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/raid1/www/Hosts/bankrupt/TCR_Public/000829.MBX T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, August 29, 2000, Vol. 4, No. 169 Headlines APB ONLINE: Safetytips.com Withdraws $950,000 Bid for APBNews.com CARMIKE CINEMAS: Shares Resume Trading on NYSE Under QCKE Symbol CELLNET DATA: Order Confirms Liquidating Plan of Reorganization CERPLEX GROUP: Committee Taps Traub Bonacquist & Fox As Lead Counsel CLARIDGE HOTEL: Order Authorizes Expanded Employment of US Bancorp Libra CLUB DEVELOPMENT: Case Summary and 7 Largest Unsecured Creditors COLORADO GREENHOUSE: New Mexico Greenhouses to be Sold to Repay Debts DIMAC HOLDINGS: Hires New President and General Manager for MBS Muiltimode FRUIT OF THE LOOM: BVD Wants Adams-Millis Trademark License in New Hands GENESIS/MULTICARE: Debtors' Motion To Honor Carrier & Warehouse Claims GIBBS CONSTRUCTION: Bankruptcy Court Confirms Plan of Reorganization GLENOIT CORPORATION: Court Approves $15.7M DIP Financing From Lenders GLOBAL TISSUE: Committee Seeks Authority to Hire Klehr, Harrison GREEN MOUNTAIN: Fitch Downgrades Credit Ratings & Continues Negative Watch GST TELECOMMUNICATIONS: Time Warner To Purchase Assets for $690 Million HARNISCHFEGER INDUSTRIES: Employs Froriep Renggli as Special Swiss Counsel HEILIG-MEYERS: Moody's Downgrades Senior, Sub & MacSaver Ratings to 'Ca' INNOVATIVE CLINICAL: Confirmed Plan Converts $100 Million Debt to Equity INTEGRATED HEALTH: SouthTrust's Motion to Compel Production Of Documents IRIDIUM, LLC: CMC International Offers $30 Million for Satellites KAISER GROUP: Hatch Group Completes Purchase of Metals & Mining Business LAROCHE INDUSTRIES: Orica Offers $44 Million for Ammonium Nitrate Business LEAR CORP.: Moody's Assigns Ba Ratings to Auto Supplier's New Debt LOIS/USA, INC.: Asks for Extension through November 30 to File a Plan LTC PROPERTIES: Moody's Lowers All Ratings & Reviewing for Downgrades MARINER POST-ACUTE: Proposes Alternative Dispute Resolution for Tort Claims MARKEL CORP.: Moody's Lowers Debt Securities Ratings And Subsidiary Ratings MASSACHUSETTS HEAVY: Shipyard Has Until Dec. 1 To Pull Itself Together MIRON BUILDING: Home Decor Retailer Files For Bankruptcy Protection NATIONAL RESTAURANTS: Order Confirms Second Amended Joint Plan NORTHERN MOUNTAIN: Helicopter Concern Applies for CCAA Protection NORTHWESTERN CORP: Moody's Changes Rating Outlook From Stable to Negative PATHMARK STORES: Defends Third-Party and Non-Debtor Releases Under Plan PREMIER SALONS: Optimistic a Plan Will be Filed before Santa Claus Arrives PRISON REALTY: Announces Settlement Accord in Stockholder Litigation PSI INDUSTRIES: Order Confirms Amended Liquidating Plan of Reorganization RELIANT BUILDING: Committee Selects DSI as Its Financial Advisors RENAISSANCE COSMETICS: Will GE Capital Abandon Liens on Causes of Action? ROBERDS, INC: Port Richey & Beavercreek Properties Fetch $6.6 Million SUN HEALTHCARE: SunDance Therapists Move to File Class Proof Of Claim SUNSHINE MINING: Case Summary and 20 Largest Unsecured Creditors SUPPLY ONE: Case Summary and 20 Largest Unsecured Creditors SURE SAVE: Plan Says Secret Hawaiian Investor Paying $6MM to Own Chain TEXAS HEALTH: Disclosure Statement Hearing Continued to September 26 TIME WARNER: Moody's Places Ratings On Review For Possible Downgrade UNITED ARTISTS: Debt-to-Equity Conversion Gives Anschutz 60% Ownership VENCOR: Debtors' Fifth Motion to Extend Exclusive Periods -- to Nov. 28 ********* APB ONLINE: Safetytips.com Withdraws $950,000 Bid for APBNews.com ----------------------------------------------------------------- APB Online Inc., operator of APBnews.com and the only media company exclusively covering crime, justice and safety, said it obtained court permission today to sell its assets at an auction on Sept. 1 in the U.S. Bankruptcy Court for the Southern District of New York. The minimum bid will be $950,000. If the minimum bid is not met, the court will auction portions of the company's assets in lots. Proceeds from the sale will be used to satisfy the claims of creditors. APB has operated under Chapter 11 bankruptcy protection since July 5. Bidders must pre-qualify by either posting a $25,000 bond; presenting a bank letter certifying availability of cash or credit; or by allowing a review of financial statements to certify ability to perform. On Aug. 23, SafetyTip.com Inc., advised APB Online Inc., that it would not fund a debtor-in-possession borrowing agreement and that it would not permit its subsidiary, New APB News, to complete the purchase of assets under the terms in the purchase and sale agreement that the parties executed on Aug. 18. The borrowing agreement and purchase agreements were the subject of a joint news release earlier this week and were to have been the subject of a hearing before the court on Sept. 1. The proposed sale to SafetyTip.com would have been subject to any higher offers from third parties. At a hearing before the court today, counsel for SafetyTip.com and New APB News advised the court that her client still had an interest in bidding on the assets. "While we are disappointed in SafetyTip.com's actions, we intend to continue publishing our award-winning content while seeking to maximize returns to creditors," said Marshall V. Davidson, APB Online chairman and chief executive officer. APB Online was organized and financed in August 1998, launching APBnews.com in November 1998. It raised capital through a second private to institutional investors in August 1999 at a valuation of $104 million. A financing that began in March failed when the market valuation of virtually all Internet content companies, public and private, declined substantially in April. On June 5, the company announced that it had exhausted its funding and terminated employees, but would continue to publish. Since that announcement, the site has continued daily posting of its award-winning content and has received additional journalism awards. On June 19, the company said it had rehired some employees after two weeks of volunteer efforts. Founded in 1998, APBnews.com is the principal operating division of APB Online Inc., a privately held communications company based in New York. APBnews.com is the first media outlet exclusively covering crime, justice and safety issues -- together the most intensively followed subjects in media. APBnews.com gets revenues from program sponsorships and e-commerce partners, and from syndication and licensing of its branded content to major Web sites, television, radio, newspapers, magazines, book publishers and wireless devices. The site is produced in a New York City newsroom staffed by veteran newspaper and television journalists, as well as freelancers nationwide. Among its professional awards are the first Scripps Howard Foundation National Journalism Award for Web Reporting, the first Society of Professional Journalists' Sigma Delta Chi Award for Excellence in Online Journalism Deadline Reporting, and a special citation for body of work in the first online award by Investigative Reporters and Editors Inc. Brill's Content recently named APBnews.com one of the best news sites on the Internet. APBnews.com is dedicated to the public's right to know, providing accurate, expert, contextual, fair and responsible coverage of crime, justice and safety. CARMIKE CINEMAS: Shares Resume Trading on NYSE Under QCKE Symbol ---------------------------------------------------------------- The New York Stock Exchange announced that it completed its review of the continued listing status of Carmike Cinemas, Inc. -- ticker symbol CKE -- and that trading in the common stock will recommence under the ticker symbol QCKE. The NYSE halted trading on August 8, 2000 in order to review the Company's continued listing status due to the Company's announcement on the same day that it had filed for protection under Chapter 11 of the U.S. Bankruptcy Code. The Company is not currently below any of the NYSE's quantitative continued listing criteria. However, if as the NYSE continues to monitor events at the Company, the Company does fall below any of the quantitative standards, the NYSE will reevaluate the continued listing of the Company's security. The NYSE noted that it may, at any time, suspend a security if it believes continued dealings in the security on the NYSE are not advisable. CELLNET DATA: Order Confirms Liquidating Plan of Reorganization --------------------------------------------------------------- By order entered on August 16, 2000 by the Honorable Peter J. Walsh, US Bankruptcy Court, District of Delaware, the amended and restated joint consolidated liquidating plan of reorganization dated as of July 11, 2000 of Cellnet Data Systems, Inc., et al. is confirmed. There are no objections to the substantive consolidation of the debtors and their estates. CERPLEX GROUP: Committee Taps Traub Bonacquist & Fox As Lead Counsel -------------------------------------------------------------------- The Official Committee of Unsecured Creditors of The Cerplex Group, Inc., seeks authority to employ Traub Bonacquist & Fox as its attorneys, nunc pro tunc to August 4, 2000. The Committee proposes that compensation will be payable to the firm on an hourly basis. The firm's current standard hourly rates are $305-$450 for partners, $295-$350 for of counsel, $260-$270 for associates and $120 for paraprofessionals. The professional services that the Firm will provide the Committee include: a) To provide legal advice to the Committee with respect to its duties and powers in these cases; b) To assist the Committee in its investigation of the acts, conduct, assets, liabilities, and financial condition of the debtors, the operation of the debtors' businesses and the desirability of the continuance of such businesses, and any other matter relevant to the case or to the formulation of a plan; c) To participate in the formulation of a plan of reorganization; d) To assist and advise the Committee in its examination and analysis of the conduct of the debtors' affairs and the cause of its insolvency. e) To assist and advise the Committee with regard to its communications to the general creditor body regarding the Committee's recommendations on any proposed plan of reorganization; f) To assist the Committee in requesting the appointment of a trustee or examiner, should such action become necessary; g) To review and analyze all applications, orders, statements of operations and schedules filed with the court by the debtors or other third parties and advise the Committee as to their propriety, and a, after approval by the Committee, object or consent thereto on its behalf; and h) To perform such other legal services as may be required and in the interest of the creditors including, but not limited to, the commencement and pursuit of such adversary proceeding as may be authorized. Based upon the affidavit of Michael S. Fox, a member of the firm, the Committee believes that the firm represents no other entity in connection with these cases and is disinterested. CLARIDGE HOTEL: Order Authorizes Expanded Employment of US Bancorp Libra ------------------------------------------------------------------------ The Honorable Judith J. Wizmur, US Bankruptcy Court, District of New Jersey, entered an order on August 11, 2000 granting the application of the Official Committee of Secured Noteholders for authority to expand the retention of its Financial Advisor, U.S. Bancorp Libra, to permit marketing of the debtor's and/or the assets of the estates for sale to a third party. CLUB DEVELOPMENT: Case Summary and 7 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Club Development, LLC 3120 South Rainbow Blvd., Suite 204 Las Vegas, NV 89146 Chapter 11 Petition Date: August 23, 2000 Court: District of Nevada Bankruptcy Case No: 00-16376 Judge: Robert C. Jones Debtor's Counsel: Brett A. Axelrod, Esq. McDonald Carano Wilson McCune et al. 2300 W. Sahara, Suite 1000 Las Vegas, NV 89102 (702) 873-4100 Total Assets: $ 1 Million above Total Debts : $ 1 Million above 7 Largest Unsecured Creditors Andrew Lessman c/o Kent Larsen, Esq. 777 N. Rainbow, #380 Las Vegas, NV 89107 $ 1,150,000 Bryan Bond 2431 Santiago Drive Newport Beach, CA 92660 $ 1,150,000 Patleen Investments, Inc. 1255 Armacost Avenue Los Angeles, CA 90025 $ 601,000 Sun West Bank P.O. Box 81710 Las Vegas, NV 89180 $ 284,000 Nevada State BAnk P.O. Box 990 Las Vegas, NV 89125 $ 278,383 Larry Miller $ 237,000 Jeff Taylor $ 180,000 Kenneth Subia 14841 South 6th Place Phoenix, AZ 85048 $ 58,201 COLORADO GREENHOUSE: New Mexico Greenhouses to be Sold to Repay Debts --------------------------------------------------------------------- The Associated Press reports that Farm Credit Services, which loaned $20 million to rebuild operations in Estancia and Grants may have trouble getting back their money. "Farm Credit Services loaned Colorado Greenhouse the money to build the New Mexico greenhouses," said Clovis attorney Richard Rowley, who represents Farm Credit Services of the Mountain Plains PCA. "Farm Credit Services will likely be granted a judgment against Colorado Greenhouse and the only way (others) are going to get their money is if the properties (greenhouses) sell for more than what is offered by Farm Credit Services." Riley filed a foreclosure lawsuit in Aug. 8 in Estancia on behalf of Farm Credit. Martin Wehr, chief executive officer for Colorado Greenhouses, said a few days after the foreclosure lawsuit was filed that the greenhouses were close to being sold, but that he could not give details on the buyer. The Estancia facility closed on Feb. 11 and Grants operation shut down in January. DIMAC HOLDINGS: Hires New President and General Manager for MBS Muiltimode -------------------------------------------------------------------------- DIMAC Holdings, Inc., et al., seeks bankruptcy court authority to employ James Christopher McDonald as President and General Manager of MBS Multimode, Inc. As President and General Manager, McDonald's primary responsibility is to improve MBS's P&L Balance sheet by, among other things, developing customer strategies and strategic initiatives that will ensure long-term competitive viability. McDonald will be employed for a one-year term with automatic extensions for subsequent one-year terms unless either MBS or McDonald provides notice of termination of the Employment Agreement, and receive a base salary of $250,000 per year. Additional compensation payable includes a signing bonus of $50,000, a guaranteed bonus of $25,000 and eligibility for an incentive bonus for each fiscal year commencing with 2001 in the target amount of 40% of base salary. The debtors will use their best efforts to implement a management stock option plan as part of a confirmed plan of reorganization for the debtors pursuant to which McDonald would receive a portion of the stock options to be provided to management of the reorganized debtors under such plan. FRUIT OF THE LOOM: BVD Wants Adams-Millis Trademark License in New Hands ------------------------------------------------------------------------ BVD Licensing Corp., a wholly owned subsidiary of Fruit of the Loom, Inc., seeks Bankruptcy Court authority to reject a Trademark License Agreement with Adams-Millis Corporation. BVD Company Inc., predecessor-in-interest to BVD, tells Judge Walsh that it entered into an agreement with Armored Hosiery Corporation in 1958 to license its trademark in the manufacture and sale of hosiery and slipper socks, among other merchandise. In 1971, Maro Hosiery Corporation assumed Armored Hosiery's interest under the License Agreement. Subsequently Maro merged and changed its name to Adam-Millis Corporation, the current licensee. Adams-Millis is a subsidiary of Sara Lee. Sara Lee owns Hanes, the main direct competitor to Fruit of the Loom. BVD receives royalty royalties equal to 2% on all items sold by Adam- Millis under that trademark. The minimum payment is $60,000 annually if sales targets are not met. BVD hasn't seen more than the minimum for years, meaning Adam-Millis' sale of items bearing that trademark total less than $3,000,000 annually. Fruit of the Loom finds the current agreement is as irritating as threadbare underwear. Adam-Millis isn't pressing sales of Adam-Millis trademarked products and BVD is not benefiting from the exposure of its trademark to consumers. Because BVD is a core asset, the Debtors tell Judge Walsh, the Debtors want to put the trademark in the hands of someone who will promote the name and pay higher royalties. Fruit of the Loom's business judgment dictates that the Debtors must reject the existing licensing agreement with its major competitor and enter into a new licensing agreement with an entity that is not a direct and substantial competitor. Fruit of the Loom advises the Court that it has received preliminary indications of interest from non-competitive third parties willing to pay more than the $60,000 annual minimum. (Fruit of the Loom Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENESIS/MULTICARE: Debtors' Motion To Honor Carrier & Warehouse Claims ---------------------------------------------------------------------- In the ordinary course of their business, the Genesis Health Ventures, Inc., and The MultiCare Companies, Inc., utilize the services of United Parcel Service and various other commercial common carriers to receive goods from suppliers, and to ship, transport, and deliver goods from their pharmacies or warehouses to customers outside the Debtors' own delivery areas. The Debtors also utilize the services of some third-party warehouses to store medical supplies, equipment, medical records, and corporate records. The Debtors pay the Common Carriers according to published tariffs, contractual rates, or the corporate rates charged by individual carriers and pay the Warehouses in accordance with either the volume of merchandise stored or a flat rate. GHV estimates that as of the commencement date, the Common Carriers are owed approximately $250,000 for prepetition Common Carrier Charges and the Warehouses are owed approximately $100,000 for prepetition Warehouse Charges. Multicare estimates that they owe the Common Carriers approximately $27,000 for prepetition charges, and owe the Warehouses approximately $9,000 for prepetition Warehouse Charges. The Debtors note that payment of such charges and fees gives the Common Carriers and Warehouses no more than that to which they are already entitled because state laws grant an entity that furnishes services or materials with respect to goods, such as a common carrier or warehouse, a possessory lien on such goods to secure payment for such charges and related expenses, and section 9-310 of the Uniform Commercial Code grants creditors such as common carriers and warehouses holding possessory liens, a priority in payment over consensual lien creditors. On the other hand, if the Debtors do not pay the prepetition Common Carrier Charges, the Common Carriers may refuse to ship the Debtors' goods to their customers. This would severely disrupt the Debtors' businesses. The Debtors submit that these amounts, estimated at approximately $350,000, are de minimis in comparison to the value that the Debtors' estates will receive from an uninterrupted supply of goods. Accordingly, the Debtors sought and obtained authority pursuant to sections 105(a), 361, and 363 of the Bankruptcy Code to pay the undisputed amounts owed to the Common Carriers and to the Warehouses in respect of the Warehouse Charges, and to discharge the liens, if any, that the Common Carriers and Warehouses have on the goods in their possession. (Genesis/Multicare Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) GIBBS CONSTRUCTION: Bankruptcy Court Confirms Plan of Reorganization -------------------------------------------------------------------- Gibbs Construction, Inc. (Pink Sheets:GBSE) announced that it has received Court confirmation of its Plan of Reorganization. Gibbs filed a Petition pursuant to Chapter 11 of the United States Bankruptcy Code on April 20, 2000 after suffering heavy losses on hotel construction projects. The Company has continued to operate in its normal course of business pending approval of its Plan of Reorganization. The Company's plan, which is expected to be effective the last week of September 2000, centers on an agreement with its major secured creditor whereby a portion of the creditors debt will be converted to equity, the establishment of a liquidating trust for the benefit of unsecured creditors, and an asset acquisition and subsequent consolidation with Thacker Asset Management, LLC. Thacker is an Atlanta based minority owned business enterprise providing construction related services to the private and public sectors. It is expected Gibbs stock, currently traded on pink sheets, will trade on the OTC (Bulletin Board). Company President, Danny Gibbs, stated, "We were extremely pleased at the overwhelming balloting in favor of Gibbs' Plan of Reorganization which will allow the Company to emerge from bankruptcy." GLENOIT CORPORATION: Court Approves $15.7M DIP Financing From Lenders --------------------------------------------------------------------- Pending a final hearing, Glenoit Corp. (X.GLN) has won interim court approval to borrow up to $15.7 million under a debtor-in-possession credit agreement provided by a group of lenders led by pre-petition agent BNP Paribas, Federal Filings, Inc., reports. According to a motion filed by the fabric, rug and textile manufacturer, the $15.7 million represents a borrowing base plus an overadvance of $13 million, for a total of up to $65 million, less outstanding borrowings under a pre-petition revolver and outstanding letters of credit under a pre-petition credit line. (ABI 25- Aug-00) GLOBAL TISSUE: Committee Seeks Authority to Hire Klehr, Harrison ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of Global Tissue LLC applies to retain Klehr, Harrison, Harvey, Branzburg & Ellers LLP as its counsel, effective as of July 26, 2000. Klehr Harrison will: a) Attend hearings in the cases and in related proceedings, as necessary; b) Review applications and motions filed in connection with the case; c) Communicate with and advise the Committee on all matters and legal issues arising in the case or related proceedings and periodically attend meetings of the Committee; d) Attend meetings with, and negotiate with, the representatives of the debtors; e) Assist and advise the Committee in its examination and analysis of the debtor's affairs; f) Assist the Committee in its review, analysis and negotiations of any financing or cash collateral agreements; g) Assist the Committee in its review of proposed offers to purchase substantially all of the assets of the debtor, participate in and oversee the auction process, and further assist the Committee in all aspects of the sale process; h) Assist the Committee in the review, analysis and negotiation of any Chapter 11 plan(s) that may be filed an to assist the Committee in the review, analysis and negotiation of the disclosure statement accompanying any Chapter 11 plan(s); i) Assist the Committee in its review of any potential causes of action available to or for the benefit of the debtor's estate. Klehr Harrison will bill at its normal hourly rates. The principal attorneys and paralegals designated to represent the Committee and their current hourly rates are: Joanne B. Wills $375 Morton R. Branzburg $350 Jeffrey Kurtzman $325 Steven K. Kortanek $275 Maria April Sawczuk $260 Ty Workman(paralegal) $105 GREEN MOUNTAIN: Fitch Downgrades Credit Ratings & Continues Negative Watch -------------------------------------------------------------------------- Fitch has downgraded the credit ratings of Green Mountain Power Corporation (GMP) to below investment grade and has maintained the ratings on Rating Watch Negative. Approximately $103 million of debt and preferred securities are affected. The resulting ratings are as follows: Green Mountain Power: From To ---- -- a) First Mortgage Bonds 'BBB' 'BB+' b) Unsecured MTNs (shelf) 'BBB-' 'BB-' c) Preferred Stock 'BB+' 'B+' The downgrade reflects GMP's increased cash requirements related to higher power supply expenses and its severely limited financial flexibility resulting from the continued delay and uncertainty surrounding final resolution to the pending rate case. The company's financial viability remains highly dependent on the granting of adequate rate relief by the regulators. GMP has little latitude or ability to withstand adverse developments prior to the dissemination of the final rate order. As a result, Fitch believes the company's financial and qualitative characteristics are no longer commensurate with an investment-grade credit. The watch status also remains in effect, pending the outcome and subsequent review of the upcoming rate order. GMP's ratings incorporate past disallowances by the Vermont Public Service Board (VPSB) of purchased power costs, which contributed to GMP's financial instability. The uncertain public policy and regulatory environment continues to negatively impact GMP's credit quality and access to capital and bank markets. The recent higher purchase power expenses include those incurred to meet GMP's obligation to sell to Hydro Quebec (HQ) under the 9701 option. This purchase power situation has negatively impacted credit protection measures, heightened supply risk, increased financial burden and reduced liquidity. Under the 9701 option, HQ can call (from GMP) energy at a below- market, fixed price of approximately $26/MWh with 60 days notice. Recently, HQ provided notice to GMP, exercising its option from the period of September 2000 through February 2001. GMP has entered into contracts to cover its supply position during September and October and is evaluating hedging alternatives for the remaining period. Nonetheless, borrowing requirements are expected to increase to fund this supply obligation, further constraining GMP's liquidity position. Lacking unexpected liquidity needs, it appears GMP should have adequate revolving credit facilities available to fund its presently forecasted near term cash needs. Favorably, HQ's increased calls in 2000 will benefit future periods, as the total amount awarded to HQ under the option is exhausted sooner. GMP will be filing testimony shortly to rebut the disallowances ordered by the VPSB in its 1998 rate case and correspondingly, to support a request for a 3.9% rate increase to cover escalating purchase power expenses and to comply with certain accounting standards (FAS 5 and 71). The VPSB is expected to issue an order in late 2000 or early 2001, which should lead to closure of GMP's long-standing rate case. The effective date of the requested $10 million rate increase is January 1, 2001. Should GMP fail to obtain an adequate level of permanent rate relief, GMP's financial viability would likely be threatened. Favorably, the VPSB has twice before granted extended stays (of the rate case) and approved two previous 'temporary' rate increase requests by GMP. Proposed rate setting initiatives now being debated, if ultimately approved, would quite significantly stabilize the company's financial prospects. Additionally, GMP has successfully implemented strong cost reduction measures. The company's re-engineering program, which includes a sizable workforce reductions, along with lower capital expenditures and lower rent expense, should yield substantially reduced O&M expenses in 2000. GMP, an investor-owned electric utility based in Colchester, Vermont, serves approximately 83,000 customers in Vermont. GST TELECOMMUNICATIONS: Time Warner To Purchase Assets for $690 Million ----------------------------------------------------------------------- Time Warner Telecom Inc. (Nasdaq: TWTC) and GST Telecommunications, Inc. announced an agreement for Time Warner Telecom to purchase substantially all the assets of GST Telecommunications, Inc., excluding the substantial majority of GST's Hawaii assets and residual cash balances, for $690 million. The consideration consists of cash and assumption of certain assumed liabilities. The agreement is subject to the execution of a definitive purchase agreement, approvals of the U.S. Bankruptcy Court for the District of Delaware and other customary terms and conditions. "This agreement complements our aggressive expansion plans to introduce robust broadband products and solutions to business customers in additional U.S. markets," said Larissa Herda, Time Warner Telecom's President and CEO. "We look forward to the synergies and opportunities this agreement offers to customers, employees and shareholders." "The combination of GST's assets and Time Warner Telecom's strengths should produce exciting benefits for customers of both companies," said Tom Malone, Acting CEO of GST. "We expect the transition process to be smooth, and intend to communicate openly and frequently with our customers, vendors, and employees throughout the process." GST had filed on May 17, 2000 in the U.S. Bankruptcy Court for the District of Delaware for protection under Chapter 11 of the U.S. Bankruptcy Code. GST sought and received Bankruptcy Court approval to proceed with an open bidding procedure for the auction of substantially all of its assets. The auction was conducted from August 22 to 25, 2000. GST appeared before the U.S. Bankruptcy Court for the District of Delaware today and received approval to conclude the bidding process and proceed toward a sale to Time Warner Telecom Inc. The agreement is expected to close later this year subject to granting of the final sales order by the court and regulatory and other approvals. Time Warner Telecom Inc., headquartered in Littleton, Colorado, is a leader in building local and regional fiber optic networks to deliver its comprehensive suite of communications products and services to business customers. The company currently provides "last mile" broadband data, voice and Internet connections in 22 U.S. metropolitan markets. Los Angeles/Orange County, Calif. and Dayton, Ohio markets plan to launch this year with five additional markets planned for launch in 2001. For more information, visit www.twtelecom.com. GST Telecommunications, Inc., an Integrated Communications Provider (ICP) headquartered in Vancouver, Wash., provides a broad range of integrated telecommunications products and services, including enhanced data and Internet services and comprehensive voice services throughout the United States, with a robust presence in California and the West. Facilities-based GST continues to focus on its western regional strategy by anchoring its next generation networks in local markets and connecting them via long haul fiber networks. Visit GST's Web site at www.gstcorp.com. HARNISCHFEGER INDUSTRIES: Employs Froriep Renggli as Special Swiss Counsel -------------------------------------------------------------------------- Harnischfeger Industries, Inc., looks to the U.S. Bankruptcy Court in Wilmington, Delaware, for authority to retain of Froriep Renggli as its special foreign counsel because of FR's expertise regarding Swiss law. The Debtors intend to employ FR to advise and assist them in connection with matters relating to a Proof of Claim filed by Mitsui & Co. (U.S.A.), Inc. against Harnischfeger Corporation d/b/a P&H Mining. The Claim is based upon a contract that is governed by Swiss law. The Debtors believe that the engagement of FR is essential to P&H's defense against the Claim. In connection with the matter, other attorneys or paralegals may also render their services to the Debtors from time to time. The Debtors believe that the attorneys at FR are well qualified to act on P&H's behalf, given their extensive knowledge and expertise regarding Swiss contract law as well as their litigation experience. FR is already employed by the Debtors as an ordinary course professional, but the capacity for which the Debtors now seek to employ FR is beyond the scope of work ordinary course professionals are authorized to perform. The Debtors represent that to the best of the Debtors' knowledge, FR does not have any connection with the Debtors, their creditors, or any other parites-in-interest. In accordance with section 330(a) of the Bankruptcy Code, the Debtors agree to pay FR on an hourly basis, plus reimbursement of actual, necessary expenses. The primary attorneys who will be handling matters related to the Claim and their current standard hourly rates are: Dominique Brown-Berset 500 Swiss Francs Arielle Visson 300 Swiss Francs Sabine Rotilio 300 Swiss Francs The hourly rates are subject to periodic adjustments to reflect economic and other conditions. FR's Swiss Franc bills will be converted to and payable in U.S. Dollars according to rates published in the Wall Street Journal on the date that the fee application covering the bills is filed with the Court by FR. In addition, FR will charge the Debtors for all other expenses incurred in connection with the Debtors' case such as telephone and telecopier toll, photocopying, mail and other charges, in accordance with FR's policy. (Harnischfeger Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) HEILIG-MEYERS: Moody's Downgrades Senior, Sub & MacSaver Ratings to 'Ca' ------------------------------------------------------------------------ Moody's Investors Service downgraded the senior implied rating of Heilig- Meyers Co. to Ca from Caa1. Moody's also downgraded the senior issuer and senior unsecured debt ratings of its subsidiary, MacSaver Financial Services, Inc., which is guaranteed by Heilig-Meyers, to Ca from Caa1. MacSaver's debt is guaranteed by Heilig-Meyers. The Ca ratings reflect uncertain recovery for noteholders following the companies' bankruptcy filing in August 2000. Heilig-Meyers has petitioned the court to allow it to close over one-third of its store base. Doing so would significantly change the company's profile as an ongoing entity. The stores remain the primary collection point for receivables. Moody's believes that this magnitude of store closings would impact the recovery potential for receivables. While most receivables have been securitized, Heilig-Meyers retains about $300 million of receivables on its books which represent unsecured receivables or subordinated interests in securitizations. Moody's does not rate the current bank facility. However, Moody's notes that collateral provisions under that agreement and repayments made under the prior facility are in question because they occurred within 90 days of the Chapter 11 filing. Heilig-Meyers co., headquartered in Richmond, Virginia, is the largest stand-alone furniture retailer in the U.S. INNOVATIVE CLINICAL: Confirmed Plan Converts $100 Million Debt to Equity ------------------------------------------------------------------------ Innovative Clinical Solutions, Ltd. (OTC Bulletin Board: ICSL.OB) announced that on August 25, 2000 the U.S. Bankruptcy Court confirmed the Company's reorganization plan to convert its $100 million debt into common equity. The Company expects to implement the plan and officially emerge from the Chapter 11 process within two weeks. The Company intends to capitalize on its strengthened financial position to expand and integrate its 3 core business lines; Clinical Studies, Network Management and Healthcare Research. "We are excited to have completed this process so quickly," stated Michael Heffernan, President and CEO of ICSL. "This financial recapitalization was a key step in the restructuring of our company, as we now have the financial flexibility needed to aggressively implement our growth plan." Innovative Clinical Solutions, Ltd., headquartered in Providence, Rhode Island, provides services that support the needs of the pharmaceutical and managed care industries. The Company integrates its pharmaceutical services division with its provider network management division to create innovative solutions for its customers. The Company's services include clinical and economic research and disease management, as well as managed care functions for specialty and multi-specialty provider networks including more than 5,000 providers and close to 10 million patients nationwide. The Company's components include ICSL Clinical Studies, ICSL Healthcare Research and ICSL Network Management. INTEGRATED HEALTH: SouthTrust's Motion to Compel Production Of Documents ------------------------------------------------------------------------ SouthTrust Bank asks the Court to compel certain of the Debtors to produce the Year 2000 Budgets relating to the business operations and financial condition of the respective Facilities: (1) IHS at Heritage Forest Lane, Inc. (2) IHS at Heritage Place, Inc. (3) IHS at Heritage Village, Inc. (4) IHS at Heritage Manor Canton, Inc. (5) Integrated Health Services at Heritage Oaks, Inc. (6) Integrated Health Services at Winterhaven, Inc. and (7) All other IHS Debtors with the Budgets under its possession SouthTrust complains that the Debtors continue to use and operate the Facilities but have failed and refused to make any payments to SouthTrust for such use. Therefore, SouthTrust filed a Stay Motion to secure either a return of the Facilities or adequate protection payments to compensate for the continued deterioration in its position in the Facilities. In conjunction with the Stay Motion, SouthTrust served upon counsel for the Debtors requests for production of documents. Counsel for the Debtors produced documents responsive to most of the specific requests made in the requests but informed SouthTrust that they would not produce the Budgets for the Facilities because the information in the Budgets constitutes trade secrets. However, SouthTrust later learned that the Debtors had shared the Budgets with third parties including the Committee! SouthTrust tells the Judge that the information contained in the Budgets is crucial for SouthTrust to identify the ongoing deterioration of the Facilities and the Debtors' projections in this regard. Specifically, SouthTrust says that it did not receive specific information regarding Prospective Payment System. It has requested that for each of the facilities, the Debtors supply information on: (a) PPS conversion date (b) average rate as of July 2000 based upon existing utilization (c) pre-PPS Medicare rates (d) whether facilities are full federal or in phase-in and (e) projected Year 2001 rate based upon existing laws and currrent utilization. SouthTrust argues that it is for the person resisting discovery to first establish that the information sought is a trade secret and demonstrate that is disclosure might be harmful. Case law, SouthTrust says, has defined "trade secret" or "confidential information" as "information, which, if disclosed, would cause substantial economic harm to the competitive position of the entity." SouthTrust contends that, while the debtors cannot prove that the information contained in the Budgets constitute trade secrets or confidential information, such information is necessary to SouthTrust, which has a first priority perfected security interest in the Facilities, in prosecuting the Stay Motion. Therefore, SouthTrust asks the Court to compel the Debtors to immediately produce the Budgets for inspection and to make available for inspection the specific documentation regarding PPS. The Debtors' Objection The Debtors argue that SouthTrust is not entitled to the relief because: (1) SouthTrust, an admittedly undersecured creditor, cannot prove a diminution of its interest in the collateral; (2) the Intercompany Agreements are not true leases; (3) Southtrust has failed to provide the required expert testimony to support its motion. The Debtors explain that IHS Acquisition leased and operated the six skilled nursing facilities: (i) Heritage Forest Lane, Dallas, Texas, (ii) Heritage Place, Mesquite, Texas, (iii) Heritage Village, Richardson, Texas, (iv) Heritage Manor Canton, Canton, Texas, (v) Heritage Oaks, Arlington, Texas and (vi) Winterhaven, Houston, Texas IHS Acquisition acquired its leasehold interest in the Facilities by assignment from Horizon/CMS Healthcare Corporation. IHS Acquisition also acquired by assignment from Horizon a purchase option on each of the Facilities. Rather than make a mortgage loan directly to IHS Acquisition, the party with the right to purchase the Facilities, the transaction was structured as an intercompany "lease" arrangement Thus, in the context of the SouthTrust financing, IHS Acquisition assigned its rights to purchase each of the Facilities to six newly created IHS subsidiaries-- Heritage Forest Lane, Heritage Place, Heritage Village, Heritage Manor Canton, Heritage Oaks and Winterhaven -- formed for the purpose of holding title to the real property comprising the Facility after which it is named and serving as a borrower under the SouthTrust financing. Contemporaneously with the closing under the SouthTrust loan, each Borrower exercised its option to purchase the real property constituting its respective Facility, and entered into an Intercompany Agreement with IHS Acquisition, pursuant to which IHS Acquisition "leased" each Facility from each respective Borrower. At closing, SouthTrust made a mortgage loan jointly to the Borrowers in the principal amount of $53 million. The SouthTrust Loan is evidenced by a single promissory note signed by each Borrower. The indebtedness to SouthTrust is secured by, among other things, certain deeds of trust given by each Borrower encumbering such Borrower's fee interest in its respective Facility. Pursuant to an assignment of rents and leases, the "rents" payable under each Intercompany Agreement are assigned to SouthTrust as additional security for the loan. Pursuant to the terms of the Loan Documents, IHS Acquisition, the licensed operator of each Facility, as tenant, is supposed to remit payments to each respective Borrower, as landlord. In turn, each Borrower is supposed to remit its allocable share of the debt service to SouthTrust. The Debtors' Argument The Debtors contend that SouthTrust's motion to compel the Debtors to turn over the Budgets is "fatally flawed" because it is premised on the erroneous assumption that the Intercompany Agreements are true leases, and that SouthTrust, as an alleged secured creditor, may compel compliance with 11 U.S.C. Sec. 365(d)(3) of the Bankruptcy Code. Intercompany Agreements Vs. True Leases The Debtors tell the Court that the Intercompany Agreements are not true leases, but rather, a structuring device ancillary to an integrated financing arrangement, the principal of which was to facilitate the borrowing of $53 million from SouthTrust under a structure that characterizes the debt service payments under the loan as "rents", which purportedly would continue to be paid in the event of an IHS Acquisition bankruptcy filing. The Debtors point out that the rents payable under the Intercompany Agreements are due at the same time as, and in the amounts of, debt service under the SouthTrust loan but are not tied to market rents for each property, that the Intercompany Agreements and the Loan Documents are interrelated, and no rent payments ever flowed between IHS Acquisition and each respective Borrower. IHS Acquisition, the Debtors say, have never made any payments to any of the Borrowers, whether characterized as rent or not, and it is IHS, not IHS Acquisition or the Borrowers, that made prepetition debt service payments to SouthTrust. Value of the Facilities According to the Debtors, SouthTrust makes only the most conclusory of assertions concerning the critical requirement that the value of its interest in collateral be declining as a result of the imposition of the automatic stay. The SouthTrust Appraisals performed by Stan T. Phillips, served upon the Debtors in June, 2000, reflect an aggregate "as is" fair market value of the Facilities of $51,200,000, the Debtors tell the Court. The Debtors draw the Court's attention to Mr. Phillips' letter of transmittal to counsel for SouthTrust, which, the Debtors point out, shows that he was not asked to bring his expertise to bear on the prime issue of whether the imposition of the stay is causing a diminution in the value of the Facilities, thereby entitling SouthTrust to relief from the stay or adequate protection. Moreover, SouthTrust has not presented any evidence that the Facilities are not properly maintained. The Debtors say that they have continued to maintain the Facilities. That SouthTrust Is an Undersecured Creditor The Debtors contend that since the SouthTrust Appraisals make no attempt to assess any relevant change in value, they merely show that SouthTrust is an undersecured creditor, and as such, is not entitled to accrue, let alone be paid, interest on its claim. Furthermore, the Debtors point out that SouthTrust places itself in the status of an undersecured creditor because SouthTrust claims that as of the filing date, the principal balance due under the SouthTrust Loan was $51,336,803 while the SouthTrust Appraisals reflect an aggregate fair market value of the Facilities of $51,200,000. The Debtors' Conclusion The Debtors therefore conclude that SouthTrust is not entitled to relief under sections 362(d)(1) or 363(e) of the Bankruptcy Code bacause SouthTrust cannot show a diminution in the value fo the Facilities, which according to the Debtors, are not declining in value, and SouthTrust's interest in the Facilities is adequately protected. Furthermore, the Intercompany Agreements are not true, bona fide leases, but rather are ancillary financing documents to the SouthTrust Loan transaction which are not subject to section 365(d)(3) of the Bankruptcy Code. (Integrated Health Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392- 0900) IRIDIUM, LLC: CMC International Offers $30 Million for Satellites ----------------------------------------------------------------- CMC International in California, The Associated Press reports, submitted a bid amounting to $30 million to save Iridium, LLC's 88 satellites and other of its assets. Both Iridium and Motorola did not comment upon the company's bid, leaving it unclear whether it was seriously considered by both companies. The court filing states that, CMC bid was "revised in response to developments in these proceedings and (Iridium's) request." But, according to a Motorola spokesman, that his company is still pursuing on destroying the satellites from orbit having talks to nobody. Motorola Inc., already received an approval from the U.S. Bankruptcy Court for the Southern District of New York to destroy the Iridium satellites. And as reported in the TCR on Aug. 25, Motorola has already notified subscribers using Iridium's services that service is ending. KAISER GROUP: Hatch Group Completes Purchase of Metals & Mining Business ------------------------------------------------------------------------ Kaiser Group International, Inc. (OTC Bulletin Board: KSRG) completed the sale of its metals, mining and industry business unit to The Hatch Group of Canada, a leading provider of engineering services to the metals and mining sectors. Kaiser's metals, mining and industry business unit includes operations related to iron and steel, alumina and aluminum and mining and industry. This transaction results from a study of strategic alternatives for Kaiser's engineering operations undertaken earlier this year in connection with the ongoing restructuring of the Company's debt. Kaiser reached a definitive agreement with The Hatch Group on July 6, 2000. The asset sale was approved by the Delaware Bankruptcy Court on August 17, 2000. About Kaiser Group International Headquartered in Fairfax, Virginia, Kaiser Group International is one of the United States' leading providers of engineering, project management, construction management, and program management services. Its more than 3,000 employees, located in 30 offices around the world, serve the market areas of transit and transportation; alumina/aluminum and mining/minerals; facilities and water/wastewater; iron and steel; and microelectronics and clean technology. Kaiser Group International, Inc., the parent company of Kaiser Engineers, reported gross revenue of more than $870 million for the 12 months ended December 31, 1999. All references to Kaiser indicate Kaiser Group International, Inc. and any of its subsidiaries. About The Hatch Group Headquartered in Mississauga, Ontario, Hatch is a global supplier of technical and strategic services, including consulting, process development, engineering, information technologies, project management and construction to the mining, metallurgical, infrastructure and energy industries worldwide. With more than 3,000 employees in 40 offices worldwide, the employee-owned Hatch Group has annual fees of more than $300 million. LAROCHE INDUSTRIES: Orica Offers $44 Million for Ammonium Nitrate Business -------------------------------------------------------------------------- LaRoche Industries has selected Orica Nitrogen LLC as the winning bidder for its ammonium nitrate business. The purchase price for the assets will total about $44 million and includes all four of LaRoche's ammonium nitrate manufacturing plants. A hearing has been set for Thursday at the U.S. Bankruptcy Court in Wilmington, Delaware, to approve the sales transaction. Orica Nitrogen LLC is an affiliate of Orica USA Inc., which is headquartered in Englewood, CO. Orica USA's parent company, Orica Limited, is the leading international manufacturer and distributor of explosives. LaRoche Industries, headquartered in Atlanta, is a manufacturer of nitrogen, chlor-alkali and fluorocarbon chemical products, with operations in the United States, Germany and France. The company's ammonium nitrate manufacturing plants are located in Alabama, Missouri, Illinois and Utah; employ about 250 employees; and have a combined production capacity of 1.1 million tons annually. LEAR CORP.: Moody's Assigns Ba Ratings to Auto Supplier's New Debt ------------------------------------------------------------------ Moody's Investors Service has assigned a (P)Ba1 long-term debt rating to Lear Corporation's (Lear) $1 Billion universal shelf registration. The rating actions reflect the rating agency's view that Lear's business prospects in the near-to-intermediate term are good, even if North American vehicle production cools. In addition, the company has made meaningful progress in integrating the UT Automotive acquisition and costs have been taken out ahead of plan. Also, debt reduction from increased cash flow and net proceeds from asset sales is in the initial stages. Moody's noted however, that Lear remains an active participant in the consolidation occurring in the automotive supplier industry and new investment opportunities could utilize excess cash flow, resulting in higher leverage than planned. Therefore, Lear's rating outlook remains negative. Ratings assigned are: (P)Ba1 for senior, unsecured debt securities, (P)Ba2 for senior subordinated, unsecured debt securities, (P)Ba3 for subordinated, unsecured debt securities, and (P)"ba3" for preferred securities issued pursuant to a 415 universal shelf registration. The rating agency noted that while the UT Automotive acquisition has enabled Lear to provide total interior systems to its customers while expanding margins and content per car, the company's balance sheet and financing flexibility have been weakened and are not expected to be rebuilt in the near term. Moreover, debt reduction from free cash flow and potential asset sales beyond the sealant and foam rubber sales will take time. In addition, improvement in leverage may be partially be offset by moderate share repurchase and acquisition activities. However, Moody's recognizes that Lear has been able to successfully take out costs, expand margins, and produce record financial results in the first half of 2000. Similar financial performance is expected for the full year. Although debt reduction is in its early stages, management's commitment to reduce debt will be one of the essential factors in any revision of the rating outlook. Lear Corporation, headquartered in Southfield, MI, provides products and systems for automotive interiors and electronics and is the world's fifth- largest automotive supplier. LOIS/USA, INC.: Asks for Extension through November 30 to File a Plan --------------------------------------------------------------------- Lois/USA, Inc., and its debtor-affiliates, by their attorneys, Togut, Segal & Segal LLP seek an order extending the exclusive periods within which they may file a Chapter 11 plan and solicit acceptances thereto. The debtors, on a consolidated basis, have outstanding account receivables of approximately $23 million. The debtors have sent out demand letters; initiated negotiations to resolve the outstanding accounts receivables; have initiated adversary proceedings; and collected some of the outstanding accounts receivable. The debtors, on a consolidated basis, have almost 2,000 creditors and approximately 800 proofs of claims have been docketed by the court. In addition, the Committee has commenced an adversary proceeding against the Lenders, seeking $40 million in damages for bad faith and misrepresentation. The outcome of this action will impact the debtors' plan and the ultimate recovery by general unsecured creditors. The debtors seek entry of an order further extending the debtors' exclusive period for filing a Chapter 11 plan through and including November 30, 2000 and the debtor's exclusive period for obtaining acceptances of any such plan through January 31, 2001. LTC PROPERTIES: Moody's Lowers All Ratings & Reviewing for Downgrades --------------------------------------------------------------------- Moody's Investors Service lowered its rating on the subordinated debt of LTC Properties, Inc. to B3, from B2, and its cumulative preferred stock rating to "b3", from "b2". Moody's also placed the ratings of LTC under review for further possible downgrade. According to Moody's, these rating actions reflect the status of LTC's negotiations with its bank group regarding the renewal of its credit facility, and the potential implications if not consummated. LTC is heavily reliant on its $195 million bank credit facility, which matures October 2000 and is nearly 90% drawn. One of its bank group members, Bank of America, has indicated it will not renew the unsecured credit facility unless it obtains altered terms. The rating actions reflect the uncertainty surrounding the credit facility renewal and, if renewed, the potential implications of a secured credit facility which would structurally subordinate bond and preferred stock holders. Other rating factors include the possibility of higher pricing, which would place downward pressure on its coverage ratios. The ratings continue to reflect a geographically well- diversified portfolio and an established track record of operating in the long-term healthcare facility business. Moody's rating review will focus on the REIT's refinancing challenges, and its ability to stabilize its operating performance. The REIT's ratings also reflect LTC's heightened leverage, significant variable rate exposure, tight liquidity position, relatively small size and limited financial flexibility. Additional concerns include pressure from continued healthcare industry challenges, including difficulties faced by its tenants. The following ratings were lowered and placed under review for possible further downgrade: * LTC Properties, Inc. a) Senior unsecured debt shelf to (P)B1, from (P)Ba3; b) subordinated debt to B3, from B2; c) cumulative preferred stock to "b3", from "b2"; d) non-cumulative preferred stock shelf to (P)"caa", from (P)"b3". LTC Properties, Inc. [NYSE: LTC], headquartered in Oxnard, California, USA, is a real estate investment trust which invests in long-term care and other healthcare facilities. The REIT's investments encompass 262 skilled nursing facilities, 95 assisted living facilities, and six schools, located in 36 states throughout the USA. The REIT also invests in mortgage loans and REMICs. As of June 30, 2000, the REIT had total assets of approximately $712 million (book). MARINER POST-ACUTE: Proposes Alternative Dispute Resolution for Tort Claims --------------------------------------------------------------------------- To expedite the resolution of pre-petition tort claims initiated against them either before or after petition, Mariner Post-Acute Network, Inc., and Mariner Health Group, Inc., sought and obtained the Bankruptcy Court's approval of the Alternative Dispute Procedures. The Debtors reveal that there are approximately 650 such Pending Actions for contingent, disputed and in many cases unliquidated claims against the Mariner Group, mostly related to personal injury or employment. Approximately 50 of the personal injury claimants have filed motions for relief from automatic stay and these have already distracted the Debtors' key employees from the important task of reorganization. The Debtors observe that liquidating these claims in the Bankruptcy Court will not be feasible or proper and resolving them through litigation in any court will be time-consuming and a drain on resources. Moreover, any time and cost associated with litigation is not in the best interests of the Claimants either, the Debtors contend, given the Debtors' large self-insured retention (SIR) which applies to defense costs, potentially and indemnity, and given that payment of any dividend to unsecured claimants is uncertain. The Debtors therefore propose an ADR Procedure with provisions on: (1) Service of ADR Claims Upon the entry of the ADR Order, Pending Actions on the Preliminary ADR Claims List will be subject to the ADR Procedures, upon the service of an ADR Notice by the Debtor. If the Debtors inadvertently omitted a Pending Action already in suit, the claimant may request inclusion of the claim in the ADR Procedures as an Additional ADR Claim. The Debtors intend to designate all claims of which they are aware and which are not in active litigation as Additional ADR Claims. (2) Injunction Commencing on the date of service of the ADR Notice, holders of ADR Claims will be enjoined from action to enforce their claims against the Debtors or their property other than through the ADR Procedure. Such injunction covers action against current or former employees of the Debtors, parties who are affiliated with or indemnified by the Debtors and the Debtors' insurance carriers. The ADR Injunction will expire upon the earliest of (i) one year after the date of the ADR Order; (ii) the completion of the ADR Procedure as to such ADR Claim; or (iii) the parties' entry into a stipulation to modify the automatic stay. In addition, ADR Claims will remain subject to the automatic stay under section 362 of the Bankruptcy Code after expiration of the ADR Injunction through the date of confirmation of a plan or plans of reorganization in the Debtors' chapter 11 cases, unless an earlier termination is ordered by the court or stipulated by the parties. (3) Opt-Out Provision A Claimant may opt-out of the ADR Procedure by way of a Stipulation and obtain expedited relief from the automatic stay four months from the entry of ADR Order by agreeing: (a) to limit its recovery only to available insurance proceeds; (b) to dismiss with prejudice its claims against any of the Debtors' current or former employees, officers or directors named as defendants in the Pending Action; (c) not to name as a defendant any current or former employees, officers or directors of the Debtors or anyone the Debtors must indemnify as defendants in the Pending Action; and (d) to waive the right to pursue or recover punitive damages in the lawsuit. This waiving of the right to recover punitive damages is to assure that a Claimant cannot opt-out, receive a large punitive damages award in a case where punitive damages are uninsurable, and would become an obligation of the estate, or, where punitive damages are insurable, could potentially exhaust coverage before those participating in the ADR Procedure can liquidate their claims. (4) Effect of Opt-Out Provision on insurance If an Insurer served with notice of the motion fails to raise objection, the insurer may not deny coverage on the basis that a Claimant has agreed to seek recovery only against available insurance proceeds and that the Debtors therefore have not satisfied their self- insured retention/deductible obligation under the applicable policy or policies. The Judge makes it clear that the ADR Order does not excuse the Debtors of their obligation to pay defense costs up to the applicable self-insured retention/deductible, if any. In the event an insurer files an objection, the Debtors are authorized to transfer and assign to any opt-out claimant concerned all of the Debtors' rights and claims against the insurers concerned and the respective claimants must sign the Opt-Out and Assignment Stipulation as a condition to opting out of the ADR Procedure. (5) Rights of Insurance Carriers The ADR Order specifies that the rights of the Debtors' Insurance Carriers under the applicable Insurance Policies or any other agreements with the Debtors are preserved and nothing in the ADR Order will be deemed an adjudication or determination of any coverage obligations of the Insurance Carriers under the Insurance Policies. (6) Settlement of Claims during ADR Procedure The parties may settle claims at any time during the ADR Procedure, subject to the Omnibus Settlement Order. To the extent any settlement amount is uninsured, it shall constitute an allowed general unsecured claim, but the Debtors may seek to subordinate any award of punitive damages to all other claims and to assert a cap on claims. To the extent any settlement amount exceeds the SIR, the appropriate third party payor shall pay such amount, subject to exclusions in the \ applicable insurance policy or policies. (7) The parties shall, in good faith, identify the proper Debtor entity for the purpose of the allowance of claims. In the event the parties cannot agree on the proper Debtor entity, the matter will come under the jurisdiction of the Bankruptcy Court. (8) The ADR Procedure will be in three stages: Stage I: Demand/Offer This will be a stage for the parties to exchange settlement offers and, if possible, resolve an ADR Claim. This stage will include: (a) Notice to Tort Claimants of (i) a copy of the ADR Order; (ii) a copy of the ADR Term Sheet; (iii) the APR Notice; and (iv) an Opt- Out Stipulation. "Upon the entry of the ADR Order, all Pending Actions included on the Preliminary ADR Claims List will be subject to the ADR Procedures upon service of the ADR Notice, without further opportunity to object to the ADR Procedure." Holder of Additional ADR Claims may object. (b) ADR Notice requesting the Tort Claimant to verify certain information regarding its ADR Claim, attach relevant documents, designate whether or not binding arbitration is acceptable, and return the ADR Notice to the Debtors, along with a settlement demand within 30 days, failure of which will result in the disallowance of the ADR Claim. In the event the Court overrules the objection to an additional ADR Claimk, the Claimant will have 30 days from the date of the overrule to return the ADR Notice to the Debtors, subject to the same disallowance provision applicable to ADR Claims. * A Settlement Demand may not exceed the amount or improve the priority set forth in the Tort Claimant's most recently filed proof of claim, amended proof of claim or scheduled claim. * The amount proposed in the Demand will be a general unsecured claim to the extent there remains any uninsured amount or to the extent any portion of the Demand is not covered under the applicable Insurance Policy. * If a return with a zero, unknown, unliquidated, indefinite demand or no Demand is received and the situation is not cured within 15 business days after written notice, the ADR Claim will be deemed disallowed, waived and discharged upon an order of the Court. The Demand will not constitute a proof of claim for any purpose. The Debtors, in collaboration with the appropriate Insurance Carrier representative, must respond in writing to all timely filed Demands within 45 days which may be an acceptance, a denial, counteroffer, request for additional documentation or information or a statement that the ADR Claim will proceed to the next stage of the ADR Procedure. If a failure to respond is not cured within 15 business clays after written notice from the Claimant to the Debtors or the insurance carrier, that portion of the Demand which is not insured will constitute an allowed general unsecured claim, subject to applicable limitations, and the claimant will have the right to prosecute his or her suit to the extent that it is covered by the applicable Insurance Policy and to seek to recover such amount from the appropriate Insurance Carrier. (c) Counteroffer If the Debtors make a counteroffer, the Claimant must respond within 15 days by either accepting or rejecting the Counteroffer, otherwise the Claimant's ADR Claim will be allowed in the amount and the classification of the Counteroffer to the extent the claim is uninsured and the claimant may recover the insured portion of the claim from the Insurance Policy. If the Counteroffer is rejected, the ADR Claim shall proceed to the next stage of the ADR Procedure. (d) Extension of Settlement Period The parties may exchange additional settlement offers after the Counteroffer Response Period; however, the underlying ADR Claim will proceed to the next step of the ADR Procedure if such claim is not resolved by the earlier of 30 days after the Debtors' receipt of the Counteroffer Response or 45 days after the Debtors serve the Counteroffer on the Claimant. Stage II: Mediation ADR Claims that are not resolved through the Demand/Offer Stage will proceed to Mediation. The mediators will he selected by the Debtors and the mediator's fee will be shared by the Debtors or applicable third party and the Claimant. The mediators will handle multiple mediations in week-tong sessions. ADR Claims will he assigned to regional Mediation Sites. The Debtors will have more than one mediator assigned to each Mediation Site, and if a Claimant objects to the Mediator originally assigned to his or her case, he or she may request another mediator at the Mediation Site. A schedule will be set forth in the Term Sheet but this will be subject to modification by the Debtors. Notices of Mediation will be sent out. At least thirty days prior to the scheduled mediation, the Debtors and Claimants will exchange comprehensive Mediation Briefs. Each mediation will be scheduled for up to eight hours, but no less than two hours. Stage III: Binding Arbitration If the parties are unable to resolve the APR Claim through the Demand/Offer and Mediation Stages, ADR Claimants who expressly consent to binding arbitration and whose claims the Debtors and their insurance carriers agree should be arbitrated will receive an Arbitration Notice. Binding Arbitrations will occur after the Mediation stage according to the schedule and procedures set forth in the ADR Term Sheet. The arbitration of all ADR Claims will be governed by the Commercial Arbitration Rules of the AAA, except where the AAA Rules are expressly modified in the ADR Term Sheet which will overrule in the event of conflict. If a Claimant has consented to binding arbitration, the fees and administrative costs of binding arbitration will be borne by the Debtors or appropriate third party, unless otherwise ordered by the arbitrator. Binding Arbitration Awards A binding arbitration award will be treated as confidential and appealable to the United States District Court for the District of Delaware only in accordance with section 10 of the Federal Arbitration Act, 9 U.S.C. section 1, et seq. Such an appeal must he filed within ten days from the date of service of the arbitration award by the arbitrator. To the extent the award for an ADR Claim is uninsured, it will constitute an allowed general unsecured claim against the appropriate Debtor entity's estate, except that the Debtors may seek to subordinate any award of punitive damages to all other claims, and to assert any applicable limit or "cap" on claims such as the limitation on allowed amounts of certain employee claims. The third party payors shall be liable for any binding arbitration awards as if the award were a final judgment of a court of competent jurisdiction, subject to any exclusions in the applicable Insurance Policy or policies and applicable SIR amounts. Stage IV: Relief from Automatic Stay The automatic stay shall be modified, by the filing of a stipulation in the form specified in the ADR Term Sheet, only to the extent of such stipulation and to permit the liquidation of any ADR Claim that is not resolved through the ADR Procedure, provided that the Claimant fully participated in good faith in the ADR Procedure and the Debtors have completed all mediations and arbitrations in the ADR Procedure. The Stipulation will provide that the automatic stay will not be lifted until the Debtors have completed all mediations and arbitrations described. If the Claimant and the Debtors cannot agree to such a stipulation, the Claimant may move the Court to terminate the automatic stay, and the Debtors reserve defenses to such a motion. If the stay is terminated by stipulation or otherwise, the Pending Action nay be liquidated in the court where it was originally venued or, if not yet in suit, in any court of competent jurisdiction. The Debtors contend that if relief from the automatic stay were granted to claimants on an ad hoc basis before such claimant complied with the ADR Procedure, the Debtors will be forced to expend resources and time in defending the claims in other forums. Accordingly, the Debtors request the court not to modify the automatic stay except in connection with the ADR Procedure or upon Court approval of a stipulation between the Debtors and a claimant. However, the Debtors do request that the Court modify the automatic stay in a limited manner upon the filing of a Stipulation lifting the automatic stay to the extent provided in the Stipulation. The Debtors remark that the proposed ADR Procedure in the MPAN cases is very similar to that of Sun Healthcare Group, Inc., filed with the same Court except for three major differences. * First, in MPAN's cases, the automatic stay will not be terminated as soon as the parties fail to resolve a claim through mediation or arbitration, but rather will be modified only when the Debtors have completed their mediations and arbitrations of all claims. * Second, the Opt-Out Stipulation provides that the effective date of the modification of the automatic stay be four months after the date of the ADR Order, and that the Claimant will waive the right to pursue punitive damages. MPAN asserts that these modifications are appropriate to enable the Mariner Group, with approximately 400 more claims to resolve than Sun, to focus on the resolution of the ADR Claims, rather than be distracted by the need to litigate numerous claims. * The third primary difference from the Sun procedure is the inclusion of the Opt-Out and Assignment Stipulation. The Debtors anticipate that to the extent that unsecured claims in these chapter 11 cases fall within the SIR/deductible portion of an insurance policy, such claims will not he paid in full, whether under a chapter 11 plan of reorganization or otherwise. Thus, to the extent that any of the Debtors' insurers contends that a Claim is uninsured in its entirety if the Debtors fail to pay an SIR or deductible in full, the Debtors believe that such an insurer would be in error because a Claimant whose claim is insured by such an insurer takes an increased risk in signing an Opt-Out Stipulation that involves a waiver of all rights of recovery against the Debtors' estates. (Mariner Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) MARKEL CORP.: Moody's Lowers Debt Securities Ratings And Subsidiary Ratings --------------------------------------------------------------------------- Moody's Investors Service has lowered the debt and capital securities ratings of Markel Corporation (senior debt from Baa2 to Baa3; trust preferred securities from "baa3" to "ba1") and its subsidiary, Terra Nova (UK) Holdings plc (senior debt from Baa2 to Baa3). These actions reflect the rating agency's expectation that earnings on a consolidated basis will be moderate over the near term. Furthermore, the outlook for the ratings is negative, reflecting the possibility that further deterioration may occur, as Markel continues to re-evaluate the quality of the Terra Nova book of business. While some of the deterioration seen in Terra Nova's results over the past six months includes charges that may be considered non-recurring, operating returns have substantially weakened. Markel's management is active in addressing the unprofitable business within the Terra Nova portfolio, however, Moody's feels that they face a greater challenge than in past acquisitions due to the distinct business practices in the London market, remoteness of operations and sheer size of the book they are attempting to re-underwrite. This will prolong a significant improvement in results. Additionally, Terra Nova's severe underperformance since the announcement of the acquisition raises questions about the future franchise value of Terra Nova to Markel. While the broader geographic scope of Terra Nova may have created a platform for geographic expansion, Markel is reducing its commitment to several of the Lloyd's syndicates, has placed the Bermuda subsidiary in run-off, is evaluating the strategic fit of Corifrance, a French insurer. While management's actions to date reflect sound decisions to improve the bottom line, it is unclear whether in the long run the combination will result in a financially and operationally stronger company. The rating agency noted that Markel has historically demonstrated conservative financial management and sound underwriting discipline. Its US operations have performed well, and Moody's does not expect a deterioration in results from the US companies. However, concerns regarding the future profitability of the combined organization are heightened when viewed in context of Markel's limited financial flexibility resulting from additional debt incurred to finance the acquisition and significant goodwill on the company's balance sheet. The rating agency stated that further deterioration in results could place downward pressure on the rating. The following ratings have been downgraded: A) Markel Corporation (a) Senior debt from Baa2 to Baa3 (b) Junior subordinated debentures from Ba1 to Ba2 B) Markel Capital Trust (a) Preferred stock from "baa3" to "ba1" C) Terra Nova (UK) Holdings plc (a) Senior debt from Baa2 to Baa3. Markel Corporation, is a Virginia-based insurance holding company for several US insurance subsidiaries, that underwrite property and casualty specialty coverages and programs. Its recently acquired subsidiary, Terra Nova (Bermuda) Holdings, Ltd. has underwriting operations in London, Bermuda, and France, as well as Lloyd's syndicates managed by Markel Syndicate Management Ltd. (formerly Octavian Syndicate Management Ltd.) As of June 30, 2000, Markel reported GAAP equity of $672 million, and a year to date net loss of $3.7 million. Markel's reported net income does not include the results of Terra Nova prior to the acquisition's close. Terra Nova (Bermuda) Holdings, Ltd. reported a net loss of $83 million for the first three months of 2000. MASSACHUSETTS HEAVY: Shipyard Has Until Dec. 1 To Pull Itself Together ---------------------------------------------------------------------- According to the Associated Press, Judge William C. Hillman gave Massachusetts Heavy Industries Inc. until Dec. 1, to pull itself out of debt or lose its shipyard. The Patriot Ledger of Quincy states that Company president Sotirios Emmanouil was happy with the decision because he is working on a deal to satisfy the judge. Emmanouil told the Patriot that he could raise $55 million by giving up half his ownership to Boston Financial Advisors. The investment group submitted a letter to the court saying it can raise the money. But, the judge doubts the deal adding, Emmanouil appears to be suffering from "a terminal case of euphoria." Massachusetts Heavy Industries filed for bankruptcy protection under Chapter 11 in U.S. Bankruptcy Court in Massachusetts. The company filed on March 13 after defaulting on loan payments. MIRON BUILDING: Home Decor Retailer Files For Bankruptcy Protection ------------------------------------------------------------------- Miron Building Products Co. Inc., a home-decorating retailer based in Lake Katrine, N.Y., has filed for bankruptcy, claiming more than 1,000 creditors and millions of dollars in liabilities, according to the Times Union Albany. Miron's spokesman, Attorney Richard H. Weiner of the Albany, N.Y., law firm Cooper Erving Savage Nolan & Heller LLP, confirmed that all of the company's eight units-including warehouses, retail outlets and a concrete plant-had closed. According to the chapter 11 petition, the claims of Miron's three largest creditors totaled more than $6 million. The company's three largest creditors are the state Department of Tax and Finance, which holds a claim of $3.5 million; the Chicago-based Tru Serv, which is owed $2.02 million; and Glens Falls Lehigh Cement in Glens Falls, N.Y., with a claim of $558,063. (ABI World, 25-Aug-00) NATIONAL RESTAURANTS: Order Confirms Second Amended Joint Plan -------------------------------------------------------------- An order of the US Bankruptcy Court, Southern District of New York was entered on July 27, 2000 confirming the debtors' second amended joint Chapter 11 plan of reorganization dated June 15, 2000 proposed by National Restaurants Management Inc., et al. NORTHERN MOUNTAIN: Helicopter Concern Applies for CCAA Protection ----------------------------------------------------------------- Northern Mountain Helicopters Group Inc. (CDNX - NMH) announced that it and its subsidiary companies, Peace Helicopters Ltd., Northern Mountain Helicopters Inc. and Northern Heli Log Ltd. (collectively, "Northern Mountain") have applied to the Supreme Court of British Columbia and obtained a protective order under the Companies' Creditors Arrangement Act ("CCAA"). The Court order appoints PricewaterhouseCoopers as monitor and effectively prevents creditors from enforcing their claims while Northern Helicopters embarks upon a restructuring process under the monitor's supervision. Mr. Charles Hodgins, Chief Financial Officer of Northern Mountain said: "We have taken this step in the interests of all our stakeholders, including our employees, our customers, our creditors and our shareholders in order to address the capital deficiency within Northern Mountain. The protection provided by the Court order enables Northern Mountain to continue the efforts we have initiated to restructure our overall business operations on a more profitable basis which will in turn enable us to solve our current financial difficulties and the filing has the support of our major secured creditors. I am hopeful that we will be able to bring a proposal back to Court within a relatively short time frame that will be acceptable to our creditors and will enable Northern Mountain to regain profitability in the short term and take advantage of the opportunities available to it, both in Canada and internationally". NORTHWESTERN CORP: Moody's Changes Rating Outlook From Stable to Negative ------------------------------------------------------------------------- Moody's Investors Service changed the rating outlook for NorthWestern Corporation to negative from stable, primarily reflecting growing concerns about the performance of its nonregulated retail propane distribution operations, which are conducted through Cornerstone Propane Partners L.P., a master limited partnership. Cornerstone's financial results have suffered over the past few years, mostly due to mild weather, and the resulting lack of cash distributions to NorthWestern have contributed to a weakening of cash flow coverage of NorthWestern's fixed obligations. In addition, NorthWestern continues to expand its investments in nonregulated businesses, which include a heating, ventilation, air conditioning (HVAC), and plumbing business (Blue Dot), as well as a telecommunications, voice, and data services business (Expanets). At the same time, Moody's notes that NorthWestern continues to operate a very efficient regulated electric and gas business. Although the regulated business faces the prospect of competition, it does provide a more stable cash flow stream compared to nonregulated businesses. However, the fact that consolidated earnings are becoming increasingly dependent on the nonregulated businesses raises concerns about the quality of, and the potential for further variability of, consolidated cash flows going forward. Any continuation of the weakening trend of fixed charge coverages for NorthWestern Corporation would increase the likelihood for a rating downgrade. NorthWestern Corporation, headquartered in Sioux Falls, South Dakota, is a diversified service and solutions company with investments in an electric and gas utility (NorthWestern Public Service), retail propane distribution and energy services (Cornerstone), as well as HVAC and plumbing (Blue Dot), and telecommunications, voice, and data services (Expanets). PATHMARK STORES: Defends Third-Party and Non-Debtor Releases Under Plan ----------------------------------------------------------------------- Continuing to gear-up for a showdown in Wilmington, Delaware, with its Official Committee of Equity Security Holders, Pathmark Stores, Inc., urges District Court Judge Farnan to overrule the Committee's objections to the releases granted to non-debtor entities under Pathmark's prepackaged plan of reorganization. The Equity Committee contends that the releases provided in the Plan violate 11 U.S.C. Secs. 1129(a)(1) and (2) and prohibit confirmation of Pathmark's Prepackaged Plan of Reorganization. "These releases are being given for good and valuable consideration . . . are critical to the Bondholder Committee's support of the Plan and should be approved," Douglas P. Bartner, Esq., George J. Wade, Esq., and Andrew V. Tenzer, Esq., of Shearman & Sterling, joined by Laura Davis Jones, Esq., Michael R. Seidl, Esq., and Rachel S. Lowy, Esq., of Pachulski Stang Ziehl Young & Jones, tell Judge Farnan. Pathmark's legal team argues that the releases provided under Pathmark's Prepackaged Plan comply with the multi- part tests and teachings articulated in In re Zenith Electronics, 241 B.R. 92 (Bankr. D. Del. 1999), and In re Continental Airlines, 203 F.3d 203 (3d Cir. 2000), to evaluate the propriety of third-party and non-debtor releases: (A) There is a significant identity of interest between Pathmark and the Directors and Officers to which releases are granted under Pathmark's Plan. The D&O Releasees can assert indemnification claims against the Debtors for many of the claims being released. (B) The D&O Releasees and the Investor Releasees have invested time and resources into formulating the plan, so they share an interest in seeing that Plan succeed and the company reorganize. (C) The Plan is supported by an overwhelming majority -- over 98% of the Bondholders. (D) The Releasees have made substantial contributions to the reorganization and equity holders in Reorganized Pathmark benefit from those contributions. (E) The Releases are a critical economic element of the Debtors' restructuring, they are fair and they are necessary. Finally, the Debtors note, pursuant to Section 5.7 of the Plan, the rights of Preferred Stockholders against the Debtors are not affected by the Plan. Any causes of action that the Preferred Stockholders currently have against the Debtors may be pursued freely by the Preferred Stockholders against Reorganized Pathmark. The Equity Committee's release-related objections, Pathmark urges Judge Farnan, should be overruled. PREMIER SALONS: Optimistic a Plan Will be Filed before Santa Claus Arrives -------------------------------------------------------------------------- Premier Salons International, Inc. and GEMM Holdings, Inc., seek entry of an order granting an extension of their exclusive period within which they may file a plan or plans of reorganization through and including October 24, 2000 and the exclusive period within which they may solicit acceptances of any such plan through and including December 25, 2000. The debtors are optimistic that the limited amount of additional time requested will allow the debtors to complete the process of finalizing and filing their plan of reorganization. The debtors have not yet determined the most appropriate structure for the sale or other investment of their business, any proposed plan of reorganization for the debtors would need to contain alternative outcomes, based on the different types of sale or investment plans which could ultimately be adopted. The debtors claim that any such plan would necessarily include varying outcomes and would make adequate disclosure to the creditors extremely difficult. "Because any plan could not be effectuated until a determination as to the sale structure is made, no party is prejudiced by the extension." Therefore, the debtors submit that the extensions are warranted. PRISON REALTY: Announces Settlement Accord in Stockholder Litigation -------------------------------------------------------------------- Prison Realty Trust, Inc. (NYSE: PZN) announced that it has entered into a memorandum of understanding regarding the settlement of all outstanding stockholder litigation against Prison Realty and certain of its existing and former directors and executive officers. The memorandum of understanding, which is subject to the execution of a definitive stipulation of settlement by the parties, subsequent court approval and other customary conditions, provides for the "global" settlement of a series of purported class action and derivative lawsuits brought against Prison Realty by current and former stockholders of the company and its predecessors, the old Corrections Corporation of America and CCA Prison Realty Trust. These lawsuits were brought as the result of, among other things, agreements entered into by Prison Realty and its primary tenant, Corrections Corporation of America ("CCA"), in May 1999 to increase payments made by Prison Realty to CCA under the terms of certain agreements and previously announced transactions relating to the restructuring of Prison Realty and CCA led by the Fortress/Blackstone investment group and Pacific Life Insurance Company. "We are very pleased with the outcome of the negotiations with the plaintiffs in this matter," said William F. Andrews, chairman of the board of Prison Realty. "We believe the proposed settlement is in the best interest of Prison Realty and its stockholders, as it frees Prison Realty from the burden of significant litigation and allows the company to refocus its attention on its business and restoring its credibility. Additionally, any significant judgment against the company resulting from this litigation or a settlement for cash to be paid by the company would have resulted in a default under the terms of our credit facility." The memorandum of understanding provides that Prison Realty will pay or issue the plaintiffs: * approximately $48 million in cash payable solely from the proceeds under Prison Realty's and CCA's insurance policies; and * approximately $72.4 million in shares of Prison Realty common stock (or 16,550,000 shares at an agreed value of $4.375 per share). The shares of common stock to be issued by Prison Realty in accordance with the agreement will be subject to a stock price guarantee of $4.375 per share, which will require Prison Realty to pay or issue, at its option, cash or additional shares of common stock to the plaintiffs if the trading price of Prison Realty common stock does not reach $4.375 per share for a specified number of trading days during the period from the completion of the settlement through August 31, 2001. In addition, shares issued in the settlement are subject to certain anti-dilution adjustments if Prison Realty undertakes certain transactions (generally, raising equity capital in excess of $110.0 million at less than the stock price guarantee) during the period from August 31, 2001 through December 31, 2001. In addition to the payments of amounts specified above, Prison Realty and the plaintiffs have agreed to certain other matters in connection with the memorandum of understanding, including: * restrictions on the form and amount of payments that may be made by Prison Realty to certain affiliates of Prison Realty and CCA and certain third parties in connection with the proposed restructuring of the companies; * restrictions on Prison Realty's ability to reprice stock options previously issued to directors or executive officers of the company for a period of 24 months; and * the requirement that each committee of the Prison Realty board of directors consist of a majority of directors which were not directors of Prison Realty or its affiliates as of December 1, 1999. Prison Realty expects to file a Current Report on Form 8-K with the U.S. Securities and Exchange Commission with respect to the settlement of the stockholder litigation which will include the full text of the memorandum of understanding among the parties. PSI INDUSTRIES: Order Confirms Amended Liquidating Plan of Reorganization ------------------------------------------------------------------------- The Honorable Steven H. Friedman, US Bankruptcy Court, Southern District of Florida, West Palm Beach Division, entered an order on August 9, 2000 confirming that the amended liquidating plan of reorganization of PSI Industries Inc. has been accepted in writing by the creditors whose acceptance is required by law; and the plan complies with the applicable provisions of chapter 11. Michael D. Sees, Esq. Of Kluger, Peretz, Kaplan & Berlin PA is named as disbursement agent. Barry R. Shear is authorized to serve as liquidating trustee. The court will conduct a post-confirmation status conference on September 12, 2000 at 1:30 PM, Courtroom 1406, US Bankruptcy Court, Miami, Florida. RELIANT BUILDING: Committee Selects DSI as Its Financial Advisors ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of Reliant Building Products, Inc., et al., seeks court authority to employ and retain Development Specialists, Inc. as financial advisors to the Committee. The hourly billing rates for the DSI personnel envisioned to work on this matter are: William A. Brandt, Jr. $425 per hour Patrick J. O'Malley $360 per hour Joseph J. Luzinski $295 per hour James E. Moore $250 per hour George E. Shoup $180 per hour RENAISSANCE COSMETICS: Will GE Capital Abandon Liens on Causes of Action? ------------------------------------------------------------------------- Houbigant, Inc., a creditor and party-in-interest in the Renaissance Cosmetics, Inc., chapter 11 cases pending in the U.S. Bankruptcy Court for the District of Delaware, asks Judge Walrath for an order finding that General Electric Capital Corporation has abandoned its security interest in Renaissance Cosmetics' pre-petition causes of action. "But for GECC's security interest, the Debtors would be free to pursue these causes of action for the benefit of the interests of all creditors -- including GECC," Michael L. Vild, Esq., and Elio Battista, Jr., Esq., of The Bayard Firm, tell Judge Walrath. "Houbigant believes that the pre- petition causes of action have substantial value and should be pursued for the benefit of all of the Debtors' creditors. Houbigant's legal team relates that Renaissance's managing officer, John Jackson, is ready to testify that the causes of action have value and should be pursued. Houbigant indicates that it has asked GECC to release its liens. GECC, represented by Jeffrey L. Tannenbaum, Esq., and Adam Rogoff, Esq., of Weil, Gotshal & Manges LLP, has resisted -- for over a year now. GECC is, Houbigant surmises, still considering if it wants to pursue the causes of action on its own. Why does Houbigant bring this Motion rather than the Debtors' lawyers at Cleary, Gottlieb, Steen & Hamilton? Well, as disclosed in Cleary Gottlieb's original employment application, it has a small conflict problem when it comes to taking positions adverse to GECC. "Accordingly," Mr. Battista says, "Hobigant makes this motion in its own name [for] the benefit of the entire estate through unconflicted counsel. In its motion papers, Houbigant doesn't describe the causes of action it wants to pursue in any detail. GECC doesn't appear to be the target. A transcript from a June 17, 1999, hearing before Judge Walrath suggests that Houbigant and Renaissance's Creditors' Committee granted GECC a waiver and release of all claims to resolve DIP Financing and Sale Procedure objections. ROBERDS, INC: Port Richey & Beavercreek Properties Fetch $6.6 Million --------------------------------------------------------------------- Roberds, Inc., debtor, seeks a court order confirming and approving the sale of the Beavercreek, Ohio and Port Richey, Florida real property sites. As set forth in the Report of Sale, Aegon USA Realty Advisors, Inc. offered the highest bids for the Beavercreek, Ohio and the Port Richey, Florida real property sites, $4,110,000 for Beavercreek and $2,510,000 for Port Richy. Aegon is the agent for the two mortgagees holding cross collateralized mortgages on the Real Property Sites, AUSA Life Insurance Company and PFL Life Insurance Company. Both bids are credit bids. The debtor states that the offers were the high bids in each case, the only alternative to acceptance would be abandonment of the real property sites because the second bids were not high enough to permit payment of the mortgages on the sites. With respect to its other property bid situations, the high bid for the Tampa real property site was made by JBS Development in an amount of $3, 100,000 - and should be confirmed if an agreement can be reached with the mortgagee, GE Capital Business asset Funding Corporation. Such negotiations with the mortgage are ongoing. The bid for the Fairborn Distribution center is well below the balance due on the mortgage of American Express Finance Corporation, so that bid has been rejected. No bids were received for the Douglasville, Georgia real property site. SUN HEALTHCARE: Sundance Therapists Move to File Class Proof Of Claim --------------------------------------------------------------------- Janice L. Reed, June P. Jagger and Mary Kay Meinted filed a proposed class action complaint in the Western District of Washington on August 11, 1999 against SunDance Rehabilitation Corporation seeking to represent all current and former occupational, physical and speech therapists, certified occupation therapy assistants, and physical therapy assistants who worked for SunDance and were not paid appropriate wages under federal and state law from August 11, 1996 to the present. The complaint alleges that SunDance deprived these individuals of appropriate pay by intentionally classifying employees as being salary basis when they were not, requiring contract and at-will employees to work off the clock and failing to pay its therapists for travel time nor reimbursing them for mileage. Due to Sun Healthcare Group, Inc.'s chapter 11 filings, the lawsuit was stayed. On November 3, 1999 the plaintiffs filed a class proof of claim on behalf of themselves and the putative class. By this motion, the plaintiffs seek application of Bankruptcy Rule 7023 to their class proof of claim and to certify the class they seek to represent. In addition they seek an enlargement of the bar date pursuant to Bankruptcy Rules 3003 and 9006 to ensure the putative class members' claims relate back to the time the class proof of claim was filed. As with Ms. Miner's case against Sunrise, plaintiff contends that class proof of claims are regularly permitted in Bankruptcy Court, that the case satisfies the requirements of Rule 7023, Fed. R. Civ. P. 23 for class certification with respect to numerosity, commonality, and typicality. It is also stated in the motion and memorandum that in satisfaction of Fed. R. Civ. P. 23(a)(4), Ms. Miner will fairly and adequately protect the interests of all class members because she has retained experienced and qualified counsel and her interests are coincident with the general interests of the class. The plaintiffs are represented by Ian Connor Bifferato of Bifferato, Bifferato & Gentilotti, Steve W. Berman of Hagens Berman, LLP, and Stephanie B. Levin of Hagens Berman & Mitchell, PLLC. The SunBridge Action In a recent SEC filing, Sun Healthcare relates that in May 1999, a former employee of SunBridge filed a proposed class action complaint against SunBridge in the Western District of Washington. The plaintiff sought to represent certain current and former employees of SunBridge who were allegedly not paid appropriate wages under federal and state law since May 1996. (Sun Healthcare Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) SUNSHINE MINING: Case Summary and 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Sunshine Mining and Refining Company 5956 sherry Lane, Suite 1621 Dallas, Texas 75225 Type of Business: Mining precious metals, primarily silver Chapter 11 Petition Date: August 23, 2000 Court: District of Delaware Bankruptcy Case No: 00-03409 Judge: Mary F. Walrath Debtor's Counsel: Mark D. Collins, Esq. Daniel J. DeFranceschi, Esq. John H. Knight, Esq. Margreta M. Sundelin, Esq. Richard, Layton & Finger, P.A. One Rodney Square P.O. Box 551 Wilmington, DE 19899 (302) 658-6541 Total Assets: $ 33,000,000.00 Total Debts : $ 55,000,000.00 20 Largest Unsecured Creditors: Liverpool Limited Partnership c/o Elliott Associates, LP 712 Fifth Ave New York, NY 10019 8% Notes $ 10,395,000 Stonehill Offshore Partners Limited c/o Stonehill Advisers, LLC 126 East 56th St., 9th Floor New York, NY 10022 10% Notes $ 8,998,812 HSBC 140 Broadway New York, NY 10005 8% Notes $ 8,580,000 Westgate International c/o Elliott Associates, LP 712 Fifth Ave New York, NY 10019 8% Notes $ 7,000,000 Stonehill Institutional Partners, L.P. c/o Stonehill Capital Management 126 East 56th St., 9th Floor New York, NY 10022 10% Notes $ 4,676,213 Chase Bank of Texas 600 Travis, Ste 1150 Houston, TX 77002 9% Bonds $ 1,515,000 Elliott Associates, LP 712 Fifth Ave New York, NY 10019 5% Notes $ 299,440 Sonat/El Paso Natural Gas P.O. Box 12878 Ray v. Ray Oklahoma City, OK 73157 Judgement $ 274,129 Shoshone County Tax Collector 700 Bank St., Ste. 1 Real Property Wallace, ID 83873 Taxes $ 260,062 Asarco, Inc. Superfund and P.O. Box 440 Business Expense Wallace, ID 83873 Reimbursement $ 254,599 Haynes & Boone, LLP Attorney Fees Restructuring $ 186,563 Roger & Wells Attorney Fees Debt Offerings $ 168,845 Hecla Mining Company Superfund $ 162,001 Warrior-Standard Americas, Inc Professional Fees Financial Consulting $ 150,000 New York Stock Exchange Listing Fees $ 118,163 Norwest Mine Supply Operating Supplies $ 114,500 Avista Utilities Billing Department $ 88,945 Idaho State Insurance Fund Worker's Compensation Premium $ 67,257 HSBC Trustees Trustee Fees $ 29,500 Great Western Chemical Reagants $ 26,306 SUPPLY ONE: Case Summary and 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Supply One, Inc. 150 E. Peckham Lane Reno, NV 89502 Chapter 11 Petition Date: August 24, 2000 Court: District of Nevada Bankruptcy Case No: 00-32425 Judge: Gregg W. Zive Debtor's Counsel: Stephen R. Harris, Esq. Belding, Harris & Petroni, Ltd. 417 West Plumb Lane Reno, Nevada 89509 (775) 786-7600 Total Assets: $ 10 Million above Total Debts : $ 10 Million above 20 Largest Unsecured Creditors: CCI Triad Goods/Services $ 147,936 Leo Gentry Whsl Nursery Goods/Services $ 139,743 Hillman Fastner Goods/Services $ 135,270 Goldstar/L.G. Electronics Goods/Services $ 130,842 Central Garden Supply Goods/Services $ 114,859 California Cascade Goods/Services $ 96,827 Siskiyou Lumber Products Goods/Services $ 95,628 Orepac/Oregon Market Goods/Services $ 95,519 Westblock Goods/Services $ 95,519 Norman Nursery Goods/Services $ 94,863 Merillat Goods/Services $ 91,253 Kraftmaid Cabinetry Inc. Goods/Services $ 88,866 Colorspot Goods/Services $ 84,387 RGIS Inventory Goods/Services $ 84,284 Ideal Paint Goods/Services $ 73,682 Basalite Goods/Services $ 72,271 Raindrip/Whse Goods/Services $ 71,121 Familian NW Goods/Services $ 70,670 Cal-Color Goods/Services $ 67,662 Larsen Supply Goods/Services $ 66,790 SURE SAVE: Plan Says Secret Hawaiian Investor Paying $6MM to Own Chain ---------------------------------------------------------------------- Grocery store chain Sure Save Super Market, Ltd., the Associated Press reports, recently presented a plan of reorganization to the U.S. Bankruptcy Court for the District of Hawaii. According to the plan, an unidentified investor will pay $3 million for the grocery store's assets and promises to pay $3 million to creditors over four years. Store representative Chuck Choi describes the investor as "a wealthy individual on the mainland." Sure Save Super Market, Ltd. filed for bankruptcy protection last June listed debts amounting to $10 million. The grocery chain owes creditors $7 million, $2.4 million to First Hawaiian Bank and $500,000 to taxes. TEXAS HEALTH: Disclosure Statement Hearing Continued to September 26 -------------------------------------------------------------------- The hearing on the Disclosure Statement for Joint Plan of Texas Health Enterprises, Inc. and HEA Management Group, Inc. and the Committee's Disclosure Statement to accompany the plan of reorganization proposed by Texas Health Enterprises, Inc.'s Official Unsecured Creditors' Committee is continued until September 26, 2000 at 1:30 PM. The continuance was granted by the Honorable Donald R. Sharp, US Bankruptcy Judge, Eastern District of Texas, on August 17, 2000. In their joint motion seeking such a continuance, the debtors and their two committees assert that they have been actively engaged in attempting to resolve the various issues among them, and have made significant progress toward integrated consensual plans of reorganization. In attempts to finalize the negotiations, various regulatory issues requiring clarification have been raised by some of the creditor parties that require additional negotiations. The motion of the US Trustee to set a date certain for confirmation is also currently set for September 26, 2000. TIME WARNER: Moody's Places Ratings On Review For Possible Downgrade --------------------------------------------------------------------- Moody's Investors Service today placed the B2 long-term senior unsecured ratings of Time Warner Telecom Inc. on review for a possible downgrade. Other ratings affected are detailed below. This review is prompted by the announcement that the company has reached an agreement to purchase all of the assets of GST Telecommunications Inc., excluding the substantial majority of GST's Hawaii assets, in a transaction valued at $690 million. GST has been operating under Chapter 11 bankruptcy protection since May 2000, and in June received court approval to initiate a bidding process for the auction of substantially all of is assets. Time Warner Telecom was the successful bidder under the auction. The transaction, which is subject to legal and regulatory approval, is expected to close prior to year end. While Time Warner Telecom has demonstrated strong execution of its business plan to date, the GST acquisition, if completed, will likely place additional financial pressures on the company, including those associated with the integration and development of GST's network, systems and customer base. Moody's review will assess the potential funding requirements associated with this acquisition and the integration of the two companies as well as the likely future capital needed to grow the business of the combined entity. The review will also focus on the probable capital structure of Time Warner Telecom post closing, the impact that any additional debt will place on the overall credit strength of the company and the degree of support , if any, that its controlling shareholder, Time Warner Inc. may provide. The ratings placed on review are: * Time Warner Telecom Inc.'s 1) B2 long-term senior unsecured rating 2) B2 issuer rating 3) B1 senior implied rating Time Warner Telecom Inc. is based in Greenwood Village, Colorado. UNITED ARTISTS: Debt-to-Equity Conversion Gives Anschutz 60% Ownership ---------------------------------------------------------------------- Denver billionaire Philp F. Anschutz is close to a deal to take control of United Artists Theater Co. in a transaction expected to include a prearranged chapter 11 filing next month, according to The Wall Street Journal. In April, Anschutz paid roughly $65 million for about 21 percent of a $440 million syndicated loan, making him the biggest single lender to the company. His debt will be converted to equity, giving him more than 60 percent of the company, according to the plan. United Artists is expected to file chapter 11 shortly after the Labor Day holiday but will continue to operate with a debt load intended to be sustainable. (ABI World, 25-Aug-00) VENCOR: Debtors' Fifth Motion to Extend Exclusive Periods -- to Nov. 28 ----------------------------------------------------------------------- With substantial progress in the reorganization, optimism in filing a consensual plan of reorganization shortly, but also the need for additional time to complete the task, there is ample cause under section 1121(d) of the Bankruptcy Code, the Debtors say, for a 43-day extension of the exclusive periods for Vencor to file a plan or plans of reorganization, from August 17, 2000 through September 29, 2000, and for soliciting acceptances of the plan or plans, from October 16, 2000 through November 28, 2000. The Debtors draw the Court's attention to the progress they have made in processing claims, in the transfer of facility operations and in negotiations with major constituencies. While negotiations with their major constituencies have taken longer than predicted at the outset of the cases, such negotiations continue and suggest good prospect that the Debtors will be able to file a consensual plan shortly. The requested extension, the Debtors say, is warranted to allow them to continue with their progress and to resolve many issues that have arisen in connection with these proceedings. Specifically, the Debtors draw the Court's attention to the progress they have made with respect to: (I) Review And Analysis of Claims There are over 8,000 proofs of claim against Vencor. The Debtors tell the Judge they have filed their first omnibus objections, expect to file more objections in the coming months, and believe that the processing of claims will be expedited once these objections have been resolved. The Debtors remind the court that, for reconciling claims efficiently on an ongoing basis, they have filed a motion to establish procedures for the settlement of certain ordinary course litigation. The Debtors say they continue to monitor the Lenox bankruptcy and other health care bankruptcies with respect to their own claims and properties to preserve the value of their estates. (II) Transfer of Facility Operations To facilitate a smooth transfer of the Debtors' facility operations at the expiry of the lease terms, the Debtors have filed several motions to seek approval of transfer agreements. (III) Continued Negotiation with Major Constituencies The Debtors have entered into the Corporate Integrity Agreement with the Office of Inspector General of the United States Department of Health and Human Services that will govern the Debtors' activities after emergence from the reorganization process and they intend to submit this to the Court for approval as part of the plan of reorganization. Consistent with the requested extensions of the Exclusive Periods, the Debtors recently have entered into discussions with their post-petition lenders to extend the deadline for the Debtors to file a joint plan of reorganization satisfactory in form and substance to the Required Lenders as defined in the DIP Credit Agreement, and to extend the lenders' commitment to the DIP Facility to provide additional financing in the event a consensual plan of reorganization could not be reached. The Debtors conclude that they remain in the best position to coordinate and facilitate the filing of a plan of reorganization in the most expeditious manner. Accordingly, an extension of Debtors' Exclusive Periods will best allow for a speedy and efficient resolution of the Vencor chapter 11 cases. The Court has entered a Bridge Order for the extension pending a hearing on September 6, 2000. (Vencor Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) ********* Bond pricing, appearing in each Monday's edition of the TCR, is provided by DLS Capital Partners in Dallas, Texas. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency-related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. 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