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/raid1/www/Hosts/bankrupt/TCR_Public/980910.MBXT R O U B L E D C O M P A N Y R E P O R T E R Thursday, September 10, 1998, Vol. 2, No. 177 Headlines ABC INTERNATIONAL TRADERS: Case Dismissed BARNEY'S: Seeks Authorization to Retain Houlihan, Lokey CAI WIRELESS: Plan Faces Shareholder, IRS Opposition CITYSCAPE FINANCIAL: Notice Regarding Solicitation of Votes COLUMBIA/HCA: S&P Cuts Outlook to "Negative" CRAWDADDY'S: Bugs in The Booze Leads to Bankruptcy FULCRUM DIRECT: Committee Applies To Retain Bayard Firm HARRAH'S JAZZ: Court Okays Changes To Reorganization Plan INTERNATIONAL WIRELESS: Capital Deficiency Problems KIA MOTORS: $2 Billion of Kia's Debts Written Off LIBERTY HOUSE: Court Authorizes Rejection of Leases LONDON'S ROYAL OPERA HOUSE: Temporarily Closed Due to Debt LONG JOHN SILVER'S: Seeks Exclusivity Extension LYNX GOLF: Notice of Bar Date of October 21, 1998 MOLTEN METAL: Future in Doubt After Investors Pull Support MUSTANG RANCH: Brothel files for Bankruptcy NET TELECOMMUNICATIONS: Order Grants Employ of Attorney PARAGON TRADE: Seeks Nod To Pay Reclamation Claims PARAGON TRADE: Seeks Authorization For CPI To Sell Assets PEGASUS GOLD: Objection to Bondholders' Proofs of Claim PEGASUS GOLD: Objections To Disclosure Statement PINNACLE BRANDS: Plan To Auction Assets Met With Interest SNAKE EYES: Files Chapter 11 SNAP-ON INC: To Cut 1100 Jobs WSR CORPORATION: Counsel Seeks to Withdraw ********* ABC INTERNATIONAL TRADERS: Case Dismissed ----------------------------------------- An order was entered in the U.S. Bankruptcy Court in the Central District of California on February 10, 1998 dismissing the Chapter 11 case, ABA International Traders Inc. d/b/a Micro Games of America and d/b/a MGA Entertainment. BARNEY'S: Seeks Authorization to Retain Houlihan, Lokey ------------------------------------------------------- Barney's, Inc. et al. seeks court authorization to retain Houlihan Lokey Howard & Zukin Financial Advisors, Inc. as the debtors' trademark appraiser for the purpose of determining the fair market value of the "Barneys New York" trademark. Houlihan Lokey will review and analyze the information supplied by the debtors and other publicly accessible sources to prepare a written report expressing its opinion of the fair makrket value of the Trademark. The conclusions of the firm will be based on valuation methods and techniques that Houlihan Lokey considers appropriate under the circumstances. Houlihan Lokey will be paid a fee of $40,000 for its valuation services and preparation of its report including expenses CAI WIRELESS: Plan Faces Shareholder, IRS Opposition ---------------------------------------------------- A group of CAI Wireless Systems' non management shareholders charged that CAI's prepackaged plan of reorganization has not been proposed in good faith and is "predicated on a valuation of the assets and the enterprise value of the Debtors which is seriously flawed." The shareholder group accused CAI, Merrill Lynch and the noteholders of trying to siphon valuable equity interests in the company from their rightful owners to creditors and management. (Federal Filings Inc. 9-Sept-98) CITYSCAPE FINANCIAL: Notice Regarding Solicitation of Votes ----------------------------------------------------------- In The Wall street Journal, September 9, 1998, Cityscape Financial Corp. and Cityscape Corp. published a notice regarding solicitation of votes for their joint prepackaged plan of reorganization. A solicitation of votes for acceptance of the plan has been announced with respect to the following securities: 12 3/4% Series A Senior Notes Due 2004; CUSIP NO.178778AF3 6% Convertible Subordinated Debentures Due 2006; CUSIP Nos.178778AA4, 178778AB2; 178778ACO 6% Series A Convertible Preferred Stock and 6%Series B Convertible Preferred Stock Complete information and documents with respect to the solicitation of votes for the joint prepackaged plan, including the Solicitation and Disclosure Statement dated August 28, 1998 and the Joint Plan of Reoganization are available to the holders of the above securities from: Bondholder Communications Group 30 Broad Street, 46th Floor New York, NY 10004 (212)809-2663 COLUMBIA/HCA: S&P Cuts Outlook to "Negative" -------------------------------------------- The Wall Street Journal reports on September 9, 1998 that Standard & Poor's Ratings Services downgraded its outlook on hospital company Columbia/HCA Healthcare Corp. to "negative" from "developing." The negative outlook by the firm follows a series of hospital sales that will shrink the company significantly. S&P warned that Columbia's ratings could be lowered if "earning levels are not realized," or if the company proceeds with a share-repurchase program that would increase the company's debt "past its stated 55% target." The ratings firm noted that the government investigation has diverted management's attention from operations. CRAWDADDY'S: Bugs in The Booze Leads to Bankruptcy -------------------------------------------------- Problems for Crawdaddy's went from bad to worse Friday, when the restaurant's status in U.S. Bankruptcy Court went from reorganization (Chapter 11) to liquidation (Chapter 7). Owner Ed Smith declined to talk about developments, only to say a news release would be issued this weekend. The Erie County Health Department cited the popular waterfront restaurant with numerous problems, including insects in bottles of liquor and crumbling kitchen walls. The restaurant closed voluntarily Monday. (Buffalo News- 09/05/98) FULCRUM DIRECT: Committee Applies To Retain Bayard Firm ------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the chapter 11 cases of Fulcrum Direct, Inc., Fulcrum West, LLC and Equipment Bond Purchaser, Inc., submits an application for an order approving the appointment and retention of The Bayard Firm as local counsel for the Committee. The Committee has also retained Ravin, Sarasohn, Cook, Baumgarten, Fisch & Rosen as its lead counsel. The firm will provide legal advice, prepare applications and motion and appear in court as necessary. The committee will ensure that there is no duplication of services performed by the two firms. The attorneys working on the case charge as their current standard hourly rates between $200 and $330 per hour. HARRAH'S JAZZ: Court Okays Changes To Reorganization Plan --------------------------------------------------------- The U.S. Bankruptcy Court in New Orleans Thursday approved the modifications to Harrah's Jazz reorganization plan and tentatively set an Oct. 13 confirmation hearing date. Harrah's Jazz expects the plan to go effective within one month after confirmation and construction on the unfinished casino to be completed about a year later, however, the company will wait until the court proceedings have concluded before pinning down specific target dates. (Federal Filings Inc. 9-Sept-98) INTERNATIONAL WIRELESS: Capital Deficiency Problems --------------------------------------------------- International Wireless Communications Holdings, a San Mateo, Calif.-based company holding interests in SMR and cellular operators and licensees, cited "financial and political instability in Asia" as the final straw that forced it to seek protection from creditors. However, financial problems have been apparent for some time. Last January, the company engineered its biggest deal in acquiring Radio Movil Digital, which held SMR properties in Argentina, Brazil, Chile and Venezuela. But within months, the Chile and Venezuela properties had been put up for sale. And in Asia, IWCH suffered losses on its equity holdings in wireless operations in Indonesia and Malaysia- countries whose currencies plummeted in value against the U.S. dollar over the last year. In a May filing with the Securities and Exchange Commission, IWCH acknowledged a "capital deficiency" giving rise to "substantial doubt about its ability to continue as a going concern." Vanguard had supplied $10 million through the purchase of convertible preferred stock just two months earlier, but in the filing the company listed long-term debt of $155.7 million as of March 31, along with a stockholders' deficit of $151 million and redeemable convertible preferred stock in the amount of $185.8 million. IWCH's 40 percent participation in Star Digitel Ltd., a Chinese cellular venture, also was a millstone around its neck. Star Digitel is a participant in plans to introduce CDMA-based service in Beijing, but IWCH failed to complete a $19 million share subscription in Star Digitel last June. Four of IWCH's eight directors resigned as the deal faltered. The Chapter 11 filing is another black eye for Vanguard Cellular Systems Inc. [VCELA] and its top executives, Haynes Griffin and Stephen Leeolou. Griffin and Leeolou also backed SMR operator Geotek Communications Inc., which was itself placed under a Chapter 11 petition earlier this year. (Phillips Publishing, Inc. Land MobileRadio-09/04/98) KIA MOTORS: $2 Billion of Kia's Debts Written Off ------------------------------------------------- Local reports claim creditors of South Korea's ailing Kia Motors Corp. has agreed to write off almost $2 billion of its debts to attract prospective buyers in a second round of bidding. State-run Yonhap news agency today reports creditors may slash up to 24 percent the automaker's massive debt of $9.6 billion after its first auction was aborted as all four bidders skirted conditions set by auction managers. Yonhap cited sources saying Korea Development Bank and other creditors are slated to announce final debt restructuring terms Thursday. (UPI:Wall Street-09/08/98) LIBERTY HOUSE: Court Authorizes Rejection of Leases --------------------------------------------------- On August 31, 1998, the Honorable Lloyd King, entered an order authorizing the debtor to reject the leases for the Penthouse stores at Prince Kuhio Plaza, Kukui Grove, Pearlridge Shopping Center and Windward Mall. LONDON'S ROYAL OPERA HOUSE: Temporarily Closed Due to Debt ---------------------------------------------------------- Great Britain's Royal Opera House in London will close for nearly a year in January to significantly reduce its heavy debts, according to a newswire report. The opera will reopen in December 1999 when its redeveloped site in London's Covent Garden is expected to be ready. The Royal Opera House has suffered financial crises for more than a year, and was on the brink of bankruptcy last November. Sir Colin Southgate, chairman of the opera house, said that a total restructuring will be implemented. (ABI 9-Sept-98) LONG JOHN SILVER'S: Seeks Exclusivity Extension ----------------------------------------------- The debtors, Long John Silver's Restaurants, Inc. et al., seeks to extend the exclusive periods in which to file a plan of reorganization and solicit acceptances thereto. A hearing to consider the motion will be held on September 16, 1998. The debtors state that they have made great strides toward stabilizing their business operations and taking other steps necessary to effectuate their ultimate reorganization. The debtors have obtained approval of a significant post-petition secured financial facility in an amount of up to $65 million. Debtors' management and professionals have devoted significant time and energy to analyzing and evaluation the debtors' 477 leases. The debtors received authorization to reject approximately 73 leases to sites where the debtors were no longer operating restaurants. October 5, 1998 has been set as the bar date in the case. After the debtors analyze the claims, they will be in a position to articulate the terms of a confirmable plan of reorganization. The debtors have also obtained court approval for the retention and severance programs. The debtors request that the court extend the periods during which only the debtors may file a plan and solicit acceptances thereof to and including January 29, 1999 and March 30, 1999 respectively. LYNX GOLF: Notice of Bar Date of October 21, 1998 ------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of California enters an order requiring that all entities that hold or assert a claim against or interest in Lynx Golf, Inc. f/k/a Lynx Acquisition Corporation, file a proof of claim and/or proof of interest on or before the close of business on October 21, 1998. MOLTEN METAL: Future in Doubt After Investors Pull Support ---------------------------------------------------------- Molten Metal Technology, scorched by controversy over the past two years, suffered another blow this week when its major lenders withdrew financial support and left the company's future existence in doubt. A U.S. Bankruptcy Court in Boston, where Molten Metal filed for Chapter 11 bankruptcy last year, Friday appointed a trustee to run the company and possibly liquidate the assets -- including the waste-processing operations in Oak Ridge. Operations at Molten Metal's waste-processing facility in Commerce Park will be suspended. Potential buyers are looking at the company's other two businesses, including the |Q-CEP Plant on Bear Creek Road in Oak Ridge that processes resins from nuclear power plants. The latest events apparently were sparked by Molten Metal's request for additional funding from its lenders, headed by Morgens Waterfall Income Partners. The financial group earlier agreed to a $20 million loan in monthly increments, but Molten Metal recently asked for additional cash advances of $6.5 million. That's when the lenders balked and filed a motion with the Bankruptcy Court, asking that a trustee run the company. The lenders argued that Molten Metal's financial forecasts for the company "clearly have been missed" and added: "The debtors clearly do not have a viable plan to conduct an orderly liquidation, having pinned their hopes on new money to enable business to continue as usual." Molten Metal has been refurbishing the Q-CEP Plant to make the Oak Ridge waste-processing operation more efficient, but a state investigation last month confirmed a number of safety problems -- including improper handling of radiation sources. The state issued an emergency order, threatening to levy a $100,000 fine unless the company quickly corrected the problems and met a series of other conditions. Molten Metal last year blamed many of its problems of negative news reports regarding a congressional investigation, which raised questions about the company's dealing with the Department of Energy and possible links to political donations by company officials. (Knoxville News Sentinel; 08/22/98) MUSTANG RANCH: Brothel files for Bankruptcy ------------------------------------------- Owners of the embattled Mustang Ranch have turned to federal court for protection under bankruptcy laws, and a judge has ordered the brothel to quit spending money. Assistant U.S. Attorney Mike Barr said the brothel is taking in $20,000 a day but hasn't put any money in the bank in weeks. Meanwhile, Mustang Ranch is "hemorrhaging hundreds of thousands of dollars," he told U.S. District Judge Howard McKibben on Thursday. The developments came the same day the brothel's owners entered innocent pleas to a 33-count federal indictment charging them and former Mustang Ranch owner Joe Conforte with racketeering and money laundering among other crimes. Hearings on the bankruptcy applications are scheduled for Oct. 5, and the criminal trial has been set for Oct. 13. It's not likely it will begin that soon. McKibben authorized Ronald Meseberg, a special agent for the U.S. Customs Service, to have access to all Mustang Ranch property, including financial records, to audit its income and assets. In the bankruptcy filing, A.G.E. Corp., the holding company that owns A.G.E Enterprises Inc., lists assets of $4.8 million and liabilities of $48.6 million in federal tax liens. A.G.E. Enterprises lists assets of $31 million and liabilities of $32.1 million. The ranch is continuing to operate, as is the neighboring Old Bridge Ranch, which also is in bankruptcy reorganization. It is run by David Burgess, who is the nephew of Conforte's late wife, Sally. Burgess claims that Conforte continues to hold a hidden interest in the Mustang Ranch and is trying to put the Old Bridge Ranch out of business so he can take it over if the federal government closes the Mustang Ranch. Barr earlier sought a court order appointing federal bankruptcy trustee Jeri Coppa-Knudson to oversee the brothel pending the outcome of the criminal case. (Las Vegas Review Journal - 09/05/98) NET TELECOMMUNICATIONS: Order Grants Employ of Attorney ------------------------------------------------------- The Honorable Linda B. Riegle entered an order on August 20, 1998 in the case of Net Telecommunications, Inc. approving the employ of Marjorie A. Guymon, attorney to the debtor. PARAGON TRADE: Seeks Nod To Pay Reclamation Claims -------------------------------------------------- While vendors have been supportive of its efforts to reorganize, Paragon Trade Brands Inc. said several vendors have recently begun to grow impatient with the resolution of their reclamation claims. Saying it is "vitally important" to remain on good terms with vendors, the disposable diaper manufacturer asked the court for authority to grant about 20 vendors administrative expense claims in lieu of reclamation claims, and to pay the claims. Paragon said it "has adequate cash reserves available to satisfy the valid Reclamation Claims," and estimated that the claims total about $3 million, as opposed to the $8 million in asserted reclamation claims. The U.S. Bankruptcy Court in Atlanta has scheduled a Sept. 28 hearing on Paragon's request. (ABI 9-Sept-98) PARAGON TRADE: Seeks Authorization For CPI To Sell Assets --------------------------------------------------------- Paragon Trade Brands, Inc. seeks authorization to use certain of its personal property, namely its stock in its wholly owned subidiary, Changing Paradigms, Inc. outside of the ordinary course of business, namely to authorize CPI to sell its assets to a third party. Paragon states that its decision to cause CPI to sell its assets to House, Home and Hardware LLC for $7 million and assumption of trade and certain other payables, subject to adjustments is reasonable and in Paragon's best business judgment. The break-up fee is limited to $140,000. PEGASUS GOLD: Objection to Bondholders' Proofs of Claim ------------------------------------------------------- Pegasus Gold, Inc.(PGI), POV Corporation, Pegasus Gold Corporation and its subsidiaries all filed global objections to proofs of claim filed by the Bondholders of Pegasus Gold, Inc. In 1995, PGI announced it s intention to purchase all outstanding ordinary shares in Zapopan N.L., a publicly traded Australian corporation. BNY was appointed as the Trustee for the bond holders. In order to complete its acquisition PGI sought to obtain necessary financing by borrowing $115 million through the sale of subordinated notes. The Offering Circular described PGI's borrowing offering 6 1/4% Convertible Subordinated Notes due to mature on April 30, 2002. The Indenture between PGI and the Bank of New York (BNY) as the trustee for the Notes sets out and controls the terms of the notes. PGI received proceeds of $117 million on the issuance of the notes. BNY, as Indenture Trustee for the holders of the notes filed its uncategorized proof of claim in the PGI bankruptcy. Smith Barney, Inc. filed unsecured non- priority claims against PGI arising out of the purchase of the convertible subordinated notes. Credit Suisse First Boston Corporation filed its uncategorized proof of claim in the PGI bankruptcy arising out of the purchase of the Convertible Subordinated Notes. Banca Unione Creditor filed a secured claim, Credit Agricole Indosuez filed multiple unsecured claims, and Kleinwort Benson filed unsecured claims all arising out of the purchase of the Convertible Subordinated Notes. PGI argues that the proofs of claims of the bondholders are general unsecured claims subordinated to all senior debt of PGI. PGI claims that the bondholders, as qualified institutional buyers cannot dispute the merits or equity of the subordination of their convertible subordinated notes. PEGASUS GOLD: Objections To Disclosure Statement ------------------------------------------------ National Union Fire Insurance Company and Safeco Insurance Company of America, object to the Disclosure Statement Respecting debtors' joi9nt liquidating plan of reorganization dated July 31, 1998. Safeco has claims totaling in excess of $10 million against Beal and Black Pine. Safeco states that the Disclosure Statement fails to contain adequate information by failing to state the extent that reclamation obligations were created as the result of post-petition mining operations. National Union is a co-surety with United States Fidelity and Guarantee Company in connection with in excess of $30 million in reclamation bonds posted in favor of the State of Montana for mining properties owned and operated by Zortman. National Union claims that the Disclosure Statement contains inadequate information regarding the assets and liabilities of the liquidating debtors, the anticipated distribution to the various liquidating debtors' creditors and the effect on the plan proposed in the Disclosure Statement of the Intercompany Settlement Agreement. PINNACLE BRANDS: Plan To Auction Assets Met With Interest --------------------------------------------------------- Pinnacle has agreed to auction its sports trading card business on Sept. 25 after a proposed sale to Toy Biz Inc. met with opposition from the official creditors' committee and U.S. Trustee, among others. Besides Toy Biz, industry players Topps Co. and Upper Deck Co., as well as Dallas-based Pinnacle's former owner, also are interested and may bid. The bidding procedures call for the card maker to file a model asset purchase agreement by today and establish a Sept. 17 bid deadline. (Federal Filings Inc. 9- Sept-98) SNAKE EYES: Files Chapter 11 ---------------------------- Snake Eyes Golf Clubs Inc., which manufactures golf clubs, announced that it has filed for chapter 11 protection and that it intends to sell its business at auction, according to a newswire report. The Jacksonville, Fla., company plans to hold the auction in about 45 days, in conjunction with the bankruptcy court's approval. Snake Eyes has a $1.4 million "back up" sale contract with Venture Access International, an investor group that will provide the opening bid in the auction. (ABI 9-Sept-98) SNAP-ON INC: To Cut 1100 Jobs ----------------------------- Snap-On Inc. said yesterday that it will close more than a quarter of its facilities, including at least two Midwest factories, as it eliminates 1,100 jobs under a major restructuring. In addition, the Kenosha, Wis.-based toolmaker said it will take a restructuring charge of $175 million in the third quarter and warned that its operating earnings would fall well below year-earlier results. The restructuring, which the company had said was needed in June, will cut 8.3 percent of Snap-On's 12,000-person work force and shutter five factories, six warehouses and 45 to 50 offices in North America and Europe over the next 12 to 18 months. WSR CORPORATION: Counsel Seeks to Withdraw ------------------------------------------ Gibbons, Del Deo, Dolan, Griffinger & Vecchione moves for entry of an order granting the firm leave to withdraw as co-counsel for WSR Corporation, R&S/Strauss, Inc., National Automotive Stores, Inc. and National Auto Stores, Corp. The firm now perceives that it may have a potential conflict of interest and wishes to withdraw as co-counsel to the debtors in the best interest of the estates. The debtors consent to the withdrawal. ********* 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 * * *