/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/990907.MBX T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, September 7, 1999, Vol. 3, No. 172 Headlines ADVANCED GAMING: Reports Minimal Revenue From Operations BENTON OIL & GAS: CEO Resigns BOSTON CHICKEN: Relationship To Terminate With Harry's COSTILLA ENERGY: Files Chapter 11 Bankruptcy COVENTRY HEALTH CARE: Reports Income For Quarter DOW CORNING: Reports Financial Results FACTORY CARD: Reports Nasdaq Notification Delisting Common Stock FIRSTPLUS FINANCIAL: Seeks To Compromise Controversy FORCENERGY: US MMS Files $ 255-MIL Claim GENEVA STEEL: Operating As DIP, Reporting 3- & 9-Month Losses GULF STATES STEEL: Committee Taps PricewaterhouseCoopers HARVARD INDUSTRIES: 2nd Quarter Post-Confirmation Figures IMAGYN MEDICAL: Seeks Order Granting Post Petition Financing INCOMNET: Files for Bankruptcy to Implement Restructuring KIWI AIRLINE: Trustee Seeks to Liquidate Airline MIDCON OFFSHORE: Unsecured Creditors To Get 7 Cents on Dollar MONTGOMERY WARD: Adversary Proceeding Against AIG NEW WORLD COFFEE: Revenue & Income Up NEXTWAVE: Injunction Against Nextel Extended to Sept. 9 PHILIP SERVICES: Seeks To Reject Certain Leases PINNACLE BRANDS: Seeks Extension of Exclusive Periods PIONEER FINANCE: Disclosure Statement Approved PLUMA INC: Revenues Down & Losses Up In 1999 PRESTON TRUCKING: Seeks Court Approval To Pay $92M To Creditors R SQUARED INC: Case Summary & 20 Largest Unsecured Creditors RAINTREE HEALTHCARE: 35.7% Drop In Revenue SANTA FE GAMING: Reports $11M Loss For Nine Month Period SERVICE MERCHANDISE: Seeks Adequate Protection For Noteholders SERVICE MERCHANDISE: Seeks To Amend Executive Security Plan SHOE CORP: Extension Granted To Assume or Reject Leases SILICON GAMING: Operating Losses Continue SYSTEMSOFT: Seeks Approval of Stipulation of Compromise TRANSTEXAS GAS: Objection of Bondholder Lenders UNITED PETROLEUM: Objection To Plan UNITEL 53 LLC: Case Summary UNITEL 57 LLC: Case Summary UNITEL VIDEO: Case Summary & 20 Largest Creditors UNITEL VIDEO: Files for Chapter 11 Protection * Meetings, Conferences and Seminars ********** ADVANCED GAMING: Reports Minimal Revenue From Operations -------------------------------------------------------- Advanced Gaming Technology Inc. experienced a net loss for the six months ended June 30, 1999 of $174,040 compared to a net loss of $1,043,720 for the same period in 1998. The company says the improvement was due to a substantial reduction of operating costs implemented in August of 1998. With the bankruptcy process complete the company indicates it will now focus all efforts on executing the new business plan. A priority will be to build new relationships with potential distributors of the electronic bingo products. The company advises that this effort will be a challenge as the marketplace is very competitive. The company is generating minimal revenue from operations. Revenue for the three months ended June 30, 1999 was $87,501 compared to $60,265 in 1998. Net loss in the 1999 quarter was $63,152, compared to net loss of $949,430 in the same 1998 quarter. The six months ended June 30, 1999 found the company earning net revenues of $175,002 but net losses sustained were $174,040. In the comparable period of 1998 net revenues were $245,055 and net losses were $1,043,720. BENTON OIL & GAS: CEO Resigns ----------------------------- Alex E. Benton, chairman, CEO and president of Benton Oil & Gas has resigned, amid heavy losses and near-record lows in the company's stock prices, The Los Angeles Times reported. Benton, who filed for personal bankruptcy in early August, will remain on the board. The company has been trying to restructure, and in February retained J.P. Morgan Securities to help sell its assets. Benton founded the company in 1988 and will stay on to head the company's Russian operations, Geoilbent and Arctic Gas. (ABI 03-Sept-99) BOSTON CHICKEN: Relationship To Terminate With Harry's ------------------------------------------------------ Sept. 3, 1999--Harry's Farmers Market, Inc. (Nasdaq: HARY) reported that, subject to certain conditions, it has agreed to pay $ 4 million in cash to terminate its relationship with Progressive Food Concepts, Inc. ("Progressive"), a subsidiary of Boston Chicken, Inc. The agreement to terminate the relationship was approved by the U.S. Bankruptcy Court in Phoenix, Arizona on August 26, 1999, where Boston Chicken and Progressive are involved in bankruptcy proceedings. Pursuant to the proposed settlement, Harry's would pay Progressive $4 million in exchange for the satisfaction of all debt owed to Progressive including $ 15.5 million of convertible debt; the termination of all consulting obligations between the parties; the termination of warrants to purchase 2 million shares of Harry's common stock, and the surrender by Progressive of its rights to use Harry's intellectual property. The settlement, upon consummation, would result in a complete termination of the business relationship between Harry's, Progressive and Boston Chicken. The settlement is subject to Harry's obtaining adequate financing, and, if necessary, the consent of its senior lender. In addition, the settlement must be consummated within 30 days of the bankruptcy court approval, unless extended an additional 15 days by the parties. If the settlement does not close within this time frame, additional bankruptcy court approval would be required. COSTILLA ENERGY: Files Chapter 11 Bankruptcy -------------------------------------------- Costilla Energy, Inc. (OTC Bulletin Board: COSE) reported today that it has filed a petition under the provisions of Chapter 11 of the United States Bankruptcy Code with the U.S. Bankruptcy Court in Midland. The action was taken by the Company to implement a restructuring of its liabilities, which include $180 million in unsecured 10 1/4 % Senior Notes, $26.5 million in secured debt under a bank credit facility, $50 million of convertible preferred stock, and hedging obligations. The Company was not in default on its senior notes or bank obligations at the time of filing, and has been in discussions with a steering committee of its senior note holders and with its bank group for the past several weeks. Under Chapter 11, Costilla will continue, without interruption, its oil and gas operations in the ordinary course of business, and intends to file a reorganization plan with the U.S. Bankruptcy Court as soon as practicable. The Company has conducted an extensive review of potential restructuring options in consultation with its financial advisors Petrie Parkman & Co., and expects to conclude its evaluation of these options within the next few weeks. Costilla also reported that its common stock is now quoted on the OTC Bulletin Board under the symbol COSE or COSE.OB. Costilla Energy, Inc. is an independent oil and gas company with operations primarily in the Gulf Coast region of South Texas and the Permian Basin of West Texas and Southeastern New Mexico. COVENTRY HEALTH CARE: Reports Income For Quarter ------------------------------------------------ Reporting on results of its three months and six months ended June 30, 1999 Coventry Health Care Inc. indicates the quarter's revenues were $531,831 with net income of $9,157. In the same quarter, ended June 30, 1998, net revenues were reported at $583,804 but net loss ensued of $27,756. In the nine month period ended June 30, 1999 net revenues were $1,059,678 with a net income of $17,450. In the same period of 1998 net revenues were $914,013 with net losses of $23,049. DOW CORNING: Reports Financial Results -------------------------------------- Dow Corning Corp. today reported global sales for the full year of 1998 of $2.57 billion, down 3 percent from $2.64 billion reported for 1997. The company reported a net loss of $595 million for the year, including a special charge of $1.27 billion ($802 million after tax) representing its best estimate of the anticipated financial consequences to resolve all claims arising from its Chapter 11 proceeding and from the breast implant controversy. Excluding the special charge, 1998 net income would have been $207 million, down 31 percent from prior year net income of $238 million. Dow Corning also reported global sales for the first half of 1999 of $1.28 billion, unchanged from the same period last year. Consolidated net income was $47 million for the first half of 1999, down 53 percent from $101 million reported in the first half of 1998. "Although sales revenue in 1999 began to recover in Asia, operations in both Europe and the Americas failed to deliver first-half growth," said Gifford Brown, Dow Corning's vice president for planning and finance and chief financial officer. "Our 1999 net income was also influenced by higher interest expenses related to our Joint Plan of Reorganization and higher Chapter 11 reorganization expenses. And while costs associated with funding our Joint Plan will have a significant impact on our financial performance, we are confident that we have the financial strength to meet all of our commitments under the Joint Plan while continuing to excel in satisfying our customers." Dow Corning, a global leader in silicon-based materials, is a Michigan corporation with shares equally owned by The Dow Chemical Co. (NYSE: DOW) and Corning Incorporated (NYSE: GLW). More than half of Dow Corning's sales are outside the United States. FACTORY CARD: Reports Nasdaq Notification Delisting Common Stock ---------------------------------------------------------------- Factory Card Outlet Corp. (Nasdaq: FCPYQ) announced today that it has been notified by the NASDAQ/AMEX that the Company's common stock has been delisted from the NASDAQ National Market, effective at the close of business on September 1, 1999, as the result of uncertainties concerning the chapter 11 cases of the Company and its operating subsidiary. The Company is considering requesting the NASDAQ Listing and Hearing Review Council to review the delisting decision, which request must be made with 15 days after the September 1, 1999 date of such decision. Factory Card Outlet is a chain of company owned stores offering a vast assortment of party supplies, greeting cards, gift wrap and other special occasion merchandise at everyday value prices. FIRSTPLUS FINANCIAL: Seeks To Compromise Controversy ---------------------------------------------------- The debtor, Firstplus Financial Inc. seeks to compromise a controversy with Bear Stearns Entities. The controversy arose because Bear Stearns Trust and BSIL (Bear Stearns International, Limited)contend that the transactions under two repurchase agreements constitute true sales of the Mortgage Loans and the Residual Certificates. Conversely, the debtor asserts that the transactions merely reflect secured loan transactions between the parties in which the debtor is the borrower and the Mortgage loans and the residual Certificates serve as the collateral securing the debtor's obligations to Bear Stearns Trust and BSIL. Based on their respective positions, the debtor asserts that the mortgage income constitutes cash collateral, while Bear Stearns Trust contends that it owns the mortgage income. Similarly, the debtor asserts that the residual income constitutes cash collateral, while BSIL contends that it owns the residual income. The material terms of the compromise include: The debtor will cooperate with BSMCC in marketing and selling all Mortgage Loans held by Bear Stearns Trust under the Trust Repurchase Agreement, and will seek orders of the court as appropriate to facilitate the sales. The debtor will pay all proceeds of the mortgage Loans to Bear Stearns Trust for application to the debtor's obligations to Bear Stearns Trust and to BSIL. The Residual Certificates held by BSIL with the debtor and the Residual Income will be assigned to BISL. BSIL will have an allowed unsecured claim in the amount of $4.8 million. BSC will release the debtor. The debtor will provide BSIL with a copy of all data it has relevant to the performance of the mortgage loans. The debtor will pay $35,000 to BSMCC as an administrative expense. BSIL and Bear Stearns Trust will withdraw their opposition to payment of the $5600,000 held back from the debtor's settlement with US Bank pursuant to a certain court order. FORCENERGY: US MMS Files $ 255-MIL Claim Against FORCENERGY ----------------------------------------------------------- As reported in Platt's Oilgram News on August 5, 1999, efforts by big Gulf of Mexico E&P independent Forcenergy to quickly extricate itself from Chapter 11 bankruptcy may have suffered a blow when the US Minerals Management Service filed a $255-mil claim against the Miami firm for potential costs of plugging and abandoning (P&A) offshore wells and production platforms. The claim far exceeds the $ 95-mil of surety bonds the MMS says Forcenergy has posted and would worsen what Forcenergy admits was a $110-mil shortfall of assets to its $ 787-mil of liabilities at Mar 31, 10 days after its bankruptcy filing in New Orleans. Moreover, the MMS says its claim stands ahead of even secured bank creditor ING, owed $ 320-mil, and cannot be "discharged" by bankruptcy reorganization. Forcenergy could become a test case for such arguments. Forcenergy has 64% of its 111-mil boe of reserves in the Gulf of Mexico, with 18% in Alaska's Cook Inlet. At Dec 31 it operated 115 structures and 546 wells in the Gulf on 60 leases. It has working interests in 217 blocks, with 100% of 50 and more than 50% in another 38. Its share of future abandonment costs is an estimated $ 119-mil, with $ 2-mil to be spent this year. Forcenergy claims it has been accruing for those costs. Like many companies, it claims salvage values will mostly offset the P&A costs. If upheld by the bankruptcy court, the huge MMS claim could vastly complicate efforts by Denver rail, oil and telecom magnate Phil Anschutz to push through a reorganization plan expected to be unveiled next week in conjunction with Forcenergy management. That plan would likely give equity control to Anschutz, Lehman Bros and Los Angeles' Oaktree Capital, which have acquired a dominant position in the $ 375-mil of defaulted Forcenergy junk bonds that stand next in line behind ING to be paid. Anshutz is already a major E&P player in the Gulf through his 40% stake in Denver-based Forest Oil. Industry speculation is that the two firms could eventually merge or otherwise share in a carve-up of Forcenergy assets. Sources close to the Anschutz camp indicate that despite the giant claim filed by MMS, the actual cash impact of the claim may be much, much smaller. Ultimately, sources say, the MMS P&A problem might be resolved by posting only about $ 10- to $ 15-mil of additional bonds. Even if the company has to post cash or treasury bills as collateral, the sources say, the funds should be available from what appears to be the company's continuing $ 40-mil a year of cash from operations on revenues running at about $ 240-mil a year in the first quarter. The Anschutz reorganization plan would effectively turn $ 375-mil of debt to equity and cut interest costs by $40-mil a year. A Forcenergy spokesman declined to comment on the MMS claim, saying it is one of many now being evaluated. The filing deadline for claims was July 30. In addition to the MMS, it is believed numerous firms that sold properties to Forcenergy during its frenetic buying spree in recent years have also filed to cover themselves in case the MMS seeks P&A payments from prior owners. The $255-mil MMS claim appears to cover 100% of the potential costs of plugging and removing any property Forcenergy has ever had an interest in. That appears to be a move by the MMS to discourage Forcenergy from walking away from played-out Gulf of Mexico properties that are no longer economic. Even though the MMS could seek recovery from other partners in those properties or past owners, the agency's huge claim has put Forcenergy-or any other operators-on notice it will not be able to merely milk properties of cash and then dump the problems onto taxpayers. Forcenergy management and the Anschutz group had initially hinted their reorganization plan would take advantage of bankruptcy rules to relinquish an undisclosed number of uneconomic Gulf leases. In addition, the MMS claims $ 3.5-mil of unpaid royalties and $ 585,000 of unpaid civil penalties. Forcenergy's failure to meet those routine obligations may have been viewed by MMS as evidence of bad faith, said a source close to the agency. Complicating the Forcenergy case is the fact that the vast bulk of its offshore surety bonds have been written by Planet Indemnity, a thinly-capitalized affiliate now of Illinois-based RLI (ON 2/24/97). Only about half of the bonded amounts have been reinsured and Planet is said to have net worth of only about $10-mil. If the MMS or Forcenergy began calling those bonds to cover actual P&A costs, Planet could cancel its coverage, forcing Forcenergy to find a replacement insuror, said an industry source. Moreover, worries about future claims could prompt the sellers of Gulf properties to insist on their own separate surety bonds from buyers, ratcheting up operating costs. GENEVA STEEL: Operating As DIP, Reporting 3- & 9-Month Losses ------------------------------------------------------------- Geneva Steel Company, having filed Chapter 11 bankruptcy proceedings on February 1, 1999, has been operating as a debtor- in-possession. For the three months ended June 30, 1999 the company reports net revenues of $87,000 with net losses of $29,491. In the same period of 1998 net revenues were $188,735 with net income of 2,013. In the nine months ended June 30, 1999 Geneva Steel had net revenues of $225,044 but sustained net losses of $121,587. In the similar period of 1998 Geneva's net revenues were $562,653 with net income of $2,690. GULF STATES STEEL: Committee Taps PricewaterhouseCoopers -------------------------------------------------------- The Official Committee of Unsecured Creditors filed an application for employment of PricewaterhouseCoopers LLP as financial advisors to the committee. The firm will provide the following services: Assistance in the analysis of proposed transactions for which Bankruptcy Court approval is sought; Assistance in the analysis of creditor claims by type and entity; Assistance in negotiations and attendance at meetings with the Unsecured Creditors' Committee, the debtor, lenders, other parties in interest, or their professionals, as requested; Assistance in the review or development of business plans, liquidation analyses and feasibility analyses, and other special projects or reports; Assistance in the review, negotiation and promulgation of any plan of reorganization; Performance of such other functions as requested by the Unsecured Creditors' Committee or its counsel, including, but not limited to an analysis of preferences, fraudulent transfers, other potential claims and other Unsecured Creditors' Committee transactions. Professionals for the firm charge hourly rates ranging from $395 per hour to $80 per hour. HARVARD INDUSTRIES: 2nd Quarter Post-Confirmation Figures --------------------------------------------------------- Following the recently reported financial figures for the first quarter of 1999, Harvard Industries Inc. is reporting second quarter, ended June 30, 1999, net revenues of $169,234; net losses of $7,313. In the same quarter of 1998 the net revenues were $129,908 with net losses of $14,613. The 1999 figures are post-confirmation while in 1998 the figures cited were pre-confirmation. IMAGYN MEDICAL: Seeks Order Granting Post Petition Financing ------------------------------------------------------------ The debtors, Imagyn Medical Technologies, Inc., et al. seek an interim order authorizing a third round of post-petition financing, authorizing use of cash collateral. The debtors seek court authorization to borrow from BT Commercial Corporation as agent for BTCC and Credit Suisse First Bostopn Management Corporation $4 million as a superpriority administrative claim and granting adequate protection. Upon the court's authorization of the third post-petition financing, the total amount of post petition financing will be $12 million. The debtors anticipate that they will initially on an emergency basis draw down from the third post-petition financing approximately $1 million to satisfy their payroll, vendor, lease and other operating obligations. Additionally, the availability of funds under the financing will enable the debtors to continue operations through October 1999 when the debtor s currently project their plan will be effective. INCOMNET: Files for Bankruptcy to Implement Restructuring --------------------------------------------------------- Incomnet Inc. and Incomnet Communications Corp, Irvine, Calif., announced yesterday that they have filed for chapter 11 protection in order to facilitate a financial restructuring. Incomnet CC, a provider of long distance telecommunications services, said the filing will allow new management time to reorganize and possibly implement a debt-for-equity exchange, merger or another transaction. Executive Vice President and CFO George Blanco said other alternatives to filing were explored, including a sale of assets, a merger, scaling back operations and restructuring debt. Bankruptcy was determined to be in the best interest of all the constituents he said. (ABI 03-Sept-99) KIWI AIRLINE: Trustee Seeks to Liquidate Airline ------------------------------------------------ The turbulent life of Kiwi International Air Lines moved a step closer to ending as its bankruptcy trustee Thursday requested court permission to liquidate the few remaining assets of the grounded carrier. Unless a buyer surfaces in the next few weeks, trustee Charles A. Stanziale Jr. said he expects the liquidation would be approved later this month. Efforts over the past several months to find a buyer proved fruitless. "I've talked to dozens of people who expressed interest, initial interest, and who for various reasons decided this wasn't for them. I reached out every place I could," Stanziale said. Kiwi, now in its second bankruptcy, struggled since its founding in 1992 by airline employees who had lost their jobs at other carriers, mostly Pan Am and Eastern. The founders chose the name of a flightless bird for their employee-owned enterprise to symbolize the loss of their wings at their old airlines. At its peak in the mid-'90s, the Newark-based airline had 1,200 employees, 15 leased jets and flew 65 flights a day. Its destinations, at various times, included Atlanta, Bermuda, Boston, Chicago, Las Vegas, Puerto Rico, and Miami, Orlando, Tampa and Palm Beach in Florida. But Kiwi was beset by debt and was shut down three times by regulators, although pilots proudly touted a safety record that "never scratched a wing." It emerged two years ago from its first bankruptcy when Baltimore surgeon Charles C. Edwards bought the airline and took majority ownership of the company from the employees. A message left Thursday for Edwards, who oversaw the airline until Stanziale was named trustee, was not returned. Kiwi suffered from the beginning because it did not have enough money to weather the hardball tactics of giant carriers such as Continental Airlines, which has a major hub at Newark International Airport, said Tom Parsons, editor and publisher of Bestfares.com, a travel magazine and Web site. While Kiwi got good ratings for service and food, it was forced to add and drop cities when bigger airlines dropped prices. "We never knew one week to the next where they were flying," Parsons said. The Kiwi name now has no market value, and better-funded discount startups in the region made it an unlikely purchase, he said. Kiwi entered what now appears to be its death spiral in March, when the Federal Aviation Administration grounded it, saying it was unable to fly safely. Kiwi declared Chapter 11 bankruptcy, hoping to reorganize, and laid off nearly all of its 500 workers and surrendered its four leased jets as it looked for a rescuer. Pan Am Airways had offered to buy Kiwi in March for $3 million, but that plan collapsed when Kiwi could not immediately regain its flight certificate. Papers filed Thursday in U.S. Bankruptcy Court here seek to convert the bankruptcy to Chapter 7, liquidation, claiming more than $20 million in debts. Stanziale said Kiwi's biggest and first creditor, the Internal Revenue Service, is owed about $12 million, but will only get about $1 million from the collection of some $1 million owed to Kiwi. MIDCON OFFSHORE: Unsecured Creditors To Get 7 Cents on Dollar ------------------------------------------------------------- Platt's Oilgram News reports on August 2, 1999 that the bankruptcy of former Houston-based Gulf of Mexico operator Midcon Offshore is being settled, with unsecured creditors to get less than seven cents on the dollar for their $10-mil in claims. Lawyers, accountants and other professionals will reap almost $5-mil in fees, despite giving up 35% of their final claims. Little or nothing will go to hundreds of Midcon working-interest partners, mainly wealthy New Yorkers. Midcon's owner John Ehrman, now president of Playa Minerals & Energy, may avoid further liability despite suspicions he transferred mineral and other assets out of the company before it filed Chapter 11 in December 1996. A litigation trust will be formed to pursue such claims, but would have no funding. "We're generally very pleased with the outcome," said Midcon attorney Trey Monsour of Verner, Lipfert, Bernhard, McPherson. "This case has been inundated with litigation from the beginning. It was very litigious and ugly. We're glad to see a census that makes sense and allows the unsecured creditors to get some recovery." Court-appointed trustee Sheila Macdonald,agreed to take only $450,000 of her authorized $ 1.2-mil fee. In the settlement, Louis Dreyfus Natural Gas agreed to take $8.6-mil for its $ 14-mil secured claim from a 1994 property sale on which Midcon reneged. LDNG kept the property and won a verdict for damages, for which Midcon granted a note and liens. Ehrman cited the LDNG debt and a cash crunch in putting Midcon into Chapter 11. He insisted it would be a brief reorganization, paying 100-cents on the dollar. At the time, he said Midcon had $100-mil of properties against just $ 22-mil of claims. But the assets were auctioned in 1997 to Basin Exploration and Hall-Houston Oil for only $ 34-mil. After paying $ 10-mil of post-bankruptcy borrowings and other obligations, only $ 15-mil remains for creditors. More than half would go to LDNG. MONTGOMERY WARD: Adversary Proceeding Against AIG ------------------------------------------------- As promised in the course of the Confirmation Hearing, the Debtors commenced an adversary proceeding against American International Group seeking the return of a $5,000,000 payment made to AIG within the 90-day period prior to the Petition Date. The Debtors contend that $5,000,000 payment constitutes a classic preference, is avoidable under chapter 5 of the Bankruptcy Code, and the amount of money equal to the difference between $5,000,000 and what AIG would receive as a general unsecured creditor of the Debtors' estates should be returned for pro rata redistribution to the Debtors' other creditors. NEW WORLD COFFEE: Revenue & Income Up ------------------------------------- Showing profitable periods for 1999 New World Coffee Manhattan Bagel Inc. reports net income in the quarter ended June 27, 1999 of $549,854; and for the first six months of the year net income of 892,737. The net revenues for the respective periods were $9,788,140 for the quarter and $19,367,977 year to date. For comparison, the second quarter of 1998 showed net income of $71,604, with net income in the first six months of $133,948. The respective net revenues for the same periods were $4,015,194, second quarter 1998, and $7,800,414 for the first six months of 1998. NEXTWAVE: Injunction Against Nextel Extended to Sept. 9 ------------------------------------------------------- The U.S. Bankruptcy Court in White Plains, N.Y., has extended NextWave Personal Communications Inc.'s temporary retraining order granted against Nextel Communications Inc. through Sept. 9. The court's Aug. 25 order also notes that the parties have been directed to commence discovery in the adversary case, absent an agreed extension to the stay of discovery that was set to expire on Aug. 25. The court also mandated that objections to NextWave's request for a preliminary injunction preventing Nextel from contacting parties in interest in the case are due on Sept. 3 and replies to the objections are due Sept. 7. (The Daily Bankruptcy Review and ABI September 3, 1999) PHILIP SERVICES: Seeks To Reject Certain Leases ----------------------------------------------- The debtors, Philip Services (Delaware) Inc., et al. seek authorization to reject certain unexpired real property leases, personal property leases and executory contracts. In an effort to reduce postpetition administrative costs and in the exercise of the debtor's business judgment, the debtors have determined that the rejection of the leases and contracts is in the best interests of the estates. Included in the rejections are approximately 10 property leases, and approximately 12 equipment leases. The remainder are settlement agreements and employment agreements and contracts. PINNACLE BRANDS: Seeks Extension of Exclusive Periods ----------------------------------------------------- The debtors, Pinnacle Brands, Inc. and its debtor affiliates seek an extension of the debtor's exclusive periods within which to file a plan or plans of reorganization and solicit acceptances thereof. A hearing will take place on September 23, 1999 at 2:00 PM. The debtors seek entry of an order further extending the Exclusive Filing Period for approximately 60 days, to and including November 1, 1999, and further extending the Exclusive Solicitation Period also for approximately sixty days to and including January 3, 2000. The debtors assert that they are making progress in the cases, that they have concluded the ale of their Optigraphics assets to Performance and are now undertaking the claims reconciliation process. In addition, the debtors are engaged in the process of formulating and finalizing a consensual liquidating plan of reorganization and have had numerous discussions with their various creditor constituencies regarding obtaining their consent to such a plan. PIONEER FINANCE: Disclosure Statement Approved ---------------------------------------------- Santa Fe Gaming Corp., La Vegas, announced yesterday that on Monday the Bankruptcy Court for the District of Nevada entered an order approving the disclosure statement filed to accompany the joint reorganization plan filed by Pioneer Finance Corp. and Pioneer Hotel Inc., according to a newswire report. The plan was filed in accordance with the consents obtained from holders of about 75 percent of the outstanding principal amount of 13.5 percent first mortgage notes. The company also announced that on Aug. 20, the court dismissed the involuntary petition filed against Santa Fe Gaming in January by certain Pioneer Finance noteholders who did not consent. The court issued its ruling after Santa Fe Gaming filed the necessary waivers from insiders, pursuant to a March order. (ABI 03-Sept-99) PLUMA INC: Revenues Down & Losses Up In 1999 -------------------------------------------- Pluma Inc. filed for Chapter 11 bankruptcy protection on May 14, 1999 and since that time has been operating as a debtor-in- possession. In reporting its most recent operating activity the company shows net sales for the six months ended June 30, 1999 were $74.5 million, a decrease of $15.7 million, or 17.4% over net sales of $90.2 million for the first six months of 1998. Net sales for the second quarter of 1999 were $36.9 million, a decrease of $14.2 million, or 27.8% from net sales of $51.1 million for the second quarter of 1998. The net losses resulting from operations were reported as $34.4 million for the quarter ended June 30, 1999, and $44.4 million in the six month period. In 1998 the quarter's net losses were 1.7 million and 2.6 million in the six month period. PRESTON TRUCKING: Seeks Court Approval To Pay $92M To Creditors --------------------------------------------------------------- Preston Trucking Co. is seeking bankruptcy court approval to begin selling property and equipment to pay off $ 92 million owed to creditors. The company will ask for permission to sell 22 real estate holdings this week, and more sales or auctions are expected. "We are trying to find buyers," said Lawrence Katz, one of the attorneys for the Preston-based company. Katz was among the Preston attorneys who met with creditors Wednesday at the U.S. Trustee's office. "Once we have created that pot of money, we will file our plan of reorganization to show how that money will be divided up," Katz said. The company, which consolidated other hauling firms' partial truckloads for regional shipments, had as many as 6,100 employees nationwide, including several hundred in Maryland, before it filed for Chapter 11 bankruptcy July 30. Preston drivers are now delivering the last truckloads in its system, and the company is down to 150 workers. Chief Financial Officer Sean Callahan said Preston expects to earn about $65 million by selling real estate holdings at truckyards in the Northeast, Mid-Atlantic and Midwest, and an additional $ 30 million by selling trucks and equipment. The company also expects to recover $ 42 million owed by customers, he said. Preston owes $ 47 million in secured loans and $ 45 million in unsecured loans. The largest creditor is a New York lender, Congress Financial Corp., which is still owed $ 33 million, said Stephen Leach, a bankruptcy attorney for Preston. Callahan, Preston President David Letke, and Chief Operating Officer Nicholas Marino bought the trucking company from Kansas City-based Yellow Corp. in July 1998. Protracted contract negotiations hurt earnings, and the company never recovered. On July 26, banks told Preston they would not provide advances to pay the company's workers, prompting the decision to file for bankruptcy. "We were out of cash," Letke said. That afternoon, Letke said he let workers know the company was shutting down, and sold its customer list to Yellow for $ 300,000. R SQUARED INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: R Squared Inc. 555 West 57th Street Suite 1240 New York, NY 10019 Court: District of Delaware Date Filed: 09/02/99 Chapter 11 Case No. 99-2980 Debtor Attorneys : Kaye, Scholer, Fierman, Hays & Handler, LLP 425 Park Avenue New York, NY 10022 Young Conaway Stargatt & Taylor LLP 11th Floor - Rodney Square North PO Box 391 Wilmington, Delaware 19801 Total Assets: $56,757,000 Total Liabilities $52,420,000 Fixed Liquidated Secured Debt $25,247,068 - 6 holders Contingent Secured Debt $8,631,932 - 1 holder Capital Lease Obligations $5,859,000 - 10 holders Fixed, Liquidated Unsecured Debt $12,682,000 -800 holders Shares of Common Stock 100 - 1 holder RAINTREE HEALTHCARE: 35.7% Drop In Revenue ------------------------------------------ In the 1999 second quarter, RainTree Healthcare Corporation recorded a net loss of $4.9 million compared to a net loss of $5.0 million in the prior year quarter. Net loss for the 1998 second quarter includes reorganization expenses amounting to $868,00. Total revenues decreased $17.2 million, or 35.7%, to $30.9 million in the 1999 second quarter from $48.1 million in the comparable 1998 quarter. The 1999 quarter figures reflect RainTree as the reorganized company whereas in 1998 the figures were for the predecessor company. SANTA FE GAMING: Reports $11M Loss For Nine Month Period -------------------------------------------------------- Consolidated revenues of Santa Fe Gaming Corporation, for the nine month period ended June 30, 1999, were $94.7 million, representing a $9.8 million, or 11.5%, increase from $84.9 million for the same period in the prior year. Revenues increased by $6.5 million at the Santa Fe and $3.4 million at the Pioneer. Consolidated net loss for the nine month period ended June 30, 1999 was $11.3 million, representing a $1.1 million, or 8.6%, decrease compared to $12.4 million in the same period in the prior year. Consolidated revenues for the three month period ended June 30, 1999 were $32.3 million, representing a $3.5 million, or 11.8%, increase from $28.8 million for the same period in the prior year. Revenues increased by $2.6 million at the Santa Fe and $900,000 at the Pioneer. Consolidated loss for the three month period ended June 30, 1999 was $5.6 million, representing a $1.6 million, or 38.6%, increase compared to $4.0 million in the same period in the prior year. The management of Santa Fe Gaming has said it believes that the corporation has sufficient working capital and available resources, primarily proceeds which may be available to Corporate from the possible disposition or refinance of subsidiary assets, or from possible modifications of subsidiary debt obligations to meet its cash requirements through the period ending June 30, 2000, excluding debt service obligations including guarantees, although no assurance can be given to that effect. If demand for payment is made under the company's guarantee of subsidiary debt and it is unable to satisfy such debt, the company says it is likely it would file for relief under Chapter 11 of the Bankruptcy Code. SERVICE MERCHANDISE: Seeks Adequate Protection For Noteholders -------------------------------------------------------------- Prior to the Petition Date, Service Merchandise issued $90,000,000 of First Mortgage Secured Notes due June 28, 2000, under a 1990 Indenture among HSBC Bank USA, as Indenture Trustee, Service Merchandise, H.J. Wilson Company, Inc., a debtor- affiliate, and Long-Term Credit Bank of Japan Limited. The Debtors' obligations under these Senior Secured Notes are secured by mortgages, deeds of trust and deeds relative to 32 fee-owned and leased properties. H.J. Wilson guarantees Service Merchandise's obligations. HSBC has demanded adequate protection of the Noteholders' security interests. Negotiations have culminated in an agreement that: (a) Service Merchandise will pay $750,000 per quarter to HSBC; (b) the Debtors will remit all proceeds to HSBC arising from the sale of an encumbered property; (c) to the extent that the value of the Noteholders' Collateral diminishes after April 15, 1999, the Noteholders will hold a claim pari passu with the DIP Lenders' claims equal to the extent of any diminution; (d) the Debtors will pay all real estate taxes and assessments as they become due and will maintain adequate insurance; (e) this agreement will terminate on the earlier of (1) substantial consummation of a plan of reorganization; (2) conversion to a chapter 7 proceeding or appointment of a trustee; and (3) a payment default not cured within 10 business days. (SERVICE MERCHANDISE Bankruptcy News Issue 9; Bankruptcy Creditors' Service Inc.) SERVICE MERCHANDISE: Seeks To Amend Executive Security Plan ----------------------------------------------------------- The Debtors, Service Merchandise, seek authority to (a) amend the 1982 Executive Security Plan entitling certain current and former employees to pension benefits and (b) freeze benefit payments under that Plan. The Debtors tell the Court that the Plan was adopted in 1982 and covers employees who enrolled before 1990. There have been no new enrollments for the past decade. Today, the Plan covers 86 current employees and 33 retirees. In the year prior to the Petition Date, the Debtors paid out approximately $600,000 under the Plan. The Debtors halted benefit payments on the Petition Date. The primary benefit offered under the Plan is two times each employee's annual salary at the time of retirement or termination, payable when certain age and service requirements are met. The benefit is paid in 120 monthly installments. The Plan was restated in 1997 to provide that Service Merchandise may amend or terminate the Plan, in whole or in part, by written instrument identified as an amendment effective as of a specific date and may make such amendment retroactive is deemed necessary or appropriate. Hence, the Debtors say, they have the explicit right to amend or terminate the Plan. By amendment, the Debtors contemplate splitting the plan into three separate plans: * Plan I will cover participants who are current employees; * Plan II will cover former employees who are vested; * Plan III will cover former employees who are not vested. Ultimately, the Debtors suggest, the participants interests in the Plan reduce to general unsecured claims. It will be easier, the Debtors suggest, to deal with these claims if they are segregated into three distinct groups rather than lumped together. (SERVICE MERCHANDISE Bankruptcy News Issue 9; Bankruptcy Creditors' Service Inc.) SHOE CORP: Extension Granted To Assume or Reject Leases ------------------------------------------------------- The US Bankruptcy Court for the Southern District of Ohio entered an order extending the time within which the debtors must move to assume or reject their unexpired leases of nonresidential real property. It is ordered that the time is extended to and including December 11, 1999. SILICON GAMING: Operating Losses Continue ----------------------------------------- At June 30, 1999 Silicon Gaming Inc. had cash and equivalents of $3,194,000. The company has incurred operating losses each year since inception and as of June 30, 1999 had an accumulated deficit of $92,509,000 and a deficiency of shareholders' equity of $30,052,000. The company has been required to obtain additional financing each year to be able to fund its ongoing operations. Based on historical levels of cash usage, the above factors raise substantial doubt about the company's ability to continue as a going concern. Revenue for the quarter ended June 30, 1999 was $5,727,000, a decrease of $2,534,000, or 31%, from $8,261,000 for the quarter ended June 30, 1998. Net losses were 3,199,000 in the 1999 quarter and $5,428,000 in the comparable period of 1998. Revenue for the six months ended June 30, 1999 was $11,388,000, a decrease of $899,000, or 7%, from $12,287,000 for the six months ended June 30, 1998, and net loss in 1999 to date is $12,239,000 compared to the same period of 1998 when net losses were $12,192,000. Silicon Gaming is headquartered in Palo Alto, California and has sales offices in Reno and Las Vegas, Nevada, and in Gulfport, Mississippi. The company's products are now manufactured at the company's location in Las Vegas, Nevada. At June 30, 1999 the company had 78 employees. SYSTEMSOFT: Seeks Approval of Stipulation of Compromise ------------------------------------------------------- The debtor, Systemsoft Corporation seeks approval and authorization to perform obligations under a Stipulation of Compromise, Settlement and Dismissal. SystemSoft and certain of its current and former officers and directors were named in a series of securities class action complaints that have been consolidated and are currently pending in the US District Court for the District of Massachusetts. The debtor claims that if the court does not approve the settlement, class plaintiffs and other class members will assert claims in the reorganization proceedings. Each of the individual defendants have filed proofs of claim in the amount of over $80 million which would be pursued if the settlement of the class action is not completed. The stipulation of compromise provides that Zurich Insurance Company has created a cash settlement fund in the amount of $2.9 million to be payable to the Plaintiff class after the Effective Date of the Settlement. The insurers have also agreed to fund a portion of the costs and administration of the settlement. The debtors allege that the settlement is reasonable in light of the chances of success in the various controversies that are being resolved under the Stipulation of Compromise as amended. TRANSTEXAS GAS: Objection of Bondholder Lenders ----------------------------------------------- The Bondholder Lenders and the Bondholders' Committee of Transtexas Gas Corporation et al. object to the motion for appointment of a Mineral Property Holders' Committee. The Bondholders state that there is no reason for an additional committee in these cases. They state that the movants are motivated "purely by self interest" and have not demonstrated any need for the Committee. The Bondholder Lenders and the Bondholders' committee are particularly worried about the astronomical costs associated with additional committees. UNITED PETROLEUM: Objection To Plan ----------------------------------- Dan Dotan and Mantel Investments, investors in approximately $3.1 million face value of United Petroleum Convertible Debentures issued in 1996 hereby object to the second amended plan of reorganization of United Petroleum Corporation. The objectors state that the plan contains numerous provisions which render it unconfirmable. The releases and injunctions in favor of the Infinity parties evidences that the plan fails to be filed in good faith. The objectors state that the plan would improperly release the Infinity parties from liabilities to the objectors which do not constitute securities claims under the plan. They also state that the plan unfairly discriminates against holders of Class 6 and 8 claims and interests, contrary to the Bankruptcy Code. UNITEL 53 LLC: Case Summary --------------------------- Debtor: Unitel 53 LLC 555 West 57th Street Suite 1240 New York, NY 10019 Court: District of Delaware Date Filed: 09/02/99 Chapter 11 Total Assets: $56,757,000 Total Liabilities $52,420,000 Fixed Liquidated Secured Debt $25,247,068 - 6 holders Contingent Secured Debt $8,631,932 - 1 holder Capital Lease Obligations $5,859,000 - 10 holders Fixed, Liquidated Unsecured Debt $12,682,000 -800 holders UNITEL 57 LLC: Case Summary --------------------------- Debtor: Unitel 57 LLC 555 West 57th Street Suite 1240 New York, NY 10019 Court: District of Delaware Date Filed: 09/02/99 Chapter 11 Total Assets: $56,757,000 Total Liabilities $52,420,000 Fixed Liquidated Secured Debt $25,247,068 - 6 holders Contingent Secured Debt $8,631,932 - 1 holder Capital Lease Obligations $5,859,000 - 10 holders Fixed, Liquidated Unsecured Debt $12,682,000 -800 holders UNITEL VIDEO: Case Summary & 20 Largest Creditors ------------------------------------------------- Debtor: Unitel Video, Inc. 555 West 57th Street Suite 1240 New York, NY 10019 Court: District of Delaware Date Filed: 09/02/99 Chapter 11 Debtor Attorneys : Kaye, Scholer, Fierman, Hays & Handler, LLP 425 Park Avenue New York, NY 10022 Young Conaway Stargatt & Taylor LLP 11th Floor - Rodney Square North PO Box 391 Wilmington, Delaware 19801 Total Assets: $56,757,000 Total Liabilities $52,420,000 Fixed Liquidated Secured Debt $25,247,068 - 6 holders Contingent Secured Debt $8,631,932 - 1 holder Capital Lease Obligations $5,859,000 - 10 holders Fixed, Liquidated Unsecured Debt $12,682,000 -800 holders Shares of Common Stock 2,714,866 - 355 holders Holders of Largest Unsecured Claims: Name Nature Amount ---- ------ ------ Allegheny County (Pa) Loan $8,525,000 Industrial Development Authority GE Capital Business Asset funding Equipment Lessor $3,361,000 Charter Financial Inc. Equipment Lessor 2,156,000 Terminal Finance Corp. II Equipment Lessor 3,103,000 Finova Capital corp. Equipment Lessor 2,657,000 MBL Construction Co. Construction Services 559,159 American Express Credit Card Charges 440,000 Parker Chapin Flattau & Klimpl Professional 387,568 Educational Broadcasting Real Property Lessor 251,754 CBS Real Property Lessor 144,734 Tektronix Inc. Services 137,903 Sony Pictures Entertainment Real Property Lessor 137,777 Quantel Corp. 132,360 Aetna US Healthcare Medical Insurance 120,143 Bexel Corp. Equipment Rental 105,655 Chase Manhattan Bank Bank Services 95,000 Acctrade Capital Inc Trade Acceptances 86,681 DC Architects Professional Services 82,890 Sony Corp of Regional Service Equipment Sales 82,594 Lasher/White (n/k/a Source NY) Services 80,238 Scitex Digital video, Inc. Equipment Sales 78,541 UNITEL VIDEO: Files for Chapter 11 Protection --------------------------------------------- Unitel Video Inc. and three of its affiliates filed for chapter 11 protection yesterday in Delaware, according to a newswire report. Unitel, which provides studio and mobile production facilities and post-production services to the major U.S. entertainment companies, listed assets of $56.8 million an liabilities of $52.4 million, including $12.7 million in unsecured debt with 800 claimants. Secured debt of $25.2 million consists of a revolving credit and term loan agreement with Heller Financial Inc. and three mortgages on Unitel property; in addition, there is $8.6 million in contingent secured debt and $5.8 million in capital lease obligations. Among the 20 largest unsecured creditors are Allegheny County (Pennsylvania) Industrial Development Authority, GE Capital Business Asset Funding Corp. and Terminal Finance Corp. (ABI 03-Sept-99) * Meetings, Conferences & Seminars ---------------------------------- September 13-15, 1999 STATES' ASSOCIATION OF BANKRUPTCY ATTORNEYS 8th Annual States' Taxation & Bankruptcy Conference Hotel Santa Fe, Santa Fe, New Mexico Contact: 1-505-827-0728 September 16-18, 1999 AMERICAN BANRKUTPCY INSTITUTE Southwest Bankruptcy Conference The Hotel Loretto, Santa Fe, New Mexico Contact: 1-703-739-0800 September 17, 1999 GEORGETOWN UNIVERSITY LAW CENTER & THE AMERICAN BANKRUPTCY INSTITUTE Bankruptcy '99: Views from the Bench Georgetown University Law Center, Washington, D.C. Contact: 1-202-662-9890 September 24-25, 1999 VIRGINIA CONTINUING LEGAL EDUCATION 14th Annual Mid-Atlantic Institute on Bankruptcy and Reorganization Practice Boar's Head Inn, Charlottesville, Virginia Contact: 1-800-979-8253 September 27-28, 1999 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. Conference on Corporate Reorganizations Regal Knickerbocker Hotel, Chicago, Illinois Contact: 1-903-592-5169 or ram@ballistic.com October 6-9, 1999 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES 73rd Annual Meeting San Francisco Marriott, San Francisco, California Contact: 1-803-957-6225 October 22-26, 1999 TURNAROUND MANAGEMENT ASSOCIATION 1999 Annual Conference The Fairmont--Atop Nob Hill, San Francisco, CA Contact: 1-312-822-9700 or ljfialkoff@turnaround.org November 17-20, 1999 AMERICAN BAR ASSOCIATION'S LATIN AMERICAN LAW SUBCOMMITTEE & THE ASSOCIATION OF COMMERCIAL BANKS OF THE DOMINICAN REPUBLIC Educational Exchange Case De Campo Resort, LaRomana, Dominican Republic Contact: 1-703-739-0800 November 29-30, 1999 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. Distressed Investing '99 The Plaza Hotel, New York, New York Contact: 1-903-592-5169 or ram@ballistic.com December 2-4, 1999 AMERICAN BANRKUTPCY INSTITUTE Winter Leadership Conference La Quinta Resort & Club, La Quinta, California Contact: 1-703-739-0800 May 4-5, 2000 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. Bankruptcy Sales & Acquisitions The Renaissance Stanford Court Hotel San Francisco, California Contact: 1-903-592-5169 or ram@ballistic.com The Meetings, Conferences and Seminars column appears in the TCR each Tuesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********** The Meetings, Conferences and Seminars column appears in the TCR each Tuesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. 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