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/raid1/www/Hosts/bankrupt/TCR_Public/011011.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, October 11, 2001, Vol. 5, No. 199 Headlines ALGOMA STEEL: Plan of Arrangement Deadline Extended to Oct. 26 ASSISTED LIVING: Falls Short Of AMEX Listing Guidelines BURPEE HOLDING: Files for Chapter 11 Protection in Philadelphia BURPEE HOLDING: Chapter 11 Case Summary CELLPOINT INC: Funding Through Private Placements Reaches $6.55M COHEN MEDICAL: Files Chapter 11 Petition in C.D. California COHEN MEDICAL: Case Summary & 20 Largest Unsecured Creditors COMDISCO INC: Equity Panel Balks At Watchell Success Fees CONDOR TECHNOLOGY: Needs to Complete Debt Workout by January 2 CREDIT CARD CENTER: Amicus Secures Management of ATM Portfolio EDISON INT'L: SoCal Unit Will Honor QF Power Purchase Agreements ETOYS INC: Seeks Okay of $2.6MM Settlement with Goldman Sachs EXODUS COMMS: Taps Skadden ARPS As Primary Bankruptcy Counsel FEDERAL-MOGUL: Gets Okay to Pay $50M In Critical Vendors' Claims FRIEDE GOLDMAN: Advances Construction of 2 Semisubmersibles GREATE BAY: Solicitation for Indenture Revision Expires Today HEALTHCENTRAL: Files for Protection Under Chapter 11 HENRY MAYO: In Talks with Creditors to Pay Off $10MM In Debts ICG COMMS: Secures Court Approval to Pay Exit Financing Fees IMPERIAL CASUALTY: S&P's Bpi Rating Reflects Volatile Returns INTEGRATED HEALTH: Lease Decision Period Extended to April 1 J.C. PENNEY: Selling $600MM Convertible Sub. Notes Due 2008 J.C. PENNEY: Fitch Rates Convertible Subordinated Notes at BB- LACLEDE STEEL: Has Until Confirmation Date to Decide on Leases LERNOUT & HAUSPIE: Hearing on Disclosure Statement on Friday MARINER POST-ACUTE: Enters Settlement on PHCM Loan with Omega OMEGA HEALTHCARE: Lenders Extend Waiver Until December 13 ONSITE ACCESS: Lease Decision Period Extended Until December 17 OWOSSO CORP: Mulls Further Sale of Assets To Stabilize Results PASW INC: Fails to Comply with Nasdaq Net Equity Requirements PACIFIC GAS: Admin. Claims for the April 6 - 30 Period Filed PENN SPECIALTY: Court Extends Lease Decision Deadline to March 4 PENN SPECIALTY: Asks Court to Extend Removal Period to Feb. 5 PHAR-MOR INC: Securities Delisted From Nasdaq PITTSBURGH CORNING: Obtains Approval of Employee Severance Plan RELIANCE GROUP: Seeks Extension of Plan Filing Period to Feb. 7 SAFETY COMPONENTS: Unit Sells Metallic Belt Links Assets STANDARD AUTOMOTIVE: Bank Lenders Agree to Forbear Until Oct. 19 STEEL HEDDLE: First Creditors' Meeting Set for October 12 SUN HEALTHCARE: Lease Decision Time Further Extended to Dec. 13 SUNBEAM CORP: Has Until December 31 to Solicit Plan Acceptance TITANIUM METALS: Valhi May Junk Deal Without Shareholders' Nod TOWER RECORDS: Closes Sale of Argentine, HK & Taiwan Operations USG CORP: Wants Rule 9027 Removal Period Extended Until March 31 U.S. WIRELESS: Seeks Court Approval of Worker Retention Plan WARNACO GROUP: Moves to Junk Countertrade Consumption Protocol WINSTAR COMMS: Agrees to Segregate Proceeds from S.F. ISP Sale ********* ALGOMA STEEL: Plan of Arrangement Deadline Extended to Oct. 26 -------------------------------------------------------------- Algoma Steel Inc.(TSE:ALG.) obtained an an extension of its protection under the Companies' Creditors Arrangement Act (CCAA) and the time for the filing of a Plan of Arrangement to October 26, 2001. The current order was to expire on October 12, 2001. The extension was supported by all of Algoma's stakeholders. Hap Stephen, Algoma's Chief Restructuring Officer, said "Progress continues to be made through discussions with the Company's stakeholders. We expect to file a restructuring plan for consideration by Algoma's stakeholders by October 26, 2001." Algoma Steel Inc., based in Sault Ste. Marie, Ontario, is Canada's third largest integrated steel producer. Revenues are derived primarily from the manufacture and sale of rolled steel products including hot and cold rolled sheet and plate. ASSISTED LIVING: Falls Short Of AMEX Listing Guidelines ------------------------------------------------------- Assisted Living Concepts, Inc. (AMEX:ALF), a national provider of assisted living services, received a notice from the American Stock Exchange on October 3, 2001 indicating that AMEX intends to file an application with the Securities and Exchange Commission to strike the Company's common stock and its two series of convertible subordinated debentures from listing and registration on AMEX. AMEX indicated that the Company has fallen below the AMEX listing guidelines as a result of the net losses sustained by the Company in its five most recent fiscal years and the continued low trading price of the Company's common stock. A trading halt of the Company's securities was instituted by AMEX on October 1, 2001 in connection with the Company's announcement on that day that it had filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The Company does not intend to appeal the delisting of its securities. If the Company's common stock is delisted from AMEX, the public trading market for its common stock will likely be adversely affected. Following such delisting of the Company's common stock from AMEX, the Company may seek to have its common stock quoted on the OTC Bulletin Board. Historically, the OTC Bulletin Board has been a less developed market providing lower trading volume than the national securities exchanges and NASDAQ. However, there is no guarantee that the Company will succeed in having its common stock quoted on the OTC Bulletin Board. BURPEE HOLDING: Files for Chapter 11 Protection in Philadelphia --------------------------------------------------------------- Burpee Holding Company, Inc. filed for Chapter 11 protection with the U.S. Bankruptcy Court in Philadelphia, Pennsylvania. George C. Ball Jr., chairman, commented, "This does not have any effect on our operating subsidiaries. This is just a credit and financing issue on the holding company." (New Generation Research, October 9, 2001) BURPEE HOLDING: Chapter 11 Case Summary --------------------------------------- Debtor: Burpee Holding Co. Chapter 11 Petition Date: September 21, 2001 Court: Eastern District of Pennsylvania (Philadelphia) Bankruptcy Case No.: 01-33512 Judge: Kevin J. Carey Debtor's Counsel: James M. Matour One Logan Square 27th Floor Philadelphia, PA 19103 215-496-7016 CELLPOINT INC: Funding Through Private Placements Reaches $6.55M ---------------------------------------------------------------- CellPoint Inc. (Nasdaq:CLPT), a global provider of mobile location software technology and platforms, announced it has raised a total of US$6.55 million to date through initial closings on private placements in Europe and North America. These initial closings were completed subsequent to restructuring of floating convertible notes announced September 26, 2001. "We are pleased with the support and trust investors have demonstrated in CellPoint," said Peter Henricsson, Chairman and Chief Executive Officer. "These closings represent an understanding of the extraordinary potential of the mobile location services industry, as well as CellPoint's market leadership position" Working with KCSA Public Relations Worldwide, CellPoint's investor relations firm in North America, the Company will next embark on a series of meetings with institutional investors in the United States."We will be raising additional working capital in the coming months, primarily with institutional investors." Tuesday last week, Nasdaq granted the Company a voting exception regarding announcement of a closing due to the delay of delivery of proxy materials and the return of proxies resulting from the September 11 events in New York City. CellPoint will file a registration statement with the Securities and Exchange Commission on Form S-3 by the end of October to register the common stock and warrants associated with all of these private placements. The initial closings included 50% warrant coverage with strike prices over two years ranging from $2.25 per share to $5.00 per share. The company will issue less than six million shares of common stock in conjunction with the initial closings. CellPoint Inc. (Nasdaq and Stockholmsborsen: CLPT) is a US company with subsidiary operations in Sweden and Great Britain delivering mobile location technology and services in cooperation with cellular operators worldwide. CellPoint's end- to-end cellular location technology is a high-capacity system that works in unmodified GSM networks and uses standard GSM or WAP phones and standard Internet services. Several commercial applications are available for business and personal location services including Resource Manager? for mobile resource management, iMate? for location-sensitive information and Finder?, an application for locating friends and family. CellPoint? and CellPoint Systems? are trademarks of CellPoint Inc. Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. Actual results may differ materially from those projected in any forward-looking statement. Investors are cautioned that such forward-looking statements involve risk and uncertainties which may cause actual results to differ from those described. COHEN MEDICAL: Files Chapter 11 Petition in C.D. California ----------------------------------------------------------- Cohen Medical Corp., a California-based health maintenance organization providing medical coverage to 6,200 people in Southern Nevada will cease operations after filing for bankruptcy in California, the Nevada state insurance commissioner said, reported the Las Vegas Review-Journal. The Cohen Medical Corp., doing business as Tower Health Nevada, filed its chapter 11 bankruptcy petition in U.S. District Court for the Central District of California. Insurance Commissioner Alice Molasky-Arman said she was dissatisfied with the California regulator's short notice to Nevada about the company's decision to cease operations. Nevada's Division of Insurance was not told about the intention to file bankruptcy though the agency's examiner was in the California receiver's office on Sept. 28. The California conservator expects to send termination notices to Nevada members, employers and providers within the next few days. (ABI World, October 9, 2001) COHEN MEDICAL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Cohen Medical Corporation dba Tower Health 200 Oceangate Boulevard 6th Floor Long Beach, CA 90802 Chapter 11 Petition Date: October 04, 2001 Court: Central District of California (Los Angeles) Bankruptcy Case No.: 01-39860 Judge: Samuel L. Bufford Debtor's Counsel: Richard K. Diamond, Esq. Danning, Gill, Diamond & Kollitz 2029 Century Pk East 3rd Floor Los Angeles, CA 90067-2904 310-277-0077 Estimated Assets: $1 million to $10 million Estimated Debts: 410 million to $50 million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Rx America 369 Billy Mitchell Road Trade $2,622,000 Salt Lake City, UT 84116 Willim J. Stilling Parsons, Behle & Latimer 201 South Main Street Suite 1600 Salt Lake City UT 84111-2216 (801) 532-1234 Garfield Medical Center Trade $497,000 PO Box 31001-0119 Pasadena, CA 91100 (800) 375-1630 Western Med Ctr-Sta Ana Trade $426,000 PO Box 3100-0543 Pasadena, CA 91110-0543 (800) 270-0702 St. Mary Medical Center Trade $388,000 Claims Department 18300 Highway 18 Apple Valley, CA 92307 (760) 242-2311 Corona Regional Med Ctr Trade $246,000 Riverside Community Trade $222,000 UCI Medical Center Trade $186,000 Daniel Freeman Hospital Trade $178,000 Presbyterian Intercomm Trade $173,000 Hospital Fountain Valley Regional Trade $167,000 Hospital Downey Community Hospital Trade $165,000 Foundation Milk Drew Medical Center Trade $164,000 St. Mary Medical Center $162,000 Applied Insurance Trade $155,000 Association Loma Linda University Trade $154,000 Medical Center Centinela Hospital Trade $146,000 Medical Center Sunrise Hospital Trade $129,000 Cedars Sinai Medical Trade $119,000 Center Pomona Valley Hospital Trade $113,000 MC Good Samaritan Hospital Trade $110,000 COMDISCO INC: Equity Panel Balks At Watchell Success Fees --------------------------------------------------------- The Official Committee of Equity Security Holders of Comdisco, Inc. clarifies that it has no objection to the retention of Watchell Lipton as lead counsel to the Creditors' Committee. However, the Equity Committee is not comfortable with the proposed contingent success fee arrangement for Watchell Lipton. Michael Yetnikoff, Esq., at Bell, Boyd & Lloyd, in Chicago, Illinois, reminds the Court that the Creditors' Committee seeks to compensate Watchell with monthly fees of $100,000, plus a Bonus Fee calculated in increments based upon distributions to unsecured creditors ranging from 85% to 100%, resulting in total compensation of $5,000,000 if unsecured creditors receive a 100% distribution. Mr. Yetnikoff notes that the $100,000 monthly fees would be credited against the Bonus Fee once the Bonus Fee exceeds $725,000; at that point the Bonus Fee would be the greater of: (a) the monthly fees plus $725,000, or (b) the Bonus Fee less monthly fees. Mr. Yetnikoff observes that the Bonus Fee could result in compensation to Watchell Lipton that is well above its normal hourly rates and incurred expenses. The Equity Committee contends that such compensation should be denied at this time. According to Mr. Yetnikoff, there are several reasons why the Court should deny the application to the extent it seeks approval of the Bonus Fee. First, Mr. Yetnikoff says, the request is without precedent. Second, Mr. Yetnikoff continues, the Bonus Fee cannot be justified because there may not be any real contingency here. Mr. Yetnikoff says it is very likely that creditors will receive a 100% recovery in these cases. Thus, Mr. Yetnikoff asserts, Watchell should not obtain a bonus -- let alone a $5,000,000 fee -- for a result that may not be either "rare" or "exceptional" at the inception of these cases. Third, Mr. Yetnikoff adds, even if the 85% to 100% recoveries that would result in a bonus could be said to constitute unexpected "success" for creditors in these cases, there is no reason to conclude that Watchell would be responsible for such an outcome. On the contrary, Mr. Yetnikoff claims, credit should be given to the Debtors' rehabilitative efforts. Fourth, Mr. Yetnikoff notes, the Bonus Fee would necessarily come from the assets of these bankruptcy cases that would be otherwise payable to equity holders. "If the Creditors' Committee wishes to reward its counsel, it should not do so with the shareholders' money. Let the creditors pay any bonus solely from distributions to general unsecured creditors," Mr. Yetnikoff contends. Fifth, Mr. Yetnikoff anticipates that the Court approval of the Bonus Fee would irreversibly impair equity's economic interests in these cases. Mr. Yetnikoff tells Judge Barliant that it is simply too soon to lock in the Bonus Fee. (Comdisco Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392- 0900) CONDOR TECHNOLOGY: Needs to Complete Debt Workout by January 2 -------------------------------------------------------------- Condor Technology Solutions Inc. yesterday disclosed that if it doesn't complete its proposed restructuring by January 2, the payment of $12.1 million under its credit agreement would immediately become due and the company would likely to be forced to file for chapter 11 bankruptcy protection, according to Dow Jones. According to documents filed with the Securities and Exchange Commission, the company is asking its shareholders to approve a restructuring of the company's debt, in addition to a 1-for-2 reverse stock split of its common shares. In the event of bankruptcy, Condor said all its outstanding debt, totaling about $49.2 million on June 30, would be ranked before payments to its shareholders. (ABI World, October 9, 2001) CREDIT CARD CENTER: Amicus Secures Management of ATM Portfolio -------------------------------------------------------------- Amicus Financial, the electronic banking division of CIBC, announced it has been awarded the opportunity to solicit all of the Credit Card Center's (CCC) former merchant customers in an effort to assume management of nearly 15,000 ATM terminals located throughout the United States. Currently, Amicus Financial manages more than 8,000 ATMs in the U.S. and Canada. "[Tues]day's announcement about our growing remote banking network - one of the largest in North America - is yet another milestone in our journey to grow North America's largest electronic bank," said Brian Cassidy, chief executive officer of Amicus. "Thanks to our thousands of bank machines, Amicus Financial is offering unprecedented access and convenience to our nearly 800,000 customers across the continent." On Friday, Aug. 24, a federal bankruptcy court judge in Philadelphia awarded XtraCash ATM, the ATM operating arm of Amicus Financial, the exclusive rights to petition all of CCC's former merchant customers with an incentive program in an effort to convert nearly 15,000 already-installed ATMs. That a reputable banking organization won this right is good news for merchants who had contracted with CCC and for consumers who relied on the convenience of these ATMs. "Amicus Financial's long-term ATM strategy is to create North America's largest and most comprehensive bank machine network," said Eugene DeSilva, chief officer of Amicus Financial's Remote Banking Division. "We want to ensure that our ATMs provide fee- free access to funds for Amicus Financial banking customers and reliable, convenient access to cash for the public." Amicus Financial's Remote Banking Division manages three distinct businesses: an owned ATM network, which includes private label bank machines like those of Marketplace Bank and Safeway SELECT Bank; a managed ATM network where Amicus Financial provides other ATM network owners with servicing and maintenance; and an independent sales operator (ISO) network, managed by XtraCash ATM, which provides service and back office processing to individual ATM operators such as convenience stores and gas stations. Bank machines formerly managed by CCC would fall under this last category. Most Amicus Financial ATMs will provide a range of services, including cash dispensing, deposit taking, and account access and management. Future services and features may include online banking capability, check cashing, advertising, money transfer, and access to web-based services. Amicus Financial, a division of the Canadian Imperial Bank of Commerce, provides electronic financial services for many great brands in North America including President's Choice Financial, Marketplace Bank and Safeway SELECT Bank. Through its network of more than 350 banking pavilions, contact centers open 24/7, and more than 8,000 ATMs, Amicus Financial currently services almost 800,000 customers and is acquiring more than 30,000 new customers each month. Amicus Financial offers a superior customer experience by combining self-service with a new standard of friendly, helpful, and responsive customer service, and with better rates and no fees on day-to-day banking. EDISON INT'L: SoCal Unit Will Honor QF Power Purchase Agreements ---------------------------------------------------------------- Southern California Edison (SoCal Edison) yesterday told small power producers that it would honor its five-year, fixed-price contracts with them, ending concern that a separate debt- recovery settlement conflicted with the contract agreement, Dow Jones reported. The June agreement has SoCal Edison buying power from the so- called qualifying facilities at 5.37 cents a kilowatt-hour, as well as paying back $1.2 billion in debt for past power purchases. But the agreement also says the timetable of debt repayment hinges on a legislative rescue for the insolvent utility, and not on a court settlement. State regulators announced last week that they had reached a settlement with the utility, allowing it to pay down $3.3 billion in debt through existing customer rates. A federal judge approved the settlement on Friday. Several qualifying facilities yesterday said they had been in contact with the utility and were told that the original agreement would essentially remain intact. SoCal Edison said it expects to repay all debt by the end of the first quarter of 2002. (ABI World, October 9, 2001) ETOYS INC: Seeks Okay of $2.6MM Settlement with Goldman Sachs ------------------------------------------------------------- Liquidating Internet toy retailer eToys Inc. is seeking bankruptcy court approval of a settlement with Goldman Sachs & Co. under which Goldman Sachs will refund $2.55 million in investment banking fees that it received from the company, Dow Jones reported. According to a recent filing with the U.S. Bankruptcy Court in Wilmington, Del., eToys engaged Goldman Sachs in December 2000 to help the company with a sale, merger or capital infusion. The parties entered into another agreement on February 7 - exactly one month before eToys' chapter 11 filing - under which eToys paid Goldman Sachs a $3 million fee and $150,000 for out- of-pocket expenses. The agreement required Goldman Sachs to return a portion of the fee unless a certain sale, merger or other transaction was consummated. eToys said that since no such transaction took place, it is entitled to a refund of $2.65 million. Objections to the settlement are due on October 23. The U.S. Bankruptcy Court in Wilmington, Delaware, will schedule a hearing only if objections are filed. Although the company shut down its web site when it filed for chapter 11 on March 7, it continued to market its assets and businesses. Since that time, it has entered into and consummated various sale and other transactions, including a transaction with an affiliate of KB Toys. Most recently, the company has sought approval to sell certain inventory from locations in Virginia and California to Bobby Wilkerson Inc. for about $1.3 million. A hearing on the request is scheduled for October 17. (ABI WOrld, October 9, 2001) EXODUS COMMS: Taps Skadden ARPS As Primary Bankruptcy Counsel ------------------------------------------------------------- Exodus Communications, Inc. presents their application to employ and retain Skadden Arps Slate Meagher & Flom, LLP as their principal bankruptcy counsel to prosecute these chapter 11 cases. Adam W. Wegner, the Debtors' Senior Adviser for Legal and Corporate Affairs, tells the Court that Skadden Arps is uniquely familiar with the Debtors' business and legal affairs. Mr. Wegner relates that the Debtors selected the firm of Skadden Arps as their attorneys because of the firm's extensive experience with and knowledge of the Debtors' business, as well as its experience and knowledge in the field of debtors' and creditors' rights and business reorganizations under chapter 11. The Debtors have hired Skadden Arps under a general retainer arrangement set forth in a formal Engagement Agreement. In short, Skadden will charge for services at hourly rates under a bundled rate structure that includes all staff, clerical and resource charges. Presently, the hourly rates under the bundled rate structure range are: Partners $480 to 695 Counsel and Associates 230 to 470 Legal Assistants and Support Staff 80 to 160 Specifically, Mr. Wegner says, the Debtors will turn to Skadden to: A. advise the Debtors with respect to their powers and duties as debtors and debtors-in-possession in the continued management and operation of their business and properties; B. attend meetings and negotiate with representatives of creditors and other parties in interest; C. take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on their behalf, the defense of any actions commenced against the estates, negotiations concerning litigation in which the Debtors may be involved, and objections to claims filed against the estates; D. prepare on behalf of the Debtors all motions, applications, answers, orders, reports, and papers necessary to the administration of the estates; E. advise the Debtors in connection with any sale of assets; F. negotiate and prosecute on the Debtors' behalf, plan of reorganization, disclosure statement, and all related agreements and documents, and take any necessary action on behalf of the Debtors to obtain confirmation of such plan; G. appear before this Court, any appellate courts, and the United States Trustee, and protect the interests of the Debtors' estates before such courts and the United States Trustee; and H. perform all other necessary legal services and provide all other necessary legal advice to the Debtors in connection with the chapter 11 cases. Skadden member J. Gregory Milnoe, Esq., relates that the firm was retained to assist the Debtors in their present restructuring efforts on July 15, 2001, and has since performed extensive legal work for the Debtors in connection with their ongoing restructuring efforts including with respect to financing and divestiture strategies and creditor issues. Mr. Milnoe believes Skadden Arps has assembled a highly qualified team of attorneys, including himself, to service the Debtors during their reorganization efforts. The other members of the legal team to service the Debtors are: * D.J. Baker, Esq., * Mark S. Chehi, Esq., and * John K. Lyons, Esq. Exodus paid Skadden a $75,000 retainer for professional services and expenses. The Debtors also paid $441,939 for prepetition legal services Mr. Milnoe confirms that members, counsel and associates of Skadden Arps: (1) do not have any connection with the Debtors or their affiliates, their creditors, or any other party in interest, or their respective attorneys and accountants, (2) are "disinterested persons," and (3) do not hold or represent any interest adverse to the estates. Mr. Milnoe tells the Court that Skadden Arps in the past has represented, currently represents, and in the future likely will represent certain creditors of the Debtors and other parties-in-interest in matters unrelated to the Debtors, the Debtors' reorganization cases or such entities' claims against or interests in the Debtors. Prior to the commencement of these cases, Skadden Arps conducted a "conflicts review" with respect to the Debtors and the most significant parties-in-interest in the Debtors' cases and has discovered that it has represented the following entities on matters related to the Debtors: A. Former Secured Creditor - The Firm regularly represent Goldman Sachs on matters unrelated to Exodus. Goldman Sachs participated in a senior secured credit facility under which certain of the Debtors were borrowers. In the spring of 2001, the Firm rendered certain advice to Goldman Sachs concerning such participation. The senior secured credit facility was paid in full by Exodus in June 2001, and the Firm's representation of Goldman Sachs in that matter concluded at that time. B. Common Shareholder - The Firm regularly represents Global Crossing Ltd. which is a 19.6% shareholder of Exodus on matters unrelated to Exodus. In detailed conflicts check, Mr. Milnoe discovered that in connection with regular, ongoing tax advice to Global Crossing concerning its investments in a variety of enterprises, tax advice was also being given regarding tax strategies and implications affecting Global Crossing's investment in Exodus. The Firm has ceased providing any such advice and clarified in writing that it will not provide advice to or otherwise represent Global Crossing in any way relating to its former, existing or future relationships with Exodus, including but not limited to, tax advice concerning Global Crossing's existing investment in Exodus. To preserve the confidences of all parties, the Firm has established an "ethical wall" and instructed Firm lawyers who have worked for Global Crossing with respect to its investment in Exodus not to discuss or share any information about that matter with any persons working on Exodus matters and vice versa. Finally, the Firm has obtained a written waiver from Global Crossing permitting it to fully represent Exodus on all matters in which Global has or may have an adverse interest, including, but not limited to, litigation before this Court or another appropriate tribunal. The Firm continues to represent Global Crossing Ltd. in matters unrelated to the Debtors. C. Litigation - The Firm previously provided advice to Live365, Inc., a customer of Exodus, in connection with a potential contract dispute. However, the matter was resolved without the initiation of any formal proceedings by the Firm, and the Firm's representation of Live365 in this matter has terminated. In addition, the Firm currently represents Merrill Lynch which is a defendant in a series of purported class action lawsuits brought on behalf of Merrill Lynch customers alleging the breach of fiduciary duties allegedly owed to such customers by publishing analyst reports about various companies including, in one case, Exodus. Such lawsuits are not based on Merrill Lynch's acting as an investment banker for a security of Exodus, and the Firm has not represented Merrill Lynch in connection with the offer, sale or issuance of a security of Exodus. Lastly, Skadden, Arps currently represents, or has represented the following entities on matters unrelated to the Debtors: 1. Secured Lenders - Skadden, Arps currently represents, or has represented certain of the Debtors' secured lenders in matters unrelated to Exodus, including: Bank of Tokyo Mitsubishi, Ltd.; Barclays Bank Plc, Barclays Global Investors Trust & Banking Co., Ltd.; Fuji Bank, Ltd., Fuji Securities Inc.; Lehman Brothers, Lehman-Sunrise Finance, K.K., and Lehman Brothers Merchant Banking Partners II, L. P.; Franklin Resources, Inc.; Transamerica Lending and Leasing, Inc.; Wells Fargo Bank, Wells Fargo & Co., Allis Chalmers Corp., Family Golf Centers, Inc, Giant Industries, Inc., Motorcar Parts and Accessories, Inc., NET Perceptions, Inc., Rockwell International Corp., USF&G-Falcon Asset Management, Inc. and William Siart. 2. Indenture Trustees - Chase Manhattan Bank and Trust Company and HSBC Bank USA are each indenture trustees with respect to the issuance of the Debtors' 11 public debt. Skadden, Arps represents Chase Manhattan Bank and Trust Company and HSBC Bank USA on matters unrelated to the Debtors. 3. Major Lessors - Of the Debtors' major lessors, identified by the Debtors as of August 8, 2001, Skadden, Arps represents or has represented the following major lessors or their affiliates in matters unrelated to the Debtors and these cases: Cisco Systems and Sun Micro systems. 4. Major Trade Creditors. Of the Debtors major vendors, Skadden, Arps represents or has represented the following major vendors or their affiliates in matters unrelated to the Debtors or their chapter 11 cases: affiliates of Akamai Technologies, Inc., including Battery Ventures, Massachusetts Financial Services Co., and the Massachusetts Institute of Technology; AT&T; Cable & Wireless; EMC 2 Corporation; and Global Crossing. 5. Officer and Directors - Daniel Lynch a former director of Exodus is an outside director of Cybercash Inc., a client of the firm. Naomi O. Seligman, a former director of Exodus is also an outside director of firm clients Sun Microsystems. 6. Retained Professionals. In addition to Skadden, Arps, the Debtors have sought, or may seek, to retain (a) Fenwick and West, (b) Bingham Dana LLP, (c) Gray Cary Ware and Freidenrich, (d) KPMG Peat Marwick, (e) Lazard Freres & Co. LLC and (e) Logan & Company, Inc. to represent them in these cases. Skadden, Arps currently represents Lazard Freres & Co. LLP, and KPMG Peat Marwick on matters unrelated to these cases. In addition, Skadden, Arps represents and has represented entities that have in the past used the services of these professionals. 7. Other Professionals. Skadden, Arps also represents or has represented in the past the following of the Debtors, ordinary course professionals or their affiliates on matters unrelated to the Debtors or their Chapter 11 cases: Baker and McKenzie, an affiliate of Baker & McKenzie; Minter, Ellison, Orrick, Herrington & Sutcliffe, LLP, PriceWaterhouse Coopers and Deloitte and Touche. 8. Major Bondholders - Skadden Arps represents or has represented the following bondholders or their affiliates in matters unrelated to the Debtors: Aegon USA Investment Management Inc., Brookside Capital Management/Bain Capital, Inc., Eaton Vance Management Inc., Fidelity Management & Research, Goldman Sachs International, Legg Mason Capital Management, Inc., Lehman Brothers, Lond, Abbett & Company, Morgan Stanley, Dean Witter, Northwestern Investment Management Company, Oppenheimer Funds, Prudential Global Asset Management, Putnam Investments, RBC Dominion Securities Corp., Smith Barney Asset Management, T. Rowe Price Associates, Inc., The TWC Group a/k/a Trust Co. of the West, and Wellington Management Company LLP. (Exodus Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) FEDERAL-MOGUL: Gets Okay to Pay $50M In Critical Vendors' Claims ---------------------------------------------------------------- David M. Sherbin, Vice President, Deputy General Counsel and Secretary of Federal-Mogul, tells the Court that Federal-Mogul Corporation needs the discretion to pay up to $50,000,000 of prepetition claims owed to certain critical vendors. By Motion, the Debtors ask the Court for authority to pay (but not an order directing them to pay) pre-petition claims of critical vendors the Company deems to be essential to the uninterrupted functioning of the Debtors' business operations. Mr. Sherbin provides these examples of situations where the Debtors might want to pay a prepetition Critical Vendor claim: (A) the goods and services provided are often the only source from which the Debtors can procure certain goods or services; (B) failure to pay the critical vendor claims would very likely result in termination of the critical vendors' provision of goods and services to the Debtors; (C) the critical vendors provide goods and services to the Debtors on advantageous terms; (D) the critical vendors would be irreparable harmed by the Debtors' failure to pay their pre-petition claims, resulting in the Debtors being forced to obtain goods and services elsewhere that would either be higher price or not the quality required by the Debtors. Mr. Sherbin explains that the Debtors will be motivated to pay a Critical Vendor Claim when the failure to pay is likely to result in: (1) the Debtors' inability to obtain necessary materials for production; (2) a temporary shutdown of the Debtors' manufacturing facilities; and (3) severe negative effects on the Debtors OE customers, which include most vehicle manufacturers in the U.S. Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young & Jones, P.C., in Wilmington, Delaware, tells the Court that these effects are primarily due to the highly integrated nature of the OE supply chain, the Debtors' central role in the supply chain and the OE customers' stringent quality requirement that limit the availability of alternative sources of supply. Such effects would result in significant shutdowns of their customers' manufacturing facilities, severely impacting those customers and potentially giving rise to damages claims against the Debtors. The Debtors seek to pay up to $50,000,000 in critical vendor claims, Ms. Jones says, recognizing the necessity of making payments to critical vendor claims and ensuring provision of adequate amounts of credit on a post-petition basis. Ms. Jones relates that the Debtors have undertaken a review of their pre-petition vendors to identify those essential to the Debtors' operations. In addition, the Debtors further developed certain procedures that will ensure continuation of trade credit necessary to the Debtors' businesses. Mr. Sherbin estimate that 1,800 vendors constitute critical vendors, or approximately 5.1% of the Debtors 35,000 vendors as of the petition date. Mr. Sherbin proposes to condition the payment of critical vendor claims on the agreement that they continue supplying goods and services on trade terms previously availed by the Debtors, or such other trade practices that are favorable to the Debtors as those in effect pre-petition. If a critical vendor refuses to supply goods and services to the Debtors on customary trade terms following the receipt of payment on its critical vendor claim, the Debtors seek authority to: (i) declare that any such trade agreement between the Debtors and critical vendor be terminated; and (ii) declare that provisional payments made to critical vendors on account of critical vendor claims be deemed to have been in payment of outstanding post-petition claims of such vendors. In the event of such occurrence, Ms. Jones requests that such critical vendors immediately repay the Debtors any payment made to it on account of critical vendor claims to the extent that payments on account of such critical vendor claims exceed the post-petition claims of such vendors without giving effect to any rights of setoff. Ms. Jones states that the Debtors seek to return the parties to their position immediately prior to the entry of the order approving this motion with respect to all pre-petition claims in the event a trade agreement is terminated or a critical vendor refuses to supply goods and services to the Debtors on customary trade terms following the receipt of payment of critical vendor claims. The Debtors further propose the reinstatement of any terminated trade agreement in the event of: (x) such determination is subsequently reversed by the Court for good cause shown that the determination was materially incorrect; (y) The underlying default under the trade agreement was fully cured by the critical vendor not later than 5 business days following the Debtors' notification to the critical vendor that a default has occurred; (z) The Debtors reach a favorable alternative agreement with the critical vendor. As a further condition of receiving critical vendor claim, Ms. Jones says, the critical vendor must agree to remove trade liens obtained by some critical vendors on the Debtors' assets. The Debtors believe that payment of critical vendor claims is necessary to effect a successful reorganization in these cases. Otherwise, Ms. Jones believes that such critical vendors are likely to discontinue providing goods to the Debtors on customary trade terms, reducing the amount of credit available to the Debtors. In addition, the Debtors believe that certain critical vendors may cease to do business with the Debtors, resulting in Debtors' inability to obtain certain essential goods and services and forcing the Debtors to incur higher costs. * * * Finding that the relief requested is in the best interest of the Debtors and their estates, creditors, and other parties in interest, Judge Robinson grants the motion on an interim basis, authorizing, but not directing, the Debtors to make payments for critical vendor claims up to $10,000,000. (Federal-Mogul Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) FRIEDE GOLDMAN: Advances Construction of 2 Semisubmersibles ----------------------------------------------------------- Friede Goldman Halter, Inc. (OTCBB:FGHLQ) announced that its Friede Goldman Offshore subsidiary has reached an agreement with Petrodrill IV Ltd. and Petrodrill V Ltd. (Petrodrill) to advance the construction of two Amethyst-class deepwater semisubmsersible drilling rigs. Friede Goldman will work, at the customer's direction, and operate on a cost-reimbursable basis with contractually established rates for equipment, personnel, and labor. The agreement is expected to generate greater security and additional employment opportunities for the local workforce. Preliminary estimates place work for this phase of completion at four months for the Company's Pascagoula, Mississippi facility and five months at the Orange, Texas facility. Petrodrill may opt to add additional phases. FGH also announced plans to consolidate its ongoing Pascagoula, Mississippi offshore projects at the East Facility on Greenwood Island. The West Bank facility will undergo a restoration and upgrade during the temporary closure. According to Offshore Group President Ron Schnoor, "With as many as six oil rigs moored at the docks over the past several years, FGO has been unable to allow for maintenance dredging. We have approximately $500,000 in the port's coffers specifically designated for dredging of the basin alongside our docks at the West Bank, so this is the perfect opportunity to carry out that project at no cost to the Company." The West Bank facility renovation is just one example of the numerous initiatives that the Company is taking to support its goals of cost-effective, stable, and well-managed business operations. Friede Goldman Halter is a world leader in the design and manufacture of equipment for the maritime and offshore energy industries. Its operating units are Friede Goldman Offshore (construction, upgrade and repair of drilling units, mobile production units, and offshore construction equipment), Halter Marine (construction and repair of ocean-going vessels for commercial and governmental markets), FGH Engineered Products Group (design and manufacture of cranes, winches, mooring systems, and marine deck equipment), and Friede & Goldman Ltd. (naval architecture and marine engineering). GREATE BAY: Solicitation for Indenture Revision Expires Today ------------------------------------------------------------- GB Property Funding Corp., GB Holdings, Inc. and Greate Bay Hotel and Casino, Inc. has extended the solicitation period for the solicitation of consents for the purpose of amending the terms of the indenture governing the Company's 11% First Mortgage Notes due 2005. The terms of the Solicitation are set forth in the Solicitation Materials distributed to holders of Notes. The Solicitation was due to expire at 5:00 p.m., Eastern Time, on October 8, 2001. The Solicitation will now expire at 5:00 p.m., Eastern Time, on October 11, 2001, unless the Solicitation is extended to a later date and time. HEALTHCENTRAL: Files for Protection Under Chapter 11 ---------------------------------------------------- HealthCentral (Nasdaq:HCEN), a leading healthcare e-commerce company, and its wholly-owned subsidiaries HealthCentralRx.com, Inc., HealthCentral Enterprise Web Services, Inc., WebRx.com, Inc., HCEN Acquisition Corp., HealthCentral.ca, Vitamins.com, Inc., Vitamins.com, LLC, L&H Vitamins, Inc. and J&M Direct Corp. announced that they have filed voluntary petitions for protection under Chapter 11 of the United States Bankruptcy Code. The Company currently intends to proceed with a sale of its assets. The Company is taking this action in an effort to maximize the value of the business for all of its stakeholders. HealthCentral (Nasdaq: HCEN) is a leading provider of healthcare e-commerce to consumers through WebRxSM, a network of sites representing the consolidation of Vitamins.com, HealthCentral.com, RxList.com and others. Its e-commerce site, WebRxSM -- http://www.webrx.com -- features more than 20,000 products. WebRxSM features one of the largest on-line selections of vitamins, a Vision Center and a Comfort Living department -- http://www.comfortliving.com -- with a broad range of products including maternity and baby care, ergonomic chairs, water purifiers and an extensive line of allergy control products. HealthCentral.com -- http://www.healthcentral.com-- provides health-related information and commentary by Dr. Dean Edell, MD and other experts. RxList.com -- http://www.rxlist.com -- provides both patient-focused and professional-focused prescription drug information monographs. HENRY MAYO: In Talks with Creditors to Pay Off $10MM In Debts ------------------------------------------------------------- Hoping to avoid bankruptcy, the financially beleaguered Henry Mayo Newhall Memorial Hospital in Valencia, California, is scrambling to cut deals with creditors to pay off its $10 million debt, The Los Angeles Daily News reported. The hospital's chief executive officer and chief financial officer have been placing calls to each creditor to persuade them to accept 22.5 cents on the dollar for past-due bills. Hospital President and CEO Roger E. Seaver said 95 percent of the creditors must agree to the discounted payment if the hospital is to avoid a bankruptcy court-supervised business reorganization. Seaver said if the hospital is forced to file for chapter 11, court and other fees would reduce the rate it can pay to creditors. "At a meeting in a couple of weeks, the major creditors will decide if they'll agree to the terms or force us into chapter 11 (bankruptcy)," Seaver said. "Getting 95 percent agreement in anything is a problem, even though it appears to be the best option for them. In the end, it's their choice." As of last Friday, Newhall Memorial had agreements from creditors owed 15 percent of the total debt, which is in excess of $10 million. (ABI World, October 9, 2001) ICG COMMS: Secures Court Approval to Pay Exit Financing Fees ------------------------------------------------------------ ICG Communications Inc. received court approval to pay due diligence reimbursement in connection with its efforts to obtain exit financing. Chief Judge Peter J. Walsh of the U.S. Bankruptcy Court in Wilmington, Del., signed the order on September 28, according to documents obtained by DBR Friday. The order permits ICG Communications to cap the reimbursement at $500,000. As part of the facilities-based communications provider's efforts to emerge from bankruptcy, ICG Communications is in the process of securing exit financing. The company said in its motion that it has entered into "preliminary discussions" with a potential lender. (ABI World, October 9, 2001) IMPERIAL CASUALTY: S&P's Bpi Rating Reflects Volatile Returns ------------------------------------------------------------- Standard & Poor's assigned its single-'Bpi' financial strength rating on Imperial Casualty & Indemnity Co. The rating action reflects the stock company's volatile returns, absence of retained earnings, and net asbestos and environmental liability exposure, which is offset in part by strong capitalization. Based in Philadelphia, Penn. (domiciled in Nebraska), Imperial Casualty & Indemnity Co. (NAIC: 11487) writes mainly general liability. All outstanding shares are owned by British Petroleum Co. PLC (BP), formerly BP Amoco (double-'A'-plus counterparty credit rating), the world's third largest integrated oil company behind Exxon Mobil and Royal Dutch/Shell. The company's business lies entirely within its major state of Connecticut and its products are distributed primarily through independent agencies. The company, which began business in 1955, is licensed in 42 states and the District of Columbia. Major Rating Factors: -- The company's historical returns have been volatile with, for example, ROA ranging from 0.3% to 14.4% in the last five years, a limiting factor. Together with a record of earnings volatility, the company's absence of retained profits (unassigned surplus is negative $0.1 million) is a rating factor. -- The combination of one-year loss development to surplus of 9.0% and high earnings volatility is a limiting factor. At year-end 2000, the company's net asbestos and environmental liability reserves exceeded 40% of policyholders' surplus. The company's direct unpaid losses are also high at 47% of policyholders' surplus. -- The company's surplus, which stood at $13.8 million at year-end 1999, has shown virtually no growth with a compound annual growth rate of 0.3% since 1972. -- At year-end year 2000, capital adequacy as measured by Standard & Poor's model was extremely strong. The company is rated on a stand-alone basis. 'Pi' ratings, denoted with a 'pi' subscript, are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. 'Pi' ratings are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a 'pi' subscript are not subject to potential CreditWatch listings. Ratings with a 'pi' subscript generally are not modified with 'plus' or 'minus' designations. However, such designations may be assigned when the insurer's financial strength rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group. INTEGRATED HEALTH: Lease Decision Period Extended to April 1 ------------------------------------------------------------ Integrated Health Services, Inc. sought and obtained an order from the Court, pursuant to 11 U.S.C. Sec. 365(d)(4), further extending the time within which they must decide whether to assume, assume and assign, or reject unexpired leases of nonresidential real property to and including April 1, 2002. The extension applied to all lessees or sub-lessees and is without prejudice to their ability to request a further extension. Presently, the Debtors are lessees or sub-lessees under more than 1,300 Unexpired Leases, approximately 181 of which are utilized in connection with the Debtors' long-term care facilities, 142 of which are utilized in connection with Symphony (and certain other ancillary divisions), while approximately another 1,024 Unexpired Leases relate to the RoTech Debtors. The Debtors include with the motion in an annex a list of the Unexpired Leases to the best of the Debtors' knowledge, representing a good faith effort on their part to list the Unexpired Leases. The Unexpired Leases are valuable assets of the Debtors' estates and are integral to the continued operation of their businesses. Thus, the Debtors do not want to forfeit their right to assume any Unexpired Lease as a result of the "deemed rejection" provision of the Bankruptcy Code, or be compelled to assume all of their Unexpired Leases within that same period in order to avoid rejections, with the resultant imposition of potentially substantial administrative expenses to their estates. However, the time required to make lease assumption and/or rejection decisions is compounded by the large number of Unexpired Leases, as well as the overall size and complexity of the Debtors' cases, the Debtors tell the Court. The task is daunting, the Debtors say, given the complexity and distinctiveness of many of the lease arrangements: in order to make reasoned decisions to assume or reject such leases, the actual and projected financial performance of each facility must be reviewed, ongoing operating results monitored and evaluated, and other factors affecting the desirability of retaining various facilities considered. The Debtors tell the Court that their continuing effort to rationalize their vast lease portfolio has produced significant results during the Third Extension Period. In particular, the Debtors remind Judge Walrath that they are in the process of formulating a plan of reorganization for the RoTech Debtors, which collectively are the lessees under more than 75% of the Unexpired Leases. The RoTech Debtors are working toward the goals of completing the confirmation process by January 26, 2002 and emerging from chapter 11 within the first quarter of 2002. In furtherance of those goals, during the Third Extension Period, the RoTech Debtors focused on identifying unwanted Unexpired Leases within their portfolio, and as a result have already filed rejection motions as to a number of Unexpired Leases. It is anticipated that at least one additional rejection motion in respect of Unexpired Leases of the RoTech Debtors will be filed shortly. Thus, the Debtors anticipate that by the end of the first quarter of 2002, assumption/rejection decisions will have been made as to the vast majority of the Unexpired Leases. The Debtors believe in good faith that an extension of their time to April 1, 2002 will facilitate an orderly and efficient process for making the assumption/ rejection decisions on this major portion of the Debtors' portfolio. In addition to the continued efforts by the RoTech Debtors to make decisions on their Unexpired Leases, the Debtors reiterate the significant progress that they have made with respect to their long-term care facility leases, drawing Judge Walrath's attention to their previous efforts in making an extensive facility-by-facility review and evaluation of their long-term care facility portfolio, which has been the subject of continuing refinement, discussion with the Creditors' Committee and its professionals, negotiation and implementation. The Debtors advise that their portfolio analysis has served, and will continue to serve, as the basis for ongoing and anticipated lease restructuring negotiations. The Debtors also note that the lessors in respect of the Unexpired Leases will not be prejudiced by the extension because: (i) the Debtors have performed and will continue to perform in a timely manner their post-Filing Date obligations under the Unexpired Leases, except with respect to those obligations which are the subject of bona-fide disputes; and (ii) any lessor may request that the Court fix an earlier date by which the Debtors must assume or reject its lease in accordance with section 365(d)(4) of the Bankruptcy Code. The Debtors are convinced that the extension will promote their ability to maximize the value of their estates, avoid the incurrence of needless administrative expenses by minimizing the likelihood of an inadvertent rejection of a valuable lease or premature assumption of a burdensome one, and, most importantly, best serve the health and safety of facility residents. The extension granted will include not only the unexpired leases in the annex but also all unexpired nonresidential real property leases pursuant to which the Debtors are or are determined to be a lessee or sublessee, provided however, that it does not apply to those nonresidential real property leases which are the subject of a separate order of the Court. (Integrated Health Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900) J.C. PENNEY: Selling $600MM Convertible Sub. Notes Due 2008 ----------------------------------------------------------- J. C. Penney Company, Inc. (NYSE: JCP) announced that it has priced a private placement of $600 million of 5 percent convertible subordinated notes due 2008. The offering was increased from the previously announced amount of $500 million. In addition, the initial purchasers of the securities will have a 30 day option to purchase up to an additional $50 million in notes. The notes are convertible into 21.1 million shares of JCPenney Common Stock at the option of the holders, at a conversion price of $28.50 per share. The notes are callable by the Company on or after October 20, 2004. The proceeds from the offering are expected to be used primarily for upcoming debt maturities. The notes are being sold to qualified institutional buyers in reliance on Rule 144A and to persons outside the United States under Regulation S. The notes, and the JCPenney Common Stock issuable upon conversion of the notes, have not been registered under the Securities Act of 1933, as amended, and they may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. J. C. Penney Company, Inc. is one of America's largest department store, drugstore, catalog, and e-commerce retailers, employing approximately 270,000 associates. The Company operates approximately 1,080 JCPenney department stores in all 50 states, Puerto Rico, and Mexico. In addition, the Company operates approximately 50 Renner department stores in Brazil. Eckerd operates approximately 2,650 drugstores throughout the Southeast, Sunbelt, and Northeast regions of the U.S. JCPenney Catalog, including e- commerce, is the nation's largest catalog merchant of general merchandise. J. C. Penney Company, Inc. is the sponsor of JCPenney Afterschool, a partnership committed to providing kids with high-quality afterschool programs to help them reach their full potential. J.C. PENNEY: Fitch Rates Convertible Subordinated Notes at BB- -------------------------------------------------------------- Fitch has assigned a rating of 'BB-' to J. C. Penney Co., Inc.'s proposed $500 million issue of seven year convertible subordinated notes. The proceeds are expected to be used primarily for upcoming debt maturities. At the same time, Fitch affirmed its rating of 'BB+' on Penney's senior notes. The Rating Outlook is Negative. The ratings reflect Penney's soft department store and Eckerd drugstore operations, and weakness in the company's catalog operation. While recent sales trends for the department and drug stores have been encouraging, profitability remains depressed. These factors are offset in part by management's efforts to improve operations and strengthen the company's liquidity position. After deteriorating for several years, Penney's credit measures have begun to stabilize. EBITDAR (before restructuring and other charges) to interest plus rents was 1.5 times in the 12 months ended July 28, 2001, compared with 1.4x in 2000 and 2.0x in 1999. Leverage as measured by lease-adjusted debt to EBITDAR of 6.4x in the latest 12 months compared with 6.7x and 4.6x in 2000 and 1999, respectively. While these levels are weak for the rating category, Fitch expects them to rebound over the medium term as debt levels are reduced and profitability and cash flow improves. Despite its soft operations, the recent sale of the Direct Marketing Services business and improving free cash flow have strengthened Penney's balance sheet and liquidity. As of July 28, 2001, the company had cash on hand of $1.7 billion. This liquidity will be used to retire debt maturities over the next couple of years, thereby allowing management time to implement its turnaround strategies. Penney's management team, under the direction of CEO Allen Questrom, is taking positive steps to return the company to profitable growth over the long term. These steps include the recent centralization of the merchandising function at the department stores, which should lead to improved assortments and more timely movement of goods into the stores. Eckerd is implementing new pricing and marketing strategies, and is reconfiguring its stores to boost sales of higher margin general merchandise. Nevertheless, the Negative Rating Outlook reflects a weakened economic outlook, the competitive nature of the pharmacy and department store sectors, and the risks associated with implementing new strategies. It also reflects the expectation that it could take an extended period of time for the company's turnaround efforts to take hold. LACLEDE STEEL: Has Until Confirmation Date to Decide on Leases -------------------------------------------------------------- Judge Barry S. Schermer concurred with Laclede Steel Company's assertion that sufficient cause exists to extend the time within which the company must elect to assume or to reject any unexpired leases of nonresidential real property. Judge Schermer thus extended Laclede Steel's lease decision period until the entry of an order confirming a plan of reorganization. Lessors may request the Court to compel Laclede Steel to assume or reject a particular unexpired lease, Judge Schermer notes. Laclede Steel likewise retains the right to oppose any such motion, Judge Schermer adds. Laclede Steel, one of only three full-line producers of continuous-weld pipe in the US, sought chapter 11 protection for the second time on July 27, 2001, in the U.S. Bankruptcy Court for the Eastern District of Missouri. Lloyd A. Palans, Esq., at Bryan Cave LLP, in St. Louis, represents the firm in its restructuring efforts. The company's 10Q Report filed with SEC lists its assets at $129,906,000 and its liabilities at $123,340,000 as of March 31, 2001. LERNOUT & HAUSPIE: Hearing on Disclosure Statement on Friday ------------------------------------------------------------ Having reviewed Lernout & Hauspie Speech Products N.V. and Dictaphone Corp.'s Disclosure Statement and the objections, and based on the Debtors' stated intent to amend and the sale motions, Judge Wizmur set a continued hearing on the Disclosure Statement, as amended, for October 12, 2001. (L&H/Dictaphone Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) MARINER POST-ACUTE: Enters Settlement on PHCM Loan with Omega ------------------------------------------------------------- Omega Healthcare Investors Inc. (NYSE:OHI) announced that it has entered into a comprehensive settlement with Mariner Post-Acute Network Inc. (MPAN) resolving all outstanding issues relating to Omega's loan (the PHCM Loan) to Professional Healthcare Management Inc. (PHCM), an MPAN subsidiary. Omega also announced the 90-day extension by one lender of a covenant waiver and continuing discussions with a second lender regarding a similar extension. MPAN Settlement Pursuant to the MPAN settlement, the PHCM Loan is secured by a first mortgage on twelve skilled nursing facilities owned by PHCM with 1,668 operating beds. PHCM will remain obligated on the total outstanding loan balance as of January 18, 2000, the date MPAN filed for protection under Chapter 11 of the Bankruptcy Code, and is to pay Omega its accrued interest at a rate of approximately 11% for the period from the filing date until September 1, 2001. As of the closing of the Settlement Agreement on September 17, 2001, PHCM paid approximately 93% of such accrued interest and Omega expects the balance will be paid within the next 60 days. Monthly payments with interest at the rate of 11.57% per annum resumed October 1, 2001. The Settlement Agreement was approved by the United States Bankruptcy Court in Wilmington, Delaware on August 22, 2001, and became effective as of September 1, 2001. On February 1, 2001, four Michigan facilities previously operated by PHCM and subject to Omega's pre-petition mortgage were transferred by PHCM to a new operator who paid for the facilities by execution of a Promissory Note that has been assigned to Omega. PHCM was given a $4.5 million credit on February 1, 2001 and an additional $3.5 million credit as of September 1, 2001, both against the PHCM Loan balance in exchange for the assignment of the Promissory Note to Omega. The Promissory Note is secured by a first mortgage on the four facilities. Following the closing under the Settlement Agreement, the outstanding principal balance on the PHCM Loan is approximately $59,700,000. The PHCM Loan term will be ten years with PHCM having the option to extend for an additional ten years. PHCM will also have the option to prepay the PHCM Loan between Feb. 1, 2005 and July 31, 2005. C. Taylor Pickett, Omega's CEO, commented, "We are pleased to have completed this agreement with MPAN and PHCM, whose commitment to providing quality patient care enabled their facilities to improve even while operating through the bankruptcy process." OMEGA HEALTHCARE: Lenders Extend Waiver Until December 13 --------------------------------------------------------- Omega Healthcare Investors Inc.'s senior lenders previously granted a waiver through September 14, 2001 of certain financial covenants under the Company's two secured credit facilities. The lenders under Omega's $175 million secured credit facility have extended this waiver through December 13, 2001. The waiver granted under Omega's separate $75 million secured credit facility has expired and discussions regarding an extension are continuing with the lender. Omega has not received any notice of default or acceleration of the outstanding balance thereunder. Omega's ability to draw upon the remaining availability under these credit facilities has been limited by the covenant violation and waiver until such time as a permanent resolution is attained. As part of this process, Omega is engaged in discussions regarding a restructuring of these credit facilities as well as evaluating various alternatives in connection with addressing the $110 million in debt maturing during the first half of 2002. There can be no assurance that Omega will be successful in restructuring its two secured credit facilities, consummating any alternative transaction that may be required to address the 2002 debt maturities or the timing or terms of any such transactions. ONSITE ACCESS: Lease Decision Period Extended Until December 17 --------------------------------------------------------------- OnSite Access, Inc. and its affiliate debtors ask Judge Richard L. Bohanon to put off until December 17, 2001 their deadline for deciding whether to assume or reject their unexpired leases of nonresidential real property. The Debtors tell Judge Bohanon that they are still in the process of analyzing the leases to determine whether these will be needed in the context of the Debtors' operations. OnSite Access assures lessors that the Debtors intend to pay their obligations under the leases and have the means to do so. Furthermore, the company says that lessors will not be prejudiced by an extension because they may individually ask the Court to fix an earlier date by which the Debtors must assume or reject a lease. OnSite Access, Inc. is a broadband telecommunications network provider of data, voice and enhanced services to small and medium-sized businesses. The company sought chapter 11 protection on May 16, 2001 in the U.S. Bankruptcy Court for the Southern District of New York. Frank A. Oswald, Esq., at Togut Segal & Segal LLP, in New York, New York, represents the firm in its reorganization efforts. OWOSSO CORP: Mulls Further Sale of Assets To Stabilize Results -------------------------------------------------------------- Owosso Corporation (Nasdaq: OWOS) announced that, at this time of great economic uncertainty, it has taken actions to significantly reduce its corporate infrastructure. Effective immediately, the corporate headquarters' organization will be reduced to a level of four individuals from its previous level of nine. This includes the departure of Jack Morrash, the Company's Executive Vice-President and Chief Financial Officer, and Harry Holiday III, Chief Operating Officer. Owosso's Corporate Controller, Kirk Moore, will remain with the Company and will assume the duties and title of Executive Vice-President - Finance and Chief Financial Officer. The Company also announced that George B. Lemmon, Jr., President and Chief Executive Officer, will take a salary reduction of 20% effective immediately. These actions are consistent with reductions implemented over the past two years which reduced the corporate office from 15 people two years ago to the current four. Owosso also announced the sale of the Company's Cramer business. Effective September 24, 2001, Owosso sold substantially all of the assets of Cramer for cash proceeds of approximately $565,000, plus the assumption of approximately $317,000 of liabilities. Owosso is in the process of disposing of the Cramer real estate, the only remaining asset of this business. The proceeds from the sale were utilized to reduced debt. The Company's remaining operating segments consist of the Motors segment, which includes Motor Products - Owosso Corporation, Motor Products - Ohio Corporation and Stature Electric, Inc., and the Coils segment, consisting of Astro Air Coils, Inc. and Snowmax, Inc. George B. Lemmon, Jr. stated, "In addition to the actions being taken to further reduce fixed costs at both the corporate and operating unit levels, the Company is considering further sales of assets and/or business units to stabilize and improve the financial results of the Company." To receive additional information on Owosso Corporation visit Owosso's website, http://www.owosso.com PASW INC: Fails to Comply with Nasdaq Net Equity Requirements ------------------------------------------------------------- PASW Inc. (Nasdaq:PASW) announced that on October 1, 2001, the company received notification from The Nasdaq Stock Market Inc. that it was not in compliance with the net tangible assets or net equity requirements for continued listing as set forth in Market Place Rule 4310c(2)(B) as modified by SR-NASD-01-14 and that its securities will be delisted from The Nasdaq National/Small Cap Market at the opening of business on October 9, 2001. After that date, the PASW common stock (PASW) and warrants (PASWW) will begin trading on the OTC Bulletin Board Market (OTCBB). PASW is in limbo. The company, formerly Pacific Softworks, had agreed in 2001 to a reverse acquisition with Canada's privately held Simmons Energy Services, a provider of drilling and maintenance equipment and services to oil and gas companies. That deal was called off, though, because PASW was unable to raise enough cash to meet its end of the agreement. Cash flow has been a problem for PASW in other respects as well: it had to discontinue operations at its Alera Systems subsidiary, which developed remote management tools until it ran out of cash, and its only remaining operating subsidiary is Network Research Corporation Japan, which distributes NETsilicon products in Asia. Founder Glenn Russell owns 67% of PASW. PACIFIC GAS: Admin. Claims for the April 6 - 30 Period Filed ------------------------------------------------------------ A slew of administrative claims against Pacific Gas and Electric Company for the period April 6, 2001 through April 30, 2001 have been filed pursuant to the Court's Order governing section 503(a) administrative expense claims arising from the sale of electric energy or services for PG&E's customers through the California Independent System Operator Corporation (the "ISO") or from the sale of electric energy or services by the California Department of Water Resources (the "DWR") (collectively, "ISO/DWR Administrative Claims"). A number of claimants have asserted administrative claims each in an undetermined amount pending resolution in judicial, administrative and other proceedings. The claimants have filed the claims because of the deadline imposed by the Court Order. Certain claimants anticipate $0 administrative claims but have filed the claims to reserve their rights for possible amendment in future. Claimants that have indicated anticipated amounts or minimum amounts for their administrative claims expressly reserve rights for future amendments. Claimants also declare that the amount of all payments received to date on account of the respective Administrative Claim has been credited and deducted for the purpose of making the Administrative Claim. In addition, a number of ISO/DWR Administrative Claims for periods other than that from April 6, 2001 through April 30, 2001 have also been filed. The Administrative Claims that have been filed are as follows (if the period is not specified, the claim pertains to the period April 6, 2001 through April 30, 2001): (1) Portland General Electric Company asserts an Administrative Claim in an unknown amount, pending a final determination of PG&E's liability for the amounts that are or may be owed to Claimant from the sale of electric energy or services, subject to resolution in judicial, administrative and other proceedings. (2) Powerex Corp. asserts an Administrative Claim in an unknown amount, pending a final determination of PG&E's liability for the amounts that are or may be owed to Claimant from the sale of electric energy or services, subject to resolution in judicial, administrative and other proceedings. (3) Claimants Dynegy Power Marketing, Inc. and West Coast Power LLC assert Administrative Claims due to West Coast Power LLC in an amount of at least $1,422,994.08 (which includes Disputes and Underscheduling Penalty), and due to Dynegy Power Marketing, Inc. in an amount that could be a positive balance. The current best information of Claimant Dynegy Power Marketing, Inc. shows a credit of $201,055.97 (which has not yet been finally determined). Claimants are informed and believe that there are reporting issues, including the failure of the ISO to promptly invoice the DWR for power, but they do not have final figures in hand. Claimants do not currently have sufficient facts to enable them to accurately quantify their claims because the actual allocations are determined by the ISO. Moreover, the Federal Energy Regulatory Commission is or may be reviewing charges during this period pursuant to its order in San Diego Gas & Electric Co. v. Sellers of Energy & Ancillary Servs., 96 FERC par. 61, 120 (2001), which may affect the amount of this claim. Claimants seek interest at the tariff, contractual, or legal rate, as appropriate. (4) Duke Energy Trading and Marketing, L.L.C. does not believe at this time that anything is owed but is filing this administrative claim in order to preserve its right to amend, if necessary, when the requisite information becomes available. (5) Duke Energy Morro Bay, LLC does not believe at this time that anything is owed but is filing this administrative claim in order to preserve its right to amend, if necessary, when the requisite information becomes available. (6) Duke Energy Moss Landing, LLC does not believe at this time that anything is owed but is filing this administrative claim in order to preserve its right to amend, if necessary, when the requisite information becomes available. (7) Duke Energy Oakland, LLC asserts an Administrative Claim in the amount of at least $414,488.00 for any and all unpaid purchase price, charges, costs and expenses for power sales, services and capital expenditures made or incurred by the Claimant for which PG&E was the ultimate purchaser or financially responsible entity, pursuant to the Must-Run Service Agreement, between Duke Energy Oakland, LLC and the CalISO, effective June 1, 1999. Although the Court's Order provides that "claims arising from 'reliability must run' (RMR) charges are not included for purposes of the bar dates, Claimant has filed this proof of claim with respect to the RMR Agreement, in the event that any of its claims under the RMR Agreement would be deemed or found not to be subject to this exception in the Order. (8) Reliant Energy Servces, Inc. has filed a proof of administrative claim currently believed to be $0 subject to amendment. (9) Claimant: Williams Energy Services and Williams Energy Marketing & Trading Company assert an Administrative Claim in the amount of $39,020,660.36 subject to amendment. (10) California Department of Water Resources asserts an Administrative Claim in the estimated amount of $179,423,648 for the period April 7, 2001 through June 30, 2001. Claimant specifies that by filing this claim, it does not waive its sovereign immunity except as otherwise provided by law. (11) California Edison Company asserts an Administrative Claim for compensation arising from post-petition purchases of energy and ancillary services made by the California Department of Water Resources for the periods April 6, 2001 through April 30, 2001 and May 1, 2001 through May 31, 2001. Due to the significant uncertainty regarding DWR purchases and uncertainty as to how and when such unprecedented utility bankruptcy claims will be settled, SCE cannot estimate (1) what portion of the $9 billion in DWR purchases should be allocated to each of the utility's respective customers, (2) how that allocation might be affected by proceedings before the Bankruptcy Court and in other jurisdictions, nor (3) how the amount will be allocated with respect to different time periods (e.g. how much of that $9 billion in DWR purchases is attributable to PG&E's pre-petition period vs. its post-petition period). In the event that some portion of PG&E's purchases are allocated to SCE, PG&E may be liable to SCE for some of these amounts on various legal theories, including, but not limited to, equitable indemnity and contribution. Therefore, with respect to post-petition purchases made by DWR through May 31, 2001, SCE's administrative claim against PG&E, if any, is contingent, unliquidated and cannot be estimated at this time. (12) Southern California Edison Company asserts an Administrative Claim for compensation arising from Underscheduled Loan Penalties during the periods April 6, 2001 through April 30, 2001 and May 1, 2001 through May 31, 2001. On December 15, 2001, the Federal Energy Regulatory Commission (FERC) order the ISO to begin calculating a penalty called an Underscheduled Load Penalty. The penalty is levied on all participants that consume more than 105% of the amount that they schedule in advance through the ISO and PX markets. The amounts collected via this penalty are credited to those participants which used less than 105% of their scheduled amount. In hours when SCE consumed less than 105% of its schedule, SCE would receive such a credit. It is not clear if the ISO could levy this penalty on PG&E in the post-petition period. If the ISO can pass the charge on to PG&E, SCE believes that all or most of any SCE gross credit would by assessed against PG&E during the periods when PG&E has consumed less than 105% of its schedule. In the event that some of PG&E's charges become credits to SCE, PG&E may be liable to SCE for some of these amounts on various legal theories, including, but not limited to, equitable indemnity and contribution. The ISO has informed SCE that the Underscheduled Load Penalty for the post-petition period has not been calculated yet. Therefore, without information from the ISO, SCE cannot estimate its administrative claim, if any, with respect to the Underscheduled Load Penalty, and thus such administrative claim is contingent and unliquidated. SCE is currently opposing the application of the Underscheduled Load Penalty by FERC. SCE submits this Proof of Administrative Claim in the event that FERC in fact imposes the Underscheduled Loan Penalty and SCE in turn is owed a credit. (13) Southern California Edison Company (SCE) asserts an Administrative Claim for compensation arising from the reallocation of post-petition "uplift charges" allocated to PG&E by the ISO and the California Power Exchange (PX). When the generation and sale of electricity in California was "deregulated" in 1998, SCE was required each day to purchase all of the electricity it sold to its retail customers through the PX, and to purchase electricity and ancillary services through the real-time energy markets managed by the ISO pursuant to a rule enacted by the CPUC. The PX and ISO settled transactions for purchases of wholesale power, including ancillary services on behalf of market participants. For the purposes of invoicing, both the ISO and the PX allocate "uplift Charges" to market participants pursuant to their respective tariffs. These charges represent a pro-rata allocation of common costs incurred by the PX and/or ISO. Uplift charges are any charges for services other than energy and ancillary services, including administration fees, grid management charges, congestion charges, rounding charges and revenue neutrality charges. It is SCE's position that the Uplift Charges allocated to PG&E by the ISO and/or by the PX should be the responsibility of PG&E alone and that no reallocation of these costs should occur. In the event that these Uplift Charges are not paid by PG&E, net creditors should receive a reduced payment pursuant to ISO tariff section 11.16.1. To the extent that Uplift Charges are re-allocated to loads and exports (including SCE), then SCE, vis-a-vis the ISO and PX, may have a claim against PG&E for those reallocated Uplift Charges on various legal theories including equitable indemnity and contribution. In May 2000, the ISO sent a notice informing all market participants that the ISO views itself as settling transactions between market participants, and will not file a proof of claim in the PG&E bankruptcy case on behalf of market participants for sales made to PG&E. Significant uncertainty exists as to how the post-petition Uplift Charges allocated by the ISO and PX will be handled. Therefore, to the extent SCE has an administrative claim against PG&E pursuant to such post- petition Uplift Charges, such claim is contingent and unliquidated at this time. (14) SCE asserts an Administration Claim for compensation arising from post-petition sales made by SCE to PG&E vis-a-vis the ISO for April, 2001. Prior to January 19, 2001, the ISO billed the PX for costs related to the ISO's procurement of electricity from third parties to meet SCE's net short position for energy and ancillary services, the PX then billed such charges to SCE. Since January 19, 2001, SCE has not been a participant in the PX, and the ISO began to bill such charges directly to SCE. For the purposes of invoicing, the ISO has historically provided a credit for the sales made by SCE to the ISO, which is netted against the ISO's charges to SCE for purchases made by SCE from the ISO. SCE indicates its position that sales of energy and ancillary services made by SCE to the ISO should be netted against the purchases made by SCE from the ISO. SCE is a net buyer from the ISO. SCE has not knowingly made sales to PG&E through the ISO. The Court has recently ruled that given PG&E's financial circumstances, the ISO cannot lawfully purchase any post-petition power on behalf of PG&E. However, significant uncertainty exists as to how the ISO's post-petition purchases on behalf of PG&E will be handled, as well as how such unprecedented utility bankruptcy claims will be settled. In the event that the ISO's post-petition sales that SCE made to the ISO are treated independently of the purchases made by SCE, SCE would have an administrative claim against PG&E on various legal theories in an amount that represents that portion of post-petition sales of energy and ancillary services that were sold to the ISO and subsequently or simultaneously sold by the ISO to PG&E. SCE estimates such contingent administrative claim for April, 2001 to be in an unluquidated amount up to $20.3 million, which includes the sale of energy, ancillary services and certain other credits. This claim represents the total gross credit earned by SCE sales to the ISO, with the amount allocated to PG&E based upon historical data. This claim is further subject to adjustment based on new Orders and information of the Federal Energy Regulatory Commission (FERC). FERC is currently conducting hearings on refunds for sales of electricity in California spot markets from October 2, 2000 through June 20, 2001. As a result, the ISO continues to make changes in past statements, resulting in changes in the amounts owed to various participants. (15) SCE asserts an Administrative Claim for compensation arising from Transmission Owner Credits for the period April 1, 2001 through April 30, 2001. SCE, as transmission owner, receives various charges and credits from the ISO for wheeling, congestion and transmission access charges. As a transmission owner, SCE generally receives a credit from the ISO for wheeling, congestion and transmission revenues that the ISO receives from third parties who use the transmission system (a Transmission Owner Credit). Beginning in January 2001, SCE has received fractional payments (or credits) from the ISO, beginning with payments for November 2000 transactions. The ISO provides detailed reports to SCE each month on the amounts owed to SCE from market participants. SCE indicates its position that the Transmission Owner Credits that SCE receives should not be treated separately from the payments for same that are due to the ISO (i.e. that Transmission Owner Credits should be based on net amounts.) SCE estimates that its claim for the portion of the outstanding net credit balance attributable to PG&E is approximately $490,603.11 for the period April 1, 2001 through April 30, 2001. To the extent that Transmission Owner Credits are treated on a gross basis (i.e. if the obligation to make payments to the ISO for wheeling and congestion are treated independently of the transmission owner's right to receive credits from the ISO), SCE anticipates that its claim could be as high as the total amount of gross credits that are owed to SCE, as transmission owner. The post-petition gross credits due to SCE, for the period April 1, 2001 through April 30, 2001, in SCE's estimation, are approximately $1,605,015.56. Due to the uncertainty as to how Transmission Owner Credits will be handled, and the uncertainty as to how and when such unprecedented utility bankruptcy claims will be settled, SCE has estimated its claim for Transmission Owner Credits based on gross credits. In the event that PG&E fails to make payment, SCE may have a claim against PG&E for lost Transmission Owner Credits on various legal theories. SCE estimates the value of its claim for Transmission Owner Credits to be in an unliquidated amount up to $1,605,015.54 subject to further adjustment. (16) SCE asserts an Administrative Claim for compensation arising from Transmission Owner Credits for the period May 1, 2001 through May 31, 2001. The ISO operates the transmission lines that are owned by SCE pursuant to a tariff which sets the terms and conditions for transmission and related services that the ISO provides as an operator of California's transmission system. SCE, as transmission owner, receives various charges and credits from the ISO for wheeling, congestion and transmission access charges. As a transmission owner, SCE generally receives a credit from the ISO for wheeling, congestion and transmission revenues that the ISO receives from third parties who use the transmission system (a "Transmission Owner Credit"). Beginning in January 2001, SCE has received fractional payments (or credits) from the ISO, beginning with payments for November 2000 transactions. The ISO provides detailed reports to SCE each month on the amounts owed to SCE from market participants. SCE indicates its position that the Transmission Owner Credits that SCE receives should not be treated separately from the payments for same that are due to the ISO (i.e., that Transmission Owner Credits should be based on net amounts.) SCE's claim for the portion of the outstanding net credit balance attributable to PG&E is approximately $470,782.10 for the period May 1, 2001 through May 31, 2001. To the extent that Transmission Owner Credits are treated on a gross basis, (i.e., if the obligation to make payments to the ISO for wheeling and congestion are treated independently of the transmission owner's right to receive credits from the ISO), SCE's claim could be as high as the total amount of gross credits that are owed to SCE, as transmission owner. The post-petition gross credits due to SCE, for the period May 1, 2001 through May 31, 2001, are approximately $1,324,102.09. Due to the uncertainty as to how Transmission Owner Credits will be handled, and the uncertainty as to how and when such unprecedented utility bankruptcy claims will be settled, SCE has estimated its claim for Transmission Owner Credits based on gross credits. In the event that PG&E fails to make payment, SCE may have a claim against PG&E for lost Transmission Owner Credits on various legal theories. SCE estimates the value of its claim for Transmission Owner Credits to be in an unliquidated amount up to $1,324,102.09. (17) Northern California Power Agency asserts an administrative claim (contingent and unliquidated) in the amount of $35,081.64 subject to amendment to the extent authorized by applicable law. Northern California Power Agency (NCPA) entered into a Scheduling Coordinator Agreement and a Participating Generator Agreement with the ISO. NCPA is a seller and a purchaser of energy and/or ancillary services in the real-time ISO market. NCPA had provided ancillary services to the ISO market for which it has not received payment. NCPA asserts a claim in this amount, plus any applicable interest and costs (including attorneys' fees to the extent authorized). NCPA does not know if and to what extent these services were for customers of PG&E. For that reason, this Administrative Claim is contingent and unliquidated. The assertion of this claim is not intended to preclude efforts by the ISO to collect amounts owed by PG&E to ISO for the benefit of NCPA and the other sellers into its markets. To the extent ISO asserts its own independent claim that includes this Administrative Claim, NCPA consents to the allowance of the ISO claim and will withdraw or consent to disallowance of NCPA's Administrative Claim to the extent NCPA's claim is duplicative. NCPA makes it clear that, in reserving this Administrative Claim, NCPA does not intend to waive any claim it has against ISO on any basis. (18) California Polar Power Brokers LLC asserts an administrative claim in the amount of at least $78,929.41 for the period April 6, 2001 to April 30, 2001. In addition, Claimant seeks interest at the tariff, contractual or legal rate, as appropriate. Claimant is informed and believes that there are reporting issues, including the failure of the ISO to promptly invoice the DWR for power, and Claimant does not have final figures, much less audited figures, in hand. Claimant does not currently have sufficient facts to enable it to accurately quantify its claims because the actual allocations are determined by the ISO. As the Federal Energy Regulatory Commission is or may be reviewing charges during this period pursuant to its order in San Diego Gas & Electric Co. v. Sellers of Energy & Ancillary Servs., 96 FERC paragraph 61,120 (2001), which may affect the amount of this claim, Claimant expressly states that this claim is subject to refinement and amendment. (19) California Polar Power Brokers LLC asserts an administrative claim in the amount of at least $23,064.87 for the period May 1, 2001 to May 31, 2001. In addition, Claimant seeks interest at the tariff, contractual or legal rate, as appropriate. However, Claimant is informed and believes that there are reporting issues, including the failure of the ISO to promptly invoice the DWR for power, and Claimant does not have final figures, much less audited figures, in hand. Claimant does not currently have sufficient facts to enable it to accurately quantify its claims because the actual allocations are determined by the ISO. The Federal Energy Regulatory Commission is or may be reviewing charges during this period pursuant to its order in San Diego Gas & Electric Co. v. Sellers of Energy & Ancillary Servs., FERC paragraph 61,120 (2001), which may affect the amount of this claim. When an accurate sum is determined, this claim will be amended. This claim is therefore subject to refinement and amendment, as Claimant learns the precise amounts outstanding. (20) Los Angeles Department of Water and Power (LADWP), asserts a contingent unliquidated administrative priority claim pursuant to Bankruptcy Code section 503(a). Claimant was paid the amounts due for such sales, to wit: $55,182,609. However, Claimant anticipates that events may occur in the future, including retroactive determinations relative to the amounts charged for the energy so sold, that might result in some adverse adjustment for which Debtor may be liable. Therefore, Claimant asserts this contingent and unliquidated Administrative Claim for the full amount received by Claimant from the sale of electric energy or services to the DWR for the claim Period, based on the latest information available to Claimant. Claimant expects that, by reason of future events, such as rate relocations by adjudicating or regulatory agencies having jurisdiction to do so, Claimant may lose the benefit to such payments. The extent to which PG&E may be liable for some amounts in such event has not been determined. Until a final determination has been made in an appropriate forum as to which parties are liable for any amounts owed to Claimant, by reason of such contingencies, Claimant cannot state the extent, if any, to which PG&E would have liability to Claimant for the amounts owed. In view of the deadlines established by the Court's Order, Claimant therefore reserves against PG&E a contingent claim not in excess of the price of the full amount of the sales in question for the Claim Period. Claimant reserves the right to amend this Administrative Claim as appropriate if and as additional information becomes known. Claimant expressly indicates that, by filing this Administrative Claim against PG&E, Claimant does not amend its claim filed for pre-chapter 11 damages and does not waive, and expressly reserves all claims against any other parties which may be liable to Claimant for the debt described above, including but not limited to the ISO and DWR. (21) The Martinez Refining Company (MRC), a division of Equilon Enterprises, LLC asserts an administrative claim pursuant to Bankruptcy Code Section 503(a) in the approximate amount of $25,776.13 for post-petition sales from April 6, 2001 through May 31, 2001. For purposes of filing this Proof of Claim, MRC also includes any parent, affiliate, subsidiary or any other related entity to MRC that is the actual creditor to any obligation stated herein. The energy transactions underlying MRC's administrative claim asserted were entered into on MRC's behalf by Viasyn, Inc., a Delaware corporation and certified scheduling coordinator of the ISO. MRC is informed and believe that the electricity herein was used exclusively in ISO designated North Path 15. At this time, MRC lacks complete information from PG&E and/or the ISO. Claimant expects to amend this claim as needed, if required. (22) Sempra Energy Trading Corp. asserts an administrative claim in the amount of $379,629.61 for the period May 1, 2001 to May 31, 2001, subject to amendment to the extent authorized by applicable law. (23) Sempra Energy Trading Corp. asserts an administrative claim in the amount of $361,871.00 for the period April 6,2001 to April 30, 2001, subject to amendment to the extent authorized by applicable law. (24) Mirant Americas Energy Marketing, LP, asserts an administrative claim in the amount of $6,047,161.32 for the period April 6, 2001 through April 30, 2001, plus certain amounts that are currently contingent and/or unliquidated, subject to amendment to the extent authorized by applicable law. Claimant makes it clear that other claims, rights, and remedies against PG&E held by Claimant and certain of its affiliates that are entitled to be treated as administrative claims are not waived, released, impaired, prejudiced or effected in any way, by the filing of this Administrative Claim or the non-inclusion of such claims in this Administrative Claim. (25) San Diego Gas & Electric Company asserts an administrative priority claim in the amount of $798,428.01, plus other unliquidated amounts, subject to amendments to the extent authorized by applicable law, for the period April 6, 2001 to April 30, 2001. Claimant relates in an Addendum to the claim that: -- On or about December 4, 1997, SDG&E entered into a Scheduling Coordinator Agreement with the ISO and on or about January 6, 1998, SDG&E entered into a PX Participation Agreement with the California Power Exchange Corporation (CalPx). Pursuant to these and related agreements, as well as applicable tariffs, SDG&E became entitled to payment on account of transactions related to the energy and ancillary services markets, including, without limitation, transmission facility access charges, congestion revenues, and other items. -- In particular, the ISO has issued a certification as of August 24, 2001 that SDG&E is owed $798,428.01 as a result in part of the failure of PG&E to pay amounts owed to the ISO for the trading month of April 2001. Under the Tariffs, (i) SDG&E is an "ISO Creditor" as to such amounts; and (ii) PG&E is an "ISO Debtor" obligated to pay SDG&E a portion of such amounts. In addition, PG&E may become an ISO Debtor with respect to post-petition energy and ancillary market transactions for other reasons, including, without limitation, the outcome of pending or future administrative and judicial proceedings. -- At present, SDG&E cannot determine either the total amount it may be owed in connection with post-petition energy and ancillary services market activity or PG&E's share thereof. In addition to such items, SDG&E may have additional claims arising from post-petition energy and ancillary services market transactions which are not reflected and may not be reflected on the ISO certifications. Accordingly, SDG&E cannot ascertain whether the certifications are reflective of the total amount it is owed by ISO or PG&E in connection with post-petition energy and ancillary services market activity. -- SDG&E has disputed certain amounts on its accounts with the ISO from time to time. Certain of the pending disputes may concern post-petition transactions in the energy and ancillary services markets. If any one or more such disputes is resolved favorably to SDG&E in any amount, under the Tariffs: (i) SDG&E shall be an "ISO Creditor" as to such amount, and (ii) PG&E shall be an "ISO Debtor" obligated to pay SDG&E a portion of such amount. At present, SDG&E cannot determine either the total amount it may be entitled to in connection with the pending disputes or PG&E's share thereof. -- PG&E may be assessed penalties under the Tariffs arising from underscheduling load during the post-petition period. Under the Tariffs, (i) SDG&E shall be an "ISO Creditor" as to any such amount, and (ii) PG&E shall be an "ISO Debtor" obligated to pay SDG&E a portion of such amount. At present, SDG&E cannot determine either the total amount of underscheduling penalties or PG&E's share thereof. -- At this time, SDG&E lacks sufficient information from PG&E, the ISO, CalPx and/or the Federal Energy Regulatory Commission (FERC) and other authorities and parties to determine the precise amount SDG&E is owed by PG&E on account of this claim. Moreover, the precise amount which SDG&E is owed by PG&E may be subject to amendment for a variety of reasons, including but not limited to, certain proceedings currently pending before ISO and FERC. Accordingly, SDG&E reserves the right to amend this Proof of Claim to describe the amount of its claim with more particularity after additional information sufficient to support such amendment becomes known. In addition, SDG&E reserves the right to amend this Proof of Claim to assert any counterclaims it may have against PG&E in the event PG&E asserts claims against SDG&E. -- This Proof of Claim shall not constitute a waiver of any rights that SDG&E may have under the Tariffs and other applicable law to insist on determination of this obligation and any potential counter-claims before a jury, arbitrator or other decision maker. The assertion of this Proof of Claim is not intended to preclude efforts by CalPx or ISO to collect amounts which either may assert are owed by PG&E to CalPx or ISO for the benefit of SDG&E. -- If any part of the interest of CalPx or ISO in any property claimed by PG&E constitutes a security, trust beneficiary, ownership, or other interest therein, SDG&E asserts the same interest. -- This claim is a secured claim to the extent of right of SDG&E to set off any claim made by PG&E against this claim. -- The specific date(s) on which the debt was incurred is not certain because of the ongoing nature of the underlying transactions. (26) San Diego Gas & Electric Company asserts an administrative claim in the amount of $753,363.36, plus other unliquidated amounts, for the trading month of May, 2001. Claimant makes it clear that this Administrative Claim may be amended to the extent authorized by applicable law. (27) Idaho Power Company asserts an administrative claim in the amount of$ 69,412.43 for the period April 6-30, 2001. The Administrative Claim is asserted for the full unpaid amount owed to Claimant from the sale of electric energy or services through the ISO for the Claim Period, based on the latest information available to Claimant. The extent to which PG&E may be liable for the amounts owed to Claimant has not been resolved in various legal proceedings. Until a final determination has been made in an appropriate forum as to which parties are liable for the amounts owed to Claimant, Claimant cannot state the extent, if any, to which PG&E has liability to Claimant for the amounts owed. Claimant has therefore asserted against PG&E the full amount owed to Claimant for sales or services described above for the Claim Period, pending final determination of PG&E's liability for the amounts in question. Claimant reserves the right to amend this Administrative Claim as appropriate as additional information becomes known. By filing this Administrative Claim against PG&E, Claimant does not waive, and expressly reserves all claims against any other parties who may be liable to Claimant for the debt described above, including but not limited to the ISO. (28) Claimant Avista Energy, Inc. asserts an administrative claim pursuant to Bankruptcy Code Section 503(a) in the amount of$ 2,889,810.00 for the month of May, 2001, subject to amendment to the extent authorized by applicable law. The Administrative Claim is asserted for the full unpaid amount owed to Claimant from the sale of electric energy or services through the ISO for the Claim Period, based on the latest information available to Claimant. The extent to which PG&E may be liable for the amounts owed to Claimant has not been resolved in various legal proceedings. Until a final determination has been made in an appropriate forum as to which parties are liable for the amounts owed to Claimant, Claimant cannot state the extent, if any, to which PG&E has liability to Claimant for the amounts owed. Claimant has therefore asserted against PG&E the full amount owed to Claimant for the sales described above for the Claim Period, pending final determination of PG&E's liability for the amounts in question. Claimant reserves the right to amend this Administrative Claim as appropriate as additional information becomes known. By filing this Administrative Claim against PG&E, Claimant does not waive, and expressly reserves all claims against any other parties who may be liable to Claimant for the debt described above, including but not limited to the ISO. (29) Idaho Power Company asserts an administrative claim in the amount of $ 76,577.79 for the month of May, 2001, subject to amendment to the extent authorized by applicable law. All amounts claimed are for sale of uninstructed energy. The Administrative Claim is asserted for the full unpaid amount owed to Claimant from the sale of electric energy or services through the ISO for the Claim Period, based on the latest information available to Claimant. The extent to which PG&E may be liable for the amounts owed to Claimant has not been resolved in various legal proceedings. Until a final determination has been made in an appropriate forum as to which parties are liable for the amounts owed to Claimant, Claimant cannot state the extent, if any, to which PG&E has liability to Claimant for the amounts owed. Claimant has therefore asserted against PG&E the full amount owed to Claimant for sales or services described above for the Claim Period, pending final determination of PG&E's liability for the amounts in question. Claimant reserves the right to amend this Administrative Claim as appropriate as additional information becomes known. By filing this Administrative Claim against PG&E, Claimant does not waive, and expressly reserves all claims against any other parties who may be liable to Claimant for the debt described above, including but not limited to the ISO. (30) AES NewEnergy, Inc. asserts an administrative claim in the amount of $956,954.70 for the period April 6-30, 2001, Subject to amendment to the extent authorized by applicable law. The Administrative Claim is asserted for the full unpaid amount owed to Claimant from the sale of electric energy or services through the ISO for the Claim Period, based on the latest information available to Claimant. The extent to which PG&E may be liable for the amounts owed to Claimant has not been resolved in various legal proceedings. Until a final determination has been made in an appropriate forum as to which parties are liable for the amounts owed to Claimant, Claimant cannot state the extent, if any, to which PG&E has liability to Claimant for the amounts owed. Claimant has therefore asserted against PG&E the full amount owed to Claimant for the sales described above for the Claim Period, pending final determination of PG&E's liability for the amounts in question. Claimant reserves the right to amend this administrative Claim as appropriate as additional information becomes known. By filing this Administrative Claim against PG&E, Claimant does not waive, and expressly reserves all claims against any other parties who may be liable to Claimant for the debt described above, including but not limited to the ISO. The Administrative Claim was calculated as follows: $969,658.82 is the total balance outstanding owed to Claimant on account of sales in the ISO markets for the month of April, 2001, as reflected in the ISO account statement attached hereto. From that amount, Claimant has deducted the amount estimated to be on account of transactions occurring prior to April 6, 2001, leaving a balance of $956,954.70 owed for postpetition transactions. (31) Avista Energy, Inc. asserts an administrative claim in the amount of$ 6,888,762.49 for the month of June, 2001, subject to amendment to the extent authorized by applicable law. All amounts owing are for sale of ancillary services. The Administrative Claim is asserted for the full unpaid amount owed to Claimant from the sale of electric energy or services through the ISO for the Claim Period, based on the latest information available to Claimant. The extent to which PG&E may be liable for the amounts owed to Claimant has not been resolved in various legal proceedings. Until a final determination has been made in an appropriate forum as to which parties are liable for the amounts owed to Claimant, Claimant cannot state the extent, if any, to which PG&E has liability to Claimant for the amounts owed. Claimant has therefore asserted against PG&E the full amount owed to Claimant for the sales described above for the Claim Period, pending final determination of PG&E's liability for the amounts in question. Claimant reserves the right to amend this Administrative Claim as appropriate as additional information becomes known. By filing this Administrative Claim against PG&E, Claimant does not waive, and expressly reserves all claims against any other parties who may be liable to Claimant for the debt described above, including but not limited to the ISO. (32) PG&E Energy Trading - Power, L.P. asserts an administrative claim in the amount of $4,694.65 for the period April 6,2001 through April 30, 2001, subject to amendment to the extent authorized by applicable law. The Administrative Claim is asserted for the full unpaid amount owed to Claimant from the sale of electric energy or services through the ISO for the period in question, based on the latest information available to Claimant. The extent to which Debtor may be liable for the amounts owed to Claimant has not been resolved in various legal proceedings. Until a final determination has been made in an appropriate forum as to which parties are liable for the amounts owed to Claimant, Claimant cannot state the extent, if any, to which the Debtor has liability to Claimant for the amounts owed. Claimant has therefore asserted against the Debtor the full amount owed to Claimant for the sales described above, pending final determination of Debtor's liability for the amounts in question. Claimant reserves the right to amend this Administrative Claim as appropriate as additional information becomes known. By filing this Administrative Claim against the Debtor, Claimant does not waive, and expressly reserves all claims against any other parties who may be liable to Claimant for the debt described above, including but not limited to the ISO. (33) PG&E Energy Services Ventures, Inc. asserts an administrative claim in the amount of $26,650.00 for the period April 6, 2001 through April 30, 2001, subject to amendment to the extent authorized by applicable law. The Administrative Claim is asserted for the full unpaid amount owed to Claimant from the sale of electric energy or services through the ISO for the period in question, based on the latest information available to Claimant. The extent to which Debtor may be liable for the amounts owed to Claimant has not been resolved in various legal proceedings. Until a final determination has been made in an appropriate forum as to which parties are liable for the amounts owed to Claimant, Claimant cannot state the extent, if any, to which the Debtor has liability to Claimant for the amounts owed. Claimant has therefore asserted against the Debtor the full amount owed to Claimant for the sales described above, pending final determination of Debtor's liability for the amounts in question. Claimant reserves the right to amend this Administrative Claim as appropriate as additional information becomes known. By filing this Administrative Claim against the Debtor, Claimant does not waive, and expressly reserves all claims against any other parties who may be liable to Claimant for the debt described above, including but not limited to the ISO. (Pacific Gas Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) PENN SPECIALTY: Court Extends Lease Decision Deadline to March 4 ---------------------------------------------------------------- Judge Joseph J. Farnan, Jr. gives Penn Specialty Chemicals, Inc. until March 4, 2002 to decide which unexpired leases of nonresidential real property it wants to assume or reject. Judge Farnan stresses that landlords have a right to seek an order requiring the company to decide on a particular unexpired lease prior to the deadline. The company may also seek additional extensions of the lease decision period if it wants to. Penn Specialty, one of the world's largest suppliers of specialty chemicals THF and PTMEG, filed for chapter 11 protection on July 9, 2001, in the U.S. Bankruptcy Court for the District of Delaware. Deborah E. Spivack, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, represents the company in its restructuring effort. PENN SPECIALTY: Asks Court to Extend Removal Period to Feb. 5 ------------------------------------------------------------- Penn Specialty Chemicals, Inc. has focused primarily on stabilizing its business, selling certain of its assets, and responding to creditor inquiries and addressing a variety of creditor concerns. For this reason, the company has not been able to review all the judicial and administrative proceedings to which it is a party. As a result, it cannot yet determine whether any of these actions should be removed under Bankruptcy Rule 9027(a). Thus, Penn Specialty asks Judge Joseph J. Farnan, Jr. to extend its removal period by an additional 120 days, through and including February 5, 2002. The company says that an extension will not prejudice its adversaries because, at any rate, these adversaries may not prosecute the actions without being granted relief from the automatic stay. Penn Specialty, one of the world's largest suppliers of specialty chemicals THF and PTMEG, filed for chapter 11 protection on July 9, 2001, in the U.S. Bankruptcy Court for the District of Delaware. Deborah E. Spivack, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, represents the company in its restructuring effort. PHAR-MOR INC: Securities Delisted From Nasdaq --------------------------------------------- Phar-Mor. Inc. (Nasdaq: PMORQ) announced that the Company's securities will be delisted from the Nasdaq at the opening of business on October 10, 2001. Following the Company's Chapter 11 bankruptcy filing on September 24, 2001, the Nasdaq Stock Market had immediately suspended trading in the Company's securities. On October 2, 2001, the Nasdaq notified the Company that as a result of the Company's bankruptcy it was delisting the Company's securities from the Nasdaq, subject to the Company's right of appeal. The Company has determined not to appeal the Nasdaq's decision but will consider, when appropriate, making application to be listed on the OTC Bulletin Board. Phar-Mor is a retail drug store chain operating 139 stores under the names "Phar-Mor," "Pharmhouse" and "The Rx Place" in 24 states. Phar-Mor's online store is accessible at http://www.pharmorwebrx.com and through the company's Web site at http://www.pharmor.com On September 24, 2001, Phar-Mor filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. On October 3, 2001, the Company announced that it would close 65 of its stores. PITTSBURGH CORNING: Obtains Approval of Employee Severance Plan --------------------------------------------------------------- The U.S. Bankruptcy Court in Pittsburgh yesterday approved Pittsburgh Corning Corp.'s severance program for 15 employees deemed key to the company's reorganization plan, Dow Jones reported. Pittsburgh Corning's plan ensures up to 18 employees bonuses and 12 months' severance pay if they are terminated without cause. The severance portion ensures that 15 of the 18 eligible employees will receive an incentive payment to stay on, even if they are terminated before the company's reorganization plan is completed or the bonuses are fully paid. (ABI World, October 9, 2001) RELIANCE GROUP: Seeks Extension of Plan Filing Period to Feb. 7 --------------------------------------------------------------- The time and resources spent responding to the various objections and motions filed by the Pennsylvania Insurance Department have made it impossible for Reliance Group Holdings, Inc. to transform their pre-petition agreement in principle with the Ad Hoc Bondholder Group and the Lender Group into a formal plan of reorganization, Steven R. Gross, Esq., at Debevoise and Plimpton, tells Judge Gonzalez. Mr. Gross notes that the Committees have supported RGH in their efforts to defend their estates against the barrage of litigation launched by the Pennsylvania Insurance Department. Because of the continued need to respond to the numerous challenges by the Pennsylvania Insurance Department, neither the Debtors nor the Committees have had any opportunity to resume negotiations on the restructuring. During the postpetition period, RGH has also worked diligently to gather necessary information to complete the schedules and statements of financial affairs. Since RGH has only one executive employee, with the help of one outside consultant, gathering and preparing such information was a significant use of corporate resources. Therefore, not only have Debtors lacked the opportunity to continue their restructuring negotiations, but they also have not been in a position to request the Court to fix a claims bar date and establish procedures for filing proofs of claim -- necessary prerequisites to formulating a confirmable plan. By Motion, the Debtors ask the Court for additional time, not only to resume restructuring negotiations, but to establish a bar date and address claim classification and related issues. Specifically, the Debtors request that they exclusive period during which to propose and file a Chapter 11 plan be extended until and including February 7, 2002 and their exclusive period during which to solicit acceptances of that plan be extended until and including April 8, 2002. The Debtors make it clear that this request is made without prejudice to their right to seek further extensions. Mr. Gross argues that 11 U.S.C. Sec. 1121(d) permits the Court to extend the exclusive period "for cause." While the Code does not define "cause" for an extension of the exclusive periods, the legislative history behind Section 1121(d) indicates that "cause" is a flexible standard designed to balance the competing interests of a debtor and its creditors. See H.R. Rep. No. 595, 95th Cong., 2d. Sess. 231, 232 (1978)(bankruptcy court is given flexibility to increase the 120-day period depending on the circumstances of the case). Congress created the exclusive periods to give a debtor a clear opportunity to propose and confirm a plan without the disruption occasioned by competing plans, Mr. Gross continues. The object of Chapter 11 is to develop, negotiate and confirm a plan by agreement. RGH made considerable progress toward such a plan prior to the petition date but has not had a realistic chance since then to resume negotiations with the creditor groups. The Debtors and their estates will benefit from additional time to pursue meaningful negotiations with their creditors. Mr. Gross assures Judge Gonzalez that creditors will not be prejudiced by relief requested as RGH is continuing to preserve the assets of the estate. The Debtors have made minimal expenditures for administrative expenses and have accrued expenses attributable to the maintenance of their bankruptcy proceedings and, primarily, to the preservation of the estates against the litigation brought by the Pennsylvania Insurance Department. (Reliance Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) SAFETY COMPONENTS: Unit Sells Metallic Belt Links Assets -------------------------------------------------------- Valentec Wells, LLC, a subsidiary of Safety Components International, Inc., closed the sale of its metallic belt links business, located at Lake City, Missouri to a subsidiary of Alliant Techsystems, Inc., a leading supplier of conventional large, medium, and small-caliber tactical and training ammunition to the U.S. Department of Defense. In announcing the sale, Mr. John C. Corey, President and CEO of SCI noted that "the deal includes the retention of all of the active employees by ATK, and was consistent with SCI's continuing focus on its core automotive businesses." Mr. Corey also added that "under ATK's ownership, the long term interest of national defense would be better served through the enhanced integration of the supply base within the small to medium- caliber ammunition industry." Safety Components International, Inc. is a leading, low-cost supplier of automotive airbag fabric and cushions with operations in North America and Europe. The Company is also a leading manufacturer of value-added synthetic fabrics used in a variety of niche industrial and commercial applications. In addition, Safety Components supplies metal airbag components utilizing its machining and stamping capabilities gained from years of experience as a military ordnance manufacturer. The company is headquartered in Greenville, South Carolina. STANDARD AUTOMOTIVE: Bank Lenders Agree to Forbear Until Oct. 19 ---------------------------------------------------------------- Standard Automotive Corporation (AMEX:AJX) today announced that the Company and its bank lenders under the Company's Term Loan and Revolving Credit Facility have entered into an extension of the forbearance agreement under the Credit Facility, expiring on October 19, 2001. The Company and the bank lenders are currently negotiating a longer-term forbearance agreement. Standard Automotive Corporation is a diversified company with production facilities located throughout the United States, Canada, and Mexico. Standard manufactures precision products for the aerospace, nuclear, industrial and defense markets; it designs and builds remotely operated systems used in contaminated waste cleanup; it designs and manufacturers trailer chassis used in transporting maritime and railroad shipping containers; and it builds a broad line of specialized dump truck bodies, dump trailers, and related products. Through its Providence Group, Standard provides engineering professional services to both government and commercial industry. STEEL HEDDLE: First Creditors' Meeting Set for October 12 --------------------------------------------------------- United States Trustee for Region 3 will convene a meeting of the Steel Heddle Group's creditors on October 12, 2001 at 11:30 a.m., Room 2313 of the U.S. Court House in Wilmington, Delaware. The company's representative is required to appear in this meeting while all creditors are welcomed, but not required, to attend. At the meeting, creditors will get the chance to examine and question the Steel Heddle Group and its debtor- affiliates under oath. The deadline to file proofs of claim will be announced later. Steel Heddle Group, Inc., a pioneer and innovator in weaving machine accessories for 103 years, filed for Chapter 11 protection on August 28, 2001 in the Delaware Bankruptcy Court. Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young & Jones, represents the Debtors in their restructuring effort. Subject to further extensions, the Debtors exclusive period during which to file a plan expires on December 26, 2001. In its schedules of assets and liabilities filed last September 25, 2001, the company listed $0 in assets and $126,812,645 in debt. As of July, Steel Heddle Group and its bankrupt affiliates reported $64,300,000 in assets and $176,000,000 in debt. SUN HEALTHCARE: Lease Decision Time Further Extended to Dec. 13 --------------------------------------------------------------- Sun Healthcare Group, Inc. sought and obtained the Court's authorization for a further extension of the time to assume or reject their unexpired leases of nonresidential real property and facility lease to and including the earlier of (a) December 13, 2001 and (b) the date on which an order is entered confirming a plan of reorganization for the Debtors. The unexpired leases are inextricably related to the core of the Debtors' business operations. These operations involve, among other things, the provision of long-term care services which require facilities specifically tailored to the provision of such care. Thus, the unexpired leases are critical assets of the Debtors. Inadequate time for making informed decisions may result in an inadvertent rejection of a valuable lease or a premature assumption of a burdensome lease, which may lead to substantial administrative expense obligations. Further, as long-term care facilities house elderly and infirm residents, any inadvertent or forced closure of a facility could adversely affect the health and welfare of the residents. However, the sheer number and complexity of the leases make it a daunting task reaching informed decisions as to whether to assume or reject the leases. In addition, as providers of long- term care services, the Debtors are subject to an extensive regulatory framework that will affect the assumption or rejection decisions. The Debtors remind the Court the progress that they have made, for example, the Government Stipulation, the Transfer Procedures and agreements with landlords, but negotiations with certain of the landlords have been difficult and they need additional time to make informed decisions with respect to the remaining unexpired leases in their portfolio. At the Debtors' behest, the Court granted the extension provided that such extension of time is without prejudice to the right of the Debtors' lessors to file an appropriate motion with the Court for a hearing to consider a reduction of such time, and without prejudice to the Debtors' right to request further extensions of time within which they may assume or reject the unexpired leases pursuant to section 365(d)(4) of the Bankruptcy Code. (Sun Healthcare Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) SUNBEAM CORP: Has Until December 31 to Solicit Plan Acceptance -------------------------------------------------------------- Upon the motion of Sunbeam Corporation and its affiliate debtors, Judge Arthur J. Gonzales extends the period during which the Debtors have the exclusive right to solicit acceptances of their reorganization plan to December 31, 2001. The Debtors retain the right to ask for a further extension of their exclusive solicitation period, Judge Gonzales notes. Sunbeam Corporation, the largest manufacturer and distributor of small appliances, sells mixers, coffeemakers, grills, smoke detectors, toasters and outdoor & camping equipment in the United States, filed for chapter 11 protection on February 6, 2001 in the Southern District of New York. George A. Davis, Esq., of Weil Gotshal & Manges LLP, represents the Debtor in their restructuring effort. As of filing date, the company listed $2,959,863,000 in assets and $3,201,512,000 in debt. TITANIUM METALS: Valhi May Junk Deal Without Shareholders' Nod -------------------------------------------------------------- Titanium Metals Corporation (NYSE: TIE) announced on September 19, 2001 that it had received a proposal from Valhi, Inc. (NYSE: VHI) whereby the shares of the common stock of NL Industries, Inc. (NYSE: NL) held by Valhi and Tremont Corporation (NYSE: TRE) would be transferred to TIMET in exchange for TIMET securities. Valhi has informed TIMET that Valhi will not approve any transaction that may be negotiated with an independent committee of TIMET's Board of Directors and its advisors without the affirmative vote of a majority of the shares voting that are held by persons other than Valhi, Tremont and their affiliates. TIMET, headquartered in Denver, is a producer of titanium metal products. Information on TIMET is available on the World Wide Web at http://www.timet.com/ TOWER RECORDS: Closes Sale of Argentine, HK & Taiwan Operations --------------------------------------------------------------- MTS, Incorporated, dba Tower Records, the world's largest independent entertainment software retailer, announced the completed sale of its operations in Argentina, Hong Kong and Taiwan, and the execution of Tower Records franchise agreements in those territories. Following news yesterday that the retailer has successfully inked an amendment to its bank deal, today's statement further attests to the company's commitment to its business plan, put into effect earlier this year. Michael Solomon, President & CEO for Tower Records said, "The divestiture of these foreign operations keeps us on track with the set of initiatives we have undertaken as part of our ongoing business program to improve Tower's performance. The conversion of six of our stores to Tower Records franchises will enable us to leverage brand equity without incurring further capital investment or net operating losses." Local record retailer, Cosmos Records Co. Ltd., a wholly owned subsidiary of UFO International Co., Ltd., has acquired Tower Records locations and operations in Taiwan and Hong Kong. The company has 18 years experience in the music business and intends to build the existing store portfolio, adding one to two stores per year over the next four years. Tower Records Franchise Division confirmed that Cosmos Records is scheduled to open a new Tower Records store in Taipei later this week, representing the third in Taiwan. The four Tower Records stores in Argentina have been sold to Condor Records, which will continue to operate and expand in that country under the Tower name, as economic conditions turn around. Michael Solomon said further, "Tower has established strong brand recognition in Argentina, as well as a solid customer base. However the prolonged Argentine recession thwarted our ability to further expand the company in that country. We believe that, as a local investor, Condor Records is well positioned to capitalize on the current changing record retail environment." Bob Kaufman, Senior Vice President for Tower Records International Franchises said, "We expect that the sale and licensing of Tower Records' operations in Taiwan, Hong Kong and Argentina will enable us to expand our business in these territories and capitalize on market opportunities. We are proud to welcome Cosmos Records in Taiwan and Hong Kong and Condor Records in Argentina to the Tower Records Franchise family." Since 1960 Tower Records has been recognized and respected throughout the world for its unique brand of retailing. Founded in Sacramento, California by current Chairman Russ Solomon, the company's growth over four decades has made Tower Records a household name. Tower Records owns and operates 173 stores worldwide with 57 franchise operations in seven countries. The company opened one of the first Internet music stores on America Online in June 1995 and followed a year later with the launch of TowerRecords.com. The site was named "Best Music Commerce site" by Forrester Research in Fall 2000. The recent founding of Tower Records own exclusive and independent record label, 33rd Street Records, has enabled the retailer to release popular and niche hit driven music, while placing great emphasis on both marketing and artist development. Tower Records' commitment to introducing its customers to the latest trends in new product lines is paramount to the organization's retail philosophy. Tower forges ahead with the development of exciting shopping environments, espousing diverse product ranges, artist performance stages, personal electronics departments, and digital centers. Tower Records maintains its commitment to providing the deepest selection of packaged entertainment in the world merchandised in stores that celebrate the unique interests and needs of the local community. USG CORP: Wants Rule 9027 Removal Period Extended Until March 31 ---------------------------------------------------------------- United States Gypsum Company has been named in tens of thousands of asbestos-related products liability suits. The liabilities of U.S. Gypsum, and the need to resolve them, are what prompted the Debtors to file for chapter 11 protection in the first place. USG Corporation's businesses have been unsustainably burdened by the costs of defending, administering and resolving asbestos claims. Within the constraints of the existing tort system and due to the nature and scope of asbestos litigation, U.S. Gypsum's efforts to determine and resolve legitimate asbestos liabilities have been frustrated. There is no workable way to determine which asbestos claims have merit and which do not. As a result, U.S. Gypsum is unable to ensure that the assets that it can be reasonably expected to devote to asbestos claims resolution are sufficient to, and go to, legitimate asbestos claimants to whom U.S. Gypsum has any true liability. The Debtors have looked to the tools provide by the Bankruptcy Code to the Court, so that they may have help in determining U.S. Gypsum's true asbestos liabilities and a rational procedure for discharging those liabilities. To ensure the Debtors' assets are used to pay meritorious claims and that the reorganization procedure is rationally executed, the Debtors may request the removal of some or all of the pending asbestos liability actions from state court to federal court and subsequently transfer some or all of these cases to the District of Delaware for final resolution. The Debtors will not implement these steps unless it is necessary in light of the administration of these chapter 11 cases, but they wish to retain flexibility to remove cases to federal court as the chapter 11 cases progress. To preserve the Company's right to use the removal tool available under 28 U.S.C. 1452, the Debtors ask the Court to extend the removal period afforded under Rule 9027 of the Federal Rules of Bankruptcy Procedure through March 31, 2002. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, notes that removal period extensions have been routinely granted by courts in Delaware, including three other major asbestos related chapter 11 cases currently pending in the District, W.R. Grace & Company (six-month extension), Armstrong World Industries, Inc. (120-day extension granted, debtors have requested a second extension), and Owen Cornings (court granted two extensions of 120 days each). Mr. DeFranceschi adds that because of the number and complexity of the Proceedings against the Debtors, the Debtors need time to determine which, if any, of the Proceedings should be removed, and if appropriate, transferred to this District. The requested relief will protect the Debtors' right to economically adjudicate lawsuits under 28 U.S.C. 1452 if the circumstances warrant removal. The requested relief is believed to be in the best interest of the Debtors' estates and creditors. As the automatic stay has been implemented the relief requested will not prejudice the plaintiffs in the cases as no Proceedings can be prosecuted without relief from the stay. Unless the requested relief is granted, the potential consolidation of the Debtors' affairs into one court may be frustrated and the Debtors' would be forced to deal with the claims and proceeding in a case by case fashion, to the detriment of their creditors. (USG Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) U.S. WIRELESS: Seeks Court Approval of Worker Retention Plan ------------------------------------------------------------ U.S. Wireless Corp. is asking the U.S. Bankruptcy Court in Wilmington, Del., to approve a key employee retention plan to help maintain the value of its assets, according to Dow Jones. A hearing has been scheduled for October 25 and objections are due October 15. The company, which provides mobile location and traffic-related information to wireless carriers, is planning to liquidate its assets on a going-concern basis. Therefore, the motion said it's "critical that existing operations be maintained in the interim," so U.S. Wireless can provide added value to creditors. Separately, U.S. Wireless will also ask the court at the Oct. 25 hearing to extend through January 10, 2002, the time in which it must assume or reject its unexpired real estate leases. The company's lease consideration period is currently set to expire October 29. The San Ramon, California-based company filed for chapter 11 bankruptcy protection on August 29, listing assets of about $17.7 million and debts of about $22.2 million. (ABI World, October 9, 2001) WARNACO GROUP: Moves to Junk Countertrade Consumption Protocol -------------------------------------------------------------- In 1997 and 1998, The Warnaco Group, Inc. and Active Media Services, Inc., entered into a series of agreements that adopted the traditional structure of the trade credit transaction, together with third party financing and trade credit insurance, according to J. Ronald Trost, Esq., at Sidley Austin Brown & Wood, in New York, New York. Those agreements consist of: (i) a Purchase Agreement dated as of December 1997 by and between Active Media and Warnaco, as amended by Amendment No. 1 dated as of April 22, 1998; (ii) a Consent Agreement dated as of April 22, 1998 by and among Warnaco, Active Media and National Westminster Bank, PLC; and (iii) related side letter agreements dated December 31, 1997 and April 22, 1998 between Warnaco and Active Media. Mr. Trost explains that Active Media obtained financing from Westminster Bank in order to purchase inventory from the Debtors. At the same time, Mr. Trost relates, Active Media and the Debtors entered into new Countertrade Consumption Procedures that set forth detailed procedures and practices between the Debtors and Active Media, with respect to Active Media supplying Goods and Services (excluding media and advertising), and Active Media was designated as the Debtors' exclusive agent to procure printing services. In addition, Mr. Trost tells the Court, the Debtors and Active Media established a "Cross Purchase Credit", which Active Media would designate for each invoice a portion that was assigned by Active Media to Westminster Bank. Thereafter, Mr. Trost says, the Debtors would pay the assigned portion of each invoice to Westminster Bank. According to Mr. Trost, Westminster Bank obtained certain representations, warranties and covenants from Warnaco pursuant to the Consent Agreement. If the Debtors would violate the Consent Agreement, Mr. Trost explains, it would give rise to a claim by Westminster Bank for an accelerated payment from the Debtors in an amount roughly equivalent to the unused balance of the Cross Purchase Credit. In sum, Mr. Trost says, the Debtors received a cash payment upon the sale of inventory to Active Media, and after that, Westminster Bank received the assigned portion of each invoice in exchange for its financing to Active Media. Mr. Trost informs Judge Bohanon that a substantial portion of the Cross Purchase Credit was not utilized by the Debtors within the time limited prescribed in the Subject Agreements. As a result, Mr. Trost notes, the Debtors estimates that some $15,000,000 in Cross Purchase Credit had not been used as of Petition Date. Also, Mr. Trost relates, pre-petition invoices submitted by Active Media that amounts to $375,000 remain unpaid. Accordingly, Mr. Trost says, Westminster Bank has a pre-petition claim against the Debtors for its portion of the invoice in the amount of $130,000. By this motion, the Debtors seek the Court's authority to reject these Agreements. Mr. Trost explains the Debtors' executory obligations that will be affected by the proposed rejection include, but not limited to: (a) continued performance under and in compliance with the Countertrade Consumption Procedures; and (b) the designation of Active Media as the exclusive agent of the Debtors in connection with the procurement of printing services. The Debtors contend that the continued purchase of Goods and Services under the Subject Agreements does not provide any benefit to their estates. The assumption of the Subject Agreements is not feasible either, Mr. Trost notes. Given the cure obligations of pre-petition invoices of no less than $505,000 and provision of Westminster Bank's claim for an accelerated payment in excess of $14,000,000, Mr. Trost observes, assumption of the Subject Agreements is simply not appropriate. The Debtors are confident they can obtain Goods & Services from other sources, aside from Active Media. Once rejection of the Subject Agreements is authorized, Mr. Trost tells the Court, the Debtors may be able to realize additional discounts in future purchases of Goods & Services either: (a) by adding such purchases to the Debtors' other trade credit agreements with Active Media, which are not affected by this Motion, or (b) by pursuing alternative purchasing assignments with third parties, including trade credit-barter companies that will provide discounts. And so, the Debtors ask Judge Bohanon to grant them the relief requested. (Warnaco Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) WINSTAR COMMS: Agrees to Segregate Proceeds from S.F. ISP Sale -------------------------------------------------------------- Winstar Communications, Inc. sought and obtained the Court approval of its motion to sell its San Francisco ISP. However, in response to the objection of Lucent Technologies, the Debtors agreed to modify the sale order to provide that: A. Upon consummation of the Sale of the Assets, the Debtors shall place the net proceeds thereof in a segregated bank account maintained by the Agent for the Debtors' postpetition lenders. B. Within 10 days of the later of September 24, 2001 or the date upon which Lucent Technologies receives invoices for all the Assets, Lucent shall provide the Debtors with documentation to establish Lucent's valid and perfected lien on all or any portion of the Assets or the proceeds. Failure to provide such notice shall result in all alleged liens being deemed null and void. C. Within 10 days of receipt of such documentation the Debtors shall reply in writing to dispute any such assertion in favor of Lucent. D. If the Debtors and Lucent are unable to agree on the extent to which Lucent has a valid and enforceable lien, if any, on the proceeds of the Sale of the Assets within 10 days thereafter, the Debtors shall file a motion with this Court seeking a determination that Lucent does not have a legal and valid lien against the Assets and the Debtors and Lucent agree to seek adjudication by this Court of the validity of such liens on an expedited basis on notice to the Debtors pre-petition lenders, creditor's committee and to Lucent. Judge Farnan also authorizes the Debtors to assume and assign to the Purchaser or its designee the Contracts, effective upon the Closing Date, except for those with Cox Communications or Lucent Technologies. The Sale Motion is withdrawn in respect of the contracts between Winstar Wireless and Cox and is without prejudice to Cox's ability to file an administrative expense claim against the Debtors. (Winstar Bankruptcy News, Issue No. 15; 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. 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