/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/991215.MBX T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, December 15, 1999, Vol. 3, No. 241 Headlines ACME STEEL: Will Up Prices of Hot Rolled Carbon and Alloy Steel ALTA GOLD: Opposition To Rocky Canyon Mining's Relief From Stay AXIOHM IPB: Case Summary & 20 Largest Unsecured Creditors AXIOHM TRANSACTION: Case Summary AZTORE HOLDINGS: Successfully Manages the Chapter 11 BEAMALLOY CORP: Case Summary and 20 Largest Unsecured Creditors BELL GEOSPACE: Seeks Final Order To Use Cash Collateral BIG SMITH BRANDS: Taps Professionals BRS PRODUCTS: Colonial Commercial Subsidiary To Acquire BRS BRUNO'S: Creditors Vote to Accept Second Amended Plan EATON'S: Benefits Restored to Employees FLORIDA COAST: Seeks OK for Distress Termination of Pension Plans FORMAN PETROLEUM: Order Approves Amended Disclosure Statement FRANKLIN OPTHALMIC: Announces Liquidation HARNISCHFEGER: Seeks Approval of Beloit Asset Auction Procedures HIGH STRENGTH STEEL: Creditors File Involuntary Chapter 7 INTERNATIONAL WIRELESS: Supplemental Disclosure Statement IRIDIUM: Motorola Leads Effort To Prop Up Iridium JUST FOR FEET: Taps Thacher Proffitt & Wood as Special Counsel JUST FOR FEET: Taps The Finley Group as Turnaround Consultants KIWI: Judge Approves Liquidation LEVITZ: Seventh Motion To Extend Time To Assume & Reject Leases OPTEL INC: Interim Financing Order SIDANKO: Access Industries Claims Lawsuit is Frivolous SUN HEALTHCARE: First Meeting of Creditors TULTEX: Reports More Lay-Offs VENCOR: Trustee Objects To Committee Members' Proxies ********* ACME STEEL: Will Up Prices of Hot Rolled Carbon and Alloy Steel --------------------------------------------------------------- Acme Steel Company announced that it will increase transaction prices $ 30 per ton, effective with new orders promised for delivery April 2, 2000 or later, for hot rolled carbon and alloy sheet and strip steel products. Additional changes to the extras may be implemented as conditions warrant. Acme Metals Incorporated (OTC Bulletin Board: AMIIQ), through its operating subsidiaries, is a fully integrated producer of steel, steel strapping and strapping products, and welded steel tubing. On September 28, 1998, Acme Metals and its subsidiaries filed separate voluntary petitions for protection and reorganization under Chapter 11 of the United States Code. The Company is in possession of its properties and assets and continues to manage its business as debtor-in-possession subject to the supervision of the Bankruptcy Code. Its common stock is listed on the Bulletin Board of the National Association of Securities Dealers under the symbol AMIIQ. ALTA GOLD: Opposition To Rocky Canyon Mining's Relief From Stay --------------------------------------------------------------- The debtor, Alta Gold Co. opposes Rocky Canyon Mining Company's motion for relief from stay. The debtor states that the relief sought by Rocky Canyon is premature. Under the Rocky Canyon Lease, Rocky Canyon is required to give the debtor written notice of its default and a ten-day period to cured the default. The debtor states that it has not received written notice. The debtor states that there is no harm in denying Rocky Canyon's request for a further short period of time in order to give Warrior a full and fair opportunity to locate an interested buyer for the debtor's assets, including the Rocky Canyon leases. Warrior, is a division of Standard New York Trading Corp., appointed by the court in September to market the debtor's assets. AXIOHM IPB: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: AXIOHM IPB 950 Danby Road Ithaca, NY 14850 Axiohm Transaction Solutions, Inc. DH Technology, Inc. 1787 Sentry Parkway West 16 Sentry Park West, Suite 450 Blue Bell, PA 19422 Cognitive LLC, 15070 Avenue of Science San Diego, CA 92128 Cognitive Solutions, Inc., 3003 Rollie Gates Road Paso Robles, CA 93446 Stadia Colorado Corp. Case: 99-4153 Court: District of Delaware Chapter:11 Filed: November 8, 1999 Attorney For Debtor: Robert J. Dehney Morris, Nichols, Arsht & Tunnell 1201 North Market Street PO Box 1347 Wilmington, DE 19899-1347 20 Largest Unsecured Creditors: Creditor Nature of Claim Amount -------- ----------------- ------ GSCP Recover, Inc. Unsecured Note $34,917,000 Lehman Brothers, Inc. Unsecured Note $25,723,000 Tri-Links Investment Trust Unsecured Note $10,000,000 Touchstone Investment Opportunities Unsecured Note $2,652,000 Touchstone Renaissance Fund LLC Unsecured Note $2,039,000 Touchstone Investment Opportunities II Unsecured Note $1,769,000 C&J Industries Trade $252,030 NMB Technologies Corporation Trade $240,978 Oracle Corporation Trade $191,648 Proto Plastics, Inc. Trade $191,245 Avery Dennison Trade $153,836 Kanzaki Specialty Papers, Inc. Trade $146,669 Trimaster Manufacturing Ltd. Trade $114,624 Conics/Conrac Systems, Inc. Trade $109,969 CJP Technology, Inc. Trade $104,345 KBYTE Trade $99,200 Cornucopia Tool and Plastic Trade $96,573 Mainland Machine Trade $95,702 Rohm Electronics Trade $93,180 Dynarex, Inc. Trade $92,308 Chesapeake Trade $90,024 Harbec Plastics, Inc. Trade $84,163 Washburn Manufacturing Tech. Inc. Trade $83,860 AXIOHM TRANSACTION: Case Summary -------------------------------- Debtor: Axiohm Transaction Solutions, Inc. DH Technology, Inc. 1787 Sentry Parkway West 16 Sentry Park West, Suite 450 Blue Bell, PA 19422 Total Assets $153,657,000 Total Debts $225,864,000 Shares of common stock 6,519,301 Type of Business: One of the largest non-captive designers, manufacturers and marketers of transaction printers in the world. The company also has an increasing sales presence in growing markets for magnetic stripe and computer chip card readers, bar code printers and related consumable supplies. 20 Largest Unsecured Creditors (See Axiohm IPB) AZTORE HOLDINGS: Successfully Manages the Chapter 11 ---------------------------------------------------- Aztore Holdings Inc. (OTC: AZHG), Monday announced that the Chapter 11 reorganization of Technical Systems Integrators Inc. ("TSI") has been successfully completed. TSI's senior creditor group engaged Aztore indirectly in February 1999 to advise it on structuring TSI's reorganization. TSI, a Phoenix-based technology company, filed for Chapter 11 bankruptcy reorganization in April 1999 and received confirmation of its reorganization plan (the "Plan") by the Bankruptcy Court on Nov. 10, 1999. The Plan became effective on Dec. 10, 1999. The Plan, structured by Aztore, reorganizes TSI into five operating companies plus a parent, TSI Capital Corp. Under the Plan, Aztore indirectly receives an interest in each of these six companies for its direct cash investment as well as its fees incurred during the Chapter 11 reorganization. Aztore indirectly controls all the new TSI companies. Each company will have approximately 200 shareholders. The senior creditor group also receives warrants in each of the companies as part of their distribution under the Plan. Aztore believes that TSI Capital Corp. will be able to operate as an investment company exempt from regulation under the Investment Company Act of 1940, due to its bankruptcy antecedents. Michael S. Williams, Aztore's President stated, "This is our fourth successful management and completion of a company reorganization using Chapter 11. "We will continue to advise and assist each of the TSI companies in preparing their financial statements, coordinating audits, filing applicable registration statements with the SEC and applying for trading on the OTC Bulletin Board. We will also advise the TSI companies on merger and acquisition activities and other general corporate matters." "One such merger has already been identified for one of the TSI companies. OHost Corporation, a Tempe, Arizona-based Internet company, which controls the first fully bilingual, Korean language vertical Internet portal called KoreaStation.com, has entered into an agreement in principal to merge with TSI Financial Services Inc. Aztore was a seed lender to OHost. The merger is expected to close on Dec. 31, 1999 and is subject to the parties entering into a definitive agreement. It is expected that the existing shareholders of TSI Financial Services Inc. will retain approximately 25 percent of the shares of the merged company, which will adopt the Korean Station name," continued Williams. Aztore Holdings Inc. is a closed-end, management investment company which specializes in speculative investing and lending to small public companies which it believes have very high growth potential or which are very financially extended. Aztore has a portfolio of approximately 25 companies. Aztore also acts as a merchant and investment banker and conducts a consulting and advisory business through its Bulldog Advisors division. Aztore has approximately 8,000,000 shares of common stock outstanding as well as approximately 8,670,000 warrants equally divided into three series with exercise prices of $.50 (expiring April 30, 2000), $1.00 (expiring April 30, 2000), and $1.50 (expiring June 15, 2000). The expiration dates of the warrants may be extended at Aztore's option. Aztore has offices in Phoenix and Houston, with its corporate office located at 3710 East Kent Drive, Phoenix, AZ 85044. For more information, please contact Michael S. Williams, President, at 480/759-9400 or by e-mail at Mike@Aztore.com. BEAMALLOY CORP: Case Summary and 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: BeamAlloy Corporation 6360 Dublin Industrial Lane Dublin, Ohio 43016 Court: Southern District of Ohio Case No.: 99-60987 Chapter: 11 Filed December 3, 1999 Type of Business: Coating Service Supplier Debtor's Attorney: Dinsmore & Shohl LLP Star Bank Center 175 South Third Street, 10th Floor Columbus, Ohio 43215 Total assets $552,108 Total liabilities 2,160,379 List of Creditors Holding 20 Largest Unsecured Claims: Worthington Industries $549,064 Jay Hall Jr. $526,918 Dr. Arnold H. Deutchman $304,988 Robert J. Partyka $297,609 Dr. Robert E. Partyka $103,463 Bates Property Management $97,259 Ohio Attorney General $60,371 Dr Sherry B. Zox $43,506 LCA International Ltd. $41,260 Dr and Mrs Maurice L. Zox $20,433 Dr Mark Deutchman $19,465 Bernard V. Fultz $16,504 Dolores A. Johnson $15,977 William J. Saas $15,969 Dr. Herbert Deutchman $12,452 Huntington National Bank $10,068 Deloitte & Touche $4,500 Dr. Arnold H. Deutchman $4,000 Mr. Robert J. Partyka $4,000 Dr. Robert E. Partyka $1,600 BELL GEOSPACE: Seeks Final Order To Use Cash Collateral ------------------------------------------------------- The debtor, Bell Geospace, Inc. filed a motion for interim and final orders authorizing use of cash collateral. A hearing to consider the entry of an interim order approving the motion will be held on December 13, 1999 at 3:30 PM. The debtor is a worldwide technology company that acquires, processes, and interprets gravity gradient data for its customers to assist them in identifying promising drilling locations. The debtor's unencumbered cash has been exhausted and the debtor is without enough funds to be able to operate for 15 or more days until a final hearing on this motion can be held. The debtor requires cash to pay its lessors and vendors, and to meet its payroll. Failure to timely pay such items will likely require the debtor to close down its operations. The debtor's schedule of cash needs through January 31, 2000 details the need for $566,449. Interim cash needs total $229,776. The total principal indebtedness owing by the debtor to Imperial Bank under the Starter Kit Loan is $690,000. The original loan prior to the Petition Date was for $900,000. BIG SMITH BRANDS: Taps Professionals ------------------------------------ By order of the US Bankruptcy Court, Southern District of Florida, Big Smith Brands, Inc., debtor, entered an order authorizing employment of attorney Susan D. Lasky, Bigge & Rodriguez as attorney for the debtor nunc pro tunc to November 5, 1999. The debtor seeks authority to appoint Kevin Checkett as special Missouri counsel to assist and represent the debtor in all matters pending in the Missouri courts or involving transactions in the State of Missouri. The debtor also seeks authority to appoint Howard H. Ward, as general counsel and a consultant to the debtor. Ward will provide advice to the debtor related to all securities and financial transactions, including transactions involving real or personal property. Ward is paid $7,000 per month. BRS PRODUCTS: Colonial Commercial Subsidiary To Acquire BRS ----------------------------------------------------------- Colonial Commercial Corp. (Nasdaq: CCOM), which through its subsidiaries distributes door hardware, heating/air conditioning equipment and climate control systems to contractors and architectural firms announced that its wholly-owned Atlantic Hardware and Supply Corp. ("Atlantic") subsidiary has agreed to fund the Plan of Reorganization of BRS Products, Inc., which filed a petition pursuant to Chapter 11 of the Bankruptcy Code on October 28, 1999. BRS Products, which is headquartered in Hoboken, New Jersey, is a manufacturer of hollow metal doors and other door products. Atlantic has provided certain post-filing financing to BRS Products and through a pre-negotiated Plan of Reorganization, will own all of the stock of the reorganized company upon its emergence from Chapter 11. The Plan of Reorganization is subject to confirmation and approval of the Bankruptcy Court. Atlantic, a distributor of doors and door hardware, purchases hollow metal doors from BRS and other door manufacturers. "The acquisition of BRS Products as restructured through the Chapter 11, will allow Atlantic to strategically diversify into the manufacturing of doors, as a complement to its distribution operations, "commented Bernard Korn, Chief Executive Officer of Colonial Commercial Corp. "While Atlantic will continue to purchase doors from a number of manufacturers, management believes that the cost savings, along with other benefits, that should accrue from its ownership of BRS, once it emerges from Chapter 11, should allow this acquisition to be synergistic and accretive to earnings in the future." Colonial Commercial Corp. recently reported a 49% increase in net income during the first nine months of 1999, on a sales gain of 45%. Earnings per diluted share increased 60% to $0.24 in the first nine months of 1999, compared with earnings per diluted share of $0.15 (excluding a one-time gain from the sale of securities) in the corresponding period of the previous year. "We expect 1999 to be an outstanding year for Colonial, and the acquisition of a reorganized BRS Products should enhance the outlook for future years. Colonial Commercial Corp., headquartered in Levittown, New York, is a distributor of door and door hardware, heating/ventilation equipment, and climate control systems to building contractors and architectural firms, primarily in the Eastern United States. Its common stock trades on NASDAQ under the symbol "CCOM", while its convertible preferred shares trade on NASDAQ under the symbol "CCOMP". (Note: Each share of the Company's preferred stock is convertible into one share of the Company's common stock. Preferred stockholders will be entitled to a dividend, based upon a formula, when and if any dividends are declared on the Company's common stock.) BRUNO'S: Creditors Vote to Accept Second Amended Plan ----------------------------------------------------- Preliminary voting results indicate, logically, that the Banks unanimously voted to accept the Bruno's Second Amended Plan of Reorganization. Holders of Unsecured Claims classified in Class 5 under the Plan and slated to receive a 30% cash dividend, reportedly, overwhelmingly support the plan with ballots cast to accept the Plan on account of 83.5% of the number of claims voted and 96.4% of the dollars of those claims voted. The Subordinated Noteholders did not vote on the Plan, of course, being deemed to reject the Plan as they take nothing under the Plan. Judge Robinson will hold hearings to consider confirmation of the Debtors' Second Amended Plan commencing at 8:00 a.m. on Monday, December 20, 1999. Bruno's will have 10 hours to make their case for confirmation of their Second Amended Plan; W.R. Huff Asset Management Co., L.L.C., will have 8 hours to litigate its objections to confirmation; Judge Robinson will listen to the Committee for 2 hours, Haskell for 1/2 hour; the United States Trustee for 1/2 hour; and other ministerial objectors, to the extent their objections cannot be resolved prior to confirmation, for limited periods of time. (Bruno's Bankruptcy News Issue 30; Bankruptcy Creditor's Service Inc.) EATON'S: Benefits Restored to Employees --------------------------------------- Canada NewsWire reported on December 13, 1999, that Koskie Minsky, the court-appointed representative for Eaton's employees, reported that former Eaton's employees will soon start to receive some previously unpaid medical benefits as well as life insurance coverage as a result of court settlements reached late in the day on December 9, 1999. On behalf of the employees, Koskie Minsky filed court proceedings against Imperial Life when life insurance coverage was terminated without notice to the employees. Eaton's also commenced proceedings against Imperial Life for cutting off employee health benefit payments. Both benefits had been terminated during the summer when Eaton's was going through financial problems that led to the retailer's insolvency. Imperial Life claimed that the payments and coverage had been stopped because Eaton's was in arrears of payments to Imperial Life. The settlements were presented to Mr. Justice Farley of the Ontario Superior Court of Justice who issued the corresponding Court orders. Health care claims incurred by employees after August 20, 1999 (the date Eaton's filed for court bankruptcy protection) while employed by Eaton's shall be processed by Imperial Life and paid in accordance with the Lifestyles Plan, the employees' benefit plan. Richter & Associates, the court-appointed monitor of Eaton's, will make the payments to employees. Eaton's has no obligation to pay any claims incurred after the implementation date for Eaton's restructuring plan (the "CCAA Plan") which is scheduled for December 29, 1999 (the "Plan Implementation Date"). Employee health claims incurred prior to August 20, 1999 will be adjudicated by Imperial Life, and Koskie Minsky will file a claim for their total value as part of the Omnibus Proof of Claim under the CCAA Plan. Employees who had life insurance coverage through Eaton's will have the following benefits restored: - payment of claims: claims on behalf of deceased employees who died in the period from August 20, 1999 to the Plan Implementation Date will be paid provided the employees died while employed with Eaton's, or within 31 days of terminating employment; and - the conversion option: employees will have the right to convert to an individual life policy with Imperial Life until January 21, 2000, provided they meet conversion eligibility requirements of their policy, and provided that conversion fees and first month's premium are paid. Conversion allows an employee to continue life insurance coverage without having to pass a medical examination and is especially valuable for employees who are now in poor health. FLORIDA COAST: Seeks OK for Distress Termination of Pension Plans -------------------------------------------------------------- The debtors, Florida Coast Paper Holding Company, LLC and its affiliates seek approval of distress termination of the Florida Coast Paper Company Pension Plans. On December 15, 1998 most of the salaried employees were laid off and remain on lay-off. As a result of the lay-off, the future benefit accruals in the Salary pension plan have earned for the laid-off salaried employees. Given the liquidating nature of these cases, it is unlikely that the debtors will ever be in a position to contribute any additional funds to the Hourly Plan. Additionally, there is no prospect of any purchaser of the debtors' assets assuming liability under the Hourly Plan. The debtors have made no minimum funding contributions to the Salary Plan since September 1998. Salary Plans minimum funding deficiency currently is $247,972. Furthermore, the present value of accrued vested benefits under the terms of the Salary Plan exceed the assets by approximately $300,000. FORMAN PETROLEUM: Order Approves Amended Disclosure Statement ------------------------------------------------------------- By order of the US Bankruptcy Court, Eastern District of Louisiana, the Amended Disclosure Statement filed by Forman Petroleum Corporation on November 22, 1999 is approved. A hearing on confirmation of the second amended joint plan of reorganization will be held on December 29, 1999 at 10:00 AM in Courtroom 705, Hale Boggs Federal Building, 501 Magazine Street, New Orleans, Louisiana. The plan is intended to enhance the long-term viability and contribute to the success of the Reorganized Debtor by adjusting the debtor's capitalization to reflect current and projected operating performance levels. Under the plan, debt levels will be reduced from over $85 million to an amount not expected to exceed approximately $3.01 million. The debtor believes that this significantly reduced debt level, together with an estimated $7 million in post-confirmation financing required in connection with the Business Plan, can be supported by its projected cash flow. The debtor is an independent energy company engaged in the acquisition, exploration, development and production of crude oil and natural gas onshore in south Louisiana. If the plan is confirmed, all Senior Notes will be canceled and the Holders of Allowed Senior Notes will receive in the aggregate 92.5% of the New Common Stock, Allowed M&M Lien Claims will receive, at the election of the Holders of such claims, either 60% in cash as of the Initial Distribution Date or 100% payable over 5 years; Allowed Unsecured Claims will receive, at the election of the holders, either 50% in cash as of the initial distribution date or 100% payable over 7 years; Convenience claims will be paid in full; the Preferred stock will be canceled and the holders of allowed preferred stock interests will receive in the aggregate 7.5% of the New common stock, the Senior Note Warrants and the Equity Warrants will be canceled and the Holders will receive New Warrants; the Loan Warrants and the Employee Stock Options will be canceled if not exercised prior to the effective date, and if exercised the holders will receive New Warrants; Issued and outstanding common stock will be canceled. Current management of the debtor will receive 27.5 month employment agreements with the reorganized debtor. The employment contract for McLain Forman provides for the issuance to him of New Warrants. Class Amount Status Priority Tax Claims $131,137 Other priority claims $71,154 unimpaired Senior Notes $81,025,000 impaired M&M Lien Claims $6,518 impaired Other Secured Claims $39,610 unimpaired Mineral Lease Obligations unimpaired Convenience Claims $249,596 impaired General Unsecured Claims $3,078,204 impaired Preferred stock interests $13,505,139 impaired Loan Warrants and Employee Stock Options impaired Other Warrants impaired Common Stock Interests impaired FRANKLIN OPTHALMIC: Announces Liquidation ----------------------------------------- Franklin Ophthalmic Instruments Co., Inc. (OTC Bulletin Board: FKLN)--announced that as a result of a Notice of Demand for payment of loans under an Amended and Restated Loan and Security Agreement dated December 30, 1997 by and between Franklin Ophthalmic Instruments Co., Inc. (the "Company") and Harris Trust and Savings Bank ("Harris Bank"), the Company has elected to liquidate for the benefit of creditors and dissolve its business. The Company originally received a notice of default during April of 1999 and due to the Company's inability to repay the loan, cure the default, and/or refinance the amounts due to Harris Bank with a new lender, Harris Bank has demanded immediate repayment of all principal and accrued and unpaid interest on the Company's indebtedness. In connection with the above Notice of Demand, the Company and Harris Bank have entered into a Forebearance Agreement ("Agreement") effective November 29, 1999 in which Harris Bank would forebear its rights and remedies with respect to existing defaults for a period of time not to exceed March 31, 2000. Pursuant to the Agreement, the Company has agreed to liquidate through operations its inventory and accounts receivable. During the period up to December 31, 1999, the Company will have a limited budget in which to fund operations. Thereafter, expenses related to liquidation are expected to be incurred by officers of the Company in connection with provisions in the Agreement that allow for the reduction of amounts owed under personal guarantees of officers of the Company if certain projections are met. Upon completion of the liquidation, the Company expects that it will file a petition for relief under the United States Bankruptcy Code. The Company does not foresee funds being available for distribution to shareholders. Franklin (a.k.a. Franklin.MOI) sells and services high-quality instrumentation utilized by ophthalmologists, optometrists, and medical organizations. In addition, Franklin is a systems integrator for ophthalmic workstations and electrical applications for the ophthalmic marketplace. The Company distributes over 2,000 products from over 40 manufacturers from its facility in Romeoville, Illinois. HARNISCHFEGER: Seeks Approval of Beloit Asset Auction Procedures ----------------------------------------------------------------- The deadline to submit bids for Beloit's assets is extended to 4:00 p.m. Eastern Time on December 17, 1999. The Debtors filed an Emergency Motion asking Judge Walsh to approve new procedures that protect "stalking horse bids" for Beloit. The Debtors believe that these new procedures are necessary to encourage initial bidders to come forward with their best offers. The Debtors must select one or more bids as stalking horse bids to provide a floor for the Beloit asset auction. Some potential bidders may not submit unqualified bids unless they get special treatment if they are selected as stalking-horse bids. Consequently, the Debtors want authority to grant any or all of the following three protections to bidders they select as stalking horses for the Beloit auction. First, stalking-horse bidders will be given a topping fee of up to 3.5% of their initial bid if the Beloit assets covered by their bids are sold to another party. Second, bids competing with a stalking-horse bid must be 0.5% more than the sum of the stalking-horse bid plus the topping fee agreed upon with the stalking-horse bidder in order to be considered by the Debtors. Third, bids competing with stalking-horse bids for the same assets will be assessed on a net basis to the estate. In other words, competing bids will be valued at their face amount less the stalking-horse bidder's agreed upon topping fee. (Harnischfeger Bankruptcy News Issue 17; Bankruptcy Creditor's Service Inc.) HIGH STRENGTH STEEL: Creditors File Involuntary Chapter 7 --------------------------------------------------------- Three steel companies filed an involuntary chapter 7 petition against High Strength Steel Inc., Houston, Reuters reported. Bethlehem Steel Corp., CitiSteel USA Inc. and Oregon Steel Mills Inc. list unsecured claims of $616,646, $376,843 and $1 million, respectively. They filed the petition in the District of Delaware. High Strength's business is described in court documents as a "service center, fabrication and distribution of steel products." (ABI 14-Dec-99) INTERNATIONAL WIRELESS: Supplemental Disclosure Statement --------------------------------------------------------- By order dated December 3, 1999, the US Bankruptcy Court for the District of Delaware entered an order approving the debtors' supplemental disclosure statement relating to the debtors' third amended joint chapter 11 plan of reorganization as containing adequate information. On December 29, 1999 at 10:30 AM a hearing will commence to consider confirmation of the plan. Subsequent to the confirmation of the existing plan, the debtors together with the creditors' committee negotiated the detailed terms of the treatment of the BTFIC financing and PWH Notes that are the subject of term sheets. The principal documents setting forth the terms of the BTFIC financing and the PWH Notes will be filed with the Court before the Supplemental Confirmation Hearing. Subsequent to the Existing Confirmation Order, the debtors also agreed to a settlement with the purchaser of their Venezuelan assets. The settlement in effect split the proceeds of an escrow that had been established under the pre-petition contract of sale of the assets. The debtors received $1,550,000 and the buyer of the assets received $1.45 million plus interest. The debtors have been advised that subsequent to the confirmation of the existing plan, the following developments have occurred: Certain members of the Informal Committee and the Loeb Shareholders continue litigation with Vanguard and certain of debtors' present and former officers and directors. One complaint seeks damages in the amount of $81 million in connection with alleged fraud, misrepresentations and violations of applicable Blue Sky Laws in connection with the merger of RMDA into IWCH. The Loeb Partners and Warburg Lawsuits were brought by Holders of Old Series I Preferred stock issued in connection with the RMDA acquisition. In addition to the two actions actually commenced, he debtors have been advised that other shareholders have threatened further litigation against Vanguard, asserting, in substance, that as the controlling shareholder of the debtors, Vanguard abused its position of trust and dominated and controlled the debtors to its own advantage and to the disadvantage of shareholder. The business of SDL, the debtors' subsidiary formed to hold telecommunications investments in China, deteriorated substantially and SDL may be near insolvency. The debtors' former partner in SDL, Star Telecom Holdings Limited has filed a lawsuit against Vanguard in California. The debtors warn that Risk Factors with regard to operations in Pakistan and Brazil may be heightened particularly as a result of the coup d'etat in Pakistan. IRIDIUM: Motorola Leads Effort To Prop Up Iridium ------------------------------------------------- The International Herald Tribune (Neuilly-sur-Seine, France) reports on December 11, 1999 that Iridium LLC, the troubled global satellite telephone venture, said a group of investors led by Motorola Inc. had agreed to commit $20 million so that the company could continue operating through early next year. The company, which filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code in August, said Thursday that the money would allow it to operate through mid-February and give its executives more time to develop a plan for restructuring. ''Our existing investors have stepped forward to provide for ongoing operations while we continue to have discussions with potential new investors, '' John Richardson, the chief executive of Iridium, said. Among those who have expressed an interest in taking a huge stake in Iridium, based in Washington, is Craig McCaw, the cellular- telephone pioneer who has been interested in gaining control of the company. Iridium executives would not say who the potential investors were, and Mr. McCaw, who is a large investor in Teledesic LLC, the so-called Internet in the Sky global satellite service that expects to begin operating in 2004, was unavailable for comment. A month ago, however, Mr. McCaw agreed to raise $1. 2 billion to lift ICO Global Communications, another global satellite telephone service, out of Chapter 11. In a statement, Iridium warned investors that once its reorganization plan was announced, its shares might be worthless. Shares of Iridium, which traded as high as $70 in May 1998, dropped to about $3 after the bankruptcy filing. Since then, the shares have been delisted by the Nasdaq stock market. JUST FOR FEET: Taps Thacher Proffitt & Wood as Special Counsel -------------------------------------------------------------- The debtors, Just For Feet, Inc., et al. seek authority to employ Thacher Proffitt & Wood as special litigation counsel. The firm is representing the debtor in its dispute with Saatchi & Saatchi Business Communications, Inc. and Fox Broadcasting Company, Inc. The debtors propose to pay Thacher its customary hourly rates. JUST FOR FEET: Taps The Finley Group as Turnaround Consultants -------------------------------------------------------------- The debtors, Just For Feet, Inc., et al. seek authority to employ The Finley Group as turnaround consultants for the debtors. The Finley Group will provide the following services: Assume the duties of the debtors' interim chief financial officer, managing and directing and overseeing all financial activities including accounting, planning, reporting, banking, cash management, credit issues, cash liquidity, tax and recording of transactions; Meet with the debtors' management and familiarize itself with the business operations, financial systems and condition and prospects of the debtors; Advise and assist the debtors in the development and evaluation of various restructuring strategies and initiatives related to business operations; Advise and assist the debtors in the development, implementation and negotiation of a plan of reorganization, along with other information, as appropriate, to be included in the disclosure statement; Participate in hearings in connection with the foregoing and provide expert testimony, if needed, in connection with any hearings before the Bankruptcy Court; and Render such other financial consulting services as may from time to time be agreed upon by The Finley Group and the debtors. The debtors shall pay The Finley Group fees of $225 per hour, subject to a maximum of $1,800 per day. KIWI: Judge Approves Liquidation -------------------------------- The New York Times reported on December 14, 1999, that the turbulent history of Kiwi International Air Lines ended quietly as a bankruptcy judge in Newark approved its liquidation. Kiwi, had been grounded since March, beset by debt and ruled unable to fly safely by regulators. The company, which was owned by its pilots and their co-workers when it started flying seven years ago, had no choice but to liquidate after it failed to attract a buyer in nearly nine months of effort, said its court- appointed trustee, Charles A. Stanziale Jr. Kiwi, which was based at Newark International Airport, had struggled since its founding by airline employees who had lost their jobs at other carriers, most at Pan Am and Eastern. They lost their stake two years ago during Kiwi's first bankruptcy when Charles C. Edwards, a Baltimore surgeon, bought the airline and took majority ownership of the company from the employees. At its peak in the mid-1990's, Kiwi had 1,200 employees and 15 leased jets, and flew 65 scheduled flights a day. But Kiwi struggled financially and was shut down three times by regulators, although pilots pointed to a safety record showing they had "never scratched a wing." The Federal Aviation Administration last grounded Kiwi in March, and the airline declared Chapter 11 bankruptcy, hoping to reorganize, and laid off nearly all of its 500 workers and surrendered its four leased jets. In September, Kiwi sought permission from Judge Rosemary Gambardella of United States Bankruptcy Court to convert the bankruptcy to Chapter 7, liquidation, claiming more than $20 million in debts. Mr. Stanziale said Kiwi's biggest creditor, the Internal Revenue Service, is owed about $12 million but will receive only about $1 million. LEVITZ: Seventh Motion To Extend Time To Assume & Reject Leases --------------------------------------------------------------- Reminding the Court that their remaining unexpired leases represent potential sources of significant value for their Estates and creditors, the Debtors ask Judge Walrath for a seventh extension, pursuant to 11 U.S.C. Sec. 365(d)(4), of their time within which to decide whether they should assume or reject non-residential real property leases. The Debtors ask for an extension through February 28, 2000. Levitz is still burdened by some excess real estate, the Debtors disclose. Additionally, the Company indicates that it may decide to close certain stores and move to new locations in order to realize excess value from an existing lease. Progress toward emergence from chapter 11 continues, the Debtors say. Additional time to make decisions about the disposition of their leases will facilitate the Debtors' consideration of various exit strategies. Hasty decisions, the Debtors caution, will forfeit value if a lease is prematurely or give rise to needless administrative priority claims if a lease is prematurely assumed. (Levitz Bankruptcy News Issue 41; Bankruptcy Creditor's Service Inc.) OPTEL INC: Interim Financing Order ---------------------------------- OpTel, Inc., et al. is seeking entry of an order authorizing the debtors to enter into a secured post-petition financing on a super priority basis, authorizing the debtors to repay pre- petition secured debt with a reservation of rights, and scheduling a final hearing. A hearing will be held before The Honorable Sue L. Robinson, in the US District Court for the District of Delaware on December 16, 1999. The Interim order provides that pending the final hearing, the debtors are authorized to borrow from the Lenders a total of up to $25 million of Loans. The post-petition financing is under a commitment of up to $60 million. SIDANKO: Access Industries Claims Lawsuit is Frivolous ------------------------------------------------------ Access Industries Inc., a privately held corporation, and its principal shareholder, Len Blavatnik, filed with the New York State Supreme Court a motion seeking the immediate dismissal of a lawsuit filed in November by TPT Ltd., a Cayman Island company, and concerning the bankruptcy of Sidanko, a Russian oil company, and certain of its subsidiaries. Said a spokesperson for Access Industries, a U.S.-based minority investor in Tyumen Oil Company (TNK), a Sidanko competitor: "This lawsuit is frivolous, full of baseless allegations and a blatant attempt to forum shop." Noting that the lawsuit's sponsors are "major players on the Russian political and economic scene," the spokesperson added: "TPT and its principal investors have benefited mightily from doing business under the Russian system and they are now attempting to disavow the very system that they have taken credit for creating. Furthermore, one of TPT's principals was chairman of Sidanko at the time it declared bankruptcy in Russia." He continued: "The lawsuit concerns purely a Russian controversy between Russian business rivals, grounded in Russian law, relating to Russian assets and the executive and judicial acts or branches of the Russian government. While we are prepared to defend ourselves vigorously, it is clear that this lawsuit does not belong in New York." The Russian government itself owns nearly 50 percent of TNK. SUN HEALTHCARE: First Meeting of Creditors -------------------------------------------------------------- Patricia A. Staiano, the United States Trustee for Region III, convened the first meeting of the Debtors' creditors pursuant to 11 U.S.C. Sec. 341(a) on Friday, December 10, 1999, in Wilmington. John "Jack" D. McLaughlin, Esq., representing the U.S. Trustee. Mr. McLaughlin introduced creditors to Michael Walsh, Esq., of Weil, Gotshal & Manges LLP, the Debtors' lead counsel in the these chapter 11 cases. Mr. Walsh introduced creditors to his co-counsel, Mark D. Collins, Esq., of Richards, Layton & Finger. Mr. Walsh introduced creditors to Mark G. Weimer, the Debtors' President and Chief Operating Officer and Matthew Patrick, the Debtors' Treasurer. Mr. McLaughlin administered an oath to Messrs. Weimer and Patrick, under which they swore to give truthful testimony at this meeting. Delivering a prepared presentation, Mr. Weimer gave creditors an overview of the Debtors' four primary business segments: inpatient care, therapy services, pharmaceutical and medical supply and international operations. Mr. Weimer showed creditors a chart depicting the Debtors' business operations as a wheel with 10 business units at the outside edge of each spoke. Those business units were designed to support an organization collecting money for healthcare services on a "cost-plus" basis. When the Balanced Budget Act of 1997 changed the reimbursement scheme to a flat cost model, cutting Medicare reimbursements to the healthcare industry by some $9.7 billion, the spoke and wheel model became unworkable. Medicare reimbursement cuts caused other less obvious, but very real problems for Sun, Mr. Weimer related: (1) payments to Sun and Sun's customer base slowed, impairing cash flow; (2) profits declined as reimbursement rates were reduced to Sun's customers; (3) increased regulatory requirements negatively impacted margins; and (4) Medicare patient-mix levels decreased as the cost of care was shifted to the State Medicaid programs--at lower margins. Additionally, Mr. Weimer related, Sun is seeing its expenses increase. For example, the Debtors anticipate that their professional liability insurance premiums will double next year. Sun participated in a demonstration project at one facility before the Prospective Payment System was introduced, Mr. Wilmer related. Sun was able to maintain profitability at that facility and projected a 25% system-wide reduction in revenues once the Prospective Payment System was rolled-out. The Government told Sun to project no more than a 20% reduction. After the PPS took effect, revenues fell by 40%. Sun, Mr. Weimer said, responded by cutting costs. Labor cuts were swift and significant. Overhead consolidations were implemented. Sun successfully cut costs by over $400 million, but it wasn't enough. "The fundamental problem is that Congressional cuts in Medicare reimbursements exceeded expectations," Mr. Weimer said. Today, Sun is faced with a three-pronged problem: (1) increasing labor costs; (2) increasing regulation and (3) decreasing reimbursements. Mr. Patrick noted that Sun is one of a number of healthcare industry bankruptcy cases at the present time. Texas Health, Vencor, and Raintree have filed for chapter 11 protection. Filings by Integrated Health and Mariner loom on the horizon. Sun is pleased to say that it has a strategy to restructure its business, Mr. Patrick reported. That strategy calls for: (A) exiting non-core businesses; (B) exiting unprofitable nurshing facilities; (C) a focus on owning more facilities in the future; (D) reducing variable costs through staff cuts; and (E) reducing fixed costs by securing rent reductions. Mr. Patrick explained that a financial restructuring is premised on: (A) de-leveraging the Company's balance sheet; (B) reducing fixed interest costs; and (C) providing the Company with financial flexibility to permit reinvestment in operations. The Term Sheet released in October, Mr. Patrick reports, have the full support of the Banks and the Senior Lenders. At present, it lacks the support of the Creditors' Committee, the TIPES holders, current equity holders, and the Government. Sun's liquidity, Mr. Patrick indicated, is more than adequate to cover post-petition working capital needs. Mr. Patrick pointed to the $75 million DIP Facility in place at this time and with adequate availability. Mr. Patrick disclosed that, over the next year, the Debtors anticipate that the DIP Facility will be backing some $43.8 million in letters of credit. The Company's future, Mr. Patrick continued, will be: (1) focused on nursing home facilities; (2) smaller; and (3) de-leveraged. Mr. Patrick explained why the Debtors are keen on the nursing home business: (a) Sun's nursing centers have seen 91% occupancy since 1991; (b) there is a restricted supply of skilled nursing facilities; (c) there are considerable barriers to entry into the nursing home market; (d) the population is aging; (e) life expectancy is increasing; (f) the Government realizes it is most economical to care for the sick and elderly in skilled nursing facilities; and (g) industry revenues are projected to top $2 trillion in 2007. (Sun Healthcare Bankruptcy News Issue 7; Bankruptcy Creditor's Service Inc.) TULTEX: Reports More Lay-Offs ----------------------------- The Richmond Times Dispatch reports on December 11, 1999 that Martinsville clothing maker Tultex Corp. is laying off 700 workers on top of the 2,600 cuts announced last week, according to the company, and half of the additional cuts are in Henry County. In all, the maker of sweat shirts, T-shirts and athletic wear is cutting 3,300 jobs. Martinsville and Henry are losing 1,450 jobs, South Boston is losing 400, and Tultex operations outside Virginia are losing a total of 1,450 jobs, the company said Thursday. Citing stiff competition from foreign companies using cheap labor, Tultex last week filed for Chapter 11 bankruptcy protection and announced it would cut 2,600 of its 4,400 jobs in Virginia, North Carolina and Jamaica. The jobs were eliminated Dec. 3. Of the latest 700 jobs cut, 350 will be at its customer-service center and warehouse in Henry, and another 350 from Tultex subsidiaries outside Virginia. Tultex plans to lay off the workers within two months. Tultex filed for the bankruptcy protection after posting a third- quarter loss of $ 35 million, almost as much as the loss for all of last year. The company, which reported debts of $ 222 million in May, hopes to reorganize primarily as a distributor of clothing manufactured by contractors. After the second round of job cuts, Tultex will employ 1,100 workers, with 450 of those located in Martinsville. As part of its reorganization plan, the company also closed 25 retail stores nationwide and shut down manufacturing plants in Mayodan, Roxboro and Longhurst, all in North Carolina, and another in Montego Bay, Jamaica. VENCOR: Trustee Objects To Committee Members' Proxies ----------------------------------------------------- The United States Trustee objects to the Committee's Motion to permit trading in debtor's securities to the extent that it asks the Court to authorize Committee Members' appointment of proxies. While it is not objectionable per se, the U.S. Trustee says, for a Committee Member to send an agent to a specific meeting, it is an abrogation of the Member's duty to appoint a full-time proxy. "When the UST appoints a member of the Committee, that member is expected to personally exercise the fiduciary responsibilities imposed upon it," the U.S. Trustee asserts. Ms. Staiano makes it clear that she will remove Committee Members who appoint full- time proxies, and will give those seats to candidates willing to shoulder the responsibilities imposed under the Bankruptcy Code. (Vencor Bankruptcy News Issue 8; Bankruptcy Creditor's Service Inc.) ********* 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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