/raid1/www/Hosts/bankrupt/TCR_Public/020116.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, January 16, 2002, Vol. 6, No. 11
Headlines
360NETWORKS: IFM Services Wants to Buy 5 Los Angeles Properties
ANC RENTAL: Wants to Form Non-Debtor Unit to Finance Vehicles
AMERICA WEST: Meets 2 Main Conditions for $380M Loan Guarantees
AMES DEPT: Working with Panel to Develop Consensual Reorg. Plan
APPLETON PAPERS: Restructures Senior Management Team for Growth
ARCH WIRELESS: Files Creditors-Backed Joint Reorganization Plan
ARMSTRONG HOLDINGS: Bar Date for IRS Claims Extended to March 29
AUDIO VISUAL SERVICES: 2001 Net Loss Remains in $55MM Territory
BETHLEHEM STEEL: Chicago Cold Gets Nod to Use Cash Collateral
BOSTON CHICKEN: Trustee Wants to Stop Securing Withdrawal Certs.
BRIDGE: Court Okays Transfer of DFS Proceeds to Cash Collateral
CALICO COMMERCE: Integral Capital Reports 3.57% Equity Interest
CHIQUITA BRANDS: Wins Court Nod to Hire BMC as Claims Agents
COSERV TELECOM: Wants to Accept Bids for Assets Until Feb. 11
EMERITUS: Restructures 3 Management Pacts to Buy 44 Communities
ENRON CORP: Brings In Skadden Arps as Special Bankruptcy Counsel
ENRON: Says UBS Warburg Pact First Step Towards Reorganization
EXODUS COMMS: Inks Designation Rights Pact with Global Crossing
FEDERAL-MOGUL: Asbestos Claimants Tap Tersigni as Accountants
FOSTER WHEELER: Deferring Interest Payments on Public Debt
FOURTHSTAGE: Wants Schedule Filing Deadline Moved to Jan. 29
GLIATECH INC: Fails to Comply with Nasdaq Equity Requirement
GLOBIX: Will File Chapter 11 Petition with Prepack Plan in Feb.
GLOBIX CORP: Begins Trading on OTCBB Effective January 15, 2002
HAMILTON BANK: Fitch Knocks Ratings to D and Withdraws Coverage
HAYES LEMMERZ: Gets OK to Pay Prepetition Critical Vendor Claims
INTERFACE: S&P Rates $175 Million Senior Unsecured Notes at BB
ISPAT INLAND: Debt Ratings Under Review for Possible Downgrade
KMART CORP: Loss of Financial Flexibility Spurs S&P Downgrades
KNOWLEDGE HOUSE: Will Apply for CDNX Listing Effective Feb. 13
LODGIAN INC: Court Grants Injunction Against Utility Companies
MILLENIUM SEACARRIERS: Moody's Further Junks Ship Mortgage Notes
MOTIENT CORPORATION: Signs-Up McGuireWoods as Bankruptcy Counsel
NATIONSRENT INC: Taps Richards Layton as Bankruptcy Co-Counsel
NORTHLAND CRANBERRIES: Will Begin Rebuilding After Debt Workout
PAXSON COMMS: Grosses $308M from Senior Sub. Discount Note Offer
PHARMACEUTICAL FORMULATIONS: Taps Ladenburg to Pursue Recap.
PILLOWTEX: State Street Wants to File Fraudulent Conveyance Suit
POLAROID CORP: Court Okays Houlihan Lokey as Committee's Advisor
POLAROID CORP: a la mode Contests Sale of Digital Solutions Unit
PSINET INC: Court Approves Omnibus Intercompany Claims Protocol
QUALITY STORES: Will Close 176 Stores & Ohio Distribution Center
RELIANCE GROUP: Bank Panel Agrees to Fix Bank Debts at $253MM
RENCO METALS: Court Fixes Feb. 20 Bar Date for Proofs of Claims
RURAL CELLULAR: S&P Rates $300M Sr. Debt Issues at Low-B Level
SAFETY-KLEEN CORP: Inks Pact to Allow MDC Unsecured Claim of $6M
SENIOR HOUSING: Acquires 31 Communities from Crestline for $600M
SIMON TRANSPORT: Seeking Waiver of Equipment Lease Defaults
THORN MEDIA: Court to Conduct Auction of All Assets on Feb. 7
TRITON ENERGY: Amerada Hess Takes Over 100% of Ordinary Shares
U.S. INDUSTRIES: Sells Ames True Temper for $165M to Wind Point
UNITEDGOLBALCOM: Extends Tender Offer for Disc. Notes to Jan. 28
VISKASE COMPANIES: Delivers Amended Rights Agreement to SEC
WASHINGTON GROUP: Names Cynthia Stinger VP of Government Affairs
WESTAR FINANCIAL: Court Approves Use of Funds to Sue Bank One
* Meetings, Conferences and Seminars
*********
360NETWORKS: IFM Services Wants to Buy 5 Los Angeles Properties
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Of the five parcels of non-residential real property owned by
the Carrier Center LA, Inc. and Meet Me Room LLC, Shelley C.
Chapman, Esq., at Willkie, Farr & Gallagher, in New York, New
York, informs Judge Gropper that the Los Angeles, California
property has generated substantial interest from one potential
purchaser, IFM Services LLC.
"Although [360networks inc., and certain of its debtor-
affiliates] have sale procedures in place for the sale of all
five properties, the requirements of this proposed purchaser and
the magnitude of this sale necessitate additional
consideration," Ms. Chapman explains. Thus, by this Motion, the
Debtors seek approval of certain bidding protections for IFM
Services and procedures that will govern an auction for the LA
property.
According to Ms. Chapman, the Debtors intend to utilize the
procedures previously approved by this Court to provide notice
of the sale and conduct an auction if other interested bidders
emerge. But at the same time, the Debtors believe that
additional bidding procedures must be approved to maximize the
value of the LA Property and ensure a fair and orderly auction
process.
Ms. Chapman recounts that IFM Services contacted CB Richard
Ellis, Inc., - the Debtors' exclusive sales and listing agent
for the Properties - in November 2001. IFM told CB Richard
Ellis that it was interested in purchasing the Property located
at 600 West 7th Street, Los Angeles, California for $46,000,000.
To secure IFM Services' offer, Ms. Chapman says, the Debtors
immediately negotiated the initial terms of a sale with IFM
Services. The parties entered into a letter of intent to sell
the LA Property on December 18, 2001. Among other things, Ms.
Chapman relates, the Letter of Intent outlines the agreed upon
terms of the Debtors' sale of the LA Property to IFM Services
and sets forth a requirement that the parties are to negotiate
any additional sale terms or minor modifications to the terms
set forth in the Letter of Intent as part of a purchase and sale
agreement.
Ms. Chapman tells the Court that it was IFM Services that
persuaded the Debtors to seek the Court's approval of certain
bidding incentives for IFM Services prior to the parties'
negotiating a final purchase agreement. "Such bidding
incentives are intended to compensate IFM Services for the time
and expense entailed in formulating an offer, finalizing a
purchase agreement and conducting the extensive due diligence
required to do so," Ms. Chapman explains.
The proposed incentives include reimbursement of legal and
consulting fees incurred in negotiating the purchase agreement
and performing due diligence and compensation for possible lost
opportunity by committing in excess of $46,000,000 to a sale,
which may not occur.
Thus, in the event an offer - which is a higher and better offer
than the offer by IFM Services - is accepted and approved by the
Bankruptcy Court, the Debtors seek approval to pay IFM Services:
(a) a break-up fee equal to 10% of any sale proceeds in excess
of the Proposed Purchase Price, with a maximum payment of
$400,000, and
(b) reimbursement of IFM Services' actual and reasonable costs
and expenses up to a maximum of $100,00.
Additionally, Ms. Chapman states, the Debtors agreed to only
entertain offers exceeding $46,600,000 as qualified higher
and/or better offers under the Bidding Procedures.
In the meantime, the Debtors contend that IFM Services' offer
represents a fair and reasonable offer based upon the valuation
of the LA Property by the Debtors and CB Richard Ellis. However,
Ms. Chapman continues, IFM Services has refused to proceed to
negotiate a final purchase agreement without prior approval of
the Bidding Incentives. Therefore, Ms. Chapman says, although
the Procedures Order sets forth the general procedures for the
sale of all the Properties, the Debtors believe the LA Property
warrants separate consideration.
"Once a final purchase agreement is executed and all of IFM
Services' termination rights in such agreement have expired, the
Debtors intend to utilize the procedures set forth in the
Procedures Order to provide notice to all interested parties of
such purchase agreement, the intended sale of the LA Property to
IFM Services, and the Bidding Procedures," Ms. Chapman informs
Judge Gropper.
If no higher and better offers are received, Ms. Chapman tells
the Court, the Debtors will file a motion seeking the approval
of the sale of the LA Property pursuant to such agreement.
But if higher and better offers are received, Ms. Chapman adds,
the Debtors will hold an auction to determine the highest and
best offer for the LA Property. Upon receipt of such higher
and/or better offer, the Debtors intend to give notice of any
auction to:
(a) any party submitting an offer for the purchase of the LA
Property,
(b) counsel to the Creditors' Committee,
(c) counsel to the agent for the Debtors' pre-petition
lenders, and
(d) the office of the United States Trustee.
In the event an auction is held, once the auction is concluded
the Debtors will file a motion seeking approval of the sale of
the LA Property to the party submitting the highest and best bid
for the LA Property at such auction.
The Debtors will conduct an auction to determine higher or
better bids, if any, on these terms and conditions:
-- Any party wishing to submit a competing bid for the LA
Property must submit such offer, in writing, to:
(i) Shelley C. Chapman, Esq., Willkie Farr & Gallagher, 787
Seventh Avenue, New York, New York 10019,
(ii) Barry Gilbert, 2401 4th Avenue, Suite 1100 Seattle,
Washington 98121; and
(iii) IFM Services, L.L.C., 59 Old Post Road Southport,
Connecticut
no later than 12:00 noon (EDT) on the date that is no later
than 10 days after the service of notice of a purchase
agreement with IFM Services under the Procedures Order.
-- To be considered a "Qualified Bidder" the party must
accompany such written offer with:
(i) the identity of such potential bidder and of an
officer(s) or authorized agent(s) who will appear on
behalf of such bidder, and
(ii) evidence, satisfactory to the Debtors, of the bidder's
financial and operational ability to complete the
transaction or transactions contemplated by such offer
and satisfy the requirements of the Bankruptcy Code
with respect to proposed transaction or transactions.
In addition, unless the Debtors, in their sole discretion,
agree otherwise, such party must bring to the Auction a
certified check payable to the Debtors in the amount equal to
10% of their bid to be held by counsel to the Debtors without
interest (unless and until a third-party escrow agreement is
arranged), such sum to be credited to the purchase price if
such bidder is a successful bidder or, if not, returned to
the potential bidder. In the event that the successful bidder
does not close, this earnest money deposit will be retained
as liquidated damages and the Debtors shall seek to close
with the next highest bidder.
-- In the event that an offer is received from a Qualified
Bidder, the Debtors will provide notice to:
(i) counsel to the Creditors Committee;
(ii) counsel to the agent for the Debtors' pre-petition
lenders;
(iii) the Office of the United States Trustee for the
Southern District of New York;
(iv) IFM Services; and
(v) all Qualified Bidders submitting a bid of the time
and place an auction will be conducted to consider
any and all bids.
Any Qualified Bidder may appear and submit its highest and
final bids for the Property.
-- These requirements apply to all competing offers:
(i) all bidders must agree to be bound by the terms of the
purchase agreement noticed pursuant to the Procedures
Order, including the purchase of the LA Property (with
only appropriate modifications for the identity of the
successful bidder, the increased bid, or other terms
more favorable to the Debtors),
(ii) all bidders must provide adequate assurance of their
ability to perform under all portions of the Purchase
Agreement, both from a financial and operating point of
view,
(iii) all competing bidders must submit an opening bid
providing for an initial increase from the Proposed
Purchase Price set forth in the purchase agreement of a
minimum of $600,000, with successive bids by any party
thereafter increasing the bid over previous bids by
$100,000 increments,
(iv) competing bids shall not be conditioned on the outcome
of unperformed due diligence by the bidder or any
financing contingency, and
(v) IFM Services shall be permitted to bid and submit a
higher offer.
-- All bidders must deliver with their bid a marked copy of the
Purchase Agreement containing only conforming changes and in
form ready for execution by the Debtors.
-- Each competing offer made or deemed to be made shall remain
open and irrevocable until the earliest to occur of:
(i) 30 days after the entry of an order, inter alia,
approving the Purchase Agreement and authorizing the
transactions contemplated thereby and the dissolution
of any stays of such order,
(ii) 48 hours after the withdrawal of the LA Property for
sale, or
(iii) 48 hours after consummation of a transaction
involving any other bidder.
All bids shall expressly acknowledge and agree to this
provision.
-- The Debtors reserve the right to:
(i) determine at their discretion which offer, if any, is
the highest and best offer, and
(ii) reject at any time prior to entry of an order of the
Court approving an offer, any offer, including the
offer of IFM Services, which the Debtors, in their
sole discretion and without liability deem to be:
(x) inadequate or insufficient,
(y) not in conformity with the requirements of the
Bankruptcy Code, the Bankruptcy Rules, the Local
Bankruptcy Rules or the terms and conditions of
the Agreement or these, or
(z) contrary to the best interests of the Debtors and
their estates.
The Debtors will have no obligation to accept or submit for
Court approval any offer presented at the auction and the
Debtors reserve the right, in their sole discretion, to
withdraw the Motion if the Debtors determine that a sale of
the LA Property is in the best interests of the estate.
-- If no offer is received from a Qualified Bidder, no Auction
will be conducted and the Debtors shall request that the
Court enter an order approving the sale of the LA Property to
IFM Services.
In the event no final purchase agreement with IFM Services is
executed, or IFM Services exercises a termination right with
respect to the sale, the Debtors further request permission to
offer the Bidding Incentives and utilize the Bidding Procedures
in connection with an offer made by a third party that is of a
higher or equal value to the offer made by IFM Services.
In addition, if the Debtors are unable to execute a purchase
agreement or otherwise proceed with a transaction with IFM
Services, the Debtors request authority to offer the Bidding
Incentives and utilize the Bidding Procedures in connection with
an offer of lesser value than the IFM Services offer with the
consent of the Creditors' Committee and the agent for the
Debtors' pre-petition lenders. (360 Bankruptcy News, Issue No.
17; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ANC RENTAL: Wants to Form Non-Debtor Unit to Finance Vehicles
-------------------------------------------------------------
ANC Rental Corporation, and its debtor-affiliates seek
authorization to:
A. create ARG Funding Corp. II, a non-debtor special purpose
subsidiary that would provide the Debtors with an
alternative structure through which to purchase and finance
vehicles,
B. create additional special purpose entities that would act as
vehicle lessors under the Alternative Finance Structure,
C. enter into Master Lease Agreements between the New Lessor
special purpose entities and the Operating Companies,
substantially in the form of the Existing Master Lease
Agreements, that will provide, in the event that the
Debtors obtain their fleet financing through the
Alternative Finance Structure,
a. the Operating Companies with the ability to rent
vehicles financed through ARG 11 from the New Lessor
special purpose entities and
b. that Debtors will guarantee and service the New Master
Lease Agreements, and
D. enter into any related corporate transactions necessary to
effectuate the creation of the Alternative Finance
Structure.
According to Bonnie Glantz Fatell, Esq., at Blank Rome Comisky &
McCauley LLP in Wilmington, Delaware, the Debtors seek to
establish the corporate structure necessary to pursue
alternative financing scenarios because they need to obtain
additional or supplemental financing not available through the
current vehicle financing structure. Although the Debtors are
not entering into any specific financing arrangements at this
time, and thus Court approval is arguably not required, in an
excess of caution and as part of the Debtors' desire to keep the
Court apprised of their restructuring efforts, the Debtors are
seeking Court approval of their preliminary efforts to obtain
alternative financing.
Prior to the Filing Date, Ms. Fatell relates that the Debtors
financed their vehicle fleet primarily by leasing vehicles from
certain wholly-owned indirect non-debtor subsidiaries, which
financed the acquisition of the fleet through the issuance of
asset-backed commercial paper, asset-backed medium-term notes
and asset-backed auction rate notes, arranged by certain special
purpose subsidiaries of the Debtors. These programs were
financed through ARG Funding Corp., a non-debtor special purpose
entity and a wholly-owned direct subsidiary of Debtors, which
issued medium term "Rental Car Asset Backed Notes", auction rate
notes to the public through private placements, variable funding
notes funded by ANC Rental Funding Corp., an indirect wholly-
owned subsidiary of Debtors, and various bank multi-seller
conduits through the issuance of commercial paper to the public.
Ms. Fatell states that ARG Funding loaned the proceeds of these
securitizations to three special purpose entities: Alamo
Financing, L.P., National Car Rental Financing, L.P., and
CarTemps Financing, L.P. for the purpose of purchasing vehicles.
In exchange for the funds advanced by ARG Funding to each
respective Existing Lessor, each Existing Lessor issued
"Variable Funding Notes" to ARG Funding. As of the Filing Date,
the indebtedness under the Leasing Company Notes was
overcollateralized by approximately 13%. Ms. Fatell explains
that each Existing Lessor used these proceeds and a portion of
its partnership capital to purchase and finance vehicles, which
are leased to Debtors' three operating companies: Alamo Rent-A-
Car, LLC, National Car Rental System, Inc., and Spirit Rent-A-
Car, Inc., d/b/a Alamo Local, each of which are debtors in these
chapter 11 cases. These leasing arrangements between each
Operating Company and each Existing Lessor are governed by
certain Amended and Restated Master Lease Agreements, each dated
as of June 30, 2000.
Ms. Fatell submits that the Operating Companies rent the
vehicles to the public as part of their car rental businesses
and each uses the cash generated from its rental operations to
make the lease payments due to its respective Existing Lessor
special purpose entities. Each Existing Lessor special purpose
entity, in turn, uses the lease payments to make payments due on
the Leasing Company Notes issued to ARG Funding, which then uses
such payments to make payments due to the holders of the medium-
term notes, the variable funding notes, and the auction rate
notes.
Pursuant to certain Insurance Agreements, by and among MBIA
Insurance Corporation, as insurer, ARG Funding, as issuer, and
The Bank of New York, as trustee, Ms. Fatell tells the Court
that MBIA issued certain note guaranty insurance policies, which
guarantee ARG Funding's payments under certain medium-term
notes. In addition, Ambac Assurance Corporation provided the
"insurance wrap" in connection with certain auction rate notes
issued by ARG Funding. The Debtors' bankruptcy filing
constituted an event of default under the Leasing Company Notes
and accordingly, ARG Funding is no longer required to advance
the Existing Lessor any funds to purchase vehicles. Thus far,
MBIA and Ambac have not allowed ARG Funding to advance the
Existing Lessor funds to purchase vehicles, except under
conditions that the Debtors did not find advantageous. Ms.
Fatell says that the Debtor Operating Companies are therefore
unable to lease new vehicles from the Existing Lessor, to the
serious detriment of the Debtors' businesses. Although the
Debtors have had discussions with MBIA and Ambac with respect to
an agreement that would allow the Debtors to continue to use the
Pre-petition Leased Vehicle Financing Program, Ms. Fatell
informs the Court that these discussions have not yet resulted
in an agreement that the Debtors believe would be in the best
interests of their reorganization efforts.
The Debtors believe that the relief requested is necessary to
establish the requisite structural framework from which to
search for an alternative method to finance the Debtors' vehicle
fleet. Ms. Fatell contends that the Alternative Finance
Structure will enable the Debtors to pursue their fleet
financing from a number of alternative sources with the
necessary corporate structure already in place, thus allowing
the Debtors to move quickly to obtain Court approval when
specific financing proposals become available. This process will
ensure that the Debtors' fleet financing is the result of a
competitive process, and that the Debtors are not required to
accept onerous terms to obtain financing under their current
fleet financing structure. Ms. Fatell assures the Court that
Debtors continue to investigate the possibility of obtaining
fleet financing from alternative sources and have determined
that the creation of the Alternative Finance Structure is
necessary to allow the Debtors to pursue the most cost-effective
method to finance their fleet. (ANC Rental Bankruptcy News,
Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900)
AMERICA WEST: Meets 2 Main Conditions for $380M Loan Guarantees
---------------------------------------------------------------
America West Holdings Corporation (NYSE: AWA) announced that the
Air Transportation Stabilization Board (ATSB) has notified the
company that it has satisfied two primary conditions for
approval of approximately $380 million in federal loan
guarantees, paving the way for the company and its subsidiary,
America West Airlines, to close a loan in the amount of $429
million and complete arrangements for more than $600 million in
concessions, financing and financial assistance.
ATSB approval of the loan guarantees was subject to an increase
in the compensation offered to the federal government and a
commitment to control growth in labor costs that could prevent
the company from achieving the goals of its seven-year business
plan.
To resolve the compensation condition, America West has agreed
to issue to the ATSB warrants for the purchase of 18.75 million
shares of the company's Class B common stock at an exercise
price of $3.00 per share. The warrants have an exercise period
of ten years. An additional 3.8 million warrants with the same
terms will be issued to other participants in the loan.
Furthermore, as previously disclosed in America West's 8-K
filing of December 18, 2001, the company will issue
approximately $120 million of seven-year debentures convertible
into shares of America West Class B common stock at a price of
$12.00 as consideration for the concessions provided by aircraft
lessors.
The issuance of warrants and convertible debt will increase the
fully diluted shares outstanding of the company after closing.
The number of fully diluted shares outstanding will vary with
changes in America West's stock price due to the differing
exercise prices of the securities and the treasury stock method
of accounting for warrants and convertible debt in the fully
diluted shares calculation. The company's estimate of shares
outstanding at various future stock prices is shown below:
AWA Stock Price Estimated Fully Diluted Shares
--------------- ------------------------------
$5 43 million
$10 50 million
$15 55 million
$20 60 million
The size of the loan has been reduced from $445 million to $429
million as certain of the lenders having no financial interest
in or exposure to America West (described in the company's press
release dated December 19, 2001) are no longer required to
participate in the transaction.
America West also has reached agreement with the ATSB on a
commitment to control the growth of the airline's labor costs
while the government guarantee is outstanding. The agreement
will not require America West to negotiate wage or benefit
concessions with its employees at this time or seek to amend any
of its existing collective bargaining agreements. Instead,
America West's commitment is tied to projections of unit labor
costs included in the seven-year business plan submitted with
its loan guarantee application. If for any year actual unit
labor costs exceed those included in that plan, America West
will be required to partially prepay the new loan. The annual
unit cost measure will be subject, at the discretion of the
ATSB, to certain allowances for unforeseen circumstances outside
of the company's control such as changes in laws affecting the
airline business, changes in accounting, inflation in excess of
projections and any material reduction in ASMs below those
projected.
The issuance of the debentures and warrants described above
would normally require approval of America West's shareholders
according to the policies of the New York Stock Exchange.
However, the NYSE provides for an exception to the shareholder
approval requirements where the audit committee of a company has
determined that the delay necessary to secure shareholder
approval would seriously jeopardize the financial viability of
the company. The audit committee of America West's board of
directors has made such a determination and expressly approved
America West's omission to seek shareholder approval pursuant to
the NYSE exception. The NYSE has accepted America West's
application of the exception. America West will mail a
notification of the use of the exception to its shareholders
promptly following the closing of the transactions.
With the satisfaction of these conditions, funding is now
contingent upon final negotiation and execution of the loan
documents including the government guarantee and there being no
material adverse change in America West's ability to repay the
loans prior to closing. America West anticipates the
transactions to be closed, and the loan to be funded, later this
week.
AMES DEPT: Working with Panel to Develop Consensual Reorg. Plan
---------------------------------------------------------------
Ames Department Stores, Inc., (OTC: AMESQ) and the statutory
Creditors Committee in its Chapter 11 case announced that they
are working diligently toward the development of a consensual
plan of reorganization that will enable Ames to emerge from
bankruptcy this year.
The joint announcement followed the January 10 meeting of the
Company and the Committee, during which the Committee expressed
satisfaction and confidence with the progress Ames has made to
date operating under Chapter 11, its ability to emerge from
bankruptcy and with the excellent working relationship that has
developed between the Company and the Committee.
Over the last several months Ames has taken a variety of actions
to address its problem areas and to assure its success as a
reorganized entity. Foremost among these has been its decisive
action in closing 151 store locations as well as one
distribution center. The closing of unprofitable stores together
with the contemplated conversion to equity of all of Ames'
obligations to unsecured creditors will contribute significantly
to Ames' restored profitability. As part of its restructuring,
the Company also anticipates that all existing equity will be
cancelled.
Ames also announced the receipt of a proposal from GE Capital to
provide exit financing in connection with the plan of
reorganization. As currently contemplated, a junior lien will be
provided to the vendors that provide trade credit to the Company
after it emerges from reorganization.
The Company has informed the Committee that it is in compliance
with all financial covenants under its DIP lending agreements.
Joseph R. Ettore, Ames' Chairman and Chief Executive Officer,
told the Committee: "Ames has had a successful holiday season in
all respects including sales, gross margins, and earnings. The
Chapter 11 process that started 5 months ago has enabled Ames to
close under-performing stores and streamline operations. It will
also permit the Company to reduce debt and create an attractive
balance sheet so that Ames can excel as a major regional
discounter. We are very pleased by the strong support that some
vendors have already started to provide and look forward to a
strong working relationship with them in the future."
Ames Department Stores, Inc. is a regional, full-line discount
retailer with annual sales over $3 billion. With stores in the
Northeast, Mid-Atlantic and Mid-West, Ames offers value-
conscious shoppers quality, name-brand products across a broad
range of merchandise categories. For more information about
Ames, visit http://www.AmesStores.com or
http://www.AmesStores.com/espanol
DebtTraders reports that Ames Department Stores' 10.000% bonds
due 2006 (AMES1) trade between 1 and 3. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AMES1for
real-time bond pricing.
APPLETON PAPERS: Restructures Senior Management Team for Growth
---------------------------------------------------------------
Doug Buth, Appleton Papers' chief executive officer, has
announced new management responsibilities aimed at continuing
the company's success in its existing businesses and enabling
growth in new products and businesses. Buth said the moves will
bring unique talents and fresh perspectives to some of the
company's major functions while broadening the management
experience and responsibilities of the individuals involved.
Ann Whalen will serve as vice president of Project Venture.
Project Venture is the company's name for its efforts to install
a new computer software system designed optimize the company's
current business as well as expand its capabilities to achieve
growth.
Whalen has been serving as vice president of logistics since
1999 and has been responsible for the company's manufacturing
planning, distribution and customer service functions. Those
functions are among the areas most affected by the new systems
installation that is part of Project Venture. Whalen joined
Appleton Papers in 1981 and has served in several financial
management positions including corporate controller and vice
president of finance.
Rick Fantini has been named vice president of operations. He
will be responsible for the company's logistics, manufacturing
and procurement functions. Fantini has been serving as vice
president of human resources and procurement since 1998. He
joined Appleton Papers in 1980 and has held management positions
in labor relations and benefits, business development and
planning, and procurement.
Fantini assumes responsibility for the company's manufacturing
operations from Jerry Wallace, executive vice president of
operations. Wallace will retire from the company date Feb. 1.
Wallace joined Appleton Papers in 1979 and served as Roaring
Spring Mill manager, thermal business unit manager, vice
president of research and development and executive vice
president and general manager of thermal business.
Paul Karch has been named vice president of human resources and
law. He has been serving as vice president of law and public
affairs as well as Appleton Papers' secretary and general
counsel. He will retain his management responsibility for those
functions and add responsibility for human resources. Karch
also serves on the Appleton Papers board of directors. Karch
joined Appleton Papers in 1994 after working for 10 years as a
partner in a private law practice.
Jim McDermott, vice president of carbonless sales, will assume
executive management responsibility for carbonless marketing and
serve as vice president of carbonless sales and marketing.
McDermott joined Appleton Papers in 1986 and has held various
field sales and sales management positions with the company.
Appleton Papers is an employee-owned company headquartered in
Appleton, Wisconsin. The company is the world's largest
producer of carbonless paper and the sole producer of the NCR
PAPER* brand of carbonless paper. Appleton Papers is also the
leading U.S. producer of thermal paper that the company markets
as its OPTIMA(R) brand, and a premier producer of specialty
coated products. The company has manufacturing operations in
Wis., Ohio, and Pa. and employs approximately 2,500 people.
* NCR PAPER is a registered trademark licensed to Appleton
Papers.
* * *
As reported in the Dec. 13, 2001, edition of Troubled Company
Reporter, Standard & Poor's assigned its single-'B'-plus rating
to Appleton Papers Inc.'s $250 million senior subordinated notes
due 2008 to be issued under Rule 144A with registration rights.
ARCH WIRELESS: Files Creditors-Backed Joint Reorganization Plan
---------------------------------------------------------------
Arch Wireless, Inc. (OTC Bulletin Board: ARCH), a leading
provider of two-way wireless messaging and mobile information,
announced that it filed a joint plan of reorganization for
itself and its wholly owned subsidiaries with the United States
Bankruptcy Court, District of Massachusetts, Western Division in
connection with their Chapter 11 petitions filed on December 6,
2001. The company and its subsidiaries anticipate filing a
Disclosure Statement relating to the Joint Plan by January 18,
2002.
Arch continues to operate in the normal course of business
during the reorganization proceeding.
Arch said the Joint Plan implements the terms of its previously
announced restructuring agreement with a majority of the
company's secured creditors. Under terms of the Joint Plan, Arch
Wireless, Inc., would issue new common stock and Arch Wireless
Holdings, Inc., the operating subsidiary of AWI, would issue
$200 million principal amount of 10% Senior Secured Notes due
2007 and $100 million principal amount of 12% Senior
Subordinated Secured PIK Notes due 2009 in full satisfaction,
release, discharge and cancellation of all existing debt
obligations and equity securities of Arch and its subsidiaries.
Among the 21 Arch entities included in the Chapter 11 filing
are: Arch Wireless, Inc., the parent company; Arch Wireless
Communications, Inc., a wholly owned subsidiary and intermediate
holding company which is the obligor on a portion of the
company's debt; Arch Wireless Holdings, Inc., a wholly-owned
subsidiary and the operating entity through which AWI conducts
the majority of its business; and the direct and indirect
subsidiaries of AWHI and certain other direct subsidiaries of
Arch Wireless, Inc.
Arch Wireless, Inc., headquartered in Westborough, Mass., is a
leading two-way wireless Internet messaging and mobile
information company with operations throughout the United
States. The company offers a full range of wireless services to
both business and retail customers, including wireless e- mail,
two-way wireless messaging and mobile data, and paging through
three regional divisions. Arch provides wireless services to
customers in all 50 states, the District of Columbia, Puerto
Rico, Canada, Mexico and in the Caribbean. Additional
information on Arch Wireless is available on the Internet at
http://www.arch.com
ARMSTRONG HOLDINGS: Bar Date for IRS Claims Extended to March 29
----------------------------------------------------------------
Armstrong Holdings, Inc., and its debtor-affiliates present
Judge Newsome with a second stipulation and order agreeing to
extend the bar date for filing proofs of claim by the Internal
Revenue Service to and including March 29, 2002. The reason
given is that the IRS is currently conducting an examination of
the Debtors' corporate income tax returns for the years 1997,
1998 and 1999. The Debtors say that the IRS was not able to
complete the examination by December 31, 2001, and thus,
requested a further extension.
Judge Newsome promptly signs the Order approving and
implementing the stipulation. (Armstrong Bankruptcy News, Issue
No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900)
AUDIO VISUAL SERVICES: 2001 Net Loss Remains in $55MM Territory
---------------------------------------------------------------
For the twelve months ended September 30, 2001 compared to the
twelve months ended September 30, 2000, Audio Visual Services
Corporation saw total revenue of $396.2 million and $420.4
million, respectively, excluding interdivision revenue of $7.9
million and $6.4 million in each year. The total decrease in
revenue from the prior year was $24.2 million, of which
approximately half of the decline occurred during the month of
September as a result of the events of September 11th. The
Company's Presentation Services division recognized $302.6
million of revenue during the twelve months ended September 30,
2001 compared with revenue of $314.2 million during the twelve
months ended September 30, 2000, a decrease of $11.6 million,
or 3.7%. The decrease is primarily attributable to lower
revenues being generated from existing properties ("same-store")
in the twelve months ended September 30, 2001 as compared with
the same period in 2000. The decrease in same-store revenues
resulted from the slowing economy, compounded by the events of
September 11, which caused the level of business meetings to
significantly decline, directly impacting the need for
audiovisual equipment rental services. The decrease in
revenues from same-store properties was partially offset by the
benefit of revenues derived from new hotel properties. Revenue
of the Company's Audio Visual Headquarters division also
decreased by approximately $11.3 million, or 9.9%, to $101.4
million for the twelve months ended September 30, 2001 from
$112.6 million for the twelve months ended September 30, 2000
primarily as a result of the impact of the economic downturn,
the events of September 11th and the discontinuance of
unprofitable business from the prior year.
Consolidated gross profit was $52.9 million for the twelve
months ended September 30, 2001, a decrease of $13.1 million
from $66.0 million reported for the twelve months ended
September 30, 2000. The gross profit of the Presentation
Services division decreased by approximately $13.4 million
during the twelve months ended September 30, 2001 due to the
loss of revenues caused by the current economic conditions as
well as higher commission rates paid to hotel properties and
salary costs. Gross profit of the Audio Visual Headquarters
division for the twelve months ended September 30, 2001 was
$9.8 million compared with $12.6 million in the prior year,
primarily due to the revenue shortfall described above. The
consolidated gross profit on revenue was also impacted by $26.0
million and $22.8 for the twelve months ended September 30,
2001 and 2000, respectively, of depreciation expense related to
rental equipment used in the audio visual services businesses.
Such depreciation expense is included in cost of revenue. In
addition, $4.7 million related to fixed asset write-offs was
included in cost of revenue during the twelve months ended
September 30, 2000. To date, the Company has continued to
monitor and reduce its overall cost structure; however, the
benefit of such efforts is not evident in the results of
operations for the twelve months ended September 30, 2001 due
to the revenue shortfall.
The Company realized a net loss from continuing operations of
$55.6 million in the twelve months ended September 30, 2001
compared to a net loss from continuing operations of $55.4
million in the twelve months ended September 30, 2000.
Audio Visual Services (AVS, formerly Caribiner International)
rents and sells audiovisual equipment and provides staging and
meeting services. In addition, AVS works with major hotel chains
to provide audiovisual and staging services for their
conferences. Customers include Doubletree, Hilton, Holiday Inn,
and Hyatt. As part of an effort to pay down debt, AVS sold its
events unit -- trade show exhibits, business meetings, training
programs, and events for corporate clients around the world --
to ad giant Interpublic Group. Warburg, Pincus Investors owns
about 27% of the company. The company filed for Chapter 11
Reorganization on December 17, 2001 in the U.S. Bankruptcy Court
for the Southern District of New York. Representing the company
in this bankruptcy case is James M. Peck, Esq., of Schulte Roth
& Zabel LLP 919 Third Avenue, New York, New York 10022 (212)
756-2000.
BETHLEHEM STEEL: Chicago Cold Gets Nod to Use Cash Collateral
-------------------------------------------------------------
In his final order, Judge Lifland authorizes Chicago Cold
Rolling, nunc pro tunc to the Petition Date, to use the Cash
Collateral in the ordinary course for paying only the operating
and other expenses in the amounts shown on budgets approved by
the Agent on a monthly basis, and for paying any and all fees
owed to the United States Trustee arising under 28 U.S.C.
section 1930(a)(6).
Judge Lifland emphasizes that Chicago Cold Rolling is not
authorized to use the Cash Collateral without the further
written consent of the Agent, or unless Chicago Cold Rolling is
authorized by the Court after notice and a hearing.
If Bethlehem Steel Corporation or Chicago Cold Rolling violates
the terms of this order, Judge Lifland warns that Chicago Cold
Rolling's authority to use the Cash Collateral shall immediately
cease, without further action by the Agent or the Lenders or
order of this Court, unless the continued use of Cash Collateral
is otherwise agreed to in writing by the Agent or is authorized
by the Court after notice and a hearing.
As adequate protection of the Agent's and the Lenders' interests
in the Pre-petition Collateral, including in regard to the use
of the Cash Collateral, and the use, sale, lease, depreciation,
or diminution in value of the Pre-petition Collateral and the
Cash Collateral from and after the Petition Date, and the
imposition of the automatic stay -- the Court rules that:
(i) the Agent and the Lenders are granted, nunc pro tunc to
the Petition Date to secure payment of the Existing
Obligations in an amount equal to the aggregate
diminution in value, if any, of the Pre-petition
Collateral and the use of Cash Collateral:
(x) a valid, binding, priming, first priority and
perfected security interest and lien, in all of
Chicago Cold Rolling's real and personal property,
including, without limitation, Chicago Cold
Rolling's accounts receivable, inventory, deposit
accounts, and the Cash Collateral Account whether
created or acquired before or after the Petition
Date, and the proceeds and product of all of the
foregoing, but excluding any recoveries under
sections 544, 545, 547, 548 and 553 of the
Bankruptcy Code; and
(y) a superpriority claim against Chicago Cold Rolling
with priority over all claims against Chicago Cold
Rolling under sections 503(b) and 507(a) of the Code
(provided, however, that such superpriority claim
shall be subject to any claim of a Chapter 7 trustee
under section 503(b) of the Code incurred after
conversion of Chicago Cold Rolling's case to Chapter
7), including a superpriority claim as contemplated
by section 507(b) of the Code;
(ii) Chicago Cold Rolling shall pay the Agent, on a monthly
basis, in arrears, all accrued and outstanding interest
in respect of the Existing Obligations pursuant to the
terms of the Loan Documents, whether accrued prior to
the Petition Date or after;
(iii) Chicago Cold Rolling shall pay or reimburse the Agent
and the Lenders, on a current basis, the Agent's
administrative fees, and the reasonable attorneys' fees
and expenses incurred by the Agent and the Lenders
(including any unpaid pre-petition fees and expenses) in
connection with matters relating to the Loan Documents,
the monitoring of these cases, or the enforcement and
protection of rights and interests of the Agent and the
Lenders; and
(iv) Chicago Cold Rolling is authorized to and shall allow
the remittance of the approximate sum of $34,000,
currently held in escrow by counsel for the Agent
pursuant to pre-petition agreements, to the Lenders for
application to principal amounts outstanding.
Furthermore, the Court directs Chicago Cold Rolling to deposit
all Cash Collateral, which it collects from and after the
Petition Date, into the accounts with the Agent established
pursuant to the terms of that certain Deposit Account Agreement
dated as of March 14, 1996 between Chicago Cold Rolling and the
Agent. "Chicago Cold Rolling shall be authorized to use funds
from the Cash Collateral Account only pursuant to the terms of
this Order, or with the Agent's and the Lenders' prior consent,
or with the approval of this Court after notice and a hearing,"
Judge Lifland emphasizes. In addition, the Court states that
the Agent and the Lenders shall have a first priority, perfected
lien on all amounts in the Cash Collateral Account to secure all
amounts owed to the Agent and the Lenders by Chicago Cold
Rolling.
As additional adequate protection, Judge Lifland also orders
Chicago Cold Rolling to furnish to the Agent and the Lenders:
(i) such information as may be required under the terms of the
Loan Documents, and when required under the terms of the
Loan Documents,
(ii) such information as may be reasonably requested by the
Agent and the Lenders, regarding Chicago Cold Rolling's
sales, cash receipts, accounts receivable, inventory, and
similar information,
(iii) a monthly reconciliation of each Approved Budget by the
tenth day of the month following each monthly period of
each Approved Budget, and
(iv) copies of financial reports filed with the Office of the
United States Trustee when filed.
Moreover, Judge Lifland instructs Chicago Cold Rolling to allow
the Agent's and the Lenders' representatives to access its
books, records and properties during ordinary business hours
upon notice as is reasonable under the circumstances.
In the event that any of the Debtors breach, violate, are in
default of, or fail to comply with the terms of this Order,
Judge Lifland declares that the Agent and the Lenders shall be
granted relief from the automatic stay and they may exercise all
of their rights and remedies against the Pre-petition
Collateral, the Cash Collateral, the Cash Collateral Account,
and the Post-petition Collateral, without further order of this
Court, provided, however, that the Agent shall give five
business days written notice to Chicago Cold Rolling, Bethlehem
Steel Corporation, the DIP Agent, the Pre-petition Agent and the
Committee before exercising such rights and remedies. (Bethlehem
Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
BOSTON CHICKEN: Trustee Wants to Stop Securing Withdrawal Certs.
----------------------------------------------------------------
Gerald K. Smith, the Boston Market Plan Trustee wants the U.S.
Bankruptcy Court for the District of Arizona to allow him to
cease obtaining certificates withdrawing authority of Boston
Chicken, Inc., and related entities to transact business in
various states.
The Third Amended Plan of reorganization says that BCI entities
"shall not continue to exist . . . as separate legal entities"
and are dissolved after the May 26, 2000 Effective date of the
Plan. Since the legal dissolution of Boston Chicken, Inc. and
its related entities, the Plan Trustee requested that various
states issue certificates withdrawing authority for the
dissolved entities to transact business in the particular
states.
Many states refused to perform the administrative function of
issuing the withdrawal certificates unless all corporate and
annual reports are filed, tax clearance letters are obtained and
the lengthy applications for withdrawal are presented. The
Trustee sees this request as burdensome and an inefficient use
of the Plan Trustee's limited resources.
If the uncooperative States object to the Trustee's motion, they
have until January 31, 2002, to interpose any objections. If
there are any objections, a hearing will be held on February 12,
2002 at the U.S. Bankruptcy Court, 2929 North Central Avenue,
10th Floor, Courtroom 6, Phoenix, Arizona.
BRIDGE: Court Okays Transfer of DFS Proceeds to Cash Collateral
---------------------------------------------------------------
After reviewing the Stipulation - together with its amendments,
Judge McDonald puts his stamp of approval of the agreement. The
Amended Stipulation has these added provisions:
(3) The sum of $27,500,000 of the DFS Proceeds shall
immediately be transferred to Bridge Information Systems,
Inc.'s Cash Collateral Account and shall be thereafter be
deemed the Lenders' Cash Collateral (subject to
disgorgement in the event of Termination to be used to pay
administrative expenses of the Debtors to the extent
provided for in the Budget and/or as may be required to be
paid pursuant to the Plan (provided that such expenditures
are consistent with the amounts set forth on the Budget),
under the same terms and conditions as provided for the
use of Cash Collateral in the Final DIP Order.
(4) The remaining amount of the DFS Proceeds shall remain in
the DFS Proceeds Account pending further court order
and/or confirmation of the Debtors' Joint Plan of
Liquidation, provided, however, that in the event any
priority tax claims are ultimately allowed in these cases,
such allowed priority tax claims shall be paid out of
Lenders' Cash Collateral and a sum equal to 12% of such
amount shall be paid to the Debtors' Cash Collateral
Account from the Remaining DFS Proceeds as additional
Expense Reimbursement amounts and shall become the
Lenders' Cash Collateral. Except for certain conditions,
the Lenders waive and release any and all rights,
remedies, liens, replacement liens, security interests,
priority claims or other claims, rights or interests in
and to the Remaining DFS Proceeds whether currently
asserted or unasserted, provided, however, that such
waivers and releases shall be of no force and effect upon
Termination.
(5) The Lenders and the Committee agree to use their best
efforts to obtain confirmation of the Plan provided that
it contains at least these provisions:
(i) that the Remaining DFS Proceeds shall be deposited
into a liquidating trust for distribution to
unsecured creditors (including the unsecured
deficiency claim of the Lenders) of Consolidated
Bridge Subsidiary Debtors),
(ii) that the Debtors' estates shall release the Agents,
the Lenders and their affiliates with respect to any
and all claims and liabilities including, without
limitation, avoidance actions, provided, however,
that no Releases or other waivers shall be granted
in favor of Welsh, Carson, Anderson & Stowe; WCA
Management Corporation; Welsh, Carson, Anderson &
Stowe VI, LP, Welsh, Carson, Anderson & Stowe VII
LP; Welsh, Carson, Anderson & Stowe VIII LP; Welsh,
Carson, Anderson & Stowe IX LP, WCAS Capital
Partners II LP, or any affiliate, related entity or
assignee of the WCAS Entities;
(iii) that the Consolidated Bridge Subsidiary Debtors
shall be substantively consolidated with one another
exclusive of other Debtors, subsidiaries or
affiliates, and
(iv) that the Lenders waive and release all right, title,
interest, and/or claim in and to avoidance actions
held by the Consolidated Bridge Subsidiary Debtors
(except to the extent that they are entitled to
receive a distribution of proceeds as the holders of
allowed unsecured claims).
In the event that the amount of unsecured claims estimated
by the Court as of the Effective Date to be allowable
against Consolidated Bridge Subsidiary Debtors exceed
$200,000,000 in the aggregate (excluding priority tax
claims and the unsecured deficiency claims of the
Lenders), the Lenders shall not be bound to support the
provision of the Plan described in subparagraph 5(iii).
(6) Among other things, the DFS Proceeds and the Diminution
Claims shall be undone, annulled and terminated in the
event that:
(i) the Plan or any other plan of reorganization or
liquidation does not contain:
(a) the Releases, or
(b) the waivers and releases described in
subparagraph 5(iii),
(ii) the Plan has a material adverse impact on the
rights and claims of the Lenders (after taking into
account the effect of this Stipulation), or
(iii) another plan of liquidation or reorganization
prosecuted by someone other than the Debtors is
confirmed.
Notwithstanding the occurrence of a Termination Event,
Termination shall not be deemed to occur unless and until
delivery of written notice of the occurrence of a
Termination Event and of the intent to effect Termination
to the Debtors and the Committee or the Lenders and the
Debtors by:
(x) the Agents (upon vote of the Required Lenders) in the
case of the Termination Events described in
subparagraphs 6(i)(a), (ii), and (iii), or
(y) the Committee (upon vote of a majority in number) in
the case of the Termination Event described in
6(i)(b).
In the event of a Termination Notice, Termination shall
occur on a date that is three days after the date of the
notice of a Termination Event.
(7) In the event of a Termination, the Expense Reimbursement,
together with any interest accruing, shall be repaid to
the DFS Proceeds Account and the waivers and releases by
the Lenders with respect to the DFS Proceeds shall be of
no force and effect. Until the Effective Date of the
Plan, sufficient reserves of Cash Collateral will be
retained by the Debtors to pay any obligation of the
Lenders and/or the Debtors to reimburse the Expense
Reimbursement to the DFS Proceeds Account upon
Termination.
(8) The Pre-petition Lenders' total claim against those of the
Debtors' estate that are either a primary obligor or
guarantor of the Pre-Petition Obligations is hereby
allowed in the aggregate amount of $743,914,462, subject
to reduction if, and only to the extent that:
(a) no obligations are funded under any undrawn and no
longer outstanding letters of credit included in the
Pre-Petition Lenders' Claim, or
(b) the parties reach agreement with respect to, or the
Court requires a reduction in, the asserted fees
included in the Pre-Petition Lenders' Claim.
This stipulation is not intended to waive, release or
alter in any way, the Lenders' right to participate in
distributions in these cases on behalf of either their
allowed secured claims or allowed unsecured claims.
BUDGET:
Estate U.S. Cash Flow Forecast
Week Ending October 21, 2001 to January 2002
Operating Receipts
A/R Collections 29,000,000
Interest 390,000
----------------
Total Operating Receipts 29,390,000
Operating Disbursements
Employee - Payroll & Taxes 834,000
Employee - Commissions 117,000
Employee - Other 3,838,000
General & Administrative 795,000
Professional Fees 16,911,000
Facilities Related 114,000
Customer Exchange Fees 7,474,000
Optional Services 5,681,000
Data Acquisition 5,863,000
Technology 3,105,000
Sales and Use Taxes 1,105,000
International and Other
Miscellaneous Disbursements 372,000
----------------
Total Operating Disbursements $46,130,000
Non-operating Disbursements
Capital Expenditures 47,000
----------------
Total 47,000
Disbursements $46,177,000
Operating Cash Inflow (Outflow) (16,787,000)
Beginning Cash Balance 79,149,000
----------------
Operating Cash Inflow (Outflow) (16,787,000)
----------------
Ending Cash Balance 62,362,000
----------------
(Bridge Bankruptcy News, Issue No. 24; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
CALICO COMMERCE: Integral Capital Reports 3.57% Equity Interest
---------------------------------------------------------------
Integral Capital Management III, L.P., a Delaware limited
partnership, beneficially owns 1,262,182 shares of the
outstanding common stock of Calico Commerce,Inc. Of this amount
1,024,638 shares are directly owned by Integral Capital Partners
III, L.P. and 237,544 shares are directly owned by Integral
Capital Partners International III, L.P., a Cayman Island
exempted limited partnership. Integral Capital Management III,
L.P. is the general partner of Integral Capital Partners III,
L.P. and the investment general partner of Integral Capital
Partners International III, L.P. The latter two share voting
and dispositive powers. The aggregate total of shares held
represent 3.57% of the outstanding common stock of Calico
Commerce, Inc. Integral Capital Partners III, L.P.'s ownership
amounts to 2.90%, while 0.67% of the outstanding common stock is
owned by Integral Capital Partners International III, L.P.
Integral Capital Management III, L.P.'s ownership is indirect
and beneficial only. The shares have been purchased by Integral
Capital Partners III, L.P. and Integral Capital Partners
International III, L.P. Management of the business affairs of
Integral Capital Managment III, L.P., including decisions
respecting disposition and/or voting of the shares, resides in a
majority of the general partners or managers of Integral Capital
Managment III, L.P. such that no single general partner of
Integral Capital Management III, L.P. has voting and/or
dispositive power of the shares.
Calico Commerce, Inc. (OTCBB:CLIC) is a provider of
interactiveselling software for organizations selling complex
products orservices. As reported in the Dec. 17, 2001 edition of
Troubled Company Reporter, Calico Commerce is considering filing
for reorganization under Chapter 11 of the U.S. Bankruptcy Code
to sell assets to PeopleSoft, Inc., the leading provider of
collaborative enterprise software.
CHIQUITA BRANDS: Wins Court Nod to Hire BMC as Claims Agents
------------------------------------------------------------
Chiquita Brands International, Inc., and its debtor-affiliates
obtained authorization from Judge Aug to retain Bankruptcy
Management Corporation as claims & notice agent.
The Debtor will pay Bankruptcy Management's fees and expenses
upon the submission of monthly invoices summarizing, in
reasonable detail, the services for which compensation is
sought. (Chiquita Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
COSERV TELECOM: Wants to Accept Bids for Assets Until Feb. 11
-------------------------------------------------------------
CoServ Telecom Holdings, L.P., announced that it has filed a
motion in U.S. Bankruptcy Court setting a deadline of February
11, 2002, for potential purchasers of its telephone and cable
companies. CoServ's motion also sets February 14, 2002, as the
date for the auction to determine the successful bidder. The
motion is expected to be approved during a scheduled January 25
hearing.
A copy of the motion can be found on the website of CoServ's
legal counsel, Gardere Wynne Sewell LLP, at
http://www.gardere.com/Bankruptcy/listcases.asp
"We initiated the Chapter 11 reorganization in order to continue
providing high levels of service to our customers as we sought a
buyer who will operate the telephone and cable companies with
our same customer service focus," said Jim Chism, division
president of CoServ Communications. "At that time, we noted that
we had received inquiries from interested buyers. In fact,
numerous prospective purchasers have indicated a strong interest
in these companies, and many are currently conducting due
diligence. The bid-auction process overseen by the court is a
fair and expedient way to conclude the sale of these companies."
On November 30, 2001, CoServ sought Chapter 11 protection for
its telephone and cable companies. On December 20, 2001, CoServ
Telecom Holdings announced it had secured Debtor-in-Possession
financing from National Rural Utilities Cooperative Finance
Corporation in the amount of $5.4 million.
For nearly 65 years, CoServ Electric has provided dependable,
affordable electric power to thousands of customers in the North
Texas area. In 1998, the company expanded both its service area
and its service offerings to include a broad range of services.
Further information on CoServ Communications is accessible at
http://www.coservcom.comand further information on CoServ
Electric is accessible at http://www.coserv.com
EMERITUS: Restructures 3 Management Pacts to Buy 44 Communities
---------------------------------------------------------------
Emeritus Assisted Living, (AMEX:ESC) (Emeritus Corporation), a
national provider of assisted living and related services to
senior citizens, announced the restructure and extension of
three agreements covering the management and option to purchase
44 communities.
The three management agreements constitute the 25 communities
referred to as "Emeritrust I" in the company's quarterly filings
(Form 10-Q), the 14 communities referred to as "Emeritrust II",
and the 5 Communities referred to as "Emeritrust II
Development." The amendments allow for Emeritus to extend its
management and purchase options of the communities until June
2003. Emeritus will continue to receive its performance-based
management fee.
"Our continued incremental improvement in operations allows us
to negotiate needed extensions with our critical partners,"
stated Ray Brandstrom, C.F.O. "This extension is intended to
give us time to complete our strategies of rate enhancement and
operational efficiencies needed to warrant exercising our
purchase options related to these three portfolios."
Emeritus Assisted Living is a national provider of assisted
living and related services to seniors. The Company is one of
the largest developers and operators of freestanding assisted
living communities throughout the United States. The Company
also participates in a joint venture to develop assisted living
communities in Japan. These communities provide a residential
housing alternative for senior citizens who need help with the
activities of daily living with an emphasis on assistance with
personal care services to provide residents with an opportunity
for support in the aging process. The Company currently holds
interests in 152 communities representing capacity for
approximately 13,900 residents in 30 states and Japan. As of
September 30, 2001, the company's balance sheet recorded a total
stockholders' equity deficit of close to $50 million. It also
posted a working capital deficit of around $80 million, as of
the same date.
The Company's common stock is traded on the American Stock
Exchange under the symbol ESC, and its home page can be found on
the Internet at http://www.emeritus.com
ENRON CORP: Brings In Skadden Arps as Special Bankruptcy Counsel
----------------------------------------------------------------
Enron Corporation and its debtor-affiliates want to employ and
retain Skadden, Arps, Slate, Meagher & Flom as their special
counsel in connection with their chapter 11 cases, nunc pro tunc
to the Petition Date.
James V. Derrick, Jr., tells the Court that the Debtors have
selected Skadden, Arps as special counsel because the firm has
represented Enron Corporation and certain of its affiliates and
subsidiaries for more than 15 years in connection with certain
corporate, financing, litigation and arbitration, securities,
tax, and other significant matters, including assistance with
energy projects throughout the world. Clearly, Mr. Derrick
notes, Skadden, Arps is experienced and knowledgeable about the
Debtors and its businesses. The Debtors contend that the
continued representation by Skadden, Arps will cause the least
disruption to the Debtors' business. According to Mr. Derrick,
Skadden, Arps will coordinate and assist Weil, Gotshal & Manges
LLP -- the Debtors' General Counsel -- to avoid duplication of
services.
The Debtors want Skadden, Arps to render these services:
(a) Advising the Debtors and assisting the General Counsel in
connection with any contemplated sales of assets or business
combinations as shall arise from time to time assigned by t
the Debtors to, and accepted by, Skadden, Arps, including
the negotiation of asset, stock purchase, merger or joint
venture agreements, the formulation and implementation of
bidding procedures, the evaluation of competing offers, the
drafting of appropriate corporate documents with respect to
the proposed sales, and counseling the Debtors in connection
with the closing of such sales;
(b) Advising the Debtors on matters relating to the
renegotiation of the business affairs, contracts and
relationships of Enron Corp's affiliates and/or subsidiaries
with particular attention to affiliate relationships,
project contracts and the restructuring of various financing
arrangements relating to foreign energy projects and other
advice related thereto;
(c) Advising the Debtors and assisting General Counsel in
drafting a disclosure statement accompanying a plan of
reorganization with respect to the Engagement matters;
(d) Providing non-bankruptcy advice to the Debtors:
(i) with respect to foreign energy projects;
(ii) through its Board of Directors and executive
management in coordination with General Counsel, with
respect to legal matters arising in or relating to the
Debtors' ordinary course of business including
attendance at senior management meetings, meetings
with the Debtors' financial and turnaround advisors,
and meetings of the Board of Directors; and
(iii) with respect to such other matters as the Debtors and
General Counsel deem appropriate under the
circumstances;
(e) Representing the Debtors in connection with specific
investigations or regulatory matters involving any branches
and/or agencies of the United States Government (including
by way of illustration only, hearings and/or investigations
initiated by the United States Congress, the Federal Energy
Regulatory Commission, the Securities and Exchange
Commission, and the Department of Justice), as well as such
matters involving any foreign or domestic state or local
governmental entity;
(f) Representing the Debtors in any litigation or arbitration
matters in which Skadden, Arps has appeared as of the
commencement of the chapter 11 cases, and such other matters
as shall arise from time to time assigned by the Company to,
and accepted by, Skadden, Arps;
(g) Attending meetings with third parties and participating in
negotiations with respect to the above matters;
(h) Appearing before the Bankruptcy Court, any district or
appellate courts, and the U.S. Trustee with respect to the
matters referred to above; and
(i) Performing the full range of services normally associated
with matters such as those identified above as the Debtors'
special counsel, which the Firm is in a position to provide.
In return for these services, Mr. Derrick says, the Engagement
Agreement provides for the implementation of a retainer program,
pursuant to which the Debtors paid a retainer of $1,000,000 on
November 30,200l for professional services to be rendered and
charges and disbursements to be incurred on behalf of the
Company by Skadden, Arps in connection with those services.
Pursuant to the Engagement Agreement, Mr. Derrick relates,
Skadden, Arps and the Debtors agreed that the Retainer would be
used to pay statements rendered by Skadden, Arps and
professional services rendered and charges and disbursements
incurred during the month of November 2001, and for future
professional services to be rendered and charges and
disbursements to be incurred. Accordingly, Mr. Derrick notes,
Skadden, Arps has applied the Retainer in the aggregate amount
of $943,012 to pay statements rendered by Skadden, Arps and
professional services rendered and charges and disbursements
incurred during the month of November 2001, and after
application of such amount, the amount of the remaining Retainer
was $56,988. As a result of the timing of the filing of the
chapter 11 petitions, Mr. Derrick remarks, the Filing Retainer
contemplated by the Engagement Agreement was never negotiated or
paid.
Skadden member John Wm. Butler, Jr., Esq., informs Judge
Gonzalez that based on their books and records, the firm
received payment from the Debtors of $3,928,429 for professional
services rendered and for charges and disbursements incurred by
Skadden, Arps during the year prior to Petition Date. During
the same one-year period, Mr. Butler continues, Skadden, Arps
billed the Debtors the amount of $4,437,147 for professional
services rendered and for charges and disbursements.
Prior to the Petition Date, Mr. Butler relates, Skadden, Arps
submitted invoices to the Debtors in the ordinary course of
business for professional fees and expenses. Pursuant to the
Engagement Agreement, Mr. Butler says, Skadden, Arps will
provide the Debtors with periodic (not less frequently than
monthly) statements for services rendered and the charges and
disbursements incurred. During the course of reorganization, Mr.
Butler advises the Court that the issuance of periodic
statements shall constitute a request for an interim payment
against the reasonable fee to be determined at the conclusion of
the representation. For professional services, Mr. Butler adds,
Skadden, Arps' fees are based in part on its guideline hourly
rates, which are periodically adjusted. Furthermore, Mr. Butler
explains, Skadden, Arps will be providing professional services
to the Debtors under its bundled rate schedules and, therefore,
the firm will not be seeking to be separately compensated for
certain staff and clerical personnel who also record time spent
working on matters. Presently, the hourly rates under the
bundled rate structure range from:
$480 to $695 for partners and of counsel
$230 to $470 for counsel, special counsel and associates
$80 to $160 for legal assistants and support staff
Mr. Butler explains that the hourly rates are subject to
periodic increases in the normal course of the firm's business,
often due to the increased experience of the particular
professional.
According to Mr. Butler, Skadden, Arps intends to apply to the
Court for allowance of compensation for professional services
rendered and reimbursement of expenses incurred in these chapter
11 cases in accordance with applicable provisions of the
Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the
Local Bankruptcy Rules and Orders of this Court. "Skadden, Arps
will seek compensation for the services of each attorney and
paraprofessional acting on behalf of the Debtors in these cases
at the then-current standard bundled rate charged for such
services on a non-bankruptcy matter," Mr. Butler states.
However, Mr. Butler says, certain charges are not separately
charged for under the bundled rate structure. Consistent with
the firm's policy with respect to its other clients, Mr. Butler
relates that Skadden, Arps will continue to charge the Debtors
for all other services. These charges and disbursements
include, among other things, costs for telephone charges,
photocopying (at a reduced rate of 10 cents per page), travel,
business meals (but not overtime meals), computerized research,
messengers, couriers, postage, witness fees and other fees
related to trials and hearings.
With the Debtors' prior consent, Mr. Derrick informs Judge
Gonzalez that Skadden, Arps also represents various entities in
which the Debtors or their non-Debtor affiliates had or have an
ownership or other interest including:
(a) Azurix Corporation, a non-Debtor Enron affiliate, in
connection with a proposed asset disposition;
(b) Dabhol Power Company, a non-Debtor Enron affiliate, in
connection with a power project in India;
(c) EOG Resources, Inc., a former Enron affiliate, in
connection with tax and other advice;
(d) Portland General Electric Company, a non-Debtor Enron
affiliate, in connection with various regulatory
matters, corporate and transactional advice; and
(e) Smith Enron Cogeneration Limited Partnership, a non-
Debtor Enron affiliate, on various project matters.
Mr. Derrick relates that Skadden, Arps proposes to continue
these engagement activities and to represent these entities for
their own financial account on future engagement matters, except
that the scope of engagement on behalf of these entities will
exclude any involvement on their behalf with respect to inter-
company matters on a basis adverse to the Debtors' chapter 11
cases or any chapter 11 case or similar proceeding commenced on
behalf of or against any of the Debtors' other subsidiaries or
in connection with any matter that is the subject of Skadden,
Arps' retention on behalf of the Debtors in these chapter 11
cases.
Although Skadden, Arps is not required to comply with any of the
"disinterestedness" criteria, Mr. Butler assures the Court that
neither Skadden, Arps nor any attorney at the Firm holds or
represents an interest adverse to the Debtors or the estates
with respect to the matters on which Skadden, Arps is to be
retained, except that:
(a) certain attorneys hold preferred stock and/or common stock
of Enron,
(b) one attorney was a former employee of Enron over 10 years
ago and holds a vested interest in a qualified retirement
plan of Enron, and
(c) one attorney is a director of JP Morgan Chase and Exxon
Mobil, each of which are listed as creditors of the
Debtors.
Moreover, Mr. Butler admits that the firm may have represented
certain parties-in-interest in these cases but many those
representations consist of episodic transactional matters -
which will not affect Skadden, Arps' representation of the
Debtors. In addition, Mr. Butler says, Skadden, Arps and the
Debtors agreed that Skadden, Arps would not represent, without
the Company's specific prior approval, another client:
(a) in litigation or arbitration matters where either of the
Debtors is a named party on a basis that is directly
adverse to the Debtors, or
(b) seeking to acquire influence or control over the Debtors
or seeking to acquire assets from the Debtors. (Enron
Bankruptcy News, Issue No. 8; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ENRON: Says UBS Warburg Pact First Step Towards Reorganization
--------------------------------------------------------------
Enron and UBS Warburg, the investment banking group of UBS, AG,
have agreed to a deal for Enron's North American Gas and
electric trading operation that entitles Enron to one-third of
the profits generated by the new AA+ rated trading entity.
"This is an extremely positive deal for Enron and its creditors
that confirms the substantial value of Enron's trading
operation," said Enron CFO Jeff McMahon. "We believe this is a
first step among many towards an overall plan of reorganization
and planned emergence from bankruptcy."
The deal is for ten years but allows UBS Warburg a series of
options to begin buying out Enron's royalty interest in the
third-year of the agreement. UBS Warburg's calls may be
exercised in three steps, each representing one-third of the
royalty stream.
Following the exercise of the first call, the royalty payment
rate will drop from 33% to 22%; following the exercise of the
second call, the royalty payment rate will drop from 22% to 11%.
Upon the exercise of the third call, the remaining 11% royalty
would cease.
The complete transaction documents will be made available on
http://www.enron.com and http://www.nysb.uscourts.gov
Enron markets electricity and natural gas, delivers energy and
other physical commodities, and provides financial and risk
management services to customers around the world. Enron's
Internet address is http://www.enron.com The stock is traded
under the ticker symbol "ENE."
EXODUS COMMS: Inks Designation Rights Pact with Global Crossing
---------------------------------------------------------------
Exodus Communications, Inc., and its debtor-affiliates request
entry of an order approving a Designation Rights Agreement,
dated October 30, 2001, between Exodus and Global Crossing,
Ltd., pursuant to which Debtors will transfer the right to
designate certain Global Crossing Guaranteed Leases for
assumption and assignment to third parties or for rejection.
Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP in
Wilmington, Delaware, relates that on January 2001, the Debtors
acquired GlobalCenter, Inc., in a stock transaction with Global
Crossing. GlobalCenter operated 10 IDCs throughout the United
States and overseas, a number of which are leased from third-
party landlords. Global Crossing guaranteed the timely
performance under a number of the leases. In order to reduce
operating expenses, Mr. Chehi states that the Debtors are in the
process of consolidating operations and eliminating
underutilized IDCs, some of which are subject to the Guaranteed
Leases.
The IDCs that are subject to the Guaranteed Leases contain
valuable tenant improvements and other property, including power
generators, HVAC systems, and other valuable equipment, that
cost hundreds of millions of dollars to purchase and install.
Mr. Chehi submits that the Debtors have identified ten Global
Crossing Guaranteed Leases that, but for entry into the
Designation Rights Agreement, the Debtors would have sought to
reject within the next month. The Debtors believe that there may
be other IDCs and offices subject to Global Crossing Guaranteed
Leases that the Debtors may decide to close.
According to Mr. Chehi, in early October, Global Crossing
proposed to pay current obligations under the Guaranteed Leases
until such leases could be assigned to a third party or
otherwise disposed in order to immediately begin the remarketing
process for these locations. The Designation Rights Agreement is
the culmination of the parties discussions regarding Global
Crossing's proposal and contains other relevant terms and
conditions, a brief summary of the terms of which are:
A. Transfer of Designation Rights: The Debtors will transfer to
Global Crossing all rights to direct the assumption and
assignment to an assignee or rejection of Guaranteed Leases
subject to the Designation Rights Agreement. Global
Crossing will provide assignment and rejection directions
to the Debtors whom, in turn, will file motions seeking
Court approval of the proposed assignments or rejections.
Global Crossing also may direct the Debtors to seek an
extension with respect to the Guaranteed Leases. Global
Crossing will reimburse certain of the Debtors' expenses in
carrying out the directions.
B. Advance of Lease Obligations: Global Crossing immediately
will pay Lease Obligations accruing after October 15, 2001,
November 1, 2001 and November 5, 2001 with respect to the
Leases. Thereafter, on the 25th day of each month, Global
Crossing will pay lease obligations under the Guaranteed
Leases subject to the Designation Rights Agreement that
must be performed in the succeeding month.
C. Marketing of Leases: Global Crossing will have the sole and
exclusive right to market the Guaranteed Leases
unencumbered by any prior brokerage agreement. If Global
Crossing receives proceeds from the sale of a Guaranteed
Lease in excess of its guarantee obligations and marketing
and disposal costs, Global Crossing shall pay 10% of the
Net Proceeds to the Debtors. Global Crossing will be
responsible for all marketing and disposal costs.
D. Removal of Property: The Debtors will have 60 days to remove
fixtures and other personal property from the sites subject
to the Guaranteed Leases under the Designation Rights
Agreement. The 60-day period will be tolled during any
period in which Global Crossing, a landlord or other
interested party contests the Debtors' ability to remove
such property.
E. Additional Leases: The Debtors and Global Crossing may add
additional Guaranteed Leases to the Designation Rights
Agreement.
F. Security: Global Crossing will pay security deposits in the
amount of one month's rent to landlords to secure Global
Crossing's payment of lease obligations.
G. Termination: The Designation Rights Agreement will terminate
on the earlier of:
a. one year after the Court's approves the agreement,
b. the date the Court enters a confirmation order, or
c. a final order is entered converting of dismissing each
of the Debtors' chapter 11 cases.
Mr. Chehi notes that the Debtors will benefit under the
Designation Rights Agreement in a number of ways, including:
A. Global Crossing immediately will pay lease obligations
accruing after October 15, 2001, November 1, 2001 and
November 5, 2001, under 10 GX Guaranteed Leases. Thus, the
Debtors immediately will eliminate substantial
administrative liability totaling approximately $2,500,000
per month under the Guaranteed Leases.
B. The Designation Rights Agreement will allow the Debtors 60
days to remove Tenant Improvements from the GlobalCenter
IDCs. This provision will give the Debtors a reasonable
time period to remove Tenant Improvements worth potentially
millions of dollars from the GlobalCenter IDCs. Absent
approval of the Designation Rights Agreement, the Debtors
would be forced to either:
a. abandon this potentially valuable property to landlords
to avoid incurring further administrative liability
for rent or
b. pay rent totaling approximately $2,500,000 per month to
landlords during the pendency of removal of the Tenant
Improvements and other personal property.
C. The Designation Rights Agreement will provide the Debtors
with an opportunity to obtain the maximum value for the
Tenant Improvements through sale to an assignee of the
Guaranteed Leases that Global Crossing procures through its
marketing efforts. In addition, the Debtors will be entitled
to 10% of the proceeds from the sale of the Guaranteed Leases
in excess of Global Crossing's guarantee obligation and
marketing costs. Absent approval of the Designation Rights
Agreement, it is highly unlikely the Debtors would obtain
similar recoveries.
The Debtors submit that the decision to sell the Designation
Rights to Global Crossing is based upon their sound business
judgment and should be approved. Absent approval of the
Designation Rights Agreement, Mr. Chehi points out that the
Debtors would be forced to either immediately reject the
Guaranteed Leases to eliminate carrying costs and forfeit
possibly millions of dollars of Tenant Improvements, or would
incur substantial carrying costs to maintain possession of the
IDCs while the Debtors removed Tenant Improvements and other
personal property from the IDCs. In addition, the Debtors could
lose significant recoveries, potentially in the millions of
dollars, from the sale of the Tenant Improvements to an assignee
procured by Global Crossing.
Landlords Object
KFPLB Michelson Jamboree, LLC and West Seyon LLC object to
Debtors' motion for entry of an order approving the Designation
Rights Agreement dated October 30, 2001 transferring to Global
Crossing, Ltd. the right to designate certain Debtor leases for
assumption and assignment to an assignee or for rejection.
Mark Minuti, Esq., at Saul Ewing LLP in Wilmington, Delaware,
tells the Court that while the Designation Rights Agreement does
provide for payment of past and future rent, the Lessors,
however, have additional and substantial claims against Tenant
and Guarantor for other unpaid amounts due as additional rent.
The Designation Rights Agreement does not seem to provide for
payment of these other obligations of Tenant and of Guarantor
for amounts due and owing such as the substantial mechanic's
lien claims that are Tenant's responsibility under the Waltham
Lease and other past due amounts owing under the Leases. If
Global Crossing were to be assigned the Leases, all of these
amounts would have to be paid as part of the Debtors' assumption
and assignment and Guarantor would have to immediately pay these
amounts. Thus, Mr. Minuti asks the Court that Global Crossing
should be required to pay to Lessors an amount equal to an
estimated $1,511,930 in unpaid mechanic's lien claims and other
costs incurred to date as well as the past due rental amounts
addressed in the Designation Rights Agreement. In addition,
there are future deficiencies related to fire code issues and
other obligations of Tenant which need to be provided for in the
Designation Rights Agreement.
Mr. Minuti points out that the Motion's exclusive jurisdiction
provision is as an improper attempt to bootstrap the Lessors to
the exclusive jurisdiction of this Court in their separate
dispute with Guarantor. Although Lessors hope that this reading
is an unintended ambiguity in the Motion, Lessors have filed
this Objection to request clarification of what should be a
self-evident truism, this Court is not, and ought not to be, the
forum in which Lessors' disputes with the non-Debtor Guarantor
are adjudicated. Mr. Minuti submits that under the proposed
terms of the Designation Rights Agreement, if the Leases are
ultimately rejected, Lessors would have no claim for damages
against Global Crossing, which would be the party responsible
for Lessors' damages. The Designation Rights Agreement subverts
the statutory scheme and strips Lessors of the mandated
protections.
Mr. Minuti notes that the Leases provide that it is a default if
Tenant or Guarantor commences or institutes any case, proceeding
or other action seeking relief as a debtor, or to adjudicate it
a bankrupt or insolvent. Thus, Lessors should not be precluded
from enforcing the obligations under the Leases as against the
non-debtor Guarantor, which is the effect of the language of the
current Designation Rights Agreement. Thus, Mr. Minuti concludes
that no provisions of the Designation Rights Agreement should be
approved by this Court to the extent they preclude the Lessors
from accelerating liability under the Leases as to Guarantor
occasioned by any default under the Leases, including without
limitation the default occasioned by the bankruptcy filing of
the Debtors, including the Tenant.
Mr. Minuti argues that the Designation Rights Agreement purports
to remove, or greatly extend, the period for timely performance
of obligations other than the payment of rent, which section
365(d)(3) does not permit.
According to Mr. Minuti, the Designation Rights Agreement
purports to give Global Crossing additional rights not otherwise
available to the Debtors under the Leases, the Bankruptcy Code
or otherwise. For instance, the Designation Rights Agreement
purports to authorize the removal of property from the premises
despite the fact that Tenant and Guarantor are in breach of the
Leases and may not otherwise be entitled to remove such
property. Mr. Minuti asserts that neither Tenant nor Guarantor
is entitled to remove fixtures under applicable law unless and
until the Leases are assumed, all defaults cured and performance
complete, and even then, only if the removal of such fixtures
does not damage the property or impair its value.
The Designation Rights Agreement also gives Global Crossing
marketing rights to the subject premises of the Leases that it
is not entitled to have. Mr. Minuti contends that Global
Crossing has no right to market the leased premises, since the
Leases afford Tenant only a limited right to assign the Leases
or sublet the lease premises, subject to prior written Lessor
approval. Granting such a right to Global Crossing, would
preclude Lessors themselves from seeking to relet or otherwise
to redevelop the leased premises. If Global Crossing wants the
benefits that accrue to a tenant in good standing under the
Leases in order to avail itself of negotiated Lease terms, Mr.
Minuti asserts that Global Crossing must assume all of the
burdens and cure the defaults of Tenant under the Leases.
* * *
Finding that good and sufficient cause, Judge Robinson orders
that the Designation Rights Agreement is approved in its
entirety and the Debtors are further authorized to engage in any
transaction pursuant thereto; provided, that any proposed
assumption or assignment of the leases of the Objecting
Landlords must be pursuant to an order following an
appropriately noticed motion and hearing.
With respect to the Objecting Landlords, the following shall
apply:
A. notwithstanding anything to the contrary in the Designation
Rights Agreement, the Objecting Landlords and Global
Crossing agree and affirm that all terms of the applicable
leases entered into with Objecting Landlords shall remain
in full force and effect;
B. nothing in this order or the Designation Rights Agreement
shall alter, modify, amend or expand the obligations, if
any, of Global Crossing as guarantor of the Debtors'
obligations under the applicable leases with the Objecting
Landlords;
C. nothing in this order or the Designation Rights Agreement
shall alter, modify, amend or expand the rights set forth
in the applicable leases, under applicable law or prior
orders of the Court permitting the Debtors or Global
Crossing to remove property from the Premises;
D. any ongoing fire code violations, building code violations or
post-petition construction and related costs at the
Premises shall constitute post-petition obligations under
the applicable leases which, to the extent required by the
applicable leases, constitute obligations which require
timely performance; provided, however, that nothing herein,
including making the payments provided for in this
paragraph shall constitute a waiver of the Objecting
Landlords right to seek payment from the Debtors or GX for
additional amounts now due and owing or incurred in the
future under the applicable leases; and
E. the Debtors agree to deliver to Objecting Landlord the "as
built" construction plans for the premises by December 31,
2001. (Exodus Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FEDERAL-MOGUL: Asbestos Claimants Tap Tersigni as Accountants
-------------------------------------------------------------
The Official Committee of Asbestos Claimants of Federal-Mogul
Corporation, and its debtor-affiliates moves the Court to
approve its application to employ nunc pro tunc as of November
30, 2001, L. Tersigni Consulting P.C. as its accountant and
financial advisor.
Loreto T. Tersigni, principal of the firm L. Tersigni Consulting
P.C., assures the court that the Firm has extensive experience
in providing accounting, financial advisory and valuation
services in bankruptcy and litigation consulting matters. This
includes having provided consulting and expert testimony
services to the asbestos reorganizations of The Babcock and
Wilcox Company, Pittsburgh Corning Corporation, Owens Corning
Corporation, Armstrong World Industries Inc., G-1 Holding Inc.,
W.R. Grace & Company. H.K. Porter Company Inc., Keene
Corporation and Hillsborough Holdings Company.
Subject to the court's approval, Tersigni's scope of services
include but is not limited to:
A. Development of oversight methods and procedures so as to
enable the Committee to fulfill its responsibilities to
monitor the Debtors' financial affairs;
B. Interpretation and analysis of financial matters including
accounting, tax, statistical, financial and economic data
regarding the Debtors and other relevant parties
C. Analysis and advice regarding additional accounting,
financial, valuation and related issues that may arise in
connection with plan negotiations and otherwise in the course
of these proceedings.
Mr. Tersigni informs the Court that the Firm charges for its
services on an hourly basis based on the current hourly rates of
the professionals rendering the service plus reimbursement of
actual necessary expenses. Mr. Tersigni himself will be
compensated at his $395 hourly rate while additional
professionals that will employed in these cases, if needed,
shall be compensated based on the following schedule:
Level Current Hourly Rate
----- -------------------
Managing Director $425
Director $320
Senior Manager $290
Manager $240
Professional Staff $160-$185
Paraprofessional $ 80
According to committee member Colette Margaret Platt, Tersigni
was selected based upon its extensive experience and knowledge
with respect to providing expert consultation and advice
regarding complex financial matters and rendering such services
as the analysis and interpretation of accounting, tax,
statistical, financial, economic and valuation data. Ms. Platt
believes that Tersigni's services are both necessary and
appropriate and will assist the Committee in the negotiation,
formulation, development and implementation of the plan or
reorganization. (Federal-Mogul Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
FOSTER WHEELER: Deferring Interest Payments on Public Debt
----------------------------------------------------------
Foster Wheeler Ltd. (NYSE:FWC) has given notice that it is
exercising its right to defer the payment of interest on the
Junior Subordinated Debentures by extending the interest period
of such debentures for one quarterly period from January 15,
2002 until April 15, 2002.
This will defer the dividend on the FW Preferred Capital Trust I
9% Preferred Securities for the same time period.
Foster Wheeler Ltd. is a global company offering, through its
subsidiaries, a broad range of design, engineering,
construction, manufacturing, project development and management,
research, plant operation and environmental services. The
corporation is based in Hamilton, Bermuda, and its operational
headquarters are in Clinton, N.J. For more information about
Foster Wheeler, visit our World-Wide Web site at
http://www.fwc.com
DebtTraders reports that Foster Wheeler Corporation's 6.750%
bonds due 2005 (FWC) currently trade in the low 80s. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=FWCfor real-
time bond pricing.
FOURTHSTAGE: Wants Schedule Filing Deadline Moved to Jan. 29
------------------------------------------------------------
Fourthstage Technologies, Inc. submits to the U.S. Bankruptcy
Court for the District of Arizona an emergency ex parte motion
to extend their time to file statements of financial affairs and
schedules of assets, liabilities, executory contracts, and
unexpired leases.
In order to prepare the Statements and Schedules, the Debtor
needs to gather information from books, records and documents
relating to thousands of transactions. Because the filing of the
Petition coincided with the Debtor's fiscal year end, they will
have to close its annual books first before an accurate
information to include in the Statements and Schedules is
available. Collection of the information necessary to complete
the Statements and Schedules will require an expenditure of
substantial time and effort on the part of the Debtor's
employees.
At this time, the Debtor anticipates that at least 14 additional
days will be required to complete the Statements and Schedules.
In this connection, the Debtor wishes to extend their Schedules
and Statements deadline through January 29, 2002.
Fourthstage Technologies, Inc., a provider of technology
integration systems, filed for chapter 11 protection on December
31, 2001 in the U.S. Bankruptcy Court for the District of
Arizona (Phoenix). Lori A. Schmig, Esq. and Christopher H.
Bayley, Esq. at Snell & Wilmer L.L.P. represent the Debtor in
their restructuring effort. When the Company filed for
protection from its creditors, it listed $49,045,972 in total
assets and $27,055,174 in total debts.
GLIATECH INC: Fails to Comply with Nasdaq Equity Requirement
------------------------------------------------------------
Gliatech Inc., (Nasdaq: GLIA) announced that it received a
Nasdaq Staff Determination on January 10, 2002, from the Nasdaq
Listing Qualifications Department which indicates that
Gliatech's common stock is subject to delisting from the Nasdaq
National Market effective January 18, 2002. The letter indicates
that the Company fails to comply with either the minimum net
tangible asset requirement or minimum stockholders' equity
requirement for continued listing as set forth in Marketplace
Rule 4450(a)(3), and that its securities are, therefore, subject
to delisting from The Nasdaq National Market. In addition
Gliatech currently does not meet the requirements for listing on
the Nasdaq SmallCap Market.
The Company's common stock may trade on the OTC Bulletin Board
electronic quotation system, or another quotation system or
exchange for which the shares of the Company's common stock may
qualify.
Corporate Update
As of December 31, 2001, Gliatech had approximately $3.0 million
of cash, cash equivalents and short-term investments. As
previously disclosed, given the funding requirements of current
operations, the Company believes it currently has sufficient
cash, cash equivalents and short-term investments on hand to
meet operating requirements through approximately March 2002.
The Company is seeking additional financing and is currently in
active discussions regarding potential funding sources such as
equity and debt financing, and is considering other strategic
alternatives in order to continue operations. The Company has
taken significant steps to reduce costs including a reduction in
the Company's workforce in November of 2001. There can be no
assurance that the Company will be able to identify necessary
financing or will be able to consummate strategic alternatives
or other alternatives in a timely manner on terms acceptable to
the Company, if at all.
Gliatech also announced that William A. Clarke and Allan M.
Green, M.D., Ph.D., J.D. have resigned from Gliatech's Board of
Directors. The current Board of Director's composition includes
Robert P. Pinkas, Chairman and Acting CEO of Gliatech, Steven L.
Basta, President of Gliatech, and Ronald D. Henriksen. "We
thank Bill and Allan for their valued service to the Company,"
stated Robert P. Pinkas.
Gliatech Inc. is engaged in the discovery and development of
biosurgery and pharmaceutical products. The biosurgery products
include ADCON-L, ADCON-T/N and ADCON Solution, which are
proprietary, resorbable, carbohydrate polymer medical devices
designed to inhibit scarring and adhesions following surgery.
Gliatech's pharmaceutical product candidates include small
molecule drugs to modulate the cognitive state of the nervous
system and proprietary monoclonal antibodies designed to inhibit
inflammation.
GLOBIX: Will File Chapter 11 Petition with Prepack Plan in Feb.
---------------------------------------------------------------
Globix Corporation (Nasdaq: GBIX) announced that it has reached
agreement on a financial restructuring designed to ensure the
financial stability of the Company. The Company has signed
lockup agreements to reduce its debt burden by $480,000,000 with
bondholders who own more than 51% of the Company's outstanding
$600,000,000 issuance of 12-1/2% senior notes due 2010. The
bondholders will exchange their senior notes, which entitle them
to interest payments in cash, for $120,000,000 in senior secured
notes and a substantial equity position in the Company.
Globix will now begin soliciting consents for the plan from its
other bondholders. The Company's preferred shareholders have
also agreed to this plan.
Once the necessary consents are received, the financial
restructuring will be finalized through a voluntary prepackaged
bankruptcy proceeding under Chapter 11 of the U.S. Bankruptcy
Code. That proceeding is expected to be filed in February 2002.
Because the holders of a majority in principal amount of the
bonds have agreed to the terms of the restructuring, the Company
expects to emerge from this process relatively quickly.
"Globix has developed a network of world-class data centers that
provide superior service to demanding customers," said Chief
Executive Officer Peter L. Herzig. "We expect the positive steps
we are announcing today will end questions about the Company's
financial stability and allow us to focus on the Company's
competitive advantage as a premium provider of complex hosting
services. Today's developments are aimed at solidifying our
current competitive position while providing the impetus for a
bright future."
Under the financial restructuring, the Company's bondholders
will exchange the current $600,000,000 indebtedness for
$120,000,000 in senior secured notes, due in 2008, with interest
at 11% payable in kind for up to four years. This will relieve
the Company of approximately $75 million in annual cash interest
expense on the existing notes. There will be no cash interest
payable on the new senior secured notes for up to four years.
Additionally, the bondholders will hold 85% of the Company's
common stock. Current holders of the Company's Series A
Preferred will hold 14% of the common stock, and the remaining
1% will be allocated to the current common shareholders.
Based on the lockup agreements in hand, the Company is confident
that it will be able to obtain the consent of the requisite
number of bondholders to confirm the financial restructuring. It
is anticipated that customers, employees and trade creditors
will not be affected by the restructuring, as the Company
expects to conduct business as usual throughout the
restructuring process. Globix U.K. and European operations will
be excluded from the filing.
Globix is a leading provider of advanced Internet hosting,
network and applications solutions for business. Globix delivers
services via its secure state-of-the-art Data Centers, its high-
performance global backbone and content delivery network, and
its world-class technical professionals. Globix provides
businesses with cutting-edge Internet resources and the ability
to deploy, manage and scale mission-critical Internet operations
for optimum performance and cost efficiency.
GLOBIX CORP: Begins Trading on OTCBB Effective January 15, 2002
---------------------------------------------------------------
Globix Corporation (Symbol: GBIX) has decided to voluntarily
delist the Company's common stock from quotation on the Nasdaq
National Market and will trade on the Over- the-Counter Bulletin
Board (OTCBB). The voluntary delisting of the Company's common
stock was effective at the close of business Monday, January 14,
2002, and the common stock commenced trading on the OTCBB
yesterday, January 15, 2002.
As announced Monday morning, Globix is currently engaged in a
financial restructuring designed to ensure the financial
stability of the Company. The financial restructuring involves
the filing of a voluntary prepackaged bankruptcy proceeding
under Chapter 11 of the U.S. Bankruptcy Code, to be filed in
February 2002. Under Nasdaq rules, a company's security must be
delisted when the company's financial restructuring involves any
sort of bankruptcy proceeding. After the Company's financial
restructuring is completed, the Company plans to submit an
application for relisting on the Nasdaq Stock Market.
Globix is a leading provider of advanced Internet hosting,
network and applications solutions for business. Globix delivers
services via its secure state-of-the-art Data Centers, its high-
performance global backbone and content delivery network, and
its world-class technical professionals. Globix provides
businesses with cutting-edge Internet resources and the ability
to deploy, manage and scale mission-critical Internet operations
for optimum performance and cost efficiency.
HAMILTON BANK: Fitch Knocks Ratings to D and Withdraws Coverage
---------------------------------------------------------------
Fitch has lowered the short-term and long-term issuer ratings of
Hamilton Bank, NA and Hamilton Bancorp to 'D'. In addition,
Fitch has also lowered the ratings on the short and long-term
deposits of Hamilton Bank, NA to 'D' and 'DD' from 'B' and 'B-',
respectively. Fitch rates no specific debt instruments of either
Hamilton Bank, NA or Hamilton Bancorp.
Late Friday, January 11, 2002, Hamilton Bank, NA, which was the
lead bank and only significant subsidiary of Hamilton Bancorp,
was closed by its regulator, the Comptroller of the Currency
(OCC). Hamilton had previously been operating under a cease and
desist order and the OCC determined that the bank's asset
quality, earnings and capital remained serious concerns.
Following a number of rating actions beginning in November 2000,
Fitch had Hamilton rated 'E' individual rating, 'CCC' long term
issuer rating and 'C' short term issuer rating since August
2001.
These ratings are indicative of a situation where default is a
real possibility and indicate a bank with problems so serious
that it will likely require external support. With the most
recent actions of the regulators, Fitch is lowering Hamilton
Bank, NA and Hamilton Bancorp's ratings indicating that these
entities face a poor prospect of repaying all obligations
through the liquidation process.
Following the above rating adjustments, Fitch is withdrawing all
rating coverage on both Hamilton Bank, NA and Hamilton Bancorp.
HAYES LEMMERZ: Gets OK to Pay Prepetition Critical Vendor Claims
----------------------------------------------------------------
Judge Walrath authorizes, but does not direct, Hayes Lemmerz
International, Inc., and its debtor-affiliates to pay critical
vendor claims subject to a $20,000,000 aggregate cap. With
respect to Debtors' request for authority to expend an
additional $10,000,000, Debtors shall be authorized to expend
the additional amount. (Hayes Lemmerz Bankruptcy News, Issue No.
4; Bankruptcy Creditors' Service, Inc., 609/392-0900)
INTERFACE: S&P Rates $175 Million Senior Unsecured Notes at BB
--------------------------------------------------------------
Standard & Poor's assigned its double-'B' senior unsecured debt
rating to Interface Inc.'s proposed $175 million senior
unsecured notes due 2010, to be issued under Rule 144A. At the
same time, the double-'B' corporate credit and senior unsecured
debt ratings for Interface Inc. are affirmed. The single-'B'-
plus subordinated debt and the preliminary double-'B'/single-
'B'-plus mixed shelf registration ratings were also affirmed.
Proceeds will be used to refinance outstanding debt under the
company's bank facility.
The outlook is negative.
Total rated debt is about $275 million.
The ratings for Interface Inc. reflect very competitive and
cyclical market conditions, offset by its strong market
positions, geographic diversity, and functionally diverse
commercial and institutional customer base.
Interface is the world's largest manufacturer of modular carpet,
with about a 40% share of the worldwide market. It also has
leading positions in the high-quality, designer-oriented segment
of the U.S. broadloom carpet market. In addition, the company is
a leading supplier of interior fabrics and upholstery products,
raised/access flooring and other specialty products. The firm
is also a provider of carpet installation and maintenance
services through its own domestic dealer network, Re:Source
Americas. International activities accounted for about 31% of
sales in 2000; this includes about 16% of sales from the U.K.
Financially, Standard & Poor's expects interest coverage to
range between 2.5 times to 3.0x with total debt to EBITDA
staying above 4.5x, compared to 3.5x and 3.4x, respectively, for
the year ended December 31, 2000. The company's financial
results continue to be adversely impacted by the current
recession.
Outlook: Negative
Standard & Poor's expects Interface to be challenged in stemming
its sales and margin declines in the current weak operating
environment. If the company is unsuccessful in improving its
credit measures over the intermediate term, the ratings could be
lowered.
ISPAT INLAND: Debt Ratings Under Review for Possible Downgrade
--------------------------------------------------------------
Moody's Investors Service places East-Chicago based Ispat Inland
Inc., and its affiliate, Ispat Inland L.P.'s B3 senior implied
rating and Caa2 senior unsecured ratings. There is approximately
$1.1 billion of debt securities affected.
Moody's downgrade considers the challenging conditions of the
domestic integrated steel industry combined with the company's
limited financial flexibility and financial difficulties
encountered at other entities.
Ratings Placed Under Review for Possible Downgrade
Ispat Inland Inc.
* senior implied rating of B3
* senior unsecured issuer rating of Caa2
* senior secured first mortgage bonds ratings of B3
* industrial revenue bonds ratings of Caa2.
Ispat Inland L.P.
* $700 million senior secured term credit facilities and
$160 million senior secured letter of credit facility
ratings of B3
Ispat Inland Inc., was acquired by Ispat International N.V. in
1998 and reported revenues of $2.0 billion for the trailing four
quarters ended September 30, 2001.
KMART CORP: Loss of Financial Flexibility Spurs S&P Downgrades
--------------------------------------------------------------
Standard & Poor's lowered its ratings on Kmart Corp. and placed
the ratings on CreditWatch with negative implications.
The rating actions are based on heightened concerns about
Kmart's loss of financial flexibility in recent weeks.
Kmart's drop in stock price has accelerated substantially since
the beginning of 2002. While the company has faced ongoing
challenges to its franchise, as reflected in recent operating
and financial results, a recent loss of supplier and investor
confidence is troubling.
Kmart had been expected to renegotiate its $1.5 billion
revolving credit facility in mid-February, however, it is now
reviewing its prospective liquidity position and business plan
for 2002 and 2003, and is considering supplemental financing.
Ratings Lowered and Placed on CreditWatch Negative
Kmart Corp. TO FROM
Corporate credit rating B- BB
Senior secured debt B- BB
Senior unsecured debt B- BB
Shelf registration:
Senior unsecured prelim. B- prelim. BB
Kmart Financing I
Corporate credit rating B- BB
Preferred stock CCC- B
DebtTraders reports that K Mart Corp's 12.500% bonds due March
1, 2005 (KMART9) are trading from 73 to 76. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KMART9for
real-time bond pricing.
KNOWLEDGE HOUSE: Will Apply for CDNX Listing Effective Feb. 13
--------------------------------------------------------------
Knowledge House Inc. (TSE:KHI) announced that it plans to apply
to transfer the listing of its common shares to the Canadian
Venture Exchange (CDNX) effective on or before February 13,
2002, subject to compliance with the requirements of CDNX.
The common shares of KHI company will be suspended from trading
on the TSE on February 13, 2002 for failure to meet the
continued listing requirements of the TSE in that the listed
common shares have not achieved a market value of $3.0 million
during the last 30 trading days of the current suspension review
period that began on September 28, 2001.
In commenting on the development, Knowledge House Chair and CEO,
Dan Potter said: "Since the company does not currently meet the
listing requirements of the TSE, it is appropriate to transfer
its listing to the CDNX. This will allow the reorganization to
continue without interruption or loss of future value
recognition and liquidity opportunities for common
shareholders."
On November 26, 2001, KHI's unsecured creditors approved its
proposal filed on October 26, 2001 under the Bankruptcy and
Insolvency Act (Canada). Under the terms of the proposal,
preferred creditors of KHI, including employees, will receive
Class A preferred shares of KHI in exchange for their claims, on
the basis of one share per dollar of debt proven. Other
unsecured creditors of KHI will receive Class B preferred shares
of KHI in exchange for their claims, on the basis of one share
per dollar of debt proven. It is expected that approximately $2
million to $3 million in unsecured debt will be converted to
Class A preferred shares or Class B preferred shares pursuant to
the proposal.
The Class A and Class B preferred shares are each 4% cumulative
preferred shares, redeemable at the option of KHI and
convertible at the option of the holder into common shares of
KHI at the then-current market price of KHI common shares, after
two years in the case of the Class A preferred shares and after
four years in the case of the Class B preferred shares. Class A
preferred shares have priority over the Class B preferred
shares. Claims of secured creditors are unaffected by the
proposal.
The proposal remains subject to court, shareholder and other
required regulatory approvals.
KHI ceased operations on September 13, 2001 due to a lack of
available financing. Before its cessation of operation, KHI
designed collaborative problem-based learning programs and
provided related services for secondary and post-secondary
education, transition to work and corporate markets.
LODGIAN INC: Court Grants Injunction Against Utility Companies
--------------------------------------------------------------
Lodgian, Inc., and its debtor-affiliates sought and obtained an
order from the Court:
A. prohibiting the Utility Companies from altering, refusing, or
discontinuing Utility Services on account of pre-petition
invoices, including the making of demands for security
deposits or accelerated payment terms;
B. providing that the Utility Companies have "adequate assurance
of payment", without the need for payment of additional
deposits or security;
C. establishing procedures for determining requests for adequate
assurance;
D. providing that if a Utility Company timely objects to entry
of an order granting this Motion and requests adequate
assurance that the Debtors believe is unreasonable, the
Debtors will file a Motion for Determination of Adequate
Assurance of Payment and that the Court will set such
motion for a hearing;
E. providing that any Utility Company that does not timely
request adequate assurance shall be deemed to have
adequate assurance under section 336 of the Bankruptcy
Code; and
F. providing that, in the event that a Determination Motion is
filed or a Determination Hearing is scheduled, any
objecting Utility Company shall be deemed to have
adequate assurance of payment without the need for
payment of deposits or other securities or the
acceleration of payment terms until an order of the Court
is entered in connection with such Determination Motion
or Determination Hearing.
The Court also authorizes immediate sanctions against any
Utility Company that unilaterally terminates services and
refuses to immediately restore such services absent compliance
with the procedures provided for in the requested order.
According to Adam C. Rogoff, Esq., at Cadwalader Wickersham &
Taft in New York, New York, in connection with the operation of
Debtors' businesses and management of their properties, the
Debtors obtain electricity, natural gas or oil, water,
telephone, cable television and/or other similar services, from
approximately 200 different utility companies. The Debtors
estimate their cost for Utility Services during the next 30 days
will be approximately $1,800,000. In general, the Debtors have
established an excellent payment history with virtually all of
their Utility Companies, consistently making payments on a
regular and timely basis. Mr. Rogoff believes that there are no
defaults or arrearages of any significance with respect to the
Debtors' undisputed Utility Services invoices, other than the
payment interruptions that may be caused by the commencement of
these chapter 11 cases.
The Debtors' businesses require that the Utility Services
continue uninterrupted as any interruption will cause
irreparable harm to the Debtors' ability to conduct their
business in an orderly and efficient manner. Mr. Rogoff fears
that the Debtors' customers could lose confidence in the
Debtors' ability to provide appropriate guest accommodations and
services, thereby causing customers to stay at replacement
hotels.
The Debtors observe that each Utility Provider holds an
administrative priority claim for any post-petition service, and
that should constitute adequate assurance of future payment.
Further, the Debtors submit that their pre-petition history of
prompt and full payment of outstanding utility bills, their
ability to pay future utility bills upon obtaining post-petition
financing to operate their businesses, the security deposits
held by certain of the Utility Companies and utility bonds
posted with respect to certain other Utility Companies together
constitute adequate assurance to the Utility Companies of
payment for all future services. The Court orders that the
foregoing method of providing adequate assurance be without
prejudice to the rights of any Utility Company to request
additional assurance within 25 days from the date hereof.
Mr. Rogoff contends that the Debtors' proposed method of
furnishing adequate assurance of payment for post-petition
Utility Service is in keeping with the spirit and intent of
section 366 of the Bankruptcy Code, is not prejudicial to the
rights of any Utility Company, and is in the best interest of
the Debtors' estate. The Debtors submit that adequate assurance
of payment to the Utility Companies is manifestly evident in
their chapter 11 cases, given the proposed debtor in possession
financing facility to be provided to the Debtors, which, if
approved, will provide the Debtors with more than sufficient
availability of funds with which to pay all post-petition
charges and other administrative expenses.
The Debtors anticipate that, despite any prohibition against
termination of services provided for in the proposed order,
certain Utility Companies may disregard this Court's order. In
order to enforce the letter and intent of such order, and
prevent the immediate harm from such disrupted services, the
Debtors sought and obtained an order from the Court authorizing
immediate sanctions, in the form of hourly payments of $500 per
hour by the violating Utility Company, for each hour that
services are discontinued in disregard of this Court's order.
Absent such sanctions, Mr. Rogoff believes that the Utility
Companies may refuse to reestablish necessary services forcing
the Debtors to seek immediate relief from this Court. On the
other hand, any Utility Company following this Court's order
will not suffer the imposition of such sanctions and, therefore,
will not be adversely affected by any such provision in the
order. (Lodgian Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
MILLENIUM SEACARRIERS: Moody's Further Junks Ship Mortgage Notes
----------------------------------------------------------------
Moody's Investors Services downgraded the ratings of Cayman
Islands' international shipping company, Millenium Seacarriers,
Inc.
The Company's $100 million 12% First Priority Ship Mortgage
Notes due 2005 dipped to Ca from Caa2. Similarly, Moody's
lowered the senior implied rating to Ca from Caa2 and the issuer
rating was lowered to C from Caa3.
The rating outlook remains negative while there is approximately
$100 million of debt securities affected.
The rating agency considers the company's track record of
continued losses, weak cash flow and the current decreased
market value of the fleet securing the Notes on its action.
Furthermore, market conditions and charter rates for the drybulk
shipping sector have deteriorated over the last several
quarters, and are not expected to improve near term adding
constraints for the downgrades, Moody's noted.
Millenium Seacarriers, Inc. maintains their executive offices in
New York City. The Company owns and operates through its wholly
owned subsidiaries a fleet of drybulk carriers, primarily in the
20,000 to 49,999dwt range (Handysize).
MOTIENT CORPORATION: Signs-Up McGuireWoods as Bankruptcy Counsel
----------------------------------------------------------------
Motient Corporation, along with Debtor-Affiliates, asks the U.S.
Bankruptcy Court for the Eastern District of Virginia to
authorize their employment and retention of the law firm of
McGuireWoods LLP as counsel in their chapter 11 cases.
The Firm's "experience and expertise in the field of business
reorganizations under chapter 11 of the Bankruptcy Code, the
Firm's expertise and experience practicing before this Court,
its experience in representing the Debtors before the Petition
Date, and its ability to respond quickly to all legal issues
that may arise in this case," are the primary reasons why the
Debtors seek to retain them as attorneys.
McGuire Woods has been familiar with the Debtors' businesses and
affairs since they have represented the Debtors prior to these
chapter 11 cases. The Debtors believe that the Firm is well
qualified and can efficiently represent them in these chapter 11
cases.
The professional services that McGuire Woods will render to the
Debtors include:
a) advise the Debtors with respect to their powers and duties as
debtors in possession in the continued management and
operation of their businesses and properties;
b) attend meetings and negotiate with representatives of
creditors and other parties in interest;
c) take all necessary action to protect and preserve the
Debtors' estates;
d) prepare on behalf of the Debtors all motions, applications,
answers, orders, reports and papers necessary to the
administration of the estates;
e) negotiate and prepare on the Debtors' behalf a plan of
reorganization, disclosure statement, and all related
agreements/documents, and take any necessary action on behalf
of the Debtors to obtain confirmation of such plan;
f) represent the Debtors in connection with postpetition
financing if obtained;
g) advise the Debtors in connection with any potential sale of
assets;
h) appear before this Court, any appellate courts, and the
United States Trustee and protect the interests of the
Debtors' estates before such courts and the United States
Trustee;
i) consult with the Debtors regarding tax, intellectual
property, labor and employment, real estate, corporate
finance, corporate and securities, and litigation matters;
and
j) perform all other necessary legal services and provide all
other necessary legal advice to the Debtors in connection
with these cases.
The Firm's hourly rates vary with the experience and seniority
of the professionals assigned which are subject to changes
consistent with charges made generally to other clients.
Motient Corporation, a provider of two-way, wireless mobile date
services and mobile internet services, filed for chapter 11
protection on January 10, 2002 in Eastern District of Virginia
(Alexandria). Erin E. McDonald, Esq. and Sarah Beckett Boehm,
Esq., at McGuire Woods, LLP represent the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed total assets of $238,229,000 and
total debts of $494,710,000.
NATIONSRENT INC: Taps Richards Layton as Bankruptcy Co-Counsel
--------------------------------------------------------------
NationsRent Inc., and its debtor-affiliates request the entry of
an order authorizing the Debtors to retain Richards, Layton &
Finger, P.A. as bankruptcy co-counsel, nunc pro tunc to the
Petition Date, to perform the extensive legal services that will
be necessary during the Debtors' chapter 11 cases.
Joseph I. Izhakoff, the Debtors' Vice-President and General
Counsel, tells the Court that the Debtors have selected Richards
Layton as their co-counsel because of the firm's extensive
experience and knowledge in the field of debtors' and creditors'
rights and business reorganizations under chapter 11 of the
Bankruptcy Code and because of its expertise, experience, and
knowledge practicing before this Court, its proximity to the
Court, and its ability to respond quickly to emergency hearings
and other emergency matters in this Court. Richards Layton's
appearance before the Court for the various applications,
motions, and matters in these chapter 11 cases will be more
efficient and cost effective for the Debtors' estates. Moreover,
since November 2001, Mr. Izhakoff relates that Richards Layton
has rendered legal services and advice to the Debtors with
respect to the preparation of these cases, during which the Firm
has acquired knowledge of these Debtors' businesses, financial
affairs and capital structure. The Debtors believe that
Richards Layton is both well qualified and uniquely able to
represent them in these chapter 11 cases in a most efficient and
timely manner.
Specifically, NationsRent will look to Richards Layton:
A. to advise the Debtors of their rights, powers and duties as
debtors and debtors in possession;
B. to take all necessary action to protect and preserve the
Debtors' estates, including the prosecution of actions on
the Debtors' behalf, the defense of any actions commenced
against the Debtors, the negotiation of disputes in which
the Debtors are involved, and the preparation of objections
to claims filed against the Debtors' estates;
C. to prepare on behalf of the Debtors all necessary motions,
applications, answers, orders, reports, and papers in
connection with the administration of the Debtors' estates;
D. to negotiate and prepare on behalf of the Debtors a plan of
reorganization and all related documents; and
E. to perform all other necessary legal services in connection
with the Debtors' chapter 11 cases.
Daniel J. DeFranceschi, Director of the firm of Richards Layton
& Finger P.A., tells the Court Richards Layton will charge the
Debtors in accordance with its customary hourly rates in effect
from time to time plus reimbursement of its actual necessary
expense incurred in connection with this engagement. The current
hourly rates of the professionals that will be involved in these
cases are:
Daniel J. DeFranceschi $350
John H. Knight $275
Paul N. Heath $200
Michael J. Merchant $180
Melissa J. Bisaccia $115
Prior to the Petition Date, Mr. Franceschi informs the Court
that the Debtors paid Richards Layton a retainer of
approximately $110,0000 in connection with and in contemplation
of the Debtors' chapter 11 filings. The Debtors propose that the
Retainer paid to Richards Layton not expended for pre-petition
services and disbursements be treated as a retainer paid in
contemplation of services to be rendered by Richards Layton as
bankruptcy co-counsel and that these amounts be applied to
services performed in connection with the Court's order
authorizing the employment of Richards Layton.
Prior to filing the Debtors' petitions, Mr. DeFranceschi states
that Richards Layton issued a billing statement to the Debtors,
for posted and estimated unposted, professional fees and charges
and disbursements incurred through the Petition Date in the
amount of $54,608.88. Prior to filing the Debtors' petitions,
and in payment of the Pre-petition Billing Statement, Richards
Layton drew down the Retainer by the Billed Amount. Mr.
DeFranceschi assures the Court that Richards Layton will
promptly issue a final billing statement for actual fees,
charges, and disbursements for the period covered by the Pre-
petition Billing Statement once all fees and charges accrued
prior to the filing have been finally posted. Richards Layton
will not apply any portion of the Retainer to fees and expenses
incurred from and after the Petition Date unless and until
authorized to do so by a further order of this Court. As of
December 14, 2001, after application of the Retainer to pay for
fees and expenses of Richards Layton, the amount of the Retainer
was $53,743.15.
In addition to the pre-petition work performed by Richards
Layton in connection with these bankruptcy cases, Richards
Layton provided general corporate advice to the Debtors and
represented the Debtors in pending litigation in the Superior
Court of the State of Delaware involving the sponsorship of a
NASCAR racing team. In connection with the Corporate
Representations, Mr. DeFranceschi submits that the Debtors paid
Richards Layton a retainer of approximately $15,000 and prior to
the filing of the Debtors' petitions and in payment of services
performed pre-petition on these matters, Richards Layton drew
down on the full amount of the $15,000 retainer.
Mr. DeFranceschi asserts that the directors and associates of
Richards Layton do not have any connection with or any interest
adverse to the Debtors, their creditors, or any other party in
interest, or their respective attorneys. The firm however, was
engaged in several unrelated matters to parties in interests in
these cases including:
A. Professionals: Bingham Dana LLP, Ernst & Young LLP, UBS
Warburg LLC
B. Secured Creditors: Bank of America, Bankers Trust Company,
Bay View Financial Corp., BNP Paribas Capital Funding II,
Citibank NA, Credit Lyonnais, Deutsche Bank, Eaton Vance,
Fifth Third Bank, First Source Loan Obligations Insured
Trust, First Union National Bank, Fleet National Bank, GE
Capital Corporation, Huntington National Bank, ING Capital
Advisors Inc., JP Morgan Chase, LaSalle Bank National,
Morgan Stanley Dean Witter, National City, Prudential
Insurance, Sun Trust Bank, Toronto Dominion Inc., Union
Bank of California, Van Kampen Senior Income Trust, and
Washington Mutual.
C. Indenture Trustee: Bank of New York
D. Senior Subordinated Noteholders: AIG Global Investment Corp.,
Apollo Advisors, Bank of Montreal, Charles Schwab Retail
Holders, Deutsche Bank, and Seneca Capital Management.
E. Major Lessors: AON Risk Services, Bombardier Capital Inc.,
Caterpillar Financial Services Corp., Citicorp, Deere
Credit Inc., Deutsche Financial Services Corp., Donlen
Corp., Finova Capital Corp., Fleet Capital Corp., Ford
Motor Credit Co., GE Capital Corp., IBJ Witehall Business
Credit Corp., Ingersoll-Rand Co., Keys Corporate Capital
Inc., LaSalle National Leasing Corp., PACCAR Financial
Corp., Sanwa Business Credit Corp., Star Bank N.A., Textron
Financial Corp., The Cit Group and Trak Int'l.
F. Major Shareholders: JP Morgan Capital Corp. (NationsRent
Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
NORTHLAND CRANBERRIES: Will Begin Rebuilding After Debt Workout
---------------------------------------------------------------
Northland Cranberries, Inc. (OTC Bulletin Board: NRCNA),
manufacturer of Northland brand 100% juice cranberry blends and
Seneca brand fruit juice products, reported fiscal 2002 first-
quarter financial results for the period ended November 30,
2001.
The company reported net income for the quarter of $51.7 million
compared to fiscal 2001 first-quarter net income of $0.2
million. The first quarter fiscal 2002 net income includes a
$50.5 million extraordinary gain on forgiveness of indebtedness
resulting from the previously announced restructuring which took
place on November 6, 2001. Income before the extraordinary gain
was $1.2 million for the first quarter of fiscal 2002 compared
to $0.2 million in fiscal 2001 in each quarter. Net revenues
for the three-month period were $30.3 million, down from last
year's first-quarter net revenues of $41.7 million, primarily
due to 1) reduced sales of Northland and Seneca branded
products; and 2) the sale of our cranberry sauce business and a
manufacturing facility in June 2001.
John Swendrowski, Northland's Chairman and Chief Executive
Officer, said, "Completion of our recent restructuring that
saved the company from bankruptcy was the focal point of the
quarter. Now that our balance sheet is restructured, we look
forward to rebuilding the Northland brand and returning the
company to profitability. For the first time in over 18 months
we are now able to support our Northland brand with both trade
and media spending in an effort to regain lost market share and
distribution."
Northland is a vertically integrated grower, handler, processor
and marketer of cranberries and value-added cranberry products.
The company processes and sells Northland brand 100% juice
cranberry blends, Seneca brand juice products, Northland brand
fresh cranberries and other cranberry products through retail
supermarkets and other distribution channels. Northland also
sells cranberry and other fruit concentrates to industrial
customers who manufacture juice products. Northland is the only
publicly-owned, regularly-traded cranberry company in the United
States, with shares traded on the Over-the-Counter Bulletin
Board under the listing symbol NRCNA.
PAXSON COMMS: Grosses $308M from Senior Sub. Discount Note Offer
----------------------------------------------------------------
Paxson Communications Corporation (AMEX:PAX) announced that it
has completed an offering of senior subordinated discount notes
due in 2009. Gross proceeds of the offering totaled
approximately $308 million and were used to refinance the
company's 12-1/2% exchange debentures due 2006, which were
issued in exchange for the outstanding shares of the company's
12-1/2% exchangeable preferred stock on January 14, 2002, and to
pay costs related to the offering. The notes were sold at a
discount of 62.132%, which represents a yield to maturity of 12
1/4%. Interest on the notes will be payable semi-annually
beginning on July 15, 2006. The senior subordinated discount
notes are guaranteed by the company's subsidiaries.
The senior subordinated discount notes have not been registered
under the Securities Act of 1933, as amended, and were sold only
to "Qualified Institutional Buyers" (as defined under Rule 144A
under the Securities Act) and outside of the United States in
accordance with Regulation S under the Securities Act.
Paxson Communications Corporation owns and operates the nation's
largest broadcast television station group and PAX TV, the
newest broadcast television network that launched in August of
1998. PAX TV reaches 85% of U.S. television households via
nationwide broadcast television, cable and satellite
distribution systems. Paxson owns and operates 65 stations
(including three stations operated under time brokerage
agreements). PAX airs its own original programming including
"It's A Miracle," "Mysterious Ways," "Encounters with the
Unexplained" and "Doc," starring recording artist Billy Ray
Cyrus. PAX TV's new season lineup includes the original series
"The Ponderosa," "Ed McMahon's Next Big Star" and "Candid
Camera." Additional Paxson properties include the PAX Family
Club, a branded affinity club that provides travel and product
discounts for families, parenting advice and valuable online
information. For more information, visit PAX TV's website at
http://www.pax.tv
PHARMACEUTICAL FORMULATIONS: Taps Ladenburg to Pursue Recap.
------------------------------------------------------------
On December 13, 2001 a certificate of amendment to increase
Pharmaceutical Formulations Inc.'s authorized common shares to
200,000,000, as approved at the 2001 annual meeting of
stockholders held on November 28, 2001, was filed with the
Delaware Secretary of State.
On December 21, 2001, ICC Industries Inc. converted $15,000,000
of indebtedness into 44,117,647 common shares. On January 2,
2002, ICC converted its 2,500,000 shares of Series A Cumulative
Redeemable Convertible Preferred Stock and unpaid dividends on
such preferred stock into 10,735,294 common shares. Both
conversions were effected at a conversion rate of $.34 per
common share. Such conversions were effected pursuant to letter
agreements between the Company and ICC dated December 21, 2001
and October 25, 2001 and substantially as described in the proxy
statement for the 2001 annual meeting.
Before the conversions, ICC owned 19,635,894 common shares
(approximately 64.74 % of the outstanding common shares).
Following the December 21st conversion, ICC owned 63,753,541
common shares (approximately 85.64% of the outstanding common
shares). Following the January 2nd conversion, ICC owned
74,488,835 common shares (approximately 87.45% of the
outstanding common shares).
The Company's revolving credit facility, which was scheduled to
expire on December 31, 2001, was extended to February 28, 2002
on the same terms and conditions.
On December 28, 2001, the Company entered into an equipment
financing lease arrangement with G.E. Capital Corporation for
$1.95 million, whereby certain operating leases have been
converted to financing leases. This will have a favorable effect
on the Company's operating results and cash flow.
The Company has appointed Ladenburg Thalman & Co. Inc., a New
York based investment banking firm, on a one year contract, to
assist in the Company's expansion and recapitalization plans,
including the proposed rights offering.
PILLOWTEX: State Street Wants to File Fraudulent Conveyance Suit
----------------------------------------------------------------
State Street Bank and Trust Company serves as the successor
trustee under an Indenture dated March 15, 1987 (as amended)
from Fieldcrest Cannon Inc., to Wachovia Bank and Trust Company
N.A. The Indenture provides for the issuance of Fieldcrest's 6%
Convertible Subordinated Debentures due 2012 in the original
aggregate principal amount of $125,000,000.
By this motion, State Street Bank asks Judge Robinson for an
order granting the Trustee leave of Court to commence and
prosecute an adversary proceeding and other appropriate action,
and any appeals or other proceedings, against Pillowtex
Corporation, HSBC Bank USA - as successor trustee with respect
to the 9% Notes and the 10% Notes, and any other appropriate
entities. The proposed filing of the adversary proceeding is
for the purpose of:
(1) avoiding and recovering as fraudulent transfers - for the
benefit of the estate of Fieldcrest Cannon Inc. -
guarantees by Fieldcrest of the 9% Notes and the 10%
Notes, and
(2) prosecuting to conclusion any other claims or actions that
may come to light in connection with the circumstances
surrounding the guarantees.
Francis A. Monaco, Jr., Esq., at Walsh Monzack & Monaco PA, in
Wilmington, Delaware, lays-out the events for the Bankruptcy
Court from State Street Bank's perspective.
On November 12, 1996, Pillowtex acquired the blanket division of
Fieldcrest. In order to pay for that acquisition, Mr. Monaco
says, Pillowtex issued its 10% Senior Subordinated Notes due
2006, in the original aggregate principal amount of
$125,000,000, pursuant to an Indenture among Pillowtex, U.S.
Bank Trust, N.A., as trustee, and various other corporations.
HSBC currently serves as successor trustee under the 10% Notes
Indenture, according to Mr. Monaco.
Pursuant to a merger effective as of December 19, 1997,
Fieldcrest became a wholly owned subsidiary of Pillowtex. In
order to finance the cost of acquiring Fieldcrest, Mr. Monaco
relates, Pillowtex issued more notes -- this time, its 9% Senior
Subordinated Notes due 2007, in the original aggregate principal
amount of $185,000,000, pursuant to an Indenture dated December
18, 1997, among Pillowtex, its existing domestic subsidiaries
and U.S. Bank as trustee. HSBC now serves as successor trustee
to this Indenture.
The Guarantees
Immediately when the Merger became effective, Mr. Monaco tells
Judge Robinson, Pillowtex caused Fieldcrest to execute these
guarantees of obligations of Pillowtex:
(i) Guarantee of the 9% Notes
(ii) Guarantee of the 10% Notes
(iii) Subsidiary Guaranty, in favor of the lenders to the
Amended and Restated Credit Agreement dated December 19,
1997 by Pillowtex, the revolving lenders, and Bank of
America N.A. - as successor administrative agent,
providing for the guarantee of Pillowtex's $350,000,000
senior secured revolving credit facility; and
(iv) Subsidiary Guaranty, in favor of the lender of the Term
Credit Agreement dated December 19, 1997 by Pillowtex,
the term lenders, and Bank of America as administrative
agent providing for a guarantee of Pillowtex's
$350,000,000 senior secured term loan.
According to Mr. Monaco, Fieldcrest's debts rose from
$331,000,000 to $1,410,000,000 upon execution of these four
guarantees.
Mr. Monaco explains that the payment of the Fieldcrest Notes is
subordinated to all "Senior Indebtedness" of Fieldcrest - which
term could, arguably, be construed to encompass the Guarantees,
and the Subsidiary Guarantees. "Fieldcrest Notes were
subordinated to over $1,000,000,000 in aggregate principal
amount of Senior Indebtedness, as well as all accrued interest
and other amounts due," Mr. Monaco states. The payment
priority, Mr. Monaco clarifies, is on parity with any other
unsecured indebtedness of Fieldcrest, and is senior only to
preferred and common stock of Fieldcrest. As a result, Mr.
Monaco says, the ability of the Fieldcrest Noteholders -
unsecured creditors of Fieldcrest - to realize upon the
unencumbered assets of Fieldcrest was drastically reduced to the
granting of the Guarantees.
Conversion Rights
Furthermore, Mr. Monaco notes, certain additional rights of the
Fieldcrest Noteholders were affected to accomplish the Merger.
For example, Section 1311 of the Fieldcrest Indenture provides
that upon a merger, the surviving company must make available
its equity for the benefit of the Fieldcrest Noteholders should
they elect to convert. As a result, as part of the Merger,
Fieldcrest executed a Supplemental Indenture dated December 19,
1997, permitting - at the option of each holder - conversion of
the Fieldcrest Notes into specific increments of cash and shares
in Pillowtex common stock.
According to Mr. Monaco, Pillowtex executed an "undertaking"
with respect to the Supplemental Indenture for the limited
purpose of recognizing its obligation to have its authorized
common stock available for the Fieldcrest Noteholders for the
purposes of conversion. But Pillowtex did not obligate itself
to make the cash payment upon conversion, nor did it guarantee
Fieldcrest's obligation to do so.
By the terms of the Supplemental Indenture, Mr. Monaco
continues, $1,000 in principal amount of Fieldcrest Notes was
convertible, at the option of the holder, into $610.20 in cash
and 6.08 shares of Pillowtex common stock. At the time, Mr.
Monaco says, $100,000,000 in principal amount of Fieldcrest
Notes were outstanding, which were convertible to $61,000,000
plus 607,900 shares.
On June 30, 1999, Pillowtex breached certain financial covenants
under the 9% Notes and the 10% Notes.
Trouble Starts
As a result of such defaults, Mr. Monaco relates, payments to
converting holders could not be made. Pillowtex and Fieldcrest
did not have sufficient cash to satisfy the cash portion of the
conversion rights held by the converting Fieldcrest Noteholders.
So, Pillowtex asked Fieldcrest Noteholders to rescind their
election to convert (by returning the Pillowtex stock in
exchange for reinstatement of the Fieldcrest Notes). But some
of the converting Fieldcrest Noteholders had already sold their
Pillowtex stock and therefore, they could not rescind the
conversion. A year after Pillowtex breached the financial
agreements, Mr. Monaco calculates that $9,028,519 was owed to
people unable to rescind the conversion, on account of the cash
portion of the conversion rights. For those individuals, Mr.
Monaco informs Judge Robinson that Fieldcrest executed written,
subordinated, non-interest bearing promissory notes to pay that
obligation in three installments. "A single payment was made in
September of 2000 and none since," Mr. Monaco recounts.
Almost three months later, Pillowtex and its subsidiaries,
including Fieldcrest, filed voluntary petitions under Chapter 11
of the United States Bankruptcy Code.
Mr. Monaco asserts that the Guarantees are avoidable and
recoverable as fraudulent transfers pursuant to applicable non-
bankruptcy law and 11 U.S.C. section 544, to wit:
(i) the granting of the Guarantees were transfers of property
of, or interests in, Fieldcrest:
(ii) Fieldcrest was insolvent or was rendered insolvent by the
conveyances; and
(iii) Fieldcrest did not receive reasonably equivalent value in
exchange for the transfers.
Even if Fieldcrest was not insolvent or rendered insolvent by
the transfer, Mr. Monaco insists that a fraudulent conveyance
occurred if:
(i) Fieldcrest did not receive reasonably equivalent value in
exchange for the transfer or obligation, and
(ii) either:
(a) Fieldcrest's remaining assets were unreasonably small
in relation to its business or to the transaction, or
(b) Fieldcrest intended, believed, or reasonably should
have believed that it would incur debts beyond its
ability to pay as they become due.
The Guarantees Had No Value to Fieldcrest
According to Mr. Monaco, the Guarantees could not have conferred
sufficient direct or indirect benefits to constitute reasonably
equivalent value because:
(a) the 10% Notes were issued a year before Fieldcrest merged
into Pillowtex, and were issued for the purpose of buying
Fieldcrest's own blanket division; and
(b) the 9% Notes were issued by Pillowtex for the purpose of
financing the cost of acquiring Fieldcrest.
State Street Bank is not aware of any cognizable commercial
benefit received by Fieldcrest in exchange for the Guarantees.
To the contrary, Mr. Monaco reminds the Court, the two
Guarantees increased Fieldcrest's debts by nearly 100% and
Fieldcrest rapidly defaulted, and remained continuously in
default, under the Fieldcrest Indenture. In addition, Mr.
Monaco observes, there was no significant or quantifiable
increase in the assets of Fieldcrest upon the execution of the
guarantees or as a result of the Merger. Clearly, Mr. Monaco
asserts, Fieldcrest was rendered insolvent by the transfers.
Considering that:
(1) Pillowtex and Fieldcrest share the same bankruptcy
counsel, and
(2) the creditors' committee's counsel is likewise conflicted
as membership on the committee includes creditors of both
the Fieldcrest and Pillowtex estates,
Mr. Monaco argues that an individual creditor, such as State
Street Bank, have standing to bring an action on behalf of
Fieldcrest.
As Trustee, State Street Bank contends that it meets all of the
requirements for creditor standing to bring avoidance actions:
(i) State Street Bank made demands upon Fieldcrest, which
demand was at least orally declines, and never responded
to in writing;
(ii) the creditors' committee, whose members include State
Street Bank, HSBC, and holders of each of the debt
issues, cannot bring the action;
(iii) State Street Bank has a colorable claim, which could
greatly benefit the estate and unsecured creditors of
Fieldcrest as a whole;
(iv) State Street Bank will bring the action on behalf of
Fieldcrest, rather than on its own behalf, and will not
merely further its own interest in doing so, thus giving
State Street Bank further credence for bringing the
underlying action; and
(v) given the showing of a colorable claim and Fieldcrest's
refusal to act, it is inferable that Fieldcrest's
inaction is unjustified.
Thus, due to the extraordinary circumstances of this case and
the intricate relations among the various parties surrounding
the potential claim, State Street Bank insists that it is the
best and perhaps the only party in a position to pursue the
claims on behalf of Fieldcrest's bankruptcy estate. (Pillowtex
Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
POLAROID CORP: Court Okays Houlihan Lokey as Committee's Advisor
----------------------------------------------------------------
Judge Walsh authorizes the Official Unsecured Creditors'
Committee of Polaroid Corporation, and its debtor-affiliates to
employ Houlihan Lokey as its financial advisor, nunc pro tunc to
October 23, 2001. At the same time, the Court amends the
indemnification provisions of the Houlihan Engagement Letter to
provide that:
(a) The Debtors are authorized to indemnify, and shall
indemnify Houlihan Lokey in accordance with the Engagement
Letter for any claim arising from, related to, or in
connection with the financial advisory services, but not
for any claim arising from, relating to, or in connection
with Houlihan Lokey's post-petition performance of any
services other than the financial advisory services unless
such post-petition services and indemnification therefore
are approved by the Court.
(b) If, before the earlier of:
(i) the entry of an Order confirming a chapter 11 plan
in these cases (that Order having become a final
Order no longer subject to appeal), and
(ii) the entry of an Order closing these cases,
Houlihan Lokey believes that it is entitled to the payment
of any such amounts by the Debtors on account of the
Debtors' indemnification contribution and/or reimbursement
obligations under the Engagement Letter (as modified),
including without limitation the advancement of defense
costs, Houlihan Lokey must file an application therefore
in this Court, and the Debtors may not pay any such
amounts to Houlihan Lokey before the entry of an Order by
this Court approving the payment. This subparagraph (b)
is intended only to specify the period of time under which
the Court shall have jurisdiction over any request for
fees and expenses by Houlihan Lokey for indemnification,
contribution or reimbursement and not a provision limiting
the duration of the Debtors' obligation to indemnify
Houlihan Lokey. (Polaroid Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
POLAROID CORP: a la mode Contests Sale of Digital Solutions Unit
----------------------------------------------------------------
a la mode, inc., the nation's largest provider of real estate
appraisal software and related technology services, announced
that it has filed an objection with the bankruptcy court
overseeing the proposed sale of one of Polaroid Corporation's
(OTC Bulletin Board: PRDCQ) subsidiaries.
The Polaroid subsidiary, Polaroid Digital Solutions, Inc.
(PDSI), also primarily sells appraisal technology products.
Prior to the commencement of Polaroid's bankruptcy, a la mode
had been negotiating the purchase of PDSI from Polaroid.
However, Polaroid management accepted another offer from a
company, from outside the appraisal industry. According to
documents filed by Polaroid last Tuesday, there were only three
bidders for the assets of PDSI -- a la mode, a group led by PDSI
management, and the non-industry bidder.
a la mode's objection relates to assertions in those documents
that the accepted offer was the highest and best, that the two
losing bidders had an opportunity to revise their bids, and that
sufficient notice had been given to do so. But a la mode
officials noted that they received the documents on the same day
that objections to the proposed sale had to be filed in federal
bankruptcy court in Delaware.
a la mode's CEO, David Biggers, noted, "Once Polaroid advised us
they were entertaining another bid, they never allowed us to
review the terms of the competing offer, or make a revised bid.
We believe the best interests of the investors, lenders, and
bondholders of Polaroid are served by using every effort to
extract the highest possible price for any subsidiary being
sold, and thus, we have requested that the bankruptcy court
allow us time to review the terms of the proposed sale, conduct
due diligence, and determine whether to make a revised offer.
Based on the preliminary information provided to us, we could
easily have raised our $4.5 million bid and exceeded the offer
accepted by Polaroid."
A hearing set for 2 pm yesterday, January 15, would determine
whether the proposed sale can proceed.
a la mode is the leader in the design, development and support
of real estate related software, Internet solutions and
electronic document technologies. The company's flagship
product, WinTOTAL appraisal software, is used by over 50%
percent of the nation's appraisers, nearly three times the share
of its closest competitor. Its e-commerce servers delivered
over 4 million electronic appraisals to lenders in the past 12
months, making it the undisputed leader in creating the
paperless real estate transaction. Headquartered in Oklahoma
City, a la mode employs 138 people. More information on the
company can be found on the Web at http://www.alamode.com
PSINET INC: Court Approves Omnibus Intercompany Claims Protocol
---------------------------------------------------------------
As part of their ongoing restructuring efforts, the PSINet
Debtors have undertaken to sell or liquidate non-core assets,
including certain of their direct and indirect foreign non-
Debtor subsidiaries operating in Europe, Latin America and the
Asia Pacific region. In order to facilitate the sale of such
foreign affiliates or to preserve their values during the
restructuring process, the Debtors anticipate that they may need
to reduce or eliminate certain intercompany claims arising
between Debtors and non-Debtor affiliates. The Debtors may also
need to reduce or eliminate intercompany debts of particular
foreign affiliates at times in order to avoid adverse
consequences under local insolvency laws or to preserve access
to lenders, vendors or other parties necessary to maintain the
going concern value of such subsidiaries during pending sale,
restructuring or liquidation efforts.
The Debtors believe that in most cases, the foreign affiliates
have little ability to repay their intercompany debts to the
Debtors, and such intercompany claims therefore have little if
any value to the Debtors' estates. Compromising these claims, on
the other hand, will help maximize the values obtained by the
Debtors from the sale or orderly liquidation of their non-
Debtor affiliates.
Intercompany claims may be eliminated in a number of different
ways. For example, a Debtor may agree to waive its intercompany
claims against a foreign affiliate in exchange for the
assumption of such liability by a second affiliate.
Alternatively, a Debtor may assign its right to collect the
intercompany debt from a foreign affiliate to a second affiliate
in exchange for a note of equivalent value from such second
affiliate (thereby allowing the second affiliate to waive or
capitalize the assigned intercompany debt of the first
affiliate). Or the Debtor may capitalize the intercompany debt
by converting the intercompany claim into an equity interest in
the foreign affiliate. The particular method employed in any
particular transaction will depend on applicable regulatory,
accounting and tax considerations and the particular
intercompany relationships involved.
In order to minimize administrative expenses and to provide
flexibility in responding to such needs as they arise, the
Debtors sought and obtained an order of the Court establishing
omnibus procedures by which they may waive, capitalize, assign
or otherwise compromise intercompany claims arising between a
Debtor and a non-Debtor affiliate without further Court
approval.
The Debtors believe the establishment of such omnibus procedures
will expedite the sale and restructuring process and reduce
administrative expenses while affording parties in interest
reasonable notice and an opportunity to object. The Debtors
therefore believe that the relief sought herein is in the best
interests of their estates, their creditors and other parties in
interest.
The Omnibus Procedures
The omnibus procedures, as approved by the Court, and effective
upon entry, are summarized as follows::
(1) Upon deciding to undertake a proposed transaction (or
series of related transactions) designed to reduce or eliminate
an intercompany claim between a Debtor and a non-Debtor
affiliate-whether by waiver, capitalization, assignment or other
compromise of such intercompany claim (each, an Intercompany
Transaction)-the applicable Debtors shall provide 10 business
days' fax notice of such proposed transaction to the US Trustee
and counsel for the Committee.
(2) The Notice must: (i) identify the applicable Debtors
and non-Debtor affiliates and the amount of each intercompany
claim involved in the proposed Intercompany Transaction, (ii)
describe the manner in which each intercompany claim would be
waived, capitalized, assigned or otherwise compromised under the
proposed Intercompany Transaction, including any consideration
received in exchange, and (iii) indicate the approximate timing
by which the Debtors intend to complete the proposed
Intercompany Transaction.
(3) The Committee and US Trustee shall have 10 business
days after service of the Notice to object. If either party
serves a timely objection to the proposed Intercompany
Transaction on the Debtors, the Debtors shall attempt to resolve
such objection consensually. If the Debtors cannot reach a
consensual resolution to the objection, the Debtors shall not
proceed with the proposed Intercompany Transaction until the
Debtors obtain approval from the Court upon notice and a
hearing.
(4) If the Debtors do not receive any timely written
objections from the Committee or US Trustee, or if the Debtors
obtain confirmation of non-opposition from both parties, the
Debtors shall be authorized to proceed with the Intercompany
Transaction without further Order of the Court.
Judge Gerber makes it clear that the authority granted shall not
extend to any Intercompany Transaction involving PSINet
Consulting Solutions Holdings, Inc. or any direct or indirect
subsidiary thereof
The Bankruptcy Court retains jurisdiction to hear and determine
all matters arising from the implementation of this Order.
(PSINet Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
QUALITY STORES: Will Close 176 Stores & Ohio Distribution Center
----------------------------------------------------------------
Quality Stores, Inc., the company operating stores under the
names of Quality Farm & Fleet, Quality Farm & Country, County
Post, and Central Tractor Farm & Country, indicated that it has
determined, in conjunction with its creditors and the purchasers
of certain assets of the estate, that the Company will close its
remaining 176 stores and the distribution center in Fostoria,
Ohio, during the first quarter of 2002. The Company expects all
of its stores to be closed by March 31, 2002. The Company also
closed or sold approximately 170 stores during 2001.
As was widely reported in early January, a joint venture that
included Great American Group, Gordon Brothers Retail Partners,
DJM Asset Management, and Tractor Supply Company was awarded the
sale of the Company's assets at the 176 core stores at an
auction held in New York, New York, on December 27, 2001. The
joint venture will manage the closing of these remaining stores.
Following the completion of the store closings, the Company will
dispose of any assets not already sold and settle the estate's
claims over a longer period of time. The Company anticipates a
liquidating Chapter 11 Plan of Reorganization within the next
month.
RELIANCE GROUP: Bank Panel Agrees to Fix Bank Debts at $253MM
-------------------------------------------------------------
Andrew DeNatale, Esq., at White & Case and Steven R. Gross of
Debevoise & Plimpton, tell Judge Gonzalez that the Official
Unsecured Bank Committee and the Official Unsecured Creditors
Committee have been actively negotiating the restructuring of
Reliance Group Holdings, Inc., and its debtor-affiliates. Some
of the negotiations have focused on the value of the aggregate
claim due and owing under the Credit Agreement.
The attorneys remind the Court that the Debtors' outstanding
liabilities include loans incurred under a revolving credit
facility and a term loan agreement entered into by RFS on
November 1, 1993 with various financial institutions. RFS has
borrowed $237,500,000 under the Credit Agreement -- $100,000,000
under the revolving credit facility and $137,500,000 in term
loans. The Credit Agreement is secured by a pledge of all of the
common stock of RIC. The principal amount of the loans under the
Credit Agreement and all accrued but unpaid interest matured on
November 10, 2000 but was not paid to RFS.
The Debtors and the Bank Committee agree that the aggregate
amount of the Claim equals $252,944,097.27, consisting of the
following components:
Accrued/Unpaid
Credit Interest
Agreement Principal thru 6/11/01 Total
-------------- --------- ----------------- --------
Revolving Loan $137,500,000 $8,941,310.44 $146,441,319.50
Term Loan $100,000,000 $6,502,777.77 $106,502,777.77
---------------
$252,944,097.27
The Bank Committee agrees to file a list of claim holders and
the percentages of the Claim owned by each holder on or before
the tenth day prior to this Court's hearing for the approval of
a disclosure statement, pursuant to Section 1125 of the
Bankruptcy Code.
This Stipulation will be deemed to constitute the proof of claim
that Chase Manhattan Bank, as administrative agent for holders
of the Claim, would otherwise have filed in accordance with the
Bar Date Order.
This Stipulation shall in no way affect or alter the rights of
any holder of any portion of the Claim to file a proof of claim
or otherwise assert their rights in these cases. (Reliance
Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
RENCO METALS: Court Fixes Feb. 20 Bar Date for Proofs of Claims
---------------------------------------------------------------
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------- x
In re : Chapter 11
RENCO METALS, INC., : Case No. 01-14311 (REG)
Debtor. :
-------------------------------- x
In re : Case No. 01-14312 (REG)
MAGNESIUM CORPORATION OF AMERICA,:
Debtor. :
---------------------------------x
NOTICE OF ENTRY OF BAR DATE ORDER FIXING LAST DAY
FOR FILING PROOFS OF CLAIM AGAINST THE DEBTORS
----------------------------------------------
TO ALL PERSONS AND ENTTITES WITH CLAIMS AGAINST THE DEBTORS:
PLEASE TAKE NOTICE: that on January 4, 2002 the United
States Bankruptcy Court for the Southern District of New York
(the "Bankruptcy Court") entered an order (the Bar Date Order")
establishing February 20, 2002 at 5:00p.m. (E.D.T.)(the "Bar
Date") as the last date and time for the filing of proofs of
claim against Magnesium Corporation of America ("Magcorp") or
Renco Metals, Inc. ("Metals" and together with Magcorp, the
"Debtors"). The Bar Date and the procedures set forth herein
for the filing of proofs of claim apply to all claims against
the Debtors that arose prior to august 2, 2001 (the "Petition
Date").
Except as described below, the Bar Date Order requires all
persons or entities (including, individuals, corporations,
partnerships, estates, trusts, governmental units) that have or
assert any Claim (as defined in section 101(5) of the Bankruptcy
code) against one or both of the Debtors to file a proof of
Claim (a "Proof of Claim") with the Clerk of the Bankruptcy
Court at the address and in the manner indicated below, so that
such Proof of Claim is actually received on or before 5:00 p.m.,
Eastern Standard Time, on February 20, 2002, the Bar Date.
WHO SHOULD FILE A PROOF OF CLAIM
--------------------------------
UNDER SECTION 101(5) OF THE BANKRUPTCY CODE AND AS USED
HEREIN, THE TERM "CLAIM" MEANS (A) RIGHT TO PAYMENT, WHETHER OR
NOT SUCH RIGHT IS REDUCED TO JUDMENT, LIQUIDATED, UNLIQUIDATED,
FIXED, CONTINGENT, MATURED, UNMATURED, DISPUTED, UNDISPUTED,
LEGAL, EQUITABLE, SECURED OR UNSECURED OR (B) RIGHT TO AN
EQUITABLE REMEDY FOR BREACH OF PERFORMANCE IF SUCH AN EQUITABLE
REMEDY IS REDUCED TO JUDMENT, FIXED, CONTINGNET, MATURED,
UNMATURED, DISPUTED, UNDISPUTED, SECURED OR UNSECURED.
Pursuant to the Bar Date Order, all persons or entities
(including, individuals, corporations, partnerships, estates,
trusts, governmental units) that have or assert any Claim
against one or both of the Debtors that arose prior to the
Petition Date and is not one of the other types of Claims
described below must file a Proof of Claim on or before the Bar
Date.
ACTS OR OMISSIONS, IF ANY, OF THE DEBTORS THAT OCCURRED PRIOR
TO THE PETITION DATE, INCLUDING THE DEBTORS' INDEMNITY
AGREEMENTS, GUARANTEES, OR SERVICES PROVIDED TO OR RENDERED BY
THE DEBTORS, MAY GIVE RISE TO CLAIMS, AGAINST THE DEBTORS
NOTWITHSTANDING THE FACT THAT SUCH CLAIMS (OR THE INJURIES ON
WHICH THEY ARE BASED) MAY BE CONTINGENT ON SUCH DATE, THEREFORE,
ANY CREDITOR HAVING A CLAIM OR POTENTIAL CLAIM AGAINST THE
DEBTOR, NO MATTER HOW REMOTE OR CONTINGENT, MUST FILE A PROOF OF
CLAIM ON OR BEFORE THE BAR DATE.
Any persons or entities holding Claims in the following
categories are NOT required to file a proof of claim on or
before the Bar Date to assert such Claims:
A. Any Claim that has already been asserted by a Proof of
Claim that was properly filed with the Clerk of the Bankruptcy
Court or the Magcorp Claims Docketing Center (as defined below)
prior to the Bar Date.
B. Any Claim that is; (a) listed on the Debtors' Schedules
of Liabilities filed with the Bankruptcy Court on October 18,
2001 (the "Schedules of Liabilities"); and (b) whose claim is
not described as being "disputed," "contingent," or
"unliquidated," and (c) not disputed by the holder of such Claim
as to the amount of classification of such Claim as set forth in
the Schedules of Liabilities;
C. Any Claim allowed by an order of the Bankruptcy Court
entered on or before the Bar Date, or any claim, if any, arising
from the rejection of an executory contract or unexpired lease,
the Bar Date for which is governed by other orders of the
Bankruptcy Court;
D. Any Claim that is allowable under Sections 503(b) and
507(a)(1) of the Bankruptcy Code as expenses of administration
in the Debtors' Chapter 11 cases;
E. Any intercompany Claim by and between the Debtors; and
F. Any Claim that is exclusively for the repayment of
principal and interest (a "Debt Claim") on or under the 11-12%
Senior Notes due July 1, 2003 (the "Senior Notes") issued
pursuant to that certain indenture, dated July 1, 1996 (the
"Indenture") by and among Metals, as Issuer, Magcorp and Sabel
Industries, Inc. a guarantor, and State Street Bank and Trust
company, as successor trustee (the "Indenture Trustee").
Any holder of a Claim arising solely from the ownership of
the common stock or other equity securities of the Debtors, need
not file a proof of interest, but must file a Proof of Claim for
any other Claim against one or both of the Debtors.
Notwithstanding anything to the contrary, the Indenture Trustee
must file a Proof of Claim, on or before the Bar Date, on
account of the applicable Debt Claims on or under the Indenture.
If you hold a Claim that is not listed on the Schedules of
Liabilities or is listed on the Schedules of Liabilities as
contingent or unliquidated or disputed, you must file a Proof of
Claim.
If you hold a Claim against both of the Debtors, you must
file a Proof of Claim against each of the Debtors.
Each Proof of Claim filed must (i) be written in the English
language; (ii) be denominated in lawful currency of the United
States as of the Petition Date, (iii) conform substantially with
Official Form No. 10; and (iv) specify the name and case number
of the Debtor against which the Claim is being asserted.
CONSEQUENCES OF FAILING TO TIMELY FILE PROOF OF CLAIM
-----------------------------------------------------
Any person or entity that is required to file a Proof of
Claim, but that fails to do so in a timely manner, will be
forever barred from asserting such Claim against the Debtor or
their successors or assigns and shall not, with respect to such
Claim, receive or be entitled to receive any payment or
distribution of property from the Debtors, or their successors
or assigns, with respect to such Claim.
RESERVATION OF RIGHTS
---------------------
The Debtors reserve the right to dispute, object, assert
offsets or defenses against any Proofs of Claim.
TIME AND PLACE FOR FILING PROOFS OF CLAIM
-----------------------------------------
Except as provided for herein, Proofs of Claim must be filed
so as to be received on or before 5:00 p.m. (E.D.T.) on February
20, 2002, at the following addressed (the "Magcorp Claims
Docketing Center"):
IF SENT BY MAIL:
----------------
Bankruptcy Services LLC
Magcorp Claims Processing
Bowling Green Station
PO Box 5213
New York, New York 10274-5213
IF SENT BY OVERNIGHT COURIER OR BY HAND:
----------------------------------------
United States Bankruptcy Court
Southern District of New York
Magcorp Claims Processing
One Bowling Green
New York, New York 10004-1408
Note that Proofs of Claim will be deemed timely filed only if
actually received by the Clerk of the Bankruptcy Court or the
Magcorp Claims Docketing Center on or before the Bar Date.
Proofs of Claim may not be delivered by facsimile or telecopy.
If you wish to receive acknowledgement of receipt of your Proof
of Claim, you must also submit a copy of your original Proof of
Claim and a self-addressed, stamped envelope.
BY ORDER OF: HONORABLE ROBERT E. GERBER
UNITED STATES BANKRUTPCY JUDGE
Joseph H. Smolinsky
CHADBOURNE & PARKE LLP
30 Rockefeller Plaza
New York, New York 10112
Tel: (212) 408-5100
Fax: (212) 541-5369
Attorneys for the Debtors and
Debtors in Possession
RURAL CELLULAR: S&P Rates $300M Sr. Debt Issues at Low-B Level
--------------------------------------------------------------
Standard & Poor's assigned its single-'B'-minus rating to Rural
Cellular Corp.'s proposed $300 million senior subordinated note
offering due 2010.
At the same time, Standard & Poor's affirmed its existing
ratings on the company. The outlook is stable.
Proceeds of the new note issue will be used to permanently
reduce one of the company's $150 million bank term loans, and
reduce amounts outstanding under its revolving credit facility.
The ratings on Rural Cellular reflect the company's high debt
leverage, the challenges it faces in managing rapid growth and a
much larger business, increased competition, and decelerating
roaming revenue growth. These factors are partially offset by
solid cash flow growth, improving EBITDA margins, relatively low
churn despite recent issues in its southern region, and the
potential to reduce debt levels with free cash flow.
Rural Cellular is a rural wireless carrier with 574,000 postpaid
and 34,000 prepaid subscribers as of September 30, 2001,
excluding its 70%-owned Wireless Alliance joint venture. The
company operates in four noncontiguous regions, the result of
numerous acquisitions over its 10-year history. Rural Cellular's
performance was solid during 2001, although some operational
problems became apparent in the company's southern region during
the latter half of the year. This region was acquired from
Triton Cellular Partners L.P. in the beginning of 2000, and
highlights some of the operating risks associated with an
acquisitive company. Overall churn levels rose to 2.8% in
the third quarter of 2001, the result of problems in the
southern region and billing and customer care consolidation in
the northwest region. However, churn improved to 2.1% in the
fourth quarter of 2001.
Rural Cellular has completed the conversion of its network to
digital from analog, and about 58% of its subscribers had
digital handsets as of September 30, 2001. Roaming revenue
comprises 28% of total revenue and is an important part of the
company's business model. Growth in this revenue segment has
been slowing because of lower per-minute yields being negotiated
with its roaming partners. Helping to mitigate this has been a
corresponding decrease in out-collect roaming expense, which the
company has been aggressively managing down.
Longer term, the role of smaller regional and rural wireless
carriers is uncertain given the trend towards national carriers
and national footprints. Management has indicated that a sale of
the company is a possibility. Given the higher credit quality of
many potential acquirers, positive event risk exists should a
transaction occur; however, a sale is not factored into the
ratings.
The company recently announced that it expects EBITDA for 2001
to rise to $197 million, up from $140 million in 2000. Pro forma
for the $300 million subordinated note offering, debt and debt-
like preferred stock total about $1.7 billion, resulting in debt
and debt-like preferred to estimated 2001 EBITDA of about 8.6
times. Despite rising capital expenditure levels anticipated for
2002 due to the buildout of its licensed personal communications
services (PCS) population equivalents, the company is expected
to remain free cash flow positive and intends to reduce debt
balances throughout the year. However, some of the debt
reduction will be offset by continued accretion of high-coupon
PIK preferred stock. The two debt-like preferred stock issues
totaled about $377 million at September 30, 2001.
Outlook: Stable
Standard & Poor's expects debt-protection measures to improve
modestly as free cash flow is applied to debt reduction.
Rating Assigned RATING
$300 million senior subordinated notes due 2010 B-
Ratings Affirmed
Corporate credit rating B+
Senior secured bank loan B+
Senior subordinated notes B-
Preferred stock CCC+
SAFETY-KLEEN CORP: Inks Pact to Allow MDC Unsecured Claim of $6M
----------------------------------------------------------------
Safety-Kleen Corp. and its subsidiaries and affiliates, and in
particular Safety-Kleen (Los Angeles), Inc., ask Judge Peter
Walsh for an order authorizing Safety-Kleen LA to enter into a
consent decree with (i) McDonnell Douglas Corporation, and (ii)
Messrs. John and David Lidyoff, both individually and in their
capacity as former partners of Oil Process Company, a dissolved
general partnership. This Consent Decree resolves certain
claims against Safety-Kleen LA in connection with asserted past
and future environmental response costs relating to (i) the
Operating Industries, Inc. and Casmalia Superfund Sites and
(ii) various personal injury lawsuits filed in connection with
Oil, J. Gregory St. Clair, Esq., at Skadden, Arps, Slate,
Meagher & Flom LLP (Illinois) in Chicago, explains. Safety-
Kleen LA has executed the Consent Decree, subject to Judge
Walsh's approval.
Prior to the Petition Date, Mr. St. Clair relates, McDonnell
Douglas commenced an action, captioned "McDonnell Douglas
Corporation v. Oil Process Company, et al.", against, among
others, Safety-Kleen LA, the Lidyoffs, and OPC, by the filing of
a complaint in the United States District Court for the Central
District of California. The Complaint asserts various claims and
causes of action against the defendants, including, but not
limited to, claims for contractual indemnity and contribution in
excess of $10 million, related to the defendants' alleged
liability under various contracts between MDC and OPC and Oil,
Inc. The Complaint further alleges that Safety-Kleen LA is
liable to McDonnell Douglas under theories of successor
liability, among others. The Complaint alleges that the Lidyoffs
were partners in OPC and that Oil is a successor corporation to
OPC. The Complaint further alleges that: (i) Oil changed its
name to Rollins O.P.C., Inc. in or about June 1992, (ii) Rollins
O.P.C., Inc. changed its name to Laidlaw Environmental Services
(Los Angeles), Inc. in or about May 1997, and (iii) Laidlaw LA
changed its name to Safety-Kleen LA in or about July 1998.
On or about October 30, 2000, MDC filed a proof of claim
asserting general unsecured claims against Safety-Kleen LA in
the approximate amount of $18,000,000, based on the causes of
action set forth in Complaint. More specifically, the MDC Claim
sets forth, among others, claims for (a) clean-up costs in
excess of $14 million (including attorney's fees) incurred prior
to the Petition Date, (b) damages in the amount of $143,509
related to two private personal injury lawsuits related to the
disposal of materials at the Superfund Sites, and (c) estimated
future cleanup costs in the amount of $3,656,000.
On or about November 16, 2000, Judge Walsh entered a stipulation
and order modifying the automatic stay, effective February 1,
2001, to permit MDC, the Lidyoffs, OPC, and Safety-Kleen LA to
continue to prosecute and defend the Action.
Following modification of stay, the parties engaged in extensive
settlement negotiations aimed at resolving the Action and the
MDC Claim. As a result of these negotiations, MDC, on the one
hand, and the Lidyoffs and Safety-Kleen LA, on the other hand,
have agreed to settle the Action and resolve the MDC Claim.
The Consent Decree
The most significant terms and conditions of the Consent Decree
are:
(a) Allowed Unsecured Claim. MDC will have an allowed
general unsecured claim in Safety-Kleen LA's chapter 11 case in
the amount of $6,000,000;
(b) Releases. MDC, on the one hand, and Safety-Kleen LA
and the Lidyoffs on the other, will provide one another with
mutual releases of all claims and causes of action asserted in
the Action; and
(c) Dismissal. The Action will be dismissed with
prejudice as to the Lidyoffs and Safety-Kleen LA, with each
party bearing its own costs and attorneys' fees.
The Consent Decree is expressly contingent upon entry of an
order by Judge Walsh allowing MDC a general unsecured claim in
the amount of $6,000,000. By its entry into the Consent Decree,
Safety-Kleen LA need not and does not concede the merits of the
MDC's claims.
Approval of Entry Into Consent Decree
The Debtors advise Judge Walsh he is empowered by Rule to
approve Safety-Kleen LA's entry into the Consent Decree if it is
in the best interests of the estates. To minimize litigation
and expedite the administration of a bankruptcy estate
'compromises are favored in bankruptcy. Indeed, courts in this
District have consistently recognized that the approval of a
proposed compromise and settlement is committed to the sound
discretion of the bankruptcy court.
In determining whether to approve a settlement, a bankruptcy
court should consider (1) the probability of success; (2) the
likely difficulties in collection; (3) the expense,
inconvenience and delay necessarily involved; and (4) the
paramount interest of the creditors.
Probability of Success in Litigation
Absent entry into the Consent Decree, Safety-Kleen LA would be
forced to defend against MDC's allegations, at a significant
cost to its estate and without any guaranty of success. Indeed,
given its inherent uncertainties, this litigation could result
in one or more awards against Safety-Kleen LA significantly
greater than the cost to Safety-Kleen LA of the settlement under
the Consent Decree.
Rather than engage in costly and time-consuming litigation with
MDC, Safety-Kleen LA and the Lidyoffs have agreed with MDC to
resolve MDC's claims at a value that the Debtors believe to be
in the best interests of Safety-Kleen LA's estate and creditors,
as well as all other parties-in-interest.
Complexity of the Litigation
Under the Consent Decree, Safety-Kleen LA will be permitted to
resolve its disputes with MDC without the need for additional
discovery or a trial on the merits. In fact, if these disputes
are not resolved as proposed herein, costly and time-consuming
litigation with MDC is a virtual certainty.
This litigation could entail, among other things, (a) extensive
documentary discovery, including review of voluminous records
relating to the Superfund Sites, (b) numerous depositions of
expert witnesses with respect to various Superfund Site issues,
(c) the preparation and filing of pretrial motions, (d)
preparation for trial (e) a trial to determine the nature and
extent of Safety-Kleen LA's liability, if any, and (f) post-
trial matters (perhaps including appeals). Further, such
litigation could result in adverse judgment at trial in an
amount significantly greater than the proposed settlement
amount.
Paramount Interest of Creditors
Entry into the Consent Decree is in the best interests of
Safety-Kleen LA's creditors because it resolves on favorable
terms both the MDC Claim and Safety-Kleen LA's liability, if
any, to MDC in the Action. This, in turn, precludes the
possibility of any adverse judgments, saves administrative
expenses (including attorney's fees), and preserves the assets
of Safety-Kleen LA's estate. Further, entry into the Consent
Decree will permit Safety-Kleen LA to reach closure with
respect to MDC's claims and to focus its restructuring efforts
on other matters.
In sum, entry into the Consent Decree meets the standards for
approval of a compromise in this District. Accordingly, the
Court should approve Safety-Kleen LA's entry into the Consent
Decree. (Safety-Kleen Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
SENIOR HOUSING: Acquires 31 Communities from Crestline for $600M
----------------------------------------------------------------
Senior Housing Properties Trust (NYSE: SNH) completed its $600
million acquisition of 31 senior living communities from
Crestline Capital Corp. (NYSE: CLJ). Simultaneously with this
acquisition, these 31 properties were leased to Five Star
Quality Care, Inc., (AMEX: FVE), SNH's former subsidiary which
was spun out to SNH shareholders on December 31, 2001, and now
operates as a separate company. The minimum rent is $63
million/year, with escalations beginning in 2003 based upon
revenue increases. The lease runs to 2017 and FVE has extension
options thereafter.
The 31 properties which SNH acquired contain 7,487 living units,
a majority of which are independent living apartments. These
properties are approximately 90% occupied and about 90% of the
operating revenues at these properties are paid from residents'
private resources, not Medicare or Medicaid funding. All of
these properties' operations are managed by a subsidiary of
Marriott International, Inc. (NYSE: MAR) under long-term
contracts, and Marriott is expected to continue managing these
operations.
SNH is a real estate investment trust headquartered in Newton,
Massachusetts, which invests in senior living properties
throughout the United States. After the acquisition announced
today, SNH will own 112 properties, with 18,405 living units,
located in 28 states.
SIMON TRANSPORT: Seeking Waiver of Eequipment Lease Defaults
------------------------------------------------------------
Simon Transportation Services Inc. (Nasdaq: SIMN) announced
revenue and operating results for the fourth quarter of fiscal
2001 and the year ended September 30, 2001.
Revenue for the fourth quarter increased 21.3% to $74.5 million,
compared with $61.4 million for the corresponding quarter of
fiscal year 2000. Net loss attributable to common stockholders
was $20.3 million, or $3.33 per diluted share, before a $6.4
million adjustment for an accrued loss on guaranteed lease
residual values. This compared with a net loss attributable to
common stockholders of $6.9 million for the corresponding
quarter a year ago.
For the year ended September 30, 2001, revenue increased 20.5%
to $278.8 million compared with $231.4 million for the year
ended September 30, 2000. Net loss attributable to common
stockholders was $41.7 million before a $6.4 million adjustment
for an accrued loss on guaranteed lease residual values. This
compared with a net loss attributable to common stockholders of
$11.1 million for the year ended September 30, 2000.
Chief Executive Officer Jon Isaacson stated, "The Company's
financial results for the fourth quarter and year were impacted
by high fuel costs, increased insurance and claims expense, soft
freight demand, and extremely high driver turnover, which led to
a large number of tractors without drivers. The driver turnover
and lack of freight hurt our equipment utilization and created
more empty miles, negatively impacting our revenue. The
resulting lower revenue per tractor and higher operating
expenses created a substantial operating loss."
"In addition to the operating loss, the Company recognized a
$6.4 million loss relating to equipment values, representing an
accrual for the difference between the residual values of leased
equipment the Company has guaranteed and the projected market
value of the equipment at lease termination. The Company has
tractor trade and repurchase agreements covering a substantial
portion of the Company's fleet. As the Company negotiates with
its equipment lessors for extended lease terms, the
trade/repurchase agreements are being renegotiated as to trade-
in and repurchase values.
"In response to these challenges, the Company has undertaken
sweeping efforts to return to profitability. These efforts have
included consolidation of terminals, reduction of non-driver
personnel, reduction of wages and benefits for remaining
salaried employees, improving service and obtaining rate
increases from customers, and higher driver wages aimed at
reducing turnover. These efforts are having some effect in
reducing driver turnover.
"Additionally, we have made significant progress in improving
service and expanding our business with our core customers.
Many of our customers have cooperated with us during a recent
rate increase and are working with us to give us additional
freight.
"The Company's operating losses have severely constrained our
liquidity. We have deferred making rent payments on leases
covering substantially all of our tractors and trailers for
several months. This has placed us in default under our leases,
as well as our line of credit and other borrowings, which are
cross-defaulted with the leases. In addition, the reduction in
our net worth caused by losses will decrease the advance rate on
our line of credit if it is not amended.
"We are seeking to restructure our equipment leases to waive the
payment defaults, extend the duration of the leases, and spread
the deferred payments over the extended lease term. A key part
of this restructuring is to negotiate with our tractor
manufacturer to extend buyback protection on the tractors to the
new lease term. We also are seeking to renegotiate the advance
rate on our line of credit to maintain our current borrowing
ability. We expect to complete the lease and line of credit
restructuring during the first calendar quarter of 2002, but we
cannot be certain that we will be successful in these
negotiations. Because of this uncertainty, our auditors have
included a "going concern" qualification in our audit report.
The above factors raise substantial doubt about our ability to
keep operating given the losses we have incurred, particularly
absent a restructuring of our financial obligations.
"While working on the restructurings, we have received
significant financial support from Jerry Moyes, our Chairman of
the Board, and his affiliates. During the fourth fiscal
quarter, Interstate Equipment Leasing, Inc., an entity
controlled by the family of Mr. Moyes advanced approximately
$2.1 million to the Company for equipment purchases and general
corporate purposes. At September 30, 2001 IEL converted $2.1
million of the advances into equity in the form of preferred
stock and preferred stock warrants. The preferred stock was
sold for a purchase price of $16.00 per share, and each share is
convertible into ten shares of Class A Common Stock. In October,
IEL advanced $1.6 million to the Company, secured by 39
tractors. In addition, pending successful completion of the
lease and line of credit restructuring, Mr. Moyes has committed
to provide the Company with a $15 million secured working
capital line of credit. Pending implementation of the credit
line, Mr. Moyes has loaned the Company $3 million, secured by a
first deed of trust on the Atlanta terminal. Proceeds from the
line of credit will be used to retire the $1.6 million from IEL
and the $3.0 million loan from Mr. Moyes."
In summary, Mr. Isaacson stated, "The Company faces many
challenges. We are hopeful that our efforts to restructure our
financial obligations will give us the breathing room we need to
return to positive cash flows and profitability. In these
challenging times, we sincerely appreciate the support of our
customers, creditors, employees and stockholders."
Simon Transportation is a truckload carrier providing
nationwide, predominantly temperature-controlled transportation
services for major shippers. The Company's Class A Common Stock
trades on the Nasdaq National Market under the symbol "SIMN". As
of September 30, 2001, the company sustained strained liquidity,
as total current liabilities exceeded total current assets by as
much as $80 million.
THORN MEDIA: Court to Conduct Auction of All Assets on Feb. 7
-------------------------------------------------------------
The Board of Directors of Thorn Media, Inc., d/b/a Total Sports
Publishing, having concluded that the Company is no longer able
to continue in operation as an independent publisher, will be
selling all of its assets. These assets include reference works
such as Total Baseball, Total Hockey, and Total Football,
executory contracts for New York Times bestselling books,
certain digital rights, and a substantial number of contracts
for unpublished works.
The Company, which filed a petition for reorganization in the
United States Bankruptcy Court for the Southern District of New
York on December 21, 2001 (case no. 01-38020), will be
conducting the sale on February 7, 2002.
Publisher and CEO John Thorn says, "We would prefer to sell all
the Company's assets to a single entity, with a hope that such
an entity would continue the tradition of the Total Sports
Publishing program that began two decades ago. However, we
cannot deny to our creditors the opportunity to extract a
perhaps better outcome by selling off the Company's assets
piecemeal."
The Company has obtained an Order Scheduling Hearing dated
December 21, 2001 which provides in part that (1) a hearing will
be held on February 7, 2002 at 2:30 p.m., before the Honorable
Cecelia G. Morris, United States Bankruptcy Judge, 176 Church
Street, Poughkeepsie, New York 12601, at which time the Court
will conduct an auction of the Company's assets, including
inventory, intellectual property, trademarks, copyrights,
licenses, website, domain names, executory contracts and digital
rights, free and clear of all liens, claims and encumbrances,
with all such liens, claims and encumbrances to attach to the
consideration paid; and (2) any party wishing to make a bid for
the Assets or specified assets, must provide the Company with
sufficient and adequate information to demonstrate their
financial wherewithal and ability to consummate the purchase of
the Assets and shall further deposit with the Company's counsel
no later than forty eight (48) hours prior to the Auction a good
faith deposit in the amount of $25,000.00 by certified or bank
check.
The Court-approved bidding procedures, including the
requirements for becoming a "qualified bidder", are contained in
the Scheduling Order and Motion and may be obtained by accessing
the Bankruptcy Court Web site, http://www.nysb.uscourts.gov
Parties interested in receiving additional information regarding
the auction and hearing, including a definitive list of the
assets, may contact Counsel for the Debtor, Todtman, Nachamie,
Spizz & Johns, P.C., Attention Attention: Arthur Goldstein, Esq.
(Agoldstein@Tnsj-Law.Com), 425 Park Avenue, New York, NY 10022,
(212) 754 9400 Or Thorn Media, Inc., Attn: John Thorn
(Jthorn@Ts-Pub.Com), 100 Enterprise Drive, Kingston, Ny 12401,
(845) 382 6964 (X 325).
TRITON ENERGY: Amerada Hess Takes Over 100% of Ordinary Shares
--------------------------------------------------------------
Amerada Hess (Cayman) Limited owns 100% of the Ordinary Shares
of Triton Energy Limited by virtue of acquisition. The total
number of shares is 64,012,076 over which the Holder exercises
shared voting and dispositive powers. The amount of funds
required for the purchase of the Ordinary Shares acquired on
December 20, 2001, and to pay related fees and expenses, was
approximately $67.6 million. Amerada Hess (Cayman) Limited
obtained the funds from Amerada Hess and Amerada Hess obtained
such funds from general corporate funds.
Having consummated the Acquisitions, Amerada Hess (Cayman)
Limited intends to cause the Company to file a Form 15 with the
Securities and Exchange Commission as soon as practicable. As a
result of the filing of the Form 15, the registration of the
Ordinary Shares under the Securities Exchange Act of 1934, as
amended, will be terminated. Accordingly, the Company will no
longer be required to file periodic reports with the Commission
in connection with the Ordinary Shares."
On December 20, 2001, Amerada Hess (Cayman) Limited acquired (i)
1,473,252 Ordinary Shares for $45.00 per Ordinary Share in a
compulsory acquisition pursuant to the procedure set out in
Section 88 of the Companies Law (2001 Second Revision) of the
Cayman Islands and (ii) 30,024 Ordinary Shares for $45.00
per Ordinary Share pursuant to a series of private purchases.
A subsidiary of Amerada Hess, the international oil and gas
exploration and production company has operations in Africa,
Asia, Europe, Latin America, and the Middle East. Triton
Energy's main properties and operations are in Colombia, the
Malaysia-Thailand joint development area, and Equatorial Guinea.
Proved reserves stack up to 194.7 million barrels of oil and
592.6 billion cu. ft. of gas. The company's current revenues are
from its oil and gas production in Colombia, although it has
made a major discovery offshore Equatorial Guinea. As of
September 30, 2001, the company's liquidity is strained, with
total current liabilities exceeding total current assets by
around $10 million.
U.S. INDUSTRIES: Sells Ames True Temper for $165M to Wind Point
---------------------------------------------------------------
U.S. Industries, Inc. (NYSE-USI) announced that it has completed
the previously announced sale of its Ames True Temper business
to Wind Point Partners for $165 million.
Following the completion of its Disposal Plan, which has been
previously announced, U.S. Industries will own several major
businesses selling branded bath and plumbing products, along
with its consumer vacuum cleaner company. The Company's
principal brands will include Jacuzzi, Zurn, Sundance Spas,
Eljer, and Rainbow Vacuum Cleaners.
As previously reported in the Troubled Company Reporter, the
company is actively pursuing its Disposal Plan and seeking to
refinance its bank debt. However, there can be no assurance when
or whether the Company will consummate any of the proposed
transactions. If the Company is unable to consummate asset
disposals or refinancing in time to meet scheduled
amortizations, the Company expects to seek a further
restructuring of its credit facilities. While the Company
believes it should be possible to implement such a further
restructuring, there can be no assurance at this time that it
will be able to do so. As a result of such uncertainties, the
Company's independent auditor has advised the Company that it
may be necessary to include a qualification in its report on the
fiscal 2001 financial statements with respect to the ability of
the Company to continue as a going concern.
UNITEDGOLBALCOM: Extends Tender Offer for Disc. Notes to Jan. 28
----------------------------------------------------------------
IDT United, Inc., a corporation formed by IDT Venture Capital
Corporation and Liberty UGC Bonds, Inc., a wholly-owned
subsidiary of Liberty Media Corporation (NYSE: L, LMC.B),
announced that it has increased the purchase price and extended
the expiration date with respect to its cash tender offer and
solicitation of consents for any and all of the $1,375,000,000
principal amount at maturity of the 10 3/4% Senior Secured
Discount Notes due 2008 of UnitedGlobalCom, Inc. (Nasdaq:
UCOMA).
The expiration date for the Offer is extended to midnight, New
York City time, Monday, January 28, 2002.
The Offer had previously been scheduled to expire on January 22,
2002. IDT United also announced that it amended the consent
solicitation portion of the Offer and is now seeking consents
from holders of the Notes to the waiver of any defaults or
events of default under the Notes, the indenture pursuant to
which the Notes were issued or related pledge agreements, and to
the waiver of compliance with the pledge agreements and the
provisions of the indenture that will be deleted as a result of
the consent solicitation, as described in the offer documents
referred to below.
Under the terms of the amended Offer, the purchase price for
each $1,000 principal amount at maturity of Notes validly
tendered and accepted for purchase will be $360. The Consent
Payment has been eliminated and no Consent Payment will be paid
in respect of any Notes tendered in the Offer (including with
respect to any Notes tendered prior to the previously existing
Consent Payment Deadline, which expired on January 9, 2002).
The Offer is conditioned on IDT United receiving valid,
unwithdrawn tenders of Notes and related consents representing
at least 66 2/3% in aggregate principal amount at maturity of
the Notes outstanding and on the satisfaction or, where
permitted, waiver of the other conditions contained in the offer
documents.
IDT United has been advised by Mellon Investor Services LLC, the
depositary for the Offer, that, as of midnight on January 11,
2002, holders of the Notes had validly tendered and not
withdrawn Notes representing $98,810,000 aggregate principal
amount at maturity of the Notes. In order to accept the terms
of the Offer, as amended, noteholders who have previously
validly tendered Notes pursuant to the Offer and not properly
withdrawn such Notes must either execute and deliver a green
letter of transmittal and consent included in the offer
documents referred to below, or, if such noteholder delivered
Notes through DTC's ATOP system, deliver a new agent's message
accepting the terms of the Offer, as amended.
Holders of the notes are advised to read the offer to purchase
and consent solicitation statement, dated December 21, 2001, as
amended and supplemented by the supplement, dated January 14,
2002, and the green letter of transmittal and consent, relating
to the offer, as amended. The supplement and the green letter
of transmittal and consent will be mailed to holders of notes
and contain important information that should be read carefully
before any decision is made with respect to the offer, as
amended, for the notes. These documents will also be made
available to all holders of notes, at no expense to them, by
contacting the information agent, Mellon Investor Services LLC
at 888-788-1979.
Salomon Smith Barney is the dealer manager and solicitation
agent and Mellon Investor Services LLC is the depositary and
information agent for the tender offer and the solicitation.
Requests for documentation should be directed to Mellon Investor
Services LLC at 888-788-1979. Questions regarding the
transaction should be directed to Salomon Smith Barney at 800-
558-3745.
As of September 30, 2001, the company's balance sheet is upside-
down, registering total stockholders' equity deficit of $2.2
billion.
VISKASE COMPANIES: Delivers Amended Rights Agreement to SEC
-----------------------------------------------------------
Viskase Companies, Inc. amended its Rights Agreement, dated June
26, 1996, between the Company and Harris Trust and Savings Bank.
Under the Rights Agreement, as amended, from the date of the
amendment through July 1, 2002, all Rights outstanding (other
than those held by a 41%-or-more stockholder and certain other
specified persons) will automatically, without any further
action of the Board of Directors, be exchanged for shares of
common stock of the Company at an exchange rate of one share of
common stock per Right simultaneous with any Person becoming a
41%-or-more stockholder. A copy of the Amended Rights Agreement
was delivered to the Securities and Exchange Commission this
past week.
Viskase Companies, Inc. has its major interests in food
packaging. Principal products manufactured are cellulosic and
nylon casings used in the preparation and packaging of processed
meat products. As of September 30, 2001, the company reports a
$170 million working capital deficiency and a $120 million
shareholders' equity deficiency.
WASHINGTON GROUP: Names Cynthia Stinger VP of Government Affairs
----------------------------------------------------------------
Washington Group International announced that Cynthia Stinger,
an executive with more than 20 years experience in government
and regulatory affairs, has joined the company as Vice President
of Government Affairs, based in Washington DC.
She joins Washington Group from GPU Inc., where she served as
Vice President of Government Affairs and President of the GPU
Foundation. GPU, Inc., was a registered public utility holding
company providing utility and related services to 4.6 million
customers in the U.S. and five countries.
"Cynthia Stinger has the extensive experience in developing
legislative and regulatory strategies which will greatly enhance
Washington Group's effectiveness in our nation's capital," said
Stephen G. Hanks, the company's President and Chief Executive
Officer. "Her ability to understand and help influence public-
policy issues will be a great asset to our company both in the
United States and internationally."
Stinger joined GPU in 1981 as Federal Affairs Representative and
was named Director of Government Affairs in 1988. She was
promoted to Vice President in 1990. Prior to working for GPU she
served on Capitol Hill as a press secretary. She is a trustee of
the Bazelon Center for Mental Health Law and serves on the Board
of Directors of the Public Affairs Council.
She is a graduate of Pennsylvania State University.
Washington Group International, Inc., is a leading international
engineering and construction firm. With more than 30,000
employees at work in 40 states and more than 35 countries, the
company offers a full life-cycle of services as a preferred
provider of premier science, engineering, construction, program
management, and development in 16 major markets.
Markets Served: Federal energy, infrastructure, mining, defense,
power, environmental, heavy-civil, industrial, nuclear-services,
operations and maintenance, petroleum and chemicals, process,
pulp and paper, telecommunications, transportation, and water-
resources.
Washington Group, as reported earlier this year in the Troubled
Company Reporter, is expecting that its confirmed Plan of
Reorganization, will become effective by month's end.
WESTAR FINANCIAL: Court Approves Use of Funds to Sue Bank One
-------------------------------------------------------------
Westar Financial Services Incorporated (OTC:WEST) filed for
reorganization protection under Chapter 11 of the Bankruptcy
Code with the United States Bankruptcy Court for the Western
district of Washington at Tacoma on December 20, 2001.
The Bankruptcy Court has approved Westar's use of funds to
pursue its claims in U.S. District Court for more than $1
billion against Bank One, Columbus, N.A., a wholly owned
subsidiary of Bank One Corporation (NYSE:ONE).
"That's a step in the right direction toward the jury trial
we've requested," said R.W. Christensen, Jr., president and CEO.
"In other developments, Westar has received an expression of
interest in its assets and some of its key personnel and is
exploring a potential transaction."
The Bankruptcy Court Clerk's address is:
Clerk
1717 Pacific Ave., No. 2100
Tacoma, WA 98402-3233
Telephone: 253/593-6310
* Meetings, Conferences and Seminars
------------------------------------
January 31 - February 1, 2002
American Conference Institute
Chapter11 Bankruptcy
The Four Seasons Hotel in Dallas, Texas
Contact: 1-888-224-2480 or
www.americanconference.com/conferences/bankruptcy/
January 31 - February 2, 2002
American Bankruptcy Institute
Rocky Mountain Bankruptcy Conference
Westin Tabor Center, Denver, Colorado
Contact: 1-703-739-0800 or http://www.abiworld.org
January 11-16, 2002
Law Education Institute, Inc
National CLE Conference(R) - Bankruptcy Law
Steamboat Grand Resort, Steamboat Springs, Colorado
Contact: 1-800-926-5895 or
http://www.lawedinstitute.com
February 25-26, 2002
American Conference Institute
Chapter11 Bankruptcy
Hyatt Regency in Los Angeles, California
Contact: 1-888-224-2480 or
www.americanconference.com/conferences/bankruptcy/
February 27-28, 2002
Information Management Network
The Distressed Real Estate Symposium
Crowne Plaza, New York, New York
Contact: 1-212-768-2800 or dgleyzer@imn.org
February 28-March 1, 2002
ALI-ABA
Corporate Mergers and Acquisitions
Renaissance Stanford Court, San Francisco, CA
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
March 3-4, 2002
Association of Insolvency and Restructuring Advisors
Business Valuation Conference (Held in conjunction with
The Norton Bankruptcy Litigation Institute I)
Park City Mariott, Park City, UT
Contact: (541) 858-1665 Fax (541) 858-9187 or
aira@airacira.org
March 3-6, 2002
NORTON INSTITUTES ON BANKRUPTCY LAW
Norton Bankruptcy Litigation Institute I
Park City Marriott Hotel, Park City, Utah
Contact: 770-535-7722 or Nortoninst@aol.com
March 7-8, 2002
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Third Annual Conference on Healthcare Transactions
The Millennium Knickerbocker Hotel, Chicago
Contact: 1-800-726-2524 or ram@ballistic.com
March 8, 2002
American Bankruptcy Institute
Bankruptcy Battleground West
Century Plaza Hotel, Los Angeles, California
Contact: 1-703-739-0800 or http://www.abiworld.org
March 14-15, 2002
American Conference Institute
Commercial Loan Workouts
The New York Marriott Marquis in New York City
Contact: 1-888-224-2480 or
www.americanconference.com
March 20-23, 2002
TURNAROUND MANAGEMENT ASSOCIATION
Spring Meeting
Sheraton El Conquistador Resort & Country Club
Tucson, Arizona
Contact: 312-822-9700 or info@turnaround.org
April 11-14, 2002
NORTON INSTITUTES ON BANKRUPTCY LAW
Norton Bankruptcy Litigation Institute II
Flamingo Hilton, Las Vegas, Nevada
Contact: 770-535-7722 or Nortoninst@aol.com
April 18-21, 2002
American Bankruptcy Institute
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
April 25-27, 2002
ALI-ABA
Fundamentals of Bankruptcy Law
Rittenhouse Hotel, Philadelphia
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
May 13, 2002 (Tentative)
American Bankruptcy Institute
New York City Bankruptcy Conference
Association of the Bar of the City of New York
New York, New York
Contact: 1-703-739-0800 or http://www.abiworld.org
May 15-18, 2002
Association of Insolvency and Restructuring Advisors
18th Annual Bankruptcy and Restructuring Conference
JW Mariott Hotel Lenox, Atlanta, GA
Contact: (541) 858-1665 Fax (541) 858-9187 or
aira@airacira.org
May 26-28, 2002
International Bar Association
International Insolvency 2002 Conference
Dublin, Ireland
Contact: Tel +44 207 629 1206 or member@int-bar.org
or http://www.ibanet.org
June 6-9, 2002
American Bankruptcy Institute
Central States Bankruptcy Workshop
Grand Traverse Resort, Traverse City, Michigan
Contact: 1-703-739-0800 or http://www.abiworld.org
June 20-21, 2002
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Fifth Annual Conference on Corporate Reorganizations
The Millennium Knickerbocker Hotel, Chicago
Contact: 1-800-726-2524 or ram@ballistic.com
June 27-30, 2002
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains, Advanced Bankruptcy Law
Jackson Lake Lodge, Jackson Hole, Wyoming
Contact: 770-535-7722 or Nortoninst@aol.com
July 11-14, 2002
American Bankruptcy Institute
Northeast Bankruptcy Conference
Ocean Edge Resort, Cape Cod, MA
Contact: 1-703-739-0800 or http://www.abiworld.org
July 17-19, 2002
Association of Insolvency and Restructuring Advisors
Bankruptcy Taxation Conference
Snow King Resort, Jackson Hole, WY
Contact: (541) 858-1665 Fax (541) 858-9187 or
aira@airacira.org
August 7-10, 2002
American Bankruptcy Institute
Southeast Bankruptcy Conference
Kiawah Island Resort, Kiawaha Island, SC
Contact: 1-703-739-0800 or http://www.abiworld.org
October 9-11, 2002
INSOL International
Annual Regional Conference
Beijing, China
Contact: tina@insol.ision.co.uk or
http://www.insol.org
October 24-28, 2002
TURNAROUND MANAGEMENT ASSOCIATION
Annual Conference
The Broadmoor, Colorado Springs, Colorado
Contact: 312-822-9700 or info@turnaround.org
December 5-8, 2002
American Bankruptcy Institute
Winter Leadership Conference
The Westin, La Paloma, Tucson, Arizona
Contact: 1-703-739-0800 or http://www.abiworld.org
April 10-13, 2003
American Bankruptcy Institute
Annual Spring Meeting
Grand Hyatt, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
December 3-7, 2003
American Bankruptcy Institute
Winter Leadership Conference
La Quinta, La Quinta, California
Contact: 1-703-739-0800 or http://www.abiworld.org
April 15-18, 2004
American Bankruptcy Institute
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
December 2-4, 2004
American Bankruptcy Institute
Winter Leadership Conference
Marriott's Camelback Inn, Scottsdale, AZ
Contact: 1-703-739-0800 or http://www.abiworld.org
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via
e-mail to conferences@bankrupt.com are encouraged.
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Ronald P. Villavelez and Peter A. Chapman, Editors.
Copyright 2002. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $575 for 6 months delivered via e-
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are $25 each. For subscription information, contact Christopher
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*** End of Transmission ***