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/raid1/www/Hosts/bankrupt/TCR_Public/990413.MBXT R O U B L E D C O M P A N Y R E P O R T E R Tuesday, April 13, 1999, Vol. 3, No. 71 Headlines ACME METALS: Committee Taps Wolf, Block, Schorr AMPACE CORP: Objects To Adequate Protection For Mercedes BISCAYNE APPAREL: Seeks OK To Execute Employment Agreements BMJ MEDICAL: Seaview Seeks Rejection of Agreements CAMPO ELECTRONICS: Trustee To Hire Accountant COMMERCIAL FINANCIAL: Requests Order To Retain Law Firm CONTINENTAL INVESTMENT: Replaces Grant Thornton EDISON BROTHERS: Committee Applies To Retain Counsel FAMILY CO: National and Gibson's To Close Doors FORCENERGY: Court Authorizes Employ of Andrews & Kurth GRANT GEOPHYSICAL: Files 10-K With SEC HEALTH-CHEM: Announces Sale To Avoid Bankruptcy KOKUMIN BANK: Reported Insolvent LOT$OFF: Announces Involuntary Petition MEDMAX: Never Gets Off Ground MEDPARTNERS: Settlement Agreement On Table MOBILEMEDIA: Court Confirms Reorganization Plan MOBILEMEDIA: TSR Wireless Withdraws Proposal PARAGON TRADE: Announces 4th Quarter and Year-End Results PCG CORP: Hearing on Confirmation of Plan PERK DEVELOPMENT: Order For Hearing On Disclosure Statement PRECISION AUTO CARE: Special Meeting of Shareholders PRIMARY HEALTH: Commencement of Cases SERVICE MERCHANDISE: The Losers are Executives and Lessors SYSTEMSOFT CORP: Applies To Retain KPMG Peat Marwick THORN APPLE: Seeks To Extend Time To Assume/Reject Leases WIRELESS ONE: Seeks To Extend Time To Assume/Reject Leases Meetings, Conferences and Seminars ********* ACME METALS: Committee Taps Wolf, Block, Schorr ----------------------------------------------- The Official Committee of Unsecured Creditors of Alpha Tube Corporation filed an application to retain Wolf, Block, Schorr and Solis-Cohen LLP as attorneys to the Committee. A hearing on the motion is scheduled for April 23, 1999. The Office of the United States Trustee appointed the following members to the Committee: AK Steel Corporation Kerry steel, Inc. Rouge Steel Company Alliance Steel, Inc. United Materials Co. Marubeni America Corp Pittsburgh Logistics Systems, Inc. Wolf Block has agreed to assist the Alpha Creditors Committee in its consultation with Alpha Tube relative to the administration of these cases, and among other responsibilities, to assist in the examination of the debtors' affairs, to assist in the negotiation of any plan of reorganization; to assist in the review, analysis and negotiation of any financing agreements. The attorneys designated to represent the Alpha Creditors Committee charge between $180 per hour and $330 per hour. AMPACE CORP: Objects To Adequate Protection For Mercedes -------------------------------------------------------- The debtors, Ampace Corporation and Ampace Freightlines, Inc. object to the motion of Mercedes-Benz Credit corporation for an order compelling the debtors to provide adequate protection. On March 2, 1999, Mercedes-Benz Credit Corporation ("MBCC") filed a motion stating that no payments had been made by the debtors for the use of 48 freightline tractors. On March 22, 1999,MBCC asserted that the payoff due for the tractors was $2,448,850, but that the value of the tractors is approximately $3.275 million. Therefor the debtors state that MBCC has an equity cushion in excess of $800,000. The debtors state that MBCC is not entitled to adequate protection payments because it has failed to demonstrate that the tractors have declined in value since the Petition date or will decline in value over the next several months. The debtors also allege that the tractors are adequately insured, and are properly maintained. The debtors state that even if MBCC quantifies the amount by which the value of the tractors will decline, the equity cushion will protect MBCC. Further, the debtors claim that they have offered to make adequate protection payments to MBCC of $14,400 per month until the debtors either sell or surrender the tractors or confirm plans of reorganization providing for different treatment of the tractors. BISCAYNE APPAREL: Seeks OK To Execute Employment Agreements ----------------------------------------------------------- Biscayne Apparel Inc. and its wholly owned subsidiary M&L International, Inc. seek authority to execute employment agreements with Peter Vandenberg, Jr., BAI's President, COO and CFO and Vice President of M&L, Stephen W. Piekarz, Vice President of Mackintosh and proposed Controller of BAI and M&L; and Sarah Murphy, assistant controller for Mackintosh and proposed assistant controller for BAI and M&L. The debtors state that the services of the three employees are required to assist the debtors in maximizing the value of their assets and emerging from chapter 11. The debtors also claim that the agreement with Vandenberg will cost the company approximately $285,000 and will save the estates approximately $750,000. Both Piekarz and Murphy will be entitled to severance benefits of $75,000 and $13, 750 respectively. BMJ MEDICAL: Seaview Seeks Rejection of Agreements -------------------------------------------------- Seaview Othopaedic and Medical Associates seeks to compel rejection of a Management Services Agreement with the debtor, BMJ Medical Management, Inc. Lighthouse Orthopaedic associates, Inc. and Orthopaedic Surgery Associates, Inc. have already filed a motion to compel rejection of the agreement and a hearing date is set for April 21, 1999. As part of the consideration afforded to Seaview and its principals to enter into the Management services Agreement with a forty year term, the debtor executed a Convertible Promissory Note in the face amount of $1.028 million. The debtor did not make the initial payment under the note, due April 1, 1999. The filing of BMJ's bankruptcy entitled Seaview to terminate the agreement. Seaview states that it is in the untenable position of not having received all that it bargained for in entering into a business relationship with the debtor, yet Seaview is expected to fully comply with the terms of the agreement including the payment of a monthly management fee to the debtor. CAMPO ELECTRONICS: Trustee To Hire Accountant --------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Louisiana entered an order on March 30, 1999 authorizing the Trustee, Wilbur R. "Bill" Babin, of the debtor, Campo Electronics, Appliances, and Computers, Inc. to retain the firm of PricewaterhouseCoopers LLP. The Trustee is authorized to employ the firm to act as its accountant as of the commencement of this Chapter 7 case, and the Trustee is authorized to advance $10,000 to the firm for its initial expenses. COMMERCIAL FINANCIAL: Requests Order To Retain Law Firm ------------------------------------------------------- Commercial Financial Services, Inc., and CF/SPC NGU, Inc., seek a court order authorizing the use of estate funds for retention of the law firm of Norman Wohlgemuth Chandler & Dowdell as special counsel to represent certain CFS employees in connection with certain governmental investigations. The debtors claim that these employees should not be required to participate in the Governmental Authorities' investigations without the benefit of counsel, and they should not be burdened with the expense of the counsel. The legal fees to the special counsel are capped at $50,000. The law firm will represent only current employees of the debtor and the debtor will hire only one firm for all of the employees involved. The governmental investigations arise from an anonymous letter sent to three rating agencies alleging certain improprieties relating to sale of assets by CFS, the maintenance and reporting of information by CFS, and certain payments made by CFS to departing employees. The governmental authorities investigating the allegations of the letter include the SEC and the Oklahoma Department of Securities. CONTINENTAL INVESTMENT: Replaces Grant Thornton ----------------------------------------------- Effective on March 10, 1999, Continental Investment Corporation engaged the accounting firm of Belew Averitt LLP, Dallas, Texas as the Company's independent accountants to replace its prior auditors GRANT THORNTON LLP who were dismissed by the Company on March 10, 1999. The new accountants have been engaged to audit and report on the financial statements of the Company for its fiscal year ended December 31, 1998. This action to replace the Company's auditors was approved by the Board of Directors of the Company. EDISON BROTHERS: Committee Applies To Retain Counsel ---------------------------------------------------- The Official Committee of Unsecured Creditors of Edison Brothers Stores Inc., et al seeks approval to retain the law firm Kramer Levin Naftalis & Frankel LLP. The Committee has selected Kramer Levin to serve as counsel to the Committee to perform all services necessary on behalf of the Committee. The firm will be responsible for assisting, advising and representing the Committee with the preparation of all legal papers, appearances in court, negotiation and formulation of a plan of reorganization, investigation of the debtors' financial condition, communication with the Committee's constituents; and performance of all of the Committee's duties and powers. The attorneys expected to represent the Committee charge hourly rates ranging from $200 per hour to $425 per hour. The Official Committee of Unsecured Creditors of Edison Brothers Stores, Inc., et al., also seeks to retain Agostini, Levitsky, Isaacs & Kulesza as local counsel in connection with the Chapter 11 cases of the debtors. The principal attorneys expected to represent the Committee charge hourly rates ranging from $210 per hour to $175 per hour. The firm will be responsible for the administration of the cases; the preparation of legal papers; appearances in court and at meetings of creditors; the negotiation, formulation, drafting and confirmation of a plan, the investigation of the financial condition of the debtors, communication with the Committee, and will serve as local counsel for Kramer, Levin, Naftalis & Frankel LLP. FAMILY CO: National and Gibson's To Close Doors ----------------------------------------------- National and Gibson's markets, owned by Family Co. of America, will close their doors permanently, barring an extension from the bankruptcy judge. The stores have been liquidating their merchandise since Tuesday. Schnuck Markets Inc. offered to pay $ 295,000 for the prescriptions files, and Judge James J. Barta scheduled a hearing today to consider various offers. Federal law usually requires a 20-day notice to allow fair bidding for assets, Barta said. Officials overseeing the bankruptcy of Family Co. of America are giving priority to the sale of the pharmacies because customers are concerned about their prescription records. FORCENERGY: Court Authorizes Employ of Andrews & Kurth ------------------------------------------------------ On March 31, 1999, the U.S. Bankruptcy Court for the Eastern District of Louisiana entered an order authorizing the employment by the debtor, Forcenergy, Inc. and Forcenergy Resources, Inc. of Andrews & Kurth LLP as attorneys to represent the debtors. GRANT GEOPHYSICAL: Files 10-K With SEC -------------------------------------- Grant Geophysical Inc. filed its annual report for the period ended December 31, 1998 with the SEC. Revenues of the Company for the twelve months ended December 31, 1998 were $175.5 million compared with $130.6 million of combined revenue for GGI and the Company for the twelve months ended December 31, 1997. Revenues from the United States operations increased $24.9 million, or 46.4%, from $53.7 million to $78.7 million in 1998. Direct operating expenses for the twelve months ended December 31, 1998 increased $29.5 million, or 29.7%, to $129.0 million compared with $99.4 million for the twelve months ended December 31, 1997. At March 26, 1999, the Company's total indebtedness was approximately $117.6 million. The Company's total indebtedness is comprised of $99.3 million aggregate principal amount of the Senior Notes, $13.0 million outstanding on the Credit Facility and $5.3 million of combined loans and capitalized leases incurred for the purpose of financing capital expenditures. Combined capital expenditures for the twelve months ended December 31, 1998 were $23.9 million. The Company will require substantial cash flow to continue operations on a satisfactory basis, complete its capital expenditure program, fully implement its business strategy and meet its principal and interest obligations with respect to the Notes and its other indebtedness. HEALTH-CHEM: Announces Sale To Avoid Bankruptcy ----------------------------------------------- Health-Chem Corporation (ASE:HCH) announced that it advised the American Stock Exchange that, as previously announced, it is in the process of offering for sale its Herculite Products and Hercon Environmental businesses and a related manufacturing facility, but that it has not as yet entered into definitive sales agreements. As a consequence, it would likely be unable to make the appropriate estimates of net realizable values necessary for the preparation of its financial statements as of December 31, 1998 so as to permit the filing of its Form 10-K for the year then ended with the Securities and Exchange Commission on or before April 15, 1999 as previously had been anticipated. The Company also advised the Exchange that since it was unable to predict when, or if, such definitive sales agreements would be entered into or consummated, it would not have funds available to it to pay interest and the $8 million of principal due on its outstanding 10.375% Convertible Subordinated Debentures at their maturity on April 15, 1999 and that the Company would be so advising the holders of the Debentures. The Company plans to apply the proceeds from the sale of these assets to repay the Company's secured debt in the principal amount of approximately $9.1 million held by IBJ Whitehall Business Credit Corporation and to retire all outstanding Debentures. The Company stated, however, that under a provision of the applicable Trust Indenture subordinating the Debentures to all senior indebtedness, the Company's indebtedness to IBJ will have to be paid in full before any payment may be made on the Debentures. Likewise, upon any distribution of assets of the Company in connection with its reorganization or liquidation, the IBJ debt would have to be first paid in full before the holders of Debentures would be entitled to receive any payment thereon. The Company has chosen to divest these assets to generate cash for the payment of its obligations to IBJ and the holders of Debentures without the intervention of court proceedings under Chapter 11 of the Bankruptcy Code. Such proceedings could be very costly and protracted and could adversely affect the amount of distributions to creditors. The Company hopes that creditors, including the holders of Debentures, will refrain from taking action pending the sale of these assets, which represent the only near-term source for the $17.5 million of funding required to retire both the IBJ debt and the Debentures. The Company intends to call an informational meeting for April 22, 1999 with the holders of its Debentures to discuss the efforts being exerted by the Company and its professional advisors to effect the sale of these assets and to answer any questions the holders of Debentures may have. The Exchange advised the Company that it was instituting a trading halt on the Company's subordinated debentures and on the Company's Common Stock, until such time as the Company's filings under the Securities Exchange Act of 1934 are current. Health-Chem Corporation is the parent company of Transderm Laboratories Corporation (OTC:TLCC), a manufacturer of controlled release products for the pharmaceutical and cosmetic industries, as well as other subsidiaries which manufacture products utilizing technologies for laminating or coating fabrics and materials. KOKUMIN BANK: Reported Insolvent -------------------------------- On Friday, Hakuo Yanagisawa, Japan's minister for financial reconstruction, said he heard nothing about a bank failure. Yanagisawa dismissed the growing suspicion that Kokumin Bank, a second-tier regional bank in Tokyo, is insolvent, saying in a news conference that if there is a possibility of a funding crisis at any bank, he should be briefed. He said he had not received any such report. However, by Sunday, The Financial Reconstruction Commission (FRC) declared that the Kokumin Bank was insolvent and decided to send its appointed administrators to take over the bank's management, FRC officials said. The government bank regulator took the measure under a financial-system recapitalization law after the bank informed the commission earlier in the day that it could no longer sustain itself and was in danger of halting the withdrawal of deposits, according to the officials. All deposits at the bank will be protected by the government and the bank will continue its business under the management of three administrators -- Akira Tachimoto, a certified public accountant, Hideki Matsushima, a lawer, and the Deposit Insurance Corp. (DIC). The Bank of Japan (BOJ), the central bank, will also provide special loans to guarantee the bank's operations. Under the law enacted in October last year, the FRC will seek a financial institution willing to take over the operations of Kokumin Bank and will transfer its bad loans to the state-run Resolution and Collection Corp. If the FRC fails to find a possible buyer of Kokumin Bank, the commission will set up a bridge bank to be wholly capitalized by the DIC, a banking safety net funded by premiums paid by financial institutions. If the bridge bank scheme is adopted, Kokumin Bank would be the first to be converted into a bridge bank under the new law. The planned bridge bank would be allowed to operate for up to three years to find a possible buyer and be liquidated if it fails to do so. Kokumin Bank has asked a group of companies affiliated with Kokusai Kogyo Co. -- a bus, transport and leisure company -- for recapitalization, but has so far not been getting a positive response, sources at the bank said. Kokusai Kogyo invested some 20 billion yen into the bank in fiscal 1996 by purchasing its newly issued shares as part of efforts to bail it out. Tens of billions of yen in deposits have been withdrawn from the bank following Thursday's media reports that it is experiencing a huge capital deficit, sources at the bank said. The Financial Supervisory Agency (FSA), another banking industry watchdog, has reportedly concluded that Kokumin Bank developed its 50 billion yen capital deficit by Sept. 30, 1998. The bank's capital deficit is expected to eventually exceed 70 billion yen, according to sources close to the FSA. The bank, buckling under the strain of massive losses on real estate loans extended during the asset-inflated ''bubble'' economy, racked up a 12.05 billion yen unconsolidated net loss in fiscal 1997, which ended March 31, 1998. On Monday, The Financial Supervisory Agency (FSA) said it has found that Kokumin Bank developed a capital deficit of 71.2 billion yen by Sept. 30. Three executives of the failed Kokumin Bank have resigned, the bank's bankruptcy administrator said Monday. Masakuni Osano, the chairman, Yukio Okonogi, the president, and Hideyuki Suzuki, a vice president, of the Tokyo-based second-tier regional bank. Also on Monday, the Kyodo news service announced that The Bank of Japan (BOJ) extended some 20-30 billion yen in unsecured loans to the failed Kokumin Bank on Monday, the day after the Financial Reconstruction Commission declared it bankrupt with massive bad loans, BOJ sources said. The central bank took the action to avert a cash shortage at Kokumin Bank while monitoring the sum of deposits withdrawn from the bank Monday. The collateral-free loans were extended at an annual interest rate of 1.0%, or 0.25 percentage point higher than that on previous unsecured loans, the sources said. The higher rate applied to Kokumin Bank was levied because of the risk of the loans' becoming irrecoverable, they said. Excluding those to Kokumin Bank, the BOJ has some 600 billion yen in unsecured loans. (Kyodo News 09-Apr-99 through 12-Apr-99) LOT$OFF: Announces Involuntary Petition --------------------------------------- San Antonio-based LOT$OFF Corporation (OTC BB:LOTS) announced today that certain trade creditors have filed an involuntary bankruptcy petition against the Company. Such creditors allege claims totaling $1,318,547.05 against the Company in their petition filed April 8, 1999 in the United States Bankruptcy Court for the Western District of Texas, San Antonio Division. The Company recognizes such trade creditors as vendors that sold goods to its retail subsidiaries, specifically 50-OFF Operating Company, 50-OFF Multistate Operations Inc. and 50-OFF Texas Stores L.P., and denies that it is obligated upon any trade account owing by such subsidiaries to them, making the involuntary petition inappropriate. The Company will contest the involuntary filing and will seek to hold the petitioning creditors jointly and severally liable for damages caused by the filing. LOT$OFF Corporation, which had been pursuing the merger or sale of all or a part of the Company's retail subsidiaries, announced on Jan. 21, 1999 that it planned to accelerate the sale of its retail assets. While management had believed that borrowings available under its revolving credit facility, available trade credit, anticipated proceeds from outstanding litigation, its operating cash flow and its cash on hand would be adequate to finance its operations through fiscal 1999 (Jan. 29), on Jan. 11, 1999, the Company learned that funds anticipated from litigation being pursued in Switzerland would not be immediately forthcoming, which resulted in the necessity for additional external financing and/or the restructuring of its existing financing, including new capital for its retail subsidiaries, the traditionally slow period for retail sales being immediately ahead. MEDMAX: Never Gets Off Ground ----------------------------- The Pittsburgh Post-Gazette reports on April 9, 1999 that MedMax health care super stores never opened, and probably never will. The "revolutionary" chain founded by a graduate of Duquesne University who dreamed of tapping the growing market of aging baby boomers has filed for Chapter 11 bankruptcy protection. Most of its stores - mainly in Detroit and Philadelphia - have been closed and those that remain are holding going- out-of-business sales. "The company essentially overextended itself and grew too fast," said Michael Jacoby, a turnaround consultant brought in to serve as CEO of the Southfield, Mich., company. Founder F. Kevin Browett, a Western Pennsylvania native, was asked to leave in February as the board of directors struggled to find a way to pay the bills. The failure of MedMax comes despite the efforts of a hardworking CEO who compiled a strong retail resume, crafted an impressive business plan and brought in private investors to help launch his dream of a home health-care chain that would dominate its category the way Home Depot dominates home improvement products. At its peak, MedMax operated as many as 13 stores selling everything from wheelchairs to Band-Aids and greeting cards. In addition, the company had contracts to rent durable medical equipment to home health-care agencies and other users in Detroit, Philadelphia and Pittsburgh. MedMax appeared to have everything. The Web site boasts that store associates were health care professionals, including a registered nurse, respiratory therapist and a certified sports trainer. Wide aisles and low shelves made everything easily accessible, even to people in wheelchairs. There was a working kitchen and bathroom to allow customers to test products before buying them. Educational seminars would be offered on everything from "Taking Care of Your Heart" to "How to Choose a Hearing Aid." In addition to trying to open too many stores too quickly, MedMax never turned a profit on the ones it did open, said Jacoby. He speculates the 18,000-square-foot superstores were just too big, with too much space allocated to low- turnover items like medical equipment. MEDPARTNERS: Settlement Agreement On Table ------------------------------------------ MedPartners Inc., (NYSE: MDM) and the State of California have reached agreement on the principal terms of a proposed comprehensive settlement regarding MedPartners' California physician management operations. Both parties said the proposed settlement will be subject to the execution and delivery of definitive agreements and other approvals. The proposed settlement provides for: A transition plan for the orderly and timely disposition of the existing operations of MedPartners Provider Network Inc. (MPN) and MedPartners' California physician practices assets that would ensure uninterrupted provision of patient care and fulfillment of management and payment obligations to MPN-affiliated health care plans and physicians; The continued funding of MedPartners California physician management operations with all of the proceeds from the sale of MedPartners and MPN assets, loans from affiliated health care plans, and additional funding provided by MedPartners; Restoration of MPN's assets, operations and management responsibilities to MedPartners, which will operate MPN as a debtor in possession under the U.S. Bankruptcy Code, subject to oversight and supervision of a new court-appointed State conservator; A continuation of a monitoring role by a new conservator and the State of California Department of Corporations with primary oversight responsibilities on the fulfillment of the proposed settlement and transition plan. MedPartners said that the proposed settlement agreement will not affect the previously reported discontinued operations charge, taken in the fourth quarter of 1998. MOBILEMEDIA: Court Confirms Reorganization Plan ----------------------------------------------- MobileMedia Corp. and Arch Communications Group, Inc. (NASDAQ:APGR) announced that MobileMedia's Third Amended Plan of Reorganization, which provides for the merger of MobileMedia into Arch, has been confirmed by the U.S. Bankruptcy Court for the District of Delaware. The Bankruptcy Court confirmed the Plan after certain objectors to the Plan withdrew their alternative proposal. MobileMedia and Arch expect to close the merger transaction in early June, at which time MobileMedia will officially emerge from Chapter 11 protection. The merger of Arch and MobileMedia will create the nation's second largest paging company with more than seven million paging units- in-service in all 50 states. At the confirmation hearing on April 12, certain objectors to MobileMedia's Plan withdrew an alternative reorganization proposal, which contemplated a combination of MobileMedia with TSR Wireless, LLC, a privately held company. The Objectors Proposal was withdrawn after it became clear that it had failed to receive significant support by MobileMedia's creditors other than those who had originally opposed the merger with Arch. MobileMedia filed a voluntary petition under chapter 11 of the U.S. Bankruptcy Code on January 30, 1997. MobileMedia and Arch executed their merger agreement on August 19, 1998 and have since executed certain amendments thereto. On December 2, 1998, MobileMedia filed the Plan, which provides for the merger. The Plan was accepted by the company's creditors as of January 27, 1999 and was accepted in a Court-ordered re-vote by the company's Class 6 creditors on March 23, 1999. The Federal Communications Commission approved the transfer of wireless messaging licenses from MobileMedia to Arch by order dated February 2, 1999 and released on February 5, 1999. MobileMedia Corporation, Fort Lee, N.J., is one of the largest providers of paging and personal communications services offering local, regional and nationwide coverage in all 50 states, the District of Columbia and in the Caribbean. MobileMedia Communications, Inc., doing business as MobileComm, is a wholly-owned subsidiary of MobileMedia Corp. MobileComm can be found on the Internet at www.mobilecomm.com. MobileComm is not associated with MobilComm, Inc. of Cincinnati, Ohio. Arch Communications Group, Inc. Westborough, MA. is the third largest paging company in the United States, with more than four million units in service. Founded in 1986, it provides narrowband wireless messaging services, principally paging, to subscribers nationwide. Arch's 2,600 employees operate from approximately 175 offices and company-owned stores in 42 states. Additional information on Arch is available on the Internet at www.arch.com. MOBILEMEDIA: TSR Wireless Withdraws Proposal -------------------------------------------- MobileMedia Corporation and TSR Wireless, LLC ("TSR") jointly announced that TSR has withdrawn its proposal to acquire MobileMedia as part of an alternative reorganization plan (the "Objectors Proposal") proposed by certain creditors that had objected to MobileMedia's Third Amended Plan of Reorganization (the "Plan"). The Plan provides for the merger of MobileMedia into Arch Communications Group, Inc. ("Arch") (Nasdaq: APGR). MobileMedia indicated that the objecting creditors had withdrawn their Objectors Proposal and that MobileMedia expects the Bankruptcy Court to approve the Plan on April 12, 1999 at the continued confirmation hearing, with the merger with Arch closing thereafter in early June, 1999. TSR indicated that it had decided not to proceed with its proposal given the timing constraints imposed by the bankruptcy process. TSR stated that it wished MobileMedia well in its merger with Arch. MobileMedia indicated that it was appreciative of the interest shown by TSR. MobileMedia filed a voluntary petition under chapter 11 of the U.S. Bankruptcy Code on January 30, 1997. MobileMedia and Arch executed their merger agreement on August 19, 1998 and have since executed certain amendments thereto. On December 2, 1998, MobileMedia also filed the Plan, which provides for the merger. The Federal Communications Commission approved the transfer of wireless messaging licenses from MobileMedia to Arch by order dated February 2, 1999 and released on February 5, 1999. PARAGON TRADE: Announces 4th Quarter and Year-End Results --------------------------------------------------------- Paragon Trade Brands, Inc. (NYSE: PTB) today reported its fourth quarter and full year 1998 financial results. The results reported include the effect of previously announced settlements with The Procter & Gamble Company (P&G) and Kimberly-Clark Corporation (K-C) related to patent disputes, as well as expenses related to the Company's Chapter 11 filing. Paragon reported a net loss of $78.8 million, or $6.59 per share, for the fourth quarter ended December 27, 1998, including non-recurring fourth quarter charges of approximately $81.9 million, all of which are non-cash. Net sales for the fourth quarter of 1998 were $132.9 million compared to $136.4 million for the same period in 1997. For the fiscal year ended December 27, 1998, the Company reported a net loss of $65.4 million, or $5.48 per share, compared to a net loss of $212.7 million, or $17.86 per share, for the year ended December 28, 1997. Net sales for the fiscal year were $535.2 million compared to $562 million for the year ended December 28, 1997. Excluding non-recurring charges, operating earnings before interest, taxes, depreciation and amortization ("EBITDA") totaled approximately $58.4 million in 1998, compared to $62.5 million for the prior period. As has been previously reported, Paragon has entered into settlement agreements with P&G and K-C that resolve all outstanding claims against the Company by both P&G and K-C, including the P&G patent judgment, and provide a clear path to market for the Company's products through licenses of certain patents and broad covenants not to sue. The settlements, which remain subject to Bankruptcy Court approval, and the corresponding licenses granted by P&G and K-C, will serve as the cornerstone of what the Company intends to be a consensual plan of reorganization. The Company is unable at this time to predict when it will emerge from Chapter 11. Paragon also announced that its Board of Directors has determined that the 1999 Annual Meeting of shareholders will be held at 9:00 a.m., Monday, November 29, 1999 at the Company's headquarters. PCG CORP: Hearing on Confirmation of Plan ----------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved the Disclosure Statement for the debtors' first amended joint liquidating plan of reorganization filed by PCG Corp. I, and its affiliates, as containing "adequate information". A hearing to consider the confirmation of the plan shall be held on May 20, 1999 at 2:30 PM, before the Honorable Prudence Carter Beatty, U.S. Bankruptcy Judge, Courtroom 701, US Bankruptcy Court, One Bowling Green, New York, NY 10004-1408. The treatment of claims and summary of distributions under the plan are as follows: Class 1 - Allowed Administrative Claims - approximately $2.7 million - shall be paid in cash. Class 2 - Allowed fee Claims - approximately $2.4 million - shall be paid in cash Class 3 - Allowed Priority claims - $0 - payable in cash Class 4 - Allowed Priority Tax Claims - approx. $596,000 - shall be paid in cash Class 5 - Allowed Secured Claims - $0 - payable in cash Class 6 - allowed General Unsecured Claims - approximately $138 million - Class 6 creditors should ultimately realize less than 1%. Class 7 - Old Preferred Stock - No distribution Class 8 - Subsidiary Stock - No distribution Class 9 - Old Common Stock - No distribution Class 10 - Warrants - No distribution Class 11 - Options - No distribution Pursuant to a certain Asset Purchase Agreement, Hartmarx Acquired substantially all of the debtors' tangible and intangible assets in exchange for $36 million in cash and the assumption of $7.1 million of the debtors' liabilities. PERK DEVELOPMENT: Order For Hearing On Disclosure Statement ----------------------------------------------------------- The hearing to consider the approval of the disclosure statement of Perk Development Corporation and Brambury Associates, debtor, shall be held before the Honorable John C. Ninfo II, U.S. Bankruptcy Judge for the Western District of New York on May 5, 1999 at 9:30 AM, Rochester, Courtroom, 1550 U.S. Courthouse, 100 State Street, Rochester, NY 14614. September 16, 1998 was fixed as the last day for filing proofs of claim in this case. PRECISION AUTO CARE: Special Meeting of Shareholders ---------------------------------------------------- A Special Meeting of Shareholders of Precision Auto Care, Inc. will be held at the Company's headquarters located at 748 Miller Drive, S.E., Leesburg, Virginia on May 25, 1999 at 11:00 a.m., for the following purposes: 1. To consider approval of the issuance of Common Stock by the Company in payment of interest and a financing fee in connection with a $5,000,000 Subordinated Debenture due May 25, 1999; 2. To consider approval of the adoption of the 1999 Employee Stock Option and Restricted Stock Plan and the reservation of 600,000 shares of Common Stock for issuance thereunder; and 3. To consider approval of the grant of restricted stock awards to the non-employee members of the Company's board of directors. PRIMARY HEALTH: Commencement of Cases ------------------------------------- On March 17, 1999,the debtors, Primary Health Systems, Inc. and its affiliates filed voluntary petitions for relief under Chapter 11. A meeting of creditors is scheduled for May 7, 1999 at 3:00 PM at the J. Caleb Boggs Federal Building, 844 King Street, Room 2313, Wilmington, Delaware 19801. SERVICE MERCHANDISE: The Losers are Executives and Lessors ---------------------------------------------------------- The Tennessean reports on April 4, 1999 that among the losers in the Service Merchandise Chapter 11 case are dozens of store owners whose leases could be broken and some former senior managers who may not get the severance packages they had expected. Among the winners are consulting firms, lawyers and other agencies expected to gain months possibly years of fees from the proceedings. Possibly losing out on future earnings are four executives who recently left the company. The court allowed Service Merchandise to reject their employment agreements, including severance agreements or release agreements. A 127-page statement by Cusano outlining the company's state of affairs says some members of senior management are automatically entitled to a minimum of 52 weeks of severance pay. The company asked the court to allow it to honor its general severance package, but to reject the 52- week feature of the senior- manager agreements. SYSTEMSOFT CORP: Applies To Retain KPMG Peat Marwick ---------------------------------------------------- SystemSoft Corporation, debtor, seeks to employ and retain KPMG Peat Marwick LLP as consultants and finanical advisors to the debtor. The debtor wishes to employ the firm to assist in the preparation and review of all reports or filings as required by the court or the US Trustee, to review and help prepare financial information for distribution to creditors; to assist in analyzing the debtors' financial condition, to advise and assist in negotiations with, and attendance at meetings with bank lenders, creditors and the official creditors' committees, to assist in analyzing the business and financial condition and reorganization alternatives available to the debtor' to advise and assist in negotiations with bank lenders, creditors and the official creditors' committees; to assist in reviewing business plans; and to assist in preparing documents necessary for confirmation of the plan. The debtor has agreed to compensate the firm with a fee based on a blended hourly rate of $265. THORN APPLE: Seeks To Extend Time To Assume/Reject Leases --------------------------------------------------------- The debtor, Thorn Apple Valley, Inc. seeks to extend the time within which he debtor may assume or reject unexpired leases of nonresidential real property. The debtor is a party to 18 unexpired leases of nonresidential real property including its corporate headquarters and other business offices, sales offices and warehouses. The list of unexpired leases does not include a lease in Scottsdale, Arizona that the debtor has already decided to reject. The debtor requests that the court extend the date by which debtor must assume or reject the leases to the earlier of November 5, 1999 or the date on which an order is entered confirming a plan of reorganization in the debtor's case. The debtor asserts that the multitude of operational issues that arose in the early stages of the case, including financing, creditor inquiries, payment disputes and obtaining product from creditors in possession of the debtor's inventory, require the debtor's immediate attention making it impossible to devote sufficient resources to make an informed decision with respect to the unexpired leases. WIRELESS ONE: Seeks To Extend Time To Assume/Reject Leases ---------------------------------------------------------- The debtor, Wireless One, Inc., seeks an extension of time within which the debtor may assume or reject unexpired leases of nonresidential real property. An amended hearing date on the motion has been scheduled for April 28, 1999 at 2:00 PM before the Honorable Peter J. Walsh, U.S. Bankruptcy Court for the District of Delaware, 824 North Market Street, Wilmington, Delaware 19801. Meetings, Conferences and Seminars ---------------------------------- April 15-18, 1999 AMERICAN BANRKUTPCY INSTITUTE Annual Spring Meeting J.W. Marriott, Washington, DC Contact: 1-703-739-0800 April 19-20, 1999 PRACTISING LAW INSTITUTE 21st Annual Current Developments in Bankruptcy and Reorganization Conference Grand Hyatt, San Francisco, California Contact: 1-800-260-4PLI or info@pli.edu April 22-23, 1999 AMERICAN LAW INSTITUTE -- AMERICAN BAR ASSOCIATION COMMITTEE ON CONTINUTING PROFESSIONAL EDUCATION Conference on Revised Article 9 of the Uniform Commercial Code Sheraton New York Hotel, New York, New York Contact: 1-800-CLE-NEWS April 22-25, 1999 COMMERCIAL LAW LEAGUE OF AMERICA 69th Annual Chicago Conference Westin Hotel, Chicago, Illinois Contact: 1-312-781-2000 or clla@clla.org April 26-27, 1999 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. Bankruptcy Sales, Mergers & Acquisitions The Mark Hopkins, San Francisco, California Contact: 1-903-592-5169 or ram@ballistic.com April 28-30, 1999 INTERNATIONAL FEDERATION OF INSOLVENCY PROFESSIONALS INSOL Bermuda '99 Conference of the Americas Castle Harbour Marriott Resort Contact: INSOL@weil.com April 30-May 4, 1999 INTER-PACIFIC BAR ASSOCIATION Annual Meeting and conference, including a one-day program on cross-border insolvencies Shangi-La Hotel, Bangkok, Thailand Contact: 011-66-2-233-0055 May 28-31, 1999 COMMERCIAL LAW LEAGUE OF AMERICA 51st Annual New England District Meeting Equinox Resort, Manchester Village, Vermont Contact: 1-413-734-6411 June 3-6, 1999 AMERICAN BANRKUTPCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800 July 1-4, 1999 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains Bankruptcy Law Institute Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 1-770-535-7722 July 10-15, 1999 COMMERCIAL LAW LEAGUE OF AMERICA 105th Annual Convention Chateau Mont Tremblant, Mont Tremblant, Quebec Contact: 1-312-781-2000 or clla@clla.org July 15-18, 1999 AMERICAN BANRKUTPCY INSTITUTE Northeast Bankruptcy Conference Mount Washington Hotel & Resort Bretton Woods, New Hampshire Contact: 1-703-739-0800 August 4-7, 1999 AMERICAN BANRKUTPCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton, Amelia Island, Florida Contact: 1-703-739-0800 August 29-September 1, 1999 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES 1999 Convention Grove Park Inn, Asheville, North Carolina Contact: 1-803-252-5646 or info@nabt.com September 16-18, 1999 AMERICAN BANRKUTPCY INSTITUTE Southwest Bankruptcy Conference The Hotel Loretto, Santa Fe, New Mexico Contact: 1-703-739-0800 December 2-4, 1999 AMERICAN BANRKUTPCY INSTITUTE Winter Leadership Conference La Quinta Resort & Club, La Quinta, California Contact: 1-703-739-0800 ********* 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 in each Friday edition of the TCR, is provided 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 1999. 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. 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