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/raid1/www/Hosts/bankrupt/TCR_Public/981026.MBXT R O U B L E D C O M P A N Y R E P O R T E R Monday, October 26, 1998, Vol. 2, No. 209 Headlines AID AUTO: Looks Into Prior Financial Statements AMERICAN TELECOM: Needs Court OK To Be Phoenix Subsidiary AMRESCO INC: Sale of $936 Million in Mortgage Loans BOSTON CHICKEN: Captec Net Lease Realty Reports High Demand BOSTON CHICKEN: New Filing Announced CAJUN ELECTRIC: Letter to the Editor CAMPO ELECTRONICS: Closes 20 Stores; 400 Left Jobless CRIIMI MAE: DCR Changes CMBS Transactions To Rating Watch CRIIMI MAE: Vice President Sold Shares After Filing DANNY'S: Troubled Grocery's Employees Sacrifice Salaries FULCRUM DIRECT: Seeks Extension of Post-Petition Financing FULCRUM DIRECT: Taps DJM Asset Management GORGES QUIK: Exiting Raw Ground Beef Business HUNGARIAN TELEPHONE: Agreements With Citizens Utilities KOENIG SPORTING GOODS: Disclosure Statement and Plan LONG TERM CREDIT: Government To Take Over Bank LEVITZ FURNITURE: Seeks To Sell Property Package For $26.5M LYNX GOLF: Announces Sale of Assets To Golfsmith Int'l. MEGO MORTGAGE: Stock Ownership Reported MID-ISLAND: to Emerge From Bankruptcy MOLTEN METAL: Offer To Purchase Wet Assets ORANGE COUNTY: Fuji Wins Ruling PARADISE HOLDINGS: Order Authorizes Sale of Assets PINNACLE BRANDS: Sale Doesn't Hinge on MLB Talks RAND ENERGY: Seeks Chapter 11 In Delaware SCOTT CABLE: Entry of Bar Date SOUNDWILL HOLDINGS: Sell-Off To Help Cut Debt Of $2.1b SOUTHERN PACIFIC: Meeting of Creditors and Bar Date Set SUN TV: Biggest Quarterly Loss In Its History SWALLEN'S: Plan Pays Retirees VENTURE STORES: Disclosure Statement Wins Approval WIRELESS ONE: Common Stock Will Trade On OTC Bulletin Board ********* AID AUTO: Looks Into Prior Financial Statements ----------------------------------------------- AID Auto Stores Inc., the financially troubled retail chain based in Westbury, said yesterday that it had "commenced an investigation of the accuracy of certain of its prior financial statements." The statement did not indicate which statements were involved or what had precipitated the inquiry. Company chief executive Philip Stephen's statement said, "The company believes that such investigation will take approximately two to three weeks. Once the process is completed, the company will make a public announcement of the results . . ." Citing a credit financing charge and lower demand for car care products during this year's mild winter, the chain of about 40 New York area stores reported lower revenues and a $4.3 million loss for 1997. It reported losses of $986,000 and $759,000, respectively, for the first and second quarters of this year. (Newsday-10/23/98) AMERICAN TELECOM: Needs Court OK To Be Phoenix Subsidiary --------------------------------------------------------- Tiny Phoenix International Industries wants to buy a 34- employee long-distance company in Syracuse, N.Y., and move it to West Palm Beach within six months. But before Phoenix can complete the deal, it will have to pay off $3 million in debt incurred by American Telecom when a slew of its customers in New York didn't pay their phone bills. American Telecom filed for Chapter 11 bankruptcy protection in February. American and Phoenix filed a reorganization plan Monday, but it has to be approved by a bankruptcy judge before American can emerge from Chapter 11 protection and become a Phoenix subsidiary. The four- employee Phoenix (OTC: PHXU, 63 cents) says it will pay $5 million for American Telecom and for Metrotel, a prepaid calling card company that shares office space and employees with American Telecom. American Telecom is a long-distance reseller licensed in 49 states, according to Phoenix. The Syracuse company, which provides service using other long-distance companies' lines, says it has more than 100,000 customers nationwide. It did not have a breakdown for Florida. Phoenix said American Telecom had $7.5 million in sales in 1997 and a $1.3 million profit. The company was incorporated in Fort Lauderdale five years ago. Phoenix is a telecommunications holding company. Its four- employee office is on Osceola Drive in suburban West Palm Beach. It shares office space with a two- employee subsidiary named HDX 9000, which specializes in Year 2000 compliance and systems engineering. This year, Phoenix bought Hospitality Communications, a two- employee phone service broker in Myrtle Beach, S.C., and sold Intuitive Technology Consultants, an Atlanta personnel placement software firm. Phoenix was formed in 1985 as an environmental cleanup company. It was bought in the mid-1990s by Gerard Haryman, a Palm Beach investor and real estate developer. The company reported revenue of $1.2 million for the nine months ended Feb. 28 and a net loss of $745,000. For the same period during the previous year, the company reported no revenue and a $215,000 net loss. The 52-week high for Phoenix's stock was $2.03 in October 1997; its 52-week low was 41 cents a share in January. (Palm Beach Post - 10/22/98) AMRESCO INC: Sale of $936 Million in Mortgage Loans -------------------------------------------------- announced that it has completed the sale of $936 million in commercial mortgage loans. The cash proceeds from the sale were used to payoff the warehouse facility used to finance the mortgage loans, with the remainder used for other corporate needs. The company has also entered into a commitment to sell an additional $400 million in home equity loans. This commitment is expected to close by October 23, 1998. As a result of these transactions, AMRESCO will have less than $100 million in home equity loans remaining on its balance sheet. AMRESCO received a price of 100.625 percent of par for the loans. Additionally, AMRESCO retained an interest in the loans that provides for participation in the profits from a subsequent sale or securitization of the loans. The company has also mutually agreed with a third party loan seller to terminate a commitment to purchase an additional $260 million of home equity loans. The company expects to recognize a fourth quarter pre-tax loss related to these items ranging from $40 to $45 million. As a result, the company does not have any significant unfunded home equity loan commitments. "Although the loss resulting from this loan sale is disappointing, we believe that this transaction greatly benefits the company by reducing the size of our balance sheet, improving liquidity and eliminating the risk of margin calls related to the market value of the loans and hedge positions," said Robert H. Lutz, Jr., chairman and CEO of AMRESCO. In conjunction with this transaction, AMRESCO has closed its hedge position related to the mortgages and thereby has eliminated the potential for future margin calls related to these hedges and mortgage loans. The gain resulting from the loan sale was offset by hedging losses, resulting in a $35.8 million net loss. Earnings per share for the recently completed third quarter are expected to be nominal, ranging from $0.00 to $0.03 per fully diluted share. This level of profitability reflects the mark to market of the company's entire commercial mortgage portfolio at quarter end, including unfunded commitments. AMRESCO expects to provide a full earnings release on October 20, 1998. AMRESCO, INC. is a diversified financial services company specializing in commercial and residential real estate and home equity lending; asset management workout services; and commercial finance. The company is headquartered in Dallas. BOSTON CHICKEN: Captec Net Lease Realty Reports High Demand ----------------------------------------------------------- Captec Net Lease Realty Inc., Ann Arbor, Mich., yesterday reported that the recent announcement of Boston Market stores closings, as a result of Boston Chicken Inc.'s chapter 11 filing, has sparked significant interest from outside parties seeking to lease the closed stores in Captec's portfolio, according to a newswire report. The real estate investment trust (REIT), which invests in long- term net leased restaurants and retail properties, holds the leases of 14 closing stores, nine of which were included in the filing. Chairman and CEO Patrick Beach said that he has always been confident of the value of its Boston Market properties and that this is an opportunity "to put the Boston Chicken issue behind us, to quickly re- tenant the closed properties and shift investors' focus back to the strength of our total portfolio..." (ABI 23- Oct-98) BOSTON CHICKEN: New Filing Announced ------------------------------------- BC Northwest, L.P. operating 56 Boston Market locations in the Pacific Northwest has filed for Chapter 11 protection, it was announced today by John Davidson, managing agent for the debtor. CAJUN ELECTRIC: Letter to the Editor ------------------------------------ To the Editor: A colleague of mine at Altheimer & Gray in Chicago, Gary S. Hand, gave me [the October 21 edition of] the Troubled Company Reporter ("TCR"). As you may know, this office represents the Committee of Certain Members of Cajun Electric (the "Committee"), a voluntary association of six of the eleven currently-extant members of Cajun Electric Power Cooperative, Inc. ("Cajun"), in the Cajun bankruptcy proceeding. In the October 21 edition of TCR, you featured a short item regarding a recent Bankruptcy Court Order enjoining the Commissioners of the Louisiana Public Service Commission ("LPSC"), the Louisiana state agency that regulates the wholesale rates Cajun may charge to its customers (including the members of the Committee). The item failed to fully and fairly describe the Bankruptcy Court's Order. On October 13, 1998, the Bankruptcy Court held a hearing on the Trustee's Motion for Preliminary Injunction in an adversary proceeding brought by the Trustee against the Commissioners of the LPSC. In his four-count Complaint, the Trustee alleged that a pending LPSC rate investigation of Cajun violates certain Bankruptcy Court orders, encroaches on the jurisdiction of the Bankruptcy Court, and violates the automatic stay and anti-discrimination provisions of the Code. The Trustee sought a preliminary injunction on all four counts of his Complaint. That relief, if it had been granted, among other things, could have prevented the LPSC from continuing the entire rate investigation. In his oral ruling of October 13, Bankruptcy Judge Gerald H. Schiff denied the preliminary injunction as to each and every one of the four counts. In fact, Judge Schiff specifically found that the Trustee could not establish a substantial likelihood of success and/or a substantial threat of irreparable harm in connection with any one of those four counts. Consequently, the Court expressly permitted the current rate investigation to continue. However, the Court expressed its concern that ultimate action by the LPSC in the rate case might possibly moot causes of action the Trustee may have. The Court therefore fashioned its own relief and enjoined the Commissioners, pending further order of the Court, from taking action based on the outcome of the rate investigation, including either raising or lowering Cajun's rates. The reference to raising rates is important, because, only a few days after the Trustee filed his Complaint to enjoin the rate investigation, he nonetheless filed a petition with the LPSC seeking to raise Cajun's rates. The Court did not anywhere find that the current rate investigation disrupted its jurisdiction or interfered in the reorganization process. Thank you for your time and attention. Very truly yours, Christopher Combest ALTHEIMER & GRAY combestc@altheimer.com CAMPO ELECTRONICS: Closes 20 Stores; 400 Left Jobless ----------------------------------------------------- Campo Electronics, once a giant retailer in electronics and appliances, shut all 20 of its remaining stores Wednesday in the southeastern United States, putting 400 of its workers at least temporarily out of jobs. In a statement, the Covington-based company said the stores will remain closed until an expected sale of its assets Monday in federal bankruptcy court. The closures came a month after the company announced it would either find a buyer or merge with another company. The 47-year-old company filed for bankruptcy protection in June 1997 after an expansion program that took it beyond its New Orleans and Mississippi Gulf Coast base left it with heavy debt. Earlier this month, company head William Wulfers, a former Wal-Mart executive, resigned after just over a year on the job. He had said he would reduce inventory, change product mixes, cut costs and get the company out of bankruptcy in a year to six months. Even with cuts, the company continued to lose money and has posted nine straight quarterly losses. Last month, Campo hired a management firm to either sell the company or find a merger partner. Company spokesman Lee Katz said the company had several potential buyers. He refused to identify them. He said he did not know if the Campo name would be kept by the buyer. The company was founded by A.J. "Tony" Campo in 1951 with a single store that sold window air conditioners. Campo became known for splashy newspaper advertisements and booming television commercials in which he proclaimed himself "The Appliance Giant." The company eventually expanded to 31 outlets in six states, but cut back to 20 and quit doing business in Texas and Tennessee after its bankruptcy filing. Its remaining stores were in Louisiana, Mississippi, Alabama and Florida.(Advocate Baton Rouge -10/22/98) CRIIMI MAE: DCR Changes CMBS Transactions To Rating Watch --------------------------------------------------------- Duff & Phelps Credit Rating Co. (DCR) has changed 13 commercial mortgage-backed securities (CMBS) transactions to Rating Watch--Down from Rating Watch -- DCR had placed the deals on Rating Watch- -Uncertain on October 5, 1998. This Rating Watch change to 'Down' from 'Uncertain' is based on DCR's further evaluation of the impact of CRIIMI MAE, Inc.'s bankruptcy filing. CRIIMI MAE Services, L.P., a subsidiary of CRIIMI MAE, Inc., acts as the special servicer for the 13 transactions listed below and acts as master servicer for the Mortgage Capital Funding Inc., Series 1997- MC1 transaction. The watch affects all DCR- rated classes within these transactions. Asset Securitization Corporation, Series 1995-MD IV Asset Securitization Corporation, Series 1996-D2 Asset Securitization Corporation, Series 1996-D3 First Union-Lehman Brothers Commercial Mortgage Trust II, Series 1997-C2 LB Commercial Conduit Mortgage Trust II, Series 1996-C2 Merrill Lynch Mortgage Investors Inc., Series 1995-C3 Merrill Lynch Mortgage Investors Inc., Series 1996-C2 Morgan Stanley Capital I Inc., Series 1998-WF1 Morgan Stanley Capital I Inc., Series 1998-WF2 Mortgage Capital Funding Inc., Series 1994-MC1 Mortgage Capital Funding Inc., Series 1997-MC1 Nomura Asset Securities Corp., Series 1998-D6 Wisconsin Avenue Securities, Series 1996-M1 DCR believes the bankruptcy of the parent may have a negative effect on CRIIMI MAE Services, L.P. CRIIMI MAE, Inc. has already had to initiate legal proceedings to block the initiatives of some of its lenders. Furthermore, a bankruptcy may lead to cost-cutting initiatives that could result in lower-quality service. DCR is also concerned that the bankruptcy may cause internal speculation resulting in the loss of employees and weakened morale. In its role as master servicer, CRIIMI MAE Services, L.P. is responsible for advancing delinquent loan payments, and as special servicer has responsibility to advance property protection expenses, which causes its current lack of liquidity to be an additional concern. Potential options to improve liquidity, such as selling servicing rights or certificates, may result in additional stress on the company's infrastructure due to its likely result of reducing income. DCR believes that the current situation has potential negative implications for the transactions for which CRIIMI MAE Services, L.P. acts a master or special servicer. CRIIMI MAE Services, L.P. is actively pursuing alternatives to help mitigate these concerns. DCR is still gathering information and will continue to monitor the ratings of the above-mentioned transactions as the situation develops. (PR Newswire: Wall Street - 10/22/98) CRIIMI MAE: Vice President Sold Shares After Filing -------------------------------------------------- According to a Securities and Exchange Commission document, Frederick Burchill, an executive vice president at Criimi Mae Inc., sold 20,000 common shares several days after the firm filed chapter 11 on Oct. 5, according to Reuters. The stock was sold through PaineWebber in Rockville, Md., which is where the firm is located. A spokesperson for the company said he was forced to liquidate because of the "precipitous drop of the share prices in his margin account." Burchill's exact stake in the company is not known, but it is believed to be "sizeable." (ABI 23-Oct-98) DANNY'S: Troubled Grocery's Employees Sacrifice Salaries -------------------------------------------------------- Employees at Danny's Markets Inc. -- who helped the small grocery store chain climb out of bankruptcy by accepting a 23- percent pay cut last year -- will vote on a new contract Sunday. Danny's made an offer Wednesday to Teamsters Local 339, which represents cashiers and other workers. Company and union officials declined to discuss details of the offer. The current contract expires Monday. "Although we've paid off our creditors and are out of bankruptcy, it's no secret that the company hasn't been doing very well," said attorney Robert Finkel, who is handling negotiations for Danny's. "Hopefully, with the employees' help, we'll be able to survive." Danny's gross sales have shrunk from about $120 million five years ago to about $98 million, officials said. Danny's filed for Chapter 11 bankruptcy in July 1997 after it said it lost $1 million over a six-month period, and requested changes to two 1992 contracts. A U.S. Bankruptcy Court judge honored the company's request, which also included a cut in paid vacation and higher deductibles for medical benefits. The United Food and Commercial Workers International Union, which represents about 50 Danny's meat cutters, made similar concessions. Their contract expires in December. (Detroit News-10/23/98) FULCRUM DIRECT: Seeks Extension of Post-Petition Financing ---------------------------------------------------------- In its motion for an extension of post-opetition financing, Fulcrum direct, Inc. states that in order for Fulcrum to have ample time and resources to maximize the value of its estates for the benefit of its creditors, Fulcrum requires an extension of the Loan Facility through and including November 28, 1998 and an increase of the Aggregate Amount by $558,000 (up to the aggregate of $2.74 million inclusive of the aggregate amount currently authorized under the loan facility). On September 15, 1998, the court approved the sale of the majority of Fulcrum's assets to dELIA's Inc. However Fulcrum has determined that it will not be in a position to wind up its operations and vacate its headquarters in Rio Rancho, New Mexico prior to late November 1998. The task of disposing of a large amount of inventory and some fixed assets is taking longer than Fulcrum anticipated, and Fulcrum needs money to market its corporate headquarters lease. FULCRUM DIRECT: Taps DJM Asset Management ----------------------------------------- Fulcrum Direct, Inc., and its affiliated debtors seek court authority to employ DJM Asset Management Inc., as real estate broker. Fulcrum intends to market the lease for its corporate headquarters in Rio Rancho, New Mexico. The potential benefit to the estate could be $350,000 if Fulcrum were to assume and assign the lease. Fulcrum submits that retaining a real estate broker is a sound exercise of business judgment. GORGES QUIK: Exiting Raw Ground Beef Business --------------------------------------------- Gorges/Quik-to-Fix Foods, Inc., today announced its intent to exit the raw ground beef business, citing higher costs of production, continued ground beef margin pressure, and a desire to concentrate on its core value added product offerings. The Company's ground beef product line primarily consists of IQF (individually quick-frozen) raw hamburger patties, which in the current year has generated approximately $54 million in sales on 60 million pounds in sales volume. "Our operating costs have been increasing due to regulatory issues and risks associated with the sale of raw ground beef, and there is no room in the already slim margin to absorb the increased costs. We are one of the middle tier producers of IQF raw ground beef, profitability has already been strained by market conditions and consolidations, and the risks for us now far outweigh the rewards." stated David Culwell, CEO of Gorges/Quik-to-Fix. While the raw ground beef segment was approximately 40% of the Company's sales volume, almost all of the Company's gross margin and operating cash flow is generated by its value-added segment of fully cooked and ready to cook beef, pork and poultry items. Mr. Culwell further stated, "This realignment of our business will allow us to focus all of our available time and resources on the part of the business we have always felt is the future of our Company." The Company operates four plants, three dedicated totally to production of the Company's signature lines of value added product, and one that is primarily a raw ground beef facility. As a part of this decision, the Company has put up for sale the facility that processes primarily ground beef, and is currently holding discussions with potential buyers. "This approach will afford our Company's employees the most orderly transition. Also, while we are anxious to devote our full attention to the value added product line, which is the mainstay of our business, we will not allow this decision to create a hardship for our valued customers. Our three remaining plants are state of the art, have sufficient capacity to meet foreseeable needs, and are more than capable of providing our customers with the quality product they expect from us." said Mr. Culwell The company anticipates a significant charge to earnings in its fiscal fourth quarter as a result of this restructuring. Since the timing of any sale, the amount of resulting proceeds, and final key dates in the realignment plan are unknown, the amount of the charge can not be determined at this time. GORGES/QUIK-TO-FIX FOODS, INC., is a leading producer, marketer and distributor of quality value added processed fresh and frozen beef, pork and poultry products supplied primarily to the foodservice industry under its GORGES(R) and QUIK-TO-FIX(R) brands. In addition, the Company co- packs a variety of products for the retail trade as well as other food service outlets, and is also a converter of protein products under the USDA Commodity Reprocessing Program. HUNGARIAN TELEPHONE: Agreements With Citizens Utilities ------------------------------------------------------- As announced on September 11, 1998 and October 2, 1998 Hungarian Telephone and Cable Corp., a Delaware corporation ("Hungarian Telephone") entered into certain agreements with each of CU CapitalCorp and Citizens International Management Services Company ("Citizens"); each of which is a wholly-owned subsidiary of Citizens Utilities Company pursuant to which Hungarian Telephone settled its disagreements with Citizens regarding certain issues with respect to (i) 2.1 million shares of Hungarian Telephone's common stock subject to Citizens' accrued preemptive rights and (ii) Hungarian Telephone's Management Services Agreement with Citizens dated as of May 31, 1995, as amended. HTCC and Citizens entered into a Certain Replacement and Termination Agreement dated as of September 30, 1998 which provides for, among other things, (i) the termination of the Master Agreement dated as of May 31, 1995 between Hungarian Telephone and Citizens; (ii) the issuance by Hungarian Telephone to Citizens of 100,000 shares of the Hungarian Telephone's common stock and a promissory note in the principal amount of $8,374,498 in settlement of $9.6 million accrued fees and expenses due and payable to Citizens under the Management Services Agreement; (iii) the termination of the Management Services Agreement; (iv) payments by Hungarian Telephone to Citizens in the aggregate amount of $21,000,000 payable in 28 quarterly installments of each year from 2004 through and including 2010 in part as consideration for Citizens' agreement to terminate the Management Services Agreement and in part as consideration for certain consulting services to be provided by Citizens to Hungarian Telephone from 2004 through and including 2010; (v) the grant by Hungarian Telephone to Citizens of certain preemptive rights in connection with any public or private issuances by the Registrant of shares of its common stock to purchase within 30 days for cash such number of shares of Hungarian Telephone's common stock sufficient to maintain Citizens' then existing percentage ownership interest of Hungarian Telephone's common stock on a fully diluted basis; and (vi) the right of one Citizens designee to Hungarian Telephone's Board of Directors to be renominated for reelection to the Registrant's Board of Directors for so long as Citizens owns at least 300,000 shares of the Registrant's common stock. The principal on the Note is payable in full on September 15, 2004 . The parties also entered into an Amended, Restated and Consolidated Stock Option Agreement dated as of September 30, 1998 (the "Restated Stock Option Agreement") pursuant to which the Hungarian Telephone granted Citizens an option to purchase 2,110,896 shares of the Registrant's common stock at a price of $13.00 per share with an expiration date of July 1, 1999 in settlement of Citizens' accrued preemptive rights. The Restated Stock Option agreement also acknowledged Citizens' existing options to date to purchase an aggregate of 4,511,322 shares of the Hungarian Telephone's common stock at exercise prices ranging from $12.75 to $18.00 per share with an expiration date of September 12, 2000. In the aggregate, Citizens presently owns approximately 18.6% of Hungarian Telephone's outstanding common stock and 59.2% of the Registrant's common stock on a fully diluted basis. KOENIG SPORTING GOODS: Disclosure Statement and Plan ---------------------------------------------------- The plan of reorganization of Koenig Sporting Goods, Inc., debtor, provides for the dissemination of the "Distributable Funds" among holders of allowed claims in certain classes. Those funds include net proceeds realized from the sale to Kinney, proceeds realized from the sale of other estate assets and cash in the estate and from causes of action. KeyBank's Secured Claim ($8,001,134) has already been paid in full. Administrative claims and allowed priority tax claims will be paid in full. Allowed general unsecured claims (Class 3)total approximately $8,415,000 The debtor estimates that holders of these claims will receive a distribution of approximately 23.6% of their claims. Allowed Class 4 personal injury claims are impaired. On the Effective Date, the automatic stay shall be deemed lifted as against these claimants so that such holders may pursue adjudication of their personal injury claims. Upon the Effective date the outstanding Equity Interests in the debtor shall be cancelled. LONG TERM CREDIT: Government To Take Over Bank ------------------------------------------------ The government said Friday it will take over the troubled Long-Term Credit Bank of Japan Ltd., in the first nationalization of a Japanese bank since World War II. Prime Minister Keizo Obuchi told reporters that he approved a request by the bank made under newly passed legislation aimed at revitalizing the country's crisis-ridden financial system. In the takeover, the government will clean up the bank's bad loans before arranging a merger with another company. Obuchi said the government would guarantee repayment to holders of LTCB bonds and ensure that healthy borrowers are not cut off from funds. The Tokyo Stock Exchange suspended trading in LTCB shares before the market opened Friday. Share prices had fallen to a record low of 2 yen (17 cents) earlier this week amid media reports the bank may be insolvent. Once a pillar of Japan's postwar economy, LTCB's recent troubles shook world confidence in the country's financial system and prompted debate in Parliament over a public-funded bailout. But hopes of rescuing the venerable lender are dying as government auditors appear likely to rule that LTCB's debts exceed its assets, meaning the bank is effectively bankrupt. Japan's Financial Supervisory Agency is expected to issue a formal ruling on the bank's financial condition as soon as next week, the Asahi newspaper reported. LTCB declined to comment. Since LTCB appears likely to be found bankrupt, the bank will be taken over by the government for one year while taxpayer money is used to write off bad loans and clean up the bank's books. Another finance company will then be found to absorb the bank's healthy operations. The most likely partner is Sumitomo Trust and Banking Co., with which LTCB had arranged a rescue merger earlier this year. The arrangement began to unravel as the size of LTCB's troubles became known. But government willingness to use public money to clean up the mess may sweeten the deal for prospective partners. The government takeover will spell the end of LTCB's 46-year history. Founded in the aftermath of military defeat to provide cheap, long-term loans to industry, the bank helped lead Japan's spectacular rise to economic superpower status. But like the U.S. savings and loan industry a decade ago, changes in regulations and the economy made specialized lenders like LTCB obsolete. Desperate for new customers, the bank increasingly lent to riskier enterprises such as real estate developers. And when property prices crashed in the 1990s, LTCB's losses ran into the billions of dollars. One of Japan's biggest banks, LTCB reported a 280 billion yen ($2.4 billion) loss with 12.8 trillion yen ($109 billion) in outstanding loans in March 1998. Earlier this month, Japan's Parliament passed legislation allowing government takeovers of foundering banks to fix them or shut them down. It authorized the government to pump up to 60 trillion yen ($515 billion) in taxpayer funds into the ailing banking system. The bank rescue package has been seen as a crucial step toward cleaning up the huge number of soured loans left by the collapse in the early 1990s of a speculative boom in Japanese real estate and stock prices. It also comes as a key part of the country's efforts to overcome its deepest recession since the end of World War II. LEVITZ FURNITURE: Seeks To Sell Property Package For $26.5M ----------------------------------------------------------- Levitz Furniture Inc. is seeking approval to sell its fee ownership in six properties and leaseholds in two others to Genext Capital LLC for $26.5 million, subject to higher offers. The sites included in the proposed transaction are locations where the retailer has or currently is conducting going-out-of-business sales. The fee-owned properties are in Fort Myers and Tampa, Fla., Lakewood and Colorado Springs, Colo., Hazelwood, Mo., and San Marcos, Calif. The leasehold properties are in San Diego and College Park, Ga. Levitz has the option of keeping the San Diego lease, in which case the purchase price would be reduced by $4.75 million. The company has requested a Nov. 17 sale hearing. Pursuant to the proposed bidding procedures, competing bidders must submit their offers by Nov. 6.(The Daily Bankruptcy Review and ABI Copyright c October 23, 1998) LYNX GOLF: Announces Sale of Assets To Golfsmith Int'l. ------------------------------------------------------- Lynx Golf, Inc. announced on October 23, 1998 the closing of a transaction in which Golfsmith International, Inc. has purchased a substantial majority of Lynx's assets. Golfsmith had been the successful bidder at a bankruptcy court hearing held in connection with the sale of the assets and on October 21 the bankruptcy court entered a final order approving the sale. Under the terms of the sale, Golfsmith purchased the assets for cash consideration totaling $9.1 million and the assumption of certain liabilities. Lynx retained its accounts receivable, the right to payment under a licensing contract and the leasehold for its Carlsbad, California headquarters and assembly operations, including most of the plant and equipment located in Carlsbad. Such leasehold and plant and equipment remain available for sale by Lynx. The proceeds of the sale of the company's assets will be used to pay claims of the company's creditors. TearDrop Golf Company had previously executed an agreement to purchase Lynx's assets, but was outbid by Golfsmith based upon the value of the consideration offered by Golfsmith. In connection with the sale of Lynx's assets, TearDrop agreed to assume Fred Couples' endorsement contract with Lynx and to pay a portion of amounts owing to Mr. Couples under that contract. Lynx Golf, Inc. announced in July that it filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the Southern District of California. MEGO MORTGAGE: Stock Ownership Reported --------------------------------------- As of September 30, 1998 Mr. Emanuel J. Friedman directly beneficially owns 6,666,667 shares of common stock of Mego Mortgage Corp.(21.81%). Mr. Friedman may be deemed to indirectly beneficially own 3,759,116 shares of common stock (12.30%) by virtue of his "control" position as Chairman and Chief Executive Officer of Friedman, Billings, Ramsey Group, Inc. ("FBRG"). This filing reflects a 5.23% decrease in the number of shares beneficially owned by Friedman, Billings, Ramsey Group, Inc. since Mr. Friedman's last Form 13D filing. Mr. Friedman may be deemed to indirectly beneficially own these shares by virtue of his "control" position as Chairman and Chief Executive Officer of Friedman, Billings, Ramsey Group, Inc. Mr. Friedman disclaims beneficial ownership of such shares. MID-ISLAND: to Emerge From Bankruptcy ------------------------------------- Mid Island Hospital, a 240-bed facility in Bethpage, said a federal judge has given the hospital permission to emerge from bankruptcy protection and form a new entity. The hospital will continue to operate under its current name but will be run by the newly formed, non-profit entity, WSNCHS North Inc., which is being funded by a consortium of Long Island hospitals. As part of the approved reorganization, WSNCHS North Inc. will enlist Mid Island Hospital in a 2,900-bed hospital group whose members include Winthrop South Nassau University Health System, and the Catholic Health Services of Long Island, which operates four hospitals. Mid Island Hospital was granted permission to emerge from Chapter 11 bankruptcy on Oct. 8 by the United States Bankruptcy Court for the Eastern District of New York. When Mid Island filed for bankruptcy protection two years ago, it had debts of $40 million and assets of $10 million, said Ronald M. Terenzi, a partner at the Garden City law firm, Berkman, Henoch, Peterson & Peddy, which is representing Mid Island Hospital. Terenzi said Mid Island will receive as much as $20 million from the hospital consortium, which will be used to pay for renovations including improvements to Mid Island's operating and emergency rooms. In exchange, members of the consortium will appoint members to Mid Island's new board of directors, Terenzi said. (Newsday-10/23/98) MOLTEN METAL: Offer To Purchase Wet Assets ------------------------------------------ Stephen S. Gray, Chapter 11 Trustee of Molten Metal Technology, Inc. and its affiliated debtors seeks authority to sell Wet Waste Assets of the debtors to Framatome technologies Inc. The total price to be paid is $10 million. The Trustee believes that a private sale to the buyer under the terms of the Agreement will generate a better return for creditors and the estate as opposed to a public auction. A hearing on the motion to sell is scheduled to take place on November 12, 1998. The Trustee is soliciting counteroffers that equal or exceed the purchase price by 5% greater than the offer price. The motion of the Chapter 11 Trustee, Stephen Gray for approval of A Break-Up Fee in the case of Molten Metal Technology, Inc., and its affiliated debtors is set for October 21, 1998. ORANGE COUNTY: Fuji Wins Ruling ------------------------------- A federal judge ruled Thursday in favor of Fuji Securities in a key matter at the heart of the ongoing legal dispute over Orange County's disastrous 1994 bankruptcy. U.S. District Judge Gary Taylor said former county Treasurer Robert Citron did not violate state laws when he borrowed money from Fuji to fund the risky investment strategy that ultimately sparked the biggest municipal failure in U.S. history. The county had argued that because Citron's transactions were "ultra vires" -- a legal term meaning "beyond the law" -- they should be voided and Fuji should reimburse the county for its original investments. But Taylor, granting Fuji's motion for summary judgment, disagreed. "Although they may have been unwise, speculative or unduly risky, the ... transactions made by the Orange County treasurer in this case were not, on the theories presented here, ultra vires," Taylor wrote in his 35-page ruling. "There was authority to act." Michael Swartz, a lawyer representing the county, said the ruling went in Fuji's favor but said the county was considering whether to appeal. "The court has carefully considered the central issues regarding the treasurer's authority and has reached a conclusion that we disagree with," Swartz said. "We are in the process of determining what steps we should take and are reviewing the possibility of expediting an appeal." It was after Citron's speculative bet on interest rates backfired and the investment pool he managed lost more than $1.6 billion that the county was forced to file for bankruptcy protection in December 1994. The county subsequently sued more than two dozen investment firms, including Fuji, in the hopes of recouping some of those losses. Sources familiar with the bankruptcy litigation have said the "ultra vires" theory was a cornerstone of the county's legal strategy and was instrumental in persuading several firms -- most notably Merrill Lynch and Co. Inc. -- to settle with the county out of court earlier this year. Swartz said Taylor's ruling would not affect these settlements, which have so far recouped more than $730 million for the county. Swartz also said the ruling would have no impact on the county's cases against investment firm Dain Rauscher Corp. and credit rating agency Standard & Poor's, a unit of McGraw-Hill Cos. Inc. Both cases were scheduled to go to trial next spring.{Reuters:Financial-1022.00764} 10/23/98 PARADISE HOLDINGS: Order Authorizes Sale of Assets ---------------------------------------------------------- The court entered an order authorizing Paradise Holdings, Inc., debtor to sell substantially all of its assets to Paradise Acquisition, Inc. for a purchase price of $2,359,717 in cash, less agreed offsets. An initial overbid must be at least $150,000 in excess of the purchase price under the Asset Purchase Agreement, and any subsequent overbid must be in increments of at least $50,000 in excess of the previous bid. A Breakup fee of $50,000 plus the amount of the buyers expenses incurred in connection with the sale is provided. PINNACLE BRANDS: Sale Doesn't Hinge on MLB Talks ------------------------------------------------ Pinnacle Brands Inc. plans to present shortly to the court an order authorizing the sale of the company's assets to Playoff Corp., regardless of the outcome of talks with Major League Baseball Properties Inc. concerning the $10 million sale. Absent an agreement that resolves MLB's objection to the sale of any trading cards bearing MLB trademarks, the order would "carve out" the MLB inventory and the court would make a separate ruling on the matter. (Federal Filings Inc. 23-Oct-98) RAND ENERGY: Seeks Chapter 11 In Delaware ----------------------------------------- Rancho Santa Fe, Calif.-based Rand Energy Co. has filed for Chapter 11 in Wilmington, Del., with more than $50 million of liabilities and fewer than 50 creditors. The Chapter 11 petition, which doesn't provide detailed financial information for privately held Rand, estimates the company's assets at more than $100 million. The filing estimates that funds will be available for distribution to unsecured creditors. (Federal Filings Inc. 23-Oct-98) SCOTT CABLE: Entry of Bar Date ------------------------------ Scott Cable Communications, Inc. d/b/a American Cable Entertainment, debtor, published notice of entry of Bar Date Order in The wall Street Journal on October 23, 1998. The order fixes November18, 1998 as the last day for filing proofs of claim against the debtor. SOUNDWILL HOLDINGS: Sell-Off To Help Cut Debt Of $2.1b ------------------------------------------------------ Soundwill Holdings, which has proposed a $2.1 billion debt restructuring to bankers, is in negotiations with several parties to sell three commercial projects to help to cut debt. Director Keith Yip Kwai-cheung said the company had been approached by various investors interested in acquiring stakes in two commercial properties in Causeway Bay, and the sale of more than 10,000 square feet of retail space in Tsuen Wan was under discussion, he said. He estimated more than half of the debt, or $1 billion, would be reduced if these properties were sold. The company approached its bank creditors on Thursday to restructure its debt repayment schedule to allow it to complete the sale of two prime commercial properties in Causeway Bay. Soundwill had previously announced it had insufficient funds to service interest and principal repayments. As at June 30, the group had net bank borrowings of about $2.14 billion, shareholders' loans of about $41 million and $200 million in convertible bonds held by chairman and controlling shareholder, Grace Chu. Mr Yip said the company was expecting a reply from bankers next week. Soundwill's meeting with its bankers on a debt restructuring has received strong support from key shareholders - Cosco International Holdings and parent Cosco (Hong Kong) Group. Cosco International Holdings managing director Gordon Kwong Che- keung said Soundwill's move was the right solution to address its debt problem and to safeguard the interests of shareholders. He said the company would not make provisions for the fall in value of its investment in Soundwill at the moment because it was a long-term investment. Cosco International acquired 10.01 per cent of the company at $3.60 a share from Soundwill's chairman last October. The value of that investment has plunged more than 94 per cent based on Soundwill's close yesterday. (South China Morning Post-10/24/98) SOUTHERN PACIFIC: Meeting of Creditors and Bar Date Set ------------------------------------------------------- A Chapter 11 bankruptcy case concerning Southern Pacific Funding Corp was filed on October 1, 1998. The Meeting of Creditors is set for November 10, 1998 at 9:00 am in the US Trustee's Office, 851 SW 6th Ave Rm. 1300 Portland, Oregon 97204. Proofs of claim must be received by the bankruptcy clerk's office by February 8, 1999 for all creditors except governmental units who must file within 180 days after date relief ordered. Debtor's attorney is John Casey Mills 111 SW 5th Avenue #3500, Portland, Oregon. Tel.(503)224- 5858. SUN TV: Biggest Quarterly Loss In Its History ---------------------------------------------- The Cincinnati Post reports on October 21, 1998 that Sun Television & Appliance, which filed for bankruptcy protection Sept. 16, has reported the biggest quarterly loss in its 49-year history. The electronics retailer reported a loss of $63.5 million for the quarter ended Aug. 29, according to documents filed this week with the Securities and Exchange Commission. The company has lost $153 million in the past 2 1/2 years. Much of the loss for the recent quarter, $47.4 million, is for charges related to closing 29 of its 59 stores this fall. The chain received U.S. Bankruptcy Court approval to close stores in metropolitan Cleveland, Cincinnati, Pittsburgh and Buffalo, and in smaller cities in Kentucky, Pennsylvania, Tennessee and Virginia the day after it filed for bankruptcy protection. The stores were turned over to a liquidator last week and going out-of- business sales are expected to be finished before year-end. The documents filed with the SEC show that shareholders - who have watched their shares plummet from $27 a share more than five years ago to 17 cents Tuesday - are unlikely to end up with anything should the company emerge from bankruptcy. SWALLEN'S: Plan Pays Retirees ----------------------------- The Cincinnati Post reports on 10/21/98 that retirees and others who bought unsecured notes from Swallen's Inc. will get about $1.1 million from the Swallen family, officials said today. The family sold the discount store chain only months before it went bankrupt in October 1995. It has reached a preliminary settlement with more than 200 people who bought the notes - called debentures - from Swallen's officials over four decades starting in the 1950s, lawyers said this morning in bankruptcy court. Those claims total more than $3.5 million and are at the bottom of the list of claims to be paid from the estate. The debentures paid interest rates as high as 13 percent, and Swallen's officials touted them to employees for years as a way to share in the company's growth. But once the company went bankrupt, they were essentially worthless. If finalized in the next few weeks, the settlement would end a state-court suit by the debenture holders against the Swallen family and an investment group that bought the company in April 1995. It would join with a $1.5 million payment from the family to the bankruptcy estate to nearly end one of the most entangled bankruptcy cases in recent memory. The family will give up a portion of the $4.5 million it gained from the sale of the company, and in return, will be released from liability from most creditors. Lawyers did not reveal the amount of the settlement with the debenture holders, but one source estimated it at about $1.1 million. That fund will be reserved for the debenture holders, while the rest of the unsecured creditors probably will get less than 10 percent of their debts back from the estate. Robert Goering, the attorney for the Swallen family, said the settlements with the debenture holders and other unsecured creditors will get his clients out of the nightmare they have been in since the family business went under. "The hard part of it is out of the way," he told bankruptcy court Judge Burton Perlman. "The numbers are done." In September, the Swallen family agreed to pay nearly $2 million and give up claims for an additional $1 million to settle with the unsecured creditors, but that settlement did not include the debenture holders. The new settlement reduces the amount the paid by the family to the estate by nearly a half- million dollars. VENTURE STORES: Disclosure Statement Wins Approval -------------------------------------------------- Venture Stores Inc.'s disclosure statement related to its first amended liquidating plan has been approved. The court gave the OK for the adequacy of information in the disclosure statement, which was amended on the hearing date, and scheduled a confirmation hearing for Nov. 23. At the same time, the court extended Venture's exclusive plan filing and solicitation periods to Dec. 21 and Feb. 19, respectively. Venture sought the three-month extension two days before the former retailer filed its initial plan and disclosure statement, with the support of the creditors' committee, on Sept. 16. (Federal Filings Inc. 23-Oct-98) WIRELESS ONE: Common Stock Will Trade On OTC Bulletin Board ----------------------------------------------------------- Wireless One, Inc. (OTC Bulletin Board:WIRL) announced that its common stock will trade on the OTC Bulletin Board starting today under the symbol "WIRL." The common stock of Wireless One, Inc. previously was listed on the Nasdaq National Market. Wireless One, Inc., a Broadband Wireless Access provider owns, develops and operates wireless video, data and voice over IP systems in eleven contiguous states in the Southeast U.S. with exclusive licenses in the Multi-Point Multi-Channel Distribution System ("MMDS") and Wireless Communications Spectrum ("WCS"). The MMDS and WCS licenses cover an estimated 7,700,000 households and 800,000 businesses in 67 markets. In addition, the Company owns a 50% interest in a joint venture, Wireless One of North Carolina, L.L.C., that holds exclusive MMDS and WCS licenses in 13 North Carolina markets with additional 3,000,000households and 290,000 businesses. The Company provides wireless services to single family units, multiple dwelling properties, educational institutions and small to medium businesses. *********** 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 * * *