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/raid1/www/Hosts/bankrupt/TCR_Public/011105.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, November 5, 2001, Vol. 5, No. 216 Headlines AHL SERVICES: Four of Seven Directors Resign & Hires New CFO AMF BOWLING: AWI Moves to Deem Utilities Adequately Assured AMERICAN CLASSIC: Northrop Grumman Stops Work on Cruise Ships AMES DEPARTMENT: Utilities Demand Weekly Payments or Deposits ARMSTRONG HOLDINGS: German Unit Scraps Plan to Sell Desso Assets BE INC: ISS Pushes For Approval of Sale of Assets & Dissolution BETHLEHEM STEEL: Taps MWW Group as Communications Consultants BORDEN CHEMICALS: Seeks Approval of 2nd DIP Financing Facility BRIDGE: McGraw-Hill Moves to Compel Payment & Allow Recoupment CHAPARRAL RESOURCES: Defaults on $3.3MM Loan with Shell Capital CHATEAU COMMUNITIES: Completes Restructuring of $70M 7.54% Notes CHIPPAC INC: Revenues Drop in Q3 Attributable to Demand Slowdown COMDISCO: Court Okays Deferment of Employee Cash-to-Option Plan CRESCENT OPERATING: Will Begin Rights Offer to Shed Debt Burden CRESCENT OPERATING: Annual Stockholders' Meeting Set for Dec. 6 DTE BURNS: S&P Places BB Rating on CreditWatch Negative DELTA AIR: Swings Into $295MM Net Loss in September Quarter EASYLINK SERVICES: Gets Commitments to Complete Debt Workout EXODUS COMMS: Signs-Up Gray Cary Ware as Corporate Counsel FEATHERLIKE INC: Strategic Restructuring Evident in Q3 Results FEDERAL-MOGUL: Intends to Assume Prepetition Employment Pacts FINOVA GROUP: Household Finance to Continue Foreclosure Actions FOCAL COMM: S&P Drops Senior Rating to D After Recapitalization FRIENDLY ICE CREAM: Refinancing Plan Spurs S&P to Affirm Ratings GENERAL DATACOMM: Files for Chapter 11 Relief in Delaware GENERAL DATACOMM: Case Summary & 20 Largest Unsecured Creditors GENESIS HEALTH: U.S. Trustee Demands Payment of Quarterly Fees GENTIA SOFTWARE: Considers Seeking Protection from Creditors INNOVATIVE CLINICAL: Research Units to Merge with NeuroScience INPRIMIS: Datawave Will Put Hold on Plan of Arrangement Talks INTEGRATED HEALTH: Seeks to Transfer Woodridge Facility in Texas LERNOUT & HAUSPIE: Court Sets Nov. 26 Auction for Speech Assets LERNOUT & HAUSPIE: Speechworks Offers $12.5M for Speech Assets PERSONNEL GROUP: Seeking New Financing to Satisfy Maturing Debts PHAR-MOR: Hires Atlas Partners as Agent to Dispose of 65 Stores PHOTOCHANNEL INC: Parent Exits Online Photofinishing Business PILLOWTEX CORP: Hires Duane Morris to Sue Westpoint Stevens POLAROID CORP: Asks Court to Approve PIDS $1.3MM Break-Up Fee PROTECTION ONE: S&P Knocks Ratings to Low-B and Junk Levels RELIANCE GROUP: Pa. Insurance Commissioner Backs Down -- Sort of RUSSELL-STANLEY: Noteholders Back Exchange Offer & Prepack Plan SERVICE MERCHANDISE: Resolves Dispute with World Financial Bank STONEBRDIGE TECHNOLOGIES: Staff-Led Investor Group Closes Buyout SUN HEALTHCARE: Receives Approval of 3rd DIP Financing Amendment UNITED AIRLINES: Posts $542M Q3 Loss Due to Air Travel Fall-Off VIDEO UPDATE: Wants More Time to Solicit Acceptances for Plan WEIRTON STEEL: Files Registration Statement to Restructure Notes WEIRTON STEEL: Firms-Up New $200MM Facility & Vendor Financing WHEELING-PITTSBURGH: Ties-Up with Weirton to Cut Healthcare Cost * BOND PRICING: For the week of November 5 - 9, 2001 ********* AHL SERVICES: Four of Seven Directors Resign & Hires New CFO ------------------------------------------------------------ AHL Services (Nasdaq: AHLS), a leading provider of marketing services in the United States and specialized staffing services in Europe, announced a significant step in positioning its core Marketing Support Services businesses, Gage Marketing Services and Service Advantage, for profitable growth. AHL's previously announced focus on these core businesses has resulted in its restructuring effort to ensure that its leadership is in line with its financial and operational goals. The board of directors and Chief Executive Officer Clay Perfall announced the initiation of a search for independent directors and a new chief financial officer, after accepting the resignations of four directors: former Chief Executive Officer Edwin R. Mellett, President and Chief Operating Officer of Marketing Services Thomas J. Marano, Chief Financial Officer Ronald J. Domanico and independent director Robert F. McCullough. The company will seek three independent, outside directors to restore the board to a total of seven members. Furthermore, the company and Marano have agreed to allow his contract with the company to expire on December 31st of this year. Domanico has committed to working with Perfall and the board through the end of January 2002. During this 90-day transition, Domanico will assist in the search for his replacement and continue his efforts to ensure the restructuring provides a solid platform for restoring shareholder value. Perfall stated, "I would like to personally thank Tom and Ron for their hard work and for the significant contributions they have made toward building AHL Services. Given the current economic environment and the strategic initiatives that AHL intends to pursue, we all felt that significant changes to our corporate management group were appropriate. I would also like to thank Ed and Bob for the contributions that they have made as directors of AHL. We will use the board vacancies created by their resignations to create a board whose skills and experiences are custom tailored to the strategic direction of the company." Perfall noted that the board is in discussions with several candidates for the vacant board seats and expects to begin filling those vacancies in the near term. AHL Services, Inc., headquartered in Atlanta, GA, is a leading provider of outsourced business services including marketing services within the United States and skilled and semi-skilled staffing services in Europe. Marketing services includes the integrated fulfillment of products, promotions and trade materials, customer relationship management, information management and merchandising services. AHL's European staffing services, which operates in Germany and the United Kingdom, provides electricians, welders, plumbers and light industrial workers. AHL has previously indicated that it intends to dispose of its European staffing operations. * * * On August 7, 2001, the Company amended its credit facility to reduce the aggregate commitment from its lenders to $125.0 million (from $201.3 million) and to adjust certain financial covenants and interest rate margins. Any unpaid balance of the credit facility is due upon the expiration of the amended agreement on April 15, 2002. As previously announced, the Company expects to use the proceeds from the sale of the European staffing business to repay the credit facility. If this sale is not completed by April 15, 2002, the Company will either extend the current credit facility or renegotiate a new agreement with a syndicate of lenders. AMF BOWLING: AWI Moves to Deem Utilities Adequately Assured ----------------------------------------------------------- Prior to the petition date, AMF Worldwide, Inc. received water, heat, natural gas, oil, electricity, trash removal, sewage, telephone and other utility services at their various locations in the United States and abroad from over 5,000 utility companies. On July 5, 2001, this Court entered an order granting the Debtors' Motion for Order Deeming Utility Companies Adequately Assured of Future Performance; and Establishing Procedures for Determining Requests for Additional Adequate Assurance. The Utility Order allowed Utility Companies to seek a security deposit in writing by July 25, 2001. Under the Utility Order, if a deposit is not timely requested, then the Utility Companies are deemed adequately assured of future payment for the remainder of the bankruptcy cases. Pursuant to the Utility Order, the Debtors have received security deposit demands totaling over $3,000,000 from the Utility Companies. Many of the Utility Companies seek a deposit equal to 2 times the monthly usage or 2 times the largest monthly bill. Thus, the Debtors seek an order from the Court which provides that each Utility Company which has requested a deposit under the Court's Utility Order shall be deemed to have adequate assurance upon the Debtor's payment to the Utility Company of a deposit equal to one-half of the average monthly bill for the affected facility. To the extent the Debtors receive further Deposit Demands not reflected on the Deposit Chart, the requesting Utility Companies will be deemed adequately assured of future payment for the remainder of these cases if the Debtors post a deposit equal to one-half of the average monthly bill. The Deposit Chart also reflects the amount of deposit equal to one-half of the average monthly bill. If the Debtors were unable to determine the existence of an account based on the information provided by the Utility Companies and a review of the Debtors' records, the amount of Proposed Deposit is reflected as "no record." Erin E. McDonald, Esq., at McGuire Woods LLP, in Richmond, Virginia, relates that the Debtors object to the Deposit Demands to the extent the Deposit Demands seek a deposit greater than one-half of the average monthly bill for each of the Debtors' facilities serviced by the Utility Companies. Ms. McDonald contends that the Court may "order reasonable modification" to the amount of deposit requested to provide adequate assurance of payment. The Debtors represent that a deposit equal to one-half of the average monthly bill for each of the Debtors' facilities serviced by the particular Utility Company would satisfy the standard governing demands for adequate assurance this Court has previously set. Based on the Debtors' post-petition liquidity and the Debtors' anticipated expeditious emergence from chapter 11, the Debtors submit that a deposit equal to one-half the average monthly bill for each of the Debtors' facilities for which a Utility Company has requested a deposit would satisfy the standard enunciated by the Court and provide the Utility Companies with adequate assurance. Ms. McDonald states that the Debtors have obtained Court approval of a debtor in possession credit facility of $75,000,000 and have entered into a cash-flow positive period in their business cycle, which should continue through the anticipated emergence date. (AMF Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) AMERICAN CLASSIC: Northrop Grumman Stops Work on Cruise Ships ------------------------------------------------------------- Northrop Grumman Corporation (NYSE: NOC) announced that it has stopped work on Project America, a cruise ship program to build two 1,900-passenger cruise ships at its Pascagoula, Miss., Ingalls Operations. This decision follows negotiations with the U.S. Maritime Administration, which has decided not to continue the guaranteed funding necessary to complete the construction of the ships. As previously announced on Oct. 25, 2001, the company said it would report a charge to operating margin of $60 million in the third quarter 2001 if Project America could not secure guaranteed funding. Northrop Grumman said it took pretax charges totaling $60 million in the third quarter 2001, reducing operating margin for the quarter from $285 million to $225 million. The company previously reported third quarter 2001 economic earnings of $161 million, now revised to economic earnings of $121 million. Under Generally Accepted Accounting Principles (GAAP), the company previously reported third quarter net income of $117 million, now revised to $79 million. Approximately 1,250 employees working on Project America were affected by temporary layoffs last week. The company said it would make every effort to reassign affected employees. Immediately, about 500 employees will be reassigned to other ongoing projects at the Ingalls Operations, while another 200 employees will be transferred to Northrop Grumman's Avondale Operations facilities in Gulfport, Miss. Most of the remaining employees will be reassigned to Avondale Operations facilities in New Orleans, La. American Classic Voyages Company (Nasdaq: AMCVQ), the parent company of Project America, filed for Chapter 11 bankruptcy protection on Oct. 19, following the tragic events of Sept. 11 and their impact on the tourism industry. Northrop Grumman Corporation is a $15 billion, global aerospace and defense company with its worldwide headquarters in Los Angeles. Northrop Grumman provides technologically advanced, innovative products, services and solutions in defense and commercial electronics, systems integration, information technology and non-nuclear shipbuilding and systems. With 80,000 employees and operations in 44 states and 25 countries, Northrop Grumman serves U.S. and international military, government and commercial customers. AMES DEPARTMENT: Utilities Demand Weekly Payments or Deposits ------------------------------------------------------------- Niagara Mohawk Power Corporation, Dominion Virginia Power, Dominion East Ohio Gas, Dominion Peoples Natural Gas, Dominion Hope Gas, Baltimore Gas and Electric Company, American Electric Power, Public Service Electric and Gas Company, Yankee Gas Services Company, GPU Energy, Central Hudson Gas & Electric Corporation, New York State Electric and Gas Corporation, National Fuel Gas Distribution Corporation, and PECO Energy Company, submit their Response To The Motion Of Ames Department Stores, Inc. For Determination Deeming Utilities Adequately Assured Of Future Performance. Eileen P. McCarthy, Esq., at Gould & Wilkie LLP in New York, New York, tells the Court that the Utilities provided the Debtors with pre-petition utility service and continue to provide the Debtors with post-petition utility service. The Utilities estimated pre-petition claims against the Debtors are: A. Dominion Virginia Power $ 76,457.56 B. Dominion East Ohio Gas 5,862.70 C. Dominion Peoples Natural Gas (17.61) D. Dominion Hope Gas 78.79 E. Baltimore Gas and Electric Company 64,749.18 F. American Electric Power 360,538.71 G. Public Service Electric and Gas Company 50,216.00 H. Yankee Gas Services Company 5,173.13 I. GPU Energy 425,110.34 J. Central Hudson Gas & Electric Corporation 47,473.08 K. New York State Electric and Gas Corporation 112,370.00 L. National Fuel Gas Distribution Corporation 98,280.00 M. Niagara Mohawk Power Corporation 462,528.52 N. PECO Energy Company 44,600.00 Based on the exposure presented by their state mandated billing cycles, the Debtors' continued losses and the uncertainty regarding the Debtors' future operations, Ms. McCarthy relates that the post-petition security that the Utilities have requested from the Debtors are: A. Dominion Virginia Power $137,450 (2 month deposit) B. Dominion East Ohio Gas $6,353 (1.3 month deposit) C. Dominion Peoples Natural Gas $10,296 (2 month deposit) D. Dominion Hope Gas $1,764 (2 month deposit) E. Baltimore Gas and Electric Company $217,949 (2-mth. deposit) F. American Electric Power $434,445 (2 month deposit) G. Public Service Electric and Gas Company $76,080 (2-mth. deposit) H. Yankee Gas Services Company $43,585 (3 month deposit) I. GPU Energy $508,847 (2 month deposit) J. Central Hudson Gas & Electric Corporation $136,300 (2 month deposit) K. New York State Electric and Gas Corporation $626,314 (2 month deposit) L. National Fuel Gas Distribution Corporation $122,235 (2 month deposit) M. Niagara Mohawk Power Corporation $952,590 (2 month deposit) N. PECO Energy Company $211,750 (2 month deposit) In the alternative and in lieu of deposits, Ms. McCarthy states that the Utilities would also be willing to accept an advance payment arrangement under which the Debtors would tender weekly payments to the Utilities in an amount equal to 1/8 of the Utilities' two month deposit requests. The Utilities would reconcile the foregoing weekly payments against the Debtors' actual usage and either bill the Debtors for any amount used that exceed the weekly payments or apply the applicable credit to the next month's bill. Ms. McCarthy contends that the weekly payment proposal not only reduces the significant exposure the Utilities face from their state mandated billing cycles but does not require the Debtors to borrow to post the deposits they are reluctant to provide even though they claim to purportedly have access to funding. Regarding the Debtors' claim that their ability to pay for future utility services and the grant of an administrative expense priority for unpaid post-petition bills should constitute adequate assurance of payment in this case, the Utilities presents these objection: A. The foregoing "protections" are inter-related because if the Debtors lose their ability to pay for future utility services the administrative expense priority will be worthless, particularly because the Debtors have provided their professionals with a $5,000,000 carve out to secure the payment of their fees. C. The Debtors has not set forth any facts to demonstrate why this case is such an exceptional case that the Court should ignore the deposit or other security requirements of Section 366 of the Bankruptcy Code. Specifically, based on the $473,000,000 that the Debtors owed to their pre- petition lenders and the numerous other secured claims against the Debtors' estates, it is unlikely that the Debtors have complete access to the $755,000,000 facilities that they obtained. Moreover, since the Debtors' most important quarter is the fourth quarter, it is very likely that the Debtors have already made substantial post- petition borrowings under their DIP Facilities, one of which was to have been fully funded upon execution. C. Based on the Debtors' history of continued losses, the Debtors' financial situation is not very promising. The Debtors' claim that the competitive retail environment and current economic conditions caused them to incur the losses that resulted in their bankruptcy filing. As there is no indication that the current economic situation is improving, the Utilities are concerned that the Debtors will continue to incur losses and possibly close and liquidate their stores as so many other retailers have done. Therefore, Ms. McCarthy concludes that the Utilities should not be required to be subject to these risks when the Court can reduce these risks by requiring the Debtors to tender weekly payments to the Utilities or require the Debtors to tender post- petition deposits that the Debtors claim to have the finances to pay. (AMES Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARMSTRONG HOLDINGS: German Unit Scraps Plan to Sell Desso Assets ---------------------------------------------------------------- Armstrong DLW AG, an indirect subsidiary of U.S.-based Armstrong Holdings, Inc. (NYSE: ACK) confirms it has terminated plans to sell the textile and sports flooring division operating under the brand name Desso. Armstrong Floor Products President and CEO Chan Galbato states, "Based on a recent review of the economy, our industry and our businesses, we now believe Desso will be a solid fit in the global Armstrong flooring portfolio. We will now focus on operating and growing the Desso businesses." Galbato joined the Armstrong team in June 2001. Approximately 1,300 Desso employees produce commercial carpet and artificial sports flooring in The Netherlands, Germany and Belgium. Based in Oss, The Netherlands, the division had annual sales of approximately 300 million Euros in 2000. Desso's parent company, Armstrong DLW AG is an indirect subsidiary of Armstrong Holdings, Inc., which is the parent company of Armstrong World Industries, a global leader in the design, innovation and manufacture of floors and ceilings. Based in Lancaster, PA, Armstrong has approximately 15,000 employees worldwide. In 2000, Armstrong's net sales totaled more than $3 billion. (Armstrong Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) BE INC: ISS Pushes For Approval of Sale of Assets & Dissolution --------------------------------------------------------------- Be Incorporated (Nasdaq:BEOS) announced that Institutional Shareholder Services (ISS), the nation's leading institutional shareholder advisory firm, has recommended that stockholders vote FOR the proposals that will be considered at Be's special meeting of stockholders on November 12, 2001 seeking approval of (1) the sale of substantially all of Be's intellectual property and other technology assets to ECA Subsidiary Acquisition Corporation, a wholly owned subsidiary of Palm, Inc., and (2) the subsequent dissolution of Be pursuant to a plan of dissolution. Institutional Shareholder Services, based in Bethesda, MD, is an independent advisor to several hundred institutional investors and provides voting recommendations for proxy contests, corporate governance proposals and other shareholder-related issues. Jean-Louis Gassee, Chairman of the Board, President and Chief Executive Officer of Be Incorporated, said, "We are very pleased with the ISS recommendation. They have a strong reputation for advocacy of shareholder interests. We strongly urge shareholders to follow ISS's recommendation and to sign, date and return their proxy cards by mail, by phone or over the internet, with a vote FOR the proposals seeking approval of our asset sale transaction with Palm and the subsequent dissolution of Be in accordance with our plan of dissolution." Be's board of directors has recommended that Be's stockholders vote FOR each of the proposals. Both proposals must be approved by a majority of the outstanding shares of common stock. The failure of stockholders to return their proxy cards or to vote via phone or the internet before November 12, 2001 will have the same effect as voting AGAINST the asset sale and the dissolution. If either the asset sale or the dissolution is not approved, it is likely that Be will file for, or will be forced to resort to, bankruptcy protection. Be, its officers, directors, employees and agents will be soliciting proxies from Be stockholders in connection with such matters. Information concerning the participants in the solicitation is set forth in the proxy statement/prospectus. BETHLEHEM STEEL: Taps MWW Group as Communications Consultants ------------------------------------------------------------- To maintain their current customers as well as to preserve their reputation in the steel industry, Bethlehem Steel Corporation and its debtor-affiliates seek to retain and employ The MWW Group as their communications consultants in these chapter 11 cases. Leonard M. Anthony, Senior Vice President, Chief Financial Officer and Treasurer, tells the Court that The MWW Group and its senior professionals have an "excellent reputation for providing high quality communications programs supporting specific business objectives as well as managing complex, high profile and sensitive business challenges". Furthermore, Mr. Anthony adds, MWW and its senior professionals have extensive experience as communication consultants to companies reorganizing under the Bankruptcy Code. Because of MWW's impeccable record, the Debtors are convinced the Group is well qualified to provide the required communications services in a most efficient and timely manner. Subject to the Court's approval, the Debtors will rely on MWW to: (a) Advise and assist the Debtors in managing the communications challenges presented by the Debtors' chapter 11 cases, including, but not limited to, maintaining the Debtors' relationships with their customers as well as preserving the Debtors' reputation in the industry; (b) Assist the Debtors in implementing specific communications programs to achieve their business objectives; and (c) Assist with such other communications services as may be necessary in connection with the Debtors' chapter 11 cases. Months before the Petition Date, MWW already began extending these services - which the Debtors want continued. Mr. Anthony informs the Court that MWW received an initial retainer payment of $25,000 prior to the filing of these chapter 11 cases. As of the Petition Date, Mr. Anthony discloses that MWW has been paid approximately $152,874 for services rendered pursuant to a Letter Agreement dated June 14, 2001. But Michael W. Kemper, on behalf of MWW, makes it clear that the firm does not hold a retainer from the Debtors for services to be performed during these chapter 11 cases. According to Mr. Kemper, MWW intends to bill the Debtors based on its standard hourly charges for professional time, which currently range from $450 per hour for its principals to $75 per hour for junior professionals, plus reasonable out-of-pocket expenses. MWW's hourly rates for these services (as such rates are subject to normal adjustment each year for inflation and other factors) are: CEO/President $450 per hour Senior Vice President $300 per hour Senior Account Supervisor $235 per hour Account Supervisor $225 per hour Senior Account Executive $200 per hour Account Executive $150 per hour Associate Account Executive $110 per hour Account Coordinator $ 75 per hour If the retention of MWW is approved, Mr. Kemper says, MWW will apply to the Court for allowance of compensation. Mr. Kemper notes that the extent and scope of services to be provided by MWW will be determined by the benefit derived by the Debtors' estates. According to Mr. Kemper, personnel with lower billing rates will be used to the extent practicable. In addition, Mr. Kemper assures Judge Lifland that the services provided by MWW are not duplicative in any manner with the services to be provided by the Debtors' other chapter 11 professionals. Aside from the compensation for professional services rendered, Mr. Kemper adds, MWW will seek reimbursement for reasonable and necessary expenses incurred, including, but not limited to: transportation, lodging, food, telephone, copying, subscriptions, word processing, news services, messenger, computer rental, etc. Mr. Kemper further assures the Court that the firm does not hold any interest adverse to the Debtors, their estates, their creditors or any other party-in-interest herein or their respective attorneys in the matters for which MWW is to be retained. However, Mr. Kemper notes that MWW regularly provides communications services to a diverse client base, including certain creditors in these cases. "The services we may currently provide or may have provided for creditors generally include, among other things, the implementation of communications programs and management of complex or sensitive business challenges unique to those companies," Mr. Kemper explains. "To the best of my knowledge, information and belief, MWW has not represented any creditors, customers or other parties in interest in the Debtors' chapter 11 cases other than Raytheon Engineers & Contractors in matters wholly unrelated to these cases," Mr. Kemper discloses. Furthermore, Mr. Kemper clarifies that MWW has not performed services for Raytheon since October 1999. In addition, Mr. Kemper says, no claims against the Debtors by Raytheon are material to the financial condition of such creditor. "Therefore, in MWW's opinion, MWW's representation of Raytheon in matters wholly unrelated to these chapter 11 cases has no bearing on the services for which MWW is to be retained in these cases," Mr. Kemper asserts. Accordingly, Mr. Kemper contends that MWW is a "disinterested person," as defined in section 101(14) and as required by section 327(a) of the Bankruptcy Code. For these reasons, the Debtors believe that the retention of MWW is in the best interests of their estates, creditors and all parties-in-interest. * * * Judge Lifland grants the Debtors' application on an interim basis. The Court will convene a hearing on November 5, 2001 at 10:00 a.m. to consider any objection to the proposed retention. Objections should be filed with the Court no later than October 30, 2001 at 5:00 p.m. and served on: (a) the Office of the United States Trustee, 33 Whitehall Street, 25th Floor in New York, New York 10004; Attention: Carolyn Schwartz, Esq., (b) The MWW Group, One Meadowlands Plaza, Sixth Floor, East Rutherford, New Jersey 07073-2137, Attention: Careen Winters, and (c) Weil, Gotshal & Manges LLP, 767 Fifth Avenue in New York, New York, 10153, Attention: Jeffrey L. Tanenbaum, Esq. or George A. Davis, Esq., so as to be actually received by such filing deadline. If there are no objections, this order shall be deemed a final order without further notice or hearing and MWW's retention shall be effective nunc pro tunc to Petition Date. (Bethlehem Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392- 0900) BORDEN CHEMICALS: Seeks Approval of 2nd DIP Financing Facility -------------------------------------------------------------- Borden Chemicals and Plastics Operating Limited Partnership (BCP) (OTC:BCPUQ) announced that it filed a motion yesterday with the U.S. Bankruptcy Court for the District of Delaware seeking authorization to obtain additional, secondary postpetition financing from its general partner, BCP Management, Inc. (BCPM), of up to $15 million (plus an additional $10.5 million available only under specific limited circumstances). The motion seeks immediate court approval of up to $10 million in postpetition loans under the Secondary Debtor-in-Possession credit facility (Secondary DIP Facility) and use of cash collateral, pending a final hearing requested to be held no later than November 30, 2001. A hearing on the interim order is requested for November 8, 2001. As lender under the Secondary DIP Facility, BCPM would hold liens on substantially all of BCP's assets, subordinate only to the liens held by the group of lenders led by Fleet Capital under the debtor-in-possession credit facility approved by final order of the court on July 11, 2001 (Primary DIP Facility). As with the Primary DIP Facility, proceeds from the Secondary DIP Facility would be used for working capital needs and general purposes. As previously announced, on April 3, 2001, BCP and its subsidiary, BCP Finance Corporation, filed voluntary petitions for protection under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware. BCPM and Borden Chemicals and Plastics Limited Partnership, BCP's sole limited partner, were not included in the filings. (Two other separate and distinct entities, Borden, Inc. and its subsidiary, Borden Chemical, Inc., are not related to the filings.) "Although BCP continues to face challenges, we have made progress in stabilizing the business and moving forward on the restructuring and asset sale process," said Mark Schneider, president and chief executive officer of BCPM. "We have paid down $18 million in debt under the Primary DIP Facility, obtained final court approval of asset sale and bidding procedures, and identified potential purchasers of assets. We also communicated with Fleet today to announce an achievable exit strategy that we believe will result in full payment of BCP's debt under the Primary DIP Facility." Schneider continued, "Right now we are engaged in serious negotiations with potential purchasers. It is important that BCP maintain liquidity during the sale process. But BCP has experienced a recent tightening of liquidity under the Primary DIP Facility. Under these circumstances and anticipating the normal seasonal slowdown in PVC sales in November and December, BCP sought additional financing from BCPM. We are pleased that BCPM has agreed to provide this new financing." "To facilitate the sale process and preserve the value of all of BCP's assets, BCPM has agreed to step up and provide this loan," said William H. Carter, chairman of BCPM. "We believe this action is in the best interest of all of BCP's creditors." Commenting on operations, Schneider said BCP continues to produce PVC resin at all three of its plants. "We appreciate the support that customers, vendors, lenders and employees have shown us over the past seven months as we have worked on the reorganization and asset sale process. We are doing everything we can to achieve a smooth reorganization. This additional financing is intended to enable us to maintain production and service without interruption." He continued, "To sustain the business, we have reduced the headcount by 30% compared with a year ago and made substantial cost cuts elsewhere. Operations also have benefited from lower raw materials costs, especially for natural gas. However, these factors have not been sufficient to offset a very weak PVC market. Market pricing dropped five cents per pound from the second to the third quarter, and BCP has been operating at 70- 75% of capacity. "Looking ahead," he said, "producers of PVC and PVC pipe have announced price increases, which bodes well for the future. And when demand does come back, the PVC industry's recovery should be swift, since inventories are very low throughout the supply chain." BCP produces PVC resins at its facilities in Geismar, La., also the site of its headquarters, and has additional PVC operations in Addis, La., and Illiopolis, Ill. BRIDGE: McGraw-Hill Moves to Compel Payment & Allow Recoupment -------------------------------------------------------------- The McGraw-Hill Companies, Inc. and/or its divisions, subsidiaries or affiliates are parties to 35 separate executory contracts with Bridge Information Systems, Inc. David A. Sosne, Esq., at Summers, Compton, Wells & Hamburg, in St. Louis, Missouri, tells the court that as of the Petition Date, those contracts gave rise to a total of more than $700,000 in administrative expense claims. According to Mr. Sosne, notwithstanding the sale of some of the Debtors' businesses and the assumption and assignment of contracts to third parties, the Debtors remain liable to the McGraw-Hill Entities for amounts that were incurred under the assigned contracts through the applicable sale closing dates. By its Motion, the McGraw-Hill Entities seek a Court order: (i) compelling the Debtors to: (A) make immediate payment of all administrative expense claims which are outstanding and overdue under their pre-petition agreements with the Debtors, and (b) make timely payments of additional administrative expense claims accruing thereunder as they become due, and (ii) authorizing Platts, a division of McGraw-Hill, to recoup the amounts owed to it by Telerate, one of the Debtors' operating units, from amounts owed to Telerate by Platts under its pre-petition contracts with Telerate. These are the administrative expense claims due to some of the McGraw-Hill Entities pursuant to certain agreements with Telerate. The McGraw-Hill Entities want Judge McDonald to compel the Debtors to make these payments immediately: Counterparty Agreement Amount Due Date ------------ --------- ------ -------- MMS International, Optional Service $1,079,251 08/31/01 Inc. Delivery Agreement Standard and QISS/DDR Agreement 40,312 overdue Poor's - Retail 26,875 10/31/01 Standard and CUSIP Electronic 138,541 overdue Poor's - CUSIP Distribution Agreement Platts Optional Service 130,000 10/30/01 Delivery Agreement In addition, the McGraw-Hill Entities request Judge McDonald for an order directing the prompt payment of all other sums due to MMS, Platts and S&P under their respective pre-petition agreements with the Debtors, as and when due: Counterparty Amount Due Date ------------ ------ -------- (A) MMS $920,731 11/30/2001 (B) CUSIP - product fees 66,000 11/30/2001 - royalties 175,000 11/30/2001 (C) S&P Retail 26,875 01/30/2002 (D) MMS 150,000 02/28/2002 Furthermore, Mr. Sosne relates, under Platts' Optional Service Delivery Agreement with Telerate dated February 1996, Telerate provides authorized customers of Platts access to Platts' products and services containing news, price assessments, analysis, research and commentary relating to energy, metal and other commodities. Mr. Sosne advises the Court that the Platts/Telerate agreement is one of the contracts the Debtors propose to assume and assign to Moneyline. Under the agreement, Mr. Sosne says, Telerate bills Platts' customers directly and collects the payments from those customers on Platts' behalf. Telerate is authorized to deduct a 10% royalty on all charges billed and collected, but is to remit the remaining 90% monthly to Platts, Mr. Sosne adds. Platts' records show that Telerate owes them $500,000 representing Platts' share of the amounts billed to customers for the period through February 15, 2001. On the other hand, Mr. Sosne states, Platts owes Telerate $13,341 for its share of the subscription revenues which Platts has billed and collected for the period beginning with the first quarter of 1999 through the projected sale closing date with Moneyline. According to Mr. Sosne, the respective obligations of Platts and Telerate are debts that arise out of a single integrated transaction. Thus, Mr. Sosne argues, Platts is entitled to recoup the amounts it owes Telerate from the amounts Telerate owes it. For that reason, the McGraw-Hill Entities also ask Judge McDonald to authorize Platts to exercise its right of recoupment under the Agreement. (Bridge Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) CHAPARRAL RESOURCES: Defaults on $3.3MM Loan with Shell Capital --------------------------------------------------------------- Chaparral Resources, Inc. (OTC Bulletin Board: CHAR) announced that it has received a notice of occurrence of certain events of default from Shell Capital Services Limited as Facility Agent under the Company's existing Loan Agreement with Shell Capital Inc. The Notice states that the Company has failed to pay or refinance the outstanding principal and accrued interest in the amount of US$3,339,489.97 that was due on September 30, 2001 under the Company's Bridge Loan with Shell Capital. As a result, the shares of preferred stock in the Company's subsidiary, Central Asian Petroleum (Guernsey) Limited that were issued to Shell Capital to induce it to enter into the Bridge Loan, have converted and Shell Capital is entitled to 40% of the distributable profits of CAP(G). There are no such distributable profits at the present time. The Notice also states that the following additional events of default under the Loan Agreement have occurred: failure to make an interest payment in the amount of US$189,280 that was due September 28, 2001 under the Company's Loan Agreement with Shell Capital; failure to achieve project completion by September 30, 2001; the previously granted waiver of the requirement that the Company's common stock be listed on one of the three major stock exchanges (Nasdaq, NYSE, or Amex) which had been granted on the condition that there would be no further events of default under the Loan Agreement has now terminated as a result of the additional events of default specified in the Notice; certain accounts payable of Closed Type JSC Karakudukmunay in which the Company has a 50% interest, in the amount of US$3,050,245 are in excess of 90 days past due; and KKM had entered into a short term debt arrangement with certain financial institutions. Although such indebtedness has since been repaid, it was prohibited under the terms of the Loan Agreement. The Notice also states that the Company and Shell Capital are in active negotiations to restructure the Loan Agreement and the Facility Agent has been instructed not to pursue any remedies available to it at the present time. The Company is attempting to restructure its Loan Agreement with Shell Capital including, waiving the existing events of default and allowing the Company to re-acquire Shell Capital's interest in CAP-G. However, there can be no assurances that the Company will be able to re- negotiate its credit agreements on acceptable terms, if at all. If the Company does not restructure the Loan Agreement and Shell Capital does not waive the existing events of default, Shell Capital could exercise its remedies under the Loan Agreement, including calling the entire loan immediately due and payable. If so, the Company's investment in the Karakuduk Field may be lost. The Company also announced that KKM has suspended drilling operations effective October 4, 2001. This temporary suspension will allow KKM's ongoing facilities development program to catch up to current and future productive capacity as well as to allow KKM to further analyze geological data from its recently completed 3D seismic survey in order to ensure the efficient development of the Karakuduk Field. Subject to completing the restructuring of its Loan Agreement, the Company expects that KKM will resume drilling during 2002. John G. McMillian, Co-Chairman and CEO, stated, "We are continuing to work in good faith to restructure our indebtedness with Shell Capital. We appreciate their past support and look forward to continuing to work with Shell Capital as we continue to develop the Karakuduk Field." Chaparral Resources, Inc. is an international oil and gas exploration and production company. The Company participates in the development of the Karakuduk Field through KKM of which it is the operator. The Company owns a 50% beneficial ownership interest in KKM with the other 50% ownership interest being held by Kazakh companies, including KazakhOil, the government-owned oil company. CHATEAU COMMUNITIES: Completes Restructuring of $70M 7.54% Notes ---------------------------------------------------------------- Chateau Communities (NYSE:CPJ), the nation's largest owner/operator of manufactured home communities, restructured the bulk of its $70 million, 7.54% senior unsecured notes scheduled to mature in November 2003. Fifty million dollars of the loan now has an extended twenty- year maturity date of October 2021, at 8.3 percent interest. On October 30, 2001, CP Limited Partnership, the operating partnership of Chateau, completed a private placement of $150 million aggregate principal amount of 7.125 percent senior unsecured notes due 2011. The net proceeds from the sale of the notes were used to repay a portion of the outstanding balance under a short-term acquisition credit facility incurred in connection with Chateau's acquisition of CWS Communities, Inc. in August 2001. CEO Gary McDaniel noted: "Completion of this financing is in keeping with our commitment to a conservative debt structure. We are pleased to have extended some of our debt to mature in twenty years. Chateau is in an excellent position to accomplish our strategic goals going forward." Because the notes were sold on a private-placement basis, the notes have not been and will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. Headquartered in Greenwood Village, Colo., Chateau Communities is a fully integrated, self-administered real estate investment trust (REIT). Its portfolio consists of 222 communities, with an aggregate of approximately 70,900 residential homesites and 1,790 park model/RV sites. In addition, Chateau manages 40 manufactured home communities with approximately 8,700 residential homesites. The Company owns or has options on 9 greenfield development communities comprising approximately 3,500 sites for future development. Chateau operates in 37 states. Visit Chateau Communities at http://www.chateaucomm.com CHIPPAC INC: Revenues Drop in Q3 Attributable to Demand Slowdown ---------------------------------------------------------------- ChipPAC, Inc. (Nasdaq: CHPC), one of the world's largest and most diversified providers of semiconductor packaging, test and distribution services, announced results for the third quarter ended September 30, 2001. Revenues for the three months ended September 30, 2001 were $74.7 million, with a net loss of $16.4 million, meeting First Call consensus estimates. The company reported revenues of $155.8 million, with a pro forma net income of $11.1 million in the same period a year ago excluding one-time charges. These results were in line with original guidance and reflect ongoing economic weakness and a continued demand slowdown throughout the semiconductor industry supply chain during the quarter. Dennis McKenna, Chairman and Chief Executive Officer of ChipPAC, Inc. said, "We saw a modest level of stability in the quarter, which we believe will continue in the fourth quarter. Our design wins, based on the strength of our technology leadership, are winning significant new and existing customer programs. Our SmartDESIGN design process continues to be a differentiator with customer design personnel based on its accuracy and reliability. Our China facility achieved quarter-over-quarter revenue improvements and set records for all-time high unit shipments. Importantly, new customer engagements were on plan and our power segment remained steady." Robert Krakauer, Chief Financial Officer of ChipPAC, commented, "We remain successful in maintaining a stable balance sheet. Our reduced capital expenditures, and comprehensive cost reduction programs have allowed us to continue to generate positive gross margins every quarter throughout this year. Competitors within our peer group have not been able to achieve this. Based on our estimates for operating cash flow we plan to have adequate liquidity levels to service our debt and working capital through 2002." McKenna continued, "The on-going weak economy makes it necessary for us to remain cautious in our outlook. At this point, we believe the expected industry recovery will now extend into 2002 with a slower ramp-up. As a result, we are taking additional steps in the fourth quarter to align our organization and assets with this current growth projection. Specifically, we will make staffing cuts globally, resulting in a one-time charge of approximately $4.5 million for restructuring. Additionally, we are rationalizing our global asset base and prioritizing higher throughput, higher efficiency equipment, that is more cost effective within our various geographies. Our estimate is that this will result in an asset write-down of approximately $25-$30 million. These actions are designed to return the company to profitability in the second half of 2002 based on improving industry volume, and our lower cost structure. Our approach is designed to provide shareholders longer-term value as we continue successfully implementing our strategic initiatives." Fourth Quarter Outlook The company believes revenues for the fourth quarter ending December 31, 2001 will be flat to up 5% from the preceding third quarter, excluding planned restructuring charges and an asset write-down. ChipPAC is a full-portfolio provider of semiconductor package design, assembly, test and distribution services. The company combines a history of innovation and service with more than a decade of experience satisfying some of the largest -- and most demanding -- customers in the industry. With advanced process technology capabilities and a global manufacturing presence spanning Korea, China, Malaysia and the United States, ChipPAC has a reputation for providing dependable, high quality packaging solutions. For more information, visit the company's Web site, http://www.chippac.com As at September 30, 2001, the Company recorded cash and cash equivalents amounting to $25.9 million, and net accounts receivable totaling $34.2 million. Total current assets reached $79 million, versus total current liabilities of $85 million. Stockholders equity as at the same date amounted to $36.7 million. COMDISCO: Court Okays Deferment of Employee Cash-to-Option Plan --------------------------------------------------------------- Comdisco's Cash to Options Programs are employee benefit programs that allow certain employees to irrevocably elect, at the beginning of a fiscal year, to receive stock options in exchange for a reduction in compensation. Felicia Gerber Perlman, Esq., at Skadden, Arps, Slate, Meagher & Flom, in Chicago, explains that there are 2 separate Cash to Options Programs: (a) The Broad-Based Program, with 122 participants, is available to non-management employees who were expected to have compensation in excess of $125,000 for the fiscal year. (b) The Senior Management Program, with 14 participants, is open to a limited number of senior management employees. Other than the method of purchasing options, Ms. Perlman says, the two programs are substantially the same. The Debtors' ability to successfully maintain their business operations and maximize the enterprise value of their businesses for their estates and creditors is dependent upon the continued employment, active participation, and dedication of their employees, Ms. Perlman tells Judge Barliant. According to Ms. Perlman, requiring the participants in the Cash to Options Programs to contribute at this time is harming employee morale and has led to an increase in employee turnover among program participants. Thus, Ms. Perlman reports, the Debtors have decided to defer collection of amounts that would otherwise have been deducted pursuant to the Cash to Options Programs from employee compensation to the fourth fiscal quarter of fiscal year 2002. The Debtors intend to further address the Cash to Options Programs in their plan of reorganization, Ms. Perlman adds. The Debtors are convinced that the cost associated with such deferral of contribution is more than justified by the benefits that the Debtors expect to realize, including boosting morale and discouraging resignations among key employees. Accordingly, the Debtors request the Court to enter an order authorizing them to defer contributions under the Cash to Options Programs until the fourth fiscal quarter of fiscal year 2002. Finding that sufficient cause exists to grant the Debtors' motion, Judge Barliant authorized the Debtors to defer collection of certain amounts owed by employees under the Cash to Options programs, that otherwise would have been deducted from employee compensation to the fourth fiscal quarter of fiscal year 2002. To the extent Debtors have already collected employee contributions under the Cash to Options programs for the 2001 fiscal year, Judge Barliant ruled, such sums may be refunded to the employees and the collections of such sums may also be deferred until the fourth fiscal quarter of fiscal year 2002. (Comdisco Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) CRESCENT OPERATING: Will Begin Rights Offer to Shed Debt Burden --------------------------------------------------------------- Crescent Operating, Inc. (OTCBB:COPI.OB) announced that it has modified the anticipated pricing and timing of its plan, announced on June 29 of this year, for a rights offering of approximately $15 million of additional shares of common stock to its common shareholders. The rights offering is now expected to commence in early 2002 following the close of its restructuring transaction which is anticipated to occur in December 2001. The per share purchase price is expected to equal the lesser of (a) the average of the reported closing prices for Crescent Operating common stock for the twenty (20) trading days immediately preceding the fifth day prior to the commencement date of the rights offering, or (b) the average of the reported closing prices for Crescent Operating common stock for the twenty (20) trading days immediately following the commencement date of the rights offering. The principal purpose of the rights offering is to raise funds to reduce Crescent Operating's debt burden. No record date has yet been set for the offering, which is subject to the filing and effectiveness of an appropriate registration statement with the Securities and Exchange Commission. Crescent Operating is a diversified management company which through various subsidiaries and affiliates, owns, leases or operates a portfolio of assets consisting primarily of three business-class hotels, five luxury resorts and spas, an interest in a temperature controlled logistics operating company, an interest in three residential developments, and an equipment sales and leasing business. CRESCENT OPERATING: Annual Stockholders' Meeting Set for Dec. 6 --------------------------------------------------------------- Crescent Operating, Inc, (OTCBB:COPI.OB) announced the mailing of its proxy statement for the annual meeting of shareholders to be held on December 6, 2001 at the Fort Worth Club, located at 306 West 7th Street, Fort Worth, Texas. At the meeting, shareholders will be asked to vote on a number of items relating to the sale of assets and capital infusion previously announced by the Company on June 29, 2001. Shareholders of record at the close of business on October 3, 2001 will receive a proxy statement and are entitled to vote at the annual meeting. DTE BURNS: S&P Places BB Rating on CreditWatch Negative ------------------------------------------------------- Standard & Poor's double-'B' rating on DTE Burns Harbor LLC's (DTE LLC) $163 million senior-secured notes remains on CreditWatch with negative implications where it was placed on May 4, 2001. The proceeds from the notes were used by DTE LLC to purchase the number one coke battery from Bethlehem Steel Corp. (D/---/---). DTE LLC's rating is unchanged and remains on CreditWatch following the filing of Chapter 11 bankruptcy protection by Bethlehem Steel Corp. The rating is still on CreditWatch as a result of DTE LLC's reliance on sales of coke to Bethlehem Steel for a portion of its cash flow. Cash flow from other revenue sources, specifically Section 29 tax credits, is not sufficient to completely cover debt service. The ability of the project, however, to sell coke on the spot market if any of Bethlehem Steel Corp.'s facilities do not require coke, combined with the acceptance of DTE Energy Co. (triple-'B'-plus/Stable/'A-2') of any changes in law, or later disallowances with respect to Section 29 tax credits, provide support for the rating. However, should the project be forced to operate on the spot market, or should a substantial delay in payment threaten the project's solvency, a substantial downgrade should be expected. The project continues to operate well and benefits from a LOC that provides a six-month debt service reserve. Bethlehem Steel is up to date on all invoices with the exception of the September invoice that was due on the date that Bethlehem filed for bankruptcy. Standard & Poor's will closely monitor the situation going forward. As with most bankruptcies, information is not readily available. Important considerations are whether Bethlehem Steel will seek to vacate or renegotiate the coke sales agreement and whether Bethlehem Steel will continue to operate the Burns Harbor facility. Standard & Poor's believes that these are not large risks because the contract price of coke is competitive and Bethlehem Steel will need coke to continue to operate. Furthermore, Bethlehem has announced its intention to continue operating and has secured $450 million of debtor-in-possession financing that will allow it to do so. Should Bethlehem cease to operate, the project can still survive, though at a substantially reduced rating level, by selling coke on the spot market. Standard & Poor's will also monitor the accounts receivable situation. A substantial delay in receiving payment from Bethlehem would erode the project's liquidity and could also lead to a substantial downgrade. Standard & Poor's expects these issues to be clarified within approximately 90 days and expects to resolve the CreditWatch status in that time frame. DELTA AIR: Swings Into $295MM Net Loss in September Quarter ----------------------------------------------------------- Delta Air Lines (NYSE: DAL) reported a net loss of $295 million for the September 2001 quarter versus net income of $273 million in the September 2000 quarter, excluding the unusual items described below. Including unusual items, the September 2001 quarter net loss of $259 million versus net income of $133 million in the September 2000 quarter. "The terrorist attacks against the United States on September 11, 2001 have had a severe impact on the airline industry," said Leo F. Mullin, Delta's chairman and chief executive officer. "Due to the dramatic decrease in passenger demand, Delta has taken several steps, including network changes and, unfortunately, employee reductions, to respond to this difficult operating environment." Delta estimates that the tragic events of September 11 negatively impacted revenues in the September 2001 quarter by approximately $400 million. This is in addition to revenues that were already projected to be down due to a weak economy and lingering effects of the 89-day Comair strike. In the September 2001 quarter, Delta's unit costs increased 4.5 percent from the September 2000 quarter, while non-fuel unit costs increased 6.4 percent, excluding unusual items. Total operating expenses decreased 1.8 percent, excluding unusual items, while available seat miles decreased 6.0 percent. Delta's fuel hedging program saved Delta $69 million, pretax, in the quarter. Delta is 67 percent hedged in the December 2001 quarter at approximately $0.59 per gallon. On September 26, Delta announced that it will reduce staffing by up to 13,000 jobs across all major work groups over the next few months. "Delta's people are Delta Air Lines," said Mullin. "This is the most difficult action I have had to take since joining Delta." Delta has offered its non-union employees in the United States and Puerto Rico six voluntary job reduction programs. Over 11,000 Delta employees elected to take the voluntary programs. "This extraordinary acceptance rate affirms the attractiveness of these programs," said Frederick Reid, president and chief operating officer of Delta. "Involuntary reductions are expected to affect only 2,000 employees -- 1,700 pilots and 300 from the other work groups." In addition to the workforce reductions, Delta has instituted a broad-based recovery plan that includes eliminating discretionary spending, cutting capital expenditures, and reducing product and service offerings. In October 2001, Delta announced the closing of 35 of 70 city ticket offices, 11 of 50 Crown Room clubs, and five of 23 reservations call centers. Delta expects to record charges in the December 2001 quarter related to its early retirement program and impairment of fleet and facilities. Unusual Items During the September 2001 quarter, Delta recorded several unusual items, net of tax: a $33 million non-cash charge related to equity rights, primarily in priceline.com, to comply with Statement of Financial Accounting Standard (SFAS) 133; a $42 million charge related to severance costs associated with the employee reduction programs; a $104 million gain for compensation received under the Air Transportation Safety and System Stabilization Act; and a $7 million gain on the sale of its investment in Equant, N.V. In the September 2000 quarter, Delta recorded the following unusual items, net of tax: a $141 million non-cash charge related to SFAS 133; a $13 million charge related to the decision to discontinue our Pacific gateway in Portland, Oregon; and a one-time, non-cash gain of $10 million related to its equity investment in Worldspan. Financial Position "An already challenging financial year for the airlines turned even more difficult when terrorist attacks struck our nation," stated M. Michele Burns, Delta's executive vice president and chief financial officer. "Delta management's quick response to reduce capacity and cut costs, combined with the assistance of government funds helped mitigate the financial pressures on our company. Nevertheless, Delta and the industry continue to face serious challenges ahead." During the September 2001 quarter, Delta received $346 million from the U.S. Government under the Air Transportation Safety and System Stabilization Act to compensate Delta for a portion of its direct and incremental losses resulting from the September 11 terrorist attacks. Delta expects to receive a total of approximately $690 million under this program. For accounting purposes, Delta recognized $171 million, pretax, of the Stabilization Act compensation payment during the September 2001 quarter. Additionally, on September 17, Delta received $1.25 billion from a public sale of Enhanced Equipment Trust Certificates. As of September 30, Delta's cash balance was $2.8 billion. On October 12, 2001, Delta received $125 million in cash from the sale of its stake in SkyWest Airlines. "Delta is pleased with its relationship with SkyWest," said Burns. "This transaction was part of our ongoing initiative to monetize non- core assets and in no way signals a change in our operational relationship." Operations Update The terrorist attacks on September 11, 2001 have had a significant impact on Delta's operations. From September 11 through September 13, Delta canceled over 6,500 flights. By September 16, Delta was operating approximately 80 percent of its pre-September 11 schedule. "The employees of Delta Air Lines worked extremely hard to get the operation up and running in a safe, secure, and timely manner," said Reid. "Our employees went well above and beyond the call of duty to make sure our passengers' needs were met." Delta's load factor from September 11 through September 30, 2001 was 48.8 percent on Delta's reduced capacity. For the month of October 2001, Delta's preliminary results indicate that load factor increased to 61 percent. "Although there are encouraging signs as our operations improve and passengers begin to return, business is still far from what it was before the attacks," said Reid. Delta is working with the Federal Aviation Administration and the Department of Transportation to enhance Delta's security measures. Delta has completed installation of new security devices on all of the cockpit doors on its mainline aircraft. Network Highlights Effective November 1, 2001, Delta will reduce its capacity by approximately 16 percent, as measured by available seat miles from the level of service planned before September 11, 2001, due to the decline in passenger demand stemming from the terrorist attacks. As part of these reductions, Delta will suspend approximately 50 percent of its Delta Express capacity to Florida and will suspend certain international flights from John F. Kennedy Airport in New York including flights to Tokyo, Tel Aviv, Munich, Dublin, Shannon, Cairo, Dubai, Zurich, Brussels and Stockholm. On October 5, Delta announced a realignment of some of its Delta Connection carriers' regional jet operations to support Delta Air Lines' network adjustments. The adjustments will maintain Delta network access for all domestic markets currently served by Delta. "In making these changes, Delta considered current and anticipated passenger demand, route profitability, and the ability to accommodate customers conveniently on other Delta flights," said Reid. "As demand returns, we will look to re- instate mainline service to cities where it can be done profitably." As a result of the capacity reduction, Delta is grounding 50 aircraft for the remainder of 2001. Delta is currently in negotiations with Boeing and Bombardier to defer certain new aircraft deliveries and will continually review its fleet plan based on demand and operational needs. On October 19, the U.S. and France announced an open skies air transport agreement. Delta, along with its European SkyTeam partners Air France, Alitalia and CSA Czech Airlines, filed an application for antitrust immunity with the U.S. Department of Transportation (DOT) earlier this year. This new open skies agreement will enable the U.S. Government to complete its review and consideration of the application. "We are hopeful that the DOT will now move swiftly to approve the application so passengers can begin to realize the benefits that will come from open skies and closer coordination among SkyTeam partners," said Mullin. Delta's goal is to become the No. 1 airline in the eyes of its customers, flying passengers and cargo from anywhere to everywhere. People choose to fly Delta more often than any other airline in the world on 4,813 flights each day to 370 cities in 64 countries on Delta, Delta Express, Delta Shuttle, Delta Connection carriers and Delta's Worldwide Partners. Delta is a founding member of SkyTeam, a global airline alliance that gives customers extensive worldwide destinations, flights and services. In addition to safely and securely making reservations and purchasing tickets at delta.com, Delta customers can select seats, upgrade, get up-to- date flight information, make accommodations reservations, and more. U.S.-based travel agencies also can access Delta Web fares for their customers via delta.com's Online Agency Service Center. For more information, go to http//www.delta.com EASYLINK SERVICES: Gets Commitments to Complete Debt Workout ------------------------------------------------------------ EasyLink Services Corporation (NASDAQ: EASY), a leading global provider of outsourced messaging services to enterprises and service providers, announced that it has received the necessary financing commitments to complete its proposed debt restructuring. Closing of the debt restructuring is expected in November and is subject to completion of definitive documentation and compliance with applicable NASDAQ stock market rules. "Completing the debt restructuring will be a major milestone for EasyLink and will enable us to continue with the execution of our business plan," said Thomas Murawski, Chief Executive Officer of EasyLink. "Combined with our recent announcement that we have achieved positive EBITDA during the third quarter of 2001, we believe we are creating long-term value for our shareholders." On September 25, 2001, the Company announced that it has entered into agreements with its major creditors to restructure its debt and lease obligations. Under the proposed restructuring, the Company will eliminate approximately $44.2 million principal of debt and decrease its annual cash debt service requirements from approximately $36.0 million to approximately $5.0 million for the next two years. In conjunction with the restructuring and related financing, the Company expects to issue an aggregate of $19.7 million of restructure notes due in 2006, $4.0 million of other residual payments due in 2004, approximately 50.0 million shares of Class A Common Stock and warrants to purchase 18.0 million shares of Class A Common Stock with an exercise price equal to the average market price prior to closing. Additionally, the Company separately announced last week that is has generated positive EBITDA (earnings before interest, taxes, depreciation and amortization) of approximately $500,000 during the 2001 third quarter on a pro-forma basis, excluding India.com, certain non-operating items and other non-cash charges. This marks the Company's first quarter of positive EBITDA results in its history and begins an expected trend of increasingly positive EBITDA results for the coming quarters. The Company will report actual 2001 third quarter results on November 6th. EasyLink Services Corporation (NASDAQ: EASY), based in Edison, NJ, is a leading global provider of outsourced messaging services to enterprises and service providers. The Company, whose customers include over 300 of the Fortune 500, offers a comprehensive portfolio of messaging services to provide the essential communications infrastructure companies need to do business in today's 24x365 environment. EasyLink's solution set includes e-mail and groupware services including managed Microsoft Exchange, Novell GroupWise and Internet e-mail services; boundary services that offer virus protection, spam control and content filtering for business e-mail systems; message delivery services such as EDI, telex, desktop fax, and broadcast and production messaging services; and professional services including managed services support, on-site applications management, help desk and staff augmentation services. For more information, please visit http://www.EasyLink.com EXODUS COMMS: Signs-Up Gray Cary Ware as Corporate Counsel ---------------------------------------------------------- Exodus Communications, Inc. applies to employ and retain Gray Cary Ware & Freidenrich LLP as their general corporate counsel to assist with general corporate issues and other related services, nunc pro tunc to the Petition Date. Adam W. Wegner, the Debtors' Adviser for Corporate and Legal Affairs, states that representation of the Debtors by Gray is critical to the success of the Debtors' reorganization cases. The Debtors have no corporate counsel, and there is a general need for corporations in reorganization to have general corporate counsel. Mr. Wegner submits that Gray is familiar with the corporate legal issues facing the Debtors, and is uniquely well suited to handle such issues. The Debtors selected Gray as their special corporate counsel because of their extensive experience and expertise in corporate law, and its broad range of legal resources. The Debtors desire to employ the Firm under a general retainer because of the extensive legal services that will be required from it in connection with these chapter 11 cases. Specifically, Gray will: A. Perform services as acting general counsel, generally including investigation, research and analysis of legal and factual issues, analysis of applicable law, negotiations with opposing counsel, drafting and preparation of documents, review and comment on documents prepared by others, and written and oral communications with other parties and with the Debtors. B. Perform specific services, including serving as corporate secretary of the Debtors and director and corporate secretary of the Debtors' subsidiary corporations, managing the Debtors' internal legal department and managing outside counsel. C. other possible services may include, but are not limited to, services related to real estate and real estate litigation, real estate leases, preparing and administering a comprehensive lease database with respect to the Debtors' real estate leases, intellectual property and licensing, employment issues, tax issues, and general commercial litigation. James M. Koshland, Esq., a partner of the Firm, submits that the partners, counsel and associates of the Firm do not have any connection with or hold any interest adverse to the Debtors, their affiliates, creditors or any other parties in interest, or their respective attorneys and accountants, the United States Trustee or any person employed in the Office of the United States Trustee, except for: A. With respect to the Debtors, the Firm has represented Salon Media Group, Inc. in a matter adverse to the Debtors that was settled and is now effectively completed; iBeam Broadcasting in a matter adverse to the Debtors that was settled and is now effectively completed; and M+W Zander in a matter adverse to the Debtors that is effectively completed. B. With respect to the Debtors' officers and directors, the Firm has formerly represented William L. Krause, Exodus' Chief Executive Officer, on matters unrelated to the Debtors and these cases. C. With respect to the Debtors' major bond holders, the Firm formerly represented Brookside Capital, Inc., Goldman Sachs & Co., on matters unrelated to the Debtors and these cases; and currently represents Fidelity Investments, interests adverse to Goldman Sachs, Lehman Brothers Morgan Stanley & Co., interests adverse to Northwestern Investment Management Company, interests adverse to Oppenheimer & Co., Inc., interests adverse to Smith Barney, interests adverse to T. Rowe Price Associates, Inc., interests adverse to TCW on matters unrelated to the Debtors and these cases. D. With respect to the Debtors' bond trustees, the Firm currently represents Chase Manhattan Bank, interests adverse to HSBC on matters unrelated to the Debtors and these cases. E. With respect to the Debtors' secured lenders, Firm formerly represented interests adverse to Bank of Tokyo Mitsubishi, Ltd., Barclays Bank PLC, interests adverse to Fuji Bank, Ltd., interests adverse to Lehman Brothers Bank FSB, interests adverse to Transamerica Lending, Inc., on matters unrelated to the Debtors and these cases; and currently represents interests adverse to Silicon Valley Bank, interests adverse to Venture Lending and Leasing, Inc., Wells Fargo Bank on matters unrelated to the Debtors and these cases. F. With respect to the Debtors' ordinary course professionals, the Firm formerly represented Baker & McKenzie, Deloitte & Touche, Fenwick & West, LLP, Minter Ellison, Orrick, Herrington & Sutcliffe, LLP, Seyfarth Shaw, interests adverse to Wachtell, Lipton, Rosen & Katz, on matters unrelated to the Debtors and these cases; and currently represents Farella Braun & Martel LLP, Fraser Milner Casgrain, KPMG LLP Littler Mendelson, interests adverse to PricewaterhouseCoopers, Wilson, Sonsini, Goodrich & Rosati, on matters unrelated to the Debtors and these cases. H. With respect to the Debtors' major trade creditors, the Firm currently represents interests adverse to Akamai Technologies, Inc., AT&T, interests adverse to Devcon Construction, EMC 2, Equity office Properties, interests adverse to GE Access, interests adverse to Global Crossing, interests adverse to MGE UPS Systems, Oracle Corporation, interests adverse to Turner Construction, on matters unrelated to the Debtors and these cases; and formerly represented HRH Construction Company, on matters unrelated to the Debtors and these cases. I. With respect to the Debtors' major lessors, the Firm currently represents interests adverse to Amdahl Corporation, interests adverse to Cabot Industrial Trust, interests adverse to Equity Office Properties, interests adverse to F5 Networks, Phoenix Leasing, Inc., on matters unrelated to the Debtors and these cases; and has formerly represented Cisco Systems, Mission West Properties, S3 Incorporated, Sun Microsystems on matters unrelated to the Debtors and these cases. J. With respect to the Debtors' retained professionals, the Firm currently represents Lazard, Freres & Co., LLC, interests adverse to KPMG PeatMarwick, on matters unrelated to the Debtors and these cases, and has formerly represented Amdahl Corporation, on matters unrelated to the Debtors and these cases. Mr. Wegner informs the Court that the Debtors have provided the Firm with a retainer in the amount of $200,000 pursuant to the terms of the engagement letter dated September 10, 2001 with the Firm. Mr. Koshland relates that the Firm drew the amount of $38,357.50 from the Retainer as payment for the Firm's pre- petition services while the remaining balance of $161,642.50, represents the amount of the retainer preceding the Petition Date. Mr. Koshland states that the Debtors have agreed to compensate the Firm for all services rendered on an hourly basis pursuant to the Firm's current normal hourly rates for professionals and reimburse it for all expenses incurred during the course of the chapter 11 cases. The Firm's current hourly rates are: Partners $240 to $650 Associates $180 to $450 Paralegals and Specialists $70 to $290 (Exodus Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) FEATHERLIKE INC: Strategic Restructuring Evident in Q3 Results -------------------------------------------------------------- Featherlite, Inc. (Nasdaq:FTHR), a leading manufacturer and marketer of specialty aluminum trailers and luxury motorcoaches, reported net sales for the third quarter ended September 30, 2001 of $51.6 million. This is up 0.4% from net sales of $51.3 million last year. Net profit for the third quarter was $106,000, as compared to a net loss of $637,000 last year. The Company's improvement of over $743,000 in net income is substantially the result of reduced selling and administrative expenses, including research and development costs, compared to last year. The reductions are related to the closing of the Featherlite plant in Pryor, Okla., at the end of the second quarter in 2001, as well as the Company's across the board focus on cost control and reduction of direct and indirect expenses. "The positive effects of our strategic restructuring were evident in Featherlite's third quarter results," Conrad Clement, Featherlite chairman and chief executive officer, said. "Though we are cautious on sales growth in the near term, particularly since the events of Sept. 11, we believe that our aggressive sales posture coupled with our successes in enhanced efficiencies have well positioned the Company to capitalize on an improving economy." Featherlite's overall sales reflected a 22.2% increase in coach sales over last year, while overall trailer sales declined 14.8 percent. "We believe Featherlite is gaining market share in the bus conversion segment of the RV industry," Clement said. As a percentage of sales, gross profit for the quarter declined slightly to 12.5% compared to 13.0 % in 2000. Trailer margins improved over 2000 due to reduced raw material costs and improved labor and overhead utilization during the quarter. Motorcoach gross profit margins declined due to reductions in new inventory at lower than average selling prices. Selling and administrative expenses declined in the third quarter of 2001 by $1.2 million, an 18% reduction from the same period in 2000. As a percentage of sales, these expenses decreased to 10.5% in 2001 from 12.8% in 2000. Featherlite's income before taxes increased by almost $1.2 million to $141,000 in the third quarter of 2001, compared to a loss before taxes of $1.0 million in the same quarter last year. For the nine months ended Sept. 30, 2001, net sales were $173.7 million, down 6.8% from sales of $186.4 million in last year's comparable period. Net loss for the nine months was $4.0 million. This compares with net income of $1.2 million in 2000. As at Sept. 30, the Company's cash and receivable totaled $6.5 million, while its current maturities of its long-term debt amounted to $21 million. FEDERAL-MOGUL: Intends to Assume Prepetition Employment Pacts ------------------------------------------------------------- Prior to the Petition Date and in the ordinary course of business, Federal-Mogul Corporation entered into a series of Amended and Restated Employment Agreements with approximately 30 senior and mid-level management executives. The specific content and details of the proposed Change of Control Agreements are proprietary and confidential. Additional details of the Change of Control Agreements will be provided to the U.S. Trustee, any official committees appointed in these cases, and any other parties in interest. However, such disclosure will be made only upon the signing of a confidentiality agreement regarding the same. Thus, the Debtors seek authority for the assumption of their pre-petition employment agreements with approximately 30 executive personnel, providing for payment of certain benefits to such employees in the event of a change of control of the Debtors. James E. O'Neill, Esq., at Pachulski Stang Ziehl Young & Jones, P.C., in Wilmington, Delaware relates that the general terms of the Change of Control Agreements provide that upon a Change of Control as therein defined, the particular employee is assured of continued employment for a 3-year period without reduction in base salary, annual bonus or related employee benefits. If, following a Change of Control, the executive is terminated Without Cause or he or she terminates the Agreement for Good Reason, the executive will receive the following payments in lieu of the continuing employment benefits otherwise provided for: A. lump-sum amount equal to: 1. three times the employee's highest base salary and highest annual bonus, and 2. the excess of the actuarial equivalent of the benefit he or she would have received under the Debtors' Personal Retirement Account and Supplemental Executive Retirement Program if his or her employment continued for three years after the date of termination over the actuarial equivalent of any amount paid or payable as of the date of termination; and B. continuation of benefits under the employee benefit plans, programs, practices and policies of Federal-Mogul, for three years. In addition, the Debtors are party to separate pre-petition severance agreements with seven key personnel. Mr. O'Neill states that the agreements provide, in each instance, that if the particular employee is terminated for any reason other than cause, the terminated employee will receive 2 years' annual base salary, or 18 months' base salary, or 1 year's annual base salary, plus targeted annual bonus, and basic medical, dental and life insurance benefits for the designated time period. The Debtors believe that the terms and conditions of the severance agreements are well within industry standards, and that assumption of such agreements during chapter 11 represents an important ingredient in the Debtors' overall management and employee retention policy. Mr. O'Neill contends that the Debtors have reasonably exercised sound business judgment in determining to assume each of the agreements, and accordingly the Debtors request approval for Federal-Mogul to assume and perform its obligations under each of such contracts. Mr. O'Neill asserts that the Change of Control Agreements provide assurance to the Debtors' senior and mid-level management personnel regarding termination benefits in the event of a change in control of the Debtors and termination of their employment. The filing of a debtor's bankruptcy petition often results in the company being "in play" and becoming the target of friendly or hostile takeover attempts with ensuing consolidation and cost-cutting measures. The commonly known and widespread knowledge of this dynamic may well induce Debtors' current senior or mid-management personnel to become receptive to proposals of alternative employment from the Debtors' competitors or companies outside the automotive parts and components industry. Mr. O'Neill claims that the assumption of the Change of Control Agreements will provide assurance and protection to the Debtors' senior and mid-level management executives and induce their continued employment on behalf of the Debtors with resultant enhancement of the Debtors' reorganization ability. The Debtors believe that the success of their reorganization effort is dependent upon retention of key personnel and avoidance of distractions resulting from job insecurity or susceptibility to proposals of alternative employment. The Debtors submit that their decision to assume the aforementioned executory contracts relating to the employment of existing senior and middle management personnel, represents a reasonable exercise of sound business judgment. Therefore, the Debtors request that the Court approve the assumption of each of such agreements by the applicable Debtor party, and authorize the Debtors to perform their respective obligations. (Federal-Mogul Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) FINOVA GROUP: Household Finance to Continue Foreclosure Actions --------------------------------------------------------------- Prior to Petition Date, Household Finance Corporation III commenced a foreclosure action by filing an Amended Foreclosure Complaint in the Circuit Court of the Ninth Judicial Circuit of the State of Florida, in and for Orange County General Civil Division. In its foreclosure action, Household Finance seeks: (i) relief to foreclose a mortgage on certain real property in Orange County, Florida; (ii) a determination of the rights of the defendants named in the Household Finance Foreclosure Action, (iii) the sale of the Orange County Property, and (iv) a deficiency judgment if the proceeds from the sale of the Orange County Property are insufficient to pay its claim. Finova Capital Corporation is one of the defendants named in the Foreclosure Action. In response, Finova Capital admits it claims an interest in the Orange County property by virtue of its judgment against Ariff A. Khimani and Sheila A. Khimani. Finova Capital also demands that any excess proceeds from the foreclosure sale of the Orange County Property be distributed to Finova Capital. But when the Debtors filed these chapter 11 cases, the foreclosure action was stayed pursuant to section 362 of the Bankruptcy Code. Thus, the Debtors and Household Finance present the Court with a stipulation lifting the automatic stay to allow Household Finance to proceed with its foreclosure action. Both parties agree that: (1) To the extent applicable, the automatic stay is lifted for the sole purpose of allowing Household Finance to: (a) prosecute the Household Finance Foreclosure Action to judgment in the Florida Civil Court; and (b) take all actions reasonably necessary to conduct a foreclosure sale of the Orange County Property and have a certificate of title issued to the highest bidder of such foreclosure sale. (2) The Debtors reserve all rights to pursue claims against any proceeds or other rights in connection with the proceeds or transaction, giving rise to the foreclosure sale of the Orange County property. (Finova Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) FOCAL COMM: S&P Drops Senior Rating to D After Recapitalization --------------------------------------------------------------- Standard & Poor's lowered its corporate credit rating on Focal Communications Corp. to 'SD' from double-'C' and lowered its senior unsecured debt rating to 'D' from single-'C'. These ratings were removed from CreditWatch negative, where they had been placed July 30, 2001. Standard & Poor's triple-'C'-plus rating on Focal's senior secured bank loan remains on CreditWatch with negative implications. The rating action follows the completion of the company's $430 million recapitalization plan. The recapitalization plan includes debt-for-equity arrangements totaling about $280 million in principal amount of bonds for receipt of about 35% of the fully diluted shares of Focal common stock. This results in the bondholders receiving about 44 cents on the dollar relative to the par value of the bonds exchanged. The recapitalization plan also includes the infusion of $150 million of private investment capital and an amendment of Focal's secured bank credit facility to provide up to $225 million of borrowing capacity. There has been no event of default as defined under the terms of the indentures of the affected bonds. Standard & Poor's, however, defines default to include debt exchanges where the total value of the securities received is materially less than the originally contracted amount. Standard & Poor's will meet with management to discuss its revised business plan, in light of the recapitalization, before assigning new corporate credit and debt ratings. The rating on the senior secured bank loan is expected to be equalized with the new corporate credit rating, given the uncertain valuation of competitive local exchange carrier assets. FRIENDLY ICE CREAM: Refinancing Plan Spurs S&P to Affirm Ratings ---------------------------------------------------------------- Standard & Poor's revised its outlook on Friendly Ice Cream Corp. to developing from negative. At the same time, Standard & Poor's affirmed its single-'B'- minus corporate credit and senior secured bank loan ratings and its triple-'C'-plus senior unsecured debt rating on the company. The outlook revision is based on the company undertaking a refinancing plan to replace its existing credit facility, which would improve its financial flexibility. Friendly is facing added liquidity pressures from the March 2001 amendment to its credit facility that requires principal payments of about $75 million in 2002. The ratings on Friendly reflect its participation in the intensely competitive restaurant industry, weak operating performance, liquidity pressures, and weak credit protection measures. These factors are partially offset by the company's strong brand name and regional market position. Wilbraham, Massachusetts-based Friendly operates 394 restaurants, franchises 160 restaurants and six cafes, and manufactures a line of packaged frozen desserts distributed through more than 3,500 supermarkets and other retail locations. The company's operating performance improved somewhat in the first nine months of 2001. Same-store sales rose 1.5% in the third quarter of 2001 following a 1.4% increase in the second quarter and a 1.0% increase in the first quarter, after declining 3.3% in all of 2000. The improved results have come after the closing of 135 underperforming restaurants since March 2000. Credit protection measures are weak, with EBITDA coverage of interest for the 12 months ended September 30, 2001, at 1.7 times, and leverage is high, with total debt to EBITDA at 5.6x for the same period. Friendly has used proceeds from asset sales and refranchised units to meet its accelerated debt requirements under its amended credit facility. To improve the company's financial flexibility management has engaged Bank of America Securities LLC as a financial adviser to help evaluate refinancing alternatives that focus on real estate-based financing. The new financing plan includes a revolving credit facility for $35 million, mortgage financing for $55 million, and a sale and leaseback for $35 million. As of Oct. 24, 2001, Friendly had obtained a commitment letter for the mortgage financing. Outlook: Developing Ratings could be upgraded if the company successfully completes the refinancing. However, ratings could be lowered if the company is unable to replace its existing credit facility because it does not generate sufficient operating cash flow to cover its 2002 scheduled principal payments. GENERAL DATACOMM: Files for Chapter 11 Relief in Delaware --------------------------------------------------------- General DataComm Industries, Inc. (GDII) announced that it received notice from its primary lenders that such lenders would not commit to make further advances to the Company. The Company does not have another source of capital available to fund its operations. Accordingly, the Company and its domestic subsidiaries have filed voluntary petitions for relief pursuant to Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. GDC -- http://www.gdc.com -- is a leader in the design, development, manufacture and service of network access communications equipment supporting the convergence of voice, video, and data over wideband and broadband connections for major service providers, government, and enterprise networks. GENERAL DATACOMM: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: General DataComm Industries, Inc. 199 Park Road Extension Middlebury, CT 06762 Chapter 11 Petition Date: November 2, 2001 Court: District of Delaware Bankruptcy Case No.: 01-11101-PJW Judge: Peter J. Walsh Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- General DataComm Inc. 01-11102 DataComm Leasing Corporation 01-11103 DataComm Rental Corporation 01-11104 GDC Federal Systems, Inc. 01-11105 GDC Naugatuck, Inc. 01-11106 GDC Holding Company, LLC 01-11108 General DataComm International Corporation 01-11109 General DataComm China, LTD 01-11110 GDC Realty, Inc. 01-11111 Type of Business: General DataComm Industries, Inc.(GDC) is a worldwide provider of wide area networking and telecommunications products and services. GDC designs, assembles, markets, installs, and maintains products that enable telecommunications common carriers, corporations, and government to build, improve, and more cost effectively manage their global telecommunication networks. Debtors' Counsel: James L. Patton, Esq. Joel A. Walte, Esq. Michael R. Nestor, Esq. The Brandywine Bldg. 1000 West Street, 17th Floor PO Box 391 Wilmington, DE 19899-0391 302 571-6684 Total Assets: $64,000,000 Total Debts: $94,000,000 Debtors' 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ US Assemblies, Georgia Trade $9,583,215 1075 Windward Ridge Parkway Suite 100 Alpharetta, Georgia 30005 -and- PO Box 90248 Raleigh, NC 27675 -and- 131 Laurel Hill Road Verona, Virginia 24482 Fax: 607-729-8981 Continental Stock Transfer Debentures $2,179,000 Agent 2 Broadway New York, New York 10004 Fax: 212-616-7619 Weisman, Cellar, Spett & Trade $2,179,000 Modlin 445 Park Avenue New York, New York 10022 Fax: 212-371-5407 MTI Electronics Trade $1,144,557 W133 N 5139 Campbell Drive Menononee Falls Wisconsin 53051-7031 Fax: 262-783-4959 State of California Tax $651,422 Board of Equalization 205 East Street, Room 1100 New York, New York 10017 Fax: 212-697-5146 Primetech Electronics, Inc. Trade $584,112 18107 Trans Canada Highway Kirkland, Quebec Canada H9J 3K1 Fax: 514-697-0059 Middlebury Tax Collector Tax $583,403 PO Box 392 Middlebury Connecticut 6762-0392 Fax: 203-758-8629 Arrow/Bell Components Trade $561,554 800 North Main Street Ext. Wallingford Connecticut 06492-2419 Fax: 631-847-2101 Avnet Electronics Marketing Trade $530,085 1157 Highland Ave. Suite 207 Cheshire, Connecticut 06410 Fax: 978-532-9795 -and- Avnet/Marshall Electronics 20 Sterling Drive PO Box 0200 Wallingford Connecticut 06492-0200 Fax: 978-532-9795 Jefferson Public Schools Trade $396,483 Bo Lowery PO Box: 34020 Louisville, Kentucky 40232 Fax: 502-485-3600 Sanmina, Inc. Trade $322,733 Interconnect Products Division 8 Presidential Ave. Woburn, Washington 01801 Fax: 408-964-3658 MOP Limited Partnership Tax $296,910 c/o The Randor Group 2200 Marcos Avenue New Hycle Park New York, New York 11042-2042 Fax: 516-775-8407 Todd Video Network Trade $287,920 Management, Inc. 6545 Cecilia Circle Minneapolis Minnesota 55439-2722 Fax: 612-941-0940 New Venture Technologies Trade $271,471 Corp, (NTC) 176 South Road Enfield Connecticut 06082-9854 Fax: 860-253-5315 Dynamic Detail, Inc. Trade $254,861 Texas Operation 410 Forest Street Marlborough Massachusetts 01752 Fax: 508-624-4525 Timex Corporation Trade $250,000 555 Christian Road PO Box 310 Middlebury Connecticut 06762 Fax: 203-346-5139 Naugatuck Tax Collector Trade $218,371 PriceWaterhouseCoopers Trade $181,936 Cherokee Electronica Trade $173,925 Kanbay, Inc. Trade $130,007 Advanced MP Technology Trade $129,324 Accutron, Inc. Trade $125,909 NEC America, Inc. Trade $125,302 GENESIS HEALTH: U.S. Trustee Demands Payment of Quarterly Fees -------------------------------------------------------------- The United States Trustee Program (USTP), a component of the United States Department of Justice, is implemented through a number of United States trustees, each of which has administrative oversight responsibilities in bankruptcy cases within a certain geographic region. The USTP is funded through a fee charged to bankruptcy estates in Chapter 11 cases, based upon estate "disbursements" made within each three-month period that the case is open. The USTP does not receive funds from tax appropriations. 28 U.S.C. section 1930(a)(6) originally provided that the quarterly fee would be paid "until a plan is confirmed or the case is converted or dismissed, whichever occurs first." In an effort to increase the USTP's funding, Congress amended the statute in January, 1996 by deleting the "until a plan is confirmed" language. Thus, the amended statute required payment of quarterly fees "until the case is converted or dismissed, whichever occurs first." In addition to the filing fee paid to the clerk, a quarterly fee shall be paid to the United States trustee, for deposit in the Treasury, in each case under chapter 11 of title 11 for each quarter (including any fraction thereof) until the case is converted or dismissed, whichever occurs first. The fee depends on the amount of disbursements. For example, it shall be $250 for each quarter in which disbursements total less than $15,000; $500 for each quarter in which disbursements total $15,000 or more but less than $75,000; $750 for each quarter in which disbursements total $75,000 or more but less than $150,000 ... $8,000 for each quarter in which the disbursements total $3,000,000 or more but less than $5,000,000; $10,000 for each quarter in which disbursements total $5,000,000 or more. The U.S. Trustee objected to confirmation of the Plan on the basis that Genesis Health Ventures, Inc. & The Multicare Companies, Inc. had failed to allocate expenses to the individual Debtor entities and thus has not paid the full amount of fees required by section 1930 of the Judicial Code. The U.S. Trustee requested that the amount of fees payable under section 1930 be determined as part of the Confirmation Hearing in accordance with section 1129(a)(12) of the Bankruptcy Code. The U.S. Trustee demands payment of an estimated additional $3.7 million. The parties agreed to preserve the issue through the establishment of an escrow account so that confirmation of the Plan could proceed. Thus, the Plan was confirmed on September 20, 2001 and the effective date occurred on October 2, 2001. At the confirmation hearing, Mr. Hager (Vice President and Chief Financial Officer of Genesis) indicated that the corporate expenses (which are "significantly greater" than the expenditures to satisfy accounts payable and payroll) were not included in the figures reported on the Supplemental Exhibits to MOR 1 - (a), yet they are allocated to individual debtor- entities for tax reporting purposes. It strikes the UST that, if the Debtors had not allocated all of their disbursements on the Supplemental Exhibits to MOR 1 - (a) in monthly operating reports, the UST's quarterly fees assessed on individual debtors have been understated because these are based on the Debtors' self-reporting of its own expenditures in satisfaction of accounts payable and payroll. The UST indicates that it will charge according to the Debtors' yet-to-come provision of an allocation of the corporate expenses to individual debtors. In her Initial Brief in Support of Her Position on the Debtors' Obligations to Pay Quarterly Fees, the UST argues that amounts in addition to the $3.7 million are owed based on an allocation of corporate overhead to the individual Debtor entities. The Debtors contest this. The economic effect of the differences between the parties would be a potential increase in the fees payable by the Debtors from $691,250 to over $4 million for the last five quarters, with more to come. The increase in such fees reduces the value of the common stock being issued to creditors by an equal amount. On the other hand, it can increase the United States Trustee System Fund which can be kept on deposit or invested for keeping a balance over the long term. In the Genesis/Multicare cases, it is a contest over millions of dollars. For the UST, this also has significant ramifications because nearly one-fourth of the nation's Chapter 11 cases are filed in Delaware annually. A number of the "mega" cases filed in Delaware (1) are jointly administered; (2) have centralized cash management systems; and (3) may have accounting information and/or reports which is consolidated. As such, quarterly fee collection is a significant function of the USTP's Delaware office. To win the contest, both sides argue vigorously over the interpretation of "disbursements" for the purpose of determining UST fees, which is the centerpiece of the whole issue. Patricia A. Staiano, the UST for Region 3, asserts that the Term "Disbursements" includes all of a Debtor's expenses. In the instant case, the "disbursements" of any one of the Genesis or Multicare debtors have two components. The first component is expenditures in satisfaction of accounts payable and payroll, as reflected on the Supplemental Exhibits to MOR - 1(a) in the monthly operating reports. The second component of the "disbursements" is the corporate expenses which (1) are shared by two or more debtors and (2) are allocated to individual debtors for tax reporting purposes. In these cases, the Debtors have not allocated the corporate expenses to each debtor-entity in their monthly operating reports. Therefore, due to the Debtors' under-reporting of disbursements, the UST has not used the corporate expenses in calculating the quarterly fees owed by each of the Genesis and Multicare debtors to date, the UST accuses. The UST tells the Court that the Debtors should not be permitted to cling to some argument, equitable or otherwise, that quarterly fees should be calculated based upon some fraction of a debtor's "disbursements" due to practical difficulties or biased, subjective notions of what the size of the UST's quarterly fee claim should be. The UST asserts that mere existence of practical difficulties does not excuse the obligation to pay quarterly fees, the UST asserts. The UST also indicates that it has been willing to meet with Chapter 11 debtors and their professionals and work through practical difficulties with respect to self-reporting and quarterly fee assessment. "Further, the mere fact that these cases are jointly administered does not affect creditors' rights," the UST asserts, "This Court should reject any idea that centralized cash management and/or accounting systems provide a vehicle for jointly-administered debtors to evade quarterly fee liability." The UST notes that, more generally, Chapter 11 case administration will be affected. When a parent ("ABC") of a subsidiary ("XYZ") carries an inter-company receivable on its books for monies due and owing from XYZ, that accounting entry is more than merely a placeholder. It is an estate asset of ABC which the creditors of ABC (including the UST) may look to for satisfaction of their claims, the UST asserts. At bottom, the UST cautions, the Debtors' argument with respect to quarterly fees - no check, no "disbursement" - threatens to take the Court down the "slippery slope" to a point where two worlds are created in jointly-administered cases with centralized cash management systems: in one world, the UST will receive information and get paid based upon voodoo accounting; in the other world, creditors and potential purchasers will receive information and/or get paid based upon GAAP. The UST urges the Court to reject the Debtors' invitation to take their ride. The UST also argues that, for purposes of calculating "disbursements," the question of whether a debtor or a third party writes the check is irrelevant. "Apparently, the Debtors want this Court to assess quarterly fee liability to the 'owner' of each of the Debtors' disbursement accounts and include only those payments made by individual debtors through their respective imprest cash accounts," the UST tells Judge Wizmur, "In other words, the Debtors contend that, if a particular debtor does not write a check, no 'disbursement' is made, and quarterly fees should be calculated accordingly." The UST notes that the Debtors make this argument even though (1) many (if not all) of the debtor-entities have active operations that require the expenditure of funds to sustain, (2) the Debtors break out expenses on Supplemental Exhibits to MOR 1 - (a) on an entity-by-entity basis and (3) the Debtors break out revenue and expenses on an entity-by-entity basis for tax reporting purposes, but a number of courts have considered the Debtors' argument and rejected it, as in In re Central Copters, Inc., 226 B.R. 447 (Bankr. D. Mont. 1998), In re Flatbush Associates, 198 B.R. 75 (Bankr. S.D.N.Y. 1996), a case which the Debtors have cited in their papers on the issue of escrowing funds, as well as in the United States Trustee v. Hays Builders, Inc. (In re Hays Builders, Inc.), 144 B.R. 778, 780 (W.D. Tenn. 1992). The UST asserts that its interpretation of "disbursements" as including all of a debtor's operating expenses is consistent with the legislative history. Quarterly fees, the UST notes, are a type of "user tax." Jamko, 240 F.3d at 1316. In conclusion, the UST requests that the Court issue an order awarding the UST the sum total reflected on UST Exhibits 4 and 5 pending a further hearing to determine the amount of quarterly fees due with respect to the corporate expenses. (Genesis/Multicare Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENTIA SOFTWARE: Considers Seeking Protection from Creditors ------------------------------------------------------------ Gentia Software plc (OTCBB: GNTIY), a leading provider of intelligent analytical applications for enterprise-wide deployment, reported its results for the third quarter, ended September 30, 2001. Gentia's revenues for the third quarter of 2001 totaled $1.1 million, compared with revenues of $1.8 million in the second quarter of 2001 and $2.6 million in the year-ago quarter. Costs for the quarter totaled $2.3 million. This compares with costs of $3.9 million in the second quarter, and $12.3 million in the year-ago quarter. Gentia reported a net loss for the quarter of $1.1 million. This compares with a loss of $2.1 million for the second quarter of 2001 and $9.7 million for the year-ago quarter. "Given the disappointing results for the third quarter, the company is facing a cash crisis and is urgently pursuing discussions with potential purchasers of its business. In the meantime, it and its subsidiaries are instituting formal steps to seek protection from creditors," said Steve Fluin, Chief Executive Officer, Gentia Software. Gentia Software (OTCBB: GNTIY) is a leading supplier of intelligent analytical applications for enterprise performance management and customer relationship management. The Company's product suite sustains and improves business performance by improving the quality of customer interactions and driving strategy and performance management. Gentia incorporates unique technology and the world-class consulting expertise of partners including IBM, NCR, PWC and KPMG. Gentia offers best-in-class solutions for Global 2000 companies including Volvo, Credit Suisse First Boston and Motorola. For more information, visit http://www.gentia.com INNOVATIVE CLINICAL: Research Units to Merge with NeuroScience -------------------------------------------------------------- Innovative Clinical Solutions, Ltd. (ICSN) announced that it has entered into a definitive agreement to merge Clinical Studies, Ltd. (CSL), its Clinical Studies and Healthcare Research subsidiary, with a subsidiary of Comprehensive NeuroScience, Inc., a privately held clinical knowledge company focused on the development, evaluation and appropriate use of drugs used to treat neuropsychiatric illnesses. The merger will result in a new healthcare research organization with significant expertise in the central nervous system (CNS) area and combined projected revenue for 2001 of approximately $50 million. Innovative Clinical Solutions, Ltd. (ICSL) will remain an independent, public company with substantial stock ownership in Comprehensive NeuroScience, Inc., which will remain a private company. The combined business will provide multi-therapeutic, Phase I-IV clinical research services as well as an array of medical information technology services to the pharmaceutical and biotechnology industries. It will be the nation's largest CNS (central nervous system) focused clinical trials company with 34 research sites and over 126 Physician Investigators in 11 states nationwide. The company's combined experience consists of over 2,600 clinical trials completed and over 36,000 patients enrolled. While the company's specialty will be CNS, it will also conduct research in areas of general medicine including Women's Health, Endocrinology, and Pain Management as well as Phase I studies. The combined business's Medical Information Technologies Division will consist of four groups: (1) the Expert Knowledge Group which develops and disseminates treatment guidelines based on the scientific survey of expert physician opinion, (2) the Health Services Group which provides strategic consultation and focused educational services to pharmaceutical companies, (3) the Pharmacoeconomic Research Group which develops and manages patient registries, and conducts Phase IV studies of outcomes and cost-effectiveness, and (4) the Behavioral Pharmacy Management Group which provides a new service for Health Plans aimed at improving the quality and cost effectiveness of prescribing practices. "This merger will have a strong impact on the bio-pharmaceutical industry," said Michael Heffernan, President and Chief Executive Officer of ICSL. "It allows the combined companies to achieve the necessary 'critical mass' that has been lacking to date in this segment of the industry. The merged company will have unparalleled central nervous system expertise and therapeutic depth. The linkage of Comprehensive NeuroScience's clinical scientists and opinion leaders with ICSL Clinical Studies' site management infrastructure will provide significant value to our customers." "We are very excited to contribute to the revolutionizing of the clinical trials enterprise by providing a powerful presence in CNS," states John Docherty, M.D., President and Chief Executive Officer of Comprehensive NeuroScience, Inc. "Our goal is to accelerate the drug development process by offering expertise and services for each facet of the treatment development and knowledge process and to improve the care of patients. ICSL Clinical Studies' national geographic presence and multi- therapeutic experience adds breadth and depth to our clinical research presence while enhancing our post-clinical trial, evaluative, and knowledge transfer services with ICSL Healthcare Research's pharmacoeconomics expertise. With such diversified service offerings designed to gather and disseminate quality research data, the new company will be a valuable partner to the pharmaceutical industry." John Docherty, M.D., will continue to serve as President and Chief Executive Officer of Comprehensive NeuroScience. Gary Gillheeney, current Chief Financial Officer and Chief Operating Officer of ICSL Clinical Studies and ICSL Healthcare Research, will be the COO and CFO of Comprehensive NeuroScience. Michael Heffernan will serve on the Board of Directors for Comprehensive NeuroScience. The combined business will be headquartered in White Plains, NY, with an operation center based in Providence, RI. The closing of the merger is subject to a number of conditions, including accounting due diligence, a satisfactory restructuring or replacement of CSL's debt facility, and shareholder approval. Innovative Clinical Solutions, Ltd., headquartered in Providence, Rhode Island, provides services that support the needs of the pharmaceutical and managed care industries. The company's components include ICSL Clinical Studies, ICSL Healthcare Research and ICSL Network Management. ICSL Clinical Studies' site management infrastructure has over ten years of experience conducting clinical trials in multiple therapeutic areas including Central Nervous System, Women's Health, Asthma and Allergy, and General Medical indications. The ICSL Healthcare Research division provides pharmacoeconomics and outcomes research solutions to the pharmaceutical and biotechnology industries with over 100 peer-reviewed publications and presentations. ICSL Network Management offers managed care functions for single-specialty physician networks in the areas of Chiropractic, Podiatry, Dermatology, Pulmonology and Urology. Comprehensive NeuroScience, Inc. of White Plains, New York, is dedicated to expediting the development and appropriate use of new products and services to relieve neuropsychiatric illnesses. Comprised of three complementary divisions (Drug Discovery, Clinical Trials, and Medical Information Technologies), Comprehensive NeuroScience, Inc. supports the drug and treatment development process from discovery through clinical trial evaluation to the synthesis and dissemination of clinically actionable medical information. The company has 12 clinical research sites that conduct Phase II-IV clinical trials in the central nervous system area. Their management team consists of world-renowned CNS thought leaders who disseminate their psychiatric/neurological expertise through publications, practice guidelines, conferences, and advisory boards. INPRIMIS: Datawave Will Put Hold on Plan of Arrangement Talks ------------------------------------------------------------- Inprimis Inc. (OTCBB:INPM) announced that it received a notice from Datawave Systems, Inc. (CDNX:DTV.V) (OTCBB:DWVSF) relating to the proposed combination of the two companies. The notice states that Datawave will require further assurances from Inprimis that the company resulting from the proposed business combination will meet the NASDAQ's SmallCap Market new listings criteria. The notice was sent in reaction to the delisting of Inprimis stock from the NASDAQ NMS. In the notice, Datawave requests that Inprimis provide adequate assurances on or prior to November 15, 2001 that a NASDAQ listing will be achieved by the combination. The notice further states that, pending receipt of such assurances, Datawave will put on hold the negotiation of the Plan of Arrangement contemplated by the non-binding Letter of Intent entered into by Inprimis, Datawave and Cash Card Communications Corp. Ltd. ("C- 4") on October 12, 2001. Inprimis is engaged in ongoing discussions with Datawave and C-4 regarding restructuring the proposed combination of Inprimis and Datawave with a view towards ensuring that the resulting company will meet the NASDAQ's SmallCap Market new listings criteria. Inprimis Inc., through its wholly owned subsidiary, Inprimis Technologies Inc., provides product design services and the technology to help consumer electronics companies, cable operators, Internet service providers and telecommunications companies bring devices to market quickly and cost effectively. Headquartered in Boca Raton, Fla., the company develops product designs, customizes embedded system software and offers systems engineering and manufacturing consultation services for interactive-television, video-on-demand, Internet-access and other convergent-technology appliances. Inprimis's television set-top box designs are currently used by Philips Electronics and LodgeNet Entertainment. The company maintains strategic relationships with Liberate, National Semiconductor, Conexant, Sigma Designs and others. For more information, call (561) 997- 6227 or visit the company's Web site at http://www.inprimis.com INTEGRATED HEALTH: Seeks to Transfer Woodridge Facility in Texas ---------------------------------------------------------------- As previously reported, the Woodridge Convalescent Center d/b/a Integrated Health Services at Woodridge, located at 1500 Autumn Drive, Grapevine, Texas, is among the 11 Facilities covered in Integrated Health Services, Inc.'s motion to reject leases. The Facility failed to generate a positive cash flow (EBITDA less capital expenditures) for the year 2000. (EBITDA refers to "Earnings Before Interest, Taxes, Depreciation and Amortization.") The Facility's year 2000 annualized pro forma cash flow was negative $488,535. Therefore, the Facility is of little or no value to the Debtors' estates. The Rejection motion was not opposed by the landlord Baron Investments, Ltd., successor in interest to Wedgwood Nursing Home, Inc. which entered into the lease with Debtor Woodridge Convalescent Center, Inc. (Transferor) in 1985 when the Facility was known as the Grapevine Nursing Home. Since the date the Rejection Motion was filed, the Debtors and the New Operator successfully concluded the negotiation of the terms of the Transfer Agreement by and between (i) Debtor Woodridge Convalescent Center, Inc. (as Transferor), (ii) Centers for Long Term Care of Woodridge, Inc. (as Transferee and New Operator), and (iii) Baron Investments, Ltd. (Landlord), which provides for the transfer to the New Operator, of the Facility. Pursuant to the Transfer Agreement, the New Operator will take over the operation of the Facility and the Lease will be terminated. In addition, the Transfer Agreement governs: (i) the transfer of Transferor's property located at the Facility to the New Operator, including, but not limited to inventory, furniture and equipment; (ii) the transfer of Resident Trust Funds; (iii) the employment of Transferor's employees; (iv) the disposition of unpaid accounts receivable; and (v) access to records. With the provision of the Transfer Agreement that the Lease will terminate as of the Effective Time, the Debtors have agreed to withdraw their Rejection Motion as of the date that the parties to the Transfer Agreement conclude a closing of the transfer of the Facility. Accordingly, the Rejection Motion will be adjourned to a date which falls after the hearing date for this Motion to allow the parties time to conclude the transactions which are contemplated in this motion. Since the New Operator will not accept an assignment of the Transferor's Medicare and Medicaid Provider Agreements, the Transferor has not and will not move to assume them. Counsel for the Department of Justice has requested that the Debtors formally reject the Transferor's Medicare provider reimbursement agreement. Accordingly, Debtors seek the Court's approval and authorization to reject the Transferor's Medicare Provider Agreement pursuant to section 365 of the Bankruptcy Code. The New Operator acknowledges and agrees that it is assuming all risk arising out of New Operator's failure to obtain new Medicare and/or Medicaid Provider Agreements with respect to the Facility. The New Operator has also agreed that it will not discharge, or take any action to cause the discharge of any Medicare or Medicaid beneficiaries who are residents or patients of the Facility immediately prior to the Effective Time by reason of New Operator's inability to bill Medicare or Medicaid with respect to such residents or patients, and to indemnify Transferor and IHS from and against all damages, claims, losses, penalties, liabilities, actions, fines, costs and expenses (including attorney's fees and expenses), incurred by the Transferor which arise out of the New Operator's failure to accept assignment of the Medicare and/or Medicaid Provider Agreements including the discharge from the Facility of any Medicare or Medicaid beneficiary who was a resident or patient of the Facility immediately prior to the time that Transferor ceases to hold a Medicare Provider Agreement and/or Medicaid Provider Agreement. The Transfer Agreement further acknowledges that all rent which was due and payable by the Transferor from the Petition Date through September 30, 2001, has been paid, and that Transferor is entitled to remain in possession and operate the Facility without any obligation for the payment of rent until the Effective Time has occurred, or until possession and operation of the Facility have been transferred to the New Operator or another qualified operator pursuant to an agreement reasonably acceptable to Transferor. Since the New Operator has declined to assume any vendor, service or other agreements to which Transferor or IHS is a party, Transferor does not seek authority to assume and assign any such contracts. The Debtors believe that it is sound decision to transfer the Facility to the New Operator considering the results this would entail: the divestiture of an unprofitable facility that the Debtors have been unable to turn around, and the elimination of significant ongoing administrative liabilities. The Debtors submit that the transfers of property and the actions which are described in the Transfer Agreement are prudent and appropriate, and that entering into the Transfer Agreement represents an exercise of sound business judgment which should be approved and authorized by the Court. Accordingly, the IHS Debtors move the Court for an order, pursuant to sections 105(a), 363(b) and 365 of the Bankruptcy Code, and Rules 6004 and 6006 of the Bankruptcy Rules, (a) approving and authorizing the Lease Termination and Operations Transfer Agreement, dated as of October 9, 2001 (the Transfer Agreement), by and between (i) Debtor Woodridge Convalescent Center, Inc. (as Transferor), (ii) Centers for Long Term Care of Woodridge, Inc. (as Transferee and New Operator), and (iii) Baron Investments, Ltd. (Landlord), which provides for the transfer to the New Operator, of the Woodridge Convalescent Center d/b/a Integrated Health Services at Woodridge (the Facility) and (ii) authorizing the Debtors to reject the Transferor's Medicare number and provider reimbursement agreement. (Integrated Health Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) LERNOUT & HAUSPIE: Court Sets Nov. 26 Auction for Speech Assets --------------------------------------------------------------- Lernout & Hauspie Speech Products N.V. (EASDAQ: LHSP, OTC: LHSPQ), L&H Holdings USA, Inc. and their affiliates, a world leader in speech and language technology, products and services, wishes to advise creditors and parties-in-interest that on October 29, 2001, the United States Bankruptcy Court for the District of Delaware approved bidding procedures and an auction date with respect to the L&H Group's planned auction of the assets of its Speech and Language Technologies Business (the SLT Assets). The deadline for the submission of bids for the SLT Assets is November 19, 2001 at 4:00 p.m. EST, and the auction for the SLT Assets is scheduled to be held in New York City on November 26, 2001, commencing at 1:00 p.m. EST. The bidding procedures set forth detailed information regarding how and when bids for the SLT Assets must be made, as well as minimum requirements that must be satisfied before potential bidders will be considered for participation in the auction. L&H is a global leader in advanced speech and language solutions for vertical markets, computers, automobiles, telecommunications, embedded products, consumer goods, and the Internet. The company is making the speech user interface (SUI) the keystone of simple, convenient interaction between humans and technology. The company provides a wide range of offerings, including: customized solutions for corporations; core speech technologies marketed to OEMs; end user applications for continuous speech products in vertical markets; and document creation and linguistic tools. L&H's products and services originate in the following basic areas: automatic speech recognition (ASR), text-to-speech (TTS), search and retrieval and audio mining. For more information, please visit L&H on the World Wide Web at http://www.lhsl.com L&H is a trademark of Lernout & Hauspie Speech Products N.V. in the United States and/or other countries. All other product names or trademarks referenced herein are trademarks of their respective owners. LERNOUT & HAUSPIE: Speechworks Offers $12.5M for Speech Assets -------------------------------------------------------------- Lernout & Hauspie Speech Products N.V. and L&H Holdings USA, Inc., Debtors and Sellers, ask Judge Wizmur to: (i) enter an order approving the bidding procedures the payment of a break-up fee and expense reimbursement, and certain exclusivity provisions; and (ii) enter of an order approving the Asset Purchase Agreement by and among L&H NV, Holdings, certain non-debtor affiliates of L&H NV and Holdings, and SpeechWorks International, Inc., dated as of October 22, 2001, subject to higher or otherwise better offers; (iii) authorizing the sale of substantially all of the assets related to the Sellers' Speech and Language Technologies Business to the highest or otherwise best bidder or bidders determined in accordance with the Bidding Procedures; and (iv) authorizing the assumption and assignment of certain executory contracts and unexpired leases of non-residential real property. The Sale Assets The SLT Assets include, without limitation, equipment, inventory, intellectual property and other intangible property, permits, receivables, license agreements and other executory contracts, and goodwill that are associated with eight separate asset groups that together comprise the SLT Assets. These eight asset groups are: (i) the Text-to-Speech Asset Group; (ii) the L&H Speech Processing/Dialog (and Automotive) Asset Group; (iii) the Dragon Speech Processing/Dialog Asset Group (which includes the M-REC speech recognition engine); (iv) the ISI Speech Processing/Dialog Asset Group; (v) the Intelligent Content Management Asset Group; (vi) the Audiominig Asset Group; (vii) the Knexyx Asset Group; and (viii) the Machine Translation Asset Group. The Debtors/Sellers tell Judge Wizmur that, subject to her approval, they have entered into the Agreement, pursuant to which the Sellers have agreed to sell two of the SLT Asset Groups (the Text-to-Speech Asset Group and the L&H Speech Processing/Dialog (and Automotive) Asset Group) to the Purchaser, subject to higher or otherwise better offers. The SLT Assets, excluding the Purchaser Assets, are referred to in this Motion as the "Other Assets". After extensive marketing by the Sellers, with the assistance of their investment banker, Credit Suisse First Boston, L&H NV and Holdings believe that, based on the current economic environment and subject to an auction process, the aggregate purchase price offered by the Purchaser for the Purchaser Assets is the highest and best value achievable for the benefit of the estates. L&H NV and Holdings have also extensively marketed the Other Assets, and have received a number of indications of interest, both written and verbal, with respect to the Other Assets. Certain of these indications of interest contemplate offers for some or all of the Other Assets together with some or all of the Purchaser Assets. Therefore, L&H NV and Holdings believe that the proposed sale of the Purchaser Assets to the Purchaser may stimulate interest by other parties for the purchase of the largest possible aggregation of SLT Assets at the highest price and best terms available. At the auction to be held in accordance with the terms of the Bidding Procedures, the Sellers will auction all of the SLT Asset Groups, including the Purchaser Assets, to the highest or otherwise best bidder or bidders. Bidders will be able to bid on any aggregation of SLT Asset Groups, but only on complete SLT Asset Groups. L&H NV and Holdings hereby seek approval of the Bidding Procedures that it believes will ensure that the maximum value achievable is obtained for all of the SLT Assets. The Sellers negotiated to allow the Agreement with the Purchaser, subject to the payment of a break-up fee, to serve as a "stalking horse" bid for the Purchaser Assets that other potential bidders can use as a starting point for additional offers for the Purchaser Assets and, potentially, for the Other Assets as well. The SLT Business The SLT Business is comprised of the SLT Assets owned and operated by L&H NV, Holdings, and the other Sellers. The SLT Business constitutes a substantial part of the remaining core assets of the L&H Group. The SLT Business is a leading developer, licensor, and provider of conversational user interface technologies, systems, and products to customers in multiple markets. As of October, 2001, the SLT Business employed approximately 600 full-time employees around the world, including almost 400 research and product development engineers. B. Products and Services. The SLT Business develops and sells a wide variety of speech and language technologies, systems, and products that incorporate automatic speech recognition, text-to- speech, intelligent content management, and other capabilities. These technologies enable telecommunication systems, computing equipment, and mobile communications devices to effectively hear what users say, speak to users, carry on conversations, recognize users by their voice, and understand the information in the computer or on the web in order to find what users need and deliver it in the most natural and efficient way. The SLT Business products and services are capable of operating across multiple languages and in a variety of environments. L&H NV and Holdings believe, in their business judgment, that the Sellers will receive maximum value from the Purchaser Assets if they are sold on the terms set forth in the Agreement, subject to higher or otherwise better offers in accordance with the Bidding Procedures, and if the Other Assets can also be sold at the Auction to the highest and best bidder or bidders. Necessity for Sale Since the commencement of these chapter 11 cases, L&H NV's and Holding's primary objectives have been to stabilize operations, develop a strategic, long-term business plan built around core businesses, and maximize the value of their assets for the benefit of their estates. In their business judgment, L&H NV and Holdings have concluded that it is in the best interests of their estates to undertake the sale of the SLT Business. The sale of the Purchaser Assets pursuant to the Agreement will gross approximately $10 million in cash plus an equity interest in the Purchaser that has an approximate value of $2.5 million, for an aggregate of $12.5 million in value for the Purchaser Assets. The proceeds of the sale of the Purchaser Assets, after payment of certain costs and expenses, will be utilized by L&H NV and Holdings to satisfy their post-petition obligations and thereafter fund distributions to pre-petition creditors. L&H NV and Holdings believe that the prompt sale of the Purchaser Assets, on terms and conditions no less favorable than those set forth in the Agreement, and the potential sale of the Other Assets as a result of the Auction, is critical to ensure that the value of the SLT Business is maximized for the benefit of L&H NV's and Holdings' estates and their creditors. (L&H/Dictaphone Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) PERSONNEL GROUP: Seeking New Financing to Satisfy Maturing Debts ---------------------------------------------------------------- Personnel Group of America, Inc. (NYSE:PGA), a leading information technology and professional staffing services company, announced its results for the third quarter ended September 30, 2001. For the third quarter, total revenues were $173.6 million, down from $194.4 million in the second quarter this year and $224.0 million in the third quarter last year. PGA's IT Services practice contributed $103.9 million of revenues in the third quarter, while the Company's Commercial Staffing unit added $69.6 million. Exclusive of restructuring and rationalization charges, the Company lost $0.9 million during the quarter, down from net income of $3.7 million last year. After the restructuring and rationalization charges, the Company reported a net loss of $1.2 million for the quarter. The Company recorded restructuring and rationalization charges of $0.5 million ($0.3 million after tax, related primarily to the structural harmonization of operations, company wide, and further workforce reductions. Since the beginning of the year, the Company has reduced its permanent workforce by more than 18%. Commenting on the third quarter results, PGA's Chief Executive Officer Larry L. Enterline said, "An already difficult economic environment worsened in the face of the terrible events of September 11, and our third quarter results reflected the combination of these events and the ongoing economic slump impacting our segment. Our operations have remained strong, however, and we have continued to generate positive cash earnings in spite of the soft economy. We are continuing to focus on our infrastructure to align our cost base with our revenue expectations. Additionally, our marketing and sales initiatives have produced several exciting wins, the most notable being the State of Georgia vendor management system project - a first in the use of web technology to automate hiring processes across multiple state agencies. We are also working hard to explore financing alternatives for the Company in anticipation of the June 2002 expiration of our current revolving credit facility." "I particularly want to recognize the professionalism and remarkable composure demonstrated by our New York companies under the severest of conditions. All of PGA's offices in the area reopened within a day of the tragedy, and our local operators have shown purposeful determination in returning to their normal business routines. The resilience, calm and genuine caring displayed by our people is something I am very proud of." James C. Hunt, PGA Chief Financial Officer, added, "As we have indicated throughout the year, we are continuing to make progress on our balance sheet, and reduced our outstanding revolving credit balance by $18.0 million during the third quarter to $120.0 million. Our days sales outstanding (DSO) of 54 days at the end of the third quarter were essentially flat with the end of the second quarter (and down from 56 days at the end of the third quarter last year). The Company is improving its aged account balances in a difficult environment and these improvements directly benefited our debt repayment objectives. Additionally, after a $1.5 million payment in October, the Company has completed its earn out obligations from past acquisitions. "Considering the weakened economic conditions, there today exists, however, greater uncertainty of the Company's ability to maintain strict compliance with certain financial covenants in the existing credit facility. We are doing everything we can to stay in compliance. Additionally, we are working hard to favorably refinance the Company in anticipation of the June 2002 expiration of the current revolving credit facility, and have had discussions with numerous parties, including our existing lenders, to evaluate our financing alternatives. Moving ahead, our focus on execution within our operations, on financial fundamentals including debt reduction, close monitoring of all spending, and on refinancing initiatives will continue unabated." Information Technology Services IT Services revenues in the third quarter decreased 14% to $103.9 million from $120.8 million in the second quarter of this year, as declines in corporate IT spending continued to reduce the demand for PGA's billable consultants. IT gross margins were 25.2% in the third quarter, down slightly from 25.6% in the second quarter this year, as the result of general margin pressures attributable to the challenging IT business environment. Operating income margins were 6.6% before restructuring and rationalization charges, down from 7.1% in the second quarter. IT Services had approximately 2,800 billable professionals on assignment at the end of the third quarter, down from approximately 3,200 at the end of the second quarter. Commercial Staffing Revenues for PGA's Commercial Staffing unit in the third quarter decreased 5% to $69.6 million from $73.5 million in the second quarter of this year. Commercial Staffing permanent placement revenues in the third quarter were 5.2% of total revenues, down from 6.8% in the second quarter of this year. Primarily as the result of the softer permanent placement business, gross margins declined to 25.8% in the third quarter, down from 28.4% in the second quarter. Operating income margins were 5.9% before restructuring and rationalization charges, also down from 7.3% in the second quarter this year. Personnel Group of America, Inc. is a nationwide provider of information technology consulting and custom-software development services; high-end clerical, accounting and other specialty professional staffing services; and technology systems for human capital management. The Company operates through a network of proprietary brand names in strategic markets throughout the United States. PHAR-MOR: Hires Atlas Partners as Agent to Dispose of 65 Stores --------------------------------------------------------------- Phar-Mor, Inc. obtained approval from the United States Bankruptcy Court, Northern district of Ohio, for the retention of Atlas Partners, LLC as its Special Real Estate Agent to handled the disposition of the 65 stores that it has announced it is closing as part of its reorganization plan. The Court also authorized Atlas to retain CB Richard Ellis, Inc. as Special Marketing Agent to assist in the disposition process. A special web site has been set up to provide immediate access to the information that prospective purchasers of the leaseholds will want at http://www.pharmorre.com This site has copies of all of the leases that are for sale, as well as numerous subleases with other users that occupy some portion of some leased locations. Due to the very fast Going Out Of Business sale that the liquidators are running, bids for the leases will be due on Monday, November 26th, and an auction will be held in Youngstown, OH and telephonically on Tuesday, November 27th. Atlas Partners is a Chicago based real estate consulting firm whose registered slogan is "The real estate department for companies that do not want to be in the real estate business ... but are."* The firm represents businesses where real estate is either part of the problem or part of the solution. CB Richard Ellis is the largest vertically integrated commercial real estate services firm in the world. Headquartered in Los Angeles with over 10,000 employees -- and nearly 250 principal offices in 44 countries -- it offers the most comprehensive services portfolio in the industry. Phar-Mor is a retail drug store chain operating 139 stores under the names "Phar-Mor," "Pharmhouse" and "The Rx Place" in 24 states. Phar-Mor's online store is accessible at http://www.pharmorwebrx.comand through the company's Web site at http://www.pharmor.com On September 24, 2001, Phar-Mor filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. On October 3, 2001, the Company announced that it would close 65 of its stores. PHOTOCHANNEL INC: Parent Exits Online Photofinishing Business ------------------------------------------------------------- PhotoChannel Networks Inc. (CDNX: PNI; OTC-BB: PHCHF), a global digital imaging network company, at the request of the Canadian Venture Exchange, wishes to clarify the news release issued November 1, 2001, announcing that it's U.S. subsidiary, PhotoChannel, Inc, has filed for Bankruptcy, under Chapter 7 with the United States Bankruptcy Court, District of Connecticut. The total liabilities of the subsidiary were in excess of CDN$2.5 million with realizable assets of less than CDN$350,000. Mr. Peter Scarth, CEO & Chairman of PhotoChannel Networks Inc. states, "PhotoChannel Networks Inc is no longer interested in pursuing a direct to consumer online photofinishing business. The subsidiary was in this business. A considerable amount of time and money was invested in this subsidiary. This business failed. As such, the filing of Chapter 7 was the only realistic business decision available to the parent company. PhotoChannel Networks Inc will continue to trade on the CDNX under the symbol PNI, and expects to resume trading on the OTC-BB soon." - All Directors of the Company continue to act for the Company, and no resignations from the Directors have been received. - The Company continues to be in good standing with its transfer agent, Computershare Investor Services. - With this Chapter 7 filing the subsidiary, PhotoChannel, Inc., will cease to operate and no longer carry on business. - The Company knows of no reasons why the U.S. subsidiary's filing for Chapter 7 under the United States Bankruptcy Act would adversely affect the parent company, PhotoChannel Networks Inc. PhotoChannel is a technology producer and integrated provider of services enabling retailers and other members of the PhotoChannel Network to meet the needs of their film and digital photography customers. The Company has created and manages the PhotoChannel Network environment whose focus is delivering photo e-processing orders from origination to fulfillment under the control of the originating retailer. Additional information is available at http://www.photochannel.com PILLOWTEX CORP: Hires Duane Morris to Sue Westpoint Stevens ----------------------------------------------------------- In connection with their dispute with WestPoint Stevens, Inc., Pillowtex Corporation desire to employ and retain Duane, Morris & Heckscher LLP as special counsel. John F. Sterling, Vice President and General Counsel of Pillowtex Corporation, tells Judge Robinson that Duane Morris has vast experience in the area of debtors', creditors' and equity security holders' rights, business reorganizations and bankruptcy law. Thus, the Debtors are convinced that the retention of Duane Morris will contribute greatly to the efficient representations of the Debtors in this matter. The Debtors will look to Duane Morris to render these professional services in connection with the WestPoint Stevens dispute: (a) Investigation and pursuit of claims against WestPoint Stevens; (b) Initiating, and representing the Debtors in connection with, a potential adversary complaint against WestPoint Stevens. Duane Morris has stated its desire and willingness to act as the Debtors' special counsel in this matter, Mr. Sterling reports. The firm will charge for its legal services on an hourly basis and will seek reimbursement of its actual and necessary expenses. Michael R. Lastowski, a partner in the Duane Morris firm, lists the principal attorneys and paralegals designated to represent the Debtors and their current standard hourly rates: Michael R. Lastowski Partner $375 Richard W. Riley Partner 290 William K. Harrington Associate 245 Ralph N. Sianni Associate 200 John W. Weiss Associate 175 Carolyn B. Fox Paralegal 110 Shelley A. Hollinghead Paralegal 110 Mr. Lastowski assures the Court that, as far as he has been able to ascertain: (1) The partners, counsel, and associates of Duane Morris do not have any connection with the Debtors, the Debtors' material secured lenders, other parties in interest, and the Debtors' largest unsecured creditors as identified in pleadings filed with their chapter 11 petitions; and (2) Duane Morris does not represent any other entity having an adverse interest in connection with these cases. Thus, Mr. Lastowski swears, Duane Morris is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. (Pillowtex Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) POLAROID CORP: Asks Court to Approve PIDS $1.3MM Break-Up Fee ------------------------------------------------------------- PIDS Holdings has expended, and likely will continue to expend, considerable time, money and energy pursuing Polaroid Corporation's Asset Sale, David S. Kurtz, Esq., at Skadden, Arps, Slate, Meagher & Flom, in Chicago, Illinois, tells the Court. Furthermore, Mr. Kurtz adds, PIDS Holdings has engaged in extended arm's-length and good faith negotiations. According to Mr. Kurtz, the amount of due diligence conducted by PIDS Holdings stretches back to the summer of 2001. To compensate PIDS Holdings for its time, energy and resources expended as well as for serving as a "stalking horse" bid, the Debtors seek the Court's authority to pay PIDS Holdings up to $1,300,000 in the event it is not the Successful Bidder. Mr. Kurtz informs Judge Walsh that the Termination Fee will not be paid until the earlier of: (y) consummation of any Acquisition Proposal or other sale of the Assets, or (z) 30 days after the acceptance by Polaroid of an Acquisition Proposal. The Debtors explain that the Bidding Protections were a material inducement for, and a condition of, PIDS Holdings' entry into the Agreement. Accordingly, the Debtors contend the Bidding Protections are fair and reasonable in view of, among other things: (a) the intensive analysis, due diligence investigation, and negotiation undertaken by PIDS Holdings in connection with the Asset Sale, and (b) the fact that the efforts of PIDS Holdings have increased the chances that the Debtors will receive the highest and best offer for the Assets, to the benefit of the Debtors, their estates, their creditors, and all other parties-in-interest. Unless the Court authorizes the payment of the termination fee, Mr. Kurtz informs Judge Walsh that PIDS Holdings is not willing to commit to hold open its offer to purchase the Assets under the terms of the Agreement. If that happens, Mr. Kurtz says, the Debtors will lose the opportunity to obtain what they believe to be the highest and best, and perhaps the only, available offer for the Assets. On the other hand, if the Court approves the payment of the termination fee, the Debtors are ensured of the sale of the Assets to a contractually committed bidder at a price they believe to be fair while. At the same time, Mr. Kurtz notes, Bidding Protections also provide the Debtors with the potential of even greater benefit to the estates. Thus, the Debtors ask Judge Walsh to authorize the payment of the Termination Fee pursuant to the terms and conditions of the Agreement. (Polaroid Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) PROTECTION ONE: S&P Knocks Ratings to Low-B and Junk Levels ----------------------------------------------------------- Standard & Poor's lowered its corporate credit and senior unsecured debt ratings on Protection One Alarm Monitoring Inc. to single-'B' from single-'B'-plus and its subordinated note ratings to triple-'C'-plus from single-'B'-minus. The outlook remains negative. The downgrade is based on deteriorating operating performance resulting in weaker credit protection measures. Topeka, Kansas- based Protection One Alarm Monitoring is the second largest security alarm company in the U.S., providing monitoring and related security services to nearly 1.3 million customers in North America. The ratings on Protection One take into consideration a highly leveraged financial profile and the management challenge of improving subpar operating performance. These concerns are only partially offset by the stability and predictability associated with the security alarm monitoring business, which yields a recurring revenue stream. Operating performance deteriorated in 2001 as new management struggled to stem high customer attrition rates and reduce operating costs, while revamping its customer acquisition strategy. Revenues have declined by nearly 15% over the past year as the subscriber base declined, hampering profitability and credit measures. The company's annualized customer attrition rate for the first nine months of 2001 remained high at nearly 16%. Efforts to streamline operations through customer service facility consolidation and staff rationalization have reduced costs, but not fast enough to offset the decline in revenues As sales decline, operating margins, which deteriorated to 30% in the first nine months of 2001 from above 35% in 2000, are likely to remain pressured, despite management's efforts to improve service levels and stabilize sales. Consequently, EBITDA interest coverage of about 1.7 times for the 12 months ended September 2001 is susceptible to further deterioration over the near term. Moreover, Standard & Poor's is concerned about the company's reliance on its credit facility that expires in early 2002. The facility is provided by Westar Industries, which owns 87% of Protection One's stock. As of Sept. 30, 2001 the company had $138 million outstanding on the credit facility. Outlook: Negative Uncertainty associated with refinancing the credit facility and the challenge of stabilizing operating performance leave the ratings susceptible to a further downgrade. RELIANCE GROUP: Pa. Insurance Commissioner Backs Down -- Sort of ---------------------------------------------------------------- The Pennsylvania Insurance Commissioner, withdraws her objection to Reliance Group Holdings, Inc.'s motion to set-up interim compensation protocol. Ann B. Laupheimer, Esq., of Blank, Rome, Comisky & McCauley, counsel for tells Judge Gonzalez that the Commissioner was unaware RGH had any liquid assets not subject to an ownership dispute. Since those uncontested assets can be used by RGH to fund its financial needs for the time being without dipping in to the funds under dispute in the Constructive Trust Action, RGH is free to spend them. In view of the fact that the Debtors have recently represented through pleadings and oral representations before this Court that they possess or will possess other liquid assets separate from the Disputed Funds with which to pay professionals and administrative expenses, the Objections of the Rehabilitator to the motion to set-up employment compensation protocol has been rendered premature. As such, the Rehabilitator requests deferral of the Compensation Procedures Objection, so long as the Debtors do not attempt to utilize the Disputed Funds to pay professionals and expenses. On the other hand, if the Debtors seek to utilize the Disputed Funds before the final resolution of the Constructive Trust Action, the Rehabilitator requests immediate notice and an opportunity to be heard prior to the approval of any payments made from the Disputed Funds. Apology not accepted, say Lorna G. Schofield, Esq., of Debevoise & Plimpton, counsel for Debtors, Jack Rose, Esq., of White & Case, counsel for the Official Unsecured Bank Committee, and Barbara Moses, Esq., of Orrick, Herrington & Sutcliffe, counsel for the Official Unsecured Creditors Committee. Since July, when the Commissioner filed her motion asking this Court to dismiss or abstain from exercising jurisdiction over these Chapter 11 cases on the ground that all of the Debtors' assets "belong to and were up streamed from RIC," the Rehabilitator has assiduously used that allegation to thwart the ordinary progress of these cases, while at the same time fighting just as hard to prevent this Court from evaluating the merits of her underlying constructive trust claim. As part of this game plan, the Rehabilitator filed a motion and a series of objections asking the Court to prevent the Debtors and Committees from paying the professionals necessary to move forward with these cases, on the ground that the funds to be used for such purposes are subject to her constructive trust claim. Even now, with her Dismissal Motion withdrawn, the Rehabilitator wants to have it both ways: to use the pendency of her constructive trust allegations as leverage to handicap the efforts of the Debtors and Committees to pay their professionals. Her latest effort comes in the form of her Supplemental Statement, in which, rather than withdrawing her objection, she requests that it be "deferred," subject to various spending caps and notice requirements that she apparently seeks to have this Court impose on the Debtors and the Committees in the form of some sort of preliminary injunction. To prove their point, the three attorneys provide a truncated timeline of recent events. On July 11, 2001, the Rehabilitator filed her Dismissal Motion asking Judge Gonzalez to dismiss or abstain from exercising jurisdiction over these chapter 11 cases on the ground that all of the "apparent" assets in the Debtors' estates belonged to and were "upstreamed" from RIC. On July 12, 2001, the Rehabilitator filed a motion to remand her constructive trust claim (as well as a similar claim, seeking to prevent the Debtors and their officers and directors from utilizing any of the proceeds of their own insurance policies) from the United States Bankruptcy Court for the Eastern District of Pennsylvania, where the Debtors had removed them, to the Commonwealth Court. In August, 2001, after a series of hearings and conferences in this Court and the Pennsylvania Bankruptcy Court, and over the Rehabilitator's objections, the Dismissal Motion was scheduled to be heard on September 12, 2001. The schedule was specifically designed to allow this Court to hear and rule on the Dismissal Motion prior to any further proceedings on the Remand Motions. On August 24, 2001, the Debtors and Committees served an extensive brief in opposition to the Dismissal Motion. The Debtors and Committees also expended significant additional expense gathering documentary evidence and attempting to negotiate factual and evidentiary stipulations with the Rehabilitator, all in preparation for the hearing on the Dismissal Motion. While the Debtors and Committees were briefing and preparing to argue the Dismissal Motion, the Rehabilitator commenced her campaign to prevent them from paying the professionals necessary to administer these proceedings (including their counsel, whose fees were largely necessitated by the Rehabilitator's litigation tactics). The legal triad claims that Ms. Koken is using the Constructive Trust Action, which is filed in another court, as a basis for objection in this Court. The Rehabilitator not only requests that her fee motion be "deferred," but also that, during the period of deferral, the Debtors be restrained from using the so- called Disputed Funds and be ordered to provide the Rehabilitator with monthly compensation reports. By these requests, the Rehabilitator seeks to restrain the Debtors from taking any action that would thwart her ability to obtain all of the relief she contends she will be entitled to if and when she ultimately prevails on her constructive trust claim. Thus, though she understandably avoids the label, the Rehabilitator has made a motion (only three business days prior to the hearing date) for a preliminary injunction. In this Circuit, as elsewhere, preliminary injunctive relief may be granted only after the applicant shows: * Irreparable harm and either: * A likelihood of success on the merits, or * The existence of sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief. Maryland Casualty Co. v. Realty Advisory Ed. on Labor Relations, 107 F .3d 979,984 (2d Cir.1997); Hasbro Bradley, Inc. v. Sparkle Toys, Inc., 780 F.2d 189, 192 (2d Cir. 1985). The Rehabilitator has not satisfied any element of the test. To the contrary, by withdrawing her Dismissal Motion in its entirety, refusing to permit this Court to decide the Remand Motions, and seeking to "defer" her fee motion, she has done her level best to ensure that this Court has no way to evaluate either the quantum of harm RIC could suffer absent preliminary relief or the likelihood that she will ultimately succeed on the merits of her constructive trust claim. The Debtors and Committees respectfully request that this Court grant in full the Debtors' motion establishing compensation and reimbursement procedures for the ordinary course professionals. Judge Gonzalez finds merit in the Debtors' and Committees' arguments. The Commissioner's Objection is overruled and the Debtors' Motion is granted. (Reliance Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) RUSSELL-STANLEY: Noteholders Back Exchange Offer & Prepack Plan --------------------------------------------------------------- Russell-Stanley Holdings, Inc. announced that it extended the expiration time of its exchange offer to holders of its 10-7/8% Senior Subordinated Notes due 2009 and its solicitation of releases and the voting deadline for votes on its prepackaged plan of reorganization. The expiration time of the exchange offer and the voting deadline are now 5:00 p.m., New York City time, on November 2, 2001, unless further extended. The Company is offering to exchange for each holder's pro rata share of $150 million aggregate principal amount of Old Notes a pro rata share of $20 million aggregate principal amount of new 9% Senior Subordinated Notes due 2008 and 3,000,000 shares of common stock. To date, approximately 99.1% of the aggregate principal amount of the Old Notes have been tendered in the exchange offer. The 9% Senior Subordinated Notes due 2008 and common stock will not be registered under the Securities Act or applicable state securities laws, and may not be offered or sold in the United States absent registration under the Securities Act and applicable state securities laws or available exemptions from such registration requirements. Russell-Stanley Holdings, Inc. is a leading manufacturer and marketer of plastic and steel containers and a leading provider of related container services in the United States and Canada. * * * At June 30, 2001, the Company's consolidated financial statements showed (i) liabilities exceeding assets by $39 million, rendering the Company insolvent and (ii) $59 million of current assets available to satisfy $278 million of debt coming due within the next year, straining liquidity to unmanageable levels. SERVICE MERCHANDISE: Resolves Dispute with World Financial Bank --------------------------------------------------------------- Service Merchandise Company, Inc. sought and obtained a Court order approving their settlement of certain disputes with World Financial Network National Bank and some of its affiliates as well as the disposition of certain funds held by Service Credit Corporation. Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, in Nashville, Tennessee, informs Judge Paine that the World Financial Parties have agreed to release any claims they may have to cash reserves in excess of $8,000,000 held by Service Credit in connection with the terminated private label credit card program that used to exist between the parties. In addition, Mr. Jennings says, the World Financial Parties will withdraw, with prejudice, its proof of claim amounting to $15,000,000. According to Mr. Jennings, the Debtors and Service Credit entered into a Private Label Credit Card Agreement with the World Financial Parties last January 1997. The program was terminated in 1999 after a dispute arose between the parties, Mr. Jennings notes. The dispute even led to the Debtors' filing of a complaint against the World Financial Parties, which the World Financial Parties sought and obtained a dismissal. Last year, Mr. Jennings reminds the Court that World Financial Parties filed a proof of claim in these chapter 11 cases, asserting claims in excess of $15,000,000 against the Debtors. The World Financial Parties also asserted claims against Service Credit including alleged rights to certain cash reserves held by Service Credit in connection with the terminated program, Mr. Jennings adds. As of August 2001, Mr. Jennings discloses, that the Service Credit Reserves exceed $8,800,000. In the meantime, the parties have filed various claims and counterclaims. Since neither party refuse to admit fault and liability, the Debtors realized that it would be more cost- efficient to settle the dispute. Mr. Jennings notes the Debtors have agreed to dismiss with prejudice its complaints and actions. Likewise, Mr. Jennings says, the World Financial Parties have agreed to release any claim to the Service Credit Reserves, to dismiss with prejudice its counterclaims, and withdraw with prejudice its Proof of Claim. Mr. Jennings relates that Service Credit has also entered into a separate and confidential agreement with the World Financial Parties. But since Service Credit is not a debtor in these cases, Mr. Jennings explains, the terms could not be disclosed in Court. Judge Paine is convinced that the compromise reached is "fair and reasonable under the circumstances since it will resolve costly and uncertain litigation, including the reduction of claims against the Debtors' estates by $15,000,000. Also, the Court agrees with the Debtors that the resolution of the World Financial Parties' alleged claims to the Service Credit Reserves will enhance the Debtors' liquidity position by over $8,000,000. (Service Merchandise Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) STONEBRDIGE TECHNOLOGIES: Staff-Led Investor Group Closes Buyout ---------------------------------------------------------------- Stonebridge Technologies, a provider of technology consulting and enterprise integration services, announced that an employee- led investor group headed by company founder and CEO James Ivy has successfully completed a buyout of the company's assets. Company officials did not disclose terms of the transaction. Stonebridge, which is based in Dallas, specializes in information technology integration projects involving business intelligence/data warehousing, enterprise resource planning (ERP), enterprise application integration and infrastructure design, architecture and implementation. "This is a great day -- a brand new day -- for our customers, our strategic partners, and most of all, for our employees," Ivy said. "When we made the decision to buy back the company two months ago, we made a commitment to continue delivering at a high level for our customers and to maintain our strategic relationships with our partners. To the credit of Stonebridge employees, we have been successful at maintaining the fundamental value of the company. Now we are focused solely on our future, which is bright indeed." The sale of the company's assets to the employee-led group was approved last week by the U.S. Bankruptcy Court in Dallas. The company had operated under voluntary Chapter 11 protection since September 6. The employee-led buyout group headed by Ivy filed an asset-purchase contract to acquire the company's assets on September 10. Ivy founded Stonebridge in 1995 and served as the company's CEO until January 1999 when he retired as chief executive. During the subsequent dot- com heyday Stonebridge experienced tremendous growth, acquiring four companies and establishing 13 offices in the Southeast and South Central United States. Stonebridge's core business, like that of other technology consulting companies, was impacted by the collapse of the dot- com market in the spring of 2000 and a sustained market slowdown. In December of last year the company initiated the first in a series of cost-cutting initiatives to gain control of its operating expenses. In May of this year, the company's board asked Ivy to return as CEO. "During my second tenure as CEO, we were able to validate our business model and go-to-market strategy, but the debt burden we inherited simply would not allow us to create an operating model that worked. While the situation has been a challenging one not only for the management team and me but also for our employees, we never lost our belief in the fundamental value of the company," Ivy said. "I am pleased to report that, as of [Thurs]day, Stonebridge is a stronger and more viable company than ever, both financially and operationally," he said. "We are positioned to succeed solely on the unique business value of our services. Our core solutions - - high-value IT consulting and development services for 60-to- 90-day enterprise integration projects that provide an immediate return on capital -- are still in demand despite a down economy. And we will be very well positioned as the market recovers in Q1 and Q2 of next year." Stonebridge Technologies collaborates with clients to architect, develop and deploy enterprise integration solutions that leverage rapid advances in Web-enabled technologies and devices to transform and extend the life of existing business-critical systems. Stonebridge's core skills in enterprise integration, business intelligence, Web integration and infrastructure services help clients increase revenues, gain operational efficiencies and create sustained competitive advantage. More information about Stonebridge is available at http://www.sbti.com SUN HEALTHCARE: Receives Approval of 3rd DIP Financing Amendment ---------------------------------------------------------------- At a hearing on October 25, 2001, Judge Walrath issued a Final Order authorizing Debtors to enter into "Third Amendment to Revolving Credit Agreement, and authorizing and directing the Debtors to immediately pay to Lenders' Agent, for itself and as agent for and on behalf of the Lenders that are parties to the Financing Agreement, the fees as set forth in the Third Amendment. The Commitment Amounts under the Third Amendment are: The CIT Group/Business Credit, Inc. $56,875,000 Heller Healthcare Finance, Inc. $45,000,000 Citicorp USA, Inc. $26,250,000 LaSalle Business Credit Inc. $21,875,000 ------------- Total $ 150,000,000 Judge Walrath makes it clear that, having received the payment of the amounts required by Section 2(f) of the Third Amendment, GMAC Commercial Creidt LLC shall have no claims against, and its acceptance of payment shall be deemed to be a release of the Agents, the Lenders and the Borrowers in respect to GMAC's prior status as a Lender under the Financing Agreement and other Loan Documents. (Sun Healthcare Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) UNITED AIRLINES: Posts $542M Q3 Loss Due to Air Travel Fall-Off --------------------------------------------------------------- UAL Corporation (NYSE: UAL), the holding company whose primary subsidiary is United Airlines, reported its third-quarter financial results. The company incurred a third-quarter loss of $542 million before special charges described in the notes to the financial statements. This performance compares to a third-quarter 2000 net loss of $64 million, excluding two special charges explained in the notes and an extraordinary item due to the early retirement of debt. The special charges recorded in the third quarter total $617 million, net of tax, and include charges for aircraft impairment, reduction in force and early termination fees offset by the first grant payment from the U.S. government. John W. Creighton, UAL chairman and chief executive officer, said, "United, along with the rest of the airline industry, has been struggling with a weak economy and was dealt a difficult and painful blow by the September 11 terrorist attacks and their impact on air travel. Our results this quarter reflect the sharp falloff in both business and leisure travel that has occurred, and we anticipate continued weakness in both of these sectors into next year. "We have already taken a number of aggressive actions to respond to these unprecedented conditions, including the largest furlough and schedule overhaul in our company's history," he adds. "Going forward, we will work hand-in-hand with our employees and unions to build on our existing strengths, including valuable hubs in outstanding cities and the best global route network in the industry. Some tough compromises will be required from all of us in the short-run, but I am confident that I can rely on the support and cooperation of our entire company as we continue to review every option available to us to restore United's financial stability." Operating Results Passenger revenues for the quarter were down 20 percent year- over-year and the company experienced a revenue shortfall of $500 million for the period September 11-30. United's cash flow during the month of October was approximately negative $15 million per day. Expenses were down 2 percent year-over-year excluding special charges. Given the current difficult revenue environment, the company is focusing its near-term efforts on eliminating the negative cash flow it has experienced and on improving its liquidity position. As of September 30, 2001, UAL's cash balance was $2.7 billion. This includes $1.5 billion received from the company's Aug. 10 Enhanced Equipment Trust Certificate (EETC) debt offering, $391 million from the U.S. government's Air Transportation Safety and System Stabilization Act and $300 million from drawn credit facilities. In addition, the company has close to $4 billion in unencumbered aircraft. Actions Taken The company has undertaken the following cost-cutting initiatives since September 11: * United reduced its capacity by 23 percent and converted six stations to United Express. * United on September 19 announced plans to reduce its workforce by approximately 20,000 employees. * The company has retired its entire fleet of Boeing 727s and 737-200s. * United is currently in negotiations with aircraft manufacturers regarding the deferral of future aircraft deliveries. * The carrier has made a number of changes to its onboard products, including in-flight entertainment, meal service and more. * The UAL board of directors has suspended its compensation through the end of the year and has suspended the quarterly common stock dividend. The company has made every effort to minimize the number of people affected by the furloughs and has put together severance packages and other voluntary options for the various employee groups affected by the workforce reduction. Outlook The company expects that, based on the revenue trends since September 11, it will record a fourth quarter net loss excluding special charges that will be substantially greater than the third quarter net loss excluding special charges. For October, passenger unit revenue is down about 30 percent year-over-year. VIDEO UPDATE: Wants More Time to Solicit Acceptances for Plan ------------------------------------------------------------- Video Update, Inc. and certain of its direct and indirect subsidiaries moved to extend exclusive period to the United States Bankruptcy Court for the District of Delaware to solicit acceptances for their plan of reorganization to November 30, 2001. The Company made tremendous progress toward successful reorganization. Having shed nearly 200 unprofitable or underperforming retail store lease and implemented other major cost cutting measures, the Debtors are now well positioned to confirm their Plan and to emerge from these proceedings as a revitalized competitor in the retail video industry. The first twelve months of these chapter 11 cases have required the Company and their professional advisors to address and resolve a number of challenging issues and to overcome a variety of difficult economic hurdles. Now that the Plan has been filed and the Disclosure Statement has been approved, the Debtors believe that the Acceptance Period should be extended for sixty days while they confirm and consummate their Plan. Video Update, Inc. and certain of its direct and indirect subsidiaries, filed for chapter 11 protection on September 18, 2000 in the Bankruptcy Court for the District of Delaware. WEIRTON STEEL: Files Registration Statement to Restructure Notes ---------------------------------------------------------------- Weirton Steel Corp. (OTC Bulletin Board: WRTL) officials said the company filed a registration statement with the U.S. Securities and Exchange Commission in order to restructure its long-term publicly held debt through an exchange offer as part of the company's announced five point strategic restructuring plan. The company will offer $85.4 million in principal amount of new 10% Senior Secured Discount Notes due 2008 in exchange for all of the company's outstanding unsecured 11-3/8% Senior Notes due 2004 and the 10-3/4% Senior Notes due 2005. The Senior Secured Discount Notes will be secured by a mortgage and first priority security interest in the company's hot strip mill, which is an integral part of the company's downstream processing operations. As part of the exchange offer, the company is also seeking consents to amend its current unsecured senior notes indentures. The exchange offer will commence as soon as practicable after the registration statement becomes effective. Under the terms of the exchange, for each $1,000 in principal amount of outstanding unsecured senior notes, holders will be offered up to $350 of principal amount of new Senior Secured Discount Notes. The exchange would extend debt maturities and reduce debt service requirements, particularly over the next two years. In addition to this exchange offer and consent solicitation, the company requested the City of Weirton to offer to exchange all of its outstanding 8-5/8% Pollution Control Revenue Refunding Bonds (Weirton Steel Corporation Project) Series 1989 due 2014 for new 9% Pollution Control Revenue Refunding Bonds (Weirton Steel Corporation Project) Series 2001 due 2014. The Secured Series 2001 Bonds will also be secured by a mortgage and first security interest in the company's hot strip mill. The dealer manager for the concurrent exchange offers and consent solicitation is Lehman Brothers Inc. (A copy of the prospectus relating to the registered exchange offer for outstanding senior notes can be obtained from Lehman Brothers Inc., 101 Hudson Street, 31st Floor, Jersey City, New Jersey 07302, Attention: Hyonwoo Shin, (212) 681-2265 (call collect) or (212) 455-3326, or can be obtained from D. F. King & Co., Inc., 77 Water Street, 20th Floor, New York, New York 10005, banks and brokers call: (212) 269-5550 (call collect) or (800) 431 9643. These securities are offered only by means of a written prospectus and this is neither an offer to sell nor a solicitation of an offer to buy.) The registration statement relating to the company's 10% Senior Secured Discount Notes has been filed with the Securities and Exchange Commission, but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation to an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Weirton Steel is a major integrated producer of flat rolled carbon steel with principal product lines consisting of tin mill products and sheet products. The company is the second largest domestic producer of tin mill products with approximately 25% of the domestic market share. Web site: http://www.weirton.com WEIRTON STEEL: Firms-Up New $200MM Facility & Vendor Financing -------------------------------------------------------------- Weirton Steel Corp. (OTC Bulletin Board: WRTL) officials said the company finalized a $200 million senior credit facility, vendor financing programs generating at least $30 million in one-time cash benefits, and an annualized $51 million operating cost savings plan which includes a significant workforce reduction. These actions constitute major milestones in the company's announced strategic restructuring plan, which consists of five integral parts: -- Reducing operating costs, including employment cost savings with union and management employees; -- Improving near term liquidity through vendor financing programs; -- Increasing borrowing availability under a new senior bank credit facility; -- Restructuring long-term debt; and -- Fundamentally repositioning the business to focus on the production and sale of tin mill and other higher margin value-added sheet products. The company entered into a new $200 million senior credit facility with Fleet Capital Corp., as agent for itself and other lenders, Foothill Capital Corp., as syndication agent, and The CIT Group/Business Credit, Inc. and GMAC Business Credit LLC, which serve as co-documentation agents for the facility, and Transamerica Business Capital Corporation as a lender. Fleet Securities, Inc. acted as arranger for the facility. The company is utilizing borrowings from the new senior credit facility to refinance its existing inventory and accounts receivable facilities. Through this new asset-based facility, the company's management believes that it will be able to more effectively borrow against accounts receivable and inventory and generate additional availability of approximately $35 million. The new facility, which is secured by the company's inventory, accounts receivable and No. 9 tandem mill, provides for revolving loans, including a letter of credit subfacility, up to a maximum of $200 million depending on the underlying asset base. The new facility extends through March 31, 2004. With the closing of the new senior credit facility, the company will continue with its plans to reduce operating costs, which when fully implemented in 2002, will save approximately $51 million on an annual basis. The cost reduction will be achieved through new collective bargaining agreements which were ratified in September 2001, a workforce reduction of 550 employees, reductions in employee benefit costs and other operating cost savings. The company has also obtained assistance from key vendors through vendor financing programs to improve near term liquidity. Under the vendor financing programs, the company has negotiated arrangements with over 60 vendors in the form of purchase credits, improved pricing or other concessions to achieve one-time cash benefits of at least $30 million in the aggregate. In addition to the liquidity generated from the new senior credit facility the company expects to begin to realize benefits in the fourth quarter of 2001 from operating cost reductions and vendor financing programs which are part of its five point restructuring plan. "We thank the financial institutions and vendors who have been instrumental in our restructuring efforts. We also greatly appreciate the leadership and cooperation of the Independent Steelworkers Union, and the efforts of all the Weirton Steel employees who have helped in achieving these milestones. I am confident that our five point restructuring plan, once completed, will ensure our long-term viability and competitiveness," commented John Walker, company President and CEO. Mark Kaplan, company CFO, stated that, "The restructuring of the company's long-term debt, including a reduction of current debt obligations and extension of debt maturities through planned exchange offers is the critical next step to improve the company's liquidity and financial stability and to permit a fundamental repositioning of the company's business." Weirton Steel is a major integrated producer of flat rolled carbon steel with principal product lines consisting of tin mill products and sheet products. The company is the second largest domestic producer of tin mill products with approximately 25% of the domestic market share. WHEELING-PITTSBURGH: Ties-Up with Weirton to Cut Healthcare Cost ---------------------------------------------------------------- Weirton Steel Corp. and Wheeling-Pittsburgh Steel Corp. announced they have joined forces to form a "steel coalition" that will reduce both companies' health care benefit costs. The effort is endorsed by the United Steelworkers of America. The joint effort does not affect the level of employee or retiree benefits, but will combine the group purchasing power of both companies and reduce the amount of administrative fees paid to insurance carriers. It also will establish new reimbursement guidelines for Ohio Valley health care providers. It is similar to cost reduction efforts related to volume purchasing that both companies have initiated with vendors outside the health care arena. Combined, both companies provide health care benefits to more than 45,000 employees, retirees and their dependents, primarily in the Upper Ohio Valley, at a cost of over $80 million per year. Weirton Steel and Wheeling-Pittsburgh Steel have signed an agreement with both Highmark and Mountain State Blue Cross Blue Shield to reduce claims processing costs and implement a regional pricing system for health care providers. The new program establishes provider payments that are more in line with reimbursement levels in the Pittsburgh area. It will become effective on Jan. 1, 2002. "Wheeling-Pittsburgh and Weirton have been hit hard by illegally-priced steel imports. All domestic steel producers are actively involved in reducing costs. While we are friendly competitors, this is an occasion when our companies can both benefit by working together for a common goal," said John Walker, Weirton Steel president and chief executive officer. James G. Bradley, Wheeling-Pittsburgh Steel president and chief executive officer, added, "By working together in the area of health care, Wheeling-Pittsburgh and Weirton will continue to provide the same outstanding benefits, but at a reduced cost. This effort supports Wheeling-Pittsburgh Steel's reorganization efforts and the company's desire to preserve jobs and health care benefits." In addition to lower reimbursement rates for hospital and physician services and reduced administrative fees, the new program will increase medical management services to improve coordination of care and help manage costs. A new case management specialist will be assigned to focus exclusively on identifying and managing highest-intensity cases. Blue Cross also will create a dedicated account manager/analyst to oversee the steel accounts and address care management, referrals and network management and a dedicated customer service unit. An onsite review nurse also will be placed at Wheeling Hospital, Ohio Valley Medical Center and East Ohio Regional Hospital. This new service will complement an existing review nurse working at hospitals in the Weirton-Steubenville area. In addition, Mountain State Blue Cross Blue Shield will work with Weirton Medical Center on initiatives to coordinate care and monitor services that are referred out of area. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) * BOND PRICING: For the week of November 5 - 9, 2001 ---------------------------------------------------- Following are indicated prices for selected issues: Amresco 9 7/8 '05 25 - 27(f) Asia Pulp & Paper 11 3/4 '05 25 - 27(f) AMR 9 '12 87 - 89 Bethelem Steel 10 3/8 '03 5 - 7(f) Chiquita 9 5/8 '04 78 - 80(f) Conseco 9 '06 40 - 42 Enron 9 5/8 '03 76 - 80 Global Crossing 9 1/8 '04 15 - 17(f) Level III 9 1/8 '04 46 - 48 McLeod 11 3/8 '09 28 - 30 Northwest Airlines 8.70 '07 73 - 75 Owens Corning 7 1/2 '05 34 - 35(f) Revlon 8 5/8 '08 42 - 44 Royal Caribbean 7 1/4 '18 61 - 63 Trump AC 11 1/4 '06 60 - 62(f) USG 9 1/4 '01 72 - 74(f) Westpoint 7 3/4 '05 32 - 34 Xerox 5 1/4 '03 80 - 82 ********* Bond pricing, appearing in each Monday's edition of the TCR, is provided by DLS Capital Partners in Dallas, Texas. 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