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T R O U B L E D C O M P A N Y R E P O R T E R
Monday, October 27, 1997 Vol. 1, No. 47
Headlines
BIG RIVERS: Disqualification Motion Appeal
CALDOR: Discussion on Extension of Exclusive period
DOW CORNING: Tort Claimants Object to Disclosure Statement
DOW CORNING: More Objections to Disclosure Statement
DOW CORNING: Earning’s Rise
FLAGSTAR: Hearing To Extend Exclusivity
KENETECH WINDPOWER: Hearing on Rejection of Agreements
LIL’ THINGS: Expedited Hearing on Loan Agreement
MIDCON: US Replies to Objection of Louis Dreyfus
WESTMORELAND COAL: Court Appoints Committee
WESTMORELAND COAL: Crowell & Moring File Motion
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BIG RIVERS: Disqualification Motion Appeal
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Appellants, Pacificorp Kentucky Energy Company and
Pacificorp Power Marketing, Inc. are appealing from an order
wherein the judge, J. Wendell Roberts refused to recuse
himself and to remove J. Baxter Schilling as examiner from
the Big Rivers Chapter 11 case, despite the allegation by
the appellants of pervasive ex parte communication between
them throughout the bankruptcy case.
On appeal, Pacificorp asks if a bankruptcy judge, by his own
order can exempt himself and an examiner from the
prohibitions on ex parte communications and whether the
bankruptcy judge erred in denying the motion to disqualify
him and to remove the examiner in light of the alleged
undisputed evidence of the extensive ex parte communications
with the examiner.
CALDOR: Discussion on Extension of Exclusive period
----------------------------------------------------
As reported in the CALDOR BANKRUPTCY NEWS, Issue Number 22,
published by the Bankruptcy Creditor’s Service, Princeton,
New Jersey:
"What's your sense on, realistically, when we can see a
plan," Judge Garrity asked Michael Crames, Esq., at the
uncontested hearing at which the Court granted the Debtors'
Fourth Motion for an extension of their exclusive periods?
"I fully appreciate the significance of the fall and
Christmas seasons, and you know I understand that, but
what's your feeling as far as whether we will see a plan in
the spring?"
"Realistically, your Honor," Mr. Crames replied, "we are
going as far as we can with the constituents; making certain
assumptions, which is not unusual in Chapter 11, as you
know, including that the business plan will be realized,
that the Debtor will achieve its projected results, that's a
major assumption obviously.
DOW CORNING: Tort Claimants Object to Disclosure Statement
----------------------------------------------------------
The Official Committee of Tort Claimants filed an objection
to the proposed amended Disclosure Statement of Dow Corning
Corporation.
They argued that the amended plan should not be sent out for
a vote because its treatment of voting, classification and
other matters is patently defective. Particularly, that the
debtor discriminates against individual tort claimants who
vote no, that the Litigation Trust violates due process,
that the “Best Interests” test can not be satisfied for
claims in the Litigation Trust, that the releases of the
debtor’s shareholders violate a provision of the Bankruptcy
Code, that the classification of tort claimants violates a
section of the Code, and that the proposed Plan cannot
possibly satisfy the cramdown standards.
The second basis of objection is that the proposed
Disclosure Statement utterly fails to provide the
information to which tort claimants are entitled. The
Disclosure Statement fails to disclose that most claimants
will not receive the recoveries advertised in the
Symptom/Medical Condition Grid, and it fails to accurately
disclose the aggregate nominal and present values of the
contemplated distributions to tort claimants.
They also claim that the Disclosure Statement does not
contain adequate information regarding the releases included
in the plan, and that it misleadingly suggests that if the
plan is voted down it will be confirmed through cram down
and claimants will face endless litigation of breast implant
claims.
DOW CORNING: Earning’s Rise
----------------------------
Dow Corning Corp. said third-quarter earnings rose fourteen
percent mostly because of lower reorganization costs.
Profits were $64.1 million vs. $56.4 million in the same
period last year. For the three months ended Sept. 30, the
company had sales of $677.8 million, up 5 percent from
$644.3 million in the same quarter last year.
"Sales volume growth was healthy in most product lines and
geographies, but the strong U.S. dollar continues to reduce
reported revenue," John Churchfield, Dow Corning's chief
financial officer, said in a statement.
He said earnings grew due mainly to lower reorganization
costs and higher non-operating income.
For the first nine months of 1997, Dow Corning earned $176.1
million, compared with $160.3 million for the same period in
1996. Sales were $1.97 billion, up from $1.89 billion for
the first nine months of last year.
Once the world's largest maker of silicone breast implants,
Dow Corning is reorganizing in federal bankruptcy court. The
Chapter 11 filing followed a flood of lawsuits by women who
claim the implants caused health problems.
DOW CORNING: More Objections to Disclosure Statement
----------------------------------------------------
The Common Benefit Litigation Expense Fund, the Mentor
Settlement Fund and the Bioplasty Settlement Fund have also
filed an Objection to the Amended Disclosure Statement of
Dow Corning Corporation.
They claim that the Disclosure Statement does not address
the issue of payment of fees and expenses for the provision
of common benefit services to breast implant recipients.
They believe that there may be a conflict of interest for
non-independent persons to serve as trustees for the
Litigation Trust.
They claim that the causation trial only benefits the
Reorganized Debtor because if the Reorganized Debtor is
successful in the trial, the outcome is binding on all
Rejecting Claimants, however, if the Reorganized Debtor is
unsuccessful, the Rejecting Claimants must still
individually prove causation.
The Objection also states that since the total number of
Rejecting Claimants, even assuming acceptance of the Plan,
could be in the tens of thousands, the provision for only
ten trials per year is inadequate.
And finally they claim that the use of a facility other than
the Claims Office in Houston, Texas, to evaluate claims made
under the Global Settlement would not be cost efficient.
FLAGSTAR: Hearing To Extend Exclusivity
---------------------------------------
A hearing will be held on November 6, 1997 to consider the
motion by debtors Flagstar Corporation, Flagstar Companies,
Inc., and Flagstar Holdings, Inc. to extend the time of the
exclusivity period for 90 days.
KENETECH WINDPOWER: Hearing on Rejection of Agreements
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A hearing will be held on November 17, 1997 on the motion of
the debtor, Kenetech Windpower, Inc., fka U.S. Windpower,
Inc., seeking to reject specified agreements related to
Altamont Pass Partnerships
The agreements in question relate to the ownership and
operation of wind-powered electric power plants in the
Altamont Pass area of California.
The debtor claims that the Agreements consist of the
estate’s remaining burdensome agreements with respect to the
partnerships’ windplants and agreements and contracts in
conjunction therewith. The debtor argues that the rejection
is in the best interest of the estates because the debtor no
longer derives any benefit from any of the agreements.
LIL’ THINGS: Expedited Hearing on Loan Agreement
------------------------------------------------
The Court has approved the debtor’s motion for an Expedited
Hearing on its Motion to Approve a First Amendment to the
Loan and Security Agreement between the debtor and
BankBoston Retail Finance Inc. and to establish certain
supplemental procedures in the event of default.
The debtor is allowed to shorten the notice of hearing on
its Amendment Motion which is set for hearing on October 28,
1997 to 13 days. The time period for responses to the
Amendment Motion is reduced to 12 days making the deadline
October 27, 1997.
MIDCON: US Replies to Objection of Louis Dreyfus
------------------------------------------------
The United States of America, on behalf of the U.S.
Department of the Interior, Minerals Management Service
(MMS) filed a Reply to the Objection of Louis Dreyfus
Natural Gas Corporation to the Proposed Use of Proceeds
Arising From the Trustee’s Motion to Sell Estate’s Interests
in South Marsh Island Block 141/144.
The Trustee in this case had requested approval to sell the
estate’s interests in the South Marsh Island Block 141 and
144 leases to Noram. According to the United States, Midcon
is in default on the leases and owes $1,040,464.29 to the
MMS plus $39,000 in civil penalties.
Louis Dreyfus Natural Gas Corporation,(LDNG) a secured
creditor whose claim against Midcon is disputed by the
estate, objects to the use of the sale proceeds to cure the
royalty default owed by Midcon to the MMS.
LDNG argues that the Trustee need not cure the royalty
default but may instead provide adequate assurance that the
Trustee will promptly cure the default, but instead to pay
LDNG’s secured claim in full.
The US disagrees that the secured claim is entitled to
payment before the cure of the defaults on the leases.
WESTMORELAND COAL: Court Appoints Committee
------------------------------------------
The Court has appointed a Retired Salaried Employees’
Committee consisting of the following individuals:
Steve J. Bobrosky Sr.
18 Third Avenue East
Big Stone Gap, Virginia 24219
James D. Garrison
1746 Derby Road
Appalachia, Virginia 24216
Howard H. Frey
236 Holmecrest Road
Jenkintown, Pennsylvania 19046
Joseph C. Byrne
12 Margin Court
Newtown, Pennsylvania 18940
Boyce W. Glover Jr.
4700 Emory Lane
Charlotte, NC 28211-3064
The US Trustee shall convene a meeting with the members of
the Retirees’ Committee as soon as practicable. The members
of the Committee may request reimbursement of expenses.
WESTMORELAND COAL: Crowell & Moring File Motion
-----------------------------------------------
Crowell & Moring LLP filed a motion seeking a determination
that the Firm can represent the UMWA Combined Benefit Fund
in its pending negotiations with the Health Care Financing
Administration (HCFA) without disqualifying the Firm from
its current representation of Westmoreland Coal Company,
Westmoreland Energy, Inc., Westmoreland Terminal Company,
Westmoreland Resources, Inc., and Westmoreland Coal Sales
Company, Inc., debtors.
The Firm argues that the HCFA matter does not involve any
issues that relate to the debtors’ Chapter 11 cases or the
debtors’ disputes with the Funds. Moreover, the fees to be
generated by the Firm in the proposed representation of the
Combined Fund in connection with the HCFA matter will
constitute less that .5 percent of the Firms’ revenues
during the period of the proposed representation.
The Firm agrees that employees of the firm working on one
matter will not work on the other matter, and that the
debtors have consented to the Firms’s proposed
representation of the Combined Fund and have agreed to waive
any conflict of interest such representation involves,
conditioned on a determination by the Court that such
representation by the Firm will not disqualify it from
representing the debtors. Likewise, the Funds have waived
any conflict of interest.
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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., Princeton, NJ, and Beard Group, Inc.,
Washington DC. Debra Brennan and
Rebecca A. Porter, Editors.
Copyright 1997. All rights reserved. This
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