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/raid1/www/Hosts/bankrupt/TCR_Public/980603.MBXT R O U B L E D C O M P A N Y R E P O R T E R Wednesday, June 3, 1998, Vol. 2, No. 108 Headlines 2CONNECT EXPRESS: Judge Denies Conversion ALLIANCE ENTERTAINMENT: Hearing on Disclosure Statement ARROW TRANSPORTATION: Court Approves Disclosure Statement BARNEY'S: Seeks Time to Assume or Reject Leases BARRY'S JEWELERS: Seeks Assumption of 12 Leases BOSTON CHICKEN: Chairman and CEO Purchases 100,000 Shares BOSTON CHICKEN: Stock Goes Way Down BOYDS WHEELS: Total Liquidation - 3 Day Auction BRUNO'S: Creditor Objects to Extension of Exclusivity D&L VENTURE CORP: Hearing Set for June 30, 1998 HAGERSTOWN FIBER: Builder and Panel Spar Over Arbitration HOMEPLACE: Seeks Okay For CFO Employment Pact K.G. MARX: May Be Forced into Bankruptcy KIA: Ford Plans Takeover LA VIDA LLENA: Consensual Reorganization Plan LONG JOHN SILVER: Case Summary & 20 Largest Creditors LOT$OFF: $6.9 Million Loss on Net Sales of $48.5 Million MICROLYTICS: SantiGroup to Report to SEC NAMCO CYBERTAINMENT: Seeks Extension of Exclusivity RICKEL HOME CENTERS: Rejects 4 Leases ROSS TECHNOLOGY: Announces Shutdown of Operations TELECOMMUNICATIONS SERVICE: Files For Bankruptcy Protection VOC Analytical Laboratories: Meeting of Creditors VOXEL: Files Chapter 11 Bankruptcy Petition WIZ INC: Order Fixes Bar Date ********* 2CONNECT EXPRESS: Judge Denies Conversion ----------------------------------------- Judge Raymond B. Ray denied the Creditors' Committee's Motion to convert the Chapter 11 case of 2Connect Express, Inc. to a Chapter 7 Case. ALLIANCE ENTERTAINMENT: Hearing on Disclosure Statement ------------------------------------------------------- Judge Burton R. Lifland, entered an order setting June 23, 1998 as the hearing date to consider whether the Disclosure Statement of Alliance Entertainment Corp et al. contains "adequate information." ARROW TRANSPORTATION: Court Approves Disclosure Statement --------------------------------------------------------- The court entered an order in the case of Arrow Transportation co. of Delaware approving the disclosure statement dated April 15, 1998. The last date for filing written ballots accepting or rejecting the plan is July 23, 1998. The hearing on confirmation of the plan will be held on July 30, 1998. The plan provides that following confirmation of the plan, a Trustee will continue to liquidate Arrow's remaining assets, collect accounts receivable, pursue causes of action and distribute the net proceeds thereof, as well as the remaining proceeds from the sale of assets to Matlack, Inc. to creditors. BARNEY'S: Seeks Time to Assume or Reject Leases ----------------------------------------------- Barney's Inc. et al., debtors, seek an order extending the debtors' time to assume or reject certain unexpired leases of nonresidential real property. The subject leases are in connection with the properties owned by the Northwestern JLM, and Fifth Avenue. The debtors seek an extension of 120 days through and including October 20, 1998. The debtors contend that they should have the ability to defer making any decision with respect to the leases until such time as the ultimate structure of the reorganized debtors can be determined. BARRY'S JEWELERS: Seeks Assumption of 12 Leases ----------------------------------------------- Barry's Jewelers, Inc. and its affiliates seek assumption of the following leases: Eastridge Mall San Jose, CA Oakridge Mall San Jose, CA Sunnyvale Town Center Sunnyvale, CA Valley Fair Mall Santa Clara CA Sun Valley Mall Concord, CA Parmatown Mall Parma, Ohio Parks at Arlington, Arlington, TX Town East Mall Mesquite, Texas Silver Lake Mall Coeur D'Alene ID Fashion Place Mall, Murray, UT Serramonte Shopping Center Daly City, CA Southland Mall Hayward, CA The stores that the debtor operates under the leases are profitable locations. Failure to retain the leases, and the consequent loss of the stores, would cause a substantial drop in both revenues and profit, and would have a significant adverse impact on the debtor's operations and prospects for reorganization. BOSTON CHICKEN: Chairman and CEO Purchases 100,000 Shares --------------------------------------------------------- Boston Chicken, Inc. said that J. Michael Jenkins, Chairman, CEO and President, today purchased 100,000 shares of Boston Chicken stock as evidence of his belief in the company and the potential of the Boston Market brand. Jenkins said, "As we announced last week, we have hired Morgan Stanley to help us evaluate the sale of some or all of our approximately 52% share in Einstein/Noah Bagel Corp." Boston Chicken also reiterated again today that it has no plans to file for bankruptcy protection, adding that speculation on the subject by both the media and other third-party sources is totally erroneous. The company also stated that, contrary to speculation by uninformed sources, the company has not retained outside advisors to provide assistance in preparing any such filings. BOSTON CHICKEN: Stock Goes Way Down ------------------------------------ Boston Chicken Inc. shares lost more than a third of their value Friday after Arthur Andersen LLP expressed doubt the operator of Boston Market restaurants can continue as a going concern. Boston Chicken fell 13/16, or 37 percent, to 21/32 in trading of 13 million shares, ranking it the third most- active U.S. issue. The shares, which are down 88 percent the past year, earlier fell to a record low of 111/16. The stock peaked at 41 in December 1996. The company had earlier said sales at its Boston Market restaurants are falling and it would write off hundreds of millions of dollars in loans to franchisees. In the fiscal first quarter, Boston Chicken reported a loss of $312.6 million, or $4.38 a diluted share.(Gazette-05/30/98) BOYDS WHEELS: Total Liquidation - 3 Day Auction ----------------------------------------------- A liquidation of substantially all of the physical assets of Boyds Wheels, Inc. will take place during a public auction June 3, 4, and 5 at 10:00 a.m. held on-site at 8380 Cerritos Avenue in Stanton. This sale comes by order of the U.S. Bankruptcy Court. The auction is unprecedented in the wheel and related industries according to Adam Reich, senior vice president and partner of Hackman Capital Partners LLC an asset recovery firm and one of the entities managing the auction. The auction is expected to attract a world-wide audience for both its magnitude, and its timing following the ever- popular Indianapolis 500 race. All Boyds Wheels assets including billet and other wheel rim inventory, machinery, custom Harley Davidson and Boyds' Speedster motorcycles, Boyds sportswear and office equipment are among the items for sale. "The purpose of the auction is to drastically restructure the company by eliminating a substantial portion of its fixed assets," says Jeffrey Golden of Albert, Weiland & Golden, LLP, bankruptcy counsel to Boyds. Boyds Wheels, Inc. posted substantial losses last year when its sales plummeted to $16 million from its highest year in sales of $27.9 million in 1996. The downfall is blamed on a slump that hit the market after Boyds spent millions on expanding its manufacturing facilities. After an intensive review of the environment and the company's operations, its Board of Directors determined that a major reorganization and Chapter 11 filing was necessary. BRUNO'S: Creditor Objects to Extension of Exclusivity ----------------------------------------------------- W.R. Huff Asset Management Co., LLC (Huff) and its affiliates file an objection to the motion of the debtors for an order extending the exclusive periods during which the debtor may file a plan of reorganization and solicit acceptances thereof. Huff owns approximately half of the original principal amount of the debtors' 10,.5 % senior subordinated notes due 2005 and is the debtors' single largest creditor. Huff states that the length of the extension of the exlusive period requested by the debtor is excessive. Huff states that there is simply no basis for granting an extension of the exclusive period to file a plan through January, 1999 at this juncture. Huff requests that the court limit any extension of the exclusive periods to 120 days. D&L VENTURE CORP: Hearing Set for June 30, 1998 ----------------------------------------------- At a hearing scheduled by the court for june 30, 1998, D&L Venture Corp. will present motions for authority to enter into an employee retention program and to assume key-man executory contracts; an application to employ Sp[ecial counsel Richard D. O'Connor and the firm of Siegel, O'Connor, Schiff & Zangari, PC and an application by the debtor to employ accountant Frank R. Miller under monthly retainer. HAGERSTOWN FIBER: Builder and Panel Spar Over Arbitration --------------------------------------------------------- The latest battle in Hagerstown Fiber L.P.'s case pits the builder of the partnership's waste paper pulping and de-inking facility, who is seeking to lift the automatic stay to permit pending arbitration proceedings to go forward, against the unofficial committee of bondholders. The arbitration of claims arising under a Sept. 30, 1994, construction contract were "already in an advanced stage" before the partnership filed for chapter 11 protection, SBCCS Constructors Joint Venture asserted. SBCCS argued that resumption of the arbitration proceedings would therefore provide an efficient and less expensive method for resolving the contract disputes. The arbitrators were "merely days away from having sufficient information for them to make dispositive rulings on the issues in arbitration when the Debtor filed its bankruptcy petition." The bondholders' panel, on the other hand, asserted that resumption of arbitration would result in duplicate litigation, prejudice creditors and waste the partnership's resources. (Courtesy of The Daily Bankruptcy Review Copyright c June 2, 1998-ABI 02-June-98) HOMEPLACE: Seeks Okay For CFO Employment Pact --------------------------------------------- HomePlace Stores Inc. asked the court to approve its employment agreement with new Chief Financial Officer Patrick Fodale. The agreement provides the CFO with a $175,000 yearly salary. The retailer noted that Fodale, who was hired on March 16 after the company fired former CFO Thomas Murasky, has extensive experience in the retail industry and, in particular, with retailers operating as debtors-in-possession, such as Color Tile Inc. In addition to the salary, the employment contract between Fodale and HomePlace provides the CFO with a 50 percent base salary bonus ($87,500) if the company exceeds target profit goals as well as reimburses Fodale up to $25,000 for relocation expenses. (Courtesy of The Daily Bankruptcy Review Copyright c June 2, 1998 - ABI 02-June-98) K.G. MARX: May Be Forced into Bankruptcy ---------------------------------------- K.G. Marx Inc. may be forced into bankruptcy by a group of its creditors, putting the company's future in question. The Westerville-based party supply retailer has been in receivership since July 1996, but three of its creditors on May 14 petitioned U.S. Bankruptcy Court in Columbus to involuntarily force the company into Chapter 7 bankruptcy. Enesco Corp., an Illinois-based giftware company, Leanin' Tree Inc. of Boulder, Colo., and United Steel & Wire Co. of Battle Creek, Mich., are seeking payment of $115,785 from the company. Enesco is K.G. Marx's largest creditor, accounting for $114,157 of the debt. In their petition, the creditors said the "significant lease obligations of (K.G. Marx) and inability of (the company) to formulate a plan of distribution to unsecured creditors" justified the action. K.G. Marx attorney A.C. Strip said that the company has been profitable over the past two years and is free of any bank debt or tax obligations. Still, the company could not come out of receivership nor could it pay Enesco because of a lawsuit filed last spring by four K.G. Marx investors over a 1995 stock and debt offering that raised $884,248. A planned secondary offering was abandoned in July last year. (Business First Columbus - 05/29/98) KIA: Ford Plans Takeover ------------------------ US auto giant Ford Motor Co. intends to take over South Korea's ailing Kia Motors Corp. through the acquisition of a controlling stake in the firm, Kia's top manager said Tuesday. The plan was unveiled as 14,000 striking workers of the debt-ridden firm prepared to demonstrate in front of its headquarters here in protest against unpaid wages. "Ford is showing its interest in taking over Kia," Yoo Chong-Yul, designated by creditors as Kia's receiver, told a press conference. Ford and its Japanese affiliate Mazda Motor Corp. hold a 16.9 percent stake in Kia. The US firm has proposed to increase its stake to between 49 and 51 percent by forming an international consortium, Yoo said. Yoo, who took over Kia's management last month on behalf of creditors, said that two major South Korean auto makers -- Hyundai Motor and Daewoo Motor --did not show their interest in taking over Kia. But reports said Kia's creditors were preparing to set public bid guidelines this month for the beleaguered company and that Ford and a consortium of Hyundai and Daewoo had shown interest in the tender. (Agence FrancePresse -06/02/98) LA VIDA LLENA: Consensual Reorganization Plan --------------------------------------------- La Vida Llena LifeCare Retirement Community Monday announced that it has signed an Agreement in Principle with the holders of a majority of its outstanding bonds to refinance existing tax-exempt bond obligations. The refinancing is to be accomplished through a pre- negotiated consensual reorganization plan under Chapter 11 of the United States Bankruptcy Code. The consensual bond refinancing will reduce overall bond indebtedness, debt service and interest rates. The bonds are not an obligation of the City of Albuquerque, and will not be paid from City funds. Approval by the City Council will be necessary for issuance of the new bonds, but is expected. La Vida Llena's outstanding bond debt consists of approximately $50 million principal amount comprising three-tiered series of bonds, referred to as Series 1993 A, B, and C bonds. While La Vida Llena has operated smoothly, the board realized that eventually the debt would not be retired through the organization's normal level of revenues and that a restructuring is necessary. La Vida Llena LifeCare Retirement Community is a retirement community in Albuquerque. Founded in 1983 by four Albuquerque churches -- La Vida Llena is an independent, nonprofit New Mexico corporation, with about 190 employees and serving nearly 400 residents. LONG JOHN SILVER: Case Summary & 20 Largest Creditors -------------------------------------------------- Debtor: Long John Silver's Inc. 300 West Vine Street P.O. Box 11988 Lexington, KY 40579 Type of business: Seafood Restaurant Chain Court: District of Delaware Case No.: 98-1164 Filed: 06/01/98 Chapter: 11 Debtor's Counsel: Young Conaway Stargatt & Taylor, LLP Laura Davis Jones Robert S. Brady Pauline K. Morgan Brendan Linehan Shannon 11th floor, Rodney Square North P.O. Box 391 Wilmington Delaware and Sherman & Sterling Ronald DeKoven Mark J. Shapiro 599 Lexington Avenue New York, NY 10022 (212) 848-4000 Total Assets: $329,100,000 Total Liabilities: $457,300,000 No. of Amount Holders ------ ------- Fixed, liquidated secured debt $241,300,000 15 Contingent secured debt $2,700,000 15 Disputed secured debt $0 0 Unliquidated secured debt $0 0 Fixed, liquidated unsecured debt $210,200,000 over 1,000 Contingent unliquidated unsecured debt undetermined Contingent liquidated unsecured debt undetermined Disputed unsecured claims $3,100,000 undetermined No. of shares of common stock 100 1` 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ Goldman Sachs & Co. 12% and 18% Notes 6,276,485 Cerberus 12% and 18% Notes 6,232,500 DK Acquisition Partners 12% and 18% Notes 6,232,500 Western International Media TV Media 6,012,027 Tyson Foods Chicken/Fish 3,181,517 Strottman International Toys 3,076,899 ProSource Food Distribution 2,445,734 Lamb Weston French Fries 1,021,759 Pilgrims Pride Chicken 762,635 Jordan McGrath Case & Taylor TV Production 705,676 Foodservice Purchasing Coop Produce, paper 649,558 New Mexico Taxation & Revenue Taxes 592,895 Northern Victor Fish 520,527 Griffith Laboratories Batter 519,545 IBM Computer Consulting 442,651 Portion Pac Dressings 406,071 Edge Network Print Media 405,427 Burrows-Corroc Paper Paper Goods 389,612 T. Marzetti Sauces 383,577 AC Humko Shortening 379, 817 LOT$OFF: $6.9 Million Loss on Net Sales of $48.5 Million -------------------------------------------------------- Preliminary results indicate that LOT$OFF experienced a $6.9 million net loss on net sales of $48.5 million for the fiscal year ended Jan. 30, 1998, the company announced. That compares to a net loss of $43.6 million on net sales of $106.2 million for fiscal year ended Jan. 31, 1997. During fiscal 1998, the company operated a weighted average of 42.1 stores, nearly half the number it operated in fiscal 1997. The company's total merchandise sales were up 0.6% (from $3,414,058 to $3,436,205) for the four weeks ended May 29, 1998, while comparable store merchandise sales were down 1.4% (from $3,212,263 to $3,166,813) for such period. LOT$OFF also announced its total and comparable store merchandise sales figures for the seventeen weeks ended May 29, 1998: total merchandise sales were up 5.1% (from $14,786,952 to $15,547,517); and comparable store merchandise sales were up 3.2% (from $13,868,370 to $14,309,565). The Company's Annual Meeting of Stockholders will be held July 14, 1998 in San Antonio, Texas. The record date for the Annual Meeting was May 28, 1998. At May 28, 1998, there were 4,159,210 shares of Common Stock outstanding, 1,596,420 shares of which are held in an escrow account at Continental Stock Transfer & Trust Company for the benefit of holders of allowed general unsecured claims pending distribution upon the filing and/or resolution of claims objections under the Company's confirmed Plan of Reorganization, as Amended and Modified. Such escrowed shares are not entitled to vote at the Annual Meeting. MICROLYTICS: SanTiGroup to Report to SEC ---------------------------------------- SanTi Group, Inc. formerly known as Microlytics, Inc. announced that it intends to file a Form 10 with the Securities and Exchange Commission during the second quarter of 1998. The filing of the Form 10 will provide current information about the company, including audited financial statements of the merged company, and will thereafter require the company to file current, quarterly and annual reports with the SEC as a reporting company. Microlytics suspended its filings with the SEC in 1996 and has provided information solely through its Chapter 11 bankruptcy process since that time. Microlytics and a privately held company, SanTi Group, Inc., merged effective May 13, 1998, with Microlytics surviving the merger and changing its name to SanTi Group, Inc. SanTi Group's common stock has not traded on the over-the counter bulletin board since the effective date of the merger. NAMCO CYBERTAINMENT: Seeks Extension of Exclusivity --------------------------------------------------- The debtor, Namco Cybertainment Inc., seeks an extension of the debtor's exclusive periods in which to file a plan of reorganization and solicit acceptances thereof. The debtors seek a 60-day extension, from May 29, 1998 through and including July 28, 1998, of the period during which the debtors will maintain the exclusive right to file a plan resolving this case; as well as a 60-day extension from July 28, 1998 through and including September 28, 1998, of the period during which the debtor will have the exclusive right to solicit acceptances to such plan. The debtor seeks this relief solely out of an abundance of caution to maintain the exclusive periods throughout the schedule contemplated for plan confirmation. The debtor anticipates filing an amended plan by May 29, 1998 and confirming the amended plan by August 10, 1998. The extension is warranted to allow the debtor additional time to complete negotiations and the prosecution of its Chapter 11 plan. RICKEL HOME CENTERS: Rejects 4 Leases ------------------------------------- In the case of Rickel Home Centers, Inc., debtor, the court entered an order authorizing the debtor to reject the following four nonresidential real property leases: Flemington, New Jersey; Middletown, New York, Pleasantville, New Jersey and Pottstown, Pennsylvania. ROSS TECHNOLOGY: Announces Shutdown of Operations ------------------------------------------------- Ross Technology Inc., Austin, Texas, announced that its Board of Directors has voted to commence an orderly shutdown of the company & operations while it continues efforts to facilitate a sale of the remaining, smaller business. Under the plan approved by the board, the company expects to continue operations at a scaled-down level through the end of the year and to continue seeking a buyer for the company for all or part of its assets, including its intellectual property. While Ross is actively discussing a sale with several parties, there is no confirmed buyer at this point so it will move ahead with its plans to maximize asset value for creditors. (ABI 02- June-98) TELECOMMUNICATIONS SERVICE: Files For Bankruptcy Protection ----------------------------------------------------------- Telecommunications Service Center, a Tampa-based long distance telephone service reseller, has filed for protection from creditors in bankruptcy court. The Chapter 11 filing is aimed at giving TSC breathing room to repair shaken finances, which were dealt a blow recently when Georgia marketing outfit One Bill Plan sold the company a bogus block of "thousands of" new out-of-state customers, said TSC President Hal Shankland. These customers turned out to have been gained allegedly through the illegal practice of slamming, or switching a client's long distance carrier without consent. "They sent us thousands of people that were not legally picked," Shankland said. He added that TSC was unable to charge those customers for service and had to eat the costs. "We just weren't able to charge them," Shankland said. "It put us in a financial bind. But it wasn't like it was bad planning on our part." TSC listed $5 million in assets and a little more than $5 million in debt. The reorganization comes on the heels of an aborted acquisition deal in which Bridgeport Communications Inc., a Fort Lauderdale-based telecommunications marketing concern, sought to buy TSC. That deal fell apart because "Bridgeport came back to the table with an entirely different proposal than they first did," Shankland said. He said that in spite of TSC's recent troubles, the company is on track for nearly $30 million in revenues this year. Besides offering switch-based long distance telephone service, TSC peddles prepaid telephone cards. (Tampa Bay Business - 05/29/98) VOC Analytical Laboratories: Meeting of Creditors ------------------------------------------------- The debtor, VOC Analytical Laboratories, Inc. filed a Notice of Commencement of Case under Chapter 11. The date of the meeting of creditors is June 17, 1998. The deadline for filing claims with the court is September 15, 1998. VOXEL: Files Chapter 11 Bankruptcy Petition ------------------------------------------- Voxel announced that it has filed a voluntary Chapter 11 petition. The filing was precipitated by a recent arbitration award of $1.9 million in favor of General Scanning Inc. and by the subsequent failure of the parties to reach an agreement as to a payment schedule. Voxel intends to operate under the protection afforded by the Bankruptcy Code so that it may complete the development of the Voxcam(R) imager unhampered by continuing collection efforts by GSI. The filing will also facilitate efforts by Voxel to maximize the value of its assets for the benefit of creditors, and to maintain the going concern value of the company for shareholders and other investors. Voxel is engaged in the development and marketing of Digital Holography, a proprietary system that produces "three-dimensional X-rays" of the internal structure of the body. WIZ INC: Order Fixes Bar Date ----------------------------- By order entered May 26, 1998, Judge Cornelius Blackshear set the date by which all claims must be filed, except those specifically excluded in the order. All claims against The Wiz, Inc. et al., debtors, must be filed before June 19, 1998. The company is currently known as NYEC, Inc. ********* The Meetings, Conferences and Seminars column 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 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 * * *