/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/990903.MBX T R O U B L E D C O M P A N Y R E P O R T E R Friday, September 3, 1999, Vol. 3, No. 171 Headlines ALL AMERICAN FOOD: Converts to Chapter 7 ALTA GOLD: Court Grants Continuance in Motion to Dismiss ATLANTIC GULF: CEO Is Likely To Leave COMMERCIAL FINANCIAL: 59 More Workers Laid Off CROWN BOOKS: Order Extends Time To Assume/Reject Leases DIXONS: Seeks Extension of Exclusive Period G-MARK INC: Case Summary & 20 Largest Creditors GOLDEN BOOKS: Announces Confirmation of Plan GOODY'S: Announces August Sales Results HJ MEYERS: Defunct Brokerage Files Assets and Liabilities HOME HEALTH: Seeks Further Extension of Exclusivity IRIDIUM: Chief Financial Officer Resigns IRIDIUM: Retains Restructuring Team JUMBOSPORTS: Chief Plans Sports Complex in Charleston, S.C. MERRY GO ROUND: Snyder Weiner Balks at Disclosing Fee Data MONTGOMERY WARD: Following Consummation of Plan No Duty To Report PACIFIC LINEN: Traub Bonaquist Says Liquidate Now PITTSBURGH PENGUINS: Lemieux Gets The Deal REPEAT O-TYPE: Court Upholds Judgment for HP SANTA FE GAMING: Announces Approval of Joint Disclosure Statement SERVICE MERCHANDISE: Seeks To Reject Sprint Agreements SERVICE MERCHANDISE: To Amend Retirement Plan SUBMICRON SYSTEMS: Case Summary & 20 Largest Creditors SUBMICRON SYSTMES: Case Summary & 20 Largest Unsecured Creditors SUBMICRON SYSTEMS: Case Summary & 20 Largest Unsecured Creditors SUBMICRON SYSTEMS: Files Chapter 11, Will Sell Assets SUBMICRON WET: Case Summary & 20 Largest Creditors SUN HEALTHCARE: Heavy Losses - Fails To Make $19.5M Payment TEXAS HEALTH: Seeks Approval of Professionals TRANSTEXAS GAS: Hearing on Disclosure Statement WASTEMASTERS: Dependent On Stock Issuance To Satisfy Debts BOND PRICING FOR WEEK OF AUGUST 30, 1999 ********** ALL AMERICAN FOOD: Converts to Chapter 7 ---------------------------------------- The U.S. Trustee overseeing the All American Food Group bankruptcy case has moved to convert the chapter 11 to chapter 7, and the company's Board of Directors has determined that it will not oppose that motion, according to a newswire report. A hearing is scheduled for Sept. 7 on the motion. All American Food filed chapter 11 last December in Newark, N.J. (ABI 02-Sept-99) ALTA GOLD: Court Grants Continuance in Motion to Dismiss -------------------------------------------------------- The bankruptcy court has granted a continuance of Alta Gold Co.'s motion to dismiss its chapter 11 bankruptcy and scheduled a Sept. 8 continuance hearing date, according to a newswire report. The Las Vegas-based company has filed to dismiss the case on the basis of an offer it received from a potential investor for the purchase of an interest in Olinghouse. The continuance was granted in order to provide additional time to finalize the sale. (ABI 02-Sept-99) ATLANTIC GULF: CEO Is Likely To Leave ------------------------------------- The Miami Herald reports on Sep. 2 that the beleaguered Miami land developer Atlantic Gulf Communities is expected to announce today the departure of its chief executive, J. Larry Rutherford. "There will be press release on it tomorrow," Richard S. Ackerman, who returned a call to Rutherford at company headquarters, said Wednesday. "That's about all I can tell you." Ackerman refused to identify his role at Atlantic Gulf. But he is a veteran real-estate executive who helped Thomas Crocker create Crocker Realty Trust, a real estate investment trust that developed Boca Raton's landmark Mizner Park. Crocker, reached Wednesday night, declined to identify Ackerman's role with Atlantic Gulf. The circumstances surrounding Rutherford's departure were not clear Wednesday. He was at a meeting and could not be reached for comment. Atlantic Gulf, which tried to emerge from the ashes of the spectacular General Development Corp. bankruptcy, has been struggling for some time. Rutherford, however, is credited with a crucial step toward making Atlantic Gulf a successful operation: retiring all of the company's $302 million reorganization debt. The executive, who was paid salary and bonus of $867,613 last year, owns 19 percent of the company's stock. As recently as March, he showed apparent confidence in the company's prospects, buying 213,333 shares at 94 cents apiece. But the financial tailspin, which began more than two years ago, only worsened. Apollo Real Estate Advisors, a prominent New York investment firm, agreed to fund the company for a while but eventually pulled back. Last year, Atlantic Gulf stock was kicked off the Nasdaq National Market because it failed to meet asset requirements. The shares have been trading for less than $1. In March, Rutherfo rd put the company up for sale but failed to snare a buyer. At least one heavy hitter -- Arvida, a unit of St. Joe Co. -- considered it but passed for unknown reasons. This summer, Atlantic Gulf be gan cutting costs by laying off a fifth of its work force, halving its Coconut Grove office space and cutting three senior management jobs. Furthermore, the company's latest financial report show s dwindling revenue and mounting losses. For the six months ended June 30, Atlantic Gulf reported revenue of $28 million, down from $58 million for the same period last year, and a net loss of $14 million up from last year's $1.9 million. COMMERCIAL FINANCIAL: 59 More Workers Laid Off ---------------------------------------------- The Tulsa World reports on September 2, 1999 that what's left of Commercial Financial Services Inc. shrank some more this week. Fifty-nine of the 110 workers helping shut down the business marked their last day at work on Tuesday. All but a handful of the remaining 61 will leave the business by the end of October. Spokeswoman Sharon Price, whose final day was Tuesday, said the last group would keep track of bookkeeping and payroll functions through the end of the year. By the first of October, the company will be down to 17 employees, Price said. One month later, the company will have only five employees, she said. By that first week of November, the company's employee base will have shrunk 99.9 percent in one year. CFS, a debt collection company that employed more than 3,900 as recently as last October, ceased operations on June 23. The company, which filed for bankruptcy protection in December, laid off 1,541 workers in January. Thirteen hundred more were let go at the close of business on June 23. The remaining staff of 140 slowly moved on as closing duties were completed. One of the final significant public events related to the closure will come on Sept. 29-30. During Wednesday and Thursday the company will auction off the computers, copiers, desks and chairs that once supported its work force. Meanwhile, the company's bankruptcy case continues. The next hearing on bankruptcy-related issues is scheduled for 9 a.m. on Sept. 9 before Judge Dana L. Rasure. CROWN BOOKS: Order Extends Time To Assume/Reject Leases ------------------------------------------------------- The US Bankruptcy Court for the District of Delaware has entered an order granting the debtors, Crown Books Corporation, and its debtor affiliates, an extension of time through and including November 12, 1999 to elect to assume, assume and assign or reject certain leases, the subject of the debtor's motion. DIXONS: Seeks Extension of Exclusive Period ------------------------------------------- The debtors, Dixons US Holdings, Inc. and its debtor affiliates seek an extension of the debtors' exclusive period in which to solicit acceptances of the Chapter 11 plan. The debtors seek an extension of approximately 60 days from August 25, 1999 through and including October 25, 1999 of the period during which the debtors will have the exclusive right to solicit acceptances to their Chapter 11 plan. The debtors seek this relief solely out of an abundance of caution to maintain the Exclusive period through the schedule contemplated for plan confirmation, and allowing for some additional time if unexpected delays are encountered. G-MARK INC: Case Summary & 20 Largest Creditors -------------------------------------------------------------- Debtor: G-Mark Inc. 100 Chaffin Industrial Park Dodge City, Ks 67801 Court: District of Delaware Date Filed: Aug. 31, 1999 Chapter 11 Debtor's Attorney: William H. Sudell, Jr., Esq. Molrris, Nichols, Arsht & Tunnell 1201 North Market Street PO Box 1347 Wilmington, DE 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ London Pacific Life & Annuity Subordinated Reorganization Securities 4,166,646 BG Services Limited Subordinated Reorganization Securities 2,833,353 Go-Sportsmens Supply, Inc. Trade Debt 410,250 Handelman Company Trade Debt 350,869 Pepsi-Cola Trade Debt 232,549 Ace Hardware Trade Debt 134,174 Eastman Kodak Trade Debt 124,166 Warren Trade Debt 122,244 Hasbro Industries, Inc. Trade Debt 121,779 RGIS Inventory Specialists Trade Debt 112,275 Rubbermaid, Inc. Trade Debt 108,053 Qualex Trade Debt 102,677 Mattel, Inc. Trade Debt 100,075 Mead Products Trade Debt 97,771 Northrup King Trade Debt 95,794 Kimberly-Clark Trade Debt 95,634 Gibson Greetings Trade debt 92,198 Thompson Consumer Trade Debt 91,464 Pennzoil Products Co. Trade Debt 77,775 Hanes Trade Debt 75,413 GOLDEN BOOKS: Announces Confirmation of Plan -------------------------------------------- Golden Books Family Entertainment, New York, announced that Hon. Tina L. Brozman (S.D.N.Y.) confirmed the company's chapter 11 reorganization plan, subject to entry of the final confirmation order, which is expected very shortly, according to a newswire report. Consummation of the plan is conditioned upon the finalization of requisite documents contemplated by the plan, final U.S. District Court approval of the settlement of a class action lawsuit and finalization of a $60 million loan facility. Under the plan, Golden Books will reduce its long-term debt and pay all trade debt in full.(ABI 02-Sept-99) GOODY'S: Announces August Sales Results --------------------------------------- Sept. 2, 1999--Goody's Family Clothing, Inc. (Nasdaq/NM:GDYS) today reported sales for the fiscal month of August 1999 of $ 90.4 million, an increase of 2.1% over August 1998 sales of $ 88.5 million. Comparable store sales for August 1999 decreased 9.3% from August 1998. Sales for the seven months ended August 28, 1999, increased 11.1% to $ 627.6 million from $564.7 million during the same period last year. Comparable store sales for the seven months decreased 2.5% from the same period in the prior year. "I am disappointed with our sales results for the month of August. The negative trend in our sales is due, in part, to the difficulty we have had in balancing our strategies of margin expansion and inventory reduction, in addition to being behind the curve in identifying certain fashion trends," said Robert M. Goodfriend, Chairman and Chief Executive Officer. "Our management team is fully focused on resolving these issues and committed to achieving positive results for the second half of the year." As previously reported, Shoe Corporation of America, Inc. ("SCOA"), which is currently under Chapter 11 bankruptcy protection, operated licensed shoe departments in most of the Company's stores. Pursuant to the terms of an agreement, SCOA removed its shoe inventory from the Company's stores during the first week of August and subsequently, the Company began stocking its own shoe departments. In August 1999, the Company recorded net sales of approximately $50,000 from the licensed shoe departments and approximately $ 855,000 from its own shoe departments compared with approximately $ 3.2 million from the licensed shoe departments in August 1998. If all shoe sales are excluded from August 1999, the Company's overall comparable store sales would have decreased approximately 6.9% from August 1998. It is not anticipated that the Company will achieve an appropriate shoe inventory mix until February 2000, the date when the SCOA agreement was originally set to expire. During August 1999, the Company opened three new stores, one each in Marion and Springfield, Ohio and one in Greenville, Alabama; and relocated one existing store. Fiscal 1999 year to date, the Company opened 15 new stores, relocated 13 stores and remodeled 4 stores. HJ MEYERS: Defunct Brokerage Files Assets and Liabilities --------------------------------------------------------- H.J. Meyers & Co., a Rochester, N.Y.-based brokerage firm that closed last September, was forced into chapter 7 in April by former employees, and this week filed its schedule of assets and liabilities in bankruptcy court, The Rochester Democrat and Chronicle reported. The brokerage, formerly known as Thomas James Associates Inc., listed assets of about $1.4 million, and owes more than $1 million to one former customer, $15,000 to Adrian Jules Ltd., a high-end clothier, and $30,000 in unpaid bills to Rochester Gas and Electric Corp. Founded in 1990 by James A. Villa and Brian S. Thomas, the company at one time employed 500 people in 15 offices nationwide and sold high-risk investments in penny stocks. The firm managed $800 million for about 100,000 clients. Thomas was barred from the securities industry for life in 1990 after the Securities & Exchange Commission claimed that the firm made $4.5 million in excessive fees. Villa now lives in Florida and filed chapter 11 in June. (ABI 02-Sept-99) HOME HEALTH: Seeks Further Extension of Exclusivity --------------------------------------------------- The debtors, Home Health Corporation of America, Inc., et al. seek to further extend the periods within which the debtors have the exclusive right to file a plan or plans of reorganization and solicit acceptances thereof. The debtors seek extensions of approximately two weeks for both periods. The debtors seek to have the exclusive right to file a plan through September 30, 1999 and to extend the period during which the debtors have the exclusive right to solicit acceptances through November 29, 1999. The debtors assert that the cases are large and complex. They also point out that they have made significant changes to their core businesses with the goal of improving profitability, including retrenching operations in the state of Texas. IRIDIUM: Chief Financial Officer Resigns -------------------------------------------------------------- Iridium LLC's Chief Financial Officer Leo Mondale has resigned. The satellite-phone and paging company said Wednesday it named David R. Gibson interim CFO. The company also named Joseph A. Bondi chief restructuring officer. Both Gibson and Bondi are managing directors at Alvarez & Marsal Inc., a New York-based turnaround firm Iridium retained to manage its restructuring effort. Iridium filed for Chapter 11 bankruptcy protection last month after defaulting on interest payments, and trading of Iridium shares was halted on the Nasdaq Stock Market. The company's $5 billion satellite-telephone network was supposed to usher in a new age of wireless communications. But Iridium, which began operations last fall, has struggled to attract customers. IRIDIUM: Retains Restructuring Team ----------------------------------- Iridium LLC announced that it has retained Alvarez & Marsal Inc., a New York-based turnaround consulting firm, to help restructure the company, according to Reuters. The global satellite telephone company filed for chapter 11 protection on Aug. 13 after defaulting on more than $1.5 billion in loans. Joseph Bondi of the firm was named chief restructuring officer and Dave Gibson, a managing director of the firm, was named interim CFO. Iridium CEO Leo Mondale resigned as CFO, a position he has held since April. (ABI 02-Sept-99) JUMBOSPORTS: Chief Plans Sports Complex in Charleston, S.C. ----------------------------------------------------------- Sep. 2--A corporate troubleshooter whose day job is fixing the JumboSports retail chain is working on a $60 million development that will cluster athletic goods stores around a golf course and other sporting venues at the vacant Centre Pointe tract. Al Fasola, chief executive officer of Tampa, Fla.-based Sports & Recreation Inc. and an Isle of Palms resident, said he holds an option on 70 acres at the North Charleston property, which is bordered by U.S. Interstate 26 and the Mark Clark Expressway. "What we're doing is putting together a community-based sports recreation complex," said Fasola, who hopes to have financing for the project in place by November and break ground in December. He hopes the complex will be ready by late 2000, when a nearby Embassy Suites hotel will be open to serve the new Charleston Area Convention Center. "That's the ideal time to open the balance of Centre Pointe," Fasola said in an interview. The sports complex will include an 18-hole par-three golf course and learning center, he said. Also, an "extreme park" will accommodate activities such as in-line skating, skateboarding and rock climbing. Other facilities will feature less-daring pastimes including soccer, jogging, beach volleyball and cycling, Fasola said. Specialty retail boutiques to be built near the venues will sell equipment for the various events. Several restaurants also are planned. "It'll be carved up into these zones for families and young adults," said Fasola, noting that activities will be changed over time "to keep things fresh." "It's going to be a place that really caters to active families and kids and gives parents and children an opportunity to do things together for an extended period of time," he said. A day spa could be added in a second development phase, he added. Fasola and his partners, including Centre Pointe's lead developer Richard Weiser, have been researching the idea since 1996. "We see this as having an application across the country," Fasola said. In marketing and demographic studies, fast-growing Charleston "kept popping up as the most interesting market" to build the first prototype, he said. "My wife and I, we took a real liking to the area and moved here last year," Fasola added. Fasola's moonlighting gig is separate from his duties at JumboSports, which is trying to reorganize its finances in a bankruptcy court. The chain hired him earlier this year at the request of creditors and bondholders. A seasoned turnaround specialist, Fasola was among the executives who steered Herman's Sporting Goods Inc. through two Chapter 11 proceedings before that Northeast retailer had to be dismantled in 1997. As part of the JumboSports revival he is returning the chain to its old corporate name, Sports & Recreation Inc. Locally, the company owns one store on Rivers Avenue. Fasola is expected to gain a sizable stake in the reorganized Sports & Recreation if the company successfully emerges from bankruptcy protection. After years of fast-paced growth, many sporting goods retailers have seen sales and profits decline sharply in the past two years. JumboSports, Sports Authority, Just For Feet and Venator Inc.'s Champs and Foot Locker chains are among the major players hurt by the downturn. Fasola said his Centre Pointe clustering concept is the kind of "major innovation" the sporting goods business needs to rebound. "We have to get the sale of sporting goods closer to the actions that are being performed," he said. "The idea of putting the retail and the activity in the same vicinity is where the industry has to go." As for the rest of the Centre Pointe property, detailed plans have not been released. Some parcels have been sold off since Weiser's Centre Pointe Developers LLC paid $8 million for the 302-acre tract in March 1997. Earlier this year Weiser named the property's main retail component Charleston Factory Stores. Phase one will include 257,000 square feet of retail stores and a food court, he said in February. The second phase will total about 120,000 square feet. Construction was supposed to have started July 1. MERRY GO ROUND: Snyder Weiner Balks at Disclosing Fee Data ---------------------------------------------------------- As Bear, Stearns & Co., Inc., continues to contest the propriety of awarding $73,200,000 to the law firm of Snyder, Weiner, Weltchek, Vogelstein & Brown for its efforts in extracting a $185,000,000 settlement from Ernst & Young for the benefit of the Merry-Go-Round Enterprises, Inc., chapter 7 estates, a dispute made its way before Judge Derby in Baltimore at the 11th hour before the deadline for completion of non-expert discovery. As previously reported, Bear Stearns believes the $73,200,000 fee Deborah H. Devan, Merry-Go-Round's chapter 7 trustee, proposes to pay to Snyder Weiner under her contingency agreement with the firm is the largest fee ever requested to be paid to a law firm in a bankruptcy case. Bear Stearns demands that Snyder Weiner produce copies of its tax returns for the last four years, a list the cases in which the firm received a contingency fee during the past five years and the number of hours expended to obtain payment of the fee. "Based on [Arnold Weiner's deposition], it does not appear that Snyder handles a large number of cases," says Irving E. Walker of Miles & Stockbridge in Baltimore, co-counsel with David M. Friedman, Esq., and Lorie R. Beers, Esq., of Kasowitz, Benson, Torres & Friedman in New York, to Bear Stearns; "the request to provide a list of the cases for which payments were received . . . does not appear to be burdensome, and the requested list should be produced." Addressing Bear Stearns' demand for production of tax returns, "because the request is limited to four tax returns, the request clearly is not burdensome," Mr. Walker adds. In an extraordinary case like this one, it is very important, Bear Stearns tells Judge Derby while urging entry of an order compelling Synder Weinder to produce the information it is withholding, that the Court have access to all facts that may shed light on the reasonableness or unreasonableness of the $73,200,000 fee. The infomration and documents sought fall within the scope of information reasonably calculated to lead to the discovery of admissable evidence. The information is particulary relevant to statements made by Snyder Weiner and Ms. Devan that the $73,200,000 fee is consistent with Snyder Weiner's standard fee arrangements in other cases. MONTGOMERY WARD: Following Consummation of Plan No Duty To Report ----------------------------------------------------------------- Following consummation of the Amended Joint Plan, Montgomery Ward Holding Corp. advised the Securities and Exchange Commission that, pursuant to Rules 12g-4(a)(1)(i) and 12h-3(b)(1)(i) promulgated by the Commission, it no longer has a duty to submit period reports to the SEC and, accordingly, won't. PACIFIC LINEN: Traub Bonaquist Says Liquidate Now ------------------------------------------------- Woodinville, Washington-based Pacific Linen tells its shareholders in a letter dated August 24, 1999, that, in light of: (i) its capital deficit for some months, (ii) its inability to raise additional equity capital through its investment bankers; (iii) unproductive attempts to sell the company, (iv) failed discussions with investors and purchasers; and (v) the imposition of credit restrictions by its secured lender to the extent that it cannot pay its obligations and purchase inventory, the company has engaged New York-based Traub, Bonaquist & Fox LLP, "to advise the Board of Directors regarding its options going forward." Traub Bonaquist has recommended an out-of-court liquidation. Scott A. Hessler, Chairman and CEO for Pacific Linen, confirms that the Company has solicited formal requests for proposals from seven professional liquidators, but declined to provide names. "These activities should cause any genuinely interested purchaser for all or a portion of the Company as a going concern to proceed with the purchase if it is going to," Mr. Hessler says. PITTSBURGH PENGUINS: Lemieux Gets The Deal ------------------------------------------ Lemieux's takeover of the bankrupt Penguins was approved Wednesday by the NHL's board of governors, climaxing a long struggle by the former hockey great and his associates to keep the team in Pittsburgh. "There have been a few difficult moments and a lot of frustration, but I was always optimistic we would get it done," Lemieux said. Only court approval remained to finalize the deal, and that's expected to be taken care of by a bankruptcy judge during a closing hearing Friday in Pittsburgh. "I'm very excited about the opportunity to come back," said Lemieux, a Hall of Famer who led the Penguins to Stanley Cups in 1991 and 1992 before retiring after the 1997 season. "This is a dream come true, after 10 months working on the deal. "I had no idea it would be this difficult. I'm glad we were finally able to put this together." Until Lemieux came into the picture, there was still some doubt whether the Penguins would remain in Pittsburgh, or even in the NHL. The team went into bankruptcy last season and was only able to meet its payroll with the help of a bank loan. With approval of Lemieux's takeover, the Penguins made it just under the wire. They're due to open training camp Saturday. Lemieux has the largest stake in the team, most of it coming from the $25 million in deferred salary the Penguins owed him. REPEAT O-TYPE: Court Upholds Judgment for HP -------------------------------------------- Sept. 2, 1999--Hewlett-Packard Company and Repeat-O-Type Stencil Manufacturing Corp. said that they have settled HP's trademark infringement lawsuit against Repeat-O-Type. The settlement comes after the U.S. District Court in San Francisco entered a substantial judgment in HP's favor and granted permanent injunctions against various Repeat-O-Type business practices. In September 1997, HP succeeded against Repeat-O-Type and its president at the time, Fred Keen, in a jury trial before the court. The jury rendered verdicts in HP's favor on each and every claim against Repeat-O-Type. The jury found Repeat-O-Type and Mr. Keen personally liable for trademark infringement, trademark counterfeiting, false advertising under California and federal law, and unfair competition. The jury awarded punitive damages of $ 40,000 against Repeat-O-Type and punitive damages of $ 60,000 against Mr. Keen as an individual. The U.S. District Court subsequently entered a judgment against Repeat-O-Type and Mr. Keen, and granted HP's request for a permanent injunction against Repeat-O-Type and Mr. Keen, barring them from any future acts of false advertising. HP had previously obtained a permanent injunction against Repeat-O-Type's trademark infringement. The total monetary award in the judgment was approximately $ 1.7 million, including $255,000 for trebled compensatory damages, $ 1.31 million for HP's attorneys' fees, $40,000 as punitive damages against Repeat-O-Type, and $60,000 as punitive damages against Mr. Keen. In response to the jury verdict and the Court's judgment, Repeat- O-Type and Fred Keen filed petitions in bankruptcy court in New Jersey in November 1997. At the time of the settlement, HP, as a creditor, had successfully obtained a judgment against Mr. Keen that he could not discharge his liability for the $ 1.7 million judgment in bankruptcy. "This judgment of the Court following a successful jury trial affirms HP's ability to successfully enforce its intellectual property rights," said Antonio M. Perez, president and chief executive officer of HP's Inkjet Imaging Solutions. "While I am pleased to see the end of legal action between the two companies, we intend to continue to vigorously protect our intellectual property rights. There is ample evidence of that currently before other courts." "We are dropping our remaining appeal against the Court's judgment and acknowledge that the Court found Repeat-O-Type and me liable for trademark infringement, trademark counterfeiting, false advertising and unfair competition," said Fred Keen, Repeat-O-Type's former president, and currently its Director of Sales and Marketing. "While we never intended to infringe HP's rights, the Court's ruling is clear, and we believe it is best to close this chapter for good." Repeat-O-Type Manufacturing Corp. is a family owned corporation that has been engaged in the manufacture of office reprographic products since 1931. The company specializes in cost saving aftermarket supplies for use in inkjet printers and digital duplicating equipment. SANTA FE GAMING: Announces Approval of Joint Disclosure Statement ----------------------------------------------------------------- Santa Fe Gaming Corporation (OTC Bulletin Board: SGMG) ("SFGC") announced that on Monday, August 30, 1999, the United States Bankruptcy Court for the District of Nevada entered an order approving the Disclosure Statement filed to accompany the joint plan of reorganization by Pioneer Finance Corp. ("PFC") and Pioneer Hotel Inc. ("PHI") in their voluntary proceedings for reorganization under Chapter 11. The joint plan of reorganization was filed in accordance with the consents obtained from holders of approximately 75% of the outstanding principal amount of 13.5% First Mortgage Notes ("13.5% Notes"), pursuant to which PFC agreed to file for relief under Chapter 11 and the consenting holders agreed to vote to accept a plan of reorganization substantially similar to the treatment proposed in the Offering Circular and Consent Solicitation Statement, dated October 23, 1998, as amended (the "Consent Solicitation"). The Court tentatively set October 25, 1999 for commencement of confirmation hearings on the joint plan of reorganization. In addition, the Bankruptcy Court announced a decision on Friday August 20, 1999, to dismiss the involuntary petition filed against SFGC in January 1999 by certain holders of 13.5% notes issued by PFC who did not consent to the Consent Solicitation. The decision to dismiss the involuntary proceedings was issued after SFGC filed the necessary waivers from insiders required by the Court, pursuant to an order dated March 19, 1999. The order of dismissal is subject to the Company filing a supplemental agreement and declaration by an insider with respect to certain transactions. Santa Fe Gaming owns and operates the Santa Fe Hotel and Casino in northwest Las Vegas and the Pioneer Hotel and Gambling Hall in Laughlin, Nevada. In addition, SFGC holds several real estate parcel for development within or in the area surrounding Las Vegas, Nevada. SERVICE MERCHANDISE: Seeks To Reject Sprint Agreements ------------------------------------------------------ The Debtors seek the Court's authority to reject a Custom Network Service Arrangement, dated December 24, 1997, a 1994 Confidentiality Agreement, and any other agreements or contracts related thereto, with Sprint Telecommunications Company, L.P., effective 10 days after the Debtors provide notice to Sprint that they no longer require Sprint's services. The Debtors indicate that they anticipate they will give notice within the next 90 days. The Sprint Agreements commit the Debtors to pay at least $3,300,000 per year for the next 4 years. The Debtors have negotiated new long-distance and network service agreements with Cable & Wireless USA, Inc., at substantial savings and will incur no fees or penalties for early termination. (Service Merchandise Bankruptcy News Issue 9; Bankruptcy Creditors' Service Inc.) SERVICE MERCHANDISE: To Amend Retirement Plan --------------------------------------------- Pursuant to applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, the Debtors intend to amend the 1996 Service Merchandise Restated Retirement Plan, a defined benefits plan designed to comply with the requirements of Section 401(a) of the Internal Revenue Code providing coverage to substantially all of the Debtors' full-time employees who have attained the age of 21 with more than one year of service and some part-time employees, to: (a) cease accrual of benefits under the Pension Plan after September 30, 1999, without prejudice to their ability to reinstate the accrual of such benefits at a later date; (b) provide that no further employees may become participants of the Pension Plan after September 30, 1999; and (c) vest benefits already accrued under the Pension Plan. As a general proposition, the Pension Plan provides vested participants with a retirement pension at normal retirement age consisting of an amount per annum equal to the product of (x) 0.75% of the participant's final average compensation and (y) the participant's years of benefit service. The Debtors stress that they intend to comply with all ERISA regulations. Although the Debtors believe they can make the amendment in the ordinary course of the their business, the Debtors seek the Court's blessing out of an abundance of caution pursuant to 11 U.S.C. Sec. 363(b) and 11 U.S.C. Sec. 105(a). More importantly, the Debtors tell Judge Paine that the proposed amendments to the Pension Plan are justified because the amendment will enhance the company's prospects for a successful reorganization by allowing the Debtors to avoid the financial obligations that are accruing under the Pension Plan. The Debtors do not quantify this assertion. SUBMICRON SYSTEMS: Case Summary & 20 Largest Creditors ------------------------------------------------------ Debtor: SubMicron Systems Corporation 6330 Hedgewood Drive Allentown, PA 18106 Type of business: The debtor is a holding company that owns all of the outstanding common stock of SubMicron Systems, Inc. and SubMicron Wet Process Stations, Inc. Through these subsidiaries the debtor designs and manufactures advanced chemical processing systems for use in the semiconductor industry. Court: District of Delaware Case No.: 99-2959 Filed: 09/01/99 Chapter: 11 Debtor's Counsel: David Carlckhoff, Jr. Cozen and O'Connor 901 Market Street Wilmington, DE 19801 After 9/13/99 Chase Manhattan Centre 1201 N. Market St. Suite 1400 Wilmington, DE 19801 Total Assets: $26,634,000 Total Liabilities: $44,380,000 No. of shares of preferred stock 82 0 No. of shares of common stock 20,167,824 0 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ The BOC Group, Inc. Note 5,000,000 Gallagher Trust Note 1,184,200 Timothy P. Flynn Note 1,184,200 J.F. shea Co., Inc. Note 947,360 Lewis H. & Peggy S. Jordan Note 947,360 Robert L. Priddy Note 681,040 Blum & Company Note 631,750 CRIM Partners, LP Note 544,732 CRIM Retirement Partners, LP Note 402,628 Del Mintz Note 355,260 Home Associates Note 177,630 Henry Benach Note 177,630 AC Israel Enterprises, Inc. Note 142,104 Gerald B. Cramer Note 142,104 LAD Equity Partners Note 142,104 Weiss Peck & Greer Note 118,420 Michael and Sharon Acks Note 94,736 Sheldon Family Ltd. Partnership Note 94,736 Mitchell H. & Dorothea M. Allee Note 94,736 CRIM Madison Partners LP Edward J. Rosenthal Profit Sharing Plan Note 71,052 SUBMICRON SYSTMES: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: SubMicron Systems Holding I, Inc. No Unsecured Creditors SUBMICRON SYSTEMS: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: SubMicron Systems, Inc. 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ Yieldup International Trade Debt 121,450 Huntair Trade Debt 80,894 Stokes Electrical Supply Trade Debt 46,904 Lepco, Inc. Trade Debt 45,993 Jenoptik Infab GmbH Trade Debt 45,800 BOC Edwards Systems Trade Debt 44,961 Lufran Trade Debt 40,541 Semi/Sematech Trade Debt 40,000 Lighting Fixture & Supply Co. Trade Debt 36,958 Asyst Technologies, Inc. Trade Debt 36,746 CAE Ultrasonics Trade Debt 34,937 Iwaki Wlachem Corp. Trade Debt 27,980 Copelco Lease Funding Corp. Trade Debt 24,702 Desert Glass Works Trade Debt 20,770 NC Stauffer Trade Debt 17,917 AEA Technology Trade Debt 16,500 Kyser Co. Trade Debt 11,576 Won IK Quartz Group Trade Debt 11,070 Design Plastics Systems, Inc. Trade Debt 7,453 Software Gouse International Trade Debt 6,933 SUBMICRON SYSTEMS: Files Chapter 11, Will Sell Assets ----------------------------------------------------- SubMicron Systems Corp., a wet process equipment manufacturer based in Allentown, Pa., announced yesterday that it has filed for chapter 11 protection in the District of Delaware and that it has entered into an agreement to sell substantially all of its assets, as well as those of its subsidiaries, to Akrion LCC, a management-led investment group backed by some members of SubMicron's senior management, investment firm Sunrise Capital Partners L.P. and SubMicron's current secured lenders, according to a newswire report. SubMicron listed assets of $26.6 million and liabilities of $44.4 million. Akrion will purchase the assets for $55.5 million in cash and the assumption of $40 million in debt and certain unspecified liabilities. SubMicron's lenders, Banc America Commercial Finance Corp.'s Greyrock Capital division, will finance the reorganization; KB Mezzanine Fund I LP may assist with financing on an as-needed basis. The sale is subject to the court's approval. (ABI 02-Sept-99) SUBMICRON WET: Case Summary & 20 Largest Creditors -------------------------------------------------- Debtor: Submicron Wet Process Stations, Inc. 3381 Edward Avenue Santa Clara, CA 95054 Court: District of Delaware Filed: 09/01/99 Chapter: 11 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ Edwards Manufacturing Inc. Trade Debt 30,331 Penvalve Trade Debt 14,249 Western Technology Marketing Trade Debt 12,853 Port Plastics Trade Debt 9,079 Iwaki Walchem Trade Debt 8,943 Wagner Process Equipment Trade Debt 8,788 Steelhead Trade Debt 6,853 US Filter Trade Debt 5,566 Valin Corporation Trade Debt 4,541 Solid Solutions Trade Debt 4,334 Hyutec Flow Systems Trade Debt 3,825 Excelerated Automation Trade Debt 2,950 Trans-Pak Inc. Trade Debt 1,827 IDX Robotics Inc. Trade Debt 1,613 Lynn Research & Technologies Trade Debt 1,500 Bear Machining Trade Debt 1,408 Officee Depot Trade Debt 1,404 Flexible Industrial Systems Trade Debt 1,345 JPC Controls Trade Debt 1,219 Astex Trade Debt 1,045 SUN HEALTHCARE: Heavy Losses - Fails To Make $19.5M Payment ----------------------------------------------------------- Sun Healthcare Group Inc. sustained heavy losses in the quarter ended June 30, 1999. On net revenues of $600,914 the net loss was $588,597. In the same quarter of 1998 net revenues were $752,392 and the net loss was $9,367. The company was not in compliance with certain financial covenants contained in its Senior Credit Facility as of December 31, 1998 and June 30, 1999. Borrowings under the Senior Credit Facility were $745.6 million and $821.3 million at December 31, 1998 and June 30, 1999, respectively. In addition, the company failed to make a $19.5 million payment due to the Senior Credit Facility bank lenders on June 30, 1999. Because of the covenant and payment defaults, the bank lenders could have required immediate repayment of all amounts outstanding under the Senior Credit Facility. Sun Healthcare Group did not have sufficient cash reserves to repay all amounts outstanding under the Senior Credit Facility at August 18, 1999. No further amounts may be borrowed under the Senior Credit Facility. Accordingly, the company will have to fund all operations, capital expenditures and regularly scheduled debt service from existing cash reserves and future net cash flows from operations. The company also did not make its semi-annual interest payments of $7.3 million on its $150.0 million 9 3/8% Subordinated Notes that was due on May 1, 1999 and of $11.9 million on the company's $250.0 million 9-1/2% Subordinated Notes that was due on July 1, 1999. The bank lenders under the company's Senior Credit Facility exercised their contractual right blocking the company from making these payments. Because the payments were not made, the company is in default under the indentures for the 9 3/8% Subordinated Notes and 9-1/2% Subordinated Notes and the holders of such Notes could declare all amounts outstanding under the respective indentures immediately due and payable, although actual payment would continue to be prohibited by the actions of the bank lenders. The company did not have sufficient cash reserves to repay all amounts outstanding under either of these indentures as of August 18, 1999. The company is in default of certain mortgage notes amounting to $31.9 million and $31.7 million at December 31, 1998 and June 30, 1999, respectively. Because is in non-compliance with the terms of these certain mortgage notes, the holder of the notes could demand immediate repayment of all amounts due under the mortgages and foreclose on four facilities. As of December 31, 1998 and June 30, 1999, the company was in non-compliance with certain financial covenants contained in certain master lease agreements for 96 of its long-term care facilities in the United States and 33 of its long-term care facilities in the United Kingdom. As a result, the lessors under these master lease agreements have certain rights, including the right to require that the company relinquish the leased facilities. As of August 18, 1999, the lessors had not exercised their rights under their respective agreements, although there is no assurance that the lessors will not do so in the future. The company was also in cross default under the terms of leases for 14 of its long-term care facilities in the United States as of December 31, 1998 and June 30, 1999. The company has a substantial number of other leases which may contain similar default or cross default provisions. Sun Healthcare Group and its principal lenders are discussing the terms of an overall financial restructuring. However, in the event the lenders or lessors under the agreements and leases described above begin to exercise remedies against the company or if the company makes a determination that it would not be able to fund its operations outside bankruptcy, the company will commence a chapter 11 bankruptcy case under title 11 of the United States Code. TEXAS HEALTH: Seeks Approval of Professionals --------------------------------------------- The Official Unsecured Creditors' Committee of Texas Health Enterprises, Inc. seeks court approval to employ Lain, Faulkner & Company PC as accountant and financial advisor to the Committee. The Committee also seeks approval to hire the law firm of McConnell & Goodrich as its counsel. TRANSTEXAS GAS: Hearing on Disclosure Statement ----------------------------------------------- The hearing to consider approval of the Disclosure Statement of TransTexas Gas Corporation will be held at US Bankruptcy Court, Wilson Plaza North, 615 Leopard Street, Corpus Christi, Texas on September 27, 1999 at 9:00 AM. WASTEMASTERS: Dependent On Stock Issuance To Satisfy Debts ---------------------------------------------------------- Wastemasters Inc.'s revenues for 1998 increased to $12,375,649 as compared to $466,000 for 1997. The dramatic increase in revenue is the result of numerous business acquisitions offset in part by the complete disposition of all of the company's operating assets that remained at December 31, 1997. The net losses in 1998 were $46,941,487 and in 1997 net losses were $20,369,295. At the present time Wastemasters is not engaged in active operations. According to the company its plan with regard to its remaining Florida assets is to raise the capital necessary to restructure or refinance the debt on the assets, to resolve the regulatory problems of the assets, and to provide sufficient working capital to resume normal operations. Since there can be no assurance that the necessary capital can be raised, the company is also in negotiations with various parties to sell or joint venture the Florida assets. The company does not expect to realize a material amount from any sale or joint venture of the Florida assets, if that becomes necessary. In addition, the company plans to continue its efforts to resolve the litigation claims against it, largely through the conversion of such claims into equity. Because it lacks active operations, the company does not have any cash to satisfy routine administrative obligations. Consequently, Wastemasters is currently dependent on the issuance of its common stock for managerial and legal services, and depends on short term loans from third parties, including its officers and directors, for the funds to satisfy miscellaneous expenses. For the foreseeable future, the company expects that it will be required to acquire necessary administrative services and satisfy its indebtedness by issuing shares of its common stock. However, the company says it has identified a number of operating entities which it believes it can acquire in the event it is able to reduce its litigation claims to an immaterial amount. The following sets forth certain information, as of August 9, 1999, with respect to the beneficial ownership of the company's voting securities by each person known to the company to be the beneficial owner of more than five percent (5%) of any class of the company's voting securities: Continental Investment is the beneficial owner of 46.6% of the outstanding common stock of the company, represented in the holding of 130,000,000 shares. Continental Investment also holds 5,000,000 shares of preferred stock of the company, which amount represents 100% of the outstanding shares of preferred stock of Wastemasters Inc. BOND PRICING FOR WEEK OF AUGUST 30, 1999 ======================================== DLS Capital Partners, Inc., bond pricing for week of August 30, 1999 Following are indicated prices for selected issues: Acme Metal 10 7/8 '07 18 - 21 (f) Amer Pad & Paper 13 '05 57 - 59 Asia Pulp & Paper 11 3/4 '05 71 - 73 E & S Holdings 10 3/8 '06 50 - 52 Geneva Steel 11 1/4 '01 13 - 15 (f) Globalstar 11 1/4 '04 61 - 62 Hechinger 9.45 '12 10 - 13 (f) Iridium 14 '05 13 - 14 (f) Jitney Jungle 10 3/8 '07 35 - 37 Just for Feet 11 '09 34 - 37 Loewen 7.20 '03 54 - 56 (f) Planet Hollywood 12 '05 26 - 28 (f) Purina Mills 9 '10 24 - 27 Samsonite 10 3/4 '08 83 - 85 Service Merchandise 9 '04 19 - 20 (f) Sterling Chemical 11 3/4 '06 60 - 65 Sun Healthcare 9 1/2 '07 9 - 11 (f) Sunbeam 0 '18 17 - 18 TWA 11 3/8 '06 64 - 66 United Artists 9 3/4 '08 31 - 34 Vencor 9 7/8 '05 28 - 30 (f) Zenith 6 1/4 '11 20 - 22 (f) ********** 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, Yvonne L. Metzler, 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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