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/raid1/www/Hosts/bankrupt/TCR_Public/980205.MBXT R O U B L E D C O M P A N Y R E P O R T E R Thursday, February 5, 1998, Vol. 2, No. 25 Headlines AL TECH : Hearing on Sale of Certain Oregon Properties ANGLO FABRICS: Files Chapter 11 Plan in So. District of NY APS HOLDING: Lists 20 Largest Creditors ARROW TRANSPORTATION: Rejects Lease Agreement with IBM BARRY'S JEWELERS: Seeks Entry into Lease Amendments BIG RIVERS: PacifiCorp Replies - Insists on Arbitration BRUNO'S: Declares Finances and 20 Largest Creditors CONSOLIDATED STAINLESS: SouthTrust Objects to Financing ELDER-BEERMAN: Board Approves Actions ELI WITT: Court Approves Settlements ELI WITT: Seeks Extension of Time to Sell Ocala Property HOMEPLACE STORES: Case Commences - Meeting of Creditors HOMEPLACE STORES: Final Order Concerning Financing HOMEPLACE STORES: Requests Real Estate Consultants LAMONTS APPAREL: Declares Securities in SEC Filing LAMONTS APPAREL: Emerges from Chapter 11 LEVITZ FURNITURE: Employment Contract for CFO MARVEL: Skadden Arps Asks to Hold Settlement in Abeyance MOLTEN METAL: Lender Agrees to Extend Loan PACKAGING PLUS: Creditors File Involuntary Petition PARAGON TRADE: Debtor Requests Approval of Special Counsel PARAGON TRADE: Seeks Extension to Assume or Reject Leases PARTY WORLD: Bar Date for Administrative Claims PARTY WORLD: Order Grants Rejection of Executory Contracts POCKET COMM.: FCC Weighs In on Licenses WESTERN PACIFIC: Judge Orders Trustee Hearing ********* AL TECH : Hearing on Sale of Certain Oregon Properties ---------------------------------------------------------- Judge Carl L. Bucki entered an order to show cause for an order authorizing the sale of certain properties in Tigard, Oregon and Gresham, Oregon. A hearing is set for February 9, 1998 with respect to the Tigard property and a hearing is set for February 23, 1998 with respect to the Gresham property. The debtor is owned by Korean and Canadian corporations which are part of the Sammi Group of South Korea. The debtor is prepared to consummate a sales contract to convey the Tigard Property to Yat Sam Wong at a purchase price of $675,000. Wong has set a deadline of February 13, 1998 for closing the sale of the property. The debtor is prepared to enter into a sales contract to sell the Gresham property to Genuine Parts Company at a purchase price of $325,000. The debtor asserts that the sale of the properties is in its best business judgment. ANGLO FABRICS: Files Chapter 11 Plan in So. District of NY ---------------------------------------------------------- The Worcester [MA] Telegram & Gazette reports on February 3, 1998 that Anglo Fabrics Co., Inc. filed a Chapter 11 petition for reorganization with U.S. Bankruptcy Court for the Southern District of New York on January 29. The petition seeks authority to borrow money to complete $5 million in current orders. However, a hearing today will determine whether a financial plan that would allow the liquidation of all the company's assets after those orders are filled is approved. The U.S. Trustee has filed an objection to the financial plan being heard today, arguing it does not protect the interests of all creditors. Anglo Fabrics has 244 employees in Webster and 21 at its headquarters in New York. The company spins and weaves yarn into wool and worsted fabric, then dyes and finishes the material for sale to clothing and other manufacturers. It has annual sales of about $28 million, according to papers filed with the court. The petition cites collateral of $18,109,409, with a debt of $10,043,815.55 to its primary lender, Congress Financial Corp. of New England. General Manager Fred Natkin, who has been with the company for 45 years, said the liquidation of assets was one option and that it was premature to say that would occur. "We'll know in three weeks." However, the future will have been decided by the time the $5 million in orders is completed in three to four months. Papers filed with the court last week noted that two containers of yarn were "at the dock in Boston" and needed to be paid for if the company was to meet its production schedule. In its papers, the company argued that any delay in getting and continuing financing would imperil the orders to be filled. Company president and owner David Siegel, in a statement released yesterday, said Anglo Fabrics' financial difficulties are the result of "increased competition over the past decade from imported textiles and apparel sales and a significant reduction in domestic apparel manufacturing." Although the company made changes to make it more competitive in the global marketplace, Siegel said, the cost of retooling production "would be prohibitive and not certain to return the business to profitability. Webster, MA, Town Administrator Mark S. Stankiewicz said the greatest effect would be the loss of jobs, not the loss of tax revenue. Commerce Insurance is the town's largest employer, with about 1,400 workers, and Cranston Print Works is second, with about 400, Stankiewicz said. The company taxes for fiscal year 1997-98 are $216,164, but that includes a $170,313 lien for a disputed water-sewer bill. The property taxes amount to $45,851. Bialy said the company has not made its second tax payment, which was due Dec. 31. The company did not file its schedule of assets and liabilities, statements of financial affairs and lists of executory contracts with its Chapter 11 petition. It said the automatic 15-day extension would be insufficient to complete that work and asked for an additional 60-day extension. Anglo Fabrics said it would send notice of its requests "by overnight mail" to all creditors, including those with liens against the company, the Internal Revenue Service, the New York state Department of Taxation and Finance, the Massachusetts Department of Revenue, the town of Webster and all parties having filed notice of appearance in the case. In papers filed with the court, Anglo Fabrics said it has negotiated an agreement with Congress Financial Corp. for financing to complete existing orders and orders currently being filled. "Following the completion of such orders and in order to maximize its business assets, the debtor (Anglo Fabrics) will conduct an orderly liquidation of its assets with the full support of Congress" Financial Corp., according to the company's post-petition financial agreement with Congress. The company's $18,109,409 collateral consists of: cash, $57,621; accounts, $495,634; due from BNY Financial Corp., NationsBanc Commercial Corp. and Suntrust Bank, $353,924; inventory, $13,349,066; parts and supplies, $675,420; plant, property and equipment, $2,700,150; other, $477,595. APS HOLDING: Lists 20 Largest Creditors --------------------------------------- APS Bankruptcy News of February 3, 1998 (Issue 1) reports the list of the 20 largest creditors of A.P.S., Inc., a wholly owned subsidiary of APS Holding Corporation. Creditor Nature of Claim Amount -------- --------------- ------ State Street Bank & Trust Co. Bonds $100,000,000 Standard Motor Products Trade 10,092,941 A-1 Cardone Trade 7,256,922 Federal-Mogul Corporation Trade 5,349,243 Exide Corporation Trade 5,336,709 Wagner Trade 4,764,660 Monroe Auto Equipment Trade 4,679,465 Gates Rubber Co. Trade 4,196,517 Fel-Pro, Incorporated Trade 4,045,220 Lakefront Manufacturing Trade 3,357,686 Four Seasons Division Trade 2,309,222 Champ Service Line Trade 1,794,511 Perfection Hy-Test Co. Trade 825,461 Big A Filters Trade 814,473 Sure State, Div. of Exide Trade 702,121 Cooper Automotive Division Trade 582,121 Dana Corporation Trade 579,866 Valvoline Oil Co. Trade 570,189 Universal Brake Parts Trade 329,991 Beck/Arnley Worldparts Corp. Trade 315,629 ARROW TRANSPORTATION: Rejects Lease Agreement with IBM ------------------------------------------------------ Arrow Transportation Co. is seeking to reject a Term Lease Master Agreement dated January 3, 1994 with IBM Credit Corporation and wants to vacate the automatic stay with respect to the computer equipment subject to the Lease and revoke a direct debit authorization. Arrow states that it no longer has any use for the equipment and believes rejecting the Lease and vacating the automatic stay to allow IBM to repossess and dispose of the equipment is in the best interests of the estate. Arrow also wants the direct debit authorization in connection with the lease to be terminated as well. BARRY'S JEWELERS: Seeks Entry into Lease Amendments --------------------------------------------------- Barry's Jewelers, Inc. is seeking authorization to assume certain modified leases of nonresidential real property. The Debtor is also asking the Court to find that company's prompt tender of the amounts specified in the lease amendments shall satisfy their "cure" and "compensation" obligations and that Barry's has provided its landlords with "adequate assurance" of future performance under the leases. Failure to retain the leases as modified would cause a significant drop in both revenues and profit, and would adversely affect the prospects for reorganization. BIG RIVERS: Pacificorp Replies-Insists on Arbitration ----------------------------------------------------- PacifiCorp Power Marketing, Inc. (PPM) is seeking enforcement of an arbitration agreement between PPM and Big Rivers Electric Company, debtor. In its response to Big Rivers, PPM claims that Big Rivers is now trying to extract itself from its agreement by stating that the court is precluded from enforcing the arbitration agreement because determining the amount of PPM's claim is a core matter. PPM states that determining the proper amount of the claim, as opposed to allowing or disallowing that claim is not a core matter. Second, PPM says that the simplistic core/non-core analysis proposed by Big Rivers is contrary to the analysis mandated by the United States Supreme Court with respect to enforcement of arbitration clauses. PPM states that enforcing the arbitration agreement does not inherently conflict with the Bankruptcy Code, and that the court should stay and refer the claim objection to arbitration. BRUNO'S: Declares Finances and 20 Largest Creditors --------------------------------------------------- As reported yesterday, Bruno's, Inc., an Alabama-based supermarket chain with stores throughout the Southeast, declared bankruptcy in Delaware. Bruno's Bankruptcy News of February 3, 1998 (Issue 1) reports the company declared total assets of $780,808,000 and total liabilities of $1,204,000,000 as of February 2, 1998. The company also listed its 20 largest creditors: Creditor Nature of Claim Amount -------- --------------- ------------ Marine Midland Bank, 10.5% Senior $421,000,000 as Indenture Trustee Subordinated Bonds due 2005 Safeway Stores Inc./ Trade 4,995,760 Produce Barner's-Birmingham Trade 3,708,486 Kraft General Foods Trade 2,460,800 Frito Lay Trade 2,062,354 Anderson News Trade 1,719,828 Amerisource Corp. Trade 1,588,492 American Greetings Corp. Trade 1,484,122 Proctor & Gamble Dist. Trade 1,400,326 Monfort, Inc. Trade 1,315,838 Cook Publications Trade 995,906 Buffalo Rock/Birmingham Trade 972,909 Nabisco Foods Group Trade 934,295 Tyson Foods, Inc. Trade 862,106 Epson America, Inc. Service Provider 795,557 R. Michael Conley Deferred Compensation 759,000 Blue Bell Creameries, Trade 746,462 Inc. William J. Boltan Severance Benefits 738,462 Bunzl Distribution USA Trade 705,273 Nestle Food Company Trade 661,857 The company has indicated that it has obtained a $200 million Debtor-in-Possession financing facility from The Chase Manhattan Bank. That facility will provide the financing the company requires to aggressively operate its business while operating under the guidelines of Chapter 11. CONSOLIDATED STAINLESS: SouthTrust Objects to Financing ------------------------------------------------------- SouthTrust Bank, NA successor by merger to SouthTrust Bank of Florida, successor by merger to SouthTrust Bank of Orlando objects to the debtor obtaining secured post- petition financing and the granting of adequate protection. SouthTrust is owed approximately $3.7 million on certain obligations of the debtor, together with late charges, interest and fees. For providing "new credit", the debtor proposes to give Mellon Bank NA security interests and liens on SouthTrusts's collateral and seeks a Final Order giving only Mellon stay relief upon an event of default, allowing Mellon to foreclose on SouthTrust's collateral in five days. According to SouthTrust, the debtor is seeking to borrow up to $19 million from SouthTrust post-petition and the debtor is indebted pre-petition to Mellon at least in the amount of $18 million. According to SouthTrust, the debtor will enter into a DIP facility applying debtor's postpetition revenues to reduce Mellon's pre-petition secured debt. The debtor, according to SouthTrust has not provided or offered adequate protection to SouthTrust for the continued use of the property securing the South Trust loans. ELDER-BEERMAN: Board Approves Actions ------------------------------------- On January 29, 1998, the Board of Directors of The Elder- Beerman Stores Corp. authorized an increase in the size of the Board to nine members and elected Laura H. Pomerantz to fill the one remaining vacancy. Pomerantz is currently Senior Managing Director of Newmark & Co. Real Estate Inc., a full service commercial real estate firm based in New York. Pomerantz has filed an SEC Form 8K indicating that she is the direct owner of 1,300 shares of common stock and has a Non-Employee Director Stock Option of 7,000 shares of common stock at $10.89 per share. Separately, the Board also approved a purchase price of $60.00 per one one-hundredth of a new series of Class A Preferred Stock, subject to adjustment, for the Rights issued pursuant to the Rights Agreement between the Company and Norwest Bank Minnesota, N.A., as Rights Agent. The Rights Agreement was adopted on December 30, 1997, pursuant to confirmation of the Company's plan of reorganization. Copies of the Rights Agreement and the related summary of Rights, which is attached as Exhibit C to the Rights Agreement, are available free of charge from the Company. ELI WITT: Court Approves Settlements ------------------------------------ Judge Alexander L. Paskay entered orders granting the motions of the debtor, The Eli Witt Company compromising and settling two controversies. The first, between The Eli Witt Company, Liggett Group, Inc. and the H.T. Hackney Co. and the second between The Eli Witt Company and Pension Benefit Guaranty Corporation. ELI WITT: Seeks Extension of Time to Sell Ocala Property -------------------------------------------------------- The hearing on the debtor's motion to sell its property in Ocala Florida was scheduled for January 12, 1998. The debtor indicated at the hearing that the party interested in purchasing the property requested an extension of time to complete its due diligence. The possible purchaser has until February 13, 1998 to complete its due diligence. Because the sale of the Ocala Facility is critical to the plan, the debtor requests that the court extend for thirty days, until March 2, 1998 the time within which the court must approve the sale of substantially all of the Ocala Facility. HOMEPLACE STORES: Case Commences - Meeting of Creditors ------------------------------------------------------- On January 5, 1998 Homeplace Stores, Inc., Homeplace Stores Two, Inc, Homeplace Management, Inc. and Homeplace Holdings, Inc. filed voluntary petitions under Chapter 11. A meeting of creditors is scheduled for February 27, 1998 at 10:30 AM at the J. Caleb Boggs Federal Building, 844 King Street, Room 2313, Wilmington, Delaware. HOMEPLACE STORES: Final Order Concerning Financing -------------------------------------------------- An order was entered on January 29, 1998 by Peter J. Walsh, Bankruptcy Judge, validating and perfecting the priority of the Junior Lenders' Liens. The court approved a DIP financing arrangement with BankBoston Retail Finance Inc. The debtors may borrow up to $110 million under the terms of the Loan Document and may use the cash collateral of the Lender for the specific purpose set forth in the Loan Documents. HOMEPLACE STORES: Requests Real Estate Consultants -------------------------------------------------- Homeplace Stores, Inc., and its affiliated companies, as debtors, request authorization to employ and retain Retail Consulting Services, Inc. as real estate consultants to the HomePlace Group. The debtors operate 98 stores in 24 states. The debtors seek to employ Retail Consulting to provide services relating to the evaluation and re-negotiation of the HomePlace Group's various leaseholds. HomePlace has agreed to pay Retail Consulting a retainer of $50,000 and fees will be paid based on the saving Retail Conusulting generates. LAMONTS APPAREL: Emerges from Chapter 11 ---------------------------------------- Lamonts Apparel, Inc. which operates 38 family apparel stores in 5 northwestern states emerged from Chapter 11 protection on January 31, 1998 after a 3-year reorganization that resulted in $42 million of financing under an agreement with BankBoston, NA. LAMONTS APPAREL: Declares Securities in SEC Filing -------------------------------------------------- Pursuant to Sections 12D-15 of the Security and Exchange Commission Act, Lamonts Apparel, Inc. of Kirkland, WA has declared the termination of registration of 13% Senior Subordinated Notes due 1995 and 11 1/2% Senior Secured Notes due in 1999. The company has also declared the termination of Common Stock, $.01 par value per share and Series A Convertible Preferred Stock, $.01 par value per share. Lamonts has also registered a stock option plan and Warrant Agreement with the SEC (Form S8). The Registration Statement covers (i) 1,333,729 shares of Class A Common Stock, par value $.01 per share, that may be issued upon the exercise of options granted under the Lamonts Apparel, Inc. 1998 Stock Option Plan; (ii) 375,000 shares of Common Stock which may be reserved by the Company for issuance upon exercise of options granted under the Stock Option Plan; and (iii) 381,065 shares of Common Stock that may be issued upon the exercise of 25,404 Class C Warrants to be issued, on a pro rata basis, to holders of options under the Stock Option Plan. LEVITZ FURNITURE: Employment Contract for CFO --------------------------------------------- Levitz Furniture Incorporated, et al., debtors, are seeking authorization to enter into an employment contract with Michael E. McCreery as the debtors' senior vice president and Chief Financial Officer. The debtors are also seeking to amend the retention of EIG Management, Inc. as special projects manager to debtors. McCreery's agreement provides for an initial term to August 9, 1999 with an automatic one year extension, unless either party terminates the agreement upon 30 day prior notice. His compensation is set for an annual base salary of $275,000 and a bonus of at least $50,000. The agreement also provides for an emergence bonus. The retention of EIG Management must now be amended since McCreery is the full time replacement for the interim services provided by EIG. MARVEL: Skadden Arps Asks to Hold Settlement in Abeyance -------------------------------------------------------- In the bankruptcy cases In re Marvel Holdings, Inc., and Marvel (Parent) Holdings Inc., the law firm of Skadden Arps, Slate, Meagher & Flom LLP, representing Ronald O. Perelman, Mafco Holdings Inc., MacAndrews & Forbes Holdings Inc., Andrews Group Incorporated, William C. Bevins and Donald G. Drapin, wrote a letter to Judge McKelvie asking that the settlement proposed by Marvel Holding, Inc., Marvel Holdings Inc. and LaSalle National Bank, as successor indenture Trustee be heard on March 16, 1998, since at that time there will be greater clarity as to Marvel Entertainment's future particularly with respect to the value of Marvel Entertainment stock. They suggest that no hearing should be held or action taken until such time as the trustee has had an opportunity to become familiar with and determine what position to take with respect to these matters. Specifically, the letter states that the proposed settlement raises several substantive and procedural issues, as follows: 1) the propriety and amount of the proposed surcharge by LaSalle on Marvel holding company noteholders who participate in the settlement. 2)the propriety of a proposed $4 million payment to LaSalle for "fees and expenses", with no further judicial scrutiny for reasonableness. 3) the statement the claims in the LaSalle Action "belong to" LaSalle, which claims were nominally brought on behalf of noteholders and would seem to be inconsistent with LaSalle's role as Indenture Trustee. 4) the propriety of LaSalle seeking to be relieved from all liability in connection with Marvel-related matters. MOLTEN METAL: Lender Agrees to Extend Loan ------------------------------------------ Federal Filings reports on February 3, 1998 that Molten Metal's lender agreed to extend the term of a $7.7 million short-term loan for one week, to Feb. 6, in order to complete due diligence in connection with a possible $20 million medium-term loan. The environmental technology company secured the short-term loan on Dec. 22 to fund operations and provide time to secure medium-term financing from various potential sources. The court entered a final order on Jan. 6 approving the $7.7 million financing agreement with Morgens Waterfall Vintiadis & Co. as agent. PACKAGING PLUS: Creditors File Involuntary Petition --------------------------------------------------- On Feb. 2, 1998, two Creditors of Packaging Plus Services, Inc. filed a petition in the United States District Court for the Eastern District of New York to preserve the testimony and evidence of Packaging Plus Services Inc. and its existing creditors in anticipation of being petitioners in an Involuntary Bankruptcy Petition against Packaging Plus Services Inc. According to public documents, the company filed its Sept. 30, quarterly report on 1-29-98 in which it reported its total current liabilities almost double of its total current assets, furthermore more than half of the current assets accounted for, is reported as "Loans and Notes Receivable" for which no explanation is included in the filings. The Creditors have alleged, among other things, misuse of the Company's funds, and failure to honor the covenants and agreements in the loan documents. Under the bankruptcy code, when an involuntary petition is filed, petitioners can seek the appointment of an interim trustee to protect the company's assets pending determination of the involuntary petition. PARAGON TRADE: Debtor Requests Approval of Special Counsel ---------------------------------------------------------- Paragon Trade Brands, Inc. is seeking court approval of the employment of Connolly, Bove, Lodge & Hutz as its special local litigation counsel in the adversary proceeding The Procter & Gamble Co. v. Paragon Trade Brands, Inc. The firm has represented Paragon for approximately the last four years in connection with this case, and the firm is owed approximately $1,325 in unpaid invoices. Paragon is also seeking court approval of the employment of Rockey, Milnamow & Katz, Ltd. as its special patent counsel. The firm has billed but unpaid invoices owing totaling approximately $56,900. PARAGON TRADE: Seeks Extension to Assume or Reject Leases --------------------------------------------------------- Paragon Trade Brands, Inc., debtor is seeking a court order extending the time within which the debtor may assume or reject its unexpired leases of nonresidential real property under which Paragon is a lessee. The debtor is seeking an extension of time through and including the confirmation of any plan of reorganization in this case. There are 29 referenced leases, and the debtor states that they are among the primary operating assets of Paragon. Given the size of the case, and the complexity of the business and legal issues arising in the case, the debtor needs additional time to make the decision as to whether or not to assume or reject any particular lease. PARTY WORLD: Court OKs Rejection of Executory Contracts ------------------------------------------------------- On January 28, 1998, the court entered an order authorizing the rejection of over 50 executory contracts of Party World Inc. and Party America, Inc. The contracts included cylinder gas agreements, service contracts, real property leases, finance agreements, equipment leases, and maintenance agreements. PARTY WORLD: Bar Date for Administrative Claims ----------------------------------------------- The debtors request a hearing on February 18, 1998 to set February 19, 1998 as the administrative bar date for all administrative claims which arose prior to December 29, 1997 and retroactively approving the debtors' previous service of the notice of the bar date, due to a miscommunication between the court and counsel. POCKET COMMUNICATIONS: FCC Weighs in on Licenses ------------------------------------------------ Assistant Attorney General Frank W. Hunger filed an objection on February 2, 1998 with the Maryland Bankruptcy Court in the case of DCR PCS, Inc., and its parent, Pocket Communications. As reported yesterday, National Telecom PCS, Inc. is seeking relief from an automatic stay in order to pursue pre-judgement attachments against the Debtors' FCC licenses. The United States' objection indicates that stay relief is permitted only if the licenses are "not necessary to an effective reorganization." This criterion cannot be met, the U.S. states, because the licenses are Pocket's "crown jewels," without which any reorganization of Pocket would be impossible. Further, the US objection flatly states that courts have repeatedly recognized the FCC's policy that a non-governmental entity, such as NatTel, simply may not obtain a security interest in such licenses. It is therefore recommending that the Motion be denied. WESTERN PACIFIC: Judge Orders Trustee Hearing --------------------------------------------- On February 2, 1998 Judge Sid Brooks of the U.S. Bankruptcy Court for the District of Colorado ordered that a hearing appointing a Chapter 11 Trustee for Western Pacific Airlines, Inc. shall be held on Wednesday, February 4, 1998. ----------- A listing of meetings, conferences and seminars appears every Tuesday. 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 Lexy Mueller, Editors. Copyright 1998. 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 are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *