/raid1/www/Hosts/bankrupt/TCR_Public/980608.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, June 8, 1998, Vol. 2, No. 111
Headlines
AMERICAN GAMING: Breeden Files Lawsuit
AMES DEPARTMENT STORES: Files Quarterly 10-Q
AVATEX: Court Rules Stockholders Can't Vote on Merger
BARRY'S JEWELERS: $50M Exit Financing Commitment Okayed
BOCA RESEARCH: Files Form 10-QA with the SEC
BRE-X: David Walsh Dies-Shareholders Claim Suit Unaffected
FPA MEDICAL: Files Form 8-K with the SEC
FASTCOMM: Case Summary & 20 Largest Creditors
KIA MOTORS: Strike Puts Ford Bid at Risk, Kia Says
LESLIE FAY: Leslie Fay Company, Inc. Announces Stock Split
LONG JOHN SILVER'S: To Shutter 74 Restaurants
MARINELAND: Judge Postpones Sale of Resort Property
MOTOROLA: Announces 10% Layoff
PLAMA PLEVEN: Canadian-Controlled Oil Refinery Bankrupt
U.S. LEATHER: DIP Pact Wins Final Court Nod
UNISON HEALTHCARE: Petition Lists Liabilities Of $182M
VANGUARD AIRLINES: Files Schedule 13D with SEC
WURLITZER: Eaglerock Capital Becomes Majority Owner
*********
AMERICAN GAMING: Breeden Files Lawsuit
--------------------------------------
American Gaming & Entertainment, Ltd. reported that, on May
29, 1998, Richard C. Breeden, Trustee for The Bennett
Funding Group, Inc., et. al., filed suit against the
Company in the United States Bankruptcy Court, Northern
District of New York. The plaintiff alleges that payments
made by The Bennett Funding Group, Inc. and related
entities to the Company between March 29,1990 and March 29,
1996, collectively totaling approximately $70,155,000 were
actual or constructive fraudulent transfers by Bennett.
In the alternative, the plaintiff alleges that all or some
of the Transfers were loans by Bennett to the Company and
are currently due and payable on demand. The plaintiff is
seeking payment by the Company of the amount of the
Transfers, accrued and unpaid interest, attorneys fees and
costs. As discovery and depositions have not yet commenced,
outside counsel to the Company is unable to predict the
outcome of this lawsuit.
However, should the plaintiff prevail, this litigation
would have a material adverse effect on the Company's
business and financial condition. The Company would then
need to pursue a formal plan of reorganization or
liquidation which would generally result in the sale of the
Company's assets to satisfy outstanding obligations. There
can be no assurance that if either action is required to be
pursued that all such obligations would be completely
satisfied. Further, in the event of either action, it is
unlikely that stockholders of the Company will recover any
of their investment in the Company.
AMES DEPARTMENT STORES: Files Quarterly 10-Q
--------------------------------------------
Ames Department Stores, Inc. reported that as of May 15,
1998 22,800,249 shares of Common Stock were outstanding.
Net sales for the thirteen weeks ended May 2, 1998
increased $66.4 million or 15.4% from the prior-year's
first quarter and comparable-store sales increased 12.9%.
These sales increases were attributable, in part, to
unseasonably warm weather and a successful 40th Anniversary
promotion in March, 1998.
On December 27, 1996, the Company entered into an
agreement with BankAmerica Business Credit, Inc., as
agent, two financial institutions as co-agents and a
syndicate consisting of five other banks and financial
institutions, for a secured revolving credit facility of
up to $320 million, with a sublimit of $100 million for
letters of credit. The Credit Agreement is in effect until
June 30, 2000.
AVATEX: Court Rules Stockholders Can't Vote on Merger
-----------------------------------------------------
Avatex Corporation announced that the Delaware Court of
Chancery issued an opinion yesterday, in which the
Court ruled in Avatex's favor on a critical issue relating
to the recently announced proposed merger between Avatex
and Xetava Corporation. In its ruling, the Court granted
Avatex's motion for a judgment on the pleadings and held
that Avatex's preferred stockholders do not have any right
to vote separately as a class on the proposed merger.
Under the merger proposal, which was previously approved by
the board of directors of Avatex and is subject to the
approval of a majority of the outstanding shares of its
common stock, among other conditions, Avatex will merger
into Xetava and Avatex's existing common and preferred
stockholders will receive new common stock of Xetava, which
upon consummation of the merger will be renamed
Avatex Corporation.
Abbey J. Butler and Melvyn J. Estrin, Co-Chairmen and Co-
Chief Executive Officers of Avatex, stated that, "The
Delaware Court's ruling acknowledged Avatex's position that
the preferred stockholders are not entitled under
the company's certificate of incorporation to vote
separately as a class on the proposed merger. We continue
to believe that proceeding with the proposed merger as
expeditiously as possible is the best way for the company
to align the interests of its equity owners in a fair
manner that will allow the company to grow and prosper into
the future."
The Delaware Court will hear on June 8, 1998 another
request to enjoin the proposed merger based on other claims
by the same preferred stockholders. Assuming that an
injunction is not issued, Avatex intends to proceed with a
special meeting of its common stockholders to vote on the
proposed merger.
Avatex is a holding company that, along with its
subsidiaries, owns interests in other corporations and
partnerships. Through Phar-Mor, Inc., its
39% owned subsidiary, Avatex is involved in operating a
chain of retail discount drug stores devoted to the sale of
prescription and over-the-counter drugs, health and beauty
aids and other general merchandise.
BARRY'S JEWELERS: $50M Exit Financing Commitment Okayed
-------------------------------------------------------
The court last week approved Barry's commitment letter with
Foothill Capital Corp. for $50 million of exit financing.
The retailer will seek approval of the definitive loan
agreements in connection with confirmation of its
reorganization plan. (Federal Filings Inc. 04-June-98)
BOCA RESEARCH: Files Form 10-QA with the SEC
-------------------------------------------
Boca Research, Inc. filed a Form 10-QA with the SEC. The
Company's net sales decreased by 16.8% to $15,616,000 in
the three months ended March 31, 1998 from $18,758,000 in
the three months ended March 31, 1997. The sales decrease
was primarily attributable to decrease in sales of
data communications products, however the product
categories of networking,video graphics, I/O, IDE, and
multiport and videoconferencing also experienced a
decline in sales. The decrease in sales in these categories
was partially offset by an increase in sales in the
categories of custom manufacturing and internet
access devices. Gross profit (loss) was ($150,000) for the
three months ended March 31, 1998 as compared to $95,000
for the three months ended March 31, 1997 and decreased as
a percentage of net sales to (0.9%) in the three months
ended March 31, 1998 from 0.5% in the three months ended
March 31, 1997.
A full-text copy of the filing is available via the
Internet at:
http://www.sec.gov/Archives/edgar/data/0000950135-98-
003665.txt
BRE-X: David Walsh Dies-Shareholders Claim Suit Unaffected
----------------------------------------------------------
David Walsh, former president of Calgary-based Bre-X
Minerals, died on Thursday. The company collapsed a year
ago amid a controversy over a gold discovery in the jungles
of Indonesia. The claim transformed Bre-X into a $4
billion company almost overnight, but its potential partner
Freeport-McMoRan Copper and Gold Inc. ultimately said
its checks turned up no significant traces of gold at the
Busang site on Borneo and Bre-X stock was reduced to
worthless paper.
An independent audit later concluded that Bre-X's data on
Busang was falsified on a scale "without precedent in the
history of mining anywhere in the world."
Investigators hired by Bre-X in the wake of the debacle
absolved Walsh of any wrongdoing in a report last October
but many bitter investors never forgave Walsh. He
proclaimed his innocence, saying he had been duped as the
investors were.
Dozens of lawyers in Canada and United States have launched
class action suits against Bre-X and its officials on
behalf of angry shareholders. On Friday, the Bahamas
Supreme Court froze all the assets of Walsh and
his wife at the request of Deloitte and Touche, the
accounting firm handling the Bre-X bankruptcy.
Attorneys representing Bre-X shareholders said the suits
would proceed and would not be affected by Walsh's death.
(Reuters:International - 06/05/98)
FPA MEDICAL: Files Form 8-K with the SEC
----------------------------------------
FPA Medical Management Inc. Files a Form 8-K current report
with the SEC. The company reports several class action
lawsuits now pending. All of the lawsuits filed allege
causes of action based on sales of stock and underlying
misrepresentations by the company.
A full-text copy of the filing is available via the
Internet at:
http://www.sec.gov/Archives/edgar/data/0000936392-98-
000911.txt
FASTCOMM: Case Summary & 20 Largest Creditors
---------------------------------------------
Debtor: Fastcomm Communications Corporation
45472 Holiday Drive
Sterling, Virginia 20166
Type of business: Designs, manufactures, and sells access
products for public and private digital networks.
Court: Eastern District of Virginia, Alexandria Division
Case No.: 98-80044 Filed: 06/02/98 Chapter: 11
Debtor's Counsel: Kermit A. Rosenberg
Holmes, Rosenberg & Doherty PC
2020 North 14th Street, Suite 410
Arlington, Virginia 22201-2515
Total Assets: $5,900,000
Total Liabilities: $6,455,815
No. of
Amount Holders
------ -------
Fixed, liquidated secured debt $0 0
Contingent secured debt $0 0
Disputed secured debt $0 0
Unliquidated secured debt $0 0
Fixed, liquidated unsecured debt Unknown Unknown
Contingent unsecured debt $0 0
Disputed unsecured debt $0 0
Unliquidated unsecured debt $0 0
No. of shares of preferred stock 0 0
No. of shares of common stock 10,319,758 6,000
20 Largest Unsecured Creditors:
Name Nature Amount
---- ------ ------
Accudyne, Inc. Trade 18,227
Comnet 98' Trade 20,139
Insight Electronics Trade 20,880
Capital Ventures Debenture 400,000
Tanon Manufacturing Trade 509,541
Scitec Limited Trade 553,953
Gary Davison Judgment 1,198,000
Gary Davison Claim 2,000,000
Kuchera Industries Trade 23,011
K-Form Trade 31,637
Hamilton/Hallmark Trade 33,725
Advanced Technology Solutions Trade 34,928
American Express Trade 38,472
HCL America, Inc. Trade 41,880
Hynex Limtied Trade 46,250
Olympus Securities Debenture 178,000
Nelson Partners Debenture 178,000
Sidley & Austin Legal Fees 197,585
Leasing Technologies Trade 221,457
Baker & Hostetler Legal Fees 251,657
KIA MOTORS: Strike Puts Ford Bid at Risk, Kia Says
--------------------------------------------------
The top executive of Kia Motors Corp. said Tuesday that
Ford Motor Co. was interested in acquiring a majority stake
in the struggling South Korean automaker, but he warned
that labor unrest could threaten a deal.
Yoo Chong Ryul, appointed chairman by a court a month ago
as Kia went into receivership, said Ford was forming a
consortium with Mazda Motors Corp. and other companies to
bid for a stake. Ford already owns 9.6 percent of
Kia, while Mazda owns 6.7 percent. Ford also owns 33
percent of Mazda.
Mr. Yoo said Ford was a last hope for Kia, which is saddled
with debts of more than 10 trillion won ($7.16 billion).
But he warned that a strike by workers at the company's two
main plants could torpedo the deal.
"If the labor relationship is not resolved," Mr. Yoo said,
"Ford will consider differently with regard to cooperation
with Kia."
The walkout by 14,000 workers since Monday has added
urgency to the struggle of a company that fell to No. 3
from No. 2 among Korean automakers after admitting it could
not pay its debts and applying for receivership nearly a
year ago. Kia had made clear its strong opposition to a
takeover by Hyundai Motor Co., the No. 1 automaker. Ford
has broken off talks with Samsung Motor Co., which
went into production in March.
Ford executives have said they want to protect their
investment and preserve the flow of vehicles the company
receives from Kia. But they have ruled out increasing
Ford's stake if it requires shouldering Kia's huge debt.
(International Herald Tribune; 06/03/98)
LESLIE FAY: Leslie Fay Company, Inc. Announces Stock Split
----------------------------------------------------------
Directors of The Leslie Fay Company, Inc. yesterday
approved a two-for-one stock split, the company announced
today. The split followed shareholder approval at the
annual shareholders' meeting earlier in the day of an
increase in the number of authorized shares of common stock
from 9,500,000 to 20,000,000. The split will be payable
on July 1 to shareholders of record on June 17. After the
split, the company will have 6,800,000 shares outstanding.
"We believe the stock split will help to broaden our
shareholder base, improve liquidity and ultimately enhance
shareholder value," John J. Pomerantz, Leslie Fay's
chairman and chief executive officer, said.
Shareholders also elected two new directors, Chaim Y.
Edelstein, 55, chairman of the board of Hills Stores
Company, and Bernard Olsoff, 69, retired president and CEO
of Frederick Atkins, Inc., an international retail
merchandising and product development organization for
department stores. William J. Nightingale decided not to
stand for re-election. Shareholders re-elected the
company's six other directors and approved all other
business items at the annual meeting.
LONG JOHN SILVER'S: To Shutter 74 Restaurants
---------------------------------------------
Long John Silver's Inc. plans to close 74 of its 900
company-owned restaurants, a move expected to add about $12
million to EBITDA, according to a spokesman for the seafood
restaurant chain. In addition, the company is looking at
another 80 locations, which are on the bubble in terms of
profitability.
MARINELAND: Judge Postpones Sale of Resort Property
---------------------------------------------------
Bankruptcy Judge George L. Proctor has delayed a decision
until the end of June on a buyer for 140 acres of resort
property surrounding Marineland; the privately owned resort
and the 10-acre non-profit oceanarium make up the town of
Marineland, which is Florida's smallest incorporated city.
Judge Proctor had given potential suitors until close of
business on Wednesday to submit proposals and will make a
final decision by June 30. Marineland Ocean Resort Inc.,
which bought the land in April 1996 to fix up the aging
hotel, restaurant, marina and other facilities while
managing the oceanarium, filed for chapter 11 protection
last October. (ABI-05-June-98)
MOTOROLA: Announces 10% Layoff
------------------------------
In order to slow its lagging profits, Motorola, Inc.
announced a layoff of 15,000 workers, plus a $1.95 billion
charge to pay for the mass firings and a consolidation of
its semiconductor and paging operations. (The Wall Street
Journal 05-June-98)
PLAMA PLEVEN: Canadian-Controlled Oil Refinery Bankrupt
-------------------------------------------------------
The second-biggest Bulgarian oil refinery, which
employs 2,000 staff and was privatized two years ago, is to
file for bankruptcy, officials said on Friday.
Staff at the Plama Pleven refinery in the north of the
country, whose owners Evroenergy were taken over by
Canada's Stellar Global Corporation in April, have not been
paid since the start of the year.
The Canadian firm was chosen by the Bulgarian government
last November to take over 57 percent of a group of
chemical plants in the northwest of the country for 123
million dollars.
It has announced investments of 118.75 million dollars over
five years, but has not yet signed contracts to that
effect. (Agence France Presse - 06/05/98)
U.S. LEATHER: DIP Pact Wins Final Court Nod
-------------------------------------------
U.S. Leather's $52.5 million debtor-in-possession credit
agreement with BankAmerica Business Credit Inc. won
final approval earlier this week. The U.S. Bankruptcy
Court in Milwaukee granted final approval at a June 1
hearing and there were no objections. (Federal Filings,
Inc. 05-June-98)
UNISON HEALTHCARE: Petition Lists Liabilities Of $182M
------------------------------------------------------
Unison Healthcare Corp.'s chapter 11 petition, filed May 28
in Phoenix, lists total assets and liabilities of
approximately $74 million and $182 million, respectively.
The filing also includes nearly 30 subsidiaries that were
not part of the Jan. 7 bankruptcy filing by three other
Unison units, which operate 26 nursing homes in
Texas and Indiana. The health care service provider's
largest unsecured creditors include indenture trustee First
Bank National Association ($100 million/12.25 percent
senior notes due 2006), Dean Witter ($47 million), and
indenture trustee IBJ Schroder Bank & Trust Co. ($20
million/13 percent senior notes due 1999).(Courtesy of
The Daily Bankruptcy Review Copyright c June 5, 1998 - ABI
05-June-98)
VANGUARD AIRLINES: Files Schedule 13D with SEC
----------------------------------------------
This Schedule 13D relates to the common stock, par value
$0.001 per share of Vanguard Airlines, Inc., a Delaware
corporation. This Schedule 13D is filed on behalf of J.F.
Shea Company, Inc.("JFSCI") John F. Shea, Edmund H. Shea,
Jr. And Peter O. Shea.
As of May 20, 1998, JFSCI held and beneficially
owned 24,340,910 shares of Common Stock, which
represented approximately 31.36% of the sum of the
66,841,055 shares of Common Stock then outstanding, the
3,024,000 shares of Common Stock issuable upon the
conversion of the Series A Preferred Stock and the
7,750,500 Warrants held by JFSCI. As of May 20, 1998, Mr.
Edmund Shea beneficially owned a total of 455,000
shares of Common Stock.
Also on March 20, 1998, the company exchanged outstanding
demand notes previously issued to J.F.Shea Co., Inc. for a
new note in the principle amount of $2,776,682.99.
WURLITZER: Eaglerock Capital Becomes Majority Owner
----------------------------------------------------
Eaglerock Capital Partners announced that it has become the
majority owner of the Wurlitzer chain by providing $700,000
to pay for the company's reorganization; the bankruptcy
court has approved the plan, according to the Telegram
Gazette. Wurlitzer filed chapter 11 in September and its
primary assets consisted of its inventory. Under the plan,
unsecured creditors who were owed about $1 million will
receive a small portion of what they were owed over a two-
year period. (ABI 05-June-98)
*********
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 * * *