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/raid1/www/Hosts/bankrupt/TCR_Public/011018.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 18, 2001, Vol. 5, No. 204 Headlines ACME METALS: Facilities Shut-Down & Asset Liquidation Begin ADVANTICA RESTAURANT: Sept. 11 Events Hurt September Sales AIRSHIELD CORP: Sells Substantially All Assets to Core Materials ALARIS MEDICAL: Completes Private $170 Million Note Offering AMES DEPARTMENT: Unsecured Panel Taps Otterbourg as Counsel ARMSTRONG HOLDINGS: Retains Deloitte as Internal Auditor ARTESYN: Negotiations to Amend Credit Agreement Terms Underway ASPEON INC: Defaults On $13.9MM Under Preferred Share Agreement AT HOME: Strikes Deal with Comcast to Continue Internet Services BETHLEHEM STEEL: Cleveland-Cliffs Sees Minor Chapter 11 Impact BIRMINGHAM STEEL: Attempting Debt Workout Options With Lenders BIRMINGHAM STEEL: Paid Down Revolver by $11.5MM in Q4 BROADBAND WIRELESS: Acquiring Entertainment Direct.TV CELLPOINT: Post Lower EBITDA Despite Dramatic Rise in Revenues CHESAPEAKE: Sells Permanent Display Business to Management Group COMDIAL CORP: Faces Nasdaq Delisting for Violating Requirements COMDISCO INC: Court Allows Panel to Hire Watchell as Counsel COVAD COMMS: Seeks Okay to Hire Ordinary Course Professionals COVAD COMMS: Appoints Patrick Bennett as Senior VP of Sales DIGITAL NOW: Case Summary & 20 Largest Unsecured Creditors EXODUS COMMS: Seeks Court Injunction Against Utility Companies FEDERAL-MOGUL: Court Allows Payment of Shipping Charges GLENEX INDUSTRIES: Quest Ventures Completes Shares Purchase GRIFFIN SERVICES: Faces Involuntary Chapter 7 Petition GRIFFIN SERVICES: Chapter 7 Involuntary Case Summary HOMESEEKERS.COM: Terminates B.J. Rone as CEO and President HOMESEEKERS.COM: In Default Under Purchase Pact with HomeMark HOMESEEKERS.COM: Mulls Operations Shut-Down & Bankruptcy Filing ITI EDUCATION: Creditors Approve Proposed Sale of Assets to EDMC INTEGRATED HEALTH: Gets Okay to Assume Amended NV & WI Leases INTIRA CORP: divine Completes Acquisition of Certain Assets INT'L FIBERCOM: Talking With Banks On Likely Covenant Violations KANA: Projects to Reach Breakeven Point in Fourth Quarter L.L. KNICKERBOCKER: Closes Substantial Sale of Assets to Marian LAIDLAW INC: Court Extends Removal Period to Confirmation Date PACIFIC GAS: Wants Open-Ended Extension of Lease Decision Period PERSONNEL GROUP: Refinancing Risk Prompts Moody's Downgrades PILLOWTEX CORP: Selling 61-Acre North Carolina Estate for $742K POLAROID CORP: Judge Walsh Allows Use of Cash Management System PSINET: Seeks Okay of Proposed Equipment Abandonment Protocol TOKHEIM: EBITDA Continues to Drop in Q3 Despite Restructuring SUN HEALTHCARE: Court Approves Stipulation with Americorp TELEPANEL SYSTEMS: Generates Positive Gross Margins in 1st Half TRAVELBYUS.COM: Cuts Jobs in Response to Weak Travel Environment U.S. PLASTIC: Continues Talks About Deferring Principal Payment VECTOUR INC: Files for Chapter 11 Protection in Delaware VECTOUR INC: Case Summary & 20 Largest Unsecured Creditors VLASIC FOODS: Campbell Moves to Allow Claims for Voting WARNACO GROUP: Seeks Approval Of Second UPS Settlement Agreement WEBVAN GROUP: DoveBid Hired to Auction All Assets Valued At $70M ********* ACME METALS: Facilities Shut-Down & Asset Liquidation Begin ----------------------------------------------------------- Acme Metals Incorporated (OTC Bulletin Board: AMIIQ) of Riverdale, Illinois, announced that it has begun a phased shut- down of the operating facilities and liquidation of the working capital assets of its wholly-owned subsidiary, Acme Steel Company, a steel manufacturer. Primary steel making operations will continue for an interim period of approximately one week so that existing stocks of raw materials can be converted into steel coils. The company plans to continue steel finishing operations until all coils have been converted into finished products. The decision to implement the shutdown was necessary as a result of ongoing severely depressed conditions within the American steel industry, coupled with the absence of any further borrowing capacity under Acme Metals' current secured working capital financing facility. Additionally, the absence of any alternative sources of funding created a lack of the liquidity necessary to continue the operations of Acme Steel on a going concern basis. Although Acme Metals diligently marketed the assets of Acme Steel over a period of approximately two years, Acme Metals has been unable to finalize a transaction for the sale of the steel making assets and does not foresee such a transaction in the immediate future. Under the current circumstances, implementing an orderly shut down of its steel making facility is both prudent and necessary to preserve and maximize value for Acme Metals and for creditors. Acme Metals' other wholly-owned operating subsidiary, Acme Packaging Corporation, remains profitable and continues to generate positive cash flow. Acme Metals therefore intends to continue operations of Acme Packaging and to restructure that business under a chapter 11 plan of reorganization. ADVANTICA RESTAURANT: Sept. 11 Events Hurt September Sales ---------------------------------------------------------- Advantica Restaurant Group, Inc. (OTC BB: DINE) reported same- store sales for company-owned restaurants during the five-week period and quarter ended September 26, 2001, compared with the same periods in fiscal year 2000. Five Weeks 13 Weeks Sept. 2001 Q3-2001 ---------- ----------- Same-Store Sales Denny's 0.4% 3.2% Coco's (4.5%) (4.9%) Carrows 3.1% 2.1% Guest Check Average Denny's 1.7% 1.2% Coco's 5.4% 4.1% Carrows 5.6% 4.0% Starting in late August and continuing through the first half of September guest counts softened as Denny's ended its summer promotion. The tragic events of September 11th further impacted sales as guest counts decreased by approximately 3.5% during the second half of September. Included below are the Company's restaurant counts at the end of September, compared with year end 2000. Restaurant Units 9/26/01 12/27/00 ---------- --------- Denny's Company-owned 638 736 Franchised 1,124 1,067 Licensed 14 19 ---------- ---------- 1,776 1,822 Discontinued Operations: Coco's Company-owned 141 144 Franchised 38 35 Licensed 300 302 ---------- ---------- 479 481 Carrows Company-owned 113 114 Franchised 29 27 ---------- ---------- 142 141 ---------- ---------- 2,397 2,444 ========== ========== Advantica Restaurant Group, Inc. is one of the largest restaurant companies in the United States, operating approximately 2,400 moderately priced restaurants in the mid- scale dining segment. Advantica owns and operates the Denny's, Coco's and Carrows restaurant brands. For further information on the Company, including news releases, links to SEC filings and other financial information, please visit Advantica's website at http://www.advantica-dine.com AIRSHIELD CORP: Sells Substantially All Assets to Core Materials ---------------------------------------------------------------- Core Materials Corporation (Amex: CME) announced that it has acquired substantially all the assets of Airshield Corporation, a privately held manufacturer of fiberglass reinforced plastic parts for the truck and automotive-aftermarket industries. Airshield is based in Brownsville, Texas, with manufacturing operations in Matamoros, Mexico. Airshield has been operating under Chapter 11 bankruptcy protection since March 2001. "We believe this acquisition represents an excellent strategic addition for us," said James L. Simonton, president and chief executive officer of Core Materials. "Not only are we acquiring an attractive book of business and expanding our relationships within the truck industry, but we are also adding a Southwest location, some valuable new manufacturing processes, and new customer markets. In support of our strategic plan to diversify our process and customer base, we see the Airshield acquisition as an excellent complementary fit." Simonton said the Company would fund the acquisition out of current cash reserves and does not expect to incur any new long- term debt. He declined to disclose the purchase price but noted that Airshield's annual sales have ranged from approximately $22 million in 1999 to an estimated $15 million for 2001. The business currently employs about 500 people. "We were strongly encouraged by their customers and ours to consider this acquisition and were able to purchase these assets at a fair value in light of Airshield's bankruptcy," he added. Core Materials manufactures medium- to high-volume compression molded fiberglass reinforced products. Airshield, using a more labor-intensive manufacturing process, produces lower-volume open and closed molded fiberglass reinforced products. This provides Core Materials Corporation a broader product offering to serve a larger segment of the fiberglass reinforced plastics market. Airshield's customers include Freightliner Corporation, International Truck and Engine Corporation, Paccar Inc., Mack Trucks, Inc. and Lund International Corporation. "In addition to acquiring the assets and book of business, we believe we are also obtaining some very capable and dedicated personnel who are committed to growing the business," said Simonton. There is a growing truck and automotive manufacturing business in Mexico that we are interested in serving. Entering this market through an established operation, with experienced people, is preferable to building a greenfield facility." Core Materials Corporation is a compounder and compression molder of sheet molding composites (SMC). The company produces high quality fiberglass reinforced, molded products and SMC materials for varied markets, including transportation, marine, agricultural and commercial products. Core Materials, with its headquarters in Columbus, Ohio, currently operates plants in Columbus and Gaffney, South Carolina. ALARIS MEDICAL: Completes Private $170 Million Note Offering ------------------------------------------------------------ ALARIS Medical Inc. (AMEX:AMI) said that its wholly-owned subsidiary, ALARIS Medical Systems Inc., has completed a previously announced private offering of $170 million of senior secured notes due in 2006. The joint managers of the offering were UBS Warburg and Bear, Stearns & Co. Inc. The financing is being used primarily to replace ALARIS Medical Systems' existing bank credit facility. Additionally, the company is planning to place a revolving credit facility of up to $20 million, primarily to secure foreign currency hedging transactions. Based on strong demand, the offering was increased from its originally anticipated size of $150 million to $170 million at an interest rate of 11 5/8 percent. The additional funds were used to repurchase $20 million aggregate principal amount of the company's 9 3/4 percent subordinated notes due 2006 at a discount to par. David L. Schlotterbeck, president and chief executive officer, said of the offering, "We were very pleased with the market's reception to this offering. We consider this a strong endorsement of the positive and building momentum at ALARIS and of our plans to become a key resource helping hospitals to substantially reduce preventable adverse drug events from intravenous infusion." Chief Financial Officer William C. Bopp commented, "With this offering, we now have a capital structure that will help us execute our strategic plan and that is not anticipated to require significant changes until late 2006. This plan anticipates growing EBITDA (earnings before interest, taxes, depreciation and amortization) to approximately $90 million for 2002 and to the range of $100 million for 2003. As a result, the company expects to have positive net income for the full year 2002. We are delighted with the financial flexibility this gives us. The elimination of the quarterly principal payments required under the previous bank credit facility will significantly improve our already strong cash position." Bopp continued, "The completion of this financing is one more in a series of recent positive events regarding ALARIS Medical." On October 9, the company announced that it anticipates that sales for the quarter ended Sept. 30, 2001 will be approximately $103 million. This 11 percent sales growth is higher than previously expected for the quarter, which was forecasted in the company's second quarter earnings release of Aug. 2, 2001 to be at or slightly above second quarter sales of $98.5 million. Adjusted EBITDA is anticipated to be approximately $1 million higher than the top end of the previously forecasted range of $18 million to $20 million. The company also indicated that it was increasing the guidance it previously provided for its full year results. Fourth quarter sales are forecasted to be 8 percent to 10 percent higher than 2000 fourth quarter sales of $102.2 million. Additionally, Adjusted EBITDA is now forecasted to be $23 million to $25 million for the fourth quarter and $82 million to $84 million for the full year. Earlier in the month, the company and McKesson Corp. (NYSE:MCK) announced a long-term strategic agreement to develop and co- market innovative new products designed to reduce intravenous medication errors, a significant cause of patient harm and a major factor in the rising cost of healthcare in the United States and throughout the world. The products will be developed through the McKesson Automation business unit and ALARIS Medical Systems Inc. These new products will seek to build on McKesson Automation's strengths in hospital data management and bar coding technology, as reflected in its Connect-Rx(TM) and AcuScan-Rx(TM) products. The new products will also capitalize on ALARIS Medical's valuable position at the hospital bedside and its strength in integrated modular medical technology. This technology includes the MEDLEY(TM) infusion medication management system incorporating the Guardrails(TM) Advisory System medication error alert software, among other systems. Under the agreement, McKesson Automation and ALARIS Medical will work together to develop a series of products intended to reduce preventable adverse drug events (or "PADEs"), focusing on technology to reduce errors that occur with intravenous administration of medications. These products are expected to provide the capability to link the patient's intravenous medication orders and the infusion pump, decreasing the potential for programming errors. This alliance supports ALARIS Medical's intention to become the leader in improving intravenous therapy safety for both the patient and the caregiver. This new financing is intended to greatly assist the company in achieving this objective. ALARIS Medical Inc., through its wholly-owned operating company, ALARIS Medical Systems Inc., is a leading developer, manufacturer and provider of integrated intravenous infusion therapy and patient monitoring instruments and related disposables, accessories and services. ALARIS Medical's primary brands, ALARIS(R), IMED(R) and IVAC(R), are recognized throughout the world. ALARIS Medical's products are distributed to more than 120 countries worldwide. In addition to its San Diego world headquarters and manufacturing facility, ALARIS Medical also operates manufacturing facilities in Creedmoor, N.C.; Basingstoke, U.K.; and Tijuana, Mexico. Additional information on ALARIS Medical can be found at http://www.alarismed.com AMES DEPARTMENT: Unsecured Panel Taps Otterbourg as Counsel ----------------------------------------------------------- The Official Committee of Unsecured Creditors of Ames Department Stores, Inc. presents its application to the U.S. Bankruptcy Court in Manhattan seeking permission to retain Otterbourg Steindler Houston & Rosen P.C., as counsel effective September 5, 2001. The Committee has selected Otterbourg to act as special counsel because of the firm's extensive experience in and knowledge of business reorganizations under Chapter 11 of the Bankruptcy Code. The Committee believes that Otterbourg is qualified to represent it in the Cases in a cost-effective, efficient and timely manner. Scott L. Hazan, Esq., a member of Otterbourg informs the Court that the firm has represented in the past and continues to represent certain creditors of the Debtors, including certain of the pre-petition and post-petition secured lenders and other parties in interest as specifically identified therein, in matters wholly unrelated to the Cases. Mr. Hazan assures the Court that Otterbourg has not and will not represent the Clients in the Cases and will not proceed to undertake any investigation, litigation or any other action against the Clients, on behalf of the Committee. Specifically, the Committee will look to Otterbourg: A. to assist and advise the Committee in its consultation with the Debtors relative to the administration of these Cases; B. to attend meetings and negotiate with the representatives of the Debtors; C. to assist and advise the Committee in its examination and analysis of the conduct of the Debtors' affairs; D. to assist the Committee in the review, analysis and negotiation of any plan(s) of reorganization that may be filed and to assist the Committee in the review, analysis and negotiation of the disclosure statement accompanying any plan(s) of reorganization; E. to assist the Committee in the review, analysis, and negotiation of any financing agreements; F. to take all necessary action to protect and preserve the interests of the Committee, including: 1. the investigation and prosecution of certain actions, on the Committee's behalf, to the extent these matters are not applicable to Clients, 2. negotiations concerning all litigation in which the Debtors are involved, and 3. if appropriate, review, analyze and reconcile claims filed against the Debtors' estates; G. to generally prepare on behalf of the Committee all necessary motions, applications, answers, orders, reports and papers in support of positions taken by the Committee; H. to appear, as appropriate, before this Court, the Appellate Courts, and the United States Trustee, and to protect the interests of the Committee before said Courts and the United States Trustee; and I. to perform all other necessary legal services in these Cases. Subject to this Court's approval, Mr. Hazan relates that Otterbourg will charge for its legal services on an hourly basis in 1/10th hour increments in accordance with its hourly rates in effect on the date such services are rendered and for its actual, reasonable and necessary out-of-pocket disbursements incurred. For the information of the Court, Mr. Hazan adds that the range of hourly rates through September 2001 generally charged by Otterbourg, subject to adjustment, are: Partner $395 - $550/hour Associate $195 - $390/hour Paralegal/Legal Assistant $145/hour Mr. Hazan submits that the Otterbourg has represented in the past and continues to represent certain creditors of the Debtors, including certain of the pre-petition and post-petition secured lenders and other parties in interest, in matters wholly unrelated to the Cases. Mr. Hazan says that Otterbourg has not and will not represent the Clients in the Cases and will not proceed to undertake any investigation, litigation or any other action against the Clients, on behalf of the Committee. Mr. Hazan present that Otterbourg has these relationship with several related parties: A. Unrelated representation to current clients including Trustee of County Seat, Bissell Companies, Chase Manhattan Bank, The IT Group/Business Credit Inc., Congress Financial Corp., Foothill Capital Corp., General Electric Capital Corp., GMAC Commercial Credit, LLC, IBJ Witehall Business, Rosenthal & Rosenthal, Sony Electronics, Inc., and Verizon Capital Corp. B. Unrelated representation to former clients including Alco Financial Corporation, Eastman Kodak, Fisher Price, Inc., Fleet Bank, Hasbro Industries, Inc., Konover & Associates, LaSalle Business Credit, Springs Industries, Inc., Textron Financial Corp., Wausau Employers Insurance, World Kitchen Inc., and Wrangler. C. Prior representation in Ames-related matters to The CIT Group, Congress Financial Corp., McDonnell Douglas. (AMES Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARMSTRONG HOLDINGS: Retains Deloitte as Internal Auditor -------------------------------------------------------- Subject to Judge Farnan's approval, Armstrong Holdings, Inc. tell him they have employed the professional services firm of Deloitte & Touche LLP to provide internal audit services. Pursuant to the Bankruptcy Code, the Debtors request that the Court approve the employment of Deloitte as their internal audit services provider, nunc pro tunc to August 30, 2001, to perform the necessary auditing services that are incidental to the administration of the Debtors' chapter 11 estates. The Debtors assure Judge Farnan that the services to be performed by Deloitte are not duplicative in any manner of the services to be performed by KPMG or any other professional retained by the Debtors in these chapter 11 cases. Indeed, the Debtors assert that the services to be performed by Deloitte are separate and distinct from the services to be performed by the Debtors' other professionals because Deloitte will provide risk based internal audit projects that will provide internal reports to the Debtors' management on the operating effectiveness and efficiencies of the Debtors' key processes, computer systems, compliance infrastructure, and financial reporting process. The auditing procedures to be performed by Deloitte will not constitute a financial audit, a review or a compilation of the Debtors' financial statements or any part thereof, nor an examination of management's assertions concerning the effectiveness of the Debtors' internal control systems, or an examination of the Debtors' compliance with laws, regulations, or other matters. Accordingly, Deloitte's performance of the internal auditing procedures will not result in the expression of an opinion, or any other form of assurance, on the Debtors' financial statements or any part thereof, nor an opinion, or any other form of assurance, on the Debtors' internal control systems or its compliance with laws, regulations, or other matters. In its capacity as internal auditor, Deloitte will work closely with the Debtors and their professionals. As internal auditor, Deloitte will provide the services set forth in an certain engagement letter, dated August 30, 2001, between Deloitte and the Debtors. The internal auditing services may include, but will not be limited to, the following: (a) Deloitte will work in concert with the Vice President of Consulting and Audit Services and/or the Chief Financial Officer and the Debtors' management to perform an enterprise- wide risk assessment, define the Debtors' audit universe, recommend a comprehensive audit plan, and execute the global internal audit plan. The recommended audit plan will require any approvals deemed appropriate by the Debtors' management, including, but not limited to, the Vice President of Consulting and Audit Services, and/or the Chief Financial Officer and the Audit Committee. (b) The Vice President of Consulting and Audit Services and/or the Chief Financial Officer and/or other such specifically designated individuals as deemed appropriate by the Debtors' management will be responsible for approving a plan for each project, generally describing its objectives and the nature and scope of the procedures to be performed by Deloitte, and Deloitte will collaboratively perform the audit plan for each project. (c) Upon completion of each individual internal audit project, a draft report will be provided to the Vice President of Consulting and Audit Services and/or other such specifically designated individuals as deemed appropriate by the Debtors' management for review and approval. The report generally will contain sections on project objectives, summaries of the procedures performed pursuant to the internal audit plan, departures, if any, from the original internal audit plan, findings from the performance of the procedures, recommendations for improvements, and management's responses to the findings and recommendations. (d) Once approved, such report will be issued by the Vice President of Consulting and Audit Services and/or the Chief Financial Officer and/or other such specifically designated individuals as deemed appropriate by the Debtors' management, for internal distribution. Tony DeVincentis will participate as the Lead Client Service Partner, and Deborah Hassan will participate as Engagement Partner, maintaining overall responsibility for the engagement on behalf of Deloitte. Joseph Murphy will coordinate daily management of the engagement. Arnry Junaideen will participate as the IT Partner, maintaining responsibility for coordinating Information Technology Resources. However, circumstances may occur that could result in changes to Deloitte's anticipated staffing for this engagement. The internal audit services will be performed in accordance with the Standards for the Professional Practice of Internal Auditing that are issued by The Institute of Internal Auditors, except for: (1) those related to the general standards applicable to the Management of the Internal Audit Department Activity, which remain the responsibility of the Debtors, and (2) those standards relating to access and possession of working papers. However, circumstances for certain projects may require that services be provided in accordance with applicable standards of the American Institute of Certified Public Accountants. In those circumstances, Deloitte will so advise the Debtors and issue a separate engagement letter. The Debtors assure Judge Farnan that the services of Deloitte as provider of internal audit services are necessary in order to enable the Debtors to execute their duties faithfully as debtors and debtors in possession. The services to be rendered by Deloitte are not intended to be duplicative in any manner with the services performed and to be performed by any other party retained by the Debtors. Because the Debtors requested Deloitte to commence work on august 30, 2001, the Debtors respectfully request that its retention be made effective as of August 30, 2001. During the chapter 11 cases, fees for this engagement will be billed in according with the terms established by the Bankruptcy Court. Deloitte's hourly rates for this engagement are: Professional Percent Mix Hourly Billing ------------ ----------- -------------- Partners/Principal 8% $185 Senior Manager 15% $135 Manager 27% $105 Senior Consultant & Consultant 50% $ 65 Subtotal 100% $ 95 D&T agrees to manage the use of its personnel to achieve an annualized average blended hourly rate of $95, and to use its best efforts to secure the lowest cost alternative for travel expenses. Disclaimers and Damage Limitations The engagement letter includes a limitation on Deloitte's warranties for its services. Deloitte first reminds the Debtors and Judge Farnan that this is a services engagement. Deloitte warrants that it shall perform services hereunder in good faith, but disclaims all other warranties, either express or implied, including, without limitation, warranties of merchantability and fitness for a particular purpose. Deloitte shall not be liable for any delays or nonperformance resulting from circumstances or causes beyond its reasonable control, including, without limitation "acts or omissions or the failure to cooperate by Armstrong (including, without limitation, entities or individuals under its control, or any of their respective officers, directors, employees, other personnel and agents); acts, or omissions or the failure to cooperate by any third party; fire or other casualty; act of God, strike or labor dispute; war or other violence; or any law, order, or requirement of any governmental agency or authority." Deloitte also places limitation on damages and indemnification. The Debtors agree that Deloitte and its personnel shall not be liable to the Debtors for any claims, liabilities, or expenses relating to this engagement for an aggregate amount in excess of the fees paid by the Debtors to Deloitte pursuant to this engagement, except to the extent finally judicially determined to have resulted primarily from the bad faith or intentional misconduct of Deloitte. Deloitte also disclaims any liability for itself or its personnel for consequential, special, indirect, incidental, punitive or exemplary loss, damage, or expense relating to this engagement. The Debtor's Indemnity The Debtors are to indemnify and hold harmless Deloitte and its personnel from all claims, liabilities. and expenses relating to this engagement, except finally judicially determined to have resulted primarily from the bad faith or intentional misconduct of Deloitte. The provisions of this indemnity are agreed to apply to the fullest extent of the law, whether in contract, statute, tort (such as negligence), or otherwise. In circumstances in which all or any portion of the provisions of this paragraph are finally judicially determined to be unavailable, Deloitte's aggregate liability for any claims, liabilities, or expenses relating to this engagement shall not exceed an amount that is proportional to the relative fault that Deloitte's conduct bears to all other conduct giving rise to such claims, liabilities, or expenses. (This also is a provision which has drawn objections by the United States Trustee.) The Debtors agree to cooperate with Deloitte in the performance by Deloitte of its services hereunder, including, without limitation, providing Deloitte with reasonable facilities and timely access to data, information and personnel of the Debtors. The Debtors shall be responsible for the performance of the Debtors' personnel and agents and for the accuracy and completeness of all data and information provided to Deloitte for purposes of the performance by Deloitte of its services. U.S. Trustee Objects: Indemnity and Time Records In support of her Objection to Debtors' Application for Authorization to Employ Deloitte & Touche LLP as Internal Auditor to the Debtors, Patricia A. Staiano, the United States Trustee for Region 3, avers to Judge Farnan that: (1) The proposed terms of the engagement contain indemnification and limitation of liability provisions that are inconsistent with prior decisions of the Court, citing In re United Cos. Fin. Corp., 241 B.R. 521 (Bankr. D. Del. 1999), and are otherwise inconsistent with the Debtors' fiduciary duties and with notions of bankruptcy professionalism. (2) Deloitte requests an exemption from the requirement to keep and furnish detailed time records and instead proposes to provide only reporting "by activity category and by day". It is not clear to the Trustee whether such reporting would provide a breakdown of what tasks each professional performed on each day and the amount of time spent on each task at least to the nearest hour or half hour. Such level of detail is frequently provided by investment bankers who do not bill by the tenth of an hour and it appears appropriate for Deloitte to be required to provide at least the same level of detail. (Armstrong Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARTESYN: Negotiations to Amend Credit Agreement Terms Underway -------------------------------------------------------------- Artesyn Technologies, Inc. (Nasdaq:ATSN) reported financial results for the third quarter ended September 28, 2001. Revenue for the quarter totaled $108.6 million, down from $182.5 million a year ago. The company incurred a cash loss for the quarter of $0.17 per diluted share, compared to cash earnings of $0.37 per diluted share in 2000. These results were in line with analyst expectations and exclude the impact of restructuring and other special charges taken during the quarter. Total orders in the quarter were $102.2 million. Customer cancellations that were prevalent during the first half of the year were minimal in the third quarter, as the book-to-bill ratio improved to 0.94. Total backlog at the end of the quarter was $84.5 million. "Aggressive cost reduction efforts initiated over the last six months allowed us to meet earnings expectations, even with lower than anticipated revenues," commented Artesyn's President and CEO, Joseph M. O'Donnell. "Total operating costs during the quarter were reduced by approximately 22% versus the second quarter, with selling and administrative expenses at their lowest level since 1996. Actions taken in the third quarter will further reduce operating and overhead costs, as we position the company to return to profitability. For the fourth quarter, we are estimating a reduction in the cash EPS loss to between $0.08 and $0.12 on flat revenues." "While these efforts are critical to improving Artesyn's financial performance, we continue to invest for the future and bring new products to market," O'Donnell continued. "During the third quarter, we introduced several new industry-leading DC/DC products and believe Artesyn now has one of the most comprehensive AC/DC and DC/DC product lines in the industry. This is evidenced by the 78 new design wins received so far this year. The combination of strong customer relationships, an expanded product portfolio and improved cost structure has positioned Artesyn to emerge from this downturn as a market leader." Additional Cost Reductions Announced During the third quarter, the company identified additional actions to further streamline operations and align costs with current market conditions. These actions include reductions in the number of facilities and hourly/salaried positions globally. Year-to-date initiatives have resulted in the elimination of approximately 3,300 positions, or 36% of the company's workforce. Total pre-tax charges for the year, related to these ongoing restructuring initiatives and inventory reserve adjustments, are now estimated at $33.0 million compared to previous estimates of $25 million. The restructuring component is expected to total approximately $17.0 million pre-tax, with $8.2 million recorded in the second quarter. A $5.0 million pre-tax charge was recorded in the third quarter, with the balance of the charge, or approximately $3.8 million, expected in the fourth quarter. These actions should generate close to $50 million in annual overhead and operating cost savings when fully implemented in the first quarter of 2002. Pre-tax charges to increase excess and obsolete inventory reserves total $16 million, with $10 million previously recorded during the second quarter. The remaining $6 million was recorded in the third quarter as a special charge to cost of sales. Including the impact of all items, the net cash loss in the third quarter was $0.38 per diluted share. Operating Cash Flow and Liquidity Improved Significant improvements were made during the quarter in strengthening the company's balance sheet and liquidity position. Artesyn ended the third quarter with over $41 million in cash and short-term investments, an increase of approximately $11 million, or 36%, over the previous quarter-ending balance. Contributing to the improvement was a substantial reduction in the accounts receivable balance and a $14 million reduction in global inventory levels before charges. A continued focus on cash management is expected to enable additional balance sheet improvements over the next several quarters. Working closely with its banking group, Artesyn obtained a waiver through December 1, 2001, for the financial covenant tests under its existing revolving credit agreement. Negotiations are underway on an amendment to the agreement with revised terms and pricing structure. The company expects to have an amendment in place by the waiver expiration date. As part of the waiver, the size of the facility was reduced from $275 million to $150 million. The company has not made a drawing under the agreement since May 2001 and believes that, along with its current cash position, this amount will be sufficient for its needs. Artesyn Technologies, Inc., headquartered in Boca Raton, Fla., is a leading provider of power conversion equipment, real-time systems and logistics management for the communications industry. For more information about Artesyn Technologies and its products, please visit the company's web site at http://www.artesyn.com ASPEON INC: Defaults On $13.9MM Under Preferred Share Agreement --------------------------------------------------------------- Aspeon Inc. (Pink Sheets:ASPE) announced that the plaintiffs in the class action suit previously filed against the company, its chief executive officer and its former chief financial officer, have taken an appeal from the order of the United States District Court which dismissed the suit with prejudice and entered judgment in favor of the company and its officers. Richard Stack, Aspeon's chief executive officer, said, "We believe that the plaintiff's claims are without merit and we intend to vigorously oppose the appeal." The company also announced pre-audit financial results for the fiscal year ended June 30, 2001. The company reported an anticipated loss of approximately $51.7 million for the year ended June 30, 2001, as compared with a loss of $9.3 million for the year ended June 30, 2000. For the year ended June 30, 2001, the company expects sales of approximately $61.1 million, as compared with $81 million for the prior year. The financial results reported in this release are subject to audit and therefore may change by a material amount, although the company believes that these amounts are realistic estimates of the final figures. The company's auditors, BDO Seidman LLP, have not had access to the working papers of the company's previous auditors for the fiscal years ended June 30, 1999 and 2000, and therefore, BDO Seidman has not been able to complete its audit of the company's financial statements for the fiscal year ended June 30, 2001. Without access to the prior years working papers, the company's auditors are able only to express an opinion on the balance sheet as at June 30, 2001 and the auditors are not able to express an opinion on the company's other financial statements for the fiscal year ended June 30, 2001. As previously reported by the company, the company and its chief executive officer have initiated a lawsuit against the company's former auditors. Until such time that the company's auditors are able to complete their audit of the company's financial statements for the fiscal year ended June 30, 2001, the company will face certain consequences, including that the company will not be able to file its Annual Report on Form 10-K with the Securities and Exchange Commission, the company will not be able to hold its annual stockholder meeting and stockholders of the company will not be able to rely upon Rule 144 or 145 of the Securities Act of 1933 for the resale of restricted securities. The company is exploring alternatives as to how it might be possible to proceed, however no assurances can be made that the company's auditors will be able to complete their audit of the company's financial statements for the fiscal year ended June 30, 2001. In announcing the results, Stack said: "This has been a year of consolidation for us. We were faced with a number of challenges to which we have had to devote much of our attention, including managing our business under severe cash constraints, defending against the shareholder lawsuit, negotiating with our preferred stockholder to restructure its equity position in the company, hiring new auditors, initiating a lawsuit against our former auditors and restructuring our application service provider (ASP) business to eliminate the cash drain it was generating. "Despite these challenges, we have continued to create new industry standards with our Javelin Point of Sale terminals and we are devoting ourselves to increasing our product sales with the goal of returning the company to profitability." On the unaudited balance sheet of the company as of June 30, 2001, there is included as a current liability an amount of $13,969,000 representing the balance owing under the preferred share agreement that currently is in default. In the event that a proposed settlement is reached with the preferred stockholder, this amount will be significantly reduced and the majority of the amount remaining will be classified as long-term debt. Aspeon is a leading manufacturer and provider of point-of-sale (POS) systems, services and enterprise technology solutions for the retail and foodservice markets. Visit Aspeon at http://www.aspeon.com AT HOME: Strikes Deal with Comcast to Continue Internet Services ---------------------------------------------------------------- Comcast Cable Communications, Inc. Senior Vice President David Juliano announced that Comcast and Excite@Home have reached an agreement to provision new high-speed Internet customers. "Comcast and Excite@Home have reached an agreement that allows Comcast to continue deploying high-speed Internet services to our customers. Comcast is pleased that the two companies were able to reach this resolution quickly, without having any impact on new or existing customers," said Juliano. Headquartered in Philadelphia, Comcast Cable is a division of Comcast Corporation (Nasdaq: CMCSK, CMCSA) --- http://www.comcast.com--- a developer, manager and operator of broadband cable networks and provider of programming content. Comcast Cable is the third largest cable company in the United States. Providing basic cable, digital cable and high speed Internet services, Comcast Cable is the company to look to first for the communications products and services that connect people to what's important in their lives. The company's approximately 18,000 cable division employees serve more than 8.4 million customers in six geographic regions. Comcast Corporation's Class A Special and Class A Common Stock are traded on The Nasdaq Stock Market under the symbols CMCSK and CMCSA, respectively. BETHLEHEM STEEL: Cleveland-Cliffs Sees Minor Chapter 11 Impact -------------------------------------------------------------- Cleveland-Cliffs Inc (NYSE: CLF) reported that the Chapter 11 bankruptcy filing by Bethlehem Steel Corporation (NYSE: BS) is not expected to have a significant impact on Cliffs' financial results for 2001. Bethlehem is a 70.3 percent owner of the Cliffs-managed Hibbing Taconite Mine in Minnesota. It is expected that Bethlehem will continue to fund its obligations and take iron ore from the mine. Cliffs is a 15 percent owner of Hibbing Taconite, with Stelco Inc. owning the balance. Cliffs did not have any trade account receivables from Bethlehem as of September 30, 2001. Cliffs sold iron ore to Bethlehem in October, prior to the bankruptcy filing, that will result in a fourth quarter pre-tax charge of approximately $1.0 million. Cleveland-Cliffs is the largest supplier of iron ore products to the North American steel industry and is developing a significant ferrous metallics business. Subsidiaries of the Company manage and hold equity interests in five iron ore mines in Michigan, Minnesota, and Eastern Canada. Cliffs has a major iron ore reserve position in the United States and is a substantial iron ore merchant. BIRMINGHAM STEEL: Attempting Debt Workout Options With Lenders -------------------------------------------------------------- The financial statements for the fourth quarter and fiscal year ended June 30, 2001 have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Birmingham Steel Corporation has substantial debt maturities due April 1, 2002, and those maturities are classified as current liabilities in the Consolidated Balance Sheet at June 30, 2001. Based upon the current level of the Company's operations and current industry conditions, the Company anticipates it will have sufficient liquidity to meet its obligations as they become due in the ordinary course of business through March 31, 2002. However, there can be no assurance that the Company will be able to refinance, restructure, extend, or amend its obligations under the Revolving Credit Facility, the Birmingham Southeast Credit Facility and Senior Notes on or prior to April 1, 2002. Although the financial and credit markets have recently tightened, the Company continues to investigate the possibility of refinancing its debt with new lenders. The Company also continues to pursue alternatives to reduce the existing debt, including the sale of SBQ assets which management believes will make a refinance or restructure more feasible. The Company also is negotiating with its existing lenders to obtain an extension of the current maturities or otherwise to restructure its debt. However, there can be no assurance that such negotiations will be successful or that alternative financing can be obtained from other sources BIRMINGHAM STEEL: Paid Down Revolver by $11.5MM in Q4 ----------------------------------------------------- Birmingham Steel Corporation (NYSE:BIR) reported financial results for the fourth quarter and fiscal year ended June 30, 2001. The Company's financial results in the fourth quarter improved from the immediately preceding quarter ended March 31, 2001, and also improved from the same period of the prior fiscal year. For the three months ended June 30, 2001, the Company reported a net loss from continuing operations of $3.5 million compared with a loss of $15.2 million in the fourth quarter of the prior fiscal year. In the immediately preceding third quarter ended March 31, 2001, the Company reported a net loss of $10.9 million. Steel shipments in the fourth quarter of fiscal 2001 were 624,000 tons, compared with 639,000 tons in the same period last year. The average selling price per ton was $274, down from $286 last year, reflecting lower overall average selling prices and a decrease in merchant product shipments. For the fiscal year ended June 30, 2001, the Company reported a net loss from continuing operations of $38.5 million compared with a loss of $59.5 million in fiscal 2000. Steel shipments for the fiscal year ended June 30, 2001, were 2,426,000 tons, down from 2,568,000 tons last year. John D. Correnti, Chairman and Chief Executive Officer of Birmingham Steel, commented, "We are pleased to report continued progress toward our goal of returning Birmingham Steel to profitability. With the exception of the Cartersville facility, each of our core operations was profitable in the fourth quarter. The Cartersville operation continued to improve in productivity and cash flow, and sustained a higher level of shipments during the quarter. In the month of June, our combined core operations, including Cartersville, generated a profit for the first time in 13 months." Correnti stated, "Although the success of the recent rebar trade cases led to a partial restoration of rebar selling prices and improved margins, business conditions remained challenging in the fourth quarter. However, because of improved cash flow and reductions in SBQ (special bar quality) working capital, we reduced debt under the revolving credit facility by $11.5 million during the quarter. Since September 30, 2000, during the worst industry conditions in 30 years, the Company reduced debt and lease obligations by $21.7 million, which enabled us to conclude the fiscal year ended June 30, 2001, with $26.8 million of availability under our revolving credit facility." Correnti said the Company was continuing discussions with its lenders regarding possible restructuring of debt or extension of certain debt maturities that are currently due April 1, 2002. In the meantime, Correnti said the Company expects to remain in compliance with all covenants pursuant to its debt agreements. Correnti also said the Company is progressing with due diligence and documentation regarding the pending sale of the Company's SBQ facilities in Cleveland, Ohio, to Corporacion Sidenor, S.A., a steel producer headquartered in Bilbao, Spain. The Company expects to have completed a definitive agreement with Sidenor by November 9, 2001. Correnti said Sidenor is currently paying the costs for approximately 60 former employees of the SBQ operations in order to retain these workers for a restart of operations upon closing of the transaction. Although the terms of the pending transaction have not been disclosed, the Company recorded an additional charge to discontinued operations in the fourth quarter to reflect the expected impact of the proposed sale. Correnti noted that the transaction with Sidenor would reduce debt and eliminate further cash requirements of the Cleveland facility. Correnti said, "These are uncertain times in the U.S. and throughout the world. Prior to September 11, 2001, the U.S. steel industry was arguably already in a recession, but we were encouraged that selling prices for steel products appeared to have bottomed. However, the tragic events of September 11 and the measured response by the United States initiated on October 7, 2001, have created near-term uncertainty in the marketplace." Correnti continued, "The outlook for the U.S. economy for the remainder of 2001 and 2002 is unclear, although the prevalent sentiment is that the overall economic environment will be challenging until consumer confidence is restored and capital spending reemerges. We believe the long-term outlook is promising for construction steel products such as rebar and merchant products. However, we expect shipments, pricing and margins will be under pressure for the remainder of 2001 and for at least the first half of 2002." Correnti concluded, "As evidenced by the fourth quarter results, Birmingham Steel has improved financial performance and cash flow during some of the most trying business conditions in recent history. Although our goal of returning the Company to profitability is not yet achieved, we are making progress. The employees and management of Birmingham Steel are committed to meeting the challenges posed by the current uncertainties in the economic environment with diligence, hard work and an unwavering commitment to success." Birmingham Steel operates in the mini-mill sector of the steel industry and conducts operations at facilities located across the United States. The common stock of Birmingham Steel is traded on the New York Stock Exchange under the symbol "BIR". BROADBAND WIRELESS: Acquiring Entertainment Direct.TV ----------------------------------------------------- Broadband Wireless International Corporation (OTC Bulletin Board: BBAN) in the ongoing process of reorganization announced the signing of a letter of intent to acquire Entertainment Direct.TV, Inc. The general terms of the all stock acquisition will allow current Broadband Wireless shareholders to retain 49% of the issued common stock of Broadband Wireless International Corporation. Entertainment Direct.TV, Inc. will be operated as a wholly owned subsidiary of Broadband Wireless. The new entity will operate under the Broadband Wireless name and will continue pursuit of both companies business models. "We have entered into this LOI in an effort to provide the critical mass necessary to build our business model and to create shareholder value. As we have identified critical niche markets that need our communications infrastructure, Entertainment Direct.TV has identified a niche marketing strategy that brings tremendous value to artists and advertisers alike," commented Dr. Ron Tripp, President of Broadband Wireless. Entertainment Direct.TV, Inc. is head quartered in Las Vegas, NV and was created to leverage the Internet to deliver entertainment products and information to targeted consumers enabling them to participate in the lifestyle of their favorite entertainer, whether an athlete or artist. This specific targeting methodology is combined with multiple, user-friendly technologies that enable rapid return on investments for the artists and their corresponding advertisers. Entertainment Direct.TV is currently under contract with a diverse group of recording artists, athletes and advertisers. Michael Williams, CEO of Entertainment Direct.TV, Inc. stated "With this transaction, we are better positioned to ensure the provision of content both to our domestic niche markets and those global markets that U.S. entertainers dominate as well. We look forward to offering the right combination of communications infrastructure and entertainment content that truly provides the specialty products that consumers are demanding." Keith McAllister, President of Entertainment Direct.TV, Inc. commented "We have created innovative marketing channels that enable advertisers to reach their targeted consumers with their particular product or information. The ability to facilitate this effort within our extensive database provides us the opportunity to generate substantial, recurring revenue from niche oriented product campaigns. Combining this with elements of Broadband Wireless's infrastructure rollout provides a total reach into these niche markets." Management from both companies continue to meet and are expected to conclude the execution of a definitive agreement later this week. Principals of Entertainment Direct.TV, Inc. are aligning financing alternatives through various sources and are expecting a combination of external financing and internal cash flow at significant levels by year end. CELLPOINT: Post Lower EBITDA Despite Dramatic Rise in Revenues -------------------------------------------------------------- CellPoint Inc. (Nasdaq:CLPT) (OMX:CLPT), a global provider of mobile location software technology and platforms, announced financial results for the fiscal year ended June 30, 2001. The previously announced liquidation of the company's telematics subsidiary, Unwire, requires CellPoint to disclose results of its telematics operations as 'discontinued operations' in accordance with U.S. Generally Accepted Accounting Principles(a). Results from Continuing Operations Revenue for the location services business segment, 'continuing operations,' climbed to $4.1 million in the fiscal year compared to $0.83 million in the previous fiscal year. EBITDA (earnings before investment expenses, taxes, depreciation and amortization) from continuing operations was a loss of $10.33 million for the fiscal year, compared to a loss of $5.51 million in the previous fiscal year. 97% of all revenue in the year came from the European marketplace. The gross profit margin increased to 85.7% from 39.7% in fiscal 2000. CellPoint expects the margins to remain high in the coming years since its focus is on selling software licenses for location platforms. Peter Henricsson, CellPoint Chairman and Chief Executive Officer, said, "We are pleased to report revenue growth of 390% from the location services business this past fiscal year despite difficult market conditions and subsequent order delays. This past fiscal year, CellPoint made substantial progress expanding operations to achieve commercialization of its location services technology, developed a new generation of software platforms for location-based services and increased marketing activities to create a more global awareness. In addition, we were successful in launching strategies to reduce overall operating costs." Operating expenses from continuing operations were $17.78 million, of which $3.93 million was depreciation and amortization. In the previous fiscal year, operating expenses from continued operations were $8.46 million, of which $2.61 million was depreciation and amortization. Selling, general and administrative expenses for continuing operations were $8.27 million; research and development expenses were $4.21 million, totaling $12.48 million for the year compared to $4.32 million in the previous fiscal year. The company incurred a loss from continuing operations of $16.5 million compared to a loss of $8.16 million in the previous year. "In July, we announced a three-pronged strategy to be cash-flow positive by current fiscal year end. The execution of this plan included the buyout and restructuring of the convertible notes from Castle Creek Technology Partners, direct private placements to date of US$6.6 million to buy down the notes and raise additional working capital, and the liquidation of our telematics subsidiary, Unwire. We are also further streamlining our operations focusing on location platforms and enabling services and are liquidating our South African subsidiary and concentrating our development and implementation resources in Sweden. We are now poised for sustained growth as we focus on implementing our product offerings for state-of-the-art location services. We have lowered the cost structure and will continue to manage operating costs without reducing our commitment to continued development and sales of our location platforms," Henricsson said. As part of the restructuring, the company has improved the balance sheet by writing off all goodwill from the Unwire purchase and is now left with $15.57 million in total goodwill which will improve the results per share going forward. The company has debts of $11.79 million, of which none is short-term debt. "We are expecting demand to build in the coming quarters secured by mobile operators' needs globally to increase average revenue per user (ARPU). Our Mobile Location System (MLS) platform addresses those needs with a seamless, network-wide location solution enabling operators or application providers to deliver expanded mobile offerings for future generations. CellPoint's MLS works across today's 2G networks (current GSM worldwide), 2.5G (GPRS) and 3G/UMTS. CellPoint is prepared to increase market penetration significantly and capitalize on the multi- billion dollar mobile location services industry," added Henricsson. Highlights Fiscal Year 2000 - 2001 -- Company begins trading on the Nasdaq National Market -- Signs commercial agreement with EuroTel Praha Ltd. for GSM location services -- Signs agreement with E-Plus to deliver world's first commercial network-based location services for German mobile operator -- Gains secondary listing in Europe and begins trading on the Stockholm OM Exchange, now called Stockholmsborsen -- Launches MLS - world's first network-based location platform enabling location services for every subscriber in any GSM network -- CellPoint joins Location Interoperability Forum (LIF); CellPoint Chairs Mobile Location Protocol group -- AirFlash and CellPoint join forces to offer integrated end-to-end location-based services Highlights since July 1 -- KPN Group, CellPoint and E-Plus sign Group License Frame Agreement for Mobile Location Systems with terms negotiated for operators within the KPN Group -- SiRF and CellPoint to integrate A-GPS into CellPoint's MLS platform to provide GSM/3G operators with enhanced Anytime, Anywhere Location Information Platform -- Location Developers' Zone launched, more than 400 developers on line - LDZ facilitates third-party development of applications and services targeted to CellPoint's mobile location platforms -- First closings of follow-on funding reach US$6.6 million; convertible notes restructured to $4.00 fixed convertible on remaining $6.1 million principal The Annual Stockholders' Meeting will be held on December 5, 2001 in Stockholm, Sweden. Stockholders of record at the close of business on October 19, 2001 shall be entitled to receive full details in the notice of, and to vote at, the annual meeting. The company noted that, as a result of its restructuring efforts, it has postponed its conference call until the end of the first quarter and has prepared a written question and answer session with management which can be viewed on CellPoint's website at www.cellpt.com/pdf/10KSB2001.PDF The company's full report filed with the SEC on Form 10KSB can be viewed at www.freeedgar.com (a) US GAAP Reporting for Discontinued Operations The decision made in the fourth quarter of fiscal 2001 to focus on the location services business requires that the Company disclose the results of the telematics operations as 'discontinued operations' according to U.S. Generally Accepted Accounting Principles (US GAAP) requirements. Accordingly, the results of the telematics business area have been segregated from the results of the Company's ongoing business of location services. The historical financial statements have also been restated to conform to this required presentation. Unwire's financial results are reported under Discontinued operations in the Consolidated Statements of Operations and its financial position is presented in the Consolidated Balance Sheets under Net assets of discontinued operations. CellPoint Inc. (Nasdaq:CLPT, SSE:CLPT, www.cellpoint.com) is a U.S. company with subsidiary operations in Sweden and Great Britain delivering mobile location technology platforms and enabling 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 Managertm for mobile resource management, iMatetm for location-sensitive information and Findertm, an application for locating friends and family. CellPoint? and CellPoint Systems? are trademarks of CellPoint Inc. CHESAPEAKE: Sells Permanent Display Business to Management Group ---------------------------------------------------------------- Chesapeake Corporation (NYSE:CSK) announced it has sold its permanent display business, Consumer Promotions International, Inc., (CPI) to a management investment group led by Michael de Gennaro, president of CPI. Chesapeake also announced it has sold Chesapeake Display and Packaging (Canada) Limited to Atlantic Decorated & Display, Inc., a subsidiary of Atlantic Packaging Products Ltd. of Scarborough, Ontario. Chesapeake's Chairman, President and Chief Executive Officer Thomas H. Johnson said, "These are the last steps in a series of divestitures that we announced earlier this year, when we announced we were discontinuing Chesapeake's Merchandising and Specialty Packaging segment. These divestitures have repositioned Chesapeake to be a focused specialty packaging company that enjoys leadership positions as a packaging supplier for particular markets, such as the pharmaceutical and healthcare sector." The CPI sale includes facilities in: Mount Vernon, NY; Leicester, England; Noisy le Grand and Rosny sous Bois, France; and Barcelona, Spain. CPI employs approximately 525 employees. CD&P Canada has one plant in Toronto and employs approximately 85 people. Chesapeake Corporation, headquartered in Richmond, Va., is a global leader in specialty packaging. Chesapeake is a leading European folding carton, leaflet and label supplier and a leader in plastics packaging for niche markets. Chesapeake has over 50 locations in North America, Europe, Africa and Asia. Chesapeake's website is http://www.cskcorp.com As of July 1, the company's current assets were valued at $274.5 million as opposed to current liabilities of $345.4 million. COMDIAL CORP: Faces Nasdaq Delisting for Violating Requirements --------------------------------------------------------------- Comdial Corporation (Nasdaq:CMDL) announced that on October 9, 2001 it received a Nasdaq Staff Determination, indicating that the Company's common stock is subject to delisting from the Nasdaq National Market because the Company has failed to comply with the minimum $4,000,000.00 net tangible assets requirement or the minimum $10,000,000.00 shareholders' equity requirement, as required by Marketplace Rule 4450(a)(3). The Company also does not meet the continued listing requirements under the Nasdaq National Market's Maintenance Standard No. 2. The Company intends to request a hearing before the Nasdaq Listing Qualifications Panel to review the Staff Determination. The appeal will stay the delisting of the Company's common stock, pending the decision of a Nasdaq Listing Qualifications Panel, which is expected to hear the appeal within 45 days. At the hearing, the Company intends to submit a plan pursuant to which it hopes to return to compliance with the continued listing requirements of the Nasdaq National Market. In the alternative, the Company may apply for listing on the Nasdaq SmallCap Market. The Company believes that it currently meets the continued listing requirements for the SmallCap Market. Comdial Corporation, headquartered in Sarasota, Florida, develops and markets sophisticated communications solutions for small to mid-sized businesses, government, and other organizations. Comdial offers a broad range of solutions to enhance the productivity of businesses, including voice switching systems, voice over IP (VoIP), voice processing and computer telephony integration solutions. For more information about Comdial and its communications solutions, please visit our web site at htp://www.comdial.com COMDISCO INC: Court Allows Panel to Hire Watchell as Counsel ------------------------------------------------------------ Judge Barliant allows the Creditors' Committee of Comdisco, Inc. to retain the firm of Watchell, Lipton, Rosen & Katz, as its counsel in Comdisco's chapter 11 cases. To address the objection raised by Equity Committee and the request of the United States Trustee, the Court has set a hearing on the contingent fee arrangement at 10:30 a.m. on October 23, 2001. Until the entry of a final, non-appealable order resolving the contingent fee arrangement, Judge Barliant directs the Debtors to pay Watchell $100,000 a month towards its fees and expenses, nunc pro tunc to July 27, 2001. (Comdisco Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) COVAD COMMS: Seeks Okay to Hire Ordinary Course Professionals ------------------------------------------------------------- Covad Communications Group, Inc. asks the Court for permission to employ certain ordinary course professionals, nunc pro tunc to the Petition Date, without requiring submission of separate retention applications for each Ordinary Course Professional. Christopher J. Lhulier, Esq., at Pachulski Stang Ziehl Young & Jones, in Wilmington, Delaware, relates that in their daily performance of their duties, the Debtor's employees regularly call upon certain professionals including attorneys and real estate brokers to assist them in carrying out their assigned responsibilities. The Debtor anticipates employing these Ordinary Course Professionals to continue rendering services during the pendency of these cases: A. Morris Nichols Arsht & Tunnell, of 1201 North Market Street, P.O. Box 1347, Wilmington, Delaware, provides advice on selected issues of Delaware corporate law. B. Brobeck Phleger & Harrision, of 2200 Geng Road, Palo Alto, California, provides representation related to employment issues. C. Barnes & Thornburg, of 750 17th Street, N.W., Washington, D.C., provides advice on certain intellectual property issues. D. Liberty Greenfield, of 717 17th Street, Suite 2700, Denver Colorado, provides assistance with real estate leases. Mr. Lhulier tells the Court that each of these Professionals will be paid no more than $25,000 per month during the pendency of these cases, without an order from the Court authorizing any higher amount. He adds that the Debtor will review the statements of the Ordinary Course Professionals and determine their reasonableness in accordance with pre-petition practices. However, Mr. Lhulier says, if an Ordinary Course Professional's fees and expenses exceed the maximum monthly amount, that Professional will be required to file a fee application in Court for the entire amount requested of that month. Likewise, if the fees and expenses exceed the maximum aggregate amount during the pendency of these cases, the Professional will be required to file a fee application for fees incurred in the month such aggregate amount is exceeded and for every month thereafter during the pendency of these cases. Mr. Lhulier says that the Debtor proposes to file a statement with the Court and to serve such statement on the United States Trustee on the 15th day of every third month after approval of this Motion, which shall include this information for each Professional: A. Name of Ordinary Course Professional B. Aggregate amounts paid as compensation for services and reimbursement of expenses incurred during the last 120 days C. Aggregate paid as compensation for services rendered and reimbursement of expenses incurred during the pendency of these cases D. General description of the services rendered by each Professional Mr. Lhulier submits that although some of the Ordinary Course Professionals may hold minor amounts of unsecured claims against the Debtor for pre-petition services, the Debtor does not believe that any of the Professionals have an interest materially adverse to them or their estates. Nevertheless, to ensure that each of the Professionals is disinterested and does not represent or hold any adverse interest, the Debtor proposes that each be required to file an affidavit of disinterestedness with the Court and serve copies to the UST and all parties-in-interest. Mr. Lhulier states that the Debtor will not make any payment to any Professional who has failed to file such an affidavit. If any of the parties-in-interest has any question regarding payments to these Professionals, Mr. Lhulier submits that the Debtor will supply them with additional pertinent information for their perusal and evaluation. Affected parties-in-interest may file objections within 45 days of the filing of an accounting reflecting such payments. Mr. Lhulier contends that the Debtor cannot continue to successfully operate its business unless it retains and pays for the services of these Professionals. He says that the Debtor's business would be harmed if the Debtor was required to submit to the Court an application, affidavit, and proposed retention for each Ordinary Course Professional. Business would be further affected if each of these Professionals were required to apply for approval of its employment and compensation. Furthermore, the substantial cost of preparing these retention applications and fee applications would cause an unnecessary drain on the Debtor's estate. (Covad Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) COVAD COMMS: Appoints Patrick Bennett as Senior VP of Sales ----------------------------------------------------------- Covad Communications (OTCBB:COVD), the leading national broadband services provider utilizing DSL (Digital Subscriber Line) technology, announced Patrick Bennett as senior vice president of sales. Bennett will be responsible for Covad's direct sales and retail channel development. This is a new position that will compliment Covad's wholesale business, which currently provides the bulk of Covad's revenue. The direct sales position will manage all Covad.net direct channel sales and support, telesales and retail channel sales and development. Bennett will be located in Media, Pennsylvania, where the majority of Covad's direct sales efforts reside. "It is important that Covad further develop its direct sales capability, providing a choice to customers who want to work directly with their broadband provider while strengthening some of the stability issues we have seen in the ISP marketplace," said Charles E. Hoffman, Covad CEO and president. "I have worked with Patrick for almost a decade and he is an enthusiastic sales leader that will help add spirit to the organization and focus on getting top performance from our direct sales efforts." Bennett, age 54, brings to Covad 19 years of successful sales development and management expertise, including the development of effective customer care, sales and marketing organizations, channel development and strategic planning. Bennett arrives at Covad from TESSCO Technologies, Inc., a leading provider of solutions for wireless communications, where he was senior vice president of marketing and product development. Prior to TESSCO, Bennett was executive vice president and chief operating officer of Rogers Wireless, Inc., Canada's largest wireless communications service provider. As a member of the senior management team, Mr. Bennett was instrumental in driving significant improvements in all operating metrics of the business. Preceding Rogers Wireless, Inc., Bennett joined the start-up organization of Sprint PCS as area vice president, where he launched service in Philadelphia and later managed the Washington/Baltimore area. He was also vice president of Sales and Marketing for Cellular One in Washington/Baltimore and president and general manager of Communications Electronics Inc., along with being vice president and general manager for American Beeper Associates in Columbia, Maryland. He began his career as a regional sales manager for Metromedia, the predecessor to Cellular One. Covad is the leading national broadband service provider of high-speed Internet and network access utilizing Digital Subscriber Line (DSL) technology. It offers DSL, IP and dial-up services through Internet Service Providers, telecommunications carriers, enterprises, affinity groups, PC OEMs and ASPs to small and medium-sized businesses and home users. Covad services are currently available across the United States in 94 of the top Metropolitan Statistical Areas (MSAs). Covad's network currently covers more than 40 million homes and business and reaches approximately 40 to 45 percent of all US homes and businesses. Corporate headquarters is located at 4250 Burton Drive, Santa Clara, CA 95054. Telephone: 1-888-GO-COVAD. Web Site: http://www.covad.com DIGITAL NOW: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Digital Now, Inc. 8401 Old Courthouse Road Suite 140 Vienna, VA 22182 aka Digital Now Chapter 11 Petition Date: October 05, 2001 Court: Eastern District of Virginia Bankruptcy Case No.: 01-81288-SSM Judge: Stephen S. Mitchell Debtor's Counsel: Donald F. King, Esq. Odin, Feldman & Pittleman 9302 Lee Highway, Suite 1100 Fairfax, VA 22031 Fax: (703) 218-2160 Email: donking@ofplaw.com Estimated Assets: $0 to $50,000 Estimated Debts: $1 million to $10 million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Covington & Burling $264,928 1201 Pennsylvania Ave NW Washington, DC 20044 Sony Electronics $163,480 Atmel Corporation $93,010 KPMG LLP $87,444 PSI Net $77,078 Orus c/o Protas Spivok et al $70,858 KPMG LLP $65,990 EFOS Canada $53,976 Infinity Financial Mgmt. $49,632 Jackson & Campbell $41,900 White & Case LLP $37,951 Telecomputing $36,765 Dalsa Inc. $34,829 Freehills $33,079 Computershare Registry $28,404 Service Interactive Worldwide Inc $27,217 Financial & Corporate $23,846 Relations Bar and Karrer $21,927 Mark Moler $15,331 Federal Express $14,997 EXODUS COMMS: Seeks Court Injunction Against Utility Companies -------------------------------------------------------------- In the ordinary course of business, Exodus Communications, Inc. use gas, water, electric, telecommunications and other services provided by Utility Companies, which are all critical to the Debtors' ability to sustain their operations during the pendency of their chapter 11 cases. The Debtors' facilities are dependent on electricity for lighting, general office use and their web-hosting infrastructure and services. In addition, telecommunications service is integral to the provision of their web-hosting services and also necessary to perform sales and marketing functions and to communicate with customers, vendors and corporate headquarters. Any interruption of these services would severely disrupt the Debtors' day-to-day operations, resulting in an inability to provide services to customers, which could result in customers leaving Exodus and a reduction in revenue. By this motion, the Debtors seek entry of an order: A. extending the deadline to provide utilities with adequate assurance through and including a hearing on their motion establishing adequate assurance procedures; and B. prohibiting the Debtors' utility service providers from altering, refusing or discontinuing services on account of outstanding pre-petition invoices and/or requiring adequate assurance of payment as a condition of receiving services during this period, provided, that such extension is without prejudice to the right of any Utility Company to request that the period be shortened and, further, that the Debtors shall maintain the burden of proving that any such Utility Company is adequately assured of future payment. Before the Petition Date, David R. Hurst, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Wilmington, Delaware, relates, the Debtors maintained favorable payment histories with all of the Utility Companies, consistently making payments on a regular and timely basis. To the best of the Debtors' knowledge, as of the Petition Date, there were no significant defaults or arrearages with respect to any utility bill, nor have there been any such defaults historically. In fact, Mr. Hurst submits that virtually all of the Debtors' utility bills are current, except for the few such bills that may have been received within the several days immediately before the Petition Date. In addition, Mr. Hurst informs the Court that many of the Utility Companies are parties from which the Debtors have contracted for use of telecommunications lines, which are the lifeblood of the Debtors' businesses and without such lines, the Debtors literally could not provide services to their customers. Prior to the Petition Date, Mr. Hurst states that the Debtors were not served with any written notices of termination of any of the Line Contracts and as of the Petition Date, the Debtors and the Utility Companies were operating under the terms of the respective Line Contracts. The Debtors have not yet sought to either assume or reject any of the Line Contracts, which a non-debtor party may not enforce termination rights under an executory contract or unexpired lease against the Debtors without seeking relief from the automatic stay. Therefore, Mr. Hurst asserts that Utility Companies could have no basis for terminating the Line Contracts or the provision of any services and it is appropriate to prohibit them from doing so. In these early stages of the Debtors' chapter 11 cases, Mr. Hurst says that it is imperative that the Utility Companies continue to provide services in the same manner and on the same terms as provided pre-petition. Therefore, to allow the Debtors a brief period of time to concentrate on matters essential to the reorganization process and to provide the Debtors an opportunity to file a motion establishing procedures for requests for adequate assurance, the Debtors request that the Court extend the deadline to provide utilities with adequate assurance through and including a hearing on the Debtors' motion establishing adequate assurance procedures. The Debtors submit that the Extension is reasonable, considering the competing interests the Debtors' officers and key management face during the first few weeks of the chapter 11 process and the Debtors' timely payment history with the Utility Companies. Further, Mr. Hurst states that the Extension is without prejudice to the right of any Utility Company to request that the period be shortened and, should any Utility Company exercise its right to do so, the Debtors will maintain the burden of proving that adequate assurance of payment exists for such Utility Company. Finally, Mr. Hurst tells the Court that the Debtors will be filing a related motion seeking to establish procedures for requests for adequate assurance. Mr. Hurst claims that the procedures established by this motion will create an administrative process which will streamline the request process, thus reducing the time and expense incurred by the Debtors, their estates and creditors in resolving any such requests, while also providing the Utility Companies with a process to address concerns regarding the Debtors post-petition payment abilities. (Exodus Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) FEDERAL-MOGUL: Court Allows Payment of Shipping Charges ------------------------------------------------------- Federal-Mogul Corporation sought and obtained an order authorizing, but not directing, them to pay pre-petition obligations owed to common carriers incurred by both their United States and United Kingdom operations. Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young & Jones, in Wilmington, Delaware relates, that these obligations are owed on account of the Debtors' shipments to both Original Equipment customers, such as large automotive manufacturers, and aftermarket customers, such as wholesale distributors and retail stores. The Debtors, Ms. Jones tells the Court, additionally seek to pay warehousing charges related to supporting their OE distribution system in the UK, as well as pre-petition obligations related to the importation of goods into the US and the UK. Lastly, the Debtors seek confirmation of the administrative expense status arising from the post-petition delivery of goods for which the Debtors are responsible for the shipping charges. In support of the Debtors' Motion, Ms. Jones details each of the pre-petition shipping obligations and reasons why the Debtors should be immediately authorized to pay them: A. Common Carrier Obligations - In the US, the average monthly freight expense for the US Debtors is approximately $6,550,000. The Debtors estimate that, as of Petition Date, the Common Carriers are owed approximately $2,650,000 for pre-petition shipments. These charges related primarily to shipments of finished products to aftermarket customers and shipment of raw materials to the Debtors' manufacturing facilities. For aftermarket sales, the Common Carrier for a particular shipment is selected at the plant or distribution center level. Shipments are made from the plants to the distribution centers to aftermarket customers. Approximately 90% of shipments are contracted through trucking companies and the remaining 10% are split between air, boat, and train companies. In the UK, the Debtors use four types of Common Carriers for freight shipments: air carriers, ocean carriers, trucking services and other express shipment services. Approximately 80% of shipments are contracted through trucking companies and the remaining 20% are split between air, ocean, and railroad companies. The Debtors pay approximately $11,800,000 per year in the aggregate for transportation and shipping. Approximately 55% of this amount is related to incoming deliveries while the remaining 45% is related to outgoing deliveries to third party customers. The Debtors presently utilize the services of 55 major transportation suppliers in the UK. The average payment terms for these transportation suppliers are 45 days. Since the Debtors have no central payment system in the UK, all invoices are matched at individual locations responsible. The average monthly freight expense is approximately $1,000,000. The Debtors estimate that, as of the Petition Date, the common Carriers are owed approximately $1,500,000 for the UK operations. The Debtors believe that failure to pay these shipping charges will result in discontinued service or withholding of important shipments of raw materials utilized in the manufacturing of their products. In this light, payment of the Common Carrier Charges would prevent disruption of the Debtors' business. Moreover, many of the shippers might contend that they are entitled to possessory liens in any goods they hold as of the Petition Date and refuse to release such goods until their claims are satisfied. The Bankruptcy Code provides that a carrier might be entitled to adequate protection of such lien, increasing the cost and administrative burden to the Debtors. Payment of shipping obligations will eliminate the need to provide such adequate protection and reduce the amount of potential secured claims. In addition, the value of the goods in the possession of the shippers far exceeds the amount of unpaid shipping charges. The Debtors, therefore, believe that it is necessary to pay these charges rather than risk losing the goods. In the event that the Debtors were not able to make payments, these Common Carriers might cease to do business with the Debtors, forcing the latter to obtain substitute freight carriers with little or no warning. This situation could obligate the Debtors to pay premium charges to the replacement carriers to obtain timely delivery of goods, causing further drain to the estates. B. Warehousing Obligations - The Debtors currently do not have any goods stored in warehouses owned by third parties in the United States. The UK operations, on the other hand, utilize one third-party warehouse at Upton, which stores and distributes ignition and wiper products to OE customers. According to the contract governing the Debtors' use of this warehouse, the warehouse operator has a lien on the goods in its possession to secure the expenses incurred in connection with the storage of the goods. Storage fees owing to the UK warehouse have averaged $150,000 monthly over the last twelve months. The Debtors estimate that their outstanding liability for Warehousing Obligations as of the Petition Date is $225,000. The Debtors believe that a failure to pay these pre-petition amounts would result in delayed delivery of the goods in storage, causing significant damage to the UK operations and relationship with UK customers. Meanwhile, payment of such amounts would not prejudice the Debtors' unsecured creditors, as the warehouse operator will have a lien for any unpaid amounts. C. Customs Duties, Brokerage Fees, and Freight Forwarder Fees - The Debtors export and import finished goods and are obligated to pay certain charges related to their shipment across international borders. As of Petition Date, the Debtors had become indirectly obligated to pay for certain goods being imported into the US or the UK that had not yet been received, in transit to the US or UK, or awaiting clearance by the US Customs Service. Prior to the Petition Date, the Debtors engaged customs brokers to obtain possession of goods imported into the US and the UK and process these goods with the customs service smoother and faster delivery of such goods worldwide. The Debtors pay the Brokers various fees based on contractual rates adjusted for the type of goods being transported. The Debtors' average yearly payments to Customs Brokers total $526,000 while the English Debtors' total $150,000. The Debtors estimate that, as of Petition Date, prepetition fees owing to the customs Brokers totaled $44,000 in the US and $15,000 in the UK. The Debtors estimate that they owe accrued and unpaid import charges for prepetition customs duties in the amount of $1,800,000 in the US and $300,000 in the UK, with an additional $200,000 in related import fees also in the UK. As with the other shipping obligations, failure to pay the customs brokers could result in demands by the relevant customs authority for redelivery of any imported goods already released to the Debtors, detention of future imported goods intended for the Debtors, and implementations of sanctions until payment is made. Payment will also eliminate potential prolonged customs clearance periods and procedures and expedite the delivery of imported and exported goods and products. D. Outstanding Orders - Numerous vendors locally and worldwide provide the Debtors with millions of dollars worth of goods, materials, and products on a monthly basis. Many shipments are in transit to the Debtors' various facilities. As of the Petition Date, the Debtors had numerous outstanding orders for a wide variety of Goods with a large number of parties. Many of the Debtors' vendors may be concerned that delivery of goods after the Petition Date will render them unsecured creditors of the Debtors' estates. This could result in their refusal to deliver or withholding important goods to the Debtors. Ms. Jones submits that obligations that arise in connection with the post-petition delivery of goods to the debtors are administrative expenses. By virtue of this provision, Ms. Jones asserts that the Debtors have the obligation to pay these expenses. However, the Debtors' relationships with their vendors and suppliers are so essential for successful reorganization that it is necessary to further assure those parties that their valid claims will be accorded first-priority administrative expense status and they will continue to be paid by the debtors. Moreover, Ms. Jones adds that since many foreign vendors are not familiar with the ability of the debtors to pay for post- petition delivery of goods, having dealt with chapter 11 debtors infrequently or not at all, confirmation by the Court of the validity of their claims is needed. (Federal-Mogul Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392- 0900) GLENEX INDUSTRIES: Quest Ventures Completes Shares Purchase ----------------------------------------------------------- Glenex Industries Inc. (CDNX - GXI) has been informed that Quest Ventures Ltd. has completed the purchase of 1,870,000 shares of Glenex, being 19.9% of the issued and outstanding capital of Glenex. The Board of Directors presently consists of A. Murray Sinclair and Brian E. Bayley, both partners of Quest Ventures Ltd., Robert Boyle, a director of the Company since 1997, and Henry Knowles, a Toronto business lawyer. Glenex Industries Inc. is engaged in the entertainment service industry, and in the production of oil and gas. GRIFFIN SERVICES: Faces Involuntary Chapter 7 Petition ------------------------------------------------------ Griffin Services, parent company of Griffin Staffing Services, is facing an involuntary chapter 7 bankruptcy petition filed against it by its workers compensation and employer liability insurance company, The Business Journal reported. Atlantic Mutual Insurance Co. of Roanoke, Va., filed the petition in the bankruptcy court for the Middle District of North Carolina in Greensboro on October 4. Atlantic Mutual alleges it is owed $445,497 in past due accounts that Griffin Services has failed to pay. The Winston-Salem, N.C.-based Griffin Services has until October 24 to file a response to the Atlantic Mutual petition in court. (ABI World, October 16, 2001) GRIFFIN SERVICES: Chapter 7 Involuntary Case Summary ---------------------------------------------------- Alleged Debtor: Griffin Services, Inc. 8011 North Point Blvd, Suite A PO Box 11865 Winston-Salem, NC 27116 Involuntary Petition Date: October 4, 2001 Case Number: 01-52373 Chapter: 7 Court: Middle District of North Carolina (Winston-Salem) Judge: Catharine R. Carruthers Alleged Debtor's Counsel: R. Bradford Leggett, Esq. Suite 700 380 Knollwood St. P. O. Box 5129 Winston-Salem, NC 27113-5129 336-722-2300 Petitioner's Counsel: William P. Miller, Esq. 300 High Point B&T Bldg. 300 N. Main St. P. O. Box 1550 High Point, NC 27261 336-889-8733 -and- Robert E. Price, Jr., Esq. Suite B 3400 Healy Dr. P. O. Box 26364 Winston-Salem, NC 27114-6364 336-760-2870 Petitioners: Atlantic Mutual Insurance Career Associates, Inc. Amount of Claim: $445,497 HOMESEEKERS.COM: Terminates B.J. Rone as CEO and President ---------------------------------------------------------- HomeSeekers.com (OTC Bulletin Board: HMSK), a leader in online real estate technology and services, has terminated its contract with Tatum CFO Partners, LLP for the services of B.J. Rone as CEO and President. Current management of HomeSeekers is overseeing day to day operations. HomeSeekers.com, Incorporated is a leading provider of technology to the North American and International real estate industries. The Company provides technology solutions and services targeted to brokers, agents, Multiple Listing Services (MLS), builders, consumers and others involved in the real estate industry. Product and service offerings can be viewed at the Company's primary website, http://www.homeseekers.com HOMESEEKERS.COM: In Default Under Purchase Pact with HomeMark ------------------------------------------------------------- HomeSeekers.com (OTC Bulletin Board: HMSK), a leader in online real estate technology and services, accepted the resignation of Ted Jones from the HomeSeekers board of directors. In addition, Joseph Harker, Chairman of the Board of Directors announced his resignation effective October 17, 2001, citing personal reasons. HomeSeekers also received notice from HomeMark placing HomeSeekers in default under the Securities Purchase Agreement dated June 6, 2001 between the Company and HomeMark. Separately, HomeSeekers revealed that it also received notice that HomeMark has sold contract rights and promissory notes and liens secured by HomeSeekers assets to privately held HomeSeekers Management, Inc. (HMI), indicating HomeMark's total severance of any perceived remaining relationship with HomeSeekers. HomeMark has never been a shareholder of HomeSeekers. HomeMark advised HomeSeekers that it would issue its own press release on the matter. HomeSeekers.com, Incorporated is a leading provider of technology to the North American and International real estate industries. The Company provides technology solutions and services targeted to brokers, agents, Multiple Listing Services (MLS), builders, consumers and others involved in the real estate industry. Product and service offerings can be viewed at the Company's primary Web site, http://www.homeseekers.com HOMESEEKERS.COM: Mulls Operations Shut-Down & Bankruptcy Filing --------------------------------------------------------------- HomeSeekers.com incurred net losses of approximately $51,627,000, $25,034,000 and $4,842,000 during the years ended June 30, 2001, 2000 and 1999, respectively, and at June 30, 2001 had a working capital deficit of approximately $9,745,000, an accumulated deficit of approximately $92,587,000 and a stockholders' deficit of approximately $5,416,000. In addition, the Company used cash of approximately $10,332,000 to fund operations during the most recent year and continues to rely on outside financing. The report of independent auditors on the Company's June 30, 2001 financial statements includes an explanatory paragraph indicating there is substantial doubt about the Company's ability to continue as a going concern. There is only a limited operating history with the existing business model, the Company has had substantial management turnover and has undergone significant restructuring of operations, and there is no assurance that necessary financing can continue to be obtained. Subsequent to June 30, 2001 the Company's cash position has deteriorated. The Company has been unable to obtain sufficient additional financing and may have to consider curtailing or ceasing operations, including the possibility of filing bankruptcy. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. ITI EDUCATION: Creditors Approve Proposed Sale of Assets to EDMC ---------------------------------------------------------------- Ernst & Young Inc., court-appointed Receiver and Manager of ITI Education Corporation, reports that the proposal to creditors of ITI was accepted earlier Monday. This event facilitates the sale of certain ITI assets to Education Management Corporation of Pittsburgh, PA. At a meeting held Monday in Halifax, E&Y put the Proposal to a vote by ITI's creditors, and 99% of the creditors voted to accept the Proposal. The court has also approved the amalgamation of ITI and certain related companies, a necessary step under the purchase agreement. E&Y will now seek the Court's approval of the Proposal, which will complete the purchase process. The sale of ITI to Education Management Corporation is expected to become final by the middle of November. "With the approval we received from creditors [Mon]day, I believe the sale of ITI to EDMC will be completed as planned," said Mathew Harris, E&Y Senior Vice President and Receiver for ITI. "We are very pleased that these last steps are now complete and look forward to finalizing this agreement very soon," said Jock McKernan, Vice-Chair of Education Management Corporation. "Our focus now is on the October 29th intake of students and filling those classes that come next. ITI offers students an opportunity to gain the kind of education that will help them get jobs with any organization that needs people to solve today's business challenges using the latest technology." INTEGRATED HEALTH: Gets Okay to Assume Amended NV & WI Leases ------------------------------------------------------------- Integrated Health Services, Inc. sought and obtained the Court's approval, pursuant to sections 105(a), and 365(a) and (b) of the Bankruptcy Code, and Rule 6006 of the Bankruptcy Rules, for the assumption of two non-residential real property leases pertaining to two Facilities - one in Nevada and another in Wisconsin. The Facilities have been profitable. Further, the Debtors have obtained rent concessions to enhance profitability. Specifically, the Leases are: (1) between Nev-Cal Associates, L.P., as landlord, and IHS 151, as tenant-assignee, dated as of March 10, 1993, related to non-residential real property and improvements located at 2898 Highway 50 E., Carson City, Nevada, and known as the Carson Convalescent Center, and (2) between Mi-Con Associates, L.P., as landlord, and IHS 145, as tenant-assignee, dated as of February 26, 1997, related to certain non-residential real property and improvements located at 1202 E. Sumner Street, Hartford, Wisconsin, and known as the Hartford Care Center. The Hartford Lease was entered by and between Mi-Con, as landlord, and HHC Nursing Facilities, Inc., as tenant, on or about February 26, 1997 and was subsequently assigned by HHC to IHS 145 pursuant to an Assignment and Assumption of Real Property Lease, entered into as of December 31, 1997. The Carson Lease was entered by and between Nev-Cal, as landlord, and Horizon Healthcare Corporation, as tenant, on or about March 10, 1993. Horizon CMS Healthcare Corporation succeeded to Horizon Healthcare Corporation's interest in the Carson Lease. The Carson Lease was subsequently assigned by Horizon CMS Healthcare Corporation to IHS 151, pursuant to an Assignment and Assumption of Real Property Lease, dated as of December 31, 1997. On an annualized basis, as of June 30, 2001, both the Hartford and Carson Facilities were profitable. The Hartford Facility's pro-forma annualized cash flow as of that date was $9,177.00, while the Carson Facility's pro-forma annualized cash flow as of that date was $351,558. In an effort to further enhance the profitability of each Facility, the Debtors commenced discussions with the landlords of each Facility in an effort to negotiate a rent concession. After extensive arm's length negotiations, the Debtors and landlords agreed to amend the Hartford and Carson Leases to reduce the rent due under each Lease, with assumption of the leases, as amended, by the Debtors. The Hartford Lease Amendment reduces the annual Hartford Lease rent from $383,200 to $263,200 -- an annual rent reduction totaling $120,000. The Carson Lease Amendment reduces the annual Carson Lease rent from $180,000 to $120,000 -- an annual rent reduction totaling $60,000. If the rent reductions had been in effect during the last six months, the Hartford Facility's pro-forma annualized cash flow as of June 30, 2001, would have been $129,177 and the Carson Facility's pro-forma annualized cash flow as of June 30, 2001, would have been $41 1,558. The Hartford and Carson Lease Amendments increase the profitability of each Facility, and the Debtors believe that the rent reductions implemented by the Lease Amendments will improve each Facility's fiscal health such that the Debtors can expect to realize increased profits during the remainder of the Lease terms. Therefore, the Debtors believe that assumption of the leases as amended pursuant to section 365 of the Bankruptcy Code is an exercise of sound business judgment. (Integrated Health Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900) INTIRA CORP: divine Completes Acquisition of Certain Assets ----------------------------------------------------------- divine, inc., (Nasdaq: DVIN), a premier integrated solution provider focused on the extended enterprise, announced that it has completed its acquisition of certain assets of Intira Corporation and HostOne. Combined, these acquisitions position divine as a leading provider of facilities-based managed applications services, with anticipated annual revenue of more than $30 million for the division. These acquisitions bring together the facilities and processes of Intira with the application management services and expertise of HostOne, and the world-class application development talent of divine's Professional Services Organization. divine's strategy is to build and deliver world- class facilities-based managed hosting services for a variety of business-critical enterprise applications, and provide an application infrastructure for divine's collaboration, interaction, and content aggregation and personalization applications. "Businesses today need to leverage complex solutions quickly, reliably, cost-effectively, and in a controlled, monitored environment," said Jim Dennedy, President, divine Managed Services. "To do that, they require high-performance infrastructure solutions to host and manage those applications. With the acquisitions of Intira and HostOne, divine has assembled the key capabilities to provide end-to-end hosting and managed support for a complete client solution." divine now has data centers in Pleasanton, Calif., and St. Louis and operational facilities in Washington D.C. and New York. By owning the application infrastructure platform and the management of the hosting environment, divine is able to provide greater control over the quality and availability of divine's and other hosted applications. For more information about divine Managed Applications Services, please visit divine's Web site, http://www.divine.com divine, inc., (Nasdaq: DVIN) is focused on extended enterprise solutions. Through professional services, software services and managed services, divine extends business systems beyond the edge of the enterprise throughout the entire value chain, including suppliers, partners and customers. divine offers single-point accountability for end-to-end solutions that enhance profitability through increased revenue, productivity, and customer loyalty. The company provides expertise in consulting, collaboration, interaction, hosting and knowledge solutions that enlighten, empower and extend enterprise systems. Founded in 1999, divine focuses on Global 5000 and high-growth middle market firms, government agencies, and educational institutions, and currently serves over 2000 customers. For more information, visit the company's Web site at http://www.divine.com INT'L FIBERCOM: Talking With Banks On Likely Covenant Violations ---------------------------------------------------------------- International FiberCom Inc. (Nasdaq:IFCI) announced that it expects to report an operating loss for its third quarter ended Sept. 30, 2001, due largely to problems in its network services group and the cost of excess capacity in certain regions as a result of the continued slowdown in telecommunications infrastructure capital spending. The company said that certain of its operations were profitable, including its wireless technology group, its systems integration group and portions of its outside plant services group, but that other operations have suffered operating losses and will be further downsized. The company's revenues for the quarter are expected to be down approximately 13 percent to 16 percent, from the $82.5 million reported for the second quarter ended June 30, 2001. As a result of these trends in the industry, the company will continue to restructure and downsize its operations. The company will incur significant charges for retiring excess equipment, for reducing staff in certain operations and in closing underutilized facilities. The company plans to narrow its focus to the lines of business that have showed consistent profitability and have the most resilient outlook, while moving infrastructure development activities to a more scalable, subcontractor-based model that is less capital and labor intensive. The company's restructuring efforts are aimed at restoring long-term profitability and operating cash flow. The company is also in the process of assessing the net realizable value of certain assets, primarily trade accounts receivable and costs in excess of billings on certain contracts, given the deterioration of the financial condition of certain customers and companies in general in the industry. As a result, the company expects to record additional reserves to take into account any estimated permanent impairment in the net realizable value of these assets. Chairman, President & CEO Joseph Kealy commented: "These have been turbulent months necessitating that we restructure our operations going forward in a manner consistent with the slowdown and changes in the telecommunications industry. In addition to last-mile opportunities, both wired and wireless, we still believe in the metro and local-loop outside plant services that have been the core of our growth. "However, the current environment requires a great deal of flexibility and agility, neither of which can be achieved with the burden of excess equipment, facilities and overhead. Our future focus with respect to outside plant services will be to achieve a more scalable project management focused operation that will allow us to bring the necessary skill sets and resources to bear with a much smaller capital investment and recurring cost burden." Kealy also said that the company is in discussion with its commercial banking syndicate to address covenant violations that will occur as a result of the expected third-quarter loss and pending restructuring charges. For the six months ended June 30, 2001, the company reported revenues of $158.4 million, with a net loss of $22.1 million, which included a provision of $19.6 million recorded against the pending sale of its Equipment Distribution Group. The company is pursuing several disposal options, but if none is successful, the company will re-evaluate the reserves established as of March 31, 2001. The company expects to report its third-quarter results during the week of Nov. 12, 2001, and will host a conference call for investors when the results are announced. KANA: Projects to Reach Breakeven Point in Fourth Quarter --------------------------------------------------------- KANA(R) (NASDAQ: KANA), the leading provider of external-facing eCRM solutions, announced financial results for the third quarter ended September 30, 2001. In addition, KANA disclosed plans to accelerate its path to profitability and projected breakeven pro-forma operating results for the current fiscal quarter. Revenues for the third quarter were approximately $17.4 million. Pro-forma net loss (which excludes the effects of amortization of intangible assets and stock-based compensation, costs and expenses associated with acquisitions, restructuring, discontinued operations and assumes the acquisition of Broadbase at the beginning of the period) for the quarter ended September 30, 2001 was ($41.4) million, compared to a pro forma net loss of ($23.0) million for the quarter ended September 30, 2000. With the completion of a recent Q3 restructuring and a large pipeline of potential new business, KANA believes that it will reach breakeven pro-forma EPS in the current fiscal quarter. The company is also guiding revenue expectations for Q4 2001 to approximately $24 million. "While Q3 was a difficult quarter for KANA and the entire global economy, we have continued to see tremendous support from our customers, especially surrounding the recent announcement of our fully-integrated iCARE product suite," said Chuck Bay, CEO and president of KANA. "With the most compelling, external-facing eCRM products on the market, strong partnerships to help in the delivery and adoption of KANA's technology, and an impressive blue-chip customer base, we are confident that KANA is well positioned to both add market share and enhance its bottom line." Highlights from the Q3 included: Product launches: The release of the fully-integrated KANA iCARE(TM) suite represented a major integration milestone and delivered the industry's first web-architected J2EE and COM eCRM suite that provides Global 2000 organizations with a highly scalable, external-facing contact center solution. KANA iCARE (Intelligent Customer Acquisition and Retention for the Enterprise) is the industry's first solution on the market today that includes an ultra-scalable contact center solution, the industry's leading in- and out-bound e-mail management system, a robust knowledge base for self- and assisted-service and sophisticated marketing and analytics. Customer wins: KANA third quarter wins included Global 2000 organizations such as: Bank One, Blue Cross Blue Shield of Minnesota, Chanel, DISA, Groupe Clarins, ICO, Pentagon Federal Credit Union, State of California Department of Information Technology, Southern California Gas Company, TaylorMade-adidas Golf, and Zebank, among others. Expanded relationships with existing customers: A large number of current KANA customers purchased additional KANA eCRM applications to help them better service and market to their customers. These companies include: adidas, Chase Manhattan, CIGNA, Cingular Wireless, CitiGroup, Cox Communications, Earthlink, eBay, First USA Bank, Fuji Bank Ltd., Grainger, Global Crossing, Hitachi Software, HotJobs, Ladbrokes, Nissan Motor Company, Northwest Airlines, Oceanic Cable, Providian Bancorp Services, State of California Governor's Office, Staples, Tiffany and Company, WorldCom, and Upromise, among others. Successful partner relationships: With the release of the KANA iCARE suite of products, KANA has streamlined its own professional services organization and is working more closely than ever with its key partners for the integration, service and maintenance of its products. Systems integration partners drove a series of customer wins including: Blue Cross Blue Shield Minnesota, BSkyB, CitiGroup, DISA, Earthlink, One2One, and WorldCom, among others. Industry honors: KANA's Contact and Response products received 2001 CRM Excellence awards from Customer Inter@ction Solutions Magazine. KANA Contact was also chosen by CUSTOMER Support Management magazine as a winner of the fourth-annual ICCM/CRM Solutions "Best of Show Award. KANA (NASDAQ: KANA) provides the industry's leading external facing eCRM solutions to the largest businesses in the world, helping them to better service, market to, and understand their customer and partners, while improving results and decreasing costs in contact centers and marketing departments. Through comprehensive multi-channel customer relationship management that combines the best-in-class KANA iCARE Architecture with enterprise applications, KANA has become the fastest-growing provider of next generation eCRM technology. The company's customer-focused service, marketing and commerce software applications enable organizations to improve customer and partner relationships by enabling them to productively interact when, where and how they want - across all touch points, including web contact, web collaboration, e-mail, and telephone. KANA's global customer base includes Global 2000 organizations in the financial services, manufacturing, high technology, communications, retail and services markets. ADP, Chase, E*Trade, GAP, GM, Hewlett-Packard, Kodak, Sony, United Airlines, Verizon, and Williams Sonoma are among the industry leaders that have implemented KANA's eCRM solutions. KANA has locations in 22 countries worldwide, in addition to an extensive global network of channel partners. At the end of Q3, the Company's current assets totaled $81.82 million, as opposed to current liabilities of $102.25 million. For more information, please visit http://www.kana.com L.L. KNICKERBOCKER: Closes Substantial Sale of Assets to Marian --------------------------------------------------------------- The L.L. Knickerbocker Co., Inc. reported the closing of the sale of substantially all of its assets to Marian, LLC, a California limited liability company formed by Brian Blosil. In consideration for the purchase of Knickerbocker's assets, the purchaser assumed approximately $2,020,000 in secured debt owed by Knickerbocker to Republic Financial Corporation, assumed approximately $1,300,000 of Knickerbocker's debts and liabilities, and agreed to issue to the Official Committee of the pre-petition unsecured creditors of Knickerbocker a subordinated promissory note in the aggregate principal amount of approximately $1,860,000. The shareholders of Knickerbocker will not receive any proceeds from the Sale. Following the consummation of the Sale, Knickerbocker has been left with little or no assets and Knickerbocker will file with the Bankruptcy Court a plan of liquidation. The shareholders of Knickerbocker are not expected to receive any proceeds pursuant to such plan of liquidation. LAIDLAW INC: Court Extends Removal Period to Confirmation Date -------------------------------------------------------------- Judge Kaplan extends Laidlaw Inc.'s time within which they must decide whether to remove any Pre-petition Lawsuit through the later of (a) the Confirmation Date; or (b) 30 days after the entry of an order terminating the automatic stay with respect to the particular Action sought to be removed. (Laidlaw Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFIC GAS: Wants Open-Ended Extension of Lease Decision Period ---------------------------------------------------------------- Pacific Gas and Electric Company seeks an order extending the time to assume or reject the approximately 250 real property leases until the time of confirmation of a plan of reorganization in the PG&E case, without prejudice to the right of any lessor subsequently to move the Court for an order compelling assumption or rejection of its Lease at an earlier date for good cause shown. PG&E notes that in an abundance of caution, the list of Leases includes certain agreements regarding real property rights and rights of way, that may not constitute leases pursuant to Section 365. PG&E expressly reserves the right to assert that any Lease does not constitute a nonresidential real property lease within the meaning of 11 U.S.C. Section 365. PG&E submits that there is cause to grant the requested extension because, inter alia, the Leases are essential to its operations, PG&E continues to comply with its post-petition obligations under the leases, and the PG&E case is exceptionally complex and involves a large number of leases. In particular, PG&E is the lessee under 255 Leases, pertaining in general terms to one of the following six functions or uses in the ordinary course of PG&E's business: office, utility, telecommunications, rights of way and similar land use rights, parking and storage. Previously, PG&E sought and obtained an extension until October 5, 2001 the time during which PG&E may file a motion to assume, assume and assign, or reject all of the Leases except one, without prejudice to PG&E's seeking a further extension by motion prior to October 5, 2001, or by filing a reorganization plan by that date which sets forth PG&E's intentions regarding such Leases. With respect to PG&E's lease with Regency Centers, L.P. in the Strawflower Village Shopping Center in Half Moon Bay, California. With respect to the Regency Lease: (i) the time is extended until at least August 31, 2001; (ii) If PG&E is not in a position to make a determination on the lease, then PG&E cannot file a motion to reject, the Regency Lease until after December 31, 2001 (but PG&E may file a motion to assume or assume and assign the Regency Lease during this period; and (iii) If no determination is made by December 31, 2001, the time during which PG&E may file a motion to assume, assume and assign, or reject the Regency Lease is extended until any date beyond December 31, 2001 that may be set by the Court pursuant to motion filed by PG&E on or prior to October 5, 2001. On September 20, 2001, PG&E (along with co-proponent PG&E Corporation, PG&E's parent company) filed a plan of reorganization with the Court. The Plan proposes to either assume, assume and assign or reject each of the Leases, as set forth on the respective schedules referenced in the Plan, which will be provided prior to confirmation of the Plan. PG&E is not in a position to file such schedules at this time. To intelligently and meaningfully appraise the Leases in the context of its plan of reorganization, PG&E thus seeks in this motion to extend until the date of confirmation of a Chapter 11 plan (or such other date as this Court may order on motion made on or before that date) the time to assume, assume and assign, or reject the Leases. PG&E explains that, as the Plan provides for the disaggregation and restructuring of PG&E's business into four lines of business to be conducted by the reorganized Debtor and three new companies, and a transfer of PG&E's assets and liabilities (including certain of the Leases) to these companies, it must assess the potential need for and value of each of the Leases, as well as evaluate the proposed transfer of certain of the Leases to one of the newly created companies. PG&E submits that the requested extension is a proper exercise of business judgment, and there is cause to grant the requested extension. Judge Montali will convene a hearing on October 29, 2001, to consider this open-ended request. Accordingly, the Debtors time to make lease disposition-related decisions is extended through the conclusion of that Oct. 29 hearing. (Pacific Gas Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) PERSONNEL GROUP: Refinancing Risk Prompts Moody's Downgrades ------------------------------------------------------------ Moody's Investors Service downgraded to Caa3 from B2 the rating on Personnel Group of America's (PGA) $115 million 5-3/4% senior subordinated notes, due 2004. The senior implied rating was also downgraded to B3 from Ba3 and its unsecured issuer rating to Caa1 from B1Moody's. The ratings outlook remains negative while there is approximately $115 million of debt securities affected. The negative ratings outlook takes into account the pressures on PGA's liquidity over the near term, seasonal weakness in the fourth quarter, little room under its bank facility financial covenants, and the need to extend or refinance the bank facility by June 2002, Moody's said. Moody's said that the rating drop reflects PGA's significant refinancing risk over the next year, during a period of likely cash flow pressures and weak liquidity. The rating agency states that the Company has high leverage, a large amount of current debt, little cushion under its credit facility financial covenants, and a weak balance sheet. Furthermore, sales and margins have declined unanticipated over the past year, and are subject to continued negative trends due to the downturn in the U.S. economy, which could possibly be extended as a result of the terrorist attacks on the U.S. Prior to 1999, PGA has had an aggressive acquisition growth strategy until later that year, reductions in technology spending weakened the demand for its services. Its Commercial Staffing business has seen cyclical weakening since late 2000, and customer spending on IT services has continued to decline. In response, PGA has managed cut costs, but the company faces a more sustained economic downturn that may sharpen and be extended, with little financial cushion. Personnel Group of America is an information technology and personnel staffing services company operating through offices in 37 states and the District of Columbia. The Company headquarters is in Charlotte, North Carolina. PILLOWTEX CORP: Selling 61-Acre North Carolina Estate for $742K --------------------------------------------------------------- Pillowtex Corporation wants to sell approximately 61 acres of real property located in the City of Laurel Hill, Scotland County, North Carolina to Larry V. Hogan. Michael G. Wilson, Esq., at Morris, Nichols, Arsht & Tunnell, in Wilmington, Delaware, tells the Court that the property has a net book value of $1,000,000. According to Mr. Wilson, the purchaser has agreed to pay $790,000, less a commission of $47,400 to Raymond Walker Company, for a net purchase price of $742,600. Mr. Wilson relates the Debtors are not aware of any liens on or interests in the property, aside from those granted to the Secured Lenders and potential statutory liens of the taxing authority for Scotland County, North Carolina. Such liens and interests would be subject to money satisfaction, Mr. Wilson adds. The Debtors propose to sell the property on an "as is" and "where is" basis, and free and clear of all liens, claims, encumbrances and other interests therein. Mr. Wilson notes that all such liens, claims, encumbrances and other interests will attach to the proceeds of the proposed sale. (Pillowtex Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) POLAROID CORP: Judge Walsh Allows Use of Cash Management System --------------------------------------------------------------- Polaroid Corporation uses a highly automated and integrated centralized cash management system to collect, transfer, and disburse funds generated by their operations. Polaroid Executive Vice President Neal D. Goldman tells the Court this cash management system also enables Polaroid to accurately record all such transactions as they are made. Mr. Goldman relates that cash used to fund the Debtors' operating expenditures comes, in large part, from the daily collection of accounts receivable. Receivables from third parties are first received in lockbox accounts, Mr. Goldman explains. Those funds are then swept into a concentration account maintained by Polaroid at Bank One. The funds in the Concentration Account are used to fund the Debtors' payroll and other disbursements through designated payroll and controlled disbursements accounts. Surplus funds in the Concentration Account are deposited in an interest-bearing overnight investment account, Mr. Goldman adds. Eric W. Kaup, Esq., at Skadden, Arps, Slate, Meagher & Flom, in Chicago, Illinois, states that the Debtors' cash management procedures are ordinary, usual and essential business practices. This system is similar to those used by other major corporate enterprises, Mr. Kaup observes. Polaroid's Cash Management System allows the Debtors to: (a) control corporate funds centrally, (b) segregate cash flows, (c) invest idle cash, (d) ensure availability of funds when necessary, and (e) reduce administrative expenses by facilitating the movement of funds and the development of more timely and accurate balance and presentment information. Mr. Kaup asserts that the operation of the Debtors' business requires that the Cash Management System continue during the pendency of these chapter 11 cases. If the Court will insist on the Debtors' adoption of a new cash management system at this critical stage, Mr. Kaup warns, the change would be expensive. Aside from that, Mr. Kaup says, a new cash management system would create unnecessary administrative burdens to the Debtors. "In short, it would be much more disruptive than productive, adversely impacting the Debtors' ability to reorganize," Mr. Kaup contends. Considering the arguments presented, Judge Walsh authorizes the Debtors to continue to use their cash management system. Judge Walsh emphasizes that the Debtors must maintain strict records of all transfers so that all transaction, including, but not limited to, inter-company transactions may be readily ascertained, traced, and recorded properly on applicable accounts. (Polaroid Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) PSINET: Seeks Okay of Proposed Equipment Abandonment Protocol ------------------------------------------------------------- PSINet, Inc. anticipate that, as they pare down and restructure their operations, they will identify significant amounts of unneeded equipment that is of inconsequential value to the Debtors and/or not worth the administrative costs that would be incurred in the ongoing storage (and insurance) or removal of such equipment. In order to expedite the abandonment process with flexibility in response and minimize administrative expenses, the Debtors seek entry of an order by the Court, pursuant to section 554 of the Bankruptcy Code, establishing procedures for the abandonment of equipment without further Court approval, following prior written notice to the Committee and the US Trustee and the absence of timely objections from interested parties, including any parties known or believed by the Debtors to assert liens or other interests in such equipment or from which the Debtors lease warehouse space or other real property at which such equipment is located. Abandonment Procedures Proposed By the Debtors The Debtors request that the following Abandonment Procedures be approved in connection with the abandonment of equipment during the course of their Chapter 11 cases: (a) Upon deciding to abandon a particular piece of equipment, the Debtors will provide 10 business days' fax notice of such proposed abandonment to the US Trustee and the Committee. (b) The Notice must: (1) specify the equipment the Debtors intend to abandon, including a description (to the extent reasonably practicable) of (i) the make and model of such equipment, (ii) the lease schedule, if any, on which the Debtors believe each piece of equipment is contained or in which it is referred to, (iii) the location of the equipment and (iv) any additional information readily available to Debtors which may help to identify the equipment; and (2) set forth the date on which the Debtors intend to abandon such equipment, which shall be the later of (i) the expiration of 30 days after service of the Notice in accordance with paragraph (d) below or (ii) such other date specified in the Notice (either date, the Effective Date). (c) The Committee and US Trustee will have 10 business days after service of the Notice to object. If either party serves a timely objection to the proposed abandonment on the Debtors, the Debtors will attempt to resolve such objection consensually. If the Debtors cannot reach a consensual resolution to the objection, the Debtors will not proceed with the proposed abandonment until the Debtors obtain approval from the Court upon notice and a hearing. (d) If the Debtors do not receive any written objections from the Committee or US Trustee prior to expiration of such 10 business day period, or if the Debtors obtain confirmation of non-opposition from both parties prior to such expiration of the 10 business day period, the Debtors will then be authorized to abandon such equipment without further Order of the Court and to take such actions as are necessary in connection with the abandonment; provided however that the Debtors will be required to file the Notice with the Court and serve it on the following parties: (1) any entity known or believed by the Debtors to assert or hold a lien or other interest in any of the equipment described in the Notice, (2) any entity from which the Debtors lease warehouse space or other real property at which any of the equipment described in the Notice is located, and (3) those parties entitled to receive notice under the order limiting notice that was approved on June 1, 2001 (as such order may be amended from time to time). To the extent the Debtors believe that one or more parties may assert an interest in the same piece of equipment proposed to be abandoned, the Debtors will simply abandon such equipment back to the party who the Debtors believe -- based on the Debtors' books and records -- is the proper "interested party" and allow such other party (or parties) claiming a competing interest in such equipment to seek relief from the Court with respect to the claimed interest. From the Debtors' perspective, however, the date of abandonment shall not be affected by any such inter-"party in interest" dispute. In the event such a party should refuse to accept such equipment, the Debtors will simply abandon the equipment as they otherwise would in the ordinary course of business in the absence of such party's apparent interest in the equipment. The Court previously entered an order approving expedited procedures for the rejection of executory contracts and unexpired leases and the abandonment of personal property at certain rejected lease locations. The Abandonment Procedures proposed by this Motion would not apply to any personal property abandoned pursuant to the provisions of that order. (e) Upon the Effective Date, the equipment described in the Notice will be deemed abandoned pursuant to section 554 of the Bankruptcy Code, on an "as is, where is" basis. The Debtors submit that adoption of the Abandonment Procedures represents the sound exercise of business judgment and a fair balancing of the need of the Debtors' Committee (as fiduciary for all unsecured creditors) and the US Trustee for notice and an opportunity to object with the Debtors' need to move quickly to dispose of excess equipment, to minimize removal costs and to cut off the needless accrual of administrative rent and other charges. The Abandonment Procedures provide a fair and expedient manner for abandoning equipment while also providing parties in interest with adequate notice of the proposed abandonment and an opportunity to object to such relief within a definitive time period, the Debtors represent. In addition to minimizing administrative expense obligations, the Debtors expect that the Abandonment Procedures will also save substantial legal expense and Court time that would otherwise be incurred if multiple hearings were held on separate motions with respect to every piece of equipment located at each POP, web hosting center or warehouse the Debtors determine should be abandoned. Accordingly, the Debtors believe adoption of the Abandonment Procedures is in the best interest of their estates. The Debtors have reviewed the Motion with the Committee and believe that the Committee does not oppose the relief sought herein. (PSINet Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) TOKHEIM: EBITDA Continues to Drop in Q3 Despite Restructuring ------------------------------------------------------------- Tokheim Corporation (OTCBB:THMC) reported that its earnings before merger and acquisition costs and other unusual items, interest, depreciation and amortization (EBITDA) for the third quarter of 2001 were $4.0 million, as compared to $5.7 million in the comparable 2000 quarter. The change is attributable to reduced sales volumes largely due to currency fluctuations, partially offset by reductions in operating costs. After the Company's completion of its Chapter 11 restructuring and adoption of "fresh start" accounting as of October 31, 2000, its capital structure was substantially changed. As a result, in fiscal 2001, depreciation and amortization expense is substantially higher and interest expense substantially lower than in fiscal 2000. As a result, the financial results for the 2001 third quarter and year to date are not directly comparable to those of prior periods. Sales in the third quarter of 2001 were $112.9 million as compared to $122.7 million in the third quarter of 2000. Of this 8% reduction, 5% is due to the continuing weakness in the value of the Euro as compared to the prior year. The operating loss for the quarter was $5.8 million as compared to a loss of $12.1 million in the prior year quarter. Net loss for the quarter reduced to $14.7 million from a loss of $30.2 million in the 2000 quarter. Because of the substantial changes to the capital structure of the Company resulting from the restructuring, a comparison of earnings per share for the current and prior year quarters is not meaningful. John S. Hamilton, President and Chief Executive Officer of Tokheim Corporation, said: "The results for this quarter show a similar pattern to those of the first half-year; namely the impact of reduced sales volumes partly due to currency fluctuations being offset by reductions in operating costs. Sales volumes in Europe picked up, partly due to conversion of equipment to enable operation with the Euro currency, while the U.S. continues to suffer an industry-wide weakness, particularly in the distributor and jobber channels." Tokheim Corporation, based in Fort Wayne, Indiana, is the world's largest producer of petroleum dispensing devices. Tokheim Corporation manufactures and services electronic and mechanical petroleum dispensing systems. These systems include petroleum dispensers and pumps, retail automation systems (such as point-of-sale systems), dispenser payment or "pay-at-the- pump" terminals, replacement parts, and upgrade kits. SUN HEALTHCARE: Court Approves Stipulation with Americorp --------------------------------------------------------- Americorp, Inc., DVI, Inc., and Wells Fargo Equipment Finance, Inc. are plaintiffs in an adversary proceeding (No. AOO-469) against SunScript Pharmacy Corp. as a result of ongoing disputes concerning title to certain Sabratek brand intravenous infusion pumps which are little machines that are hooked up to I.V. bags in a health care facility to regulate the amount of intravenous fluid and medicine being delivered to the patient. The Plaintiffs and Conseco Capital Finance, Inc., for their part, and SunScnpt are parties to a number of leases of these Sabratek brand intravenous infusion pumps. Conseco, which has the smallest interest in the Leases, chose not to join as a Plaintiff in the Adversary. The plaintiffs and SunSript dispute over title to certain of the Pumps, whether the Leases are true leases or disguised sales, and whether SunScript was entitled to a 10% end of term purchase option for the Pumps. After a period of negotiation, the parties to the Adversary entered into a settlement stipulation. Although Conseco is not a party to the Adversary or to the Stipulation, Conseco has informed Americorp that it agreed to accept $37,000 of the settlement proceeds from Americorp in satisfaction of its claims under the Leases. Americorp has represented and warranted to SunScript that Americorp will pay Conseco the $37,000 sum from the settlement proceeds under the Stipulation. The Stipulation provides that SunScript will pay (1) outstanding postpetition rent under the Leases ($393,571.71); (2) all future rent due under the Leases ($274,355.17); and (3) 10% of Americorp's cost for the Pumps less 50% of the accrued rent under certain Leases beyond their three year term ($64,998.85). Upon receipt of the payments, (a) Plaintiffs will warrant and deliver title to all of the Pumps to SunScript; (b) SunScript and the Sun Healthcare Group will be discharged from any further obligations under the Leases or related to the Pumps, including, without limitation, any claims arising under or related to the Leases under sections 503(b)(l)(A), 365(d)(10), 365(g) or 502(b) of the Bankruptcy Code, and (c) all proofs of claim which Plaintiffs or Conseco have filed related to or arising under the Leases or the Pumps shall be deemed withdrawn with prejudice, and Plaintiffs and Conseco shall file no further or amended claims related to or arising under the Leases or related to the Pumps. The Debtors believe that they should enter into the stipulation because SunScript and certain other of the Debtors need the Pumps for their operations and the price for the Pumps is fair. The Debtors note that they are paying just a little more for the Pumps than the postpetition rent due under the Leases through the expiration of their terms. If the Plaintiffs prevailed in the Adversary, the Debtors would have to pay that amount anyway, in addition to the rent accruing under the Leases after the expiration of their terms, and would have no right to purchase the Pumps. The Debtors note that, in sum, the purchase price for the Pumps winds up being less that what SunScript would have to pay anyway in postpetition rent if it lost the Adversary. Accordingly, the Debtors sought and obtained the Court's approval for entry into the stipulation. (Sun Healthcare Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) TELEPANEL SYSTEMS: Generates Positive Gross Margins in 1st Half --------------------------------------------------------------- Telepanel Systems Inc. (TSE:TLS and OTC:TLSXF), a world leader in electronic shelf label systems for retail stores, announced a successful showcasing of their technology at an exposition for a Canadian general merchandise retailer. As well, Telepanel announced financial results for the second quarter ended July 31, 2001 (all results are stated in Canadian Dollars). Telepanel recently completed a showcasing of their technology at a dealer exposition for a general merchandise retailer that has over 400 locations throughout Canada. The internal trade show presents products and new technologies approved by the corporate head office and the Information Technology Group. The Telepanel ESL system was on display for the franchisees to assess and provide feedback for a customized solution. "We have received a great deal of interest from our very successful demonstration at the dealer show", stated Garry Wallace, President and CEO of Telepanel. "This is one of the first times that the key motivations of the system are for objectives in addition to accurate and cost-effective price changes. This chain is looking at the Telepanel ESL system to improve overall labeling and for inventory management". "With the assistance of our partners, we are developing an information and pricing solution using ESLs to improve inventory management within the store, and improve the utility of labelling systems. These are objectives that you just can't achieve with paper labels, and this progressive store wants to utilize these inherent benefits. This realization of 'soft- benefits is an important stage for the ESL industry.' There has always been interest in the system to replace paper labels, but valuation of intangible benefits is a large step in the right direction to adding value to the business case in installing an ESL system", he added. For the second quarter ended July 31, 2001, revenue was $1,673,851, compared to the same period last year of $1,409,683. Selling, general and administration expenses were reduced by over $400,000 from $1,791,594 to $1,372,534. The operating loss -- eclipsing total revenues -- decreased for the six-month period to $2,547,013 from $2,947,278 last period mainly due to the decrease in the S, G & A expenses. "The results for the first six months are very encouraging", commented Garry Wallace. "Our second quarter results reflect the focus and hard line approach that we have taken on operating expenses. The full effect of the reduction in overhead will appear in the next quarter results." Mr. Wallace added, "We continue to generate positive gross margins and have shown an increase in sales over last period's six-month comparative results. As well, with our new Millennium Plus product and reduced price point, the market has shown substantial interest, increasing the opportunity for roll out discussions." "We are beginning to see some very positive prospects from a number of our partnerships and alliances, providing Telepanel with the breadth and depth in the sales and marketing area that we could not achieve on our own." Wallace added, "With the recently announced funding commitment, the new streamlined structure and cash expenses reduced by over 60%, we are in a very good position to capitalize on future ESL rollouts." In additional news, Telepanel has refiled first quarter results on Sedar for note disclosure that was inadvertently omitted previously. As well, due to timing and scheduling conflicts the Annual General and Special Meeting is being moved by approximately three weeks. The exact date will be released shortly, once the arrangements are set. Telepanel is a leader in developing wireless electronic shelf labeling systems for retail stores. Telepanel ESLs are placed on the edge of store shelves to show a product's price and other information. Prices are changed by a radio communications link from the store's product database, to provide rapid, accurate pricing updates. Telepanel's systems are integrated with the leading 2.4 GHz RF LANs which allows retailers to take advantage of their investment in IEEE-standard in-store RF networks and extend their use to electronic shelf labels. Telepanel wireless ESLs are installed throughout the United States, Canada, and Europe, with such premier supermarket chains as Adam's Super Food Stores, A & P, Stop & Shop, Loblaws, Big Y, Reasor's, Doll's, Brown's, Stew Leonard's, Grand Union, Wakefern, Berks, Ellington, Port Richmond, Champion, Leclerc, Intermarche, SPAR, and Super U, and at Universal Studios, Hollywood. TRAVELBYUS.COM: Cuts Jobs in Response to Weak Travel Environment ---------------------------------------------------------------- travelbyus (Toronto: TBU; Frankfurt: TVB; Boston: TBY; OTC Bulletin Board: TRIPZ) announced that the Company and its various subsidiaries have completed a reduction in force that resulted in the elimination of 51 positions. The reduction represents approximately 45% of the Company's employees. These actions are a direct result of the adverse effects on the demand for vacation travel caused by the weakening economy in the aftermath of last month's terrorist attacks on the United States. The primary job cuts centered on the Reno reservation center, but also affected employees at other levels of the Company, including management, technology and back office support. In addition, the Company will further reduce operating costs by consolidating certain office locations and discontinuing its wholesale product division. "These job eliminations are very painful, but the actions had to be taken to preserve the operational viability of the Company," said Bill Kerby, CEO. "All of the resources of the Company are now directed towards the strengthening of our travel agency network and maximizing the revenues of Cheap Seats Travel, our air consolidator component." The staff and facilities reductions are necessitated by the Company's need to align operational expenses with projected revenues. The changes are designed to eliminate non-core business segments that fail to generate revenues in excess of operational expenses. The Company will focus on its primary business of maximizing preferred vendor revenues by delivering marketing, technology and other services to its travel agency distribution network. In addition, the Company will seek opportunities to expand the market share of its Cheap Seats air consolidator segment. travelbyus is a vertically integrated travel company. Through the use of proprietary technology, the Company's website links its unique travel packages and services to its member travel agencies and consumers. Its patent pending business model enables it to offer the right product to the right customer at the right time. U.S. PLASTIC: Continues Talks About Deferring Principal Payment --------------------------------------------------------------- U.S. Plastic Lumber Corp. (Nasdaq:USPL), announced that it has no explanation for Monday's large drop in its stock price other than uncertainty related to a news release issued by Dow Jones referencing portions of the Company's October 12, 2001 8-K filing with the Securities and Exchange Commission. The Dow Jones release was issued without the Company's knowledge or input. "The Company continues to make all of its interest payments to the senior lenders and is negotiating the deferral of principal payments until a sale of certain non-core assets that will refinance the Company's debt structure," said John W. Poling, CFO of USPL. "We have not been declared in default during this period of negotiations, and our bank group continues to express a strong interest in working with the Company to meet its obligations until the refinancing is complete." The Company continues to negotiate the sale of its non-core assets and believes a closing can take place within a timeframe that is suitable to our senior lenders. Such a sale, should it occur, would substantially reduce the Company's debt and resolve the liquidity issues that have plagued the Company since the beginning of the year. Additionally, USPL recently announced a reorganization of its manufacturing footprint to reduce the number of plastic manufacturing and processing facilities from 8 to 3. USPL expects to realize an annual savings of approximately $5 million in 2002. This latest consolidation completes the Company's plans to reduce its fixed costs, yet maintain the same capacity to meet the demands for its products in 2002 and beyond. * * * On October 4, 2001, the Company notified the participants in the Master Credit Facility with GE Capital Corp. that it would be suspending further principal payments on the Master Credit Facility until the sale of certain assets or the refinancing of the Senior Credit Facility. The Company also informed the participants that it would not meet the minimum tangible net worth covenant of the Master Credit Facility for the third quarter of 2001 due to the aforementioned restructuring and other non-recurring charges that it will record in the third quarter of 2001. The Company is currently in negotiations with both groups of lenders to obtain the appropriate waivers and amendment agreements for the deferral of principal payments and the failure to meet financial covenants. However, its failure to comply with the financial covenants and the deferral of principal payments constitute defaults under the terms of the Senior Credit Facility and Master Credit Facility, as amended. Defaults under these lending agreements cause defaults, pursuant to cross default provisions, of other agreements of the Company, including but not limited to other lending agreements, debenture agreements, lease agreements and others. While the Company believes that it will be successful in obtaining the necessary waivers and amendments from both lending groups, the Company can give no assurance that it will be successful. The failure to obtain these waivers and amendments would have a material adverse effect upon the Company's liquidity and capital resources, and may impair its ability to continue as a going concern. VECTOUR INC: Files for Chapter 11 Protection in Delaware -------------------------------------------------------- The economic impact of the September 11th terrorist attacks has forced VecTour Inc. and certain of its subsidiaries to file voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code in the District of Delaware. VecTour Inc. is the largest privately owned ground transportation company in the U.S. and is the third largest overall with fifteen operations nationwide. VecTour's fiscal 2001 revenues were approximately $122 million. To support its financing needs, VecTour expects to enter into a $5 million debtor-in-possession (DIP) financing with its existing bank group led by ING (US) Capital LLC. The Company believes that the DIP financing, which is subject to Court approval, will provide adequate working capital during the period of its reorganization. VecTour intends to use the protection afforded under Chapter 11 to emerge from the restructuring process with a plan of reorganization that best preserves the value of and helps ensure the long-term viability of its operating companies. Four of VecTour's primary lines of business - airport transportation, sightseeing tours, cruise line transportation, and conventions & charters - experienced immediate 25% to 50% drops in revenue after September 11th. Recoveries have been consistent but slow since then. Overhead cost reductions have only partially offset the impact of the revenue losses. Although the Company's management has actively pursued federal and state financial assistance, it was apparent that any such aid would not be available in time to avoid the Chapter 11 filing. "VecTour's mission since the tragic events of September 11th has been simple - to protect our businesses until the country and the economy have had time to recover," indicated Joe Scott, the Company's President and Chief Operating Officer. "The best way to attain that goal is to obtain the immediate financing that only a DIP facility can provide. This way, we can assure our customers and our employees that our businesses will continue uninterrupted. We see the filing as the clearest route to long- term success." VecTour, Inc. is headquartered in Blue Bell, Pennsylvania. The Company is a leading nationwide provider of ground transportation for sightseeing, tour, transit, specialized transportation, entertainers on tour, airport transportation and charter services. VECTOUR INC: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: VecTour, Inc. 610 Sentry Parkway Suite 200 Blue Bell, PA 19422 Chapter 11 Petition Date: October 16, 2001 Court: District of Delaware Bankruptcy Case No.: 01-10903 Judge: Erwin I. Katz Debtor Affiliates Filing Separate Chapter 11 Entity Case No. ------ -------- Golden Touch Transportation, Inc. 01-10904 VIP Tours & Charters Sightseeing 01-10905 Corporation Boardwalk Financial Services, Inc. 01-10906 VecTour of Pennsylvania, Inc. 01-10907 VecTour of Chicago, Inc. 01-10908 Perkiomen Valley Bus Company 01-10909 VecTour of California, Inc. 01-10910 Protrav Services, Inc. 01-10911 United Limo, Inc. 01-10912 Tri State Coach Lines, Inc. 01-10913 VecTour of Florida, Inc. 01-10914 VecTour of Nevada, Inc. 01-10915 VecTour of Tennessee, Inc. 01-10916 Shoup Buses, Inc. 01-10917 VecTour of New York, Inc. 01-10918 Debtor's Counsel: David B. Stratton, Esq. David M. Fournier, Esq. Pepper Hamilton LLP 1201 Market Street, Suite 1600 Wilmington, Delaware 19801 (302) 777-65000 Estimated Assets: $1 million to $10 million Total Debts: more than $100 million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Bridgstone/Firestone Contract $232,056 Conway, Mackenzie & Contract $231,605 Dunleavey Marsh USA, Inc. Trade Debt $225,697 Streicher Mobile Fueling, Contract $178,060 Inc. Harbor Graphics Trade Debt $151,217 Corporation AT&T Trade Debt $119,188 Valley Market Trade Debt $113,400 US Fleet Services, Inc. Contract $112,393 Mayer Brown & Pratt Contract $110,608 Port Authority of Contract $101,983 New York & New Jersey Nextel Communications Trade Debt $101,086 Yeager Fuel Trade Debt $83,160 Morris Associates Contract $79,529 Port of Miami Trade Debt $68,006 Kirkland & Ellie Trade Debt $62,550 Cummins Mid-State Trade Debt $61,495 Power Inc. NYC Department of Trade Debt $59,985 Finance Grand Ole Opry Contract $56,962 Prevost Car Inc. Contract $52,226 Blue Shield of CA Contract $51,773 VLASIC FOODS: Campbell Moves to Allow Claims for Voting ------------------------------------------------------- Campbell Soup Company and its affiliates hold: (a) pre- and post-petition liquidated and fixed unsecured claims against Vlasic Foods International, Inc. aggregating $2,991,902; (b) claims against Vlasic for reimbursement arising from insurance policies maintained by Campbell Companies relating to workers' compensation for employees of the Debtors aggregating $2,972,230; and (c) additional contingent and unliquidated claims. Bonnie Glantz Fatell, Esq., at Blank Rome Comisky & McCauley LLP, in Wilmington, Delaware, charts the amounts owed to each Campbell company as set forth in the Proofs of Claim: Campbell Company Quantified Claim Amount ---------------- ----------------------- (1) Campbell Soup Company $4,797,878 (2) Campbell Foodservice Company 99,772 (3) Campbell Sales Company 520,906 (4) Campbell Soup Supply Company LLC 34,232 (5) Joseph Campbell Company 453,151 (6) Pepperidge Farm, Incorporated 58,193 ---------- TOTAL $5,964,132 According to Ms. Fatell, no objection has been received to allowance of the claims. At the same time, Ms. Fatell notes that the October 4, 1002 deadline for voting objections has passed. But to date, Ms. Fatell informs Judge Walrath none of the Campbell companies has received ballots that would permit it to vote its claims. Instead, Ms. Fatell says, several Campbell companies have received erroneous ballots. The Campbell companies are currently attempting to obtain appropriate Class 5 (General Unsecured Claims) ballots through Debtors' counsel and the voting agent, Ms. Fatell reports. Out of an abundance of caution in view of the failure to receive correct ballots, the Campbell companies ask the Court to allow their claims for the purposes of plan voting in the respective quantified claim amounts. The Campbell companies further request that, if they have not received the appropriate ballots in reasonably sufficient time to enter their votes prior to the October 24, 2001 voting deadline, the Court should enter an order deeming the Campbell companies to have timely voted the quantified claim amounts as temporarily allowed Class 5 Claims to reject the Plan. Finally, in view of the apparent uncertainty that exists as to the amount of the claims (as evidenced by the erroneous ballots received to date), the Campbell companies ask Judge Walrath for an order designating the quantified claim amount of each claim as the amount thereof for which deposits should be made in the Distribution Reserve if such claim is disputed or subject to withheld distributions because of a disputed setoff, in each case subject to (a) any further order of the Court allowing or disallowing such claim in whole or in part, and (b) any further order of the Court estimating such claim at a different amount. (Vlasic Foods Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) WARNACO GROUP: Seeks Approval Of Second UPS Settlement Agreement ---------------------------------------------------------------- Authentic Fitness Corporation, one of the Warnaco Debtors, and United Parcel Service, Inc., and UPS Worldwide Logistics are parties to a written agreement dated August 1996 that calls for the carriage of Authentic Fitness' goods between the United States and Mexico. Shalom L. Kohn, Esq., at Sidley Austin Brown & Wood, in New York, New York, informs the Court that a truckload of Authentic Fitness' plastic swimsuit mannequins was destroyed during the carriage by UPS from South El Monte, California to Tlaxcala, Mexico last June 1999. This led Authentic Fitness to file a complaint against UPS in the United States District Court, Southern District of Texas, Houston Division, asserting a claim for over $53,280 arising from the destruction of their Cargo. On the other hand, Mr. Kohn relates, UPS claimed their Agreement (allegedly modified in February 1997) does not provide insurance coverage for Authentic Fitness' goods during carriage in Mexico. Thus, UPS washed its hands on any liability for Authentic Fitness' destroyed Cargo. In effort to recover its losses, Mr. Kohn says, Authentic Fitness submitted a claim to its own insurer, ACE/Inamar, with respect to the Destroyed Cargo last July 1999. According to Mr. Kohn, Authentic Fitness' deductible under the ACE/Inamar insurance policy is $10,000. As a result, Mr. Kohn notes, Authentic Fitness recovered $40,400 from ACE/Inamar in satisfaction of its Insurance Claim after adjustment for the Deductible. According to Mr. Kohn, if AFC was successful under the Complaint, pursuant to ACE/Inamar's subrogation rights under the insurance Policy, Authentic Fitness' actual maximum recovery would be limited to the Deductible but only if judgment on the Complaint was greater then $40,400. The case is set for trial in Texas on November 5, 2001, Mr. Kohn tells Judge Bohanon. But the hearing may be cancelled for Authentic Fitness has agreed to settle their Claim with UPS and enter into a settlement agreement. Pursuant to the Settlement Agreement, Mr. Kohn explains, UPS will pay $17,600 to Authentic Fitness and Authentic Fitness will release all liabilities arising from the Claim. Thus, by this motion, the Debtors seek an order: (a) approving the settlement between Authentic Fitness and UPS; and (b) authorizing entry into the Settlement Agreement. The Debtors are confident that the terms of the Settlement Agreement are fair and reasonable under these considerations: (1) Probability Of Success In Litigation. Authentic Fitness estimates that its probability of success in litigation is at best 50% based on these considerations: (i) The No Insurance Coverage Clause. If UPS successfully argued that the "No Insurance Coverage Clause" contained in the purported modified Agreement was enforceable, no recovery would be available to the Debtors. (ii) The No Value Declared Argument. The Mexican bill of lading of UPS' subcontractor referenced no declared value for the Destroyed Cargo, which UPS contends evidences Authentic Fitness' reliance exclusively on its own insurance (ACE/Inamar) for its losses. (iii) The Limitation in the Mexican Carrier's Bill of Lading. UPS argued that Authentic Fitness' recovery for the Destroyed Cargo is limited because it was subject to a Mexican Carriers' Bill of Lading. If this argument were successful, the maximum recovery by Authentic Fitness would be approximately $4,118 (15 days Mexican minimum wage ($300) per metric ton of cargo carried). (iv) The Force Majeure Argument. UPS argued that there was nothing negligent about their carriage of the Destroyed Cargo, and that it was an unavoidable accident caused by a sudden lane change of a vehicle in front of them. (v) Potential liability. If Authentic Fitness was unsuccessful on the merits at trial, its recovery would be zero or a maximum $4,118 recovery under Mexican limitations of liability. In addition, Authentic Fitness would be required to pay for its legal fees and expenses. (2) The Complexity of The Litigation Involved, And The Expense, Inconvenience And Delay Necessarily Attending It. Continuing the litigation against UPS would require extensive time away from work for Authentic Fitness' witnesses, as well as the incurrence of attorneys' fees and expenses. Thus even a favorable trial result would impose costs and burdens disproportionate to the benefits in light of the settlement reached. (3) The Paramount Interests of Creditors. The settlement allows the Debtors to permanently resolve all disputes relating to the Claim. Because Authentic Fitness' has recovered $40,400 in satisfaction of the Insurance Claim from ACE/Inamar, the only benefit to continuing the litigation to the Debtors, and their Creditors, is the possible recovery of up to the $10,000 deductible paid by AFC to ACE/Inamar, but only if Authentic Fitness obtains a judgment in excess of the $40,400 recovered from ACE/Inamar on the Insurance Claim. With these odds, the Debtors have decided it is better for them to take control of the outcome - thus the entry into the Settlement Agreement. (Warnaco Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) WEBVAN GROUP: DoveBid Hired to Auction All Assets Valued At $70M ---------------------------------------------------------------- DoveBid(R), Inc., the leader in Webcast industrial auctions, valuation services, and other capital asset disposition services for the Global 4000, announced it will conduct a Webcast auction for the heralded online grocer, Webvan Group, Inc, who filed Chapter 11 bankruptcy in July 2001. The auction will take place October 30-31, 2001 at Webvan's headquarters in Foster City, Calif. Webvan has contracted DoveBid to auction all of the assets in its headquarters facility, originally valued at over $70 million dollars. DoveBid anticipates the auction to be the largest dot- com auction to date, with millions of dollars of assets for sale, including brand new in-the-box equipment. Assets include Sun(R) servers, Cisco(R) networking equipment, Compaq(R) and Dell(R) servers, Herman-Miller(R) and Smed office furniture, storage devices, PCs, notebooks, laptops, conferencing equipment and telephone systems. "DoveBid has already auctioned off the assets of hundreds of dot-coms since the beginning of this year. In fact, DoveBid conducted its first auction for Webvan last March, selling surplus distribution center assets from Webvan's acquisition of HomeGrocer.com," said Kirk Dove, President of Auction Services at DoveBid. "This auction of Webvan will be the largest dot-com auction of the year for buyers around the globe. It will feature large amounts of servers, routers, and switches ideal for small businesses, while also featuring laptops, computers, monitors, and printers for the average consumer." The auction will take place at Webvan's headquarters, 310 Lakeside Drive, Foster City, Calif. 94404, beginning at 10:00 a.m. (PT) Tuesday, October 30, 2001, and continuing through Wednesday, October 31 (if necessary). Participants may attend in-person or bid online. Assets may be previewed on October 29 from 9 a.m. to 4 p.m. PT at the same location as the sale. Detailed preview information, asset catalog, and online bidding instructions available at http://www.dovebid.com DoveBid conducts a semi-monthly Dot-Com Exchange that includes up to forty dot-coms. DoveBid has seen thousands of bidders participate in these dot-com auctions, both on the auction floor and through the Internet. At the August Dot-Com Exchange, over 250 bidders came to the San Jose location, while almost 1,500 logged on via the Internet. For more information or to view DoveBid's auction calendar, please visit http://www.dovebid.com DoveBid, Inc. is a leader in Webcast industrial auctions and valuation services for Global 4000 businesses. DoveBid has conducted over 5,000 of industry-specific auctions valued at over $5 billion of assets. DoveBid's asset disposition services include live Webcast auctions, featured online auctions and a corporate marketplace. DoveBid Valuation Services is one of the world's largest capital asset appraisal companies, with the industry's largest valuation database and real market data. DoveBid focuses on 19 categories of capital assets and has more than 20 offices throughout North America, Europe and the Asia-Pacific region. More information on DoveBid can be found at http://www.dovebid.com or by contacting company headquarters in Foster City, California, at 800/665-1042 or 650/571-7400. 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