/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/990816.MBX T R O U B L E D C O M P A N Y R E P O R T E R Monday, August 16, 1999, Vol. 3, No. 157 Headlines ABLE CUSTOM YACHTS: Files For Protection From Creditors AMPACE CORP: Seeks Extension of Exclusivity BMJ MEDICAL: Seeks Approval of Settlement With Boca Raton BMJ MEDICAL: Seeks Sale of Bakersfield Surgery Center BMJ MEDICAL: Seeks Sale of Lake Tahoe Surgery Center BUILDERS TRANSPORT: Compromise Settlement and Agreement CHERRYDALE FARMS: Hearing To Consider Disclosure Statement CONXUS COMMUNICATIONS: Panel Seeks Documents and Depositions CRIIMI MAE: Fitch IBCA Affirms Rating of Certificates DAEWOO: U.S. Investment Firm to Purchase Assets for $3.2 Billion DEVLIEG-BULLARD: Final Order Authorizing Financing EDC DESIGNS: Kentucky Furniture Store Files Chapter 11 FEDCO: Seeks Extension of Time To Assume/Reject Leases GENEVA STEEL: Executives Expect Part Of Government Loans GENEVA STEEL: Moves On HIsmelt Plan GULF STATES STEEL: Debtor Taps Professionals LIVENT: Former Employee Agrees to SEC Settlement LOEWEN: Bankruptcy Generates Work For Bingham Dana LOEWEN: Reports Second Quarter Results NEUROMEDICAL SYSTEMS: Order Authorizes Retention Consultants NEUROMEDICAL SYSTEMS: Extension of Exclusivity PRINCETON HOSPITAL: Workers Still Awaiting Checks RENAISSANCE COSMETICS: Taps Mills Potoczak As Tax Accountants SERVAL CORP: Files For Protection Under Canadian Bankruptcy Law SERVICE MERCHANDISE: Fitch IBCA Affirms Rating SOURCEONE WIRELESS: Proposed Sale of Assets STARTER CORP: Committee Objects To Extension of Exclusivity TIRE WAREHOUSE: Seven Operations Sold At Bankruptcy Auction UNITED COMPANIES: Equity Taps Saul, Ewing as Local Counsel ********** ABLE CUSTOM YACHTS: Files For Protection From Creditors ------------------------------------------------------- The boat-building company, also known as Trenton Marine Inc., owes $ 252,753.62, according to papers filed in U.S. Bankruptcy Court in Bangor last month. The company produces semicustom and custom powerboats and sailboats, which vary in interior arrangements, deck layouts and engine details. The business has been based in Trenton since 1991, said the company's general manager, Rupert Lyle. Locally, the company owes $ 16,564.25 to Hancock County in back rent for property the company leases near the Hancock County-Bar Harbor Airport; $ 13,269.10 to C.W. Paine Yacht Design in Camden; and $ 2,670.58 to Acadia Sails in Southwest Harbor. Other debts range from $ 61,000 owed to a Florida resident to about $ 3,100 to Sailing magazine in Wisconsin. Trenton Marine is drafting a deal with a company associated with Southwest Harbor-based Morris Yachts Inc., stating an expression of intent to buy Trenton Marine's assets. A federal bankruptcy judge in Bangor will evaluate the merits of any objections about the sale and eventually decide whether to approve it, possibly within two months. Able Custom Yachts builds three production boats, including Able 42, a sailboat, 36-foot Wolf-class powerboats, and an Apogee 50 sailboat. Able Custom Yachts hopes to continue to manufacture custom-made power boats and sailboats with its 35 employees. AMPACE CORP: Seeks Extension of Exclusivity ------------------------------------------- The debtors, Ampace Corporation and Ampace Freightlines, Inc. seek an extension of the exclusive period during which the debtors may file a plan of reorganization and solicit acceptances thereof. A hearing on the motion is scheduled for September 15, 1999 at 9:30 AM before the Honorable Peter J. Walsh, US Bankruptcy Court for the District of Delaware, Wilmington. The debtors have been involved in the negotiation of an amended plan and Disclosure Statement that incorporate the terms of the proposal from Blackwater Capital Partners II, LP for the purchase of the common stock of Ampace Corporation. The Disclosure statement hearing has been continued until August 18, 1999, and the debtors anticipate that they will file the plan no later than August 16, 1999. Because of the delay resulting from the negotiations with Blackwater and the Committee, the debtors will not be in a position to seek acceptances of the Amended Plan prior to the August 12, 1999 expiration of the debtors' solicitation period. The debtors seek an extension of the Solicitation Period for 60 days, through and including October 11, 1999. BMJ MEDICAL: Seeks Approval of Settlement With Boca Raton --------------------------------------------------------- BMJ Medical Management, Inc. seeks approval of a settlement agreement with Boca Raton Orthopedic Group, Inc. and authorization to reject a management services agreement and sale of related assets, assumption and assignment of related lease and rejection of a lease. The Settlement Agreement with Boca Raton Orthopedic Group provides for an integrated set of transactions: Termination of the management services agreement, Transfer to BROG Medical Group of the title to accounts receivable, rejection of a real property lease, and execution of releases. The debtor will receive a cash payment of $2.92 million, cancellation of BMJ's obligation to issue any shares of capital stock in connection with the Stock Purchase Agreement, release of claims and a right to 50% of any consideration in excess of $2.92 million received by BROG Medical Group and the Physicians for the sale of capital assets or intangibles within 12 months from the Closing Date. BMJ MEDICAL: Seeks Sale of Bakersfield Surgery Center ----------------------------------------------------- A certain limited partnership, Surgical Associates of Bakersfield, (SAB) of which BMJ of Bakersfield, Inc. is general partner, operates the Kern Surgery Center in Bakersfield, California. BMJ owns all of the outstanding equity interests in BMJ of Bakersfield, Inc. SAB entered into an Asset Purchase Agreement with Millennium Surgery Center which provides for Millennium to acquire substantially all of the assets related to the Surgery Center for $400,000. BMJ MEDICAL: Seeks Sale of Lake Tahoe Surgery Center ---------------------------------------------------- BMJ has entered into an Acquisition Agreement with ProMedCo Management Company which provides for ProMedCo of Northern Nevada, Inc. to acquire the assets related to the Lake Tahoe Surgery Center. The purchase price is $5.035 million, payable in not less than $4 million in cash. BMJ has determined that retaining the assets, all of which are located in or relate to operations in Nevada where BMJ has no other operations does not provide the best long-term value to its estates and creditors. BMJ and its financial advisor conducted an extensive marketing campaign for the assets. BUILDERS TRANSPORT: Compromise Settlement and Agreement ------------------------------------------------------- The debtors, Builders Transport, Inc. et al. seek approval of a compromise stipulation and agreement. The agreement provides allowance of a claim against the estate of Builders Transport, Inc. which is entitled to administrative expense priority in the amount of $150,000. Associates can pursue its application for allowance of administrative expense claims in the sum of approximately $3.2 million. CHERRYDALE FARMS: Hearing To Consider Disclosure Statement ---------------------------------------------------------- Cherrydale Farms, Inc. et al., debtors, filed a plan of orderly liquidation. A hearing to consider approval of the Disclosure Statement shall be held before the Honorable Peter J. Walsh at the US Bankruptcy Court for the District of Delaware, Marine Midland Plaza, 824 Market Street, 6th Floor, Wilmington at 3:00 PM on September 22, 1998. CONXUS COMMUNICATIONS: Panel Seeks Documents and Depositions ------------------------------------------------------------ Conxus Communications Inc.'s official committee of unsecured creditors is seeking an order requiring Motorola Inc. to produce documents and submit to requests for depositions. "Viewed in the context of the sweeping releases to be awarded to Motorola under the Final DIP Financing Order, the committee's request is not unduly burdensome and the extremely limited discovery to which Motorola would consent is patently inadequate," the panel's August 4 motion argues. The narrowband PCS network developer received approval on July 1 of a $17 million debtor-in-possession (DIP) credit agreement with Motorola as well as permission to use cash collateral of pre-petition lenders Chase Manhattan Bank and Glenayre Electronics Inc. (The Daily Bankruptcy Review and ABI Copyright c August 13, 1999) CRIIMI MAE: Fitch IBCA Affirms Rating of Certificates ----------------------------------------------------- First Union-Lehman Brothers Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 1997-C1, $ 165.2 million class A-1, $ 318.0 million class A-2, $ 395.8 million class A-3, and interest-only class IO are affirmed at 'AAA' by Fitch IBCA. In addition, the $ 78.3 million class B is affirmed at 'AA', the $ 71.8 million class C at 'A', the $ 71.8 million class D at 'BBB', the $ 19.6 million class E at 'BBB-' and the $ 71.8 million class F at 'BB'. The $ 13.1 million class G, $ 26.1 million class H, $ 13.1 million class J, and the $ 26.1 million class K certificates are not rated by Fitch IBCA. The affirmations follow Fitch IBCA's annual review of the transaction, which closed in April of 1997. The certificates are collateralized by 276 fixed rate multifamily and commercial mortgage loans. As of the July 1999 distribution date, the pool's aggregate certificate balance declined by 2.7%, from $ 1.31 billion at closing to $ 1.27 billion. Four loans have paid off since closing. One loan, representing 0.6% of the pool's unpaid principal balance, is 30 days delinquent. A total of nine loans (2.97%) are specially serviced by CRIIMI MAE Services, L.P. (CRIIMI MAE). Seven of these specially serviced loans (1.7%) are 90 days delinquent; they include six loans (1.6%), collateralized by properties where Service Merchandise is either a sole or major tenant. Service Merchandise Co. (NYSE: SME) filed for Chapter 11 bankruptcy protection on March 27, 1999. The borrower, a wholly owned subsidiary of Service Merchandise Co., also declared Chapter 11 bankruptcy. CRIIMI MAE, the special servicer, is currently negotiating with Service Merchandise Co. regarding possible resolution. Of the six stores in this pool, Service Merchandise Co. has closed only its Buffalo, NY location. It is under a contract for sale, subject to approval by bankruptcy court. Service Merchandise Co. has not announced plans to close any of the remaining stores. CRIIMI MAE collected year-end 1998 property financial statements for 170 loans, representing 72% of the pool's unpaid principal balance. Outstanding advances total $ 2.5 million. A total of seven loans, representing 1.4% of the pool balance, had a year- end 1998 debt service coverage ratio below 1.0 times. A stress scenario was applied whereby loans identified as potential problems were assumed to default. Under this stress scenario, subordination levels would be approaching those at closing and justify the rating actions. Fitch IBCA will continue to monitor this transaction, as surveillance is ongoing. DAEWOO: U.S. Investment Firm to Purchase Assets for $3.2 Billion ---------------------------------------------------------------- Walid Alomar & Assoc., a U.S. investment firm, has agreed to purchase some assets and operations of South Korea's Daewoo Electronics, a subsidiary of Daewoo Group, to the tune of US$3.2 billion, according to Reuters. Previously, creditors had rescued the Daewoo Group from bankruptcy last month in exchange for US$8.3 billion in collateral, but Daewoo and the creditors were still working on how Daewoo Group should be restructured. Daewoo and Walid signed a preliminary agreement on July 9, but the deal is scheduled to be finalized on September 9, pending the approval of Daewoo's creditors and shareholders. Daewoo Electronics president said that Walid Alomar, son of a former Saudi Arabian minister, had agreed to take over Daewoo's sales networks and plants, valued at more than US$3 billion, and that Daewoo would use the proceeds from the sale to redeem its liabilities, which were valued at US$4.8 billion at the end of June. Alomar formed New Daewoo Electronics (New DEC) on August 6. (ABI 13-Aug--99) DEVLIEG-BULLARD: Final Order Authorizing Financing -------------------------------------------------- The US Bankruptcy Court for the Northern District of Ohio entered an order authorizing the debtor, Devlieg-Bullard, Inc. to obtain secured post-petition financing on a super priority basis under a commitment of $30 million under an agreement among The CIT Group/Business Credit, Inc., BNY Factoring, LLC any additional financial institutions which become parties to that Credit Agreement and CITBC, as agent, in the form of guaranties, in respect of Letters of Credit issued for the debtor's account and for the debtor to execute an agreement with respect to the post petition financing and revolving loan promissory notes and term loan promissory notes. EDC DESIGNS: Kentucky Furniture Store Files Chapter 11 ------------------------------------------------------ EDC Designs Inc., which operated as The Best of Heleringer's, a furniture retailer in Middletown, Ky., filed chapter 11 in the U.S. Bankruptcy Court for the Western District of Kentucky in Louisville on July 30, Business First reported. EDC's attorney, Robert W. Adams III, said that a deal could soon be completed with a Northeast inventory company, enabling the store to reorganize under new management. The retailer's liabilities exceed $1 million and its assets are between $50,000 and $1 million. The furniture chain itself, owned by John Heleringer and other partners, filed for bankruptcy in October 1996. (ABI 13-Aug-99) FEDCO: Seeks Extension of Time To Assume/Reject Leases ------------------------------------------------------ The debtor, Federal Employees' Distributing Company, d/b/a FEDCO, Inc. seeks an extension of time until the earlier of December 31, 1999 or the effective date of its reorganization plan, whichever is earlier to assume or reject its unexpired leases of nonresidential real property. The 60-day initial period expires on September 7, 1999. The hearing on the debtor's disclosure statement is not scheduled until September 15, 1999, and if approved, the confirmation hearing will not occur until late October or November, 1999. The debtor will not be able to determine by September 7, 1999 whether it will assume or reject the unexpired leases. If the unexpired leases are deemed rejected and the debtor forced to surrender its leased properties, it would be unable to consummate the Dayton Hudson Agreement and would, potentially, forfeit the anticipated $119.5 million in proceeds. GENEVA STEEL: Executives Expect Part Of Government Loans -------------------------------------------------------- Geneva Steel Co.'s executives expect to get part of the $ 1.5 billion in guaranteed loans the federal government is offering beleaguered steel, oil and natural gas companies to help industries rocked by low prices. Geneva President Joe Cannon and Vice President Ken Johnsen met face-to-face with President Clinton and other Cabinet heads last week to discuss specific ways to help resuscitate stagnant domestic steel companies. Geneva, which filed for Chapter 11 protection last year, must still get a loan from the private sector to solve its financial woes. But the federal government's recent aid package would guarantee any loans for as little as $ 25 million and as much as $ 250 million. Johnsen characterized the government's action as a "credit enhancer that allows companies who might be denied a loan to receive a loan." "That obviously makes it much easier to obtain financing," he said. Johnsen said he is "very confident" Geneva meets the condition for a loan that the company be "in a financially distressed position." The House of Representatives and the U.S. Senate have passed the steel aid package. The bill now awaits Clinton's signature. Johnsen said any money Geneva receives would go toward Geneva's climb from bankruptcy. GENEVA STEEL: Moves On HIsmelt Plan ----------------------------------- According to a report in Coal Outlook, July 26, 1999, Geneva Steel still plans to install a $1 billion facility using the HIsmelt direct-reduction steel process. That facility could use cheap, non-metallurgical coal available in Utah in the production of steel. Geneva currently has to bring in by train expensive met coal from Pennsylvania for its coking facilities. The HIsmelt unit would produce 3,000 metric tons/day of liquid metal. The U.S. Dept. of Energy, which would put up $150 million of the project cost, hosted a public "scoping" meeting on the project in Utah on July 15. An environmental impact statement on the project is being prepared. A first draft of the EIS should go up for public comment next spring, with a final EIS issued by fall 2000. Design and permitting work is underway and should be complete by December 2000. Geneva and DOE hope to get the facility built by 2003. GULF STATES STEEL: Debtor Taps Professionals -------------------------------------------- The debtor, Gulf States Steel, Inc. of Alabama applied for two separate orders authorizing the retention of Ernst & Young LLP as accountants for the debtor and authorizing the retention of Lazard Freres & Co., LLC as the debtor's investment banker. The Official Committee of Noteholders requests authorization to retain Stroock & Stroock & Lavan LLP as its counsel effective as of July 1, 1999 and to approve retention of Najjar Denaburg, PC as local counsel. The Committee seeks to retain Houlihan, Lokey Howard & Zukin as financial advisors. LIVENT: Former Employee Agrees to SEC Settlement ------------------------------------------------ A former corporate secretary and former counsel for bankrupt theater production company Livent Inc. of Canada agreed to settle allegations made by the Securities and Exchange Commission (SEC) that he participated in an attempt by Livent's top executives to manipulate the company's financial results, The Wall Street Journal reported. Although he did not admit any wrongdoing as a term of the settlement, Jerald M. Banks agreed to pay a $25,000 fine and be barred from practicing or appearing before the SEC as an attorney for five years. Banks is Livent's sixth former employee to settle with the SEC over allegations that the company inflated its earnings by hiding expenses and improperly recording revenue. According to the SEC, Banks's part in the scheme involved negotiating, drafting and finalizing three secret agreements to transactions that allegedly generated revenue for Livent, and that the scheme made Livent's financial situation look better than it actually was. Livent itself, which produces such Broadway shows as "Ragtime" and "Fosse," settled SEC allegations in January via a cease-and-desist order after new management found irregularities in the company's accounting records. Livent filed for bankruptcy in November and has agreed to sell most of its assets to SFX Entertainment Inc. (ABI 13-Aug- -99) LOEWEN: Bankruptcy Generates Work For Bingham Dana -------------------------------------------------- The Connecticut Law Tribune reports on August 2, 1999 that The Chapter 11 case of The Loewen Group, Inc. is likely the most voluminous bankruptcy filing in U.S. history. In June, The Loewen Group Inc., based in Vancouver, British Columbia, commenced bankruptcy proceedings both in the United States and in Canada. The simultaneous filing of roughly 870 bankruptcy petitions in U.S. Bankruptcy Court in Delaware, where the case is pending, generated an unheard of $750,000 in filing fees, according to Evan D. Flaschen, a partner in Bingham Dana's Hartford office. Just printing out all the receipts took the court two hours, says Flaschen, who, along with other lawyers at the Boston-based firm, is representing the official committee of unsecured Loewen creditors. The Loewen Group Inc. owns or operates more than 1,100 funeral homes and more than 400 cemeteries across the United States, Canada and the United Kingdom. In a statement, Loewen Chairman John S. Lacey says filing for Chapter 11 will enable Loewen to restructure its debt and implement a new business plan. Lacey attributes the company's financial woes, in part, to its recent focus on acquiring cemeteries rather than expanding its funeral home operations, which he calls "our most profitable, core assets." As of March 31, Loewen and its subsidiaries had approximately $4.5 billion in assets and $3.6 billion in liabilities, making its Chapter 11 case the largest bankruptcy filing so far this year, Flaschen contends. The company, he says, projects that its restructuring will take between 12 and 18 months to complete. Also representing the creditors committee are: partners William E. Kelly, Gregory W. Nye and Ronald J. Silverman, counsel Judith H. Friedman, and associates Anthony J. Smits and Anna M. Gustafson, all of Bingham's Hartford office. (All of them joined Bingham through its recent merger with what was Hartford's Hebb & Gitlin.) Bingham Boston-based partners Donald-Bruce Abrams and John S. Brown, and Peter D. Schellie, a partner in the firm's Washington, D.C. office, are also taking part in the effort. Handling the Chapter 11 case for the debtors are partners Richard M. Cieri, Paul E. Harner and Robert J. Graves, and associate Charles M. Oellermann, of Cleveland-based Jones, Day, Reavis & Pogue. In addition, partners Eric A. Henzy, Robert U. Sattin and Bruce M. Lutsk, of Hartford's Reid and Riege, are counsel to State Street Bank & Trust Co. in Hartford, which, as the indentured trustee, represents all of the Loewen's bondholders. LOEWEN: Reports Second Quarter Results -------------------------------------- The Loewen Group Inc. (NYSE: LWN), (Toronto: LWN), (ME: LWN), announced revenues for the second quarter ended June 30, 1999, of $264.1 million, compared to approximately $280.0 million in the same period last year after excluding the 124 cemeteries sold on March 31, 1999. After providing for $67.2 million of mainly non- cash reorganization charges relating to the Company's June 1, 1999 Chapter 11 and Companies' Creditors Arrangement Act (CCAA) filings, and two non-operating charges totaling $28.6 million, the net loss for the second quarter of 1999 was $105.3 million or [1.44) per share. Earnings from operations before impairment charges were $28.4 million in the second quarter of 1999, compared to $51.2 million for the same period last year, principally as a result of lower sales and higher costs in the Company's cemetery and pre-need funeral divisions. Funeral home revenues for the quarter were $149.6 million, a slight decrease of 1.0 percent from $151.2 million in the second quarter of 1998 due to lower pre-need funeral sales and other revenue. Approximately 39,000 funerals were performed in the quarter, an increase of 1,200 over the same period last year. On a same store basis, the number of funerals performed in the second quarter of 1999 was down 2.0 percent. Same store costs increased by 0.8 percent, and gross margins decreased to 33.4 percent compared to 36.8 percent in Q2 1998. Second quarter cemetery revenues were down 27.3 percent to $90.6 million, compared to $124.5 million in Q2 1998. This reflects the sale of 124 cemeteries on March 31, 1999 and the Company's previously announced reduction and restructuring of its pre-need sales program. Cemetery costs included approximately $3.8 million of additional environmental and marketing costs. These factors reduced cemetery gross margins to 20.2 percent from 26.6 percent for the same period last year. "During the past few months," Mr. Lacey added, "our efforts have been focused on maintaining a high level of service for our customers during the reorganization process. While we are working on our restructuring plan, we are also mindful of the needs of our day-to-day operations. By securing $200 million in DIP financing with First Union National Bank in June, we are able to properly fund operations and continue serving our customers with the attention they deserve." "Although reorganization is a difficult process for the Company, we believe that we are making good progress with the plans to reorganize the Company. We are working hard towards removing both financial and operational hurdles which have impeded the Company for the past few years," Mr. Lacey concluded. The Company's reorganization plan to be submitted to the Courts will address the primary objectives of improving the Company's balance sheet, reducing and restructuring debt, decreasing overhead, enhancing funeral and cemetery operations, and achieving greater accountability for cemetery profitability and cash flow. The non-operating charges comprised a $15.1 million pre-tax asset impairment charge related to two cemeteries considered probable for sale and a $13.5 million loss on the sale of 124 cemeteries and three funeral homes on March 31, 1999 for gross proceeds of $193 million. The loss recorded in the second quarter reflects the final adjustments of the net book values, sale proceeds and other adjustments contained in the sales agreement. The $67.2 million in reorganization costs arising from the filing of Chapter 11 and CCAA included non-cash charges of $27.2 million in executory contracts submitted for rejection, $21.7 million in deferred debt issue costs written off, and a provision for a $9.8 million option liability in connection with the PATS senior notes. On June 1, 1999, the Company filed for protection under Chapter 11 in the United States. The Company and its subsidiaries are operating their businesses as debtors-in-possession (DIP). The bankruptcy petitions provide an opportunity to re-examine and begin implementing the Company's revised strategies while working to restructure its indebtedness. As a result of the Chapter 11 and CCAA filings, no principal or interest payments will be made on most pre-petition date US debt obligations without Court approval or until a plan of reorganization providing for the repayment terms has been submitted and confirmed by the Courts and has become effective. Interest on unsecured and undersecured pre-petition date debt obligations subject to compromise has not been accrued after the petition date. Interest expense and principal payments will continue to be recorded on most secured vendor financing, including capital lease obligations, unless the leases are rejected by the debtors. Revenues for the six months ended June 30, 1999 were $574.9 million, compared to $611.7 million in the same period last year. Inclusive of non-recurring charges from Q2, net loss for the first half of 1999 was $98.4 million or [1.38) per share. For the six-month period, funeral home revenues were $325.1 million, a slight increase from $322.8 million last year. Approximately 85,000 funerals were performed, an increase of 2,100 over the same period last year. On a same store basis, revenue per service performed was up 0.3 percent while the number of funerals was down 2.3 percent compared to the six month period last year. Same store costs decreased by 0.6 percent. Funeral home gross margins decreased to 38.0 percent compared to 39.7 percent in first half 1998. Cemetery revenues for the first half of 1999 were down 15.7 percent to $202.2 million, compared to $239.8 million in 1998. Cemetery gross margins declined to 24.0 percent for the six months versus 29.3 percent for the same period last year due to the sale of 124 cemeteries on March 31, 1999, the Company's previously announced reduction and restructuring of its pre-need sales program, and additional environmental and marketing costs. The Company's attached unaudited interim consolidated statement of operations has been prepared on a going concern basis in accordance with Canadian generally accepted accounting principles. The going concern basis of presentation assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. As a result of the Chapter 11 and CCAA proceedings and circumstances relating to this event, including the Company's debt structure, recent losses and negative cash flow, such realization of assets and discharge of liabilities are subject to significant uncertainty. The unaudited interim consolidated financial statements do not reflect adjustments that would be necessary if the "going concern" basis was not appropriate. If the "going concern" basis was not appropriate for these unaudited interim consolidated financial statements, then significant adjustments would be necessary in the carrying value of assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used. Additionally, the amounts reported could materially change because of a plan of reorganization, since the reported amounts in these interim consolidated financial statements do not give effect to adjustments to the carrying value of the underlying assets or amounts of liabilities that may ultimately result. The appropriateness of the "going concern" basis is dependent upon, among other things, confirmation of a plan of reorganization, future profitable operations, the ability to comply with the terms of post-petition date $200 million DIP financing and the ability to generate sufficient cash from operations and financing arrangements to meet obligations. The Company's Common shares are traded on the New York Stock Exchange (NYSE), The Toronto Stock Exchange and the Montreal Exchange. On August 10, 1999, the NYSE notified the Company that the Company had fallen below a new continued listing criterion requiring a minimum share price of $1 over a 30-day trading period. The Company has until January 25, 2000 to satisfy the criterion. The NYSE also stated that it will continue to monitor the Company's financial condition during this period and will immediately suspend trading if the NYSE receives authoritative advice that the Common shares have no value, the Common shares are cancelled, the Company announces any material adverse news or the Company's financial condition further deteriorates. Based in Vancouver, The Loewen Group Inc. owns or operates more than 1,100 funeral homes and more than 400 cemeteries across the United States, Canada, and the United Kingdom. The Company employs approximately 13,000 people and derives approximately 90 percent of its revenue from its U.S. operations. NEUROMEDICAL SYSTEMS: Order Authorizes Retention Consultants ------------------------------------------------------------ The US Bankruptcy Court for the District of Delaware entered an order on July 30, 1999 authorizing the debtor, Neuromedical Systems, Inc., to retain Brent I. Kugman and Associates as management consultants to the debtor. NEUROMEDICAL SYSTEMS: Extension of Exclusivity ---------------------------------------------- The US Bankruptcy Court for the District of Delaware entered an order on July 30, 1999 granting the debtor, Neuromedical Systems, Inc., an extension of its exclusive period to file a plan by fifty days, to and including September 13, 1999 and granting an extension of its exclusive period to solicit acceptance of a plan until November 11, 1999. PRINCETON HOSPITAL: Workers Still Awaiting Checks ------------------------------------------------- Roughly 20 former employees of the bankrupt Princeton Hospital, Orlando, Fla., attended bankruptcy court on Tuesday in the hopes of finding out when they might get paid, according to The Orlando Sentinel. U.S. Bankruptcy Judge Arthur Briskman told the former employees that they most likely would not get paid before September 1, when the hospital is scheduled to be auctioned, but that even then, some employees won't see any money. "There's not going to be money for everybody," Judge Briskman said. "That's just the nature of the beast." The hospital filed chapter 11 in January, listing assets of $25 million and debts of $60 million. It closed its doors on July 29 when hospital officials said it didn't have the $650,000 needed to cover payroll and operating expenses through September 1, leaving many of the hospital's workers scrambling to collect paychecks. (ABI 13-Aug-99) RENAISSANCE COSMETICS: Taps Mills Potoczak As Tax Accountants ------------------------------------------------------------- The debtors, Renaissance Cosmetics, Inc., et al. seek an order authorizing the employment and retention of Mills Potoczak & Company as tax accountants for the debtors. Specifically, the firm will prepare and file various Federal, state and local tax returns for the debtors. The debtors propose to provide the firm with a $10,000 retainer against which the firm's fees and expenses will be charged. SERVAL CORP: Files For Protection Under Canadian Bankruptcy Law --------------------------------------------------------------- Serval Corp. has filed for protection under the Companies' Creditors Arrangement Act, meaning that in the short term creditors owed $62-million cannot take any action to enforce their claims. The company is another victim of reduced drilling in 1998 and in the first quarter of this year because of cheap crude prices. Ken Baker, senior vice-president and chief operating officer, said $26-million was owed to secured creditors, while $36-million was due to unsecured creditors. He estimated the worth of Serval's assets at $62-million. The company intends to file a re-organization proposal with the Court of Queen's Bench in Alberta within 90 days. It is looking at several restructuring options, including the sale of some divisions and non-core assets. The court appointed KPMG Inc. as monitor to oversee the daily cash management of the firm, which has a staff of about 200. Last year's prolonged slump in oil prices, which tumbled to $12 (US) a barrel, drastically cut the number of wells drilled in Canada, key to the health of firms such as Serval. Many producers were also slow to pay their bills as they struggled with ballooning debt loads and falling cash flow. The lethal combination caused a number of service firms to go under or be taken over by rivals. Fracmaster Ltd., for example, sought CCAA protection in March after being unable to pay $134- million owed to its banks and trade creditors. It was eventually sold to BJ Services Co. of Houston for $80-million. Serval took action earlier this year to improve its financial status. It arranged for a $10.4-million sale and leaseback of equipment in January, and raised $3.3-million in February through a private placement of debentures. In April, it agreed to sell construction equipment for $12.7-million. Despite the various steps, business continued to decline as tough competition, an early spring and wet weather turned up the pressure. 'This is a very volatile sector and it's a difficult one to work in and it's a difficult one to grow in,' Mr. Baker said. 'The steepness of the decline was unusual as well. We went from basically an all-time high to an all-time low within a 12-month period.' Serval's announcement came as signs abound that the sector is recovering from last year's beating. Oil and gas prices are relatively strong, producers are expanding their capital budgets and the number of rigs drilling is rising. The service company reported a net loss of $1.3-million on revenue of $9.1-million in the three months ended March 31, down from earnings of $800,000 on revenue of $13.9-million in the same period a year ago. SERVICE MERCHANDISE: Fitch IBCA Affirms Rating ---------------------------------------------- Aug. 12, 1999--First Union-Lehman Brothers Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 1997-C1, $ 165.2 million class A-1, $ 318.0 million class A-2, $ 395.8 million class A-3, and interest-only class IO are affirmed at 'AAA' by Fitch IBCA. In addition, the $ 78.3 million class B is affirmed at 'AA', the $ 71.8 million class C at 'A', the $ 71.8 million class D at 'BBB', the $ 19.6 million class E at 'BBB-' and the $ 71.8 million class F at 'BB'. The $ 13.1 million class G, $ 26.1 million class H, $ 13.1 million class J, and the $ 26.1 million class K certificates are not rated by Fitch IBCA. The affirmations follow Fitch IBCA's annual review of the transaction, which closed in April of 1997. The certificates are collateralized by 276 fixed rate multifamily and commercial mortgage loans. As of the July 1999 distribution date, the pool's aggregate certificate balance declined by 2.7%, from $ 1.31 billion at closing to $ 1.27 billion. Four loans have paid off since closing. One loan, representing 0.6% of the pool's unpaid principal balance, is 30 days delinquent. A total of nine loans (2.97%) are specially serviced by CRIIMI MAE Services, L.P. (CRIIMI MAE). Seven of these specially serviced loans (1.7%) are 90 days delinquent; they include six loans (1.6%), collateralized by properties where Service Merchandise is either a sole or major tenant. Service Merchandise Co. (NYSE: SME) filed for Chapter 11 bankruptcy protection on March 27, 1999. The borrower, a wholly owned subsidiary of Service Merchandise Co., also declared Chapter 11 bankruptcy. CRIIMI MAE, the special servicer, is currently negotiating with Service Merchandise Co. regarding possible resolution. Of the six stores in this pool, Service Merchandise Co. has closed only its Buffalo, NY location. It is under a contract for sale, subject to approval by bankruptcy court. Service Merchandise Co. has not announced plans to close any of the remaining stores. CRIIMI MAE collected year-end 1998 property financial statements for 170 loans, representing 72% of the pool's unpaid principal balance. Outstanding advances total $ 2.5 million. A total of seven loans, representing 1.4% of the pool balance, had a year- end 1998 debt service coverage ratio below 1.0 times. A stress scenario was applied whereby loans identified as potential problems were assumed to default. Under this stress scenario, subordination levels would be approaching those at closing and justify the rating actions. Fitch IBCA will continue to monitor this transaction, as surveillance is ongoing. SOURCEONE WIRELESS: Proposed Sale of Assets ------------------------------------------- The debtor, SourceOne Wireless, Inc. has received an offer from Aquis Communications, Inc. to purchase substantially all of the debtor's operating assets for $4 million in cash and $3.5 million in Aquis preferred stock. A break-up fee of $375,000 is proposed, and any initial competing bid must exceed the Aquis offer by $375,000 (thereafter bids shall be in increments of no less than $50,000). STARTER CORP: Committee Objects To Extension of Exclusivity ----------------------------------------------------------- The Official Committee of Unsecured Creditors of Starter Corporation, et al. objects to the motion of Starter Corporation, et al. for an order approving an extension of the exclusive periods during which the debtors may file a plan of reorganization and solicit acceptances thereof. The debtors claimed in their application seeking the extension that this is a large and complex case, and therefore the extension is necessary. The Committee states that the size and complexity of a case are only relevant in a reorganization, and since these cases are liquidation cases, neither the size nor the complexity are relevant. The Committee states that there is nothing complex about what remains to be accomplished in these cases, and there is no reason to extend exclusivity. TIRE WAREHOUSE: Seven Operations Sold At Bankruptcy Auction ----------------------------------------------------------- The Albany Times Union reports on August 11, 1999 that seven local Tire Warehouse operations were sold at a bankruptcy auction Tuesday and will become Wholesale Tire Co./WTC outlets starting today. The new operator will honor the existing tire warranties of Tire Warehouse customers and will expand auto repair service options for customers, said attorney Lisa Tang, who represented Tire Warehouse in proceedings in U.S. bankruptcy court. The Lake George-based chain filed for Chapter 11 protection in 1997 because of increased competition. Wholesale Tire Co./WTC paid $ 238,000 for the seven stores, said Tang. The Long Island company is privately owned and operates 20 stores in that area. The seven local stores are in East Greenbush, Troy, Glenville, Albany, Clifton Park, Schenectady and Queensbury. The new owner plans to bolster the existing staff of 55 employees, said Tom Engel, vice president of Wholesale Tire Co./WTC. UNITED COMPANIES: Equity Taps Saul, Ewing as Local Counsel ---------------------------------------------------------- The Official Committee of Equity Security Holders of United Companies Financial Corporation, et al. applied to retain the law firm of Saul, Ewing, Remick & Saul, LLP as local counsel. The attorneys designated to work on this case charge between $200 per hour and $295 per hour. ********** 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. 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