/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/990617.MBXT R O U B L E D C O M P A N Y R E P O R T E R=20 =20 Thursday, June 17, 1999, Vol. 3, No. 115 = =20 =20 Headlines FACTORY CARD: Appointment of Official Committee of Equity Holders FACTORY CARD: Committee Supports Extension Regarding Leases FACTORY CARD: Seeks To Set Bar Date For August 2 FIRST JERSEY: Fee Before Filing Ruled Preferential Transfer FIRST MERCHANTS: Establishes Long-Term Equity Incentive Plan FIRSTPLUS FINANCIAL: Joint Motion To Compromise Controversy FIRSTPLUS FINANCIAL: Sale of Loans To Conti Mortgage Corp FLORIDA COAST PAPER: Time Extended To File Schedules GEOTEK: Comments Due on Plan HARNISCHFEGER: Court Approves Professionals HARNISCHFEGER: Extension of Time To File Schedules HEALTHSPHERE: Files For Bankruptcy HOMEPLACE: Back Bay Capital and BankBoston Announce Loans HOMEPLACE: Plan Becomes Effective; Merger Completed LOEHMANN'S: Seeks To Reject Certain Unexpired Leases NUCENTRIX: Equity Plan For Key Players NU-KOTE: Objections To Disclosure Statements OKURA & CO: Seeks Approval of Stipulation ORANGE COUNTY: Settlement With Standard & Poor's PARAGON TRADE: Kimberly-Clark Seeks Protective Order PCG CORP: Seeks Substantive Consolidation PHILIP SERVICES: Extends Lock-Up Agreement with Lenders PHP HEALTHCARE: Seeks To Assume and Assign CSC License Agreement PREMIS CORP: Company To Cease All Operations/Liquidation Pending PREMIS CORP: Stockholders To Vote On Sale Of Subsidiary RECYCLING INDUSTRIES: Seeks Approval of Sale of Assets SCOOP INC: Disclosure Statement in Support of Plan SCOOP INC: Hearing Regarding Disclosure Statement SOURCEONE WIRELESS: Seeks Extension To Assume or Reject Leases TEXFI INDUSTRIES: Troublesome Events Continue To Vex Company THORN APPLE: Creditors give Debtor Until July For Plan or Sale ********** FACTORY CARD: Appointment of Official Committee of Equity Holders ----------------------------------------------------------------- Ronald L. Chez and Allstate Insurance Company, together with=20 certain related entities, who in the aggregate own approximately=20 25% of the outstanding common stock of Factory Card Outlet Corp.=20 fiel a motion for appointment of an Official Committee of Equity=20 Holders. The movants allege that there are compelling reasons=20 for the appointment of an Equity Committee in this case. They=20 say that the debtor's status as a public company, the size and=20 complexity of the case and the solvency of the debtor weigh=20 strongly in favor of the appointment of an Equity Committee. The movants also claim that the participation of equity in=20 determining the case's direction and the terms of its=20 reorganization plan are most critical at this juncture. "The=20 timing is exactly right for existing equity to be represented in=20 these negotiations. The existing equity shareholders should=20 directly participate in the pending decisions on whether the=20 company should seek a stand-alone plan, as opposed to a sale, and=20 what portion, if any, of existing equity should be provided to=20 the debtor's shareholders." FACTORY CARD: Committee Supports Extension Regarding Leases ------------------------------------------------------------ The Official Committee of Unsecured Creditors of the debtors,=20 Factory Card Outlet Corp, and Factory Card Outlet of America Ltd.=20 believes that the debtors have not had an adequate opportunity to=20 make informed lease determinations and that ample cause exists=20 to grant the requested extension for determination of assumption=20 or rejection of the debtors' 210 leases. The debtors seek an=20 extension of time through July 31, 1999 to make determinations=20 with respect to their closed store leases and through November=20 24, 1999 to make decisions with respect to their remaining=20 operating store leases. FACTORY CARD: Seeks To Set Bar Date For August 2 ------------------------------------------------- The debtors, Factory Card Outlet Corp, and Factory Card Outlet of=20 America Ltd. request entry of an order fixing August 2, 1999 at=20 5:00 PM, Pacific Time as the last date for filing proofs of claim=20 against the debtors. =20 FIRST JERSEY: Fee Before Filing Ruled Preferential Transfer ----------------------------------------------------------- A Third Circuit Court of Appeals has ruled that Robinson St. John=20 & Wayne, a New Jersey law firm, must return $450,000 it was paid=20 in shares of stock just before its client, First Jersey Securities Inc., filed chapter 11, according to The Legal=20 Intelligencer. The court ruled that the transfer was a=20 preferential payment and that the shares of stock in=20 International Thoroughbred Breeders Inc. that were paid to the=20 firm one day prior to the chapter 11 filing gave it an interest adverse to the debtor's estate. It is not clear what the impact=20 of the ruling will be, because the firm has now split into two.=20 Walter J. Greenhalgh, who was lead counsel to First Jersey, is=20 now with the Newark office of Duane Morris & Heckscher. The=20 appeals court reversed the bankruptcy court and the district=20 court, which both held that the payment to the firm was proper, even though it occurred during the 90-day preference period,=20 because it was not made in order to satisfy a past due debt, and=20 that even if it had been a voidable preference, it qualified for=20 an exception as a payment made in the "ordinary course of=20 business." U.S. District Judge Murray M. Schwartz (D. Del.) said=20 that the bankruptcy court's reasoning that a "debt is not owed=20 until payment is past due is not found in the preference statute"=20 and that "this is the type of payment Congress intended the=20 preference section to reach." Judge Schwartz also said that the=20 stock transfer "resulted in a large diminution of the value of=20 the debtor's estate, and a serious depletion of assets of the=20 estate available to other creditors. Similarly situated creditors=20 were not treated equally." (ABI 16-June-99) FIRST MERCHANTS: Establishes Long-Term Equity Incentive Plan ------------------------------------------------------------ First Merchants Corporation, an Indiana corporation, has=20 established a Long-Term Equity Incentive Plan effective as of=20 April 14, 1999, subject to the approval of the plan at the=20 company's 1999 annual meeting of shareholders. Initial stock to=20 be registered for participation in the plan is 600,000 shares of=20 the company's common stock. The plan is designed to promote the interests of the company, its=20 subsidiaries, and its shareholders by providing stock-based=20 incentives to selected employees, non-employee directors,=20 subsidiary directors and advisory directors who are expected to=20 contribute materially to the success of the company and its=20 subsidiaries. The purpose of the plan is to provide a means of=20 rewarding performance and to provide an opportunity to increase=20 the personal ownership interest of the above in the continued=20 success of the company. The company believes that the plan will =20 assist its efforts to attract and retain quality personnel,=20 directors and advisors. For a complete text of the plan access http://www.sec.gov/cgi- bin/srch-edgar?0000712534-99-000020 on the Internet, free of=20 charge. FIRSTPLUS FINANCIAL: Joint Motion To Compromise Controversy ----------------------------------------------------------- The debtors, FirstPlus Financial Inc. and FirstPlus Special=20 Funding Corp. and German American Capital Corporation ("GACC")=20 filed a joint motion to compromise a controversy with GACC and=20 related entities. The settlement provides: Financial will receive $6 million in cash from a certain escrow=20 agreement. At the same time, GACC will receive the remaining=20 $3.3 million from the escrow to pay down GACC secured debt. The=20 balance of the GACC secured debtor will be paid in full over a=20 four year term. GACC will pay all recording and other loan=20 clean-up expenses relating to the loan sale dated October 8,=20 1998. The debtors claim this will save between $2.5 million and=20 $4 million. The debtors request that the court approve the=20 compromise. The debtors say that their probability of success in=20 litigation against GACC is uncertain and that litigation would be=20 complex, expensive and would foster delay. =20 FIRSTPLUS FINANCIAL: Sale of Loans To Conti Mortgage Corp --------------------------------------------------------- FirstPlus Financial, Inc. intends to sell certain loans to Conti=20 Mortgage Corporation for the sum of $1,481,705 pursuant to a=20 certain Mortgage Loan Sale Agreement. The proceeds of the sale will be applied against existing=20 indebtedness to Comerica Bank pursuant to court order. FLORIDA COAST PAPER: Time Extended To File Schedules ---------------------------------------------------- The US Bankruptcy Court for the District of Delaware entered an=20 order extending the time within which the debtor Florida Coast=20 Paper Holding Company LLC and its affiliates must file =20 schedules, lists and statement of financial affairs through June=20 15, 1999. GEOTEK: Comments Due on Plan ---------------------------- The FCC said comments are due June 28 on bankrupt Geotek's plan=20 to transfer its MHz SMR license to creditors Hughes Electronics=20 and Wilmington Trust, which plan to sell them to a Nextel subsidiary, according to Mobile Communications Report. The FCC=20 may review the two steps separately. Oppositions are due July 8=20 and replies are due July 15.=20 HARNISCHFEGER: Court Approves Professionals ------------------------------------------- The Debtors obtained authority to employ Kirkland & Ellis as=20 their attorneys. =20 James H.M. Sprayregen, Esq., leads the engagement, assisted by=20 Anne Marrs Huber, Esq. Mr. Sprayregen advises the Court and=20 parties-in-interest that Kirkland was retained in contemplation=20 of these chapter 11 cases in April 1999. Within the year prior=20 to the Petition Date, Kirkland received approximately $876,409=20 for pre-petition services. Kirkland received a $100,000 retainer=20 in connection with these chapter 11 cases. =20 =20 The Debtors agree, subject to Court approval, to pay Kirkland the=20 customary hourly rates billed by the Firm's professionals, and=20 reimburse all expenses. Kirkland does not relate its customary=20 billing rates to the Court or parties-in-interest.=20 The Debtors seek to employ PricewaterhouseCoopers, LLP, as their=20 accountants and auditors in these chapter 11 cases. =20 PwC will bill the Debtors at its customary hourly rates: Partners $350-550 Directors/Principals $240-490 Associates $140-290=20 Paraprofessionals/Administrative Support $60-100 The Debtors ask to employ PricewaterhouseCoopers Securities, a=20 wholly-owned subsidiary of PricewaterhouseCoopers, as their=20 financial advisors. Specifically, PwC Securities will:=20 The Debtors agree to pay PwC Securities a $150,000 monthly=20 advisory fee. PwC Securites discloses that it received $100,000=20 for services performed prior to the Petition Date.=20 The Debtors obtained the Court's authority to employ the law firm=20 of Mayer, Brown and Platt as special arbitration and litigation=20 counsel. Mayer Brown is currently assisting the Debtors in=20 litigating several claims on behalf of the Beloit subsidiaries. =20 There are pending litigation matters for which Mayer Brown has=20 been the lead counsel for the Debtors. These matters include the=20 APP Singapore Arbitration, the Norscan Icc Arbitration, the=20 Potlatch Idaho State Court Litigation, and the ALPAC AND=20 Ingersoll Rand Canadian Litigation. The Debtors tell the Court=20 that Mayer Brown has been involved in these cases and has the=20 necessary familiarity and expertise necessary to represent the=20 Debtors in the cases. APP SINGAPORE ARBITRATION. The Singapore arbitration matters=20 relate to two fine-paper machines that Asia Pulp & Paper, Co.,=20 agreed to purchase, including manufacture and services, from two=20 indirect subsidiaries of Beloit Corporation for over 300,000,000. THE NORSCAN ICC ARBITRATION. Norscan-Tech Limited is a Hong Kong=20 Corporation. It filed for arbitration against Beloit before the=20 International Chamber of Commerce in February 1999. The=20 arbitration arises from a contract for the design, fabrication=20 and delivery of paper manufacturing equipment for erection in=20 Changshu, China. Norscan alleges breach of contract and=20 misrepresentation by Beloit and seeks $4,711,000. The Beloit=20 subsidiaries are filed a counterclaim alleging misrepresentation.=20 POTLATCH IDAHO STATE COURT LITIGATION. Potlatch filed a=20 complaint against Beloit, in an Idaho state court, for breach of=20 contract and breach of warranty, for seven large pulp washers. =20 In June 1997, an Idaho jury awarded Potlatch $95,000,000 in=20 damages. The fees, costs, and interests for the case now total=20 $116,000,000. The case was appealed and after reversal by the=20 Idaho Supreme Court, a new jury trial will be conducted. ALPAC AND INGERSOLL RAND CANADIAN LITIGATION. The ALPAC and=20 Ingersoll Rand litigation was brought by ALPAC against Ingersoll=20 Rand and Beloit in September 1997. ALPAC alleges that it was=20 sold a defective drum debarker and asserts that Beloit is liable=20 because Beloit purchased certain assets of Ingersoll Rand. =20 Ingersoll wants Beloit to indemnify it against ALPAC's=20 claims and Beloit denies any obligation. The hourly rates for the attorneys primarily handling these=20 matters are: Hugh R. Mccombs $400 James E. Tancula $375 Bettina Getz $350 Michael J. Gill $350 Frank A. Perrone $275 Theresa A. Canady $215 Ronald P. Gould $215 Timothy J. Tyler $215 Judge Walsh granted the Debtors request to employ Kekst and=20 Company as their Public Relations Consultants. =20 Kekst's customary hourly billing rates are:=20 Senior Partners $495 to $700 Partners $460 to $495 Senior Associates $335 to $360 Associates $275 to $300 The court also approved Poorman-Douglas Corporation, a=20 subsidiary of Fleet National Bank, as their notice agent and=20 claims agent. (Harnischfeger Bankruptcy News Issue No.2 June 16,=20 1999; Bankruptcy Creditors' Service, Inc.) HARNISCHFEGER: Extension of Time To File Schedules -------------------------------------------------- The court allowed the Debtors an additional 40 days from the=20 Petition Date, to and including August 2, 1999, to file their=20 schedules of assets and liabilities, list of equity security=20 holders, schedules of executory contracts and unexpired leases=20 and statements of financial affairs. =20 The Debtors say they have more than 21,000 creditors, including=20 employees, and that given the size and complexity of their=20 business and the fact that certain pre-petition invoices have not=20 yet been received or entered into the Debtors' financial=20 accounting systems, they have not had the opportunity to gather=20 the necessary information to prepare and file the Statements and=20 Schedules. (Harnischfeger Bankruptcy News Issue No.2 June 16,=20 1999; Bankruptcy Creditors' Service, Inc.) HEALTHSPHERE: Files For Bankruptcy ---------------------------------- Two Memphis-based home health care firms and six subsidiaries=20 have filed for chapter 11 protection, according to The Commercial=20 Appeal. HealthSphere of America Inc. and its subsidiary Home- Bound Medical Systems Inc. filed, along with six other Home-Bound=20 entities in Tennessee, Arkansas and Missouri. The corporations=20 have until June 25 to disclose their financial situations and=20 list their creditors. John L. Ryder of Apperson, Crump, Duzane & Maxwell in Memphis is representing the eight firms. (ABI 16-June- 99) HOMEPLACE: Back Bay Capital and BankBoston Announce Loans --------------------------------------------------------- Back Bay Capital LLC announced on June 16, 1999 that it has provided a $15 million junior secured term loan to the newly- created HomePlace of America, Inc. Funds will be used primarily=20 to facilitate HomePlace Holdings' emergence from Chapter 11=20 bankruptcy proceedings and its merger with Waccamaw Corporation,=20 a retailer of home decor and furnishings, to form HomePlace of=20 America. Headquartered in Myrtle Beach, S.C., HomePlace of=20 America, Inc. is a retailer of home fashion textiles, home=20 furnishings and housewares. "We are pleased to assist HomePlace and Waccamaw in this exciting new phase of growth,"=20 said Ward K. Mooney, chief operating officer of Back Bay Capital.=20 "We are confident that this facility will enable them to=20 accomplish their strategic objectives." "Back Bay Capital=20 provided us with the additional liquidity we needed to complete=20 this complex transaction," said Greg Johnson, president and chief executive officer of HomePlace of America. The new=20 company will form the third-largest national chain of fashion=20 home furnishings, high-quality linens for bed and bath,=20 housewares and home decor products. It will operate 117=20 superstores in 27 states. Back Bay Capital is a high-yield finance group that provides Tranche B, junior secured loans to=20 companies seeking growth financings, bridge and acquisition=20 facilities and turnaround capital. Headquartered in Boston, Back=20 Bay Capital has offices in Chicago and Los Angeles.=20 BankBoston Retail Finance Inc. today announced that it has=20 provided a $200 million revolving line of credit to HomePlace of=20 America, Inc., formerly HomePlace Holdings and Waccamaw=20 Corporation. Headquartered in Myrtle Beach, SC, HomePlace of=20 America, Inc. is a retailer of home fashion textiles, home=20 furnishings and housewares. The funds provided by BankBoston Retail Finance will help in two areas: provide the=20 working capital necessary to facilitate HomePlace Holdings'=20 emergence from Chapter 11 bankruptcy proceedings; and enable it=20 to merge with Waccamaw Corporation, a retailer of home decor and=20 furnishings. "HomePlace and Waccamaw are both clients of=20 BankBoston Retail Finance," said Edward J. Siskin, chief=20 operating officer of BankBoston Retail Finance Inc. "It is very exciting to see an existing client emerge from bankruptcy and=20 merge with another BankBoston client to become a new, stronger=20 organization." "Once the merger is completed, our new company=20 will be able to offer a broad merchandise selection at, or below,=20 department store sale prices," said Greg Johnson, president and=20 chief executive officer of Waccamaw Corporation. The new company=20 will form the third-largest national chain of fashion home furnishings, high-quality linens for bed and bath, housewares and=20 home d=82cor products. It will operate 117 superstores in 27=20 states. BancBoston Robertson Stephens, the Section 20 subsidiary=20 of BankBoston, acted as the syndicating agent in this tax-free=20 transaction.=20 =20 HOMEPLACE: Plan Becomes Effective; Merger Completed --------------------------------------------------- HomePlace Stores, Inc. announced on June 15, 1999 that its First=20 Amended Joint Plan of Reorganization became effective, bringing=20 about its simultaneous emergence from Chapter 11 and the=20 completion of its merger with The Waccamaw Corporation. The=20 stores will operate under the HomePlace name. Waccamaw CEO Greg=20 Johnson will serve as President and CEO of the new combined=20 chain, and the corporate offices of the new company will be=20 consolidated into Waccamaw's Myrtle Beach headquarters and=20 HomePlace's existing corporate offices in suburban Cleveland will=20 be closed. The merger creates a new combined entity, HomePlace of America=20 Inc., one of the nation's largest home furnishings retailers with=20 117 stores in 27 states and annual sales exceeding $600 million. LOEHMANN'S: Seeks To Reject Certain Unexpired Leases ---------------------------------------------------- The debtor, Loehmann's Inc., seeks entry of an order authorizing=20 the debtor to reject certain unexpired leases of nonresidential=20 real property. The stores covered by the leases are located in=20 West Long Branch, NJ and Philadelphia, PA. The two premises covered by the leases are former sites for=20 Loehmann's stores that are closed. The Philadelphia store has=20 been closed since January, 1999 and the West Long Branch store=20 has been closed since May, 1998. As such stores are not required=20 by the debtor in its operations, the rejection of the leases will=20 eliminate the debtor's obligations of approximately $31,000 per=20 month. NUCENTRIX: Equity Plan For Key Players -------------------------------------- The Nucentrix Broadband Networks, Inc. has registered 900,000=20 shares of common stock of the company in furtherance of it's 1999=20 Share Incentive Plan. The plan is intended to provide incentives=20 which will attract, retain and motivate highly competent persons=20 as non-employee directors, officers, and key employees of, and=20 consultants to, Nucentrix Broadband Networks, Inc. and its=20 subsidiaries and affiliates, by providing them opportunities to=20 acquire shares of the common stock of the company or to=20 receive monetary payments based on the value of such shares. =20 Additionally, the plan is intended to assist in further aligning=20 the interests of the company's directors, officers, key employees=20 and consultants to those of its other stockholders. The plan will be effective as of April 1, 1999, the date on which=20 the plan was adopted by the committee, provided that the plan is=20 approved by the stockholders of the company at an annual meeting=20 or any special meeting of stockholders of the company within 12=20 months of the effective date, and such approval of stockholders=20 shall be a condition to the right of each participant to receive=20 any benefits. Interested parties may read the text of the proposal by accessing=20 http://www.sec.gov/cgi-bin/srch-edgar?0000950134-99-005181on the=20 internet at no charge. NU-KOTE: Objections To Disclosure Statements -------------------------------------------- Hewlett-Packard Company objects to approval of the Creditors'=20 Disclosure Statement. The company says that it objects to those=20 portions of the Disclosure Statement that either mischaracterize=20 or inadequately describe the pending litigation between Nu-kote=20 International, Inc., and Hewlett-Packard. Hewlett-Packard Company also objects to Nu-Kote's Disclosure=20 Statement. The company states that Nu-Kote also mischaracterizes=20 and inadequately describes the pending litigation. Canon Computer Systems, Inc. and Canon USA and Canon Inc. object=20 to both the Creditors' Disclosure Statement and the debtor's=20 Disclosure Statements. Canon states that both the Creditors' and=20 the Debtors' Disclosure Statements fail to provide adequate=20 information and clarification regarding post-confirmation=20 procedures to be employed, pursuant to the Creditors' Joint Plan,=20 to resolve the Canon Litigation; treatment of set-off and=20 recoupment issues likely to arise regarding the various=20 litigation with Canon, Hewlett Packard, and Seiko Epson; and=20 whether the proponents of the Creditors' Joint Plan seek to use=20 the post-confirmation injunctive power of this court to inhibit=20 creditors such as Canon from protecting their intellectual=20 property rights. OKURA & CO: Seeks Approval of Stipulation ----------------------------------------- The debtor, Okura & Co. (America) Inc. seeks approval of a=20 proposed stipulation and order among Okura, the Official=20 Committee of Unsecured Creditors and The Bank of Tokyo- Mitsubishi, Ltd.("BTM") =20 Upon approval of the Stipulation, BTM will have an allowed claim=20 against Okura in the amount of $15,862,767. 40% will be paid in=20 cash, and 60% will be allowed as a general unsecured claim. =20 Releases will be granted among the parties and the previous=20 adversary proceeding will be dismissed. The debtor states that=20 the Stipulation is beneficial to the debtor as it will reduce the=20 amount of BTM's puportedly secured claim against Okura which will=20 result in a greater recovery for general unsecured creditors. ORANGE COUNTY: Settlement With Standard & Poor's ------------------------------------------------ Standard & Poor's has agreed to pay $140,000 to settle a lawsuit=20 in which Orange County accused the rating agency of failing to=20 warn against issuing bonds just before the county declared=20 bankruptcy in 1994. The settlement, announced Tuesday, must be approved by a judge.=20 The county's $2 billion suit against S&P was the last one pending=20 among the county's more than two dozen lawsuits against finance=20 and securities firms, and former financial advisers and lawyers. If approved, the $140,000 would mean that the county has=20 recovered $860.7 million, or more than half of the $1.64 billion=20 it lost in the nation's largest municipal bankruptcy. "The settlement with Standard & Poor's represents the final step=20 necessary to put the litigation surrounding Orange County's=20 bankruptcy to a conclusion," Thomas Hayes, the federal bankruptcy=20 court-appointed overseer, said in a statement. Final court approval was anticipated in about four months. The county had argued that S&P gave its highest ratings to one- year notes and multiyear bonds that the county issued in 1994,=20 just before it declared bankruptcy and that S&P should have=20 warned county officials against issuing the bonds. Standard & Poor's countered that its liability should be=20 determined under federal rather than state law. Federal law=20 limits a defendant's damages to its fair share of the blame,=20 while state law allows individual lawsuits for such =20 claims. The company also said its ratings were protected by the=20 First Amendment. In May, the 9th U.S. Circuit Court of Appeals ruled the county=20 would have to show S&P acted with "actual malice." All of the=20 county's other suits related to its bankruptcy have been=20 settled out-of-court including in December 1998 when U.S.=20 District Judge Gary Taylor approved a total of $703 million in=20 settlements, the largest being $447.7 million from Merrill Lynch=20 & Co. The county filed for bankruptcy protection in December 1994 after=20 it was revealed that risky investments by Treasurer Robert L.=20 Citron on behalf of cities, schools and special districts had=20 lost $1.64 billion. The county emerged from bankruptcy in 1996, but still has $1.3=20 million in debt stemming from the investment losses, Orange=20 County Chief Financial Officer Gary Burton said earlier this=20 month. =20 PARAGON TRADE: Kimberly-Clark Seeks Protective Order ---------------------------------------------------- Kimberly-Clark asserts that the Equity Committee has sought=20 extensive discovery to try to prove that certain patents are=20 invalid. In negotiating with the debtor, Kimberly-Clark stated=20 that if the debtor operated within certain "safe harbors" it=20 would not sue the debtor for infringement of these patents.=20 Kimberly-Clark states that the discovery is enormously burdensome=20 and intrusive. The Equity Committee has failed to follow proper=20 procedure for securing deposition testimony and the company=20 requests that the court quash The Equity Committee's second=20 request for production to Kimberly-Clark relating to the Kimberly=20 Clark settlement. The Equity Committee is trying to establish that the patents are=20 invalid so that the debtor may ignore them. Kimberly-Clark argues=20 that if the patents are valid, the debtor benefits from having a=20 clear path to market that does not risk the accrual of patent=20 infringement damages; and the "safe harbor" provides a clear=20 benefit to the debtor. Kimberly-Clark says that the "safe=20 harbor" provides no downside for the debtor. In the worst case - where the patents are invalid and the debtor's safe harbor is of=20 little value - there would be no reason to disapprove the=20 Settlement Agreement as a consequence, because the safe harbor=20 imposes no harm or cost to the debtor. =20 PCG CORP: Seeks Substantive Consolidation ----------------------------------------- The debtors, PCG Corp I. Et al., seek substantive consolidation=20 of the debtors' chapter 11 cases. The plan of reorganization in=20 these cases is a joint plan by and among each of the debtors. =20 Consolidation will enable the debtors to pool their respective=20 assets and liabilities, and utilize all available cash to=20 effectuate the payments required by the plan. Moreover,=20 consolidation will eliminate any claims that are based upon=20 guarantees or are otherwise duplicative of another claim. =20 The debtors say that consolidation will not adversely affect any=20 creditors based upon the de minimus distribution to be made to=20 general unsecured creditors. Apart from the fact that=20 substantive consolidation will not adversely affect the rights of=20 creditors, there is good reason to grant the relief. Despite the=20 fact that the debtors are nine separate corporations, they argue=20 that they have functioned essentially as a single business=20 operation, with virtually identical officers and directors. The=20 debtors have maintained a centralized cash management system in=20 order to provide the most efficient management and use of cash by=20 its operating generally without regard to corporate separateness. =20 The effect of consolidation will be that for the purposes of the=20 plan, all assets and liabilities of the debtors will be pooled or=20 treated as though they were pooled, and any obligation of any of=20 the debtors will be deemed to be one obligation of the=20 consolidated debtors. Any claims filed against any of the=20 debtors will be deemed one claim filed against the consolidated=20 debtors in the consolidated case. PHILIP SERVICES: Extends Lock-Up Agreement with Lenders ------------------------------------------------------- Philip Services Corp. (TSE/ME: PHV) announced that Philip and its=20 lending syndicate have agreed to extend the date to file Philip's=20 pre-packaged plan of reorganization to June 30, 1999. Philip will=20 file its plan under Chapter 11 of the Bankruptcy Code in the=20 United States and the Companies Creditors Arrangement Act in Canada. Under the terms of the lock-up agreement between Philip and its=20 lending syndicate, the Company's lenders will convert=20 approximately US$1.0 billion of senior secured debt into US$250=20 million of senior secured debt, US$100 million in secured payment=20 in kind notes, and 90 percent of the common shares of the=20 restructured company. Under the proposed plan of reorganization=20 employees, ongoing trade suppliers and clients will remain financially unimpaired and will be paid in the normal=20 course of business throughout the restructuring. Philip has=20 access to proceeds from the sale of assets of US$64 million and=20 expects to have access to an additional US$100 million in debtor- in-possession financing upon filing its plan to meet its ongoing=20 working capital requirements. The extension was required to permit Philip and its lenders to=20 finalize the structural aspects of the restructuring plan and to=20 conclude negotiations with certain unsecured non-trade creditors=20 who would be impaired in the Company's plan of reorganization.=20 The Company will settle these obligations with a combination of=20 unsecured payment in-kind notes and common shares of the=20 restructured company. Common shares issued to settle unsecured=20 creditor claims or class action litigation will reduce the amount=20 of equity available for distribution to existing shareholders.=20 The Company currently anticipates that existing shareholders may=20 retain up to 5% of the shares of the restructured company,=20 although there can be no assurance given in this regard. Philip Services is an integrated metals recovery and industrial=20 services company with operations throughout the United States,=20 Canada and Europe. Philip provides diversified metals services,=20 together with by-product management and industrial outsourcing=20 services, to all major industry sectors. PHP HEALTHCARE: Seeks To Assume and Assign CSC License Agreement ---------------------------------------------------------------- The debtor, PHP Healthcare Corporation ("PHP") agreed to the=20 license of the software provided by Vmark Software, Inc. and CSC=20 agreed to provide support and maintenance services related to=20 such software to be used in the operations of PHP's wholly-owned=20 subsidiary, DC Chartered Health Plan, Inc. DC Chartered has been=20 utilizing the software and related support services since the=20 inception date of the License Agreement. The software and=20 related support services have not been utilized by PHP directly,=20 and are of no use to PHP in its current operations. PHP seeks=20 entry of an order authorizing the assumption of the License=20 Agreement by PHP and the immediate assignment of the License=20 Agreement to DC Chartered. A hearing will be held on June 25,=20 1999 at 2:00 PM. PREMIS CORP: Company To Cease All Operations/Liquidation Pending ---------------------------------------------------------------- In filing its March 31, 1999 financial statements for the year=20 end period Premis Corporation reported 1999 revenues of=20 $5,465,851 with net income of $283,860. For the year ended March=20 31, 1998 revenue was $5,945,378 with a net loss of $2,426,214. As reported elsewhere in this issue Premis Corporation has=20 historically developed, marketed and supported a line of=20 enterprise-wide solutions to meet the information needs of multi- store specialty and general merchandise retailing chains. On May=20 7, 1999, the Board of Directors of the company adopted the plan=20 of liquidation. The company is seeking ratification and=20 approval of the Board's action and the affirmative adoption of=20 the plan of liquidation by the stockholders. The plan of=20 liquidation provides that upon adoption by the stockholders, the=20 company will proceed to liquidate its assets and to dissolve its=20 corporate existence in accordance with Minnesota law. Assuming the plan of liquidation is approved by the stockholders=20 at the annual meeting, Premis indicates the Board of Directors=20 will proceed in the following manner: The company will file a=20 Notice of Intent to Dissolve with the Minnesota Secretary of=20 State. The Board will collect monies owed to the company and=20 sell the company's assets in one or more transactions.=20 The company will pay or provide for payment of all debts and=20 liabilities of the company and all expenses of liquidation and=20 dissolution (to the extent of available funds realized upon the=20 sale of the company's assets plus existing cash on hand). After=20 all assets of the company have been reduced to cash and all=20 creditors' claims have been paid or provided for, and if there=20 then are no pending legal, administrative or arbitration=20 proceedings (or adequate provisions have been made to satisfy any=20 liability arising from such proceedings), the company will=20 distribute all remaining assets (consisting solely of cash) to=20 the stockholders. Following this distribution, the company will=20 file Articles of Dissolution with the Secretary of State of=20 Minnesota and will take any and all other necessary or=20 appropriate actions to dissolve and to terminate the company's=20 existence. In anticipation of the approval of the plan of liquidation,=20 Premis Corporation restructured its operations, including the=20 closing of its Canadian operations during February and March=20 1999. Severance agreements have been signed by all Canadian=20 employees, and the company has provided for all anticipated costs=20 of this closing. Additionally, the company has significantly=20 reduced head count in the United States, and has provided for=20 all related severance agreements. PREMIS CORP: Stockholders To Vote On Sale Of Subsidiary ------------------------------------------------------- Stockholders are being invited to attend the annual meeting of=20 Pemis Corporation to be held at 2:00 p.m., on July 15, 1999, at=20 the Ramada Plaza Hotel, located at 12201 Ridgedale Drive in=20 Minnetonka, Minnesota. The agenda for this year's meeting includes proposals to sell the company's ownership of its subsidiary, PREMIS Systems Canada =20 Incorporated and its OpenEnterprise software to ACA Facilitair=20 BV; to adopt a plan of complete liquidation and dissolution of=20 the company; if the transaction is approved and the second=20 payment under the NCR agreement is recieved, to authorize to the=20 Board to retain up to $1 million, in net proceeds of the=20 liquidation for a period of up to 12 months to identify and=20 secure a business combination which may provide shareholders with=20 additional value; to elect five directors; and to appoint=20 PricewaterhouseCoopers LLP as auditors for the fiscal year ending=20 March 31, 2000. If the transaction is not approved, or if the=20 transaction is approved but is not consummated for any reason,=20 management will implement the plan of liquidation (see=20 additional article in this issue). Following the formal business=20 of the meeting, management of the company will respond to=20 questions from shareholders. PREMIS Corporation, a Minnesota corporation, develops, markets=20 and supports a line of enterprise-wide solutions to meet the=20 information needs of multi-store specialty and general=20 merchandise retailing chains. The company's development efforts=20 have focused on developing leading-edge, industry-specific=20 software systems to collect business information, analyze=20 the collected data and provide timely and meaningful reports to=20 individuals within an organization. The company's information=20 management software systems are designed to assist businesses=20 with the day-to-day management of their operations and long-term=20 strategic planning. Premis' systems, which remain in=20 development, provide retailers with a variety of integrated=20 functions and benefits, such as: point of sale ("POS") data=20 collection, "real time" sales analysis reporting, enterprise=20 inventory tracking, gross margin improvement, increased inventory=20 productivity, improved loss prevention, and on-line enterprise=20 communications by and between stores and corporate offices. On April 20, 1999, Premis and ACA Facilitair BV, a corporation=20 organized under the laws of the Netherlands, entered into a stock=20 purchase agreement, an exclusive software license agreement, and=20 an escrow agreement with a bank in Minneapolis, Minnesota. ACA=20 is a leading supplier of enterprise systems for retailers in the=20 Netherlands. ACA plans to utilize the OpenEnterprise suite of=20 products developed by PSC as product offerings in North America=20 with later introduction in Europe. In accordance with the terms of the stock purchase agreement, ACA=20 agrees to purchase and the company agrees to sell all of the=20 company's shares of its wholly-owned subsidiary, Premis Systems=20 Canada Incorporated. PSC owns the OpenEnterprise software,=20 related customer contracts and maintenance agreements, and rights=20 to the NCR Payment. Sale of the PSC shares is contingent upon=20 approval by the shareholders of the company at the annual=20 meeting. Under the terms of the stock purchase agreement, ACA=20 will purchase the PSC shares for $1,000,000 (US) (which has been=20 deposited in escrow pursuant to the escrow agreement in the form=20 of $100,000 cash and a $900,000 irrevocable direct pay letter of=20 credit), plus an amount equal to the after tax proceeds of the=20 NCR Payment. ACA has operated the business of PSC since April=20 20, 1999 as agreed upon under the terms of the exclusive software=20 license agreement, which was executed simultaneously=20 with the stock purchase agreement. If the shareholders do not approve the sale of the PSC shares,=20 the funds and letter of credit currently held under the escrow=20 agreement will be released in payment of the one-time license fee=20 under the exclusive software license agreement and the exclusive=20 software license agreement will remain in force and effect in=20 perpetuity, absent an event of default giving rise to a right of=20 termination. In the event that the sale of the PSC shares is not=20 approved by the shareholders, Premis Corporation will=20 continue to own the PSC shares (unless subsequently sold) and=20 will retain all rights to receipt of the NCR Payment, if any. RECYCLING INDUSTRIES: Seeks Approval of Sale of Assets -------------------------------------------------------------- The debtors, Recycling Industries Inc., and affiliated debtors=20 seek court authority to sell all of the machinery, equipment,=20 spare parts, tools, furniture, fixtures and vehicles of Nevada=20 Recycling, Inc. to Silver Dollar Salvage, LLC for a purchase=20 price of $2.5 million. A break-up fee of $150,000 is included in=20 the agreement. SCOOP INC: Disclosure Statement in Support of Plan -------------------------------------------------- The purposes of the plan of Scoop, Inc. are twofold; distributing=20 to creditors the cash in the estate as of the Effective Date and=20 providing to the Equity Security Holders Interests in the=20 Reorganized Debtor pursuant to the provision of the InfiniCom=20 Stock Agreement. The debtor estimates that approximately $3,743,671 in general=20 unsecured claims will be asserted against the estate. The debtor=20 estimates that it will have approximately $1,558,000 available to=20 it to distribute to creditors. The debtor estimates about=20 $550,000 in priority claims, most of which the debtor disputes. The debtor's assets have already been liquidated. Through the=20 SMS Asset Sale and the SIS Asset Sale, the debtor's assets both=20 tangible and intangible have been converted into cash. Pursuant=20 to the plan, the debtor's corporate shell is effectively being=20 liquidated in accordance with the terms of the InfiniCom Stock=20 Agreements. The debtor believes that creditors' recovery on their allowed=20 claims will be maximized through the reorganization of the=20 debtor's financial affairs rather than through any Chapter 7=20 liquidation proceeding. If the debtor's case were converted to=20 a Chapter 7 liquidation proceeding, InfiniCom would have no=20 interest in acquiring the debtor's stock and would terminate the=20 InfiniCom Stock Agreement, thereby depriving the creditors of up=20 to a $225,000 recovery on their allowed general unsecured claims=20 (estimated to be approximately a 18% recovery. SCOOP INC: Hearing Regarding Disclosure Statement ------------------------------------------------- The hearing to consider approval of the proposed Disclosure=20 Statement of Scoop, Inc. will be held on July 16, 1999 at 2:30 PM=20 before the Honorable Robert W. Alberts, US Bankruptcy Judge, in=20 Courtroom 6C of the US Bankruptcy Court, located at 411 West=20 Fourth Street, Santa Ana, California. SOURCEONE WIRELESS: Seeks Extension To Assume or Reject Leases -------------------------------------------------------------- The debtor, SourceOne Wireless, Inc. seeks an extension of time=20 for assumption or rejection of unexpired leases of nonresidential=20 real property. The debtor is lessee under approximately 85 Tower Leases and also=20 a lessee under four separate leases of real property. =20 The debtor needs the assurance in the case of both kinds of=20 leases that the leases will remain in effect long enough to allow=20 potential purchasers to conduct due diligence of the debtor,=20 including determining which real estate leases, if any, to assume=20 as part of any sale or sales. The debtor requests that the court=20 enter an order extending the deadline for assuming or rejecting=20 the leases to August 26, 1999. TEXFI INDUSTRIES: Troublesome Events Continue To Vex Company ------------------------------------------------------------ Net sales for the thirteen weeks ended January 29, 1999 decreased=20 to $27,192,000 as compared to net sales of $41,776,000 for the=20 thirteen weeks ended January 30, 1998 for Texfi Industries Inc.=20 Losses were up for the 1999 period to $2,600,000 from $897,000 in=20 1998. Earlier reports in this Reporter cited the violations the company=20 experienced in its credit and loan facility debt service coverage=20 ratio, and minimum capital funds requirement. A forbearance=20 agreement was secured by Texfi through May 28, 1999. The company=20 was also delinquent on certain real property taxes and equipment=20 operating leases. On May 28, 1999, the company negotiated an additional amendment=20 to the forbearance agreement and a third amendment to the loan=20 agreement. The amendment reduced the credit facility from $40.0=20 million to $30.0 million, revised the period end EBITDA financial=20 requirements, limited borrowing base availability on specific in- house trade accounts receivable customers, and increased=20 applicable interest rate margins. The amendment extends the initial forbearance period by 120 days=20 through September 28, 1999. The extension period is separated=20 into two sixty day periods, each contingent upon the company=20 raising an additional $1.0 million in subordinated financing. The=20 first extension period runs through July 28, 1999 dependent upon=20 the May 28, 1999 receipt of $1.0 million in cash, representing=20 the net proceeds of a subordinated loan made by MAI. In=20 addition, the amendment required that the net proceeds from this=20 MAI subordinated loan similarly be applied to the revolving=20 credit line and the company is prohibited from payment of=20 interest or principal on either MAI subordinated loan. Subsequent to year-end, Texfi failed to make the February 1, 1999=20 interest payment due on the 8-3/4% Debentures which approximated=20 $1.5 million, make the April 1, 1999 interest payment due on the=20 Series C Debentures which approximated $153,000, and honor the=20 approximately $1.5 million in Series C Debentures put to the=20 company for redemption at the option of Series C=20 Debenture holders. In earlier editions we reported that in May 1999 certain=20 executive officers and entities affiliated with those officers=20 sold their combined interest, representing 23% of the common=20 stock of the company, to Whitecross Ltd., a Bahamas holding=20 company. In conjunction therewith, Mr. Richard L. Kramer=20 resigned as a director and Chairman of the Board of Directors. In=20 addition, Mr. William L. Remley resigned as Chief Executive=20 Officer, director, and Vice Chairman of the Board. The Board=20 named Mr. Andrew J. Parise, Jr. as Chairman of the Board of=20 Directors and Chief Executive Officer in addition to his=20 responsibilities as President and Chief Operating Officer. THORN APPLE: Creditors give Debtor Until July For Plan or Sale -------------------------------------------------------------- Thorn Apple Valley Inc. and its official committee of unsecured=20 creditors reached a stipulation regarding a plan of=20 reorganization and sale of its assets. Currently, the meat=20 processor is in an "intense period of negotiation" with potential=20 purchasers and investors, according to an attorney working on the=20 case. The overriding issue in the case is whether Thorn Apple=20 Valley formulates a plan or decides to sell substantially all of=20 its assets. Under the terms of the agreement with the committee,=20 reached late last month, the absence of a plan or sale by June 30=20 constitutes a default on Thorn Apple Valley's loans. In return,=20 the committee withdrew a motion to terminate exclusivity and=20 further agreed not to oppose Thorn Apple Valley's request to=20 extend the exclusive period for 30 days. (The Daily Bankruptcy=20 Review and ABI; June 16, 1999) ********** The Meetings, Conferences and Seminars column appears=20 in the TCR each Tuesday. Submissions via e-mail to=20 conferences@bankrupt.com are encouraged. =20 Bond pricing, appearing in each Friday edition of the TCR,=20 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 =20 Troubled Company Reporter is a daily newsletter, co- published by Bankruptcy Creditors' Service, Inc.,=20 Princeton, NJ, and Beard Group, Inc., Washington, DC. =20 Debra Brennan, Yvonne L. Metzler and Lexy Mueller, Editors.=20 Copyright 1999. All rights reserved. ISSN 1520-9474. =20 This material is copyrighted and any commercial use, resale=20 or publication in any form (including e-mail forwarding,=20 electronic re-mailing and photocopying) is strictly=20 prohibited without prior written permission of the=20 publishers. =20 Information contained herein is obtained from sources=20 believed to be reliable, but is not guaranteed. =20 =20 The TCR subscription rate is $575 for six months delivered=20 via e-mail. Additional e-mail subscriptions for members of=20 the same firm for the term of the initial subscription or=20 balance thereof are $25 each. For subscription=20 information, contact Christopher Beard at 301/951-6400. =20 =20 * * * End of Transmission * * *