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/raid1/www/Hosts/bankrupt/TCR_Public/980831.MBXT R O U B L E D C O M P A N Y R E P O R T E R Monday, August 31, 1998, Vol. 2, No. 170 Headlines APS HOLDING: Announces Agreement With Bank Lending Group ADVANCED GAMING: Announces Scott Chairman, Pres. and COO AMERICAN RICE: Bondholder Panel Wins Examiner Bid BOSTON CHICKEN: Files Quarterly Report BRADLEES: Improved Second Quarter BROTHERS GOURMET: Case Summary & 20 Largest Creditors BUILDERS TRANSPORT: Settlement With NationsBanc Leasing BYC CORP: Revenge Acquires Assets of BYC Corp. CENDANT CORP: Board Votes to Terminate Shelton CITYSCAPE FINANCIAL: Viability in Question CONCORD ENERGY: Files Voluntary Petition Under Chapter 11 CONDERE CORP: Assets To Be Sold to Titan Tire CROWN BOOKS: Committee Opposes Immediate Action on Leases CROWN BOOKS: Committee Taps M.R. Weiser as Accountants FOXMEYER: SAP Stock Falls Sharply FRETTER INC: Dixons Seeking Another Exclusivity Extension MCGINNIS MANAGEMENT: Three Hedge Funds File for Bankruptcy MOBILEMEDIA: Reports Details of Merger PINNACLE MICRO: Three Creditors Try To Force Bankruptcy PROPSPERITY CRUISES: Plans To Operate During Bankruptcy QUADRAX CORP: Seeks To Extend Exclusivity REGENCY HOMES: Will the Deposits Be Honored? RENAISSANCE COSMETICS: Expects to File Pre-packaged Chap 11 SA TELECOMMUNICATIONS: Seeks Time To Assume/Reject Leases SILAS CREEK: Settlement Stays Conversion ********* APS HOLDING: Announces Agreement With Bank Lending Group -------------------------------------------------------- APS Holding Corporation announced today that it has reached agreement with its Bank Lending Group, led by The Chase Manhattan Bank as agent, regarding modifications to the covenants associated with its post-petition DIP financing agreement. Among the covenant modifications agreed to is a waiver of any violations of the Company's EBITDA covenant through September 30, 1998. APS Holding Corporation, which has been in Chapter 11 bankruptcy since February 2, 1998, has not been in violation of any of its financial covenants through July 1998. The Company had indicated in its fiscal 1998 10-K and first quarter 1999 10-Q filings that without modification it might violate financial covenants in the second or third quarters of fiscal 1999, which end July 25 and October 25, 1998, respectively. ADVANCED GAMING: Announces Scott Chairman, Pres. and COO -------------------------------------------------------- Advanced Gaming Technology Inc. (OTC BB:AGTI) Thursday announced that Daniel H. Scott has been appointed chairman of the board, president and chief operating officer of the company. Scott replaces Thomas Nieman, who resigned to pursue other opportunities. Scott is a 15-year veteran of the gaming industry in Las Vegas. He recently served two years as senior vice president and chief financial officer for MGM Grand Hotel. He was also vice president and treasurer during a 12-year tenure at Caesars Palace. Scott's first priority will be to reorganize the company. Advanced Gaming, effective Thursday, filed a petition for reorganization in Las Vegas pursuant to Chapter 11 of the U.S. Bankruptcy Code. The company has retained the firm of Levene, Neale, Bender and Rankin L.L.P. of Los Angeles to represent the company during the reorganization process. The company is currently burdened with a debt structure and a shortage of working capital, which requires a formal reorganization and a new plan of business. The company incurred a loss in excess of $9 million in its most recent fiscal year ended Dec. 31, 1997. The company's accumulated loss since inception is $33 million. In this regard, the company has already made significant cost reductions as part of its new reorganization strategy. Advanced Gaming Technology designs and markets patented and proprietary gaming systems including technologically advanced electronic bingo systems. Its stock trades under the symbol AGTI on the NASD electronic bulletin board. AMERICAN RICE: Bondholder Panel Wins Examiner Bid ------------------------------------------------- The court Tuesday granted a bondholder panel request to appoint an examiner for American Rice Inc. to probe "potential improprieties involving the Debtor, its present and former management and directors, and its professionals." The examiner will be named soon but won't take office until Sept. 20. The ruling will not affect the pending sale of the company's olive business for more than $55 million, however, the examiner will look at a number of alleged insider transactions, which may include the proposed sale.(Federal Filings Inc. 27-Aug-98) BOSTON CHICKEN: Files Quarterly Report -------------------------------------- Boston Chicken, Inc. filed a 10-Q Quarterly Report with the SEC for the quarterly period ending July 2, 1998. A full-text copy of the filing is available via the Internet at: http://www.sec.gov/Archives/edgar/data/0000927356-98- 001453.txt The company reports a net loss for the two quarters ended July 12, 1998 of $(437,050) Based upon the decline in store cash flow of the Boston Market system during 1998, unless the Company is able to renegotiate its senior credit facilities, sell assets and/or improve Boston Market store performance, the Company may not generate sufficient liquidity to meet its financial obligations in 1998. Number of shares of Common Stock, $.01 par value per share, outstanding as of August 17, 1998: 77,130,853. BRADLEES: Improved Second Quarter --------------------------------- Bradlees Inc., Braintree, Mass., reported yesterday that its operating results for the second quarter ended August 1 are significantly improved and that its net loss has been reduced, according to a newswire report. The net loss for the quarter was $2.7 million, down from a $16.9 million net loss for the same period last year. Chairman and CEO Peter Thorner said that customer traffic counts increased 12.7 percent in July, which is the ninth consecutive monthly gain. He said the company is poised to emerge from chapter 11 by the end of its fiscal year. BROTHERS GOURMET: Case Summary & 20 Largest Creditors -------------------------------------------------- Debtor: Brothers Gourmet Coffees, Inc. 2255 Glades Road, Suite 1002 Boca Raton, Florida 33431 Type of business: Integrated Sourcer, Roaster, and distributor of gourmet coffee products and supplier of wholesale gourmet coffees. Court: District of Delaware Filed: 08/27/98 Chapter: 11 Debtor's Counsel: Thomas L. Ambro Richards, Layton & Finger P.A. One Rodney Square P.O. Box 551 Wilmington, Delaware 19899 (302) 658-6541 Total Assets: $29,500,000 Total Debts: $41,000,000 No. of shares of preferred stock 0 No. of shares of common stock : (a)12,324,890- Including 203,566 shares of treasury stock (b) 839,332 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ Dilmun Financial Unsec. Financing $15,000,000 Ahold USA Customer Credits 1,046 Coex Coffee Trade Debt 884,253 Blaser & Wolthers Trade Debt 736,418 Deschis USA Trade Debt 551,655 Carcafe SA Trade Debt 494,918 Shopper Food Warehouse Customer Credits 203,504 King Soopers Customer Credits 198,339 Agroindustrias Trade Debt 174,365 Fred Meyers Customer Credits 154,732 Curro Cabinets Trade Debt 146,771 Active Media Services Trade Debt 137,801 Flavor & Fragrance Trade Debt 127,989 C&S Wholesale Grocers Customer Credits 94,204 Gollucke & Rolhfus Trade Debt 92,965 Rowley Agency Trade Debt 90,306 Winn Dixie, Tampa Customer Credits 89,625 Metro Traffic Control Trade debt 83,730 Beck Flavors Trade Debt 78,992 AC Nielsen Trade Debt 64,959 BUILDERS TRANSPORT: Settlement With NationsBanc Leasing ------------------------------------------------------ The debtors, Builders Transport, Inc. and its affiliated debtors, notify the court that under a certain Motor Vehicle Lease Agreement, NationsBanc Leasing agreed to lease to debtors 130 tractor trailer vehicles. NationsBanc claimed a remaining outstanding balance of rent due in the amount of approximately $1.96 million. The debtor filed counterclaims, but did not provide a specific amount. The parties and Schneider National, Inc., successor in interest to Builders Transport have agreed that, without making a determination regarding whether or not the appeals and the counterclaims are subject to the order transferring certain assets, of the debtor to Schneider, Debtor will dismiss the appeal and the counterclaim against NationsBanc. The debtors determined that since the equipment subject to the lease has already been sold, and was not necessary for an effective reorganization, continuing to pursue the litigation against NationsBanc would not be a prudent use of its resources. BYC CORP: Revenge Acquires Assets of BYC Corp. ---------------------------------------------- Revenge Marine Inc. announced the signing of an option to acquire all assets and assume certain liabilities of BYC Corp., according to a newswire report. BYC acquired the assets of the Black Yacht Corp. through a secured lending relationship with an affiliate, pursuant to bankruptcy court proceedings in October 1997. The acquisition is for $5.5 million in cash, warrants to acquire equity and other future considerations. Revenge expects to exercise its exclusive option by September 24. (ABI 28-Aug-98) CENDANT CORP: Board Votes to Terminate Shelton ---------------------------------------------- After receipt of a report by the board's audit committee, the board of Cendant Corp. voted to terminate E. Kirk Shelton, which means that although Shelton has already stepped down form his position, he won't receive the severance pay that was negotiated before the accounting fraud was discovered. Lawyers for Shelton said they will vigourously contest the board's action. The reports states that CUC officials deliberately inflated revenue and decreased expenses to meet Wall Street expectations. The budgets showed false entries. Walter Forbes, founder of CUC stepped down as chairman of Cendant in July, and now states that he knew nothing of the fraud. The board did not act on Forbes's severance package, totaling $47.5 million in cash and stock options. Cendant said it would delay filing its revised financial results for the years 1995 to 1997 because the staff of the SEC disagrees with its latest accounting methods. At issue is the handling of membership clubs' fees. (The Wall Street Journal 28-Aug-98) CITYSCAPE FINANCIAL: Viability in Question ------------------------------------------- Cityscape Financial Corp. filed its recently quarterly report, Securities and Exchange Commission form 10-Q, in which it noted that the company is continuing to incur substantial losses and that its ability to continue as a viable entity remains a serious concern. In the filing, Cityscape said, "The company's operations for 1997 and the first six months of 1998 have consumed substantial amounts of cash and have generated significant net losses, which have reduced stockholders' equity to a deficit of $263.9 million at June 30, 1998." It added, "The company is unable to access the capital markets and has experienced difficulties in securing loan warehouse or purchase facilities. The company's ability to operate is dependent upon continued access to loan warehouse and loan purchase facilities." In other words, Cityscape's stock is less than worthless and the company has absolutely no liquidity and maneuverability with which to try and climb out from under its debt. The filing continued, "The company expects that its difficulty in accessing capital, which has had a negative impact on liquidity as well as profitability, will continue for the foreseeable future. The profitability of the company has been and will continue to be adversely affected....There is substantial doubt about the company's ability to continue as a going concern." As a result of its ever-worsening financial condition, Cityscape retained CIBC Oppenheimer Corp. and Jay Alix & Associates to explore strategic alternatives for resolving the company's problems and initiated a plan of reorganization which should result in Cityscape filing for bankruptcy under chapter 11 of the Bankruptcy Code at some point after mid-September. "Toward that end, during the second and third quarters of 1998, the company has engaged in negotiations, first with holders of a substantial majority of the Notes, and second with holders of a substantial majority of the Convertible Debentures, on the terms of a plan of reorganization that both groups would find acceptable," Cityscape said. "Those negotiations resulted in agreements in principle with both groups on the terms of the plan," the company added. If the plan is ultimately approved by certain classes of creditors and confirmed by a bankruptcy court, holders of Notes will receive 90.5% of the new common stock of the reorganized company plus $75 million of 10-year senior notes while holders Convertible Debentures will receive 9.5% of the new common stock plus warrants to purchase additional common stock should the reorganized company's enterprise value reach $300 million, Preferred Stock holders will receive warrants to purchase 10% of the new common stock should the company's enterprise value reach $430 million, and Common Stock holders will receive nothing. Currently, Cityscape is soliciting approval of the plan from the various note and stock holders. "Immediately following the completion of the solicitation, assuming the requisite acceptances by certain classes of creditors are obtained, the company and (its subsidiary) expect to commence cases under chapter 11 of the Bankruptcy Code," Cityscape said. The company said that it expects the solicitation process to take approximately one month. However, "There can be no assurance that the company will be in position to commence the chapter 11 proceedings as expeditiously as contemplated, that requisite acceptances of the (reorganization) plan will be obtained, that the terms of the plan will not change, that the bankruptcy court...will confirm the plan within the anticipated time frame or at all, or that the plan will be consummated even if it is confirmed." Cityscape added that even if the plan is implemented, "no assurances can be given as to the effect of any such success on the company's results of operations or financial condition."(National Mortgage News-08/24/98) CONCORD ENERGY: Files Voluntary Petition Under Chapter 11 --------------------------------------------------------- Concord Energy Incorporated (Nasdaq: CODE) today announced that it and its subsidiary Knight Equipment & Manufacturing Corporation ("KEMCO") have filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code in Federal Bankruptcy Court in San Antonio, Texas. The Company said that it will continue to operate in the normal course of business during the bankruptcy proceeding and that it is pursuing alternatives for debtor-in- possession ("DIP") financing. KEMCO has reached an agreement for interim DIP financing, subject to court approval, and it is pursuing other alternatives which may involve the sale of assets of KEMCO as well as other DIP financing. Chairman and CEO Deral Knight said that the Board of Directors reviewed strategic options and determined that a restructuring of the Company in the context of a Chapter 11 reorganization afforded the Company the best opportunity to return it to profitability and to provide a maximum recovery for all parties in interest. The Company is an integrated oil and gas service company that also has interests in oil and gas properties. The Company's KEMCO subsidiary designs, re-engineers and markets oil and gas processing equipment. Concord's IPS subsidiary markets a proprietary information software system that automates and expedites the dissemination of critical oil and gas production data. CONDERE CORP: Assets To Be Sold to Titan Tire --------------------------------------------- Titan International Inc. announced that Bankruptcy Judge Edward Ellington, Jackson, Miss., rejected an objection by the International Steelworkers to the sale of all assets of Condere Corp., which owns Fidelity Tire, according to a newswire report. This ruling clears the way for the sale of Condere's assets, and Titan CEO Maurice Taylor Jr. said that the company now can move ahead at maximum capacity and should have an output of $100-$120 million in revenue. CROWN BOOKS: Committee Opposes Immediate Action on Leases --------------------------------------------------------- The Official Committee of Unsecured Creditors objects to the motion of certain landlords to compel the debtor to assume or reject unexpired leases of nonresidential real property. The Committee states that the landlords seek to compel the debtors to assume or reject three particular leases on or before September 14, 1998, a date which is "a mere 60 days" from the Petition Date. The Committee argues that the debtors must have ample time to meaningfully assess the value of their leases. The Committee urges the Court to grant the debtors the necessary time. CROWN BOOKS: Committee Taps M.R. Weiser as Accountants ----------------------------------------------------- The Official Committee of Unsecured Creditors for the debtors, applies to the court for an order approving the appointment of M.R. Weiser & Co. LLP as accountants and financial advisors to the Official Committee of Unsecured Creditors. The Committee made a determination to retain the accountants to perform certain accounting services, including ascertaining the viability of the debtors, to review and analyze the debtors' books and develop a set of projections and feasibility, to prepare a liquidation analysis and to review debtor's historical financial information. M.R. Weiser's billing rates range from $340 for a partner to $90 for a paraprofessional. FOXMEYER: SAP Stock Falls Sharply --------------------------------- The stock of SAP AG fell sharply last Thursday, a day after FoxMeyer Corp., a bankrupt drug distributor, filed a $500 million lawsuit against the German software company's U.S. subsidiary. SAP fell $5, or more than 8 percent, to $47.31 on the New York Stock Exchange shortly after midday. SAP vowed to fight the lawsuit, saying it was baseless. In a statement released in Germany, the company said the charges did not correspond to the facts of the case. "SAP complied with all of its contractual obligations," it said. In the lawsuit, the bankruptcy trustee for FoxMeyer alleges "gross negligence" by SAP America "was a significant factor" in the drug distributor's August 1996 collapse. Yet analysts said the lawsuit would not have negative consequences for the world's leading maker of so-called ERP software. The trustee, Bart Brown, also filed a lawsuit Wednesday against Deloitte & Touche LLP, FoxMeyer's former accounting firm, accusing it of agreeing to a damaging refinancing plan. In another $500 million case filed in July, Brown sued Andersen Consulting, which installed the SAP software. (Reuters: Financial - 08/27/98) FRETTER INC: Dixons Seeking Another Exclusivity Extension --------------------------------------------------------- Fretter's Dixons U.S. Holdings Inc. unit is seeking another extension of its exclusive periods for filing a reorganization plan and soliciting plan acceptances to Oct. 26 and Dec. 28, respectively. "The Debtors request for an extension of the Exclusive Periods is merely a reflection of the fact that certain issues must be addressed before a viable chapter 11 plan can be proposed and confirmed." The company said significant progress has been made in the case. (Federal Filings Inc. 27-Aug-98) MCGINNIS MANAGEMENT: Three Hedge Funds File for Bankruptcy ---------------------------------------------------------- Dana McGinnis has filed for bankruptcy protection after his three hedge funds, McGinnis Management Partners'; Focus Fund, Global Fund and Russia Value Fund, were asked by Citicorp., the largest lender to the funds, to put up more capital, according to The Wall Street Journal. The San Antonio-based bond trader had about $200 million invested for wealthy clients and was hit hard by the Russian debt crisis. McGinnis, who said he had considerable gains for investors in emerging markets, said that he was upset he was forced into bankruptcy and that "Russia didn't have to do this, and my lender didn't have to do what it did." He did not identify the lender, but court documents indicate that it is Citicorp. Several other funds have also received margin calls; the forward foreign- currency contracts that were supposed to protect these funds are not expected to be honored by Russian banks. McGinnis said that before Russia devalued its currency and put a moratorium on payments on its ruble-denominated government debt, his Russia fund was up 1 percent on the year. The bankruptcy filing put a preliminary value on the funds' obligations to Citicorp at more than $100 million. Lesser amounts are owed to Credit Suisse First Boston Corp.,Lehman Brothers and BankAmerica Corp. (ABI 28-Aug-98) MOBILEMEDIA: Reports Details of Merger -------------------------------------- Arch Communications Group, Inc. (Nasdaq:APGR) and MobileMedia Corporation announced a definitive merger agreement for Arch to acquire MobileMedia. Under the terms of the merger agreement, Arch will acquire MobileMedia for a combination of cash, the assumption of certain liabilities, and the issuance of Arch common stock and warrants to acquire Arch common stock. The transaction will be implemented through a plan of reorganization that MobileMedia will file with the U.S. Bankruptcy Court for the District of Delaware. The acquisition is expected to close during the first quarter of 1999, subject to satisfaction of various closing conditions, including (i) approval by Arch's shareholders; (ii)confirmation of the plan of reorganization by a final order of such Bankruptcy Court; (iii) approval by a final order of the Federal Communications Commission of the transfer of MobileMedia's FCC licenses to Arch; (iv) approval (or expiration of waiting periods) under the Hart Scott Rodino Act; and (v) various other conditions. Terms of the transaction include: o Holders of MobileMedia's secured bank debt, which aggregates $649 million in principal amount, will receive 100% of such principal amount in cash,comprised of a $479 million payment from Arch and $170 million in proceeds expected to be distributed upon the closing of MobileMedia's pending sale of its tower site assets to Pinnacle Towers, Inc. o Arch intends to finance the $479 million cash payment with $262 million in proceeds from additional bank debt and an additional note offering and $217 million in cash from the proceeds of the issuance of Arch common stock upon the exercise of transferable rights to be issued by Arch to MobileMedia's unsecured creditors. Assuming full exercise of such rights, such unsecured creditors (or their assignees) would be entitled to acquire for cash between 34.3% and 52.1% of Arch's common stock (depending upon the market price of the Arch common stock during a designated period based on a price collar which has a low of $6.25 per share and a high of $10.63 per share), and warrants to purchase another approximately 2.5% of the Arch common stock. o Certain of MobileMedia's largest unsecured creditors have agreed in connection with the transaction to act as standby purchasers with respect to any shares of Arch common stock and warrants not purchased upon the exercise of such rights. As consideration for their backup commitments, such creditors will receive warrants to purchase another 2.5% of Arch's common stock. o In addition to the rights, MobileMedia's unsecured creditors, whose claims aggregate approximately $480 million, will receive between 17.2% (if the rights entitle them to purchase 52.1%) and 31.3% (if the rights entitle them to purchase 34.3%) of Arch's common stock (depending upon the market price of the Arch common stock during a designated period). o Arch's existing shareholders (including its Series C preferred shareholders)will also receive warrants in connection with the transaction to purchase 7% of Arch's common stock. All warrants will have an exercise price of $8.19 per share. o Therefore, on a diluted basis, the existing Arch shareholders (including the Series C preferred shareholders) will hold, as of the effective date of the transaction, between 30.7% and 34.4% of Arch's common stock, while MobileMedia's unsecured creditors will hold between 65.6% (if the existing Arch shareholders hold 34.4%) and 69.3% (if the existing Arch shareholders hold 30.7%) of such stock. o Arch will also pay the administrative expenses of MobileMedia as of the effective date of the transaction (with a reduction of the shares to be distributed to MobileMedia's unsecured creditors if and to the extent that such expenses exceed $34 million), and will repay expected borrowings under MobileMedia's debtor in possession borrowing facility. o MobileMedia's existing shareholders will not receive any consideration under the merger or the plan of reorganization, and their shares of MobileMedia common stock will be canceled. PINNACLE MICRO: Three Creditors Try To Force Bankruptcy ------------------------------------------------------- Three creditors are trying to force Pinnacle Micro Inc. into Chapter 7 bankruptcy. The creditors filed an involuntary-bankruptcy petition last week against the Irvine maker of optical-storage devices. If a judge approves the petition after hearing Pinnacle's objections in October, the company's assets will be sold. The petition could pre-empt Pinnacle's attempt to settle with creditors out of court. The company, which lost $61 million in the past two years, wants creditors to wait for their money. Earlier this month, it formally asked them to approve a plan to reorganize its debts. The plan calls for Pinnacle to begin repaying creditors if it returns to profitability. Pinnacle intends to contest the filing on several grounds; if it is unsuccessful, it will exercise its right to convert the filing to chapter 11. It then would immediately submit its plan and disclosure statement, which would be materially the same as the current out-of- court plan. Per the plan, Pinnacle plans to pay unsecured creditors 100 percent of valid claims; no fixed payments would be required to be made to unsecured creditors, except for a one percent annual distribution to them, and no interest would accrue or be paid by Pinnacle on the amounts owed. Claims of unsecured creditors would be subordinate to the existing debt and any new senior debt defined by the plan. Once among Orange County's most promising high-tech firms, Pinnacle has been losing money since 1995, when it tried to expand from selling storage devices to manufacturing them. Its key product, the 4.6-gigabyte Apex drive, was more than a year late. Since 1995, its sales have fallen by more than half while its annual losses have soared. Last year, Pinnacle lost $30 million on sales of $31 million. In the past 12 months, its payroll has shriveled from 106 people to 26. The three creditors who signed the involuntary-bankruptcy petition former employee William Pat Price of Fountain Valley and consultants Keiji Murayama of Tokyo and Clifton R. Huxford of Beverly Hills said they're owed $216,000. Pinnacle says in its proposed reorganization plan that it owes Coast Business Credit $5.4 million and various trade creditors $17.6 million. The company lists $7.6 million in assets, mostly unsold inventory and customers' unpaid bills and all of it pledged to Coast and to the trade creditors. The assets probably would fetch $1.8 million in a liquidation, the company estimated. Approximately 91 percent of the creditors who have voted on the plan favor it. The final date for receipt of ballots is September 22. Pinnacle is offering the trade creditors a share of its net cash flow once it has some to share. Pinnacle says it is bringing its losses under control and predicts it could raise $12 million for the trade creditors within four years.(Orange County Register - 08/27/98 and ABI 28-Aug-98) PROPSPERITY CRUISES: Plans To Operate During Bankruptcy ------------------------------------------------------- Although the ship's owners have filed for bankruptcy in federal court, citing mounting legal bills and other factors, Vegas-N-Venice will continue to operate. "We are open and we intend to stay open pending the outcome of bankruptcy court," said Ben Sorman, spokesman for Prosperity I Cruises, owner of the gaming ship. "We intend to stay open. . . . We are getting our finances in order and we're going to continue to operate." Sorman spoke publicly for the first time Tuesday after his company filed for Chapter 11 reorganization Friday in U.S. Bankruptcy Court in Tampa. At least a few companies owed money by Prosperity I, including the Herald-Tribune, have reported trouble collecting from the ship owner. But Sorman said no payroll checks have bounced at Vegas-N-Venice, and the ship would stay afloat financially. In recent months, Prosperity I has been slowly sinking beneath the weight of mounting attorneys' fees resulting from legal battles with the city of Venice, the county, then the state. "It's just one court battle after another," Sorman said. "It's been costly." Other factors in Prosperity's financial distress, Sorman said, include "bad press" from local media, including the Herald-Tribune, and a crimp on operations caused by the effects of this year's El Nino effect and resulting bad weather. Most of the legal challenges have centered on accusations that Vegas-N-Venice tears up the bottom of Hatchett Creek with its hull and propellers, churning up silt in its wake and violating water quality standards. Both the county Department of Natural Resources and the state Department of Environmental Protection have levied such charges. Both cases are pending, and DEP officials say it is gearing up to move ahead with its lawsuit, which was immediately put on hold after being filed in April. Regarding the pending bankruptcy, ". . . in no way would this affect our pending lawsuit. We still plan to move forward as we normally would," said Ted Murray, a lead investigator on the Vegas-N-Venice case in the agency's Tampa office. Murray said he and other members of the Tampa regional office will meet with other DEP officials in Tallahassee this week to discuss their strategy with the newly rekindled lawsuit.(Sarasota Herald - 08/26/98) QUADRAX CORP: Seeks To Extend Exclusivity ----------------------------------------- Quadrax Corporation, debtor, seeks to extend the exclusive period for the debtor to file a plan of reorganization by 90 days. A hearing on the confirmation of the debtor's plan is expected to occur on September 28, 1998. The debtor states that under the Bankruptcy Code, if a debtor files a plan of reorganization within 120 days from the commencement of the case, the Exclusive Period automatically increases to 180 days. Quadrax Corporation filed a plan within the 120-day period thereby extending the Exclusive Period until August 26, 1998. The debtor states that cause exists to extend the Exclusive period as this case has been extremely complex and the debtor has proceeded as diligently as possible to propose the debtor's plan and to obtain the support of the Creditors Committee for the debtor's plan. REGENCY HOMES: Will the Deposits Be Honored? -------------------------------------------- Columbia-based Regency Homes Corp., which declared bankruptcy last month and stranded hundreds of people who paid deposits on new houses, has signed a deal to sell some of its assets to another local builder for $25.5 million. Landover-based Washington Homes Inc. said yesterday that it will buy or manage Regency building lots, unsold and uncompleted houses and contract rights in communities in Maryland and Virginia. A Washington Homes spokesman said the company would not comment on whether it would honor commitments to build homes for 200 persons who paid Regency $1.2 million in deposits. The Maryland Insurance Administration has a $500,000 bond from Regency to cover the home buyers' deposits but agency officials did not know yesterday whether the agreement with Washington Homes would affect those contracts. One local real estate analyst said that Washington Homes likely would offer credits to the would-be home owners. The agreement between two of the region's largest home builders faces approval by the trustee of the U.S. Bankruptcy Court in the District of Maryland, which is overseeing liquidation of Regency's assets. The company sought Chapter 7 bankruptcy protection from creditors July 30, which effectively ended Regency's operations. Regency reported assets of more than $50 million and liabilities of at least $53 million and was on the verge of making a deal last month with Beazer Homes USA when the Atlanta-based company canceled the negotiations. (Washington Times; 08/27/98) RENAISSANCE COSMETICS: Expects to File Pre-packaged Chap 11 ----------------------------------------------------------- Renaissance Cosmetics Inc., Stamford, Conn., announced that it has reached an agreement in principle on terms of a financial restructuring with holders of its senior notes due 2004, according to a newswire report. The company expects to implement its restructuring through a pre- packaged chapter 11 filing but does not expect its subsidiaries will be involved in such a filing. The restructuring would convert $200 million of outstanding notes and accrued an unpaid interest into virtually 100 percent of the common stock of Renaissance. All of its outstanding preferred stock and accrued dividends and outstanding common stock would be canceled, and holders would receive warrants exercisable for shares of common stock of the reorganized company in exchange. Renaissance also announced it has retained Development Specialists Inc. to assist it in further restructuring efforts and operations. Renaissance Cosmetics is a holding company whose direct and indirect subsidiaries manufacture and market fragrances, cosmetics and artificial nails and related products. (ABI 28-Aug-98) SA TELECOMMUNICATIONS: Seeks Time To Assume/Reject Leases --------------------------------------------------------- The debtors, SA Telecommunications, Inc. seeks to extend the time within which the debtors must assume or reject certain unexpired leases of nonresidential real property. Substantially all of the assets of the business have been sold and operational control of the business has been assumed by the EqualNet Parties as of March 17, 1998. In conjunction with EqualNet Parties' assumption of control and in anticipation of the closing, the debtors and the EqualNet Parties have been conducting a comprehensive review of the debtors' operations in an effort to determine which, if any, of the debtors' various leases and contracts are necessary to the buyer's operations after its acquisition of the assets. Treatment of the remaining leases will be made on an ongoing basis and the debtors will promptly make motions regarding any particular leases as soon as a determination is made. The debtors are now seeing a short extension until the Effective Date. SILAS CREEK: Settlement Stays Conversion ---------------------------------------- The U.S. Trustee temporarily backed off his bid to convert Silas Creek Retail's chapter 11 case to chapter 7 or dismiss it altogether, pending approval of a recent settlement. The defunct fabrics and crafts retailer and the parties that bought the bulk of its assets have agreed to a $2.3 million settlement of their post-closing adjustment dispute. ABC Fabrics Inc. acquired substantially all of Silas Creek's assets for about $39 million last November, assigning certain rights to Hancock Fabrics Inc. for about $22.5 million. Silas Creek intends to file a liquidating plan of reorganization by the end of September. (The Daily Bankruptcy Review and ABI 28-Aug-98) ********* 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. ISSN 1520-9474. 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 * * *