Center), Driftwood-Gilroy (the Gilroy Facility), and Driftwood Manor- Santa Cruz. (2) the California Monterey Palms Lease relating to real property commonly known as the Monterey Palms Healthcare Center (3) the Illinois LaSalle Lease relating to the real property commonly known as the LaSalle Healthcare Center (4) the Illinois Litchfield Lease relating to the real property commonly known as the Litchfield Healthcare Center The California Driftwood Lease, beteeen GranCare and NHP, has a remaining term through June 1, 2006. GCI and GranCare, as successor tenants and NHP, as successor lessor, were parties to the California Monterey Palms Lease, dated April 20, 1994 and has a remaining term through June 1, 2006. The Illinois Leases, between Evergreen and NHP, commenced on May 1, 1989 and have a remaining term through June 1, 2006. The Debtors draw Judge Walrath's attention to benefits that can be derived from the proposed transaction including: (a) Rejection of the eleven leases pertaining to 11 Facilities that are underperforming and are a continuing drain on the Debtors' resources; (b) An orderly transition of operations or closure of each of the Rejected Facilities - the Debtors will continue operating the Rejected Facilities until they can be transitioned within a reasonable time period to a replacement operator, with the provision that, after August 1, 2001, LCT's administrative monthly rental obligations for each of the Rejected Leases will be eliminated, and instead, NHP Texas will pay LCT a 5% monthly management fee for operation of each Rejected Facility, and will reimburse LCT for any Net Operating Losses while any Net Operating Profits will be turned over to NHP Texas; (c) The assumption of the Assumed Leases despite cross-default provisions and claims of prepetition termination; (d) A settlement of NHP's claims relating to the rejection of the Rejected Leases, including limiting NHP Texas' draw under a $1,365,000 letter of credit to $682,500; (e) The settlement of claims arising from the assumption of the Assumed Leases; (f) Upon the assumption and assignment of the Gilroy Sublease to NHP, the release of all of the Debtors' obligations related to it and the assurance of future performance because the sublessee will be the Master Lessor (NHP) that is in as good a position as the sublessor to perform the sublessor's obligations under the Gilroy Sublease; (g) The general release, other than as set forth in Agreements, of all claims of NHP against the Debtors; (h) The right of the Debtors, at any time prior to the confirmation or pursuant to a plan of reorganization and subject to the approval of the Court, to assign their interests in the Assumed Leases in compliance with section 365 of the Code; To realize these benefits, the Debtors must: (a) Generally release all their claims against NHP, other than as set forth in the Agreements; (b) satisfy certain claims that are otherwise due or are subject to reasonable compromise relating to the Rejected and Assumed Leases; (c) pay (i) unpaid administrative rent from the Petition Date through July 31, 2001; and (ii) unpaid real property taxes incurred from the Petition Date to July 31, 2001; (d) transfer the personal property affiliated with a Rejected Facility, free and clear of liens of and (e) Have MPAN guarantee the obligations of the Debtors' under the assumed Leases; (f) Let NHP retain the security deposits relating to such Rejected Leases and the right to draw $682,50O under the letter of credit posted by MPAN and LCT with NHP Texas to guarantee their performance under the Texas Lease; (g) Assume and assign each of the Medicare Provider Agreements related to the Rejected Facilities to the Replacement Operator, at a cost in excess of offsets which will be $50,000 per Rejected Facility as to each Medicare Provider Agreement assumed and assigned. The OTA As mentioned above, the terms of the OTA are substantially similar to those that have been previously approved by the Court. Specifically, the OTA in this motion provides for: -- the employment by the Replacement Operator of all or virtually all of LCT's employees at a Rejected Facility as of the Closing Date, thereby avoiding any WARN Act and severance claims which might otherwise be asserted if a Rejected Facility were to cease operations. -- the payment by LCT of all of the wages due and all amounts owing for earned vacation pay as of the Closing Date; -- the reconciliation of future amounts received from the collection of accounts receivable; -- the transfer of patient records and financial data. LCT will assume and assign the Medicare Provider Agreement and provider number applicable to each of the Rejected Facilities only after the relevant Replacement Operator obtains HCFA approval of the change of ownership. Notwithstanding the assumption and assignment of the Medicare Provider Agreements, any claim of Medicare, the applicable fiscal intermediary, the Department of Health and Human Services (HHS) or any other party against the Debtors under the Medicare Provider Agreements arising prior to the petition date will continue to be treated as prepetition claims as if such Medicare Provider Agreements had been rejected so that such claims will not be treated as administrative claims, and will not be offset against the Debtors' claims arising after the petition date. However, HCFA will be allowed to offset such claims against any prepetition underpayment claim of the Debtors against Medicare, even if the claim and debt are not mutual. To the extent HCFA's claim is not satisfied in full via offset, the United States will have an administrative expense claim pursuant to 11 U.S.C. section 507(b) and such claim will be capped at $50,000 with respect to each of the Rejected Facilities. The Replacement Operator will have no successor liability for any claim against, any Debtor or any of their affiliates under the Medicare Provider Agreements arising prior to the effective date of the assignment, but will succeed to the quality of care history of the Rejected Facilities, except that the assignee will not be liable to pay any civil monetary penalty accruing prior to the Closing Date. Revised and Restated Master Addendum to Assumed Leases The Master Addendum will generally amend the rights and responsibilities of the parties to the Assumed Leases, and generally provides for the following: * options to extend the terms of such Assumed Leases beyond the initial terms; * a reduction in rent for the Illinois Litchfield Facility; * rights governing the exercise of purchase options in respect of properties subject to the Assumed Leases; * cross-default between the two California Leases but not to any other leases or obligations, and, likewise, cross-default between the two Illinois Leases but not to any other leases or obligations; * an amendment of the California Driftwood Lease to, among other things, exclude all references to the Gilroy Facility; * an amendment to provide for uniform financial reporting requirements in each of the Assumed Leases; and * the entry of MPAN into the Guaranty in favor of Nationwide. The Debtors submit that all defaults under the Assumed Leases were minor in nature, caused primarily by the timing of payments due in relation to the Petition Date. The Debtors intend to pay all such arrearages, plus penalties and interest where appropriate, pursuant to the terms and conditions of the Settlement Agreement. Further, NHP has agreed that the Debtors have established adequate assurance of future performance as to Assumed Leases, as required by section 365(b)(1)(C). As sublessor under the Gilroy Sublease, the Debtors have no cure obligations associated with their proposed assumption of the Gilroy Sublease. MPAN's Incurrence Of Unsecured Debt In Connection With The Guaranty By entering into the Guaranty in order to provide Nationwide with additional adequate assurance of the Debtors' future performance under the Assumed Leases, MPAN will be incurring unsecured debt pursuant to section 364 of the Bankruptcy Code. Therefore, in addition to seeking authority for MPAN to enter into the Guaranty, the Debtors seek authority for MPAN to incur such debt in accordance with section 364(b) of the Bankruptcy Code. The Debtors represent that the incurrence of such debt is justified by the significant benefits that will flow to the Debtors' estates and creditors from the restructuring of the NHP Lease Portfolio. The Debtors also point out that under the circumstances and because of the Debtors' performance history under the Assumed Leases, there is very little risk associated with MPAN's entry into the Guaranty. As to each of the Rejected Facilities, the Agreements require LCT to transfer, free and clear of all liens, encumbrances, claims, and interests, (a) to NHP Texas tangible personal property; and (b) to Replacement Operator consumables, inventories, and supplies actually used in the operation of the relevant Rejected Facility. LCT believes that the only entities asserting any interests in the assets to be sold are Chase and the "DIP Lenders" and "PrePetition Lenders". The Debtors have obtained the consent of the MPAN Bank Group to the transfer of assets and revised proposed order form caters to this. Objection By NovaCare Holdings, Inc. NovaCare objects to the assumption and assignment of the Medicare Provider Agreements relating to the NHP Lease Portfolio Facilities to the extent that this affects the right that it claims on Prudent Buyer Monies which is the subject of Adversary Proceeding No. 00-1577 (See prior entry [00167]) and to the extent this affects its ability to collect the administrative claim granted to it as adequate protection in relation to Prudent Buyer Monies. (In the same objection, NCH objects to another which provides for the transfer of the Hayward Facility in California.) As previously reported, NovaCare alleges that certain Prudent Buyer Monies owed by HCFA are allegedly not property of the Section 541 Debtor-Defendants' bankruptcy estates. In Adversary Proceeding No. 00-1577, NovaCare is asking the Court to require the Debtors to turn over such Monies to NCH. The Rejected Facilities covered by the NHP Lease Portfolio and the Hayward Facility are not Section 541 Facilities. NCH objects to the transfer of the Rejected Facilities and the Hayward Facility to the extent that any order authorizing such transfer includes the Prudent Buyer Offset Provision, thus authorizing HCFA to offset against monies owed to other facilities without further order of the Bankruptcy Court. NCH is concerned that the granting of such non-mutual offset rights will diminish or eliminate monies owed to other facilities and hence diminish or eliminate the Prudent Buyer Appeal Monies due to the Section 541 Facilities in which NCH has claimed an interest. NCH also objects to the transfer of the Facilities to the extent that any order authorizing such transfer grants to HCFA an administrative claim which will jeopardize the ability of NCH to collect in full the administrative claim previously granted to it as adequate protection in the NCH Stipulation. NCH relates that in previous proposed sale/transfer of facilities by the Debtors, it originally objected to the inclusion of Prudent Buyer Offset Provision but its objection was resolved by the provision of adequate protection to it by the Debtors by way of the NCH Stipulation. The Stipulation, NovaCare relates, Provides the following adequate protection to NCH to the extent that the Prudent Buyer Offset Provision adversely affects the rights of NCH: "In the event that: (a) HHS is permitted to, and actually does, effect an offset of a claim of HHS against a Debtor which is not a Covered Debtor and/or a facility owned by a Debtor which is not a Covered Debtor (collectively, a "Non- Covered Debtor") against a Covered Prudent Buyer Claim; and (b) HHS would not have been permitted or entitled under applicable law to exercise such offset but for the inclusion of a Prudent Buyer Offset Provision in a stipulation or order of the Bankruptcy Court (any such offset being a "Non-Muttial Offset"), then (x) the respective rights, claims and interests of NAHC and the applicable Covered Debtor or Covered Debtors against one another with respect to the Covered Prudent Buyer Claim against which such Non-Mutual Offset was exercised shall be detennined as if the Covered Debtor against which such Non-Mutual Offset was exercised by HHS had received cash in the amount of such Non-Mutual Offset, and such cash had then been immediately placed and maintained in a segregated account; and (y) if and only if a final order is entered determining that NAHC is entitled to a payment of some amount out of the cash that would have then been placed and maintained in such a segregated account, NAHC shall immediately be paid such finally ordered amount from the Debtors' general operating funds and/or accounts (the obligation to immediately pay such finally ordered amount to NAHC being specifically enforceable, and the Debtors specifically agreeing not to argue to the Bankruptcy Court that this payment obligation should in any way or for any reason be delayed for any period of time whatsoever and specifically waiving the right to make any such argument, claim or defense); and, if NAHC is not paid such amount, NAHC shall have an administrative claim equal to the amount that should have been, but was not, paid to NAHC." NCH notes that the Stipulation also provides it with the right to request additional adequate protection if the Prudent Buyer Offset Provision adversely affects the rights of NCH which are not adequately protected by the terms of the NCH Stipulation. NCH also notes that the Stipulation, however, does not bind HCFA to first attempt to satisfy in full its claims either by offsetting against non-Prudent Buyer Appeal monies due to the Debtors or by offsetting against Prudent Buyer Appeal Monies that are subject to the claims of NCH. NCH points out that it has not claimed an interest in the non-Prudent Buyer Appeal Monies and has only claimed an interest in and right to approximately $8 million out of the $27 million of the Prudent Buyer Appeal Monies due from HCFA to the Debtors. NCH tells the Court that if did not object to the inclusion of the Prudent Buyer Offset Provision in the prior sale/transfer orders because it previously believed that it was adequately protected by the NCH Stipulation. To date, NCH reminds the Court, the Debtors have sold/transferred approximately 36 facilities with the Medicare Provider Agreements being assumed and assigned without successor liability through the use of the Prudent Buyer Offset Provision. Recently, NCH objected to the transfer of the last four facilities and its objection was resolved by the inclusion of a "carve-out provision" in the applicable orders with respect to the NHP Indiana Lease Portfolio - that is, providing that: "the offset rights granted to HCFA under the Order shall not apply to any funds from prudent buyer settlements as to which NCH has asserted a claim to a constructive trust in the Complaint which it has filed in Adversary Proceeding No. 00-1577 (MFW) until and unless the Court enters a final order determining that such funds are not held in constructive trust for or that NCH is not otherwise entitled to such funds." It appears to NCH that HCFA is getting more concerned about its ability to recover all amounts that are allegedly due to it through the exercise of such non-mutual offset right. Originally, NCH notes, no administrative claims were granted to HCFA in addition to the non-mutual offset rights. Then, in the orders authorizing the sale/transfer of the last 13 facilities, HCFA was granted administrative claims in excess of $1.4 million. In seven of the orders, HCFA's administrative claims were capped at $50,000 each and in the other 6 orders, the administrative claims were originally capped at $50,000 each and then increased to $500,000, $100,000, $100,000, $125,000, $190,000 and $63,000. In the motion regarding the NHP Lease Portfolio, the proposed cap on the administrative claim as to the facilities being transferred is $50,000 per facility, thus, $600,000 for all twelve facilities. NCH tells Judge Walrath that it has not got enough information to enable it to determine if the terms and provisions contained in the NCH Stipulation continue to adequately protect its interest in the Prudent Buyer Appeal Monies owed to Section 541 Facilities. NCH requests that, in the event the Court authorizes the granting of non-mutual offset rights and an administrative claim to HCFA, then the following alternative forms of relief be granted: (a) a "carve-out provision"; (b) supplemental adequate protection over and above that provided in the NCH Stipulation in order to insure that the payment of the administrative claim previously granted to NCH before the payment of any additional administrative claims granted to HCFA. Revised Proposed Order Form With the consent of HCFA, the Debtors have revised the proposed order form to provide for the proposed treatment of trust claims in addition to the above-mentioned revision to provide for the transfer of assets upon the consent of the MPAN Bank Group. Among other things, the revised order form reads: "Notwithstanding anything to the contrary in this Order, the offset rights granted to HCFA under this Order will not apply to any funds from prudent buyer settlements as to which Nova Care Holdings, Inc. . . . has asserted a claim to a constructive trust in the Complaint which it has filed in Adversary Proceeding No. 00-1577 (MFW) until and unless the Court enters a final order determining that such funds are not held in constructive trust or that NCH is not otherwise entitled to such funds." (Mariner Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) MORRIS MATERIAL: Delaware Court Confirms Chapter 11 Plan -------------------------------------------------------- Morris Material Handling, Inc. announced that its Chapter 11 Reorganization Plan was confirmed by the United States Bankruptcy Court, District State of Delaware. The Reorganization Plan provides for conversion of virtually all of the Company's bank, bondholder, and other pre-filing obligations into equity of the reorganized Company. No distribution to Morris's current shareholders is included in the Reorganization Plan, and all existing Morris shares will be canceled. Consummation of the Reorganization Plan is conditioned upon the finalization of documentation required by the Plan, and finalization of a $30 million loan facility for which the Company has received a commitment. This facility will be utilized to fund cash costs of exiting Chapter 11 as well as the Company's ongoing operations. The virtually debt-free capital structure established by the Reorganization Plan will allow the Company the flexibility to respond to and take advantage of the changing dynamics of its industry. The Reorganization Plan will allow Morris to emerge from Chapter 11 as a leading North American supplier of through- the-air material handling equipment and services to a broad base of customers in manufacturing, paper and primary metal industries through a network of company locations. MOSLER INC.: BVI Offers Support to Former Customers & Employees --------------------------------------------------------------- BVI Inc., a leading provider of full-service solutions to the financial industry, announced that it has already begun efforts to support former customers and employees of Mosler, Inc. Many of Mosler's customers immediately turned to BVI Inc. after the August 3rd announcement that the company was ceasing operations. According to Wayne Tilker, President and CEO of BVI Inc., "Due to the sudden nature of Mosler's announcement, many customers have found themselves with no bank equipment service or technical support. BVI is already helping many of these customers and will continue to be available to support these customers through this difficult time." Financial institutions are urged to contact BVI before an emergency arises. "We have found that many customers have not yet learned about the situation they are facing and that their service provider has ceased operations," Tilker said. "As a result, many will not find out until they have an immediate service need, which may be too late." Former employees are also welcome to contact BVI. "We will make every effort to help these people and look for the opportunity to involve them to our growing organization," Tilker added. "We have the experience to provide bank equipment, technical support, alarm installation and monitoring," Tilker concluded. "In our 82 years of experience, we know the urgency of providing service in a timely manner and being available to our customers 24 hours a day." Bank Vault Inspection Company (BVIC) was established in 1919 to inspect and service bank equipment and invented the first Rotary Night Depository in 1926. In 1999, the company changed its name to BVI Inc., and has expanded its services to offer a wide-variety of banking and financial solutions including architecture, design, construction and project management, ATM and security equipment, service and technical support. Each year, more than 500 satisfied clients turn to BVI for solutions, including projects from New England to Washington, D.C. Located in Trevose, PA., BVI Inc. has regional offices in Philadelphia, NYC and Baltimore. NETSOL INTERNATIONAL: Cary G. Burch Resigns From Board ------------------------------------------------------ Cary G. Burch has advised Mr. George Swarts, court appointed Receiver of NetSol International, that he was officially resigning his position as a member of the Board of Directors, and as advisor to NetSol. Mr. Burch's resignation letter to Mr. Swarts was dated July 30, 2001. OWENS CORNING: Court Approves Settlement Agreement With CARLY ------------------------------------------------------------- Owens Corning sought and obtained an order from the Court approving a settlement agreement between the Debtors and CARLY. Prior to the Petition Date, the Debtors entered into four equipment lease agreements with CARLY 1995 Leasing Trust for production equipment: a) agreement dated December 15, 1995 between CARLY and the Debtors; b) agreement dated December 15, 1995 between CARLY and Owens- Corning Fiberglass (G.B.) Ltd. c) agreement dated December 15, 1995 between CARLY and Owens- Corning Fiberglass France S.A. d) agreement dated December 15, 1995 between CARLY and N.V. Owens-Corning Fiberglass S.A. (Belgium) To protect its interest under the agreement, CARLY has considered seeking a judicial determination that the agreement is a true lease and a determination of the extent, validity and priority of its liens and filing with the Court of a motion to compel the Debtors' assumption or rejection of the agreement and the exercise and pursuit of its other rights and remedies. To avoid cost, delay, and risk attendant to litigating whether the agreement is a true lease of personal property or a sale under a financing agreement and determination of the extent, validity and priority of CARLY's liens, the parties have agreed to settlement of their dispute, subject to approval by the Court. On December 28, 2000, the Debtors and its subsidiaries exercised its option to purchase all of the equipment subject to the above-mentioned agreements. The principal terms of the stipulation provides for: a) Debtors shall commence payments to CARLY consisting of 12 equal monthly installments representing the aggregate sun of $8,796,241.18 plus unpaid monthly basic rent from October to December 2000 plus accrued unpaid supplemental rent payments, including interest on overdue accounts accrued plus interest on the amounts described. The amount of each of the twelve installments will be $854,234.97. b) Neither CARLY nor any participant shall take any actions to exercise its rights with respect to the Owens Corning Equipment nor seek any judicial determination with respect to the Owens Corning Agreement c) The parties will mutually release each other from claims to the extent related to the Owens Corning Agreement or Owens Corning Equipment, provided that the claims of CARLY shall be preserved notwithstanding the payment of all protection payments and the foregoing release of other claims. Norman L. Pernick, Esq., at Saul Ewing LLP in Wilmington, Delaware believes that factors weigh in favor of the approval of the Stipulation for the following reasons: a) probability of the Debtors' success in litigating the nature of the Owens Corning Agreement and determination of the extent, validity and priority of CARLY's liens is uncertain; b) certain of the issues in determination of whether the Owens Corning Agreement is a true lease of personal property or a sale under a financing agreement and determination of the extent, validity and priority of CARLY's liens are factually complex and would require significant litigation between parties to resolve with a substantial investment of time and effort, which would cause the Debtors to incur potentially substantial legal fees, costs and expenses; c) prompt resolution of the dispute of this dispute, without resorting to costly litigation, is in the best interest of the Debtors' estate and creditors. Mr. Pernick believes that under the circumstances, it is prudent to settle the circumstances on the terms set forth. (Owens Corning Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) POLAROID CORP.: Receives One-Month Extension of Bank Waivers ------------------------------------------------------------ Polaroid Corporation (NYSE: PRD) announced it has received a one-month extension of waivers on its bank loan covenants and a $10 million increase in availability under its domestic credit facility enhancing the company's near-term liquidity and operational stability. Separately, Polaroid extended secured creditor status to its bondholders in a move to help facilitate the restructuring of its debt. "This news allows us to continue on a business-as-usual basis as we negotiate with bondholder representatives and bank lenders and explore strategic options for the company's future," said Gary T. DiCamillo, chairman and chief executive officer of Polaroid. Under terms of the bank agreements, Polaroid received an extension to November 15 of its domestic and international loan- covenant waivers, which were due to expire on October 12. The company also received a $10 million increase in availability under its domestic credit facility. These actions will facilitate the implementation of a series of initiatives aimed at strengthening Polaroid's financial performance, while it restructures its debt. "The $10 million increase in credit availability and waiver extension are positive steps," noted William L. Flaherty, executive vice president and chief financial officer. "These actions support the company's continuing ability to conduct its day to day business activities and meet its obligations to suppliers, vendors and employees." As a result of negotiations with an ad hoc committee of bondholders and their legal and financial advisors, Polaroid pledged two additional properties in Massachusetts as security against both bank and bond debt. The ad hoc bonderholders' committee, which negotiated with the company on this arrangement, has retained the law firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P. and financial advisor Houlihan Lokey Howard & Zukin. "We have begun our dialogue with the company and believe that the interests of Polaroid's bondholders are best served in a stable negotiating environment," said a bondholder on the ad hoc committee. "With this arrangement, Polaroid and its banks have demonstrated sufficient effort to address bondholder concerns to give us confidence that we can continue our due diligence and negotiations toward an acceptable resolution." A copy of the new waiver will be available in the Form 8-K to be filed with the Securities and Exchange Commission. Polaroid Corporation is the worldwide leader in instant imaging. Polaroid supplies instant photographic cameras and films; digital imaging hardware, software and media; secure identification systems; and sunglasses to markets worldwide. Visit the Polaroid web site at http://www.polaroid.com PSA INC: Court Approves First Amended Disclosure Statement ---------------------------------------------------------- A hearing was held on July 27, 2001 to consider the request of PSA, Inc and subsidiaries for entry of an order approving the First Amended Proposed Disclosure statement with respect to the joint reorganization plan submitted by the debtors and the Official Committee of Unsecured Creditors. The court approved the plan and Disclosure statement Summaries for distribution to holders of Payphone Investor claims and holders of General Unsecured Claims. There are approximately 18,000 Payphone Investors, who collectively invested approximately $400 million pursuant to lease arrangements with PSA Inc. Under the joint plan, Payphone Investors will collectively receive all issued shares of stock in "Reorganized ETS". In addition, Payphone Investors will collectively receive 85% of the "Litigation Trust" under the joint plan. The Litigation Trust will be the entity created for the purpose of investigating and prosecuting certain types of litigation claims. The Payphone Investors will share the Reorganized ETS Stock and Litigation Trust proceeds on a pro rata basis based upon the amount of each Payphone Investor's claim. The cash flow projections accompanying the Disclosure statement reflect that Reorganized ETS will run on a cash-positive basis, and that it will accumulate approximately $3.2 million in 2002 and additional sums thereafter. It is estimated that Reorganized ETS will have a reorganization value of approximately $24 million after implementation of the joint plan. Counsel for the debtors are E. Penn Nicholson and Shannon Lowry Nagle of Powell, Gloldstein, Fraxer & Murphy LLP and Brendan Linehan Shannon of Young Conaway Stargatt & Taylor LLP. Kirk L. Brett of Duval & Stachenfeld LLP Frederick B. Rosner of Walsh Monzak & Monaco PA are Counsel for the Creditors' Committee. PSA INC: Court Stretches Lease Decision Period Through August 31 ---------------------------------------------------------------- By order entered by the Honorable John C. Akard, US Bankruptcy Judge, District of Delaware, on July 27, 2001, the time within which the debtors, PSA Inc. may assume or reject any unexpired leases of nonresidential real property is extended to the later of August 31, 2001 and the Effective Date of the joint plan. RELIANCE: Rehabilitator Moves To Remand Commonwealth Actions ------------------------------------------------------------ The United States Bankruptcy Court for the Eastern District of Pennsylvania should decline Reliance Group Holdings, Inc.'s invitation to involve itself in a battle over who will have control over Reliance's restructuring and rehabilitation. By Motion, M. Diane Koken, Insurance Commissioner of the Commonwealth of Pennsylvania and Rehabilitator of Reliance Insurance Company, urges Judge Carey to: (1) remand the cases transferred from the Commonwealth Court of Pennsylvania back to that court where they belong; and (2) abstain from all further proceedings related to her cases brought before the Commonwealth Court. Concurrently with filing the Remand Motion, the Rehabilitator sought and obtained, ex parte, an order for expedited consideration of her Remand Motion. The Rehabilitator asserts that this Remand Motion must be heard before the Debtors' Transfer Motion. Wait, the Debtors tell Judge Carey, for Judge Gonzalez to rule on the Motion to Dismiss pending before the Bankruptcy Court in Manhattan. Leigh R. Schachter, Esq., at Debevoise & Plimpton, representing the Debtors, and Andrew DeNatale, Esq., at White & Case, representing the Official Creditors' Committee, point out that the Remand Motion and the Dismissal Motion are strikingly similar. Both argue that the Commonwealth Court, rather than any United States Bankruptcy Court, should determine whether the $95 million and the insurance policies are the property of Debtors' estate, and both raise the same underlying legal issues, including whether the McCarran-Ferguson Act makes abstention appropriate, whether reverse preemption of federal bankruptcy law applies to this case, and whether the Commonwealth Court actions were brought in furtherance of the Rehabilitator's police or regulatory powers. Principles of judicial economy and fairness to the parties dictate that these overlapping and complex issues should be litigated in only one court, and the Southern District of New York, rather than the Eastern District of Pennsylvania is the proper forum for resolution of these issues, because: (1) the Rehabilitator raised the issues in this Court first; (2) the S.D.N.Y.'s determination may result in dismissal of the RGH entire chapter 11 case which would render the Remand Motion moot, and; (3) the S.D.N.Y. is the "home" court where RGH cases are pending and in which all other claims against RGH will be decided. At a chambers conference convened in Philadelphia, Judge Carey expressed his view that he does not want to set-up a situation where the Eastern District of Pennsylvania and the Southern District of New York are considering the same or overlapping issues at the same time. Ann B. Laupheimer, Esq., at Blank, Rome, Comisky & McCauley and Lawrence Tabas, Esq., at Obermayer, Renmann, step Judge Carey through the Rehabilitator's story of how matters got to his courtroom: RIC's rehabilitation proceedings commenced on May 29, 2001 in Pennsylvania State Court. The very same day, the Debtors and their board members sought to implement, without the consent of the Insurance Commissioner or the Rehabilitator, a settlement which utilized $17.4 million of a limited pool of insurance proceeds of the Lloyds Policies which provide coverage for the Debtors, their officers and directors, and RIC and its officers and directors. In addition, the benefits of that settlement would flow to creditors of the Debtors, a constituency whose entitlement to assets falls low in the priorities of potential claimants upon the proceeds of the Lloyds Policies. As a result, the Rehabilitator filed the Emergency Petition in the Commonwealth Court on June 4, 2001 to preserve the proceeds of the Lloyds Policies. Thereafter, on June 11, 2001, the Rehabilitator commenced the Commonwealth Court Action for a determination that in excess of $95 million is held by RGH in a constructive or resulting trust for the benefit of RIC and should be returned to RIC. This sum was upstreamed from RIC for nonexistent tax payments and refunds that resulted from RIC's losses. The next day, on June 12, 2001, the Debtors commenced their chapter 11 cases. Two weeks later, on June 29, 2001, the Debtor caused the Rehabilitator's Emergency Petition and the Commonwealth Court Action to be removed from the Commonwealth Court to the Pennsylvania Bankruptcy Court of the Eastern District and moved to transfer venue of those proceedings to this Court. The date obtained by the Debtors for hearing on the Venue Motions was August 1, 2001. In response to these actions by the Debtors, the Rehabilitator took two simultaneous actions. The Rehabilitator (a) filed the Dismissal Motion with this Court on July 11, 2001, which was scheduled for hearing on August 8, 2001, and (b) filed motions with the Pennsylvania Bankruptcy Court of the Eastern District on July 12, 2001 to remand the removed Emergency Petition and Commonwealth Court Action back to the Commonwealth Court. In accordance with established law in the Eastern District of Pennsylvania, the Rehabilitator made a motion for an expedited hearing on the Remand Motions in order to have them heard at the same hearing date as the Venue Motions (August 1, 2001). The Pennsylvania Bankruptcy Court of the Eastern District granted that motion. That series of events, the Rehabilitator contends, makes the Remand Motion the one that should be heard first -- and heard in Pennsylvania. The Rehabilitator charges the Debtors and the Committee with flagrant forum shopping, artificial deadlines and delay tactics, all in an effort to avoid the proper handling of RIC's insolvency by a state court administering state law governing the regulation of business of insurance, free from interference by federal statutes, as required under the McCarran Ferguson Act. * * * Not persuaded by the Rehabilitator's chicken-and-egg arguments, Judge Carey advised the parties in a Conference Call that he concludes the Motion to Dismiss should be heard by Judge Gonzalez first. If the Rehabilitator prevails in her argument that the chapter 11 cases are a sham, there is nothing left for the Eastern District of Pennsylvania to consider. In the event that the Debtors successfully defend against the Motion to Dismiss, Judge Carey will entertain the Rehabilitator's Remand Motion on November 7, 2001 at 10:00 a.m. (Reliance Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392- 0900) RHYTHMS NETCONNECTIONS: Cuts Jobs & Halts Service For 31 Days ------------------------------------------------------------- Rhythms NetConnections Inc. (OTC Bulletin Board: RTHMQ), a provider of broadband communication services, said the Company sent 31-day service termination notices to all of its customers. During the next 31 days, Rhythms intends to assist its customers in transitioning their existing digital subscriber line services to alternative broadband providers. The Company is also reducing its workforce by approximately 700 employees, or approximately 75 percent of its total workforce. Approximately 85 percent of the affected employees are in Colorado. About Rhythms Based in Englewood, Colo., Rhythms NetConnections Inc. (OTC Bulletin Board: RTHMQ) provides DSL-based, broadband communication services to businesses and consumers. On August 1, 2001, Rhythms and all of its wholly-owned U.S. subsidiaries voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Southern District of New York. For more information concerning Rhythms, call 1-800-RHYTHMS (1-800- 749-8467), or visit the Company's Web site at http://www.rhythms.com Rhythms, Rhythms NetConnections and (any product names for which trademark applications have been filed) are trademarks of Rhythms NetConnections Inc. STELLEX TECHNOLOGIES: Wants More Time To Solicit Votes For Plan --------------------------------------------------------------- Stellex Technologies, Inc. and its affiliated debtors request the entry of an order further extending through and including September 19, 2001 the time within which the debtors maintain the exclusive right to solicit acceptances for any plan of reorganization filed on or prior to June 11, 2001. A hearing to consider confirmation of the plan has been set for August 21, 2001. However, the current exclusive solicitation deadline will expire prior to the voting deadline. Accordingly the debtors request this extension. TANDYCRAFTS INC: Names Jeff Pecora As New President For Pinnacle ---------------------------------------------------------------- Tandycrafts, Inc. (Pink Sheets: TACR), which filed for Chapter 11 protection on May 15, 2001, announced two key management changes at its Pinnacle Art & Frame division. The Fort Worth, Texas consumer products Company said Jeff Pecora has been named President of the Pinnacle Art & Frame division. Jeff, who was formerly Senior Vice President of Sales, has been with Pinnacle 16 years and has been instrumental in providing leadership to the sales and service group. Under his guidance, Pinnacle has made significant gains with some of their largest customers in the mass merchandise and specialty retail channels. Tim Charon has been named Senior Vice President of Sales & Marketing at Pinnacle. Tim has 17 years of industry experience, the last 5 with Pinnacle. During this past year, Tim has had primary responsibility for managing Pinnacle's largest account. Under his guidance, this account has grown significantly. "Through the transition of the past year both Jeff and Tim have played important roles at Pinnacle," said Michael J Walsh, Chairman and Chief Executive officer at Tandycrafts. "With these changes, we intend to sharpen our focus on our profitable businesses as we concentrate on the driving factors of our business." "Pinnacle is a terrific company that remains well positioned to serve our customer base," Pinnacle's President Pecora said. "Despite our current financial issues, our core competencies cannot be duplicated. I plan to re-focus the management team, our associates and suppliers to enable the company to build upon its excellent track record." "We have demonstrated over the years that we can compete with anyone in the frame and mirror business," said Tim Charon Senior Vice President of Sales. "We plan to become an even more important supplier by adding fresh new looks to our product line." Tandycrafts, Inc. -- http://www.tandycrafts.com-- is a maker and marketer of picture frames and wall decor. Tandycrafts' products are sold nationwide through wholesale distribution channels, including mass merchandisers and specialty retailers. TRISTAR CORPORATION: Files For Chapter 11 Protection ---------------------------------------------------- Tristar Corporation (TSAR) filed for and obtained bankruptcy protection under chapter 11 petition. Tristar has secured debtor-in-possession financing from its current lender and has a significant backlog of customer orders for the 2001 holiday season which it anticipates fulfilling. Tristar Corporation is engaged in developing, manufacturing and marketing an extensive line of value-priced products comprised of designer alternative fragrances, contemporary cosmetics and selected toiletry products. These products are distributed by the Company in North and South America primarily to chain stores, mass merchandisers, retail outlets, distributors and wholesalers. TRISTAR CORP.: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Tristar Corporation 105 St. Mary's Street, Suite 1800 San Antonio, TX 78205 aka Tristar do Brasil aka Tristar d Mexico aka Fragrance Impressions, Ltd. aka TRISTAR USA, INC. Type of Business: Tristar is principally engaged in developing, manufacturing, marketing and distributing value oriented designer alternative fragrances, complementary products to those fragrances and cosmetic pencils. Chapter 11 Petition Date: August 8, 2001 Court: Western District of Texas (San Antonio) Bankruptcy Case No.: 5-01-53706-lmc Judge: Leif M. Clark Debtor's Counsel: David S. Gragg, Esq. Langley & Banack, Inc. Trinity Plaza II 745 East Mulberry, Suite 900 San Antonio, TX 78212-3166 (210) 736-6600 Total Assets: $43,102,000 Total Debts: $36,391,000 List Of Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Drabel Trade Debt-Supplies $1,236,674 Francis Lebard Le Pre De L'Isle 16 Rue De La Metainie 96540 Marines France 011 33 1346 759 Trilite Internationsl, LLC Trade Debt $913,376 Hitesh Desai PO Box 41362 Baniyas Complex, Suite 402 Nasser Square Deira Dubai, UAE 011 91 142 234 478 Tom McCann Notes Payable/ $681,171 43 Bradley Road Severance Agmt Weston, CT 06883 (203) 226-4512 Wisthoff GMBH & Co. Trade Debt $662,475 Vera Heinsohn 4300 Essen 14 Postfach 142660 Fed Republic CY Germany 011 49 201 5602 George Luby Note Payable $612,669 1937 Innisbrook Ct. Venice, FL 34293 (941) 493-7642 Ron L. Walsworth Note Payable $544,814 28 Old Tabby Road Spring Island, SC 29910 (843)987-1655 Armstrong Packaging Trade Debt $480,743 Louis Armstrong PO Box 203 706 Rand Kaufman. TX 75142 (800) 366-0488 Fulbright & Jaworski, L.L.P Legal Services $417,015 Phil Rentfro/Susan Ferguson 300 Convent St. Suite 2200 San Antonio, TX 78205 (210) 270-7172 Starion International Ltd. Trade Debt $400,792 Hunters Road Welson Industrial Estate Corby Northhampshire NN17 1 JE England Navin Ullal Divis Health, Controller Precision Valve Trade Debt $376,900 85 Fuller Road Ajax Ontario L1S 2E1 Canada Jack Friedman Note Payable $374,353 901 North Ocean Blvd. Palm Beach, FL 33480 Richard Howard Severance Claim $361,867 5 Woods Ends Road Rumson, NJ 07760 (732) 747-3005 Emicos International Ltd. Trade Debt $357,572 PO Box 16758 Dubai UAE 011 971 4 3497 Acrotech Southwest Inc. Trade Debt $336,339 200 Holdsworth Dr. PO Box 291487 Kerrville, TX 28029-1487 (830) 896-6464 EMSAR Trade Debt $317,466 Rick Schofield 7871 Collections Center Dr. Chicago, IL 60693 (203) 502-6800 Precious Products (India) Trade Debt $302,650 Ltd. Hiten Patel Piso No. 1 to 4 Gal No 986 Sanascoadi, Tal Shirur Dist Pune India 01191 982 301 7715 (cell) 01191 213 752 3 Meso PVT Ltd. Trade Debt $296,920 Harish Malaviva 101 Centre Point Jujbhai Lane Lalbaug Mumbai 400 012 01191 224 166 295 (cell) 01191 224 148 2 Fort Worth Packaging Trade Debt $208,527 Joseph McKeon Notes Payable $179,324 California Cedar Products Trade Debt $160,259 VLASIC FOODS: Paying Prepetition Shipping-Related Claims -------------------------------------------------------- Vlasic Foods International, Inc. sought and obtained the Court's authority to make payments to commercial common carrier/shippers, independent operators or regional and pooled distribution centers and public warehousemen. David R. Hurst, Esq., at Skadden Arps slate Meagher & Flom, in Wilmington, Delaware explains that these payments are necessary for the continued delivery, distribution and sale of the Debtors' products. Failure to make these payments could result in irreparable damages to the Debtors' estates, Mr. Hurst says. As of the Petition Date, Mr. Hurst says, the estimated aggregate amount of outstanding pre-petition Distribution Charges is approximately $200,000. Aside from shippers, distributors and warehousemen, the Debtors also employ several independent brokers who sell certain of the Debtors' products to the Debtors' customers. The Debtors generally pay these brokers a commission after receipt of full payment from the customer. Mr. Hurst and a number of Independent Brokers stand to receive approximately a total of $1,600,000. If these pre-petition brokers' fees are not paid, the Debtors believe it would drastically curtail the brokers' selling efforts on their behalf. So, the Court also authorized the Debtors to make payments to these independent brokers. The Court also authorized and directed all applicable banks and other financial institutions to receive, process, honor and pay any and all checks evidencing amounts paid by the Debtors whether presented prior or after the Petition Date. Those shippers, distributors, warehousemen and independent brokers who accept these payments are obliged to continue providing services to the Debtors on the customary trade terms before the Petition Date. If any of them refuses to do so, then: (i) any payments relating to this Order made after the Petition Date shall be deemed avoidable post-petition transfer under section 549 of the Bankruptcy Code and therefore, shall be recovered by the Debtors in cash upon written request, and (ii) upon recovery by the Debtors, the claim shall be reinstates as a pre-petition claim in the amount so recovered. The Court emphasized that this order should be construed to limit, or in any way affect, the Debtors' ability to contest any claims asserted by the third parties on any ground that applicable law permits nor shall be deemed as executory contracts with the same third parties. (Vlasic Foods Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392- 0900) WHEELING-PITTSBURGH: Settles Disputes With Trustees For IRBs ------------------------------------------------------------ Wheeling-Pittsburgh Steel Corp. maintains two facilities in Virginia and Nevada that are financed with industrial revenue bonds. By Motion, the Debtors ask Judge Bodoh to put his stamp of approval on two Stipulations that will resolve disputes with the Indenture Trustees for these industrial revenue bonds. The Nevada Industrial Revenue Bonds The Director of the State of Nevada Department of Business and Industry issued tax exempt industrial revenue bonds in the amount of $3.5 million to SunTrust Bank, as successor-in- interest to Crestar Bank, the Nevada Trustee for certain bondholders under an Indenture dated in September 1999, and loaned the proceeds from the sale of the Nevada bonds to FBW Leasecorp, inc., under a Financing Agreement dated in September 1999, for the purpose of financing construction of an 18,500 square foot manufacturing facility in Churchill County, Nevada. FBW leased the Nevada facility to WPSC under a Lease Agreement dated August 1999, and under an Assignment of Rents and Leases dated august 1999, assigned to the Nevada Trustee as security for repayment of the Nevada bonds FBW's right to collect monthly rent payments under the Nevada Lease, and granted the Nevada Trustee mortgages and security interests in the Nevada facility and the property on which it was constructed, all fixtures, machinery, and other personal property used in connection with the Nevada facility under a Deed of Trust and Security Agreement. Under the Nevada bond documents, Nevada rent is supposed to be paid by WPSC through a monthly deposit into a revenue fund held by the Nevada Trustee from which the Nevada Trustee is to make required distributions to the Nevada bondholders semiannually on each March 1 and September 1. Under the Nevada Indenture, a Debt Service Reserve Fund was established and the Nevada Trustee is permitted to draw on the Debt Service Reserve Fund as necessary to satisfy the obligations of WPSC if the funds in the Revenue Fund are insufficient. The Nevada Trustee is also presently holding funds in a variety of other accounts. Since the payment due for April 2001, WPSC has not paid any installments of the Nevada rent due under the Nevada leases and has indicated that it does not intend to make any further payments during the pendency of this bankruptcy case. The Virginia Industrial Revenue Bonds The Industrial Development Authority of Greensville County, Virginia, issued tax exempt revenue bonds in the amount of $4.68 million to First Union National Bank as trustee for certain bondholders under an Indenture dated in April 19999, and used the proceeds from the sale of the Virginia bonds to finance construction of an 78,250 square foot manufacturing facility in Greensville County, Virginia. The Authority leased the Virginia facility to WPSC under a Lease Agreement dated as of August 17, 1998, and, under an Assignment of Rents and Leases dated as of April 1, 1999, assigned to the Virginia Trustee as security for repayment of the Virginia bonds the Authority's right to collect monthly rent payments under the Virginia lease, and further granted the Virginia Trustee mortgages and security interests in the Virginia facility and the property on which it was constructed, all fixtures, machinery and other personal property used in connection with the Virginia facility under the Amended and Restated Deed of Trust and Security Agreement dated as of April 1, 19999. The Virginia bond documents also provide that the Authority's obligation to pay any amounts due under the Virginia bond documents is limited to the revenues derived from WPSC under the Virginia lease. Under the Virginia bond documents, Virginia rent is supposed to be paid by WPSC through a monthly deposit into a revenue fund held by the Virginia Trustee from which the Virginia Trustee is to make required distributions to the Virginia bondholders semiannually on each April 1 and October 1. Under the Virginia Indenture, a Debt Service Reserve Fund was established and the Virginia Trustee s permitted to draw on the Debt Service Reserve Fund as necessary to satisfy the obligations of WPSC if the funds in the revenue fund are insufficient. The Virginia Trustee is also presently holding funds in a variety of other accounts. Since the payment due for May 2001, WPSC has not paid any installments of Virginia rent due under the Virginia lease and has indicated that it does not intend to make any further payments during the pendency of its bankruptcy case. The Disputes Michael E. Wiles, Esq., and Richard F. Hahn, Esq., at Debevoise & Plimpton, explain that WPSC and the Nevada Trustee and the Virginia Trustee dispute whether: (a) WPSC and the Nevada Lease and the Virginia Lease constitute secured financing or true leases; (b) whether the Trustees are entitled to the protections afforded lessors under the Bankruptcy Code; and (c) if the transactions constitute secured financings, whether the Trustees are entitled to adequate protection under the Bankruptcy Code. WPSC and the Trustees believe it is in their respective best interests to defer litigation over these issues. Pending resolution of these disputes, WPSC and the Trustees have negotiated stipulations and orders granting the Trustee Banks limited relief from the automatic stay. The terms and conditions of the Virginia stipulation and the Nevada stipulation are identical, other than the names of the parties. Terms of the Stipulations Under the stipulations, the Trustees, the Authority, and FBW will not seek relief from the automatic stay in respect of their rights under the bond documents and lease or seek to compel WPSC to pay rent or adequate protection through November 1, 2001. The stipulations also provide that no party in interest will initiate any action seeking an adjudication as to whether 9i) the lease and other bond documents constitute a true lease or a secured financing, (ii) the Trustees, the Authority or FBW is entitled to protections offered a lessor under the Bankruptcy Code or to relief from the automatic stay or to receive adequate protection payments, or (iii) the nature, amount, priority and status of the claims of the Trustees, the Authority, or FBW. The stipulations do not limit WPSC, the Trustees, the Authority, FBW, or the Virginia or Nevada bondholders' ability to file pleadings or take other legal action with respect of their rights under the bond documents as part of a plan of reorganization and disclosure statement or motion for authority to sell the facility or to assume the lease or to assign WPSC's rights under the lease. The stipulations further provide that the Trustees are granted limited relief from the automatic stay to withdraw funds in any of the trust accounts as necessary to pay (i) principal or/and interest payments which thereafter become due on the bonds on the dates when due, (ii) any fees and expenses of the Trustees incurred under the Indenture (including attorney's fees), and (iii) any other costs, fees and expenses which may become due and owing under the Indenture. WPSC will, in the interim, continue, as long as the lease remains in effect, to comply with the provisions of the lease with respect to maintenance and insurance of the facilities. Finally, the stipulation confers exclusive jurisdiction on the Bankruptcy Court to determine these disputes. (Wheeling- Pittsburgh Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) WINSTAR COMM.: Court Approves Interim Compensation Procedures ------------------------------------------------------------- Winstar Communications, Inc. sought and obtained a Court Order to establish procedures for interim compensation and reimbursements of expenses of professionals employed in these chapter 11 estates. The Court orders the implementation of procedures for the monthly payment of compensation and reimbursement of the professionals as specifically stated: a) Not earlier than the 25th day of each calendar month, each professional seeking interim compensation shall file an application and serve a copy to: (i) the Debtors, c/o Winstar Communication, Inc., 685 Third Avenue, New York, New York 10017 (Attn: Laura Janke, Esq); (ii) Counsel to the Debtors, Young Conaway Stargatt & Taylor, LLP, Wilmington Trust Center, P.O. Box 391, Wilmington, Delaware 19899-0391 (Attn: Pauline K. Morgan, Esq), and Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022 (Attn: Marian Luketic, Esq); (iii) Counsel to all statutory committees appointed in these cases; (iv) Counsel to the Debtors' pre-petition lenders, Wachtell Lipton Rosen & Katz, 51 west 52nd Street, New York, New York 10019 (Attn: Chaim fortgang, Esq);(v)Counsel to the Debtors' post-petition lenders, Weil Gotshal & Manges, 767 Fifth Avenue, New York, New York 10153 (Attn: Steve Karotkin, Esq) and (vi)the Office of the United States Trustee, 601 Walnut Street, Curtis Center, Suite 950 West, Philadelphia, Pennsylvania 19106, collectively the Notice Parties. Each Notice Party will have 20 days after service of a Fee Application to object. After the Objection Deadline, the Professional may file a certificate of no objection after the which the Debtors are authorized to pay the Professional an amount equal to the lesser of (i) 80% and 100% of the Maximum Interim Payment and (ii) 80% percent of the fees and 100% of the expenses not subject to an objection. b) If any of the notice parties objects to a Professional's Fee Application, it must file with the Court and serve on the affected Professional and each of the Notice Parties a written objection, which must be filed in Court and received by the affected Professional and Notice Parties on/before the Objection Deadline. Thereafter the objecting party and the affected professional may attempt to resolve the Objection on a consensual basis. If the parties are unable to reach a resolution within the 20 days after the service of the Objection, the affected professional may either file a response to the Objection with the court together with a request or payment of the difference between the Maximum and the Actual Interim Payment made; or forego payment of the Incremental Amount until the next interim or final fee application hearing, at which time the Court will consider and dispose of the Objection if requested by the parties. c) Beginning the period ending June 30,2001, at three-month intervals or at such other intervals convenient to the Court, each of the Professionals must file with the court and serve to the Notice Parties a request for court approval and allowance of the compensation and reimbursement of expenses sought. The Interim Fee Application Request must include a summary of the Fee Application and other information requested by the Court. Each Professional must file its Interim Fee Application Request on/before August 14, 2001 and the first Interim Fee Application Request should cover the Interim Fee Period from the commencement of this case through and including June 30, 2001. Any Professional that fails to file when due will be ineligible to receive further payments until such time that the Request is submitted by the Professional. d) The Debtors shall request that the Court schedule a hearing on the Requests at least once every 6 months, or as appropriated by Court. e) The pendency of an objection to payment of compensation or reimbursement of expenses will not disqualify a Professional from future payment of compensation or reimbursement of expenses under these compensation procedures. f) Neither (i) the payment of or failure to pay, in whole or in part, monthly interim compensation nor (ii)the filing or of failure to file an Objection will bind any party in interest or the Court with respect to the allowance of interim or final applications for compensation and reimbursement of expenses of Professionals. All fees and expenses paid are subject to disgorgement until final allowance by the Court. Counsel to the Debtors, Pauline K. Morgan Esq., at Young Conaway Stargatt & Taylor, of Wilmington, Delaware relates that the Interim Procedures will enable the United States Trustee and all other parties to efficiently keep track and record all Professionals' fees and expenses incurred in these cases. (Winstar Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) ********* 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 are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. 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, Bernadette de Roda, Aileen Quijano and Peter A. Chapman, Editors. Copyright 2001. 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 6 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 ***