/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000515.MBXT R O U B L E D C O M P A N Y R E P O R T E R Monday, May 15, 2000, Vol. 4, No. 95 Headlines ACCESS1: Plans To Stay In Business AMERISERVE: Loses Major Customer Chick-fil-A BANKERS COMMERCIAL: Placed In Temporary Receivership BOBBY ALLISON WIRELESS: Annual Meeting Set For June 5 BOBBY ALLISON WIRELESS: Shareholders Report Holdings BROOKE GROUP: Lorber Reports Holdings CAMBRIDGE INDUSTRIES: Case Summary and 20 Largest Creditors CLARIDGE: Announces Approval of Disclosure Statement DAEWOO MOTOR: GM Steps Up Drive for Daewoo DAVIS INDUSTRIES: Judge Rejects Bankruptcy Plan DYNAMATIC CORPORATION: Case Summary and 20 Largest Creditors FORE RIVER SHIPYARD: McCain Hearings on The Shipyard ICO GLOBAL: Should Emerge From Bankruptcy on May 15, 2000 INTEGRATED HEALTH: Taps Chapin, Flatteau & Klimpl LLP IRVINGTON KNOLLS: State Imposes Fine, Considers Revoking License MARINER: Obtains Extension of Time To Assume/Reject Leases MEDICAL SPECIALISTS: Case Summary and 20 Largest Creditors MERRILL LYNCH JAPAN SECURITIES CO: Posts Annual Loss MICROAGE: Bonus For Loyal Employees MONET GROUP: Case Summary and 18 Largest Unsecured Creditors MOUNT AIRY: Judge Refuses To Stop Sale NEWCOR: Sr Subordinated Notes To Become Due and Paybale PAGING NETWORK: In Default of Debt Agreements PLANET HOLLYWOOD: Comes To Times Square PROTECTION ONE: Troubled Security Company Fixed RELIASTAR FINANCIAL: Employees To Cash In Stock ROBERDS: Liquidation Sale at Eight Georgia Stores SIMMONDS CAPITAL: SCL Electronics Files For Bankruptcy STONE & WEBSTER: In Hot Water As It Loses $250M Pact SUN HEALTHCARE: First Motion To Extend Exclusivity THIS END UP: Admonished For Sloppy Chapter 11 THIS END UP: Employees' Health Insurance Key Item TOWER AIR: Returns Aircraft VENCOR: Announces First Quarter Results WASTE MANAGEMENT: Subsidiary Completes Sale of Italian WASTE MANAGEMENT: Wins Dismissal of A Lawsuit ********* ACCESS1: Plans To Stay In Business ---------------------------------- An attorney for Access1 yesterday said the bankrupt locally based Internet service provider intends to reorganize and stay in business. "The idea is that people will be taken care of," Delmar Joyce said. "The whole plan is to save the company." But Joyce quickly added he will not be handling Access1's bankruptcy case. That will be turned over to another attorney, whom Joyce declined to identify. Since late March, Access1 -- which claimed to have 30,000 customers -- has frustrated many users with service they describe as intermittent or nonexistent. Access1 customers have been further frustrated by their inability to reach the company by phone, or to obtain refunds. Access1 typically required prepayment for a year or more of service. Some customers said they paid nearly $500 for "lifetime" service. A local bankruptcy attorney suggested yesterday that customers who believe they're not receiving service may want to file claims with the bankruptcy court. Peter Salmon, a local lawyer who is not connected with this case, said that whether these customers can recover funds could depend on the nature of their service agreement with Access1. Filing a claim can protect their interests in the event refunds are provided through the court, he said. Thomas Walker, chief executive officer of the company, first said technical glitches and an internal error had contributed to a system crash. Later, he blamed poor service from telecommunications providers and said hackers were also sabotaging Access1's attempts to provide Internet service. AMERISERVE: Loses Major Customer Chick-fil-A --------------------------------- According to reports circulated by Fort Worth Star-Telegram on May 6, 2000, AmeriServe Food Distribution, reorganizing under Chapter 11 bankruptcy, last week said that it has lost another major customer - Chick-fil-A - effective June 10. AmeriServe supplied more than 900 Chick-fil-A restaurants, including more than 125 in Texas. The lost business amounts to less than 5 percent of AmeriServe's current annual revenue, the company said. The announcement came a month after AmeriServe announced that it will lose $2.2 billion worth of accounts at 58,000 Burger King restaurants. "We are looking for long-term stability, and we have greater confidence that MBM will serve us better over the long term. MBM is a good geographic match. It's based in the Southeast, the region where we have our greatest density of stores," said Tim Yancey, Chick-fil-A's distribution director. AmeriServe filed for Chapter 11 protection this year. Analysts blamed the problems on acquisitions that left the company with heavy debt. AmeriServe said it will still supply more than 17,000 fast-food restaurants, including KFC, Pizza Hut and Taco Bell, all owned by Tricon Global Restaurants of Louisville, Ky.irm based in Greenwich, Conn. BANKERS COMMERCIAL: Placed In Temporary Receivership ----------------------------------------------------- The Texas Insurance Department has placed Bankers Commercial Life Insurance Co. in temporary receivership. The state says the company is more than $4 million in debt. Judge Ernest Garcia, of the 353rd State District Court in Austin, signed the order in response to a petition filed by the state attorney general's office on behalf of the state insurance department, which said in a statement that Bankers did not oppose the order. Texas commissioner Jose Montemayor was appointed receiver of the company under the order, which also freezes the company's bank accounts and other assets. Montemayor will appoint a special deputy receiver to handle day- to-day responsibilities of winding down the company. Insurance department spokesman Lee Jones said he couldn't divulge the specifics of Bankers financial troubles. The department did say Bankers' liabilities exceed its assets by more than $4 million. Bankers was placed in confidential supervision on Sept. 7, 1999, and in confidential conservatorship 20 days later, in an unsuccessful attempt to rehabilitate the company. This included negotiations for another company to buy Bankers, the insurance department said. Bankers could not be reached for comment. BOBBY ALLISON WIRELESS: Annual Meeting Set For June 5 ----------------------------------------------------- Stockholders are being invited to attend the 2000 annual meeting of shareholders of Bobby Allison Wireless Corporation, which will be held at 10:00 a.m. EDT on Monday, June 5, 2000, at the company's newly to be opened corporate headquarters at 1200 Starkey Road, Suite 105, Tampa, Florida. A proxy statement soliciting proxies is being sent to the holders of the company's common stock and Series B Preferred Stock, the only classes of capital stock eligible to vote on matters at the annual meeting. Holders of Series A Preferred Stock and Series C Preferred Stock are eligible to attend but are not eligible to vote on matters before the annual meeting. At the meeting, three directors will be elected to hold office until their successors are elected and qualified, two by the holders of common stock and one by the holders of Series B Preferred Stock. BOBBY ALLISON WIRELESS: Shareholders Report Holdings ---------------------------------------------------- James S. Holbrook Jr. beneficially owns 49,578 shares of the common stock of Bobby Allison Wireless Corporation with sole voting and dispositive power; another 340,019 shares over which he exercises shared voting and dispositive powers. The holding represents 38.08% of the outstanding shares of common stock of the company. Sterne, Agee & Leach Group Inc. exercise sole powers over 140,484 such shares and shared powers over another 291,441 shares, representing 32.6% of the outstanding shares of common stock of the company. Sterne, Agee & Leach Inc. have sole voting and dispositive power over 35,000 shares and shared power over the 291,441 shares. The Trust Company of Sterne, Agee & Leach,Inc. hold sole power over 100,000 shares and shared powers over the 291,441 shares. Holbrook is the President and CEO of Sterne, Agee & Leach Group; is the Chairman of the Board, President and Chief Executive Officer of Sterne, Agee & Leach Inc.; and is the Chairman of the Board of the Trust Company. Sterne, Agee & Leach Group is the parent of Sterne, Agee & Leach Inc. BROOKE GROUP: Lorber Reports Holdings ------------------------------------- As of May 2, 2000 Mr. Howard M. Lorber was the beneficial owner of, in the aggregate, 1,304,065 shares of common stock of Brooke Group Ltd., which constituted approximately 5.65% of the 21,989,782 shares of the company's outstanding common stock (plus 1,093,750 shares acquirable by Mr. Lorber or his assignee within 60 days upon exercise of options). Mr. Lorber's beneficial ownership includes 1,093,750 options for common stock, which Mr. Lorber or his assignee has the right to acquire within 60 days. Mr. Lorber exercises sole voting power and sole dispositive power over (i) 194,250 shares of common stock held by him, (ii) 175,000 shares of common stock acquirable by him within 60 days upon exercise of options and (iii) 918,750 shares of common stock acquirable by Lorber Epsilon 1999 Limited Partnership, a Delaware limited partnership, as assignee of Mr. Lorber, within 60 days upon exercise of options. Lorber Epsilon 1999 LLC, a Delaware limited liability company, is general partner of Lorber Epsilon 1999 Limited Partnership. Mr. Lorber is the sole member and manager of Lorber Epsilon 1999 LLC. Mr. Lorber exercises shared voting powers and shared dispositive power over 16,065 shares of common stock held by Lorber Charitable Fund. Lorber Charitable Fund is a New York not-for- profit corporation, of which Mr. Lorber and family members serve as directors and executive officers. Mr. Lorber's principal occupation is President and Chief Operating Officer since November 1994 and director since 1991 of New Valley Corporation. New Valley, a majority-owned subsidiary of the company, is principally engaged in the investment banking and brokerage business, in the real estate development business in Russia and in investments in Internet-related businesses. CAMBRIDGE INDUSTRIES: Case Summary and 20 Largest Creditors ----------------------------------------------------------- Debtor: Cambridge Industries, Inc. 555 Horace Brown Drive Madison Heights, MI 48071 Type of Business: Automotive and Truck Supplier Petition Date: May 10, 2000 Chapter 11 Court: District of Delaware Bankruptcy Case No.: 00-01919 Debtor's Counsel: David M. Fournier Pepper Hamilton, LP 1201 Market Street, Suite 1600 Wilmington, DE 19801 (302) 777-6500 Total Assets: $ 345,443,204 Total Debts: $ 459,758,684 20 Largest Unsecured Creditors State Street Bank and Trust Co. Corporate Trust Goodwin Square 225 Asylum St., 23rd Flr Hartford, CT 06103 Steven Cimalore 860-244-1844 Bonds $ 100,000,000 Ashland Chemical Co. 5200 Blazer Parkway Dublin, OH 43017 Roger Adkins Trade - 614-790-3953 Raw Materials $ 2,861,136 Mexican Industries, Inc. 1801 Howard Street Detroit, MI 48216 Susan Deab Trade - 313-963-6114 Raw Materials $ 1,093,173 Active Burgess Mould & Design PO Box 441550 Detroit, MI 48244-1550 Bob Bastuba Trade - 519-737-1341 Tooling $ 1,069,356 Alpha Owens Coming AOCLLC 1399 Waterways Drive Suite 200 Ann Arbor, MI 48108 Jim Plaunt Trade - 734-995-6779 Raw Materials $ 879,006 Keykert USA 48941 Liberty Drive Wixom, MI 48393 Craig Richards Trade - 248-960-4100 Tooling $ 804,812 Nova Int'l Machine and Tool, Ltd. c/o Beckman Lawson, LLP 800 Standard Federal Plaza Fort Wayne, IN 46802 Douglas R. Adelsperger Trade - 219-422-0800 Tooling $ 796,426 Genesis Mold Inc. 440 Silver Creek Ind Drive Tecumseh, Ontario NBN 4W2 Canada Ross Ienna Trade - 519-727-4801 Tooling $ 769,185 Defiance Metal Products 21 Seneca Street Defiance, OH 43512 Dan Stoufer Trade - 419-754-5332 Components $ 726,110 AZDEL 160 Hansan Court Wooddale, Il 60191 Jeff Kolke Trade - 248-351-8437 Raw Materials $ 505,073 Vetrotex Certainteed Corp. Fiber Glass Reinforcements 3410 Briarfield Blvd. Suite B Maurnee, OH 43537 Dean Talip Trade - 419-866-3173 Raw Materials $ 498,494 PPG Industries, Inc. 122 Carrowmoor Ct. Dublin, OH 43017 John Reddinger Trade - 614-764-2340 Raw Materials $ 491,720 Altron Automation 3523 Highland Drive Hudsonville, MI 49426 Robert Wormmeester Repair and 616-669-7711 maintenance $ 471,413 Corver Engineering Co. 9440 Grinneli Detroit, MI 48213 Tim Gallagher Repair and 313-571-0110 maintenance $ 468,995 Cascade Die Casting 9983 Sparta Ave. Sparta, MI 48089 Phil Torchio Trade and 616-281-1660 components $ 441,968 Prime Source Polymers 12003 Toepfer Warren, MI 48089 Verne Wagoner Trade - 810-757-5777 Raw materials $ 374,135 Delta Mold Inc. 9415 Stockport Place Charlotte, NC 28273 Donald Wisch Trade - 704-588-6600 Raw materials $ 352,600 Creusot-Loire Industries c/o Creusot-Marrel, Inc. 724 W. Lancaster Avenue Trade - Wayne, PA 19087 Plant supplies $ 348,160 OSB Automotive Tooling 44476 Phoenix Drive Sterling Heights, MI 48314 Trade - Chuck La Fave Tooling $ 310,600 Sherwin Williams 388 Robbins Drive Troy, MI 48083 Robert Ciranna Trade - 248-588-3500 Raw materials $ 300,661 CLARIDGE: Announces Approval of Disclosure Statement ---------------------------------------------------- On May 9, 2000, The Claridge Hotel and Casino Corporation (the "Corporation"), its wholly owned subsidiary, The Claridge at Park Place, Incorporated (the "CPPI") and Atlantic City Boardwalk Associates, L.P. (the "Partnership"), debtors, received from the US Bankruptcy Court in Camden, New Jersey, an order approving the adequacy of their First Amended Disclosure Statement. The Plan proposes that the Partnership will transfer its assets, which include, principally, the land, building and furnishings of the Claridge casino hotel to the reorganized CPPI, which will continue under the Plan to be a wholly owned subsidiary of the reorganized Corporation. The Plan provides for the holders of the Corporation's $85 million First Mortgage Notes to receive on a pro rata basis 100% of the equity of the reorganized Corporation, outstanding on the effective date of the Plan, and debt not to exceed $15 million in the form of new ten year secured Notes carrying an 8% coupon rate. The Plan provides for unsecured creditors to be paid in six equal installments over a five-year period beginning on the effective date of the Plan. Total payments to unsecured creditors will not exceed $5.5 million. The Plan and Disclosure Statement, along with ballots, will be mailed to creditors entitled to vote on or before May 31, 2000. The deadline for return of the ballots will be 5 p.m. (EDT) June 28, 2000. The confirmation hearing has been scheduled for July 13, 2000. On August 16, 1999, The Claridge Hotel and Casino Corporation and The Claridge at Park Place, Incorporated filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in order to facilitate a financial restructuring. On October 5, 1999, Atlantic City Boardwalk Associates, L.P. filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. The Claridge Hotel and Casino Corporation is a closely-held public corporation and is the issuer of $85 million of 11 3/4% First Mortgage Notes which are publicly traded on the New York Stock Exchange under the symbol CLAR02. DAEWOO MOTOR: GM Steps Up Drive for Daewoo ------------------------------------------ Having failed once to buy Daewoo Motor Corp. in a process that has taken on nationalistic overtones, General Motors Corp. is stepping up its efforts to counter rivals who insist that the failed automaker stay in Korean hands. General Motors' chairman, Jack Smith, on Wednesday chided Hyundai Motor Co., part of the biggest South Korean business conglomerate, for opposing the efforts of GM and other foreign companies to take over Daewoo. "They're trying to sell their cars in all the markets of the world," said Mr. Smith, who was here for the opening of a showroom for GM luxury cars and for two days of conversations with senior government officials aimed at pressing GM's bid. "They've had a chance on a world scale," he said, suggesting that GM should be given a similar opportunity to compete in South Korea by buying Daewoo. GM failed in its initial bid for Daewoo after Hyundai Motor executives protested that the sale of the company to a foreign manufacturer would destroy South Korea's indigenous motor-vehicle industry, which Hyundai dominates. Hyundai has maintained that foreign manufacturers in general, and GM in particular, represent a threat not only to local manufacturers but also to a network of suppliers and workers. "If foreign makers take over Daewoo, the domestic car industry would fall apart," a Hyundai spokesman said. "When you look at GM's experience in acquiring foreign companies, that did not help the domestic industry." Despite memories of a troubled alliance between General Motors and Daewoo that ended in 1992, GM describe the company's renewed interest as an integral part of GM's strategy to capture a greater share of the rapidly growing Asian market. "The region's long-term growth potential still exceeds that of North America and Europe combined," Mr. Smith said. "Every major player in the global auto industry would like to be involved in that growth." He portrayed GM's interest in Daewoo as part of "a chain reaction of activity" as the automotive industry consolidates, a process begun by the combining of Daimler- Benz AG and Chrysler Corp. into DaimlerChrysler AG in 1998. GM itself has expanded considerably in Asia, acquiring Japanese companies such as Isuzu, Suzuki and Fuji Heavy Industries, which manufactures cars under the Subaru name. But Daewoo would be a bigger addition. The company's plants - in addition to South Korea, it has operations in Asia and Eastern Europe - can produce about 2 million cars a year. The company's aggressive expansion, analysts say, was one of the key reasons for its downfall under a massive debt burden. It is also said to be one of the main reasons GM and Daewoo, in which the American company once owned a 50 percent stake, parted ways in 1992. "The partners had conflicting views on capacity expansion, debt leverage, profitability objectives and marketing issues," Mr. Smith said "Neither company was perfect, of course. Both made mistakes, but I think we have learned from our difficulties and developed a global alliance strategy that is working well for GM and its partners." Mr. Smith sought to assure South Koreans of his desire to keep Daewoo intact as a relatively autonomous local operation rather than turn it into an assembly operation for GM-designed vehicles, as some critics have said it intends. He said all Daewoo's factories would be kept open, an effort to head off union concerns about possible job cuts after a sale of the company. Mr. Smith said, however, that he still did not have a clear idea of the real value of the company, and he called for government moves to increase transparency in business transactions. The race for Daewoo Motors - DaimlerChrysler, Fiat SpA and Ford Motor Co., as well as Hyundai, are known to be interested in the company - has inspired some unusual tactics as the contenders attempt to show their viability. Last weekend, Hyundai announced that it was planning to build a small "world car" in cooperation with DaimlerChrysler and Mitsubishi Motors Corp. of Japan. DaimlerChrysler quickly denied the existence of such a plan. Mr. Smith sought to play down speculation that GM might enter into a joint bid for Daewoo with Hyundai, a strategy believed to have been contemplated by both Ford and DaimlerChrysler. "We've been looking at it as a separate entity," he said. Mr. Smith said, however, that Hyundai would have no problem joining an alliance with a foreign company if necessary to survive on foreign markets. "If it wants a partner, it can pick a partner," he said. "I don't see them being disadvantaged in this global world." (The International Herald Tribune 11-May-2000) DAVIS INDUSTRIES: Judge Rejects Bankruptcy Plan ----------------------------------------------- Davis Industries who filed for bankruptcy protection a year ago after a number of municipalities sued the Chino manufacturer of cheap guns, which claims the company and others alike to have the responsibility for the effects of handgun violence was ordered to draw up another bankruptcy plan by Judge Meredith Jury that would satisfy the court and the numerous cities and counties who sued the Inland Empire handgun maker. DYNAMATIC CORPORATION: Case Summary and 20 Largest Creditors ------------------------------------------------------------ Debtor: Dynamatic Corporation 3122-14th Avenue PO Box 1412 Kenosha, WI 53141-1412 Type of Business: Manufacturing and sale Petition Date: May 9, 2000 Chapter 11 Court: District of Delaware Bankruptcy Case No.: 00-01911 Judge: Mary F. Walrath Debtor's Counsel: Robert F. Stewart, Jr. Dilworth, Paxson, Kalish & Kauffman 307 Spalding Rd Wilmington, DE 19103 (302) 577-9800 Total Assets: $ 11,923,106 Total Debts: $ 11,594,250 20 Largest Unsecured Creditors Dynamatic Pension Plan for Salaried Employees 3122 14th Avenue Kenosha, WI 53141 $ 1,774,345 Dynamatic Pension Plan for Hourly Rated Employees 3122 14th Avenue Kenosha, WI 53141 $ 1,126,753 Post Retirement Medical - Salaried 3122 14th Avenue Kenosha, WI 53141 $ 1,066,161 Post Retirement Medical - Hourly Rate 3122 14th Avenue Kenosha, WI 53141 $ 1,066,161 TPA, Inc. $ 192,000 Badger Electronics $ 76,567 IBM $ 65,475 CNA Insurance $ 62,268 City of Kenosha $ 61,667 Nova Steel Inc. $ 59,816 Rockwell Automation/ Reliance Electric $ 51,600 Lakeside Steel & Mfg. Co. $ 49,980 Wisconsin Electric Power $ 46,008 LSI Consulting Inc. $ 37,995 Standard Funding Corporation $ 36,367 National Building Maintenance $ 27,218 Claremont Foundry $ 24,602 Kenosha Water Utility $ 24,393 Marsh Electronics $ 18,743 Gordon Flesch Company $ 17,988 FORE RIVER SHIPYARD: McCain Hearings on The Shipyard ---------------------------------------------------- The Patriot Ledger reports on May 6, 2000 that out of the gigantic hole known as the Big Dig sprung an unexpected surprise last week, when Sen. John McCain announced that the Senate Commerce Committee would cast a critical eye on the Fore River Shipyard bankruptcy. McCain had called state officials to Washington to appear before the committee and explain the cost overrun of $ 2 billion on the Central Artery/Tunnel project. Then he unexpectedly announced the shipyard inquiry, which will begin May 16. Where all of this will lead is anybody's guess. The Senate has a legitimate concern when it appears public money has been spent unwisely, whether the amount is $ 2 billion or the $ 47 million that the U.S. Maritime Administration paid because it had underwritten bank loans to Massachusetts Heavy Industries. The Big Dig will be finished somehow--likely with no further infusion of federal money--and the result will be a far better traffic flow in and around Boston than exists now. The shipyard, at this point, is a huge question mark. McCain's worst fear--shared by many others--is that the maritime agency won't be able to recoup any of its losses there. At this point MHI is in bankruptcy and trying to reorganize to revive shipbuilding at the yard. McCain said the inspector general of the federal Department of Transportation had identified potentially serious mismanagement problems on the project. The inspector general, who has kept a close eye on the shipyard, said in March that the project's finances were in order. There's no shortage of questions about what went wrong at the shipyard and McCain is in a position to ask them. The blunt- spoken senator is known as a pit bull on the subject of waste and abuse in federally-funded programs. It's not known yet who will be questioned at the hearings in addition to representatives of the transportation department. But it would be a shame to have a public hearing that generates nothing more than accusations of a boondoggle. Sotirios Emmanouil, the head of MHI and the man chiefly responsible for promoting the revival of the shipyard, should be called before McCain and his committee. Critics of MHI and its plans have warned from the outset that there was no evidence of firm orders for ships to be built at Quincy. Emmanouil, who is managing a shipyard in Greece while attempting to resuscitate his Fore River plans, has been relentlessly close-mouthed about discussing what he considers proprietary business information. But a Senate committee has much more leverage to extract information from a reluctant respondent than does the average questioner. ICO GLOBAL: Should Emerge From Bankruptcy on May 15, 2000 --------------------------------------------------------- Aerospace Daily (The McGraw-Hill Companies, Inc.) reports on May 3, 2000 that ICO Global Communications, a satellite communications specialist should officially emerge from bankruptcy this month with $ 1.2 billion in hand to finish its satellite constellation and ground network. Voting on the company's reorganization plan was completed April 26, and all indications are that the plan has been approved, said Joseph Tedino, ICO's communications and investor relations VP. Assuming the U.S. Bankruptcy Court in Wilmington, Del., confirms the vote during a May 3 hearing, the company should emerge May 15 from nine months in Chapter 11. Funds have come from companies associated with cell phone pioneer Craig McCaw, including Eagle River Investments and Teledesic. Also investing, according to Tedino, are Deutsche Telecom, Qatar Telecom, Credit Suisse First Boston, Turk Telecom, and a Saudi Investment Group named TSFL. ICO plans to launch its service at the end of 2002 but has not set a launch schedule, said Tedino. The company is considering using the Delta III, Atlas IIAS and Proton rockets in addition to the Sea Launch vehicle. ICO lost its first satellite in March when a Sea Launch rocket failed. INTEGRATED HEALTH: Taps Chapin, Flatteau & Klimpl LLP ----------------------------------------------------- Judge Walrath approved the Debtors' application to employ the New York-based law firm of Parker, Chapin, Flatteau & Klimpl, LLP, as special counsel in these chapter 11 cases. Parker Chapin represented the Debtors for six years prior to the Petition Date, gaining a substantial knowledge and understanding of the Debtors' various lines of business and their wide-ranging legal needs. While being careful to not duplicate the general bankruptcy work that will be performed by Kaye Scholer, Parker Chapin will attend to general litigation, real estate and regulatory matters and will handle many claims administration matters. Kay Scholer and Parker Chapin agree to assist one another on an "as and when needed" basis so as to serve the needs of the Debtors by utilitzing the Firms' respective resources without duplication. Hourly rates of members of the firm working on this case range from $475 to $125. IRVINGTON KNOLLS: State Imposes Fine, Considers Revoking License ---------------------------------------------------------------- The Baltimore Sun reports on May 6, 2000 that state officials, which have been thwarted in efforts to force the sale of a troubled Baltimore nursing home, have imposed a $10,000 fine and are considering revoking the license for the facility after allegedly finding more violations. Carol Benner, director of the state Office of Quality Care, said yesterday that the fine was levied last month against the Irvington Knolls Care Center after inspectors again found evidence that some of the home's 171 patients suffered "actual harm." "We're concerned about the residents," said Benner, noting that the nursing home at 22 S. Athol Ave. has been cited for deficiencies numerous times in the past. "Based on the survey report, we might take the license." Ben Gershowitz, son of the home's owner, said they are disputing several of the state's findings and will be presenting evidence to back up their claim. In January, the state ordered the owner, Sonya Goodman, to sell the home by March 1, but just days before that date, Irvington Knolls filed for protection under federal bankruptcy laws. Records show the state has not attempted to intervene in the case. In the bankruptcy petition, Lawyers for Irvington Knolls listed assets of $5 million and liabilities of $17.1 million. Benner said she planned to meet Monday with representatives of the home to discuss the allegations in the latest inspection -- conducted on April 13 -- and the possibility of revoking the license. If the license is revoked, the patients will be transferred to other licensed homes. Benner said the two most serious problems in the recent inspection report involved instances of bedsores and a patient who suffered a leg fracture. The report also lists 13 instances of medication orders not being followed within a 12-hour period. Under new federal rules imposed late last year, the infractions, coupled with Irvington's record, triggered an automatic fine. Benner said the fines of $5,000 per serious violation were among the first to be imposed in the state under the new federal rules. Previously, the state could not impose fines immediately, but first had to give the facility operators an opportunity to contest the findings and file plans to eliminate deficiencies. Benner said Irvington officials told her this week that they hoped to arrange a sale of the home as soon as next week. Gershowitz declined to comment when asked about plans to sell the home. MARINER: Obtains Extension of Time To Assume/Reject Leases ---------------------------------------------------------- The Debtors, Mariner Post-Acute Network, Inc., and its affiliated debtors sought and obtained an extension of their time to assume or reject nonresidential real property leases until the earlier of September 18, 2000, and the date of confirmation of a Plan. Justifying their requested extension, the Debtors tell Judge Walrath: (1) The unexpired leases are valuable assets of the estates and are integral to their operation of comprehensive long-term care services to the elderly and the infirm, which requires specifically tailored facilities. If the requested extension is not granted, any inability to make reasoned decisions on whether to assume or reject leases within the 60 day period will mean a forfeit of the right to assume the unexpired leases concerned as a result of the "deemed rejected" provision of section 365(d)(4) of the Bankruptcy Code. (2) Because of the nature of business, any inadvertent or forced closure of a long-term care facility as a result of a premature "deemed rejection" of leases would adversely affect the health and welfare of the facility's residents. (3) The cases are complex and involve a large number of leases. The Debtors remind the court that they are parties to hundreds of leases of nonresidential real property and the majority of the unexpired leases are unique, containing different terms and market values to each landlord and facility. In some cases, they say, analysis of the lease is complicated by the fact that several unexpired leases are with a single landlord and involve facilities with different financial performance. (4) As providers of long-term care, the Debtors are subject to an extensive regulatory framework which will affect the assumption/rejection decisions. The Debtors further tells the Court that the requested extension of the period will have for all practical purposes an administrative rather than a substantive effect, given that any lessor may request the court to fix an earlier date by which the Debtors must assume or reject its lease. The Debtors also indicate their aim to evaluate the unexpired leases on an on-going basis expeditiously, despite court approval of the proposed extension period. With respect to unexpired leases under which Studer/Morton is the lessor, Judge Walrath approved an agreement for a shorter extension, through the earlier of June 16, 2000, and the date of confirmation of a Plan. (Mariner Bankruptcy News Issue 4; Bankruptcy Creditors' Services Inc.) MEDICAL SPECIALISTS: Case Summary and 20 Largest Creditors ---------------------------------------------------------- Debtor: Medical Specialists, Inc. Highland II 7229 Forest Avenue Richmond, VA 23226 Type of Business: Multi-specialty Medical Practice Petition Date: May 9, 2000 Chapter 11 Court: Eastern District of Virginia Bankruptcy Case No.: 00-32751 Judge: Robert G. Mayer Debtor's Counsel: Paula S. Bernan, 34679 LeClair Ryan 707 East Main Street, 11th Flr Richmond, VA 23219 804-783-2003 Total Assets: $ 3,564,914 Total Debts: $ 2,923,756(Exhibit A) $ 3,170,397(Summary of Schedules) 20 Largest Unsecured Creditors Bon Secours Home Infusion trade debt $ 218,644 Florida infusion/Nations Drug trade debt $ 202,949 Keiiter Stephens $ 103,983 Dr. Peter S. Ro $ 70,511 The Network trade debt $ 64,845 Dr. Emerson Farley, Jr. wage $ 63,753 Lawrence Zacharias, M.D. $ 56,947 Dr. David Riddick $ 56,860 Radiology Assoc. of Richmond trade debt $ 42,371 Marjorie L. Collings wage $ 31,432 VMSO, LLC trade debt $ 26,027 County of Henrico, Virginia $ 23,446 Internal Revenue Service $ 23,153 Wyeth-Ayerst trade debt $ 23,061 Dr. John Daniel, III $ 20,956 Beckman Coulter trade debt $ 19,267 Bon Secourts - Virginia lease $ 17,855 Medpath trade debt $ 17,573 Betty T. Garrett wage $ 15,803 RPAS trade debt $ 15,407 MERRILL LYNCH JAPAN SECURITIES CO: Posts Annual Loss ---------------------------------------------------- Merrill Lynch Japan Securities Co. posted a pretax loss of 22.4 billion yen for the year ended March 31 despite strong share trading and increased sales of investment-trust products. Operating revenue effectively jumped 330% from a year earlier to 19.7 billion yen, thanks to the active stock market and interest in investment trusts, even though the company had an irregular nine-month term through March 1999. But operating expenses rose 9% to 39.9 billion yen because of a bigger payroll, the adoption of a merit pay system and training of new sales staff. The number of sales personnel stood at 1,100 after the company took over the branches and some employees of failed Yamaichi Securities Co. in July 1998. The figure rose to 1,200 at the end of March. The subsidiary, wholly owned by Merrill Lynch & Co. of the U.S., posted a net loss of 7.4 billion yen. It is aiming to post profit in the year ending March 2003, President Ronald Strauss said. The company intends to begin online stock trading by the end of this year. Merrill Lynch Japan Securities is trying to increase client assets held long-term in custody. The balance of such assets had increased 210% to 1.37 trillion yen at the end of March, and the number of the accounts had risen 110% to 82,000. (Nikkei 08-May-2000) MICROAGE: Bonus For Loyal Employees ----------------------------------- THE ARIZONA REPUBLIC reports on May 11, 2000, that MicroAge Inc., hoping to keep employees during its Chapter 11 case, has proposed a 10 percent bonus for rank-and-file workers and managers who stay with the company throughout the reorganization. Higher-ranking employees would get bigger bonuses, as much as 75 percent in the case of the top seven executives. Under MicroAge's proposal, workers would get bonus checks in installments. The first payment would come about six months after the bonus plan was approved. At that time, employees would be due to get half the bonus they had accrued. For associates and managers, the bulk of MicroAge's 4,000 full-time employees, that means half of 3 percent of their base salary. The other half would be paid after the company emerged from Chapter 11. The next payment would come a year after the bonus plan, when employees were due to get half of 7 percent of their base salary. The rest would be paid at the end of the case. In all, those who stuck it out would receive 10 percent of their base salary. A hearing about the plan, which also lays out severance terms for workers, is scheduled for May 23. MONET GROUP: Case Summary and 18 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: The Monet Group, Inc. The Empire State Bldg 350 Fifth Avenue New York, NY 10118 Petition Date: May 11, 2000 Chapter 11 Court: District of Delaware Bankrutpcy Case No.: 00-01936 Debtor's Counsel: Joanne B. Wills 919 Market St., Suite 1000 Wilmington, DE 19801 (302) 426-1189 Total Assets: $ 50 million above Total Debts: $ 100 million above 18 Largest Unsecured Creditors London Pacific Life and Annuity Company 3109 Poplar Wood Court, Suite 108 Raleigh, NC 27604 Senior Susan Gressel Subordinated (919) 981-2712 Debt $ 18,783,068 C.B. Capital Investors, LP c/o Chase Capital Partners 380 Madison Avenue, 12th Floor New York, NY 10017 Junior Brett Ingersoll Subordinated (212) 622-3672 Debt $ 10,629,683 Chemical Ventures, Inc. c/o Chase Capital Partners 380 Madison Avenue, 12th Floor New York, NY 10017 Guaranty of Brett Ingersoll Secured Credit (212) 622-3672 Facility $ 9,000,000 Hewlett Packard Company FCG Default & Bankruptcy 20 Perimeter Summit Blvd. MS 507 Atlanta, GA 30319-1417 Ann E. Martin (404) 648-8127 Trade Debt $ 2,854,522 E.H. Ashley & Company, Inc. One White Squadron Road PO Box 15067 Riverside, RI 02915 Bea, A/R Manager (401) 431-0950 Trade Debt $ 415,769 United Healthcare of New England Health Insurance $ 200,378 A&H Manufacturing Co. Trade Debt $ 177,031 Alliance Consulting Group MIS Consulting $ 169,347 TransWorld Marketing Corp. Trade Debt $ 160,247 Hallmark/Sweet Trade Debt $ 128,319 Unicare Life & Health Health Insurance $ 126,596 Ernst & Young, LLP Professional Svcs $ 98,850 Gems Resources Enterprise Trade Debt $ 97,138 Nippon Express USA, Inc. Trade Debt $ 92,000 Fantasia (CN) Trade Debt $ 85,292 P. Craft Jewelry Trade Debt $ 65,683 Duk Jin Trading Co. Trade Debt $ 65,000 Stanfre Industries, Inc. Trade Debt $ 63,891 MOUNT AIRY: Judge Refuses To Stop Sale -------------------------------------- According to The Associated Press, U.S. Bankruptcy Judge John Thomas refused to stop a sheriff's sale next week of Mount Airy Lodge, one of the largest and best-known resorts in the Poconos, whose last chance not to lose the property at the sale in Monroe County is to find a buyer who can pay $ 32 million to the mortgage holder. A postponement of the sale was requested by the estate of former majority owner Emil Wagner, the minority shareholders, and the U.S. trustee's office. Since the November bankruptcy filing to refinance or sell the hotel, 1,200-acre resort in Paradise Township was not accomplished because the allotted time was not enough. NEWCOR: Sr Subordinated Notes To Become Due and Paybale -------------------------------------------------------- Newcor, Inc. has announced that the exchange offer EXX Inc. intends to commence would cause the company's senior credit facility and its $125 million 97/8% Senior Subordinated Notes due 2008 to become due and payable upon the consummation of the proposed offer. As previously announced, the Board of Directors of Newcor, Inc. is reviewing the materials filed by EXX Inc. with the Securities and Exchange Commission relating to EXX's proposed exchange offer for all the outstanding common shares of Newcor for an undetermined amount of Class A common stock of EXX and/or cash with a purported value of $4.00 per share. The proposed exchange offer had not been commenced as of May 4, 2000. Materials filed with the SEC by EXX Inc. indicate that the proposed exchange offer is subject to a number of conditions including the following condition: "EXX be satisfied, in its reasonable judgment, that the indebtedness of Newcor under the $125 million 9-7/8% Senior Subordinated Notes due 2008 will not become immediately due and payable upon the consummation of the proposed offer." A company spokesperson noted that the exchange offer in its present form would violate the terms of the indenture governing the company's $125 million 9-7/8% Senior Subordinated Notes due 2008. The proposed structure would result in EXX owning more than 35% of Newcor's voting stock, constituting a "change of control" under such indenture and triggering a requirement, under Section 4.15 of the indenture, for Newcor to offer to repurchase the notes for an offer price in cash equal to 101% of the aggregate principal amount of the notes. A "change of control" as defined in the indenture would also constitute an event of default under Newcor's senior credit facility. Completion of EXX's exchange offer, without the consent of Newcor's senior creditors and bondholders, would in all likelihood require EXX to refinance Newcor's existing senior credit facility and $125 million 97/8% Senior Subordinated Notes. The materials filed by EXX with the SEC do not address EXX's ability to refinance Newcor's debt under its bonds or senior credit facility if EXX decides to waive such condition. According to EXX's public filings, EXX is a Las Vegas, Nevada- based holding company engaged in the design production and sale of "impulse toys," watches, kites, electric motors and cable pressurization equipment with net sales for the year ended December 31, 1999 of $21.2 million. Newcor is a manufacturer of precision machined components and assemblies for the automotive, medium and heavy duty truck and agricultural vehicle industries and is a manufacturer of custom rubber and plastic products primarily for the automotive industry. Newcor is also a supplier of standard and custom machines and systems primarily for the automotive and appliance industries. PAGING NETWORK: In Default of Debt Agreements --------------------------------------------- Paging Network, Inc. is a provider of wireless communications services throughout the United States and in the U.S. Virgin Islands, Puerto Rico and Canada. PageNet provides services in all 50 states and the District of Columbia, including service in the 100 most populated markets in the United States. PageNet also owns a minority interest in a wireless communications company in Brazil. On November 8, 1999, PageNet announced that it had signed a definitive agreement to merge with Arch Communications Group, Inc. Under the terms of the merger agreement, each share of PageNet's common stock will be exchanged for 0.1247 share of Arch common stock and PageNet's 8.875% senior subordinated notes due 2006, its 10% senior subordinated notes due 2008, and its 10.125% senior subordinated notes due 2007, along with all accrued interest thereon, will be exchanged in a registered exchange offer under which the holders of each $1,000 of outstanding principal of Notes will receive, upon consummation of the merger, approximately 64 shares of common stock of Arch. As part of the merger, PageNet intends to distribute up to 80.5% of its interest in Vast, a wholly-owned subsidiary of PageNet, to holders of the Notes and PageNet's common stock. Holders of the Notes will receive up to a 68.9% interest in Vast, while holders of PageNet's common stock will receive up to an 11.6% interest. The remaining interest will be held by the combined company following the merger. The merger agreement requires 97.5% acceptance by the holders of the Notes and affirmative votes of a majority of PageNet's and Arch's stockholders to complete the merger. Consent of the lenders under PageNet's revolving credit facility is also required. The merger agreement also provides for PageNet to file a "pre-packaged" Chapter 11 reorganization plan if the level of acceptances from the holders of the Notes is below 97.5%, but greater than 66.7% in amount and 50% in number required under the Bankruptcy Code for the noteholder class to accept the "pre-packaged" Chapter 11 reorganization plan. Consummation of the merger is subject to customary regulatory review, certain third-party consents, including PageNet's lenders, and the approvals noted above. The company has received approval from the Department of Justice and the Federal Communications Commission to proceed with the merger, and anticipates completing the merger during the third quarter of 2000. PageNet reported a net loss for the year ended December 31, 1999 of $299,002 on revenues of 4989,723. In the prior year its net loss was $162,007 on revenues of $1,046,027. PageNet's deteriorating financial results and liquidity have caused PageNet to be in default of the covenants of all of its domestic debt agreements. On February 2, 2000, PageNet failed to make the semi-annual interest payment on its 8.875% senior subordinated notes due 2006, and its 10.125% senior subordinated notes due 2007. As of March 2, 2000, the non-payment of interest constituted a default under the indentures of the 8.875% Notes and the 10.125% Notes. As of April 17, 2000, PageNet failed to make the semi-annual interest payment on its 10% senior subordinated notes due 2008, and does not expect to make additional cash interest payments on any of its Notes. As a result of this default, PageNet's bondholders could demand at any time that PageNet immediately pay $1.2 billion of its bonds in full. Should this happen, PageNet would immediately file for protection under Chapter 11 of the United States Bankruptcy Code. PageNet is prohibited from additional borrowings and has classified all of its outstanding indebtedness under the Credit Agreement and the Notes as a current liability as of December 31, 1999. As of May 1, 2000, PageNet had approximately $55 million in cash. The company believes that this cash, plus the cash expected to be generated from operations, is sufficient to meet its obligations, except for the cash interest payments due under the Notes, into the third quarter of 2000. However, if PageNet's financial results continue to deteriorate, PageNet may not have enough cash to meet such obligations through the third quarter of 2000. PageNet is considering alternatives to ensure that it has sufficient liquidity through the completion of the merger. However, there can be no assurance that PageNet's efforts to obtain additional liquidity will be timely or successful or that the merger will be completed. As a result, PageNet may have to reduce the level of its operations and/or file for protection under Chapter 11 to complete the merger and/or restructure its obligations. PageNet is negotiating a debtor-in-possession loan facility with its lenders to be made available in the event it commences a Chapter 11 case. Filing for bankruptcy would have a material impact on PageNet's results of operations and financial position. The company's deteriorating financial condition and lack of additional liquidity indicate that PageNet may not be able to continue as a going concern for a reasonable period of time. PLANET HOLLYWOOD: Comes To Times Square -------------------------------------- May 6, 2000 -- (Daily News) -- One of Times Square's major celebrity-backed theme restaurants, the Official All-Star Cafe, is shutting down within the next couple of weeks. The sports establishment, part of a six-restaurant chain backed by Tiger Woods, Wayne Gretzky, Ken Griffey Jr. and Andre Agassi, will be replaced by the resurrected Planet Hollywood. The movie-themed eatery, which declared bankruptcy in August, will close its branch on W. 57th St. and move to the Crossroads of the World in August. Howard Rubenstein, spokesman for Planet Hollywood owner Robert Earl, who also owns the Official All-Star Cafe, says Planet Hollywood has reorganized its finances and will emerge from bankruptcy, possibly as early as next week. Rubenstein says the other five All-Star Cafes will stay open. Earl intends to use part of the new restaurant space on Broadway and 45th St. as a glassed-in storefront studio to broadcast live radio and TV. Radio deejay Jay Thomas is expected to move his daily Jammin' 105 morning show to the new Planet Hollywood. Thomas' producer, Jane Youdelman, says it's a done deal but Rubenstein is more cautious. "Robert loves Jay Thomas," he says, "but Planet Hollywood is still awaiting final approval of the building plans before actually signing up Jay's show." PROTECTION ONE: Troubled Security Company Fixed ------------------------------------------------- The president of Protection One said Friday that the once- troubled security company has turned the corner. Annette Beck, who also serves as the chief operating officer of the Western Resources subsidiary, said the company increased earnings, reduced costs and slowed customer defections in the first quarter of 2000. "We have absolutely rounded the bend," Beck said. "I would characterize Protection One as fixed." Friday's earnings report showed the company --- the nation's second-largest provider of residential and commercial monitored security services --- had cut its customer defection rate to 11.1 percent from 14.7 percent in the fourth quarter of 1999. Each percentage point drop in the attrition rate saves the company about $2 million, Beck said. Protection One, which operates from Topeka and Culver City, Calif., posted net income of $4 million in the first quarter, which translates into earnings of 3 cents per share. In the first quarter of 1999, the company recorded a net loss of $4.8 million. However, the earnings in the first quarter of 2000 were largely attributable to the company's aggressive effort to repurchase its debt in the marketplace, which was trading at a discount. That effort produced a one-time gain of $31.9 million. At the end of 1999, Protection One, which is 85 percent owned by Western, showed $1.1 billion in debt on its balance sheet. By the end of the just-completed quarter the debt had been reduced to $703 million. "That is a huge, huge improvement on our balance sheet," Beck said. On an operational basis, the company is still posting loses --- $17.7 million in the first quarter. Beck said like other growth companies, Protection One is valued on its cash flow, not its earnings. To stop customers from leaving because of poor service, Beck added workers at the company's four major call centers across the country. At the same time, she reduced costs by overhauling the company's marketing effort. RELIASTAR FINANCIAL: Employees To Cash In Stock ----------------------------------------------- Employees at ReliaStar Financial Corp. will reap a windfall in September when the company's sale to ING Group of the Netherlands becomes final. As part of the sales agreement announced Monday, ReliaStar's 3,800 employees will get to prematurely exercise all their stock options. Employees hold options for 8.4 million shares with collective gross value of about $453 million. In 1997, all employees received options for 200 shares priced at $39 each. Those options were supposed to vest either in 2002 or when the stock reached $60 a share. But the merger will let employees cash out early at the $54-a-share buyout price from ING. There are 350,000 options outstanding from that one-time grant. They are worth $18.9 million and bring a profit of $5.2 million at the buyout price. Some employees quipped that while it's not the same as the estimated $30 million that the deal is worth to CEO John Turner, the early option exercise is still a nice bonus. Before the news of the $6.1 billion ReliaStar-ING deal, Minnesota's fourth-largest ever, ReliaStar's stock price had hovered around $30. Besides the stock options, employees also participate in ReliaStar's annual profit-sharing plan, which in recent years has paid out 7 to 12 percent of each employee's salary, depending on the company's financial performance. The bulk of this plan is designed to work as a retirement savings plan. ROBERDS: Liquidation Sale at Eight Georgia Stores ------------------------------------------------- The Atlanta Journal and Constitution reports on May 12, 2000 that Roberds' liquidation sale at eight Georgia stores is slated to start next Friday as part of the failed chain's going-out-of- business plan, but customer orders are still in limbo. A bankruptcy court in Ohio will decide Monday which liquidation firm will handle the close-out sale and how long it will last. Roberds entered Atlanta in 1979 with a store in Norcross and slowly built up its presence to eight locations in Georgia, a distribution center and service center. A store in Decatur went dark in 1997, and another in Buckhead was shuttered earlier this year, leaving the retailer with sites in Norcross, Marietta, Athens, Douglasville, Fayetteville, Forest Park, Roswell and Gainesville. Metro Atlanta was Roberds' biggest market, and the retailer had planned to add at least three stores here this year. But Roberds buckled under in the face of competition from Best Buy, Circuit City and Atlanta-based Havertys, and the expansion of Rooms-to- Go. Roberds owns some of its stores. The Buckhead store at 2755 Piedmont Road N. E. is already under contract to be sold to an unidentified developer on June 1, Grigsby said. SIMMONDS CAPITAL: SCL Electronics Files For Bankruptcy ------------------------------------------------------ Simmonds Capital Limited (TSE:SMM) announced that its wholly owned subsidiary SCL Electronics Ltd. has made a voluntary assignment pursuant to the Bankruptcy and Insolvency Act. This decision came following the receipt from SCL Electronics Ltd's bank lender of a payment demand and a notice of intention to enforce security. The estimated book value of the remaining assets of SCL Electronics Ltd. are $5.7 million with liabilities of $24.6 million, including $4.9 million owed to the bank as the largest secured creditor and $16.8 million owed to Simmonds Capital as the largest unsecured creditor. SCL Electronics Ltd. is a Canadian distributor of audio and video products. Mr. John Simmonds, CEO of Simmonds Capital, stated " Since last year, we have been working on a divestiture plan for the operating divisions of SCL Electronics. The amounts for the divestiture have been fully provided for in our 1999 financial statements as losses from discontinued operations. In February, we received shareholder approval to sell these discontinued operations in order to focus on our merchant banking activities. The contract manufacturing business sale closed in February and we have recently completed the sale of the A.C. Simmonds & Sons components division. Unfortunately, we have been unable to find a purchaser for the audio/video division of SCL Electronics as a going concern. This is the last remnant of our operating businesses to be sold. Our goal is to wind up SCL Electronics as quickly as possible and to put our efforts into building our investment and merchant banking activities." Simmonds Capital Limited is a merchant banking company with an active role in certain strategic investments. The company's current investments include three main initiatives: interactive gaming technology focused on the North American horse racing market, internet service site focused on home products and home service, and wireless communications. STONE & WEBSTER: In Hot Water As It Loses $250M Pact ---------------------------------------------------- On May 6, 2000, The Boston Globe reported that the owners of the Maine Yankee nuclear power plant have canceled a $250 million cleanup contract with Stone & Webster Inc., which could push the Boston-based engineering firm closer to bankruptcy. Maine Yankee's owners, including Central Maine Power Co., Bangor Hydro, and National Grid, voted last week to suspend payments to Stone & Webster. Earlier in the week, a key Stone & Webster subcontractor ceased work on a power plant project in Tiverton, R.I. Other projects could also slip as the gravity of Stone & Webster's financial position begins to sink in with customers around the world. Last Week, Stone & Webster disclosed that its problems had forced it to take a $27.5 million charge and begin talks to sell most of its assets. If the talks fail, Stone & Webster may be forced into default with creditors, it said. The company expects to receive credit extensions in such an event. Many worry that Stone & Webster might not be able to continue operating, though. Last Week, the Massachusetts Water Resources Authority said it would reduce payments to Stone & Webster if it seeks bankruptcy protection and shift contracts so that subcontractors are still paid to work on the MetroWest water-supply tunnel. Stone & Webster is construction manager for the $680 million tunnel. It has 30 employees dedicated to the job and has received $19 million of the $38 million it is due under an eight-year contract. Maine Yankee, in Wiscasset, was closed in 1997 amid safety problems and rising costs. Stone & Webster was hired in 1998 to "decommission" the plant by removing or storing radioactive material. It employs 480 people at Maine Yankee. Central Maine's board ended the contract "to avoid the uncertainty over the possibility of a bankruptcy trustee deciding how to deal with the contract," said Mark Ishkanian, a spokesman. Stone & Webster had already received about $60 million under a contract due to end in 2004. Spokesman Michael Freitag would not discuss the company's financial outlook beyond its previous disclosures. But he said that "while we dispute Maine Yankee's right to terminate our current arrangement, we're encouraged by its willingness to explore alternatives that would allow S&W to continue its involvement in this important project. "We hope to quickly identify a solution that allows us to continue our work and ensure that the project is completed safely and within the time frame originally established." Maine Yankee spokesman Eric Howes said the vote to suspend the contract was not unanimous but declined to say which owners don't support the decision. SUN HEALTHCARE: First Motion To Extend Exclusivity -------------------------------------------------- The Debtors' chapter 11 cases are large and complex. In the initial months following the commencement of these cases, Sun tells Judge Walrath, the Debtors' efforts have been focused primarily on stabilizing their operations and dealing with various critical issues typically faced by a debtor at the outset of a case. A reorganization of Sun's magnitude takes time, and it is simply not possible to propose and file a comprehensive, coherent, and feasible, much less consensual, plan of reorganization which the Court could confirm without more time. Accordingly, without prejudice to their right to seek further extensions for cause, the Debtors ask, pursuant to 11 U.S.C. Sec. 1121(d), for an extension of the time within which they may file a plan of reorganization to and including June 12, 2000, and if a plan is filed within that time, a concomitant extension of their exclusive period during which to solicit acceptances of that plan to and including August 11, 2000. In presenting this Motion to Judge Walrath for her consideration, the Debtors disclose that, in fact, negotiations with representatives of the largest creditor groups are already underway. The Debtors have reached an agreement in principal with the senior bank lenders and certain holders of the senior subordinated notes. The Debtors have actually started drafting their disclosure statement and plan of reorganization to implement this agreement in principal. However, the Debtors caution, significant work remains in identifying and addressing the claims of the thousands of other creditors. Considering the merits of the Debtors' Motion, Judge Walrath finds that the Debtors have taken many concrete steps towards a successful rehabilitation of their business and have established cause for the requested extensions. (Sun Healthcare Bankruptcy News Issue 11; Bankruptcy Creditors' Services Inc.) THIS END UP: Admonished For Sloppy Chapter 11 --------------------------------------------- This End Up, which pioneered crate-style furniture 26 years ago, has a judge's approval to conduct liquidation sales at its 69 stores. U. S. Bankruptcy Court Judge Peter J. Walsh also admonished the company Tuesday for conducting a sloppy Chapter 11 reorganization, especially in its handling of employees' medical benefits before and since the bankruptcy filing. Liquidation sales could begin immediately and run up to three weeks. (Daily Press Inc. 11-May-2000) THIS END UP: Employees' Health Insurance Key Item ------------------------------------------------- The Richmond Times Dispatch reports on May 6, 2000 that employees at furniture retailer This End Up feel as if they have been turned upside down. A key gripe centers on the employee health care insurance program that reportedly has been topsy-turvy since the Richmond-based chain filed for bankruptcy protection in mid-February. Some employees have been denied coverage. Others are being sent bills for doctor visits or surgeries. And now United Healthcare Insurance Co., which administers This End Up's insurance program, wants to terminate its agreement. A U.S. Bankruptcy Court judge will consider the motion Monday. "It has been a very difficult issue for employees," said Bryan Peery, recently named This End Up's president. "We're very anxious to have this issue resolved." If the insurance claims aren't paid, This End Up's employees could be held liable for the bills. The chain has about 1,600 workers. Some workers say they have left the chain because of the insurance problems. Others say they may have to file for personal bankruptcy. "This is just horrible what they have done to us," said one worker who didn't want to be identified. This End Up operates a self-funded health care plan, meaning the company is solely responsible for paying the benefits. Workers contribute to the plan. United Healthcare administers the plan, paying out claims and getting reimbursed by This End Up. But the chain stopped putting funds into a special account weeks before the bankruptcy filing. The insurer says it is owed more than $ 188,000 it paid out before the filing. Since the filing, United Healthcare has received more than 1,500 claims, court records show. Three weeks ago, This End Up put $ 200,000 into the fund to pay claims made after the bankruptcy filing. United Healthcare has not drawn on those funds. The insurer says it is difficult to differentiate between claims made before the filing and after. That is important because laws prohibit firms from paying pre-bankruptcy claims during a bankruptcy case. TOWER AIR: Returns Aircraft --------------------------- Tower Air, still in search new investors, suspended all scheduled flights due to its financial difficulties. The airline filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in Wilmington, Del., in February, but still flew a limited scheduled service operation. The airline is also in the process of returning an unspecified number of Boeing 747 aircraft to its lessors. VENCOR: Announces First Quarter Results --------------------------------------- Vencor, Inc. (OTCBB:VCRI) (the "Company") announced its operating results for the first quarter ended March 31, 2000. Revenues for the quarter totaled $715 million compared to $700 million in the year-earlier period. The Company reported a loss from operations of $16 million or $0.23 per share compared to a loss of $15 million or $0.21 per share in the first quarter of 1999. The reported loss from operations for both interim periods included expenses incurred in connection with the Company's restructuring activities totaling $3 million and $2 million, respectively. In addition to the operating loss reported in the first quarter of 1999, the Company also recorded a charge of $9 million or$0.13 per share related to a change in accounting for start-up costs. The Company also announced that it has filed a motion with the United States Bankruptcy Court for the District of Delaware (the "Court") to extend the Company's exclusive right to file its plan of reorganization through July 18, 2000. The Company and the lenders under the debtor-in-possession financing (the "DIP Financing") have already agreed to permit the Company to seek an extension to file its plan of reorganization through June 15, 2000. The current exclusive period is scheduled to terminate on May 16, 2000. In support of its motion, the Company informed the Court that it has continued to make progress in its reorganization proceedings. In addition, the motion notes that the Company has reached an understanding with certain of its senior bank lenders, certain holders of the Company's $300 million 9 7/8% Guaranteed Senior Subordinated Notes due 2005 and the advisors to the official committee of unsecured creditors regarding the broad terms of a plan of reorganization. The Company also has continued to engage in discussions with Ventas, Inc. (NYSE:VTR) to obtain its support for a consensual plan of reorganization and is simultaneously pursuing alternatives based upon the possible outcome of those negotiations. The Company also informed the Court that it has continued its conversations with the Department of Justice regarding a settlement of ongoing investigations and the negotiation of other agreements with the Company. The motion further notes that the Company has filed amended schedules of unsecured creditors and has made progress in reviewing and analyzing pre-petition claims against the Company. In spite of this progress, additional time is necessary for the Company to resolve issues that have arisen in connection with the reorganization. The hearing on the motion is scheduled for May 31, 2000. The Company has requested an interim order from the Court to maintain the Company's exclusive right to file a plan of reorganization until the motion is decided. Vencor and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 with the Court on September 13, 1999. Vencor, Inc. is a national provider of long-term healthcare services primarily operating nursing centers and hospitals. WASTE MANAGEMENT: Subsidiary Completes Sale of Italian Operations ----------------------------------------------------------------- Waste Management Inc. (NYSE:WMI) announced that its wholly owned subsidiary has completed its previously announced transaction to sell its waste services operations in Italy to Emas S.p.A. and Italcogim S.p.A. for approximately U.S. $70 million, including cash and assumed debt. The sale of the business in Italy stems from its strategy to re- focus the company on its North American solid waste operations. The company's subsidiaries are in discussions with other parties regarding the divestiture of its other international businesses, as well as non-core and certain non-integrated solid waste assets in North America. The company intends to use the proceeds of these divestitures primarily to reduce debt and to make selective tuck-in acquisitions of solid waste businesses in North America. Waste Management Inc. is its industry's leading provider of comprehensive waste management services. Based in Houston, the company serves municipal, commercial, industrial, and residential customers throughout the United States, and in Canada, Puerto Rico and Mexico. WASTE MANAGEMENT: Wins Dismissal of A Lawsuit --------------------------------------------- As reported in The Times Union on May 6, 2000, chairman Louis D. Paolino Jr. and other former officers of Mount Laurel, N.J.-based Eastern Environmental Services Inc. were sued by Waste Management in federal court in Wilmington last year for allegedly overstating profits before selling Eastern in 1998. Paolino and associates sued in Delaware Chancery Court in February, saying the buyout agreement covered legal expenses. Judge Myron Steele dismissed the suit after lawyers agreed that the company would pay the legal expenses, according to documents filed in state court. ********* 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., Trenton, NJ, and Beard Group, Inc., Washington, DC. Debra Brennan, Yvonne L. Metzler, Edem Alfeche and Ronald Ladia, Editors. Copyright 2000. 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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