/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000531.MBXT R O U B L E D C O M P A N Y R E P O R T E R Wednesday, May 31, 2000, Vol. 4, No. 106 Headlines ACCESS AIR: Reorganization Plan CLOVERLAND MANUFACTURING: Files for Chapter 11 DELOREAN MOTOR: Bankruptcy Closes; Over 90% Distribution EAGLE GEOPHYSICAL: Announces Filing of Reorganization Plan GENICOM: Hurt By Changing Computer Printer Market HARNISCHFEGER: Beloit Owes Former Workers HEDSTROM HOLDINGS: Files Motion To Extend Time To File Schedules INVERWORLD: Court Approves Plan To Sell Assets MARINA DEVELOPMENT: Seeks Hearing on Confirmation of Plan MATTHEWS STUDIO: Reports $4.9-Million Loss MEDICAL RESOURCES: Seeks Additional Time To Assume/Reject Leases MICROAGE: Bonus Plan Criticized MONDI OF AMERICA: Hearing on Approval of Disclosure Statement MOSSIMO: Target Deal Still On NATIONAL HEALTH: Moody's Lowers Ratings OPHTHALMIC IMAGING: Announces Planned Investment PAGING NETWORK: President and COO of Subsidiary Resigns PATHMARK STORES: Execs Have Stake In Finding A Buyer PENN TRAFFIC: Announces 43.6 Percent EBITDA Increase PIC N' PAY: To Close Stores PRIMARY HEALTH: Final Order Approves Amendment to DIP Financing PREMIER LASER: Bar Date Set For July 31, 2000 PREMIER SALONS: Seeks Extension of Exclusivity SAFETY COMPONENTS: Committee Taps Richard, Layton & Finger SAFETY KLEEN: Names Top Officers SOUTHERN MINERAL: Last Date For Filing Proofs of Claim SUNSHINE MINING: Announces Noteholders Meeting SUNTERRA CORP.: Reduces Work Force TELEGEN CORP: Court Approves Disclosure Statement TOYSMART.COM: Online Toy Store Shutting Down U.S. LEATHER: Offers Workers $1,500 Each In Settlement VISTA EYECARE: Committee Taps Houlihan Lokey WORLDCLASS PROCESSING: Sale Moving Forward WORLDCORP, INC: Motion For Approval of Settlement Term Sheet ********* ACCESS AIR: Reorganization Plan ------------------------------- AccessAir is negotiating with management companies that would provide support services the airline had been providing itself. The new company would provide such services as maintenance, fuel purchasing, ground handling and access to insurance. This would mean lower overhead costs. AccessAir intends to enter a contract with an online reservation service. AccessAir plans initially to provide service between Des Moines and Chicago, Los Angeles, Las Vegas and Orlando, Fla. AccessAir expects to expand its fleet. The airline now flies two aircraft and would expand to three. CLOVERLAND MANUFACTURING: Files for Chapter 11 ------------------------------------------------ Automobile engine rebuilder, Cloverland Manufacturing of Escanaba, filed for bankruptcy protection under Chapter 11 caused by the abnormally mild weather the past several winters with extreme temperatures putting stress on engines. DELOREAN MOTOR: Bankruptcy Closes; Over 90% Distribution -------------------------------------------------------- The DeLorean Motor Co. bankruptcy case, originally filed as a Chapter 11 case in October, 1982, and converted to Chapter 7 in December, 1983, is about to close after 18 years. "This case was a no-asset case when it converted," says David W. Allard, the trustee of 17 years. "Hundreds of lawsuit recoveries over the years, including one very large jury verdict in New York in 1998, created a sizable estate for distribution." Allard is with the Detroit law firm of Allard & Fish, P.C., and is president- elect of the National Association of Bankruptcy Trustees. Attorneys estimated in 1983 that creditors would receive less than 5 cents on the dollar, yet the unsecured creditors received an interim distribution of 9% in 1990 and are currently receiving checks for 90% of the remaining balance. "I am hopeful that creditors will be able to collect up to 100% of their principal in a final distribution to be made near the year end. That's almost unheard of in Chapter 7 cases," says Allard. "However, we are having difficulty locating all the creditors entitled to payment after so many years." The complex and often contentious international case has been presided over by Judge Ray Reynolds Graves, United States Bankruptcy Court, Detroit, MI. Allard is represented by Deborah Fish of Allard & Fish, Detroit, MI, Sheldon Toll, Robert Weiss, and Judy Calton of Honigman Miller Schwartz and Cohn, Detroit, MI, Whitney Gerard and Zachary Shimer of Chadbourne & Parke, New York, NY and Michael Hess, the lead trial lawyer in the New York case, who left Chadbourne & Parke after concluding the trial to become Mayor Giuliani's City Corporation Counsel. The firm of Jay Alix & Associates led by Jay Alix and Rob Rock, Southfield, MI, New York, NY, and Chicago, IL, has been Allard's accountant since 1983. Donald M. Robiner, United States Trustee, Cleveland, OH and Marion J. Mack, Jr., Assistant United States Trustee, Detroit, MI have administered the bankruptcy proceeding for many years. EAGLE GEOPHYSICAL: Announces Filing of Reorganization Plan ---------------------------------------------------------- Eagle Geophysical, Inc. (Nasdaq: EGEO) and its subsidiaries announced that they have filed their proposed Joint Plan of Reorganization in their bankruptcy proceedings. As previously reported, Eagle Geophysical and its wholly-owned subsidiaries filed petitions for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on September 29, 1999. One of the debtor subsidiaries, Atlantic Horizon, Inc., previously filed and obtained confirmation of a plan of liquidation in March 2000. The proposed Plan for the remaining entities generally provides for payment of secured claims, an option for holders allowed unsecured claims totalling $ 100,000 or less to take either a cash payment of 15% of their claims or shares of new common stock in the reorganized company. The proposed Plan also provides for the company's bondholders and remaining allowed unsecured creditors to receive shares of new common stock in the reorganized company. All of the currently outstanding shares of common stock of the company would be cancelled, with current shareholders of the company receiving no interest in the reorganized company. Eagle Geophysical has now sold the majority of its marine assets, and the reorganized company will sell the remaining marine assets and continue to conduct the company's business as an onshore and transition zone seismic data acquisition company. A hearing was held by the Bankruptcy Court on May 24, 2000 and the company's Disclosure Statement was approved. The Bankruptcy Court has set June 28, 2000, at 3:00 p.m. for the hearing on the confirmation of Eagle's First Amended Joint Plan of Reorganization. If confirmed, all outstanding shares of common stock of the company will be extinguished and new common stock will be issued to various creditors under the Plan on the Effective Date of the Plan. Eagle Geophysical provides seismic data acquisition services to the petroleum industry. GENICOM: ----------------------------------------------------------------- According to an article in The Washington Post on May 30, 2000, Chantilly-based Genicom Corp., once manufacturing computer printers for the likes of Wal-Mart, Chrysler, General Motors and Prudential is spending its last days in the federal bankruptcy court in Wilmington, Del., its assets being auctioned off piece by piece. At best, the sales may yield $ 34.8 million for the creditors of a company that in 1998 generated $ 452 million in revenue. According to the report Genicom's bitter ending is the result of a changing computer printer market, some bad management decisions and a business acquisition that quickly turned sour. Genicom was forced to file bankruptcy by a group of nine lenders headed by Bank of America that say they are owed nearly $ 116 million. In the 1990s, Genicom's executives attempted to increase the size of the firm's printer business through acquisition of smaller firms that had a particular niche they wanted to pursue. By 1997, Genicom's executives decided they needed a brand-name printer to market, so in August 1997 the company paid $ 27 million to buy the printer division of a leading manufacturer, Digital Equipment Corp. Winn said the Digital name gave the firm the immediate market recognition it had sought, not to mention another $ 115 million in annual revenue. In 1998, the company hit its peak in revenue, taking in $ 452 million, making it the 41st biggest company in the Washington area. But Genicom's euphoria over the Digital purchase lasted just a matter of months. In February 1998, Compaq Computer bought the rest of Digital and within weeks announced that it would abandon the use of the Digital brand. That immediately undercut the whole point of Genicom's acquisition. Under the terms of Genicom's purchase, Digital was to continue marketing its named printers, a task that Compaq was supposed to assume with its acquisition of the rest of Digital. HARNISCHFEGER: Beloit Owes Former Workers ------------------------------------------- According to an AP report on, The Department of Workforce Development sent a letter to Beloit Corp.'s former parent company Harnischfeger Industries who declared bankruptcy last summer, saying Beloit Corp. owes 200 former employees of the 270 who filed complaints, a total of $ 3.6 million in severance pay. HEDSTROM HOLDINGS: Files Motion To Extend Time To File Schedules ---------------------------------------------------------------- The debtors, Hedstrom Holdings, Inc., et al. seek an extension of the time to file schedules of assets and liabilities, schedules of executory contracts and unexpired leases and statements of financial affairs with the US Bankruptcy Court for the District of Delaware. The debtors request that the court further extend the time to file their schedules and statements to and including June 22, 2000. The debtors will not be able to complete the schedules and statements by the May 22, 2000 deadline due to the size and complexity of the debtors' cases, and the competing demands upon their employees to assist in efforts to stabilize business operations during the initial postpetition period. INVERWORLD: Court Approves Plan To Sell Assets ------------------------------------------ San Antonio Express-News reports on May 23, 2000 that U.S. Bankruptcy Court Judge Leif Clark approved a plan to allow PricewaterhouseCoopers, InverWorld's court-appointed bankruptcy receiver, to sell the defunct company's remaining portfolio holdings, valued at $88.5 million, over the protests of two of the several lawyers representing InverWorld creditors and investors. But an official with Morgan Stanley Dean Witter, hired by PricewaterhouseCoopers for the sale of InverWorld assets, testified that because about 95 percent of the assets are bonds denominated in U.S. dollars, and because U.S. interest rates are rising, it would be best if the bonds were sold quickly. "All insolvency proceedings are, in effect, rough justice," Clark said when making his decision. His order becomes final in 10 days. Once that happens, said Len Blackwell, the PricewaterhouseCoopers official who is acting as receiver and trustee to several of the InverWorld entities, the sale will begin. Most of the assets will be sold off within 30 days, he said. But some of them are obscure corporate or government bonds from other countries, and they could take longer to sell. MARINA DEVELOPMENT: Seeks Hearing on Confirmation of Plan --------------------------------------------------------- The debtor, Marina Development Associates, LP seeks to dispense with the requirement that the debtor file a disclosure statement and asks that the court set a hearing on confirmation of the debtor's plan of liquidation. The plan provides for full payment of all allowed claims, with no class of claims or interests being impaired. The plan will be funded by the proceeds realized from the transfer of the debtor's property. The debtor entered into an agreement for the sale of substantially all of its assets to Optima Equities, Inc. for the sum of $6.25 million together with 50% ownership interest in Optima. It is anticipated that the purchase price will be more than sufficient to fund a plan of reorganization which provides for payment in full to the debtor's various creditors. MATTHEWS STUDIO: Reports $4.9-Million Loss ------------------------------------------ The Los Angeles Times reports on May 23, 2000 that bankrupt Matthews Studio Group of Burbank, which supplies lighting, grip, transportation, professional camera, video and audio equipment to the entertainment industry, reported a net loss of $ 4.9 million for the second quarter ended March 31 compared with $ 2.2 million for the same period last year. Revenues were $ 10.4 million, a 29% decrease. MEDICAL RESOURCES: Seeks Additional Time To Assume/Reject Leases ---------------------------------------------------------------- The debtors, Medical Resources, Inc., et al. seek an extension of time within which the debtors may assume or reject unexpired leases of nonresidential real property. The debtors seek an extension through and including the earlier of October 6, 2000 or the effective date of the debtors' amended joint plan of reorganization. MRI is currently party to six unexpired leases of nonresidential real property. Each of the leases relates either to MRI's corporate or regional headquarters. These headquarters contain the equipment and personnel which perform all of MRI's essential business functions. Accordingly, each of the unexpired leases is important to the continued operation of the business. The debtors are continuing to evaluate the unexpired leases in the context of their reorganization plans and their anticipated emergence from Chapter 11. MICROAGE: Bonus Plan Criticized --------------------------------- The Arizona Republic reports on May 23, 2000 that a key party in the MicroAge Inc. bankruptcy case has filed an objection to the company's employee bonus and severance plan. The U.S. Trustee's Office, a bankruptcy case watchdog, takes issue with benefits for the company's top executives. In a filing in U.S. Bankruptcy Court in Phoenix, it notes that the plan, which is designed to encourage workers to stay during the Chapter 11 reorganization, is "heavily skewed" toward top management. Those executives would receive a bonus equal to 75 percent of their base salary, compared with 10 percent for most of the 4,000 full-time employees. The filing says bonuses may not be necessary to keep top executives such as Jeffrey McKeever, the chief executive officer, since they likely would receive large stock-option grants or hold onto at least some of their stock holdings if the company successfully reorganizes. MONDI OF AMERICA: Hearing on Approval of Disclosure Statement ------------------------------------------------------------- A hearing will be held on June 9, 2000 at 3:30 PM before the Honorable Peter J. Walsh, US Bankruptcy Judge, 824 N. Market Street, 6th Floor, Wilmington, Delaware 19801 to consider the adequacy of the information contained in the Disclosure Statement. The consolidated plan of liquidation of Mondi Of America, Inc. and its debtor affiliates ultimately provides for the complete liquidation of the debtors' assets to pay allowed claims. The debtors have converted a majority of their assets into cash; assumed and assigned, rejected or otherwise disposed of all of their 51 leases of non-residential real property and collected most of their prepetition accounts receivable. The debtors currently employ only three employees and anticipate that only one employee will remain through the Effective Date. To carry out the provisions of the plan the debtors will establish a Liquidating trust and appoint a plan trustee. The estimated distribution to allowed unsecured claimants is estimated between $.31 and $.62 per dollar of allowed unsecured claim, depending upon the reconciliation of disputed claims, convenience class election and the debtors' contingent non-cash assets. MOSSIMO: Target Deal Still On ------------------------------- According to an AP report on May 24, Mossimo Inc.'s products will be sold in Target stores beginning next February for a guaranteed $ 27.8 million in royalties from Target for the first three years despite the company's present condition. NATIONAL HEALTH: Moody's Lowers Ratings --------------------------------------- Moody's Investors Service has lowered its senior unsecured long- term debt rating for National Health Investors, Inc. (NHI) to Ba3, from Ba1, its subordinated debt rating to B2, from Ba3, and its cumulative preferred stock rating to "b2", from "ba3". Moody's also placed NHI's ratings under review for further possible downgrade. According to Moody's, these rating actions follow NHI's announcement that holders of private notes financed through the National Health Corporation Leveraged Employee Stock Ownership Plan (ESOP) have requested that the REIT repurchase approximately $25.9 million in notes by June 15, 2000. Although National Healthcare Corporation (NHC), a public healthcare operator and sponsor of NHI, and National Health Realty, Inc., (NHR), a public REIT spun-off by NHC, are guarantors on the notes, NHI is ultimately responsible for the buyback. If NHI does not repurchase the ESOP notes as required, holders could accelerate them, which in turn, could subject other debt of NHI to acceleration. The REIT's ratings also reflect NHI's tight liquidity, its near- term debt maturities, the continued financial, operational challenges facing some of its operators, and the deterioration in portfolio lease and debt service coverage ratios. NHI's heightened leverage profile, its relatively small size and limited financial flexibility in a more difficult operating and capital markets environment are additional credit concerns. NHI's $100 million bank credit facility, which is approximately 90% drawn, matures in October 2000, constraining its financial flexibility. Difficult capital markets conditions are another compounding factor. Moody's expects that the REIT will be able to refinance its bank line, albeit at less favorable terms given current market conditions. Moody's noted that National Healthcare Corporation, NHI's external advisor, operates over 29% of the REIT's total investments, representing roughly 35% of NHI's revenues. Moody's believes that NHI's relationship with NHC benefits the REIT in its efforts to promptly address difficulties with unaffiliated operators as they arise. Nonetheless, the REIT's operator concentrations and the difficulties facing them could still make the effort to find permanent replacements difficult, and National Healthcare Corporation's capacity to fill this void is limited. Furthermore, NHI's heavy reliance on NHC limits its financial flexibility. In Moody's view, the affiliation between NHC and NHI increases the REIT's business risk profile to levels similar to that of a health care operator, rather than a real estate lender. NHC's financial performance, which has and continues to be under pressure from continued healthcare industry challenges, could contribute to deterioration in NHI's earnings and cash flow performance. The ratings continue to reflect NHI's good profitability measures and adequate interest and fixed charge coverages at the corporate level, as well as its established track record of operating in the long-term healthcare facility business. Moody's review will focus on NHI's ability to satisfy its near- term debt obligations and improve liquidity, and its medium and long-term financial and investment strategies, as well as the impact of on-going litigation and other challenges facing National Healthcare Corporation on NHI's credit profile. The following ratings were lowered and placed under review for possible further downgrade: National Health Investors, Inc. - Senior unsecured debt to Ba3, from Ba1; senior subordinated debt to B2, from Ba3; cumulative preferred stock to "b2", from "ba3"; senior unsecured debt shelf to (P)Ba3, from (P) Ba1; senior subordinated debt shelf to (P)B2, from (P)Ba3; cumulative preferred stock shelf to "b2", from (P)"ba3"; and non-cumulative preferred stock shelf to (P)"b3", from (P)"b1". National Health Investors, Inc. [NYSE: NHI], headquartered in Murfreesboro, Tennessee, USA, is a real estate investment trust which invests in long-term care and other health care facilities. The REIT is invested in 146 long-term care facilities, two acute care hospitals, eight medical office buildings, 22 assisted living facilities, seven retirement centers and 17 residential projects for the developmentally disabled, located in 26 states throughout the USA. As of March 31, 2000, the REIT had total assets of approximately $762.7 million (book). OPHTHALMIC IMAGING: Announces Planned Investment ------------------------------------------------ Ophthalmic Imaging Systems (OTC Bulletin Board: OISI) ("OIS") announced that a private investor has agreed to make a substantial investment in the Company. In addition to providing working capital for the Company, the group has agreed to purchase the shares of OIS Common Stock held by the controlling shareholder, which recently filed for protection under Chapter 11 bankruptcy. The transactions are subject to certain customary closing conditions and approval by the bankruptcy court and, are expected to be concluded by mid-summer. Further terms were not disclosed. OIS Chairman, Walt Williams commented, "Ophthalmic Imaging Systems has always had a reputation for innovation and quality in ophthalmic diagnostic products. With this injection of new working capital we will be able to get on with our business of providing superior products and exemplary technical support to the medical community we serve." Ophthalmic Imaging Systems is the leading provider of ophthalmic digital imaging systems. The Company designs, develops, manufactures and markets digital imaging and image enhancement systems and analysis software. With over a decade in the ophthalmic imaging business, OIS has consistently been the first to introduce new technology and features. The Company offers customer support through a worldwide network of service technicians. PAGING NETWORK: President and COO of Subsidiary Resigns -------------------------------------------------------- Paging Network Inc. (Nasdaq:PAGEE) announced that Mark A. Knickrehm, president and chief operating officer of Vast Solutions, Inc., a wholly owned subsidiary of PageNet, has resigned effective May 26 and will be replaced by Christopher C. Sanders. Knickrehm, 38, has been with Vast, a leading provider of wireless communications solutions, since its inception as a separate PageNet subsidiary in June 1999. He was executive vice president and chief financial officer of PageNet from February 1998 until he assumed the Vast posts. Prior to joining PageNet, he was a partner of McKinsey & Company, where he co-led the consulting firm's wireless communications practice. PATHMARK STORES: Execs Have Stake In Finding A Buyer ----------------------------------------------------- According to an article in The Star-Ledger on May 23, 2000, top executives at Pathmark Stores Inc. have a stake in helping the troubled company find a buyer quickly. They could get millions of dollars if the company is sold by July 31, according to company documents. Pathmark has been trying in recent months to get out from under its $ 1.5 billion debt. The company said in March that it hired an investment bank to help it weigh its options, which include either restructuring the debt or selling the company. The company has said it is in negotiations with its bondholders to reach a restructuring agreement. PENN TRAFFIC: Announces 43.6 Percent EBITDA Increase ---------------------------------------------------- The Penn Traffic Company (Nasdaq: PNFT) announced that EBITDA for the first quarter ended April 29, 2000 was $22.0 million, compared to $15.4 million in the prior year, an increase of 43.6 percent. Same store sales increased 0.4 percent from the comparable prior year period. Revenues for the first quarter were approximately $592.6 million compared to $615.0 million in the prior year, a decrease of 3.6 percent. Revenue comparisons are affected by store closures and sales completed since February 1999. Net income excluding amortization of excess reorganization value and an unusual item was $0.8 million or $.04 per share in the first quarter. During the quarter, the Company recorded a noncash charge of$27.3 million for amortization of excess reorganization value and an unusual item of $0.4 million associated with the implementation of a warehouse consolidation project. Amortization of excess reorganization value is a noncash charge related to the Company's recent financial restructuring that will end during calendar year 2002. After deduction of these items, the Company reported a net loss of $26.7 million or$1.33 per share. "We are making excellent progress in implementing our business strategy, which is designed to generate sales and operating income growth in an evolving competitive environment," said Joseph V. Fisher, President and Chief Executive Officer of The Penn Traffic Company. "We believe that we are well positioned to achieve positive same store sales and solid EBITDA growth for our current fiscal year and beyond." According to Mr. Fisher, the major components of Penn Traffic's strategy are: - Reestablish a strong capital investment program - Enhance the Company's merchandising - Improve store operations - Reduce and contain costs. "Our $100 million 18-month capital expenditure program is proceeding on schedule," said Martin A. Fox, Executive Vice President and Chief Financial Officer. "We are now back on track with a sustainable long-term capital program that we believe will allow us to maintain or improve our market positions. With our growth in EBITDA and lower than planned debt levels, we expect that these capital investments can primarily be funded from operations." "Since the beginning of our fiscal year, we have completed 10 major remodels of our stores, with nine of these stores relaunched since April," said Mr. Fisher. "We expect that these capital projects will enhance our sales and profits for the remainder of this year and in the future." Since January 30, 2000, Penn Traffic has completed major remodels in Fulton, Ithaca (two stores) and Silver Creek, New York; DuBois (two stores) and North Warren, Pennsylvania; and Columbus, Lancaster and Portsmouth, Ohio. In addition, the Company has completed several smaller remodels of other stores this year. "We are nearing the completion of our warehouse consolidation project," said Mr. Fisher. "We expect to realize annual cost savings of approximately $2 million upon the completion of the start-up phase in July." Penn Traffic is converting its Jamestown, New York warehouse to a company-wide general merchandise/health and beauty care (GM/HBC) warehouse and closing the Columbus, Ohio GM/HBC facility. As described above, first quarter results include a $0.4 million unusual item associated with the implementation of this project. The Company expects to record an additional charge of approximately $1 million in the second quarter when the project is completed. PIC N' PAY: To Close Stores --------------------------- The Virginia-Pilot reports on May 23, 2000 that 11 Pic N' Pay shoe stores and two Shoe World stores will close by the end of May. Mathews, N.C.-based Pic N' Pay Stores Inc., which owns those brands along with Shoe City, filed for Chapter 11 Bankruptcy in March. PRIMARY HEALTH: Final Order Approves Amendment to DIP Financing --------------------------------------------------------------- The Honorable Mary F. Walrath entered an order on May 17, 2000 approving the fifth amendment to the DIP credit agreement among Primary Health Systems, Inc. and its subsidiaries and the lenders, First Union National Bank, agent. The debtors are authorized to obtain, and the lenders are authorized to extend, additional postpetition financing pursuant to the terms and subject to the conditions set forth in the Credit Agreement, the Fifth Amendment, the Loan Documents, and the Order, in a maximum principal amount outstanding not to exceed $58 million. PREMIER LASER: Bar Date Set For July 31, 2000 --------------------------------------------- The debtor, Premier Laser Systems, Inc., and EYESYS-Premier, Inc. seek entry of an order setting July 31, 2000 as the Bar Date, the last date for filing proofs of claim against the debtors. The debtors also seek entry of an order establishing August 30, 2000 as the last date for the filing of proofs of claim by entities such as codebtors, sureties or guarantors, and September 29, 2000 as the last date for the filing of proofs of claim by governmental units. PREMIER SALONS: Seeks Extension of Exclusivity ---------------------------------------------- The debtors, Premier Salons International, Inc. et al. seek to extend the exclusive periods during which the debtors may file a plan of reorganization through and including August 25, 2000 and solicit acceptances thereof through and including October 24, 2000. The debtors claim that there is cause for such an extension. The debtors retained Abrams, Jossel & Knopfler LLC to explore strategic alternatives for the debtors. US Bank is analyzing the firm's reports and the debtors expect to work closely with the firm and US Bank to develop a consensual plan of reorganization. The debtors have reject unprofitable Street Salon leases and closed unprofitable department store salons. The debtors' assets total approximately $18 million and they have $23 million in liabilities with over 7,000 potential creditors. SAFETY COMPONENTS: Committee Taps Richard, Layton & Finger ---------------------------------------------------------- The Official Committee of Unsecured Creditors of Safety Components International, Inc., et al. seek to retain Richard, Layton & Finger, PA as counsel to the official unsecured creditors' committee. The firm will render inter alia the following legal services: Advise the Committee as to its rights and duties; Advise the Committee in connection with proposals and pleadings submitted by the debtors or others to the court; Investigate the actions of the debtors and the assets and liabilities of their estates; Advise the Committee in connection with the negotiation and formulation of a plan or plans of reorganization; Consulting with the debtors and their professionals concerning the administration of the cases; Generally advocating positions that further the interests of the unsecured creditors represented by the Committee; and Performing such services as are in the interests of the debtors' unsecured creditors. The firm will be paid according to its customary hourly rates. SAFETY KLEEN: Names Top Officers -------------------------------- Safety-Kleen Corp., partly owned by Laidlaw Inc. of Canada, announced David E. Thomas Jr., the chairman of Safety-Kleen's board as CEO and Grover C. Wrenn, the company's vice chairman, is made President and COO. SOUTHERN MINERAL: Last Date For Filing Proofs of Claim ------------------------------------------------------ On October 29, 1999, Southern Mineral Corporation and its affiliated debtors filed petitions for relief under Chapter 11. The Court fixed March 5, 2000 as the deadline for creditors to file proofs of claim. On May 16, 2000, the court entered an order fixing a supplemental Bar Date for certain claimants and approving notice and service requirements in connection therewith, directing all of the entities to file proofs of claim and proper supporting documentation with the court. All proofs of claim to be filed by the Affected Creditors must be filed on or before June 15, 2000. SUNSHINE MINING: Announces Noteholders Meeting ---------------------------------------------- Sunshine Mining and Refining Company (NYSE:SSC) announced recently that a meeting of the Noteholders of the 8% Senior Exchangeable Notes of Sunshine Precious Metals Inc. (the Eurobonds) was convened today. At the meeting, a motion was made and passed to further extend the maturity of the Eurobonds from May 24 to June 23, 2000. Also at the meeting, a motion was made and passed to allow extraordinary resolutions to be passed by either (i) a meeting of the Noteholders duly convened pursuant to the Trust Deed, or (ii) written consent executed by Noteholders holding two-thirds of the principal amount of Notes outstanding. The meeting has been adjourned until June 23, 2000. As previously announced, Sunshine is continuing negotiations with the Noteholders and holders of its other debt securities regarding a comprehensive restructuring of the Company's balance sheet. SUNTERRA CORP.: Reduces Work Force --------------------------------- The Sun-Sentinel reports on May 24, 2000 that Sunterra Corp., one of the world's largest time-share companies, is eliminating 930 jobs from its worldwide workforce -- including cuts at its Orlando headquarters -- and halting sales at some of its less profitable resorts. However, cutting 12 percent of its 7,800- person work force is not enough to provide the company with sufficient liquidity to ensure that it will be able to continue operations. The company, which is trying to sell some of its resorts, is scrambling to avoid defaulting on a scheduled $ 6.5 million payment due last week on its $ 140 million in senior notes. A 30- day grace period gives the company until mid-June to make good on the payment. "Only two things can happen at this point. Either they will sell the company or file for bankruptcy," said an analyst who asked not be identified. "And it's looking less and less likely that they will sell." TELEGEN CORP: Court Approves Disclosure Statement ------------------------------------------------- Telegen Corporation (OTCBB:TLGNQ.OB) announced that the U.S. Bankruptcy Court for the Northern District of California has approved its disclosure statement to be used in soliciting creditor and shareholder votes on Telegen's Plan of Reorganization. Additionally, the Court set June 28, 2000 at 1:30 PM as the date for a hearing to consider confirmation of the Plan. The deadline for voting on the Plan is June 23, 2000 at 5 PM Pacific Time. Creditors and shareholders should expect to receive their ballot and explanatory materials by late next week. Ballots and materials are also being sent to creditors of Telegen's subsidiaries, Telegen Communications Corporation and Telegen Display Laboratories, Inc., who are also affected by the Plan because the subsidiaries' assets are to be consolidated with Telegen's assets if the Plan is confirmed. A brief synopsis of the Plan of Reorganization is available on Telegen's web site at http://www.telegen.com/plan.html. Telegen Corporation is headquartered in San Mateo, California, with a diverse technology base in flat panel display technology, telecommunications and Internet products. The Company's stock is traded under the symbol TLGNQ.OB. TOYSMART.COM: Online Toy Store Shutting Down -------------------------------------------- Toysmart.com is shutting down its online educational toy store after it failed to compete with bigger rivals on the Web including eToys and Toysrus.com. Shoppers logging on to the site, of which Walt Disney Co. owns a majority stake, found a notice saying it was closed for inventory, but a spokeswoman confirmed Monday that the Waltham, Mass.-based company was ceasing operations. "The online toy market is an incredibly competitive business that has some very strong players," said Michelle Bergman, a spokeswoman for Go.com, which oversees the Disney's Internet businesses. U.S. LEATHER: Offers Workers $1,500 Each In Settlement ------------------------------------------- Milwaukee Journal Sentinel reports on May 24, 2000 that bankrupt United States Leather Inc., the company which currently owes creditors about $35 million, is giving $1,500 to each of the workers who lost their jobs when the company shut down its two Milwaukee plants, under a proposed settlement announced at a bankruptcy hearing last week. As part of the tentative agreement, the state also would retain a $2.3 million lien on U.S. Leather's Wisconsin assets to cover any unpaid vacation, severance pay and other benefit claims by former employees. The proposed settlement is a compromise that guarantees workers some compensation for the plant closings and avoids a prolonged court battle that workers might not win, said Assistant Attorney General Richard E. Braun, who represents the Wisconsin Department of Workforce Development in the case. As part of the deal, the state would drop claims and litigation related to allegations that U.S. Leather violated state plant- closing laws when it gave workers only two days notice in February that it was shutting down the its Pfister & Vogel tannery, 1531 N. Water St., and A.L. Gebhardt tannery, at 2615 W. Greves St. Together, the tanneries, which produced leather for shoes and other items, had about 525 employees, according to Braun. Moreover, in last week's hearing, Judge Margaret Dee McGarity approved a plan by the company to liquidate by selling its equipment and properties. Money from those sales would be used to pay off its debt, with primary lender Congress Financial Corp., which is based in New York, receiving top priority for repayment. VISTA EYECARE: Committee Taps Houlihan Lokey -------------------------------------------- The Official Committee of Unsecured Creditors of Vista Eyecare, Inc. f/k/a National Vision Associates, LTD, et al. applies for approval of the appointment and retention of Houlihan Lokey Howard & Zukin Capital to May 1, 2000 as financial advisor to the committee. The court will perform the following services: Analyze and review the financial and operating statements of the debtors; Analyze the business plans and forecasts of the debtors; Evaluate the assets and liabilities of the debtors; Provide such specific valuation and analyses as the Committee may require in connection with these cases; Evaluate the sales process for certain assets of the debtors and their subsidiaries; Devise appropriate strategies to maximize the value to be received by the unsecured creditors in the debtors' cases; Assess the financial issues and options concerning the debtors' plan of reorganization; Prepare analysis and explanation of the debtors' plan of reorganization to various constituencies; and Provide testimony in court on behalf of the Committee if necessary. Houlihan, Lokey shall receive a cash fee, payable by the debtors of $100,000 per month for services provided by Houlihan Lokey to the Committee. WORLDCLASS PROCESSING: Sale Moving Forward ------------------------------------------ With the approval of U.S. Bankruptcy Court Judge Judith Fitzgerald, the sale of WorldClass Processing, Inc., the steel processing facility located in the Port Ambridge Industrial Park in Ambridge, PA, is moving forward and should be completed by June 30. Neal Dugan, WorldClass Processing president and chief executive officer, and Jack Teitz, the company's chief financial officer, said they will assist in the transition in ownership to Samuel Manu-tech of Mississauga, Canada, but will not remain with the company. "We want to make this as smooth a transition as possible," said Dugan and Teitz. "We have an extremely dedicated group of employees who have done an exceptional job under some dire circumstances to keep this company alive, and we are extremely pleased that Samuel Manu-tech wants to keep the group intact, and is currently negotiating with key staff members to keep them on board," they added. "Samuel Manu-tech has achieved a reputation as an excellent operator and for treating their employees in a highly professional manner. They also have plans to further enhance the growth possibilities for WorldClass," said Dugan and Teitz. "When we complete our role in the transition process, Jack and I will be launching a new business endeavor," said Dugan, "and we'll have an announcement at that time." Samuel Manu-tech has promised to honor the WorldClass contract with the United Steel Workers Union. WorldClass Processing currently employs more than 70 people, operating five to six days a week, 24 hours a day, depending on the work volume. Founded in 1991, the steel processing facility opened in 1992, but has been ensnared in a five-year legal dispute with two former partners which resulted in a chapter 11 bankruptcy reorganization filing 18 months ago. WORLDCORP, INC: Motion For Approval of Settlement Term Sheet ------------------------------------------------------------ The debtors, Worldcorp, Inc. and Worldcorp Acquisition Corp. seek approval of the a settlement term sheet. The debtors have filed a joint liquidating plan of reorganization that calls for all of their assets to be liquidated and distributed to creditors. The court entered an order approving the disclosure statement and voting procedures for the debtors' plan. The proposed plan, approved disclosure statement and ballots for voting on the plan were distributed to creditors in accordance without he terms of the court's March 20, 2000 order. The plan was accepted by all voting classes, and no objections to the plan were received. On April 26, 2000, the court held a confirmation hearing on the debtors' proposed plan. Thereafter certain objections to the plan were raised and the debtors and the Committee are now filing a motion for approval of the Settlement Term Sheet to pave the way for confirmation of the plan. The settlement provides for settlement of a Bonus Claim Motion of Mark Feldman and Joseph Dryer. The debtors' professionals agree to reduce the amounts of fees. The debtors agree to withdraw their limited objection to a claim of Rothschild Recovery Fund, LP(now known as WLR Recovery Fund, LP)which clears the way for a settlement of that claim that was negotiated by the disinterested members of the Committee; and William Gorog agreed to reduce his pending administrative claim by $100,000. ********* 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. 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