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/raid1/www/Hosts/bankrupt/TCR_Public/971210.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, December 10, 1997, Vol. 1, No. 76 Headlines ABC INTERNATIONAL: Committee Cautious About Dismissal of Cases ALLIANCE ENTERTAINMENT: Teller Steps Down; Weisman New CEO ALPHASTAR TELEVISION: Seeks 90-day Extension of Exclusivity COLOR TILE: Substitution of Co-Counsel to Committee COLOR TILE: Rejection of Remaining Franchise Agreements EXCALIBUR FINANCIAL: Selling Non-Performing Loan Portfolio FLEXEL, INC.: Administrative Claims Bar Date FRETTER, INC.: Extension of Exclusivity to February 2, 1998 GAYLORD COMPANIES: Seeks to Hire Accountants GROSSMAN'S, INC.: Extension of Exclusive Period to February 2, 1998 GUY F. ATKINSON: Senior Executive Retention Program Proposed HARVARD INDUSTRIES: Employee Severance Plan Proposed KOENIG SPORTING GOODS: General Claims Bar Date Set MARVEL ENTERTAINMENT: Committee Taps Chanin & Company, LLC MARTIN LAWRENCE: Plan Payments to Unsecured Creditors Delayed MEDNET, MPC CORP.: Extension of Exclusivity to December 29, 1997 NOBODY BEATS THE WIZ: Going Into Chapter 11? ORGANIK TECHNOLOGIES: Lezak Hopeful for Successful Turnaround POCKET COMMUNICATIONS: Needs 30-day Extension of Exclusive Period SA TELECOMMUNICATIONS: Claims Agent Retained SILAS CREEK: Seeks 60-day Extension of Exclusivity SILAS CREEK: Seeks Extension of Lease Assumption Period TODAY'S MAN: Committee Wants to be Sure All Votes are Counted WESTERN PACIFIC: Motion for Extension of Lease Assumption Period --------- ABC INTERNATIONAL: Committee Cautious About Dismissal of Cases -------------------------------------------------------------- The Official Committee of Unsecured Creditors of ABC International Traders, inc., tells the Bankruptcy Court that it will fully support dismissal of the Debtor's case if the Committee can be assured that creditors will ever receive payment on account of their claims. The Committee observes that certain financial projections supplied by the Debtor for post-dismissal operations do not account for payment of pre- petition claims. Hence, although the Debtor says in its motion papers that it will pay all claims in full in the ordinary course of business, there is no evidence that the Debtor will be able to make those payments. Accordingly, the Committee asks that the Court condition dismissal of the Debtor's case on the Debtor's agreement to restrict payments to the Debtor's principals and capital expenditures until pre- petition claims are actually paid. ALLIANCE ENTERTAINMENT: Teller Steps Down; Weisman New CEO ----------------------------------------------------------- Alliance Entertainment Corp. announced yesterday that Alvin Teller resigned as an officer of the Company, effective January 1, 1998. Eric Weisman has been named president and CEO to replace Mr. Teller. Teller will remain with the company, serving as non-executive chairman of the Board of Directors. "My decision to step down as president and chief executive of Alliance reflects [the] fact that, with the Board's recent approval of a business plan, the stage is now set for Alliance's successful emergence from Chapter 11. That has been my overriding goal since July, and now that the job is nearing completion, I feel my work here is--for the most part--complete," Teller said in a written statement. ALPHASTAR TELEVISION: Seeks 90-day Extension of Exclusivity ----------------------------------------------------------- Alphastar Television Network, Inc., and Tee-Comm Distribution, Inc., seek an extension of their exclusive period during which to file a plan of reorganization through March 5, 1998 and an extension of their exclusive period during which to solicit acceptances of such plan through May 5, 1998. The Debtors say that their cases have become more complex because of the parallel Canadian insolvency proceeding involving Tee-C0omm Electronics, their Canadian parent. The Debtors have been focused during the past several months on efforts to market and sell their assets to Champion. Given that focus, the Debtors need more time to prepare and file a liquidating plan, which they believe can be proposed within the next 90 days. COLOR TILE: Substitution of Co-Counsel to Committee --------------------------------------------------- The Official Committee of Unsecured Creditors of Color Tile Inc. et al. is seeking an order granting the withdrawal of Neal, Gerber & Eisenberg as co-counsel to the Committee and the retention of Bell, Boy & Lloyd as co-counsel to the Committee. The reason for the change is that David F. Heroy of Neal, Gerber & Eisenberg was the principal attorney working with the Committee, and he is now working at the firm of Bell, Boy & Lloyd. COLOR TILE: Rejection of Remaining Franchise Agreements ------------------------------------------------------- Judge Balick has approved the Debtors' request to reject, pursuant to 11 U.S.C. Sec. 365(a), all unexpired Franchise Agreements pursuant. All Franchisees are directed to file rejection damage claims by December 26, 1997. EXCALIBUR FINANCIAL: Selling Non-Performing Loan Portfolio ----------------------------------------------------------- American Acquisition LLC has agreed, subject to Court approval, to purchase a $2.25 million portfolio of 58 non-performing loans owned by Excalibur Financial Services, L.P., whose chapter 11 case pends before Judge Walsh in Delaware. Excalibur acquired the portfolio from the FDIC and RTC in 1994, and collection efforts have reached a standstill. American Acquisition has offered $40,000 for the portfolio. FLEXEL, INC.: Administrative Claims Bar Date -------------------------------------------- The Liquidating Agent appointed in Flexel, Inc.'s chapter 11 case asks that the Court set December 31, 1997 as the deadline for the filing of all administrative claims in the Debtor's case. FRETTER, INC.: Extension of Exclusivity to February 2, 1998 ----------------------------------------------------------- Fretter, Inc., and its debtor affiliates asks the Bankruptcy Court for an order extending its exclusive period during which to file a plan of reorganization or liquidation through February 2, 1998, and further asks Judge Morgenstern-Clarren to extend their exclusive period during which to solicit acceptances of such plan through March 30, 1998. Fretter says that there are significant issues which need to be resolved before any formal plan can be proposed. Those issues include (a) treatment of 300,000 extended service contract claims, (b) $9 million of workers' compensation insurance disputes, (c) potential joint and several liability with the Silo debtors whose cases pend before the Delaware bankruptcy court, and (d) Silo's claims against Fretter. GAYLORD COMPANIES: Seeks to Hire Accountants -------------------------------------------- Gaylord Companies, Inc., debtors have applied for authority to employ the firm of Longanbach, Giusti, Kuck & Hornberger, Inc. as accountants. The debtors believe that it is in the best interests of the companies and their bankruptcy estates to emerge from Chapter 11 as quickly as possible, and that the employment of this accounting firm is critical to the reorganization efforts. The firm will prepare tax returns, assist in preparation of operating reports, schedules and statements, appraise the debtors' businesses, assist in development of an arrangement for sale of the businesses. The debtors have agreed to pay a retainer of $7500, and will pay for the accounting services based on hourly rates that range from $150 per hour to $75 per hour. GROSSMAN'S, INC.: Extension of Exclusive Period to February 2, 1998 ------------------------------------------------------------------- Grossman's, Inc., and its two debtor affiliates seek an order further extending their exclusive period during which to file a plan of reorganization through February 2, 1998 and, simultaneously, seek and extension of their exclusive period during which to solicit acceptances of such plan through March 4, 1998. Grossmans tells the Court that it seeks this extension out of an abundance of caution in the (unlikely) event that confirmation of its current Plan were derailed. GUY F. ATKINSON: Senior Executive Retention Program Proposed ------------------------------------------------------------ As a result of the filing of chapter 11 petitions by Guy F. Atkinson Company and its affiliates, and the Companies' decision to accept offers for the acquisition of all or segments of their businesses, senior executives are now worried about their continued employment in the event a sale takes place. Unless the senior executives are provided with a measure of security, they will likely resign and seek employment elsewhere, the Debtors tell the California Bankruptcy Court. To counter a feared exodus of the companies' senior executives, the Debtors propose a program to provide: * 12 months' pay to 6 Corporate Executives and * 6 months' pay to 9 Operational Executives, in the event their employment is terminated involuntarily and without cause, during the pendency of the chapter 11 cases or within one year following confirmation of a plan. HARVARD INDUSTRIES: Employee Severance Plan Proposed ---------------------------------------------------- Doehler-Jarvis, Inc., Harvard Industries, Inc., and their debtor affiliates tell the Delaware bankruptcy court that they need to bolster their ability to retain key personnel who possess the knowledge, skills and experience necessary to a successful reorganization. Employees are nervous, and attrition rates have increased, the Debtors say, pointing to 117 resignations since the commencement of these cases. To stem the disruption and incentivize employees to remain in the Debtors' employ, the Debtors propose to implement a severance plan covering 1,200 of their employees. The plan will provide that, in the event an employee's employment is involuntarily terminated without cause, the employee will be paid one week's pay for each year or partial year of service, up to a maximum of 26 weeks' pay. The Debtors also propose to modify severance benefits payable to three senior officers, in the event that their employment is terminated involuntarily and without cause within 60 days following consummation of a plan. The Debtors estimate the cost of these modified severance benefits to be: Individual Position Severance Cost ---------- -------- -------------- Roger Burtraw President $1,446,000 Richard Dawson VP & CFO $1,069,000 Joseph Gagliardi SVP for Law & Admin. $420,000 KOENIG SPORTING GOODS: General Claims Bar Date Set -------------------------------------------------- Judge David F. Snow of the U.S. Bankruptcy Court for the Northern District of Ohio, Eastern Division, has ordered that all proofs of claim against Koenig Sporting Goods, Inc., chapter 11 estate must be filed on or before January 30, 1998. MARVEL ENTERTAINMENT: Committee Taps Chanin & Company, LLC ---------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the Marvel Entertainment Group chapter 11 cases seeks the Court's authority to retain, nunc pro tunc to November 17, 1997, Chanin & Company, LLC, as its financial advisors. The Committee says that it needs independent disinterested advice and assistance from Chanin to (a) analyze and interpret the Debtors' financial data, (b) negotiate a confirmable plan, and (c) ascertain the extent of the claims against the Debtors' estates. Chanin has agreed to provide its financial advisory services to the Committee in exchange for a $100,000 monthly fee for the first three months of its engagement, $75,000 per month for the following three months, and $25,000 per month thereafter. Additionally, Chanin has negotiated a Transaction Fee based on the total consideration distributed to General Unsecured Creditors: Creditor Recovery Transaction Fee ----------------- --------------- 100% 2.5% 75% - 100% 1.5% 50% - 75% 1.0% 0 - 50% 0.0% and will be payable in the same form as consideration distributed to General Unsecured Creditors. MARTIN LAWRENCE: Plan Payments to Unsecured Creditors Delayed ------------------------------------------------------------- Duke Salisbury, the Estate Representative appointed under the chapter 11 plan for Martin Lawrence Limited Editions, Inc., confirmed on August 11, 1997, tells the California Bankruptcy Court that he needs more time to file objections to certain proofs of claim and, as a result, will need to further delay payments to Class 11 Claimants holding General Unsecured Claims. Mr. Salisbury and his counsel believe that they can sift though all of the claims, prosecute claim objections and make distributions by February 18, 1998. MEDNET, MPC CORP.: Extension of Exclusivity to December 29, 1997 ---------------------------------------------------------------- Mednet, MPC Corporation, Medi-Mail, Inc., and Medi-Claim, Inc., ask the Nevada bankruptcy court for an order extending their exclusive period during which to file a plan of reorganization through December 29, 1997, and an extension of their exclusive period during which to solicit acceptances of such plan through February 28, 1998. Mednet tells Judge Riegle that it has been working closely with Bergen Brunswig Drug Company in the drafting and formulation of a plan of reorganization, and intends to share that plan proposal with its Creditors' Committee shortly. Mednet is confident consensus will be achieved by the end of the year. NOBODY BEATS THE WIZ: Going Into Chapter 11? -------------------------------------------- Consumer Electronics reported on December 8, 1997 that Nobody Beats the Wiz is battling tight finances, and is said to be reviewing a range of options including closing up to 15-20 stores. To close the stores, Wiz may have to seek bankruptcy protection since it appears to lack money needed to buy out leases. The privately held chain is aid to owe creditors $300,000 - $30 million. Among stores being considered for closing are some in mid-Manhattan and in Southern Connecticut, including Danbury, Milford, Norwalk. A decision on the chain's future is expected as soon as this week, as vendors shipping for the holidays are on a COD basis. Besides filing for Chapter 11 protection they may ask for an extension of moratorium on old debt or making a commitment on a payment schedule to vendors. Nobody Beats the Wiz restructured in July, closed 5 stores and obtained a $200 million credit agreement with Congress Financial. It had projected a 4% decline in same-store sales through the year-end, and Paragon Capital is said to be ready to provide another $75 million depending on Christmas sales. ORGANIK TECHNOLOGIES: Lezak Hopeful for Successful Turnaround ------------------------------------------------------------- Daniel Lezak, hired to turnaround the ailing wrinkle-free cotton manufacturer Organik Technology, told the Los Angeles Daily News in an interview last week that he intends to "find a financier and hire sales people to market the cotton product." Answering the question, "Can he resurrect Organik?" the LADN noted that Lezak has helped dozens of companies recover. "It's got a great product," Lezak told the Daily News. Besides, "I've done this more than 60 times." POCKET COMMUNICATIONS: Needs 30-day Extension of Exclusive Period ----------------------------------------------------------------- "[T]o allow the Debtors and their principal creditor constituents a brief additional time to close an agreement on one of a few pending proposals for financing a consensual version of the pending plan of reorganization," Pocket Communications, Inc., asks Judge Derby of the Maryland Bankruptcy Court for an extension of its exclusive period during which to file a plan of reorganization through December 28, 1997. The Debtors indicate that they are also working with the DIP lender at this time to bridge the gap for the period between the termination of the DIP Facility in mid-December and the anticipated confirmation of the Debtors' consensual plan. SA TELECOMMUNICATIONS: Claims Agent Retained -------------------------------------------- SA Telecommunications, Inc., U.S. Communications, Inc., and their debtor affiliates have retained, with the consent of the Delaware Bankruptcy Clerk but subject to Court approval, Bankruptcy Services, Inc., as the Official Noticing, Claims and/or Solicitation and Balloting Agent. SILAS CREEK: Seeks 60-day Extension of Exclusivity -------------------------------------------------- The debtors, Silas Creek Retail, Inc. and Silas Creek Retail L.P. filed a motion for entry of an order extending (a) the exclusive period during which the debtors may file a plan of reorganization through February 6, 1998 and (b) the exclusive period during which to solicit acceptances of such plan through April 10, 1998. Silas Creek argues that it is entitled to a further extension because it has "acted with diligence, decisiveness and vigor" throughout the short six-month history of these cases. A hearing on the motion will be held before Judge Balick on December 17, 1997. SILAS CREEK: Seeks Extension of Lease Assumption Period ------------------------------------------------------- The Debtors remind the Court that the terms of the Sale Order authorizing the sale of stores to Carolina Sales, Inc., and Hancock Fabrics, Inc., contemplated the assumption and assignment of the Debtors' non-residential real property leases and certain contracts to the Buyers. The Debtors anticipate completing that process by January 31, 1998. Accordingly, the Debtors seek an extension of their time within which to assume or reject leases and contracts through January 31, 1998. TODAY'S MAN: Committee Wants to be Sure All Votes are Counted ------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the Today's Man chapter 11 cases observes that the Debtors are filed various omnibus motions seeking reductions in the allowable amounts of creditors' unsecured claims. The Committee asks the Court to enter an order temporarily allowing, pursuant to Bankruptcy Rule 3018(a), any claim to which the Debtor has interposed a partial objection in an amount equal to the undisputed portion. The Committee wants it to be clear that any ballot cast for or against the Debtors' Second Amended Plan will be counted at the undisputed amount of each claim. WESTERN PACIFIC: Motion for Extension of Lease Assumption Period ---------------------------------------------------------------- Western Pacific Airlines, Inc., asks Judge Brooks for an extension of the period during which it must decide whether to assume or reject its leases and executory contracts through confirmation of a plan of reorganization. The Debtor tells the Court that the review of contracts is on-going, but the ultimate decision concerning the burdens or benefits of many contracts will be tied to the ultimate reorganization plan. --------- A list of meetings, conferences and seminars appears in the TCR each Tuesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. Bond pricing, appearing each Friday, is supplied by DLS Capital Partners, Dallas, Texas. 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 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 six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof is $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *