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/raid1/www/Hosts/bankrupt/TCR_Public/010410.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, April 10, 2001, Vol. 5, No. 70 Headlines ARMSTRONG WORLD: Hires Garvey Schubert As Tax Counsel AVTEAM, INC.: Shares Knocked Off Nasdaq List BLUE ZONE: Negative Cash Flow, Losses Raise Going Concern Doubts BORDEN CHEMICALS: Fleet Capital Extends $100 Million DIP Loan BRIDGE INFORMATION: Syndicates Financial Data Via ScreamingMedia CHANDLER USA: Standard & Poor's Lowers Credit Ratings To BB COMDISCO INC.: Fitch Slashes Senior Debt Rating To B CONVERGENT COMM.: Nasdaq To Delist Shares On April 17 CROWN CRAFTS: Lenders Agree To Extend Maturity Date Of Loans DUALSTAR: Intends to Appeal Nasdaq's Move To Delist Shares EQUITEX INC.: Asks For More Time To File Annual Report FINOVA: Agrees With ABN AMRO To Limit Finova Capital Transfers FRESH AMERICA: Seeks Waiver Of Senior Credit Facility Defaults FRIEDE GOLDMAN: Secures $100 Million Loan From Pegasus Partners FUTUREONE INC.: Files Chapter 11 Petition in Colorado GENESIS HEALTH: Court Okays UBS Warburg's Employment GLOBAL HEALTH: Inks Asset Sale Agreement With NBTY, Inc. HARNISCHFEGER: U.S. Lodges Settlement Agreement re EPA Claim ICG COMMUNICATIONS: Rejects Equipment Leases With Comdisco Inc. IDOLLS CORP.: Shuts Down & Advertises Going-Out-Of-Business Sale IMPERIAL SUGAR: Equity Committee Retains Bifferato As Counsel INTEGRATED HEALTH: Rejecting LTC/Symphony Lease With McDonald LERNOUT & HAUSPIE: KMPG Files Lawsuit Alleging Audit Obstruction LOEWEN: Teamsters Objects To Participating in ADR Procedures LONDON FOG: Court Confirms Chapter 11 Plan of Reorganization MICROAGE: Plans to Sell Pinacor CTI Through Competitive Bidding ORBITAL SCIENCES: Delays Filing of Form 10-K With SEC PACIFIC GAS: Honoring Wage And Salary Obligations PACIFIC GAS: Insurer MBIA Closely Monitoring Bankruptcy Case PACIFIC GAS: Fitch's Ratings On Securities Dive To D Levels PG&E NATIONAL: S&P Affirms BBB Corporate Credit Rating POLAROID CORP.: Fitch Cuts Senior Unsecured Debt Rating To B- SERVICE MERCHANDISE: Court Okays Procedures re Avoidance Actions SOURCE MEDIA: Posts 19.8 Million Net Loss For the Year 2000 STAMPEDE WORLDWIDE: Files For Chapter 11 Bankruptcy Protection SUMMIT CBO: Moody's Places Four Classes Of Notes On Watch SUNTERRA: Court Gives Nod On $160MM Loan From Greenwich Capital TATHAM OFFSHORE: PwC Resigns As Independent Accountants TRANS WORLD: Reaches Key Agreement On Contract Waiver With Union URSUS TELECOM: Files for Chapter 11 Bankruptcy Protection WHEELING-PITTSBURGH: Cuts 50 Jobs To Reduce Costs WORLD ACCESS: Noteholders Agree to Stay Involuntary Petition ********* ARMSTRONG WORLD: Hires Garvey Schubert As Tax Counsel ----------------------------------------------------- Walter Gangl, an authorized officer of Armstrong World Industries, on behalf of the Debtors, asks Judge Joseph Farnan to authorize the employment of Garvey, Schubert & Barer as their special state and local property tax litigation counsel. The Debtors have employed Garvey Schubert as their counsel to handle state and local property tax litigation matters since May 14, 1997. As special property tax litigation counsel, Garvey Schubert has provided the Debtors with these services: (a) General representation in the limited area of state and local property tax appeal matters; (b) Proceedings to obtain reductions in the assessment of the real and personal property of the Debtors resulting in substantial tax refunds or tax savings to the Debtors; (c) Appeals of property tax assessments of real and personal property of the Debtors in the states of Oregon, Florida, and Mississippi; and (d) Advice to the Debtors regarding the annual reporting of real and personal property tax assessments before local administrative boards, state tribunals, and in state courts. Garvey Schubert expects to continue to provide these types of services during the pendency of these cases. The Debtors urged Judge Farnan to approve the continued employment of Garvey Schubert as their legal counsel to perform tax legal services that are required to effectively and efficiently operate their business while their Chapter 11 cases are pending. The Debtors believe that the continued employment of Garvey Schubert is in the best interest of the Debtors, their creditors, and all parties-in-interest. During the four years in which Garvey Schubert has provided legal services to the Debtors, Garvey Schubert has become thoroughly familiar with the Debtors' properties, plant operations, and state and local property tax issues. One year prior to the Petition Date, Garvey Schubert and the Debtors entered into a Contingent Fee Arrangement. Due to this contingent agreement, the Debtors have not paid Garvey Schubert any monies in the year prior to the Petition Date. Before the Contingent Fee Arrangement was in effect between the parties, the Debtors paid Garvey Schubert the aggregate sum of approximately $61,330.00 in the ordinary course of their business for its legal services. In addition, the Debtors have accumulated approximately $26,903.31 in unpaid pre-petition fees and Garvey Schubert has devoted approximately $6,000.00 in time to matters which are being handled on a contingent fee basis. If Garvey Schubert's employment is approved by the Court, the firm's compensation for legal and consulting services will be based upon fixed contingent fee arrangements and will be computed at the contingent fee rates customarily charged by Garvey Schubert for such services. Due to the nature of a contingent fee arrangement, Garvey Schubert has not presented the Debtors with billings for services that Garvey Schubert has provided to the Debtors under negotiated, fixed, contingent fee arrangements, described only as customarily charged by Garvey Schubert, prior to the commencement of these cases. Garvey Schubert expects to continue to provide those same services on a contingent fee basis during the pendency of these cases. Considering the nature of those legal services and the manner in which Garvey Schubert has historically billed the Debtors on those assignments, the Debtors and Garvey Schubert asked Judge Farnan to excuse Garvey Schubert from the interim compensation procedures established for professionals in these cases. The firm told Judge Farnan that this request is justified under the Bankruptcy Code, which allows a debtor in possession to employ a professional on a contingent fee basis. David Canary, a partner in the firm Garvey, Schubert & Barer, assured Judge Farnan that the firm is a disinterested person within the meaning of the Code. Additionally, Canary said that the firm has no connection with persons or entities that represented, is representing or may in the future represent claimants or parties-in-interest in these cases, except that: (i) As part of its practice, Garvey Schubert appears in transactions and proceedings involving many different attorneys, accountants, and investment bankers, in which it has represented, is representing or may in the future represent claimants and parties-in-interest in such cases. Canary assured the Court that Garvey Schubert has not and will not represent any such entities in relation to the Debtors and these cases. The firm does not have any relationship with such entities which would be adverse to the Debtors or their estates. (ii) As to matters totally unrelated to the Debtors, Garvey Schubert has represented, currently represents, and may in the future represent these entities which have interests in Armstrong's estates: DuPont Company Eastman Kodak Company Georgia-Pacific Corporation Garvey Schubert assures the Court that the firm has not represented and will not represent any of the foregoing or any of their respective affiliates in relation to the Debtors or these cases. (Armstrong Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) AVTEAM, INC.: Shares Knocked Off Nasdaq List -------------------------------------------- AVTEAM, Inc. (Nasdaq: AVTMQ), a global supplier of aftermarket aircraft engines, engine parts, airframe components, and engine repair and overhaul services to the aviation industry, announced that it was delisted from the NASDAQ Stock Market on April 5, 2001. In a recent correspondence, NASDAQ cited the fact that the Company could not currently evidence compliance with all requirements for continued listing on the Nasdaq National Market and expressed concern that the Company would not be able to sustain compliance with those requirements over the long term. Subject to the approval of the bankruptcy court, the Company intends to pursue a strategic partner for AVTEAM Engine Repair Corp. and in the interim operates as a debtor-in-possession. BLUE ZONE: Negative Cash Flow, Losses Raise Going Concern Doubts ---------------------------------------------------------------- Blue Zone has used in-depth knowledge acquired from working closely with broadcasting companies to develop proprietary technology for use in media applications. The Company's experience with live news delivery, including the large variety of filming, graphics and editing equipment for audio and video production, combined with understanding of the specific communication standards that exist inside a newsroom between equipment and employees, has provided Blue Zone with the opportunity to develop software to service the unique needs of the broadcast community. The business has historically been focused on providing Website design and content services and interactive consulting to a range of Canadian-based media and broadcasting companies. This focus is now expanding to include convergence technology targeted at the North American broadcast and media companies. The Company has incurred losses in each of the last three fiscal years, and as of December 31, 2000, had an accumulated deficit of $5,739,000. The net loss was $3,884,000 in fiscal 2000 and $1,422,000 in fiscal 1999. Blue Zone continues to incur losses as a result of the focus on executing the Company's business plan, which is built around marketing of the MediaBZ product line to a broad range of television and radio media companies throughout North America. Blue Zone's business plan may take several years to be successful, and success is not assured. Over the last two years, general and administrative expenses and research and development expense have increased in accordance with the plan to support this effort, which included leasing new office space in 1999 and increasing employee numbers to 46 during the year ended December 31, 2000. The Company's capital budget has also increased to provide the infrastructure requirements for success of the business plan. In the short term, the Company will continue to work towards controlling discretionary costs, while still supporting growth of the business. The Company intends to establish a presence in Los Angeles during the first quarter of fiscal 2001 to provide better access to the important US market for Blue Zone's sales. There can be no assurances that these efforts will be successful. Product and service revenue increased to $1,169,000 for the year ended December 31, 2000, an increase of 32% over revenue of $883,000 for the year ended December 31, 1999, however, as noted above, the Company incurred net losses of $3,843,767 in fiscal 2000, $1,422,331 in fiscal 1999, and in fiscal 1998 Company net losses were $28,457. The Company does not have an adequate source of reliable, long- term revenue to fund operations. As a result, Blue Zone is reliant on outside sources of capital funding. There can be no assurances that the Company will in the future achieve a consistent and reliable revenue stream adequate to support continued operations. In addition, there are no assurances that the Company will be able to secure adequate sources of new capital funding, whether it be in the form of share capital, debt, or other financing sources. The Company currently has one customer that accounts for approximately 89% of the revenue recorded for the year ended December 31, 2000. Blue Zone had cash and cash equivalents of $1,845,000 and working capital of $1,694,000 at December 31, 2000. This compares to cash and cash equivalents of $4,098,000 and working capital of $3,764,000 at December 31, 1999. The balances were higher at the 1999 year end because of proceeds from a $5,250,000 private placement in October 1999, compared to a private placement of $2,500,000 in December 2000. This, combined with a higher cash utilization rate in 2000, contributed to an erosion of working capital. Surplus cash is invested in high grade corporate securities and guaranteed investment certificates with terms to maturity of less than three months. KPMG LLP, auditors for Blue Zone, have issued a "going concern" statement in their Auditor's Report as they cite the losses suffered and the negative cash flows from operations. These factors, according to the auditors, "raise substantial doubt about its (the Company's) ability to continue as a going concern." BORDEN CHEMICALS: Fleet Capital Extends $100 Million DIP Loan ------------------------------------------------------------- Borden Chemicals and Plastics Operating Limited Partnership (BCP) received approval from the United States Bankruptcy Court for the District of Delaware of various first-day motions presented by BCP with its Chapter 11 filing April 3, 2001, allowing BCP to continue to pay salaries, wages, and other benefits to employees and to honor prepetition obligations to employees. First-day orders were requested of the court so that BCP, a producer of polyvinyl chloride (PVC) resins, could continue operations with as little disruption and loss of productivity as possible and maintain the confidence and support of customers, employees, suppliers and service providers. The company also sought to obtain postpetition financing and establish procedures for an orderly administration of the chapter 11 proceedings. The court has entered an interim order granting the company's request of a $100 million debtor-in-possession (DIP) credit facility, which will provide up to approximately $20 million of new availability, to be provided by a group of lenders led by Fleet Capital Corporation. Subject to certain terms and conditions, BCP anticipates that the DIP financing would be used for employee compensation, materials and services from vendors, ongoing operations and other working-capital needs. The court has scheduled a hearing on April 18, 2001, for final approval of the request. "With interim financing in place, vendors, customers and employees should feel confident about doing business with BCP. We remain a focused PVC player in a market that we believe will recover and have long-term growth prospects," said Mark J. Schneider, president and chief executive officer, BCP Management, Inc. (BCPM), the general partner of BCP. BCP and its subsidiary, BCP Finance Corporation, filed voluntary petitions for protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on April 3, 2001. BCPM and Borden Chemicals and Plastics Limited Partnership (BCPLP), the limited partner of BCP, were not included in the April 3 Chapter 11 filings. (Two other separate and distinct entities, Borden, Inc., and its subsidiary, Borden Chemical, Inc., are not related to the filings.) BCP produces PVC resins at its facilities in Geismar, La., also the site of its headquarters. BCP has additional PVC operations in Addis, La., and Illiopolis, Ill. BRIDGE INFORMATION: Syndicates Financial Data Via ScreamingMedia ---------------------------------------------------------------- Bridge Information Systems, Inc. (BRIDGE(R)), one of the world's leading providers of financial information services, had an agreement with ScreamingMedia, the world's leading provider of content solutions, to syndicate its real-time 24-hour financial news and proprietary content. ScreamingMedia's network will have access to BridgeNews content including its NOW modules, a recently launched family of news solutions developed by BridgeNews. "We believe BridgeNews' reliable content will immediately find a loyal audience among ScreamingMedia's best-of-breed clients ranging from Fortune 500 companies to portals, websites and wireless networks," said Angus Robertson, Executive Vice President, BridgeNews. "ScreamingMedia's clients will have the added benefit of selecting BridgeNews NOW modules, integrating BridgeNews seamlessly into their web and wireless platforms." "We are pleased to add BRIDGE to the over 3,000 publications in our network," said Kevin Clark, CEO of ScreamingMedia. "By partnering with BridgeNews, our clients will have access to a premier source of breaking news, analysis, statistics, forecasts, calendars and summaries." BridgeNews NOW draws on one of the hallmarks of BridgeNews -- constantly updated front pages used by market professionals to gain instant insight into the latest in economic, political, market and company events. The NOW modules are in the form of self-contained real-time newspapers that present an experience similar to scanning a specific section of the newspaper. The modules offer flexible presentation including prioritized news headlines with abstracts offering hyperlinks to full stories; a prioritized listing of headlines with links to full stories; or a chronological order display of the latest items in each NOW module. BridgeNews, the news gathering arm of BRIDGE, generates over 8,000 news items each day with its editorial staff of 600 in more than 100 locations around the world. BridgeNews delivers real-time, 24-hour coverage of the world's markets including breaking news, analysis, statistics, forecasts, calendars and summaries. About ScreamingMedia ScreamingMedia Inc. (Nasdaq: SCRM) is the world's leading provider of content solutions. Powered by its state-of-the-art technology platform, ScreamingMedia offers its clients robust technology and content services to meet all their business needs. For enterprises and media companies with their own content resources, ScreamingMedia Technology Services licenses the company's core infrastructure platform and tools, enabling B2B customers to power the aggregation, syndication, processing and integration of content across their own web and wireless networks. Through its Content Services, ScreamingMedia aggregates licensed content -- news, features, photos, video, stock quotes, audio, weather reports and more -- from more than 3,000 publications, then filters, delivers and precisely integrates this content instantaneously into the web and wireless platforms of its clients, including Fortune 500 corporations, portals, vortals, niche websites and wireless networks. Serving the United States, Europe and Latin America, ScreamingMedia is headquartered in New York City and has offices in San Francisco, Miami, London, Paris and Syndey, Australia through an exclusive agreement with BecomeMedia. For more information, visit ScreamingMedia's website at http://www.screamingmedia.com.(Bridge Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) CHANDLER USA: Standard & Poor's Lowers Credit Ratings To BB ----------------------------------------------------------- Standard & Poor's lowered its issuer credit and senior unsecured debt ratings on Chandler USA Inc. to double-'B' from triple-'B'. At the same time, Standard & Poor's lowered its counterparty credit and financial strength ratings on National American Insurance Co. (NAICO), which is Chandler USA's subsidiary, to triple-'B' from single-'A'. These rating actions are in response to the group's increased debt and operating leverage; reduced financial flexibility, which stems from the recent privatization that put control of the group into the hands of the CEO (80% share) and COO (20% share); and uncertainties involving future business strategies, with a reduction in new business production and agents with plans to cut growth outside the group's core states of Oklahoma and Texas. In addition, Standard & Poor's believes the group's capital will be strained to service debt obligations. Offsetting these weaknesses, the group has a good business position in the traditional small commercial and political subdivision property/casualty market in Oklahoma and, to a lesser extent, in Texas. The company continuously re-underwrites its book of business, pruning unprofitable accounts and classes of business. Within the company's chosen markets in Oklahoma and Texas, NAICO has a good, defensible business position. On this underlying core block of business, NAICO has been successful in deriving good profitability and leveraging relationships with its key reinsurers. Earnings volatility results from the company's opportunistic philosophy and the large dependence on reinsurance to smooth earnings results. Major Rating Factors: -- Increased leverage. Debt and operating leverage increased to accomplish the recent privatization. Increased operating leverage caused the company to be more selective on its new business production plans in states outside the company's home state of Oklahoma (47% of direct premiums written in 2000) and Texas (42%). Overall debt to total capital increased to about 36% at the close of the deal that privatized the company in March 2001, and debt to equity will be about 56%. -- Deteriorating capital and financial flexibility. Volatility in earnings from a series of one-time events in 1999 and 2000 has reduced capital strength--as measured by Standard & Poor's capital adequacy ratio--to about 128% (low single-'A'- minus range) in 2001 from 182.2% (triple-'A' range) in 1998. The company also paid dividends from paid-in surplus of $2.5 million in early 2000 and $7 million in March 2001. Debt obligations will continue to strain the company's capitalization in the near future. -- Earnings volatility. Constant innovation is necessary for the successful execution of an opportunistic operating strategy, but Standard & Poor's recognizes that new programs or products might not always yield desired results and could cause earnings volatility. Settlement of litigation and the rescission of a reinsurance treaty had significant effects on results in 1999 and 2000. Standard & Poor's also recognizes that part of the opportunistic approach is the variance in gross and net premiums with changing and selective use of reinsurance, which is becoming more expensive in 2001. COMDISCO INC.: Fitch Slashes Senior Debt Rating To B ---------------------------------------------------- Fitch lowered Comdisco Inc.'s senior debt rating to 'B' and commercial paper rating to 'B'. The ratings remain on Rating Watch Negative. Approximately $4.3 billion of securities are affected by this action. Bonds rated in the 'B' category indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained favorable business and economic environment. The rating actions are based on Fitch's increasing concern that cash flows from Comdisco's businesses will not be sufficient to meet contractual debt maturities, the majority of which come due during the second half of fiscal year 2001, ending Sept. 30, 2001. Fitch believes that cash flows realized in Comdisco's fiscal year 2001 will be somewhat below the company's projected total of $3.1 billion due to weakness in the venture loan and lease business. In this sector, Comdisco provided equipment loans and leases to companies sponsored by venture capitalists. The rapid erosion in the Nasdaq market in 2001 has resulted in a growing reluctance by venture capitalists to support troubled investments. Consequently, without the support of the venture capitalists and the existence of a buoyant Nasdaq, the risk/return profile for this business has become significantly unfavorable. To help meet remaining contractual debt maturities of approximately $2.3 billion in fiscal 2001, Comdisco will actively seek to sell discrete business units or the entire company. On April 3, 2001, Comdisco announced that it had hired Goldman Sachs & Co. and McKinsey & Co. to advise management on strategic alternatives. Given the lack of market interest in commercial finance company assets since 1999, the ultimate success of this initiative is not certain. In addition to a decline in cash flow from the Ventures business, Fitch believes that Comdisco will revalue and write down the carrying value of certain assets in this portfolio. If this occurs, it will have an adverse effect on Comdisco's earnings power and a detrimental impact on adjusted equity, as defined in the company's bank credit facilities. Continued weak operating performance could result in Comdisco tripping its minimum net worth covenant, maximum debt-to-net worth covenant, or both and eliminate any financial flexibility available to the company. On April 3, 2001, Comdisco announced that it had drawn down completely on its $880 million of committed bank facilities to refinance outstanding commercial paper and exit this market. Of this amount, $525 million expires in December 2001 with no term out provision. To extend these facilities beyond this date, Comdisco may be required to provide the banks security. Future rating actions will be predicated, in part, by Comdisco's success in improving its cash flow to meet debt maturities, stabilization of the Ventures business, and continued compliance with its bank covenants. Based in Rosemont, Ill., Comdisco Inc. is a worldwide company engaged in information technology leasing, technology services and venture loans and leases. CONVERGENT COMM.: Nasdaq To Delist Shares On April 17 ----------------------------------------------------- Convergent Communications, Inc. announced that a notification was received Friday from the Nasdaq SmallCap to delist the Company's common stock (CONV) effective April 17, 2001. The action has been taken pursuant to Marketplace Rule 4310(c)(2)(B)(ii), whereby the Company's market capitalization has been less than $35 million for 30 calendar days. CROWN CRAFTS: Lenders Agree To Extend Maturity Date Of Loans ------------------------------------------------------------ Crown Crafts, Inc. (NYSE: CRW) has executed definitive agreements with its lenders to amend the covenants and extend the expiration date of its loans from April 3, 2001, to June 30, 2001. The company and its lenders are working on a longer term restructuring which is expected to be completed by June 30, 2001. Also, following the announcement that the NYSE will cease trading the Company's stock effective April 10, the Company has arranged for Wachovia Securities to make a market in the stock and will be applying for a Nasdaq OTC listing. Crown Crafts, Inc., headquartered in Atlanta, Georgia, designs, manufactures and markets home textile furnishings and accessories. The Company's two major product groups are bedroom products and infant & juvenile products. DUALSTAR: Intends to Appeal Nasdaq's Move To Delist Shares ---------------------------------------------------------- DualStar Technologies Corporation said it received a Nasdaq Staff Determination dated April 4, 2001 notifying the Company that it has not met the minimum bid price requirements for continued listing set forth in Marketplace Rules 4450(a)(5) and 4310(c)(8)(B). The notice of non-compliance subjects DualStar to delisting from The Nasdaq National Market, effective April 12, 2001. The Company, however, has requested a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination. During such review process, the Company's securities will continue to be listed on The Nasdaq National Market. There can be no assurance the Panel will grant the Company's request for continued listing. About DualStar DualStar Technologies Corp., through its subsidiaries, designs and installs infrastructure systems and provides services that control and enhance the environment in buildings. DualStar construction subsidiaries, including Centrifugal/Mechanical Associates, Inc., High-Rise Electric, Inc. and Integrated Controls Enterprises, Inc., provide services governing heating, ventilation and air conditioning (HVAC), electrical contracting, building control and energy management (BMS), and security and safety. DualStar's communications subsidiaries, OnTera, Inc. and ParaComm, Inc. provide various communications services including enhanced local, regional and long distance telephony as a Competitive Local Exchange Carrier (CLEC), direct broadcast satellite (DBS) television as a System Operator (MSO and SO), and high-speed Internet access as an Internet Service Provider (ISP). For more information, visit the Company's web site at http://www.dualstar.com.DualStar common stock is traded on The Nasdaq National Market under the symbol DSTR. EQUITEX INC.: Asks For More Time To File Annual Report ------------------------------------------------------ Equitex, Inc., a Delaware corporation, has requested an extension of time to April 16, 2001 for the filing of its Annual Report on Form 10-K with the Securities & Exchange Commission. The Company says this additional time is necessary for it to complete preparation of the audited financial statements for the year ended December 31, 2000, most notably the consolidation of its newly acquired subsidiary Meridian Services, Inc. Equitex' results of operations experienced a significant change for the years ended December 31, 2000 as compared to December 31, 1999, due primarily to the divestiture of a subsidiary during the year ended December 31, 2000. As a result, the Company expects its net loss to be approximately $5 million greater for the year 2000 than it was for 1999. FINOVA: Agrees With ABN AMRO To Limit Finova Capital Transfers -------------------------------------------------------------- The FINOVA Group, Inc. subsidiaries, FINOVA Capital PLC and FINOVA Capital Corp., owe ABN AMRO Bank N.V. not less than $87,000,000, plus certain costs, fees and expenses, borrowed from ABN AMRO on July 7, 1997. Pursuant to a Stipulation, presented to Judge Walsh for his stamp of approval, FINOVA and ABN AMRO agreed that FINOVA PLC will not: (A) make any loans or other financial accommodations on behalf of any of the Debtors or any non-debtor affiliates; (B) transfer any of PLC's assets to or for the benefit of any other Debtor or non-debtor affiliates; and (C) pay any claim or obligation held or asserted for any prepetition obligations under an agreement dated March 19, 1992, with Greyhound Financial Corporation, Greyhound Bank PLC and Greyhound Financial Services Limited; unless it obtains permission from ABM AMRO to do so. In exchange, ABN AMRO will remove any freeze placed upon FINOVA PLC's bank accounts and agrees that it will not place any subsequent freeze on or otherwise seek to prohibit any transfers from FINOVA PLC's bank accounts. Margot B. Schonholtz, Esq., Stephen J. Quine, Esq., and David A. Sullivan, Esq., at Clifford Chance Rogers & Wells LLP, in New York, and Laurie Selber Silverstein, Esq., at Potter, Anderson & Coroon, in Wilmington represent ABN AMRO in this matter. A hearing before Judge Walsh with respect to the stipulation is scheduled for April 12, 2000 at 11:30 a.m. (Finova Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392- 0900) FRESH AMERICA: Seeks Waiver Of Senior Credit Facility Defaults -------------------------------------------------------------- Fresh America Corp. (Nasdaq:FRES), a major North American fresh produce distribution company reported that it is continuing efforts to refinance or extend its senior secured revolving credit facility. The credit facility was originally scheduled to expire on February 1, 2001; however, the Company has received extensions through April 16, 2001 to provide additional time for negotiations. The outstanding borrowings under the facility have been reduced from $21.2 million at December 31, 1999 to a current balance of $8.6 million. There can be no assurance that the Company will be able to extend its senior credit facility beyond April 16, 2001 or receive consents and waivers required from other debtors for such extension to become effective. The Company is also continuing its efforts to arrange replacement financing or other sources of funds should such extension become effective. The Company has also received notice from The Nasdaq Market, Inc. that Fresh America's common stock had failed to maintain a minimum market value of public float of $5 million over the last 30 consecutive trading days as required by Nasdaq rules. Fresh America will be provided until April 25, 2001 to regain compliance with the rule. If Fresh America is unable to demonstrate compliance with the Nasdaq rule by April 25, 2001, its common stock will be subject to delisting from the Nasdaq National Market. Fresh America is considering what action to take to respond to the possible delisting by Nasdaq. Additionally, as of December 29, 2000, the Company fails to meet the Nasdaq National Market's minimum requirement for net tangible assets of $4 million. Fresh America is an integrated food distribution management company that operates ten distribution facilities located in Dallas and Houston, Texas; Atlanta, Ga.; Pensacola, Fla.; Scranton and Wilkes-Barre, Pa.; Richmond, Ind.; Chicago; Phoenix, Ariz.; and Los Angeles. FRIEDE GOLDMAN: Secures $100 Million Loan From Pegasus Partners --------------------------------------------------------------- Friede Goldman Halter Inc. announced that it has secured a loan with securities firm Pegasus Partners for $100 million, according to the Associated Press. Pegasus agreed to loan the Gulfport, Miss.-based company the money in the form of a secured note with a three-year maturity period. Friede Goldman, which builds rigs and ships at facilities along the Gulf Coast, has lost more than $100 million over the last few years because of delays and excess costs associated with four drilling rigs in two separate contracts. The company has announced more than $680 million in new projects since the fall. In the company's annual report filed on Monday last week, Friede Goldman said that it must renegotiate terms of loans and raise millions of dollars in the coming months or face the prospect of seeking bankruptcy protection. (ABI World, April 6, 2001) FUTUREONE INC.: Files Chapter 11 Petition in Colorado ----------------------------------------------------- FutureOne, Inc. (OTC Bulletin Board: FUTO.OB) -- http://www.futureone.com-- filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code. The filing was made in the U.S. Bankruptcy Court in the District of Colorado. Donald D. Cannella, recently appointed CEO of FutureOne, Inc., stated that its wholly owned subsidiary, OPEC CORP., is not seeking protection from its creditors under Chapter 11 and will continue to operate unaffected by the bankruptcy filing. OPEC CORP., the only remaining business segment of FutureOne, has been servicing FutureOne debt for the past six months. Donald D. Cannella, President of FutureOne, stated, "Restructuring the debt resulting from failed business ventures is another key element in the reorganization of FutureOne." FutureOne intends to emerge from bankruptcy as a focused, profitable and competitive telecommunication infrastructure services provider. About the Company: The Company has recently completed a restructuring, which includes the divestiture of all of its unprofitable operations and consolidation and down sizing of its corporate overhead to allow it to focus on providing telecommunications infrastructure installation, and related services, through its wholly owned subsidiary OPEC CORP., www.opeccorp.com. OPEC provides a comprehensive range of telecommunications services, which include the design, engineering, placement and maintenance of aerial and underground fiber-optic, coaxial and copper cable systems for major communications companies, utility providers, and real estate developers in the western United States. OPEC also provides auxiliary services such as, copper and fiber splicing, horizontal drilling and boring, network repair and maintenance, commercial and residential installations, testing, line conditioning and construction management services. GENESIS HEALTH: Court Okays UBS Warburg's Employment ---------------------------------------------------- The Court approved the application authorizing the retention and employment of UBS Warburg LLC as Investment Banker and Financial Advisor for Genesis Health Ventures, Inc. & The Multicare Companies, Inc., nunc pro tunc to July 12, 2000. (Genesis/Multicare Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL HEALTH: Inks Asset Sale Agreement With NBTY, Inc. -------------------------------------------------------- NBTY, Inc. (Nasdaq: NBTY), (www.NBTY.com), a leading manufacturer and marketer of vitamins and nutritional supplements said it has entered into a contract to purchase substantially all of the assets of Global Health Sciences, Inc. and certain of its operating subsidiaries. Global and the subsidiaries, which manufacture nutritional supplements in California, filed voluntary petitions under Chapter 11 of the Bankruptcy Code. The price, which was not disclosed, is subject to final adjustment and approval of the Bankruptcy Court. About NBTY NBTY is a leading vertically integrated U.S. manufacturer and retailer of a broad line of high-quality, value-priced nutritional supplements in the United States and throughout the world. The Company markets more than 1,000 products under several brands, including Nature's Bounty(R), Vitamin World(R), Puritan's Pride(R), Holland & Barrett(R), Nutrition Headquarters(R), American Health(R), Nutrition Warehouse(R) and Dynamic Essentials(R). HARNISCHFEGER: U.S. Lodges Settlement Agreement re EPA Claim ------------------------------------------------------------ The United States is lodging the Settlement Agreement executed by the United States and Harnischfeger Industries, Inc. with respect to a Proof of Claim against the Beloit Corporation filed by the United States, on behalf of the Environmental Protection Agency against the Beloit Corporation, asserting a general unsecured claim for unreimbursed environmental response costs incurred by the United States at the O'Brien Machinery Site, located in Downingtown, Chester County, Pennsylvania, and for response costs to be incurred in the future by the United States at the Site, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. Sections 9601, et seq. The Claim was previously objected to by the Debtor in its Seventy-seventh Omnibus Objection before the parties reached the settlement agreement. Pursuant to Department of Justice policy, 28 C.F.R. Section 50.7, and Paragraph 11 of the Settlement Agreement, at this time the United States is lodging the Settlement Agreement. A copy of this Settlement Agreement is being lodged, subject to notice of the lodging being published in the Federal Register for a thirty-day public comment period. Upon expiration of the public comment period and review of any comments received, the United States will then move the Bankruptcy Court to approve and enter the Settlement Agreement or to take some other course of action. The Environmental Enforcement Section of the U.S. Department of Justice makes it clear that no action is required by the Bankruptcy Court until the public comment period expires and the United States files an appropriate motion. The Settlement Agreement Among other things, the parties agreed, subject to Court approval, that: (1) The EPA Response Costs Claim will be allowed as a general unsecured claim against Beloit in the amount of $280,000, and will be paid as a general unsecured claim upon distribution to holders of general unsecured claims without discrimination in accordance with the terms of the Amended Joint Plan. The United States will be deemed to have withdrawn the EPA Response Costs Claim for any amount in excess of $280,000. (2) If Beloit receives reimbursement through any insurance coverage related to EPA's claims as addressed in this Agreement, (a) Beloit will provide notice to EPA within 10 days of receipt of such reimbursement; (b) Beloit will pay EPA from the net proceeds of such insurance reimbursement any difference between the allowed claim amount as described in (1) above and the actual amount distributed to EPA under the plan of reorganization approved by the Bankruptcy Court. (3) In consideration of the payments or distributions that will be made by Beloit under the terms of this Settlement Agreement, the United States covenants not to bring a civil action or take administrative action against Beloit pursuant to Sections 106 and 107 of CERCLA relating to the Site, provided that, -- this covenant not to sue is conditioned upon the complete and satisfactory performance by Beloit of its obligations under this Settlement Agreement; -- this covenant not to sue extends only to Beloit and does not extend to any other person; -- the covenant not to sue does not pertain to any matters other than those expressly specified. -- the United States reserves, and this Settlement Agreement is without prejudice to, all rights against Beloit with respect to all other matters, and specifically with respect to: * liability for damages for injury to, destruction of, or loss of natural resources; * liability for response costs that have been or may be incurred by federal agencies which are trustees for natural resources; * claims based on a failure by Beloit to meet a requirement of this Settlement Agreement; and * claims for any site other than the O'Brien Machinery Site. -- Beloit reserves the right to assert that any discharge granted under 11 U.S.C. Section 1141 applies to the fullest extent of the law. (4) With regard to claims for contribution against Beloit for matters addressed in this Settlement Agreement, Beloit is entitled to such protection from contribution actions or claims as is provided by CERCLA Section 113(f)(2), 42 U.S.C. Section 9613(f)(2). -- The "matters addressed" in this Settlement Agreement include all response costs incurred in connection with the Site prior to the date of lodging of this Settlement Agreement. (5) Beloit covenants not to sue and agrees not to assert any claims or causes of action against the United States with respect to the Site, including but not limited to: * any direct or indirect claim for reimbursement from the hazardous Substance Superfund, * any claims for contribution against the United States, its departments, agencies or instrumentalities, and * any claims arising out of response activities at the Site. The parties specify that nothing in this Settlement Agreement shall be construed to constitute preauthorization of a claim within the meaning of Section 111 of CERCLA, 42 U.S.C. Section 9611, or 40 C.F.R. Section 300.700(d). The parties also made it clear that nothing in this Settlement Agreement shall be construed to create any rights in, or grant any cause of action to, any person not a party to this Settlement Agreement. The United States reserves the right to withdraw from, or withhold its consent to, this Settlement Agreement if the public comments received regarding the Settlement Agreement disclose facts or considerations which indicate that the Settlement Agreement is inappropriate, or improper, or inadequate. (Harnischfeger Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 609/392-0900) ICG COMMUNICATIONS: Rejects Equipment Leases With Comdisco Inc. --------------------------------------------------------------- ICG Communications, Inc. sought Judge Peter Walsh's authority to reject three leases of a desktop and laptop computer, and a server, with related monitors and printers. Comdisco, Inc. is a finance company which provides global technology services and management to a range of customers. The Debtors and Comdisco entered into a master equipment lease in 1997, to which there are six separate equipment schedules. Each schedule, by its terms, constitutes a separate lease of equipment. The Debtors sought to reject only the equipment leases for the three computer items, not the master lease or any remaining equipment schedule. The Debtors advise they have not yet made a decision as to whether to assume or reject the master lease or the remaining three equipment schedules, and reserve their rights as to those agreements. The initial term of these leases was 26 months. Unless all equipment is returned to Comdisco by the end of this initial term, the lease is automatically renewed, although the Debtors can terminate upon sixty days' notice. The equipment which was leased from Comdisco, which is still in the Debtors' possession, is mostly composed of computer equipment which has become obsolete, if not entirely useless. Toward the beginning of 2000, the Debtors evaluated whether any of the equipment leased under the master lease was necessary for use in the operation of the Debtors' businesses, and concluded that the equipment in this motion had outlived its usefulness. For several months prior to the Petition Date, the Debtors attempted to work with Comdisco to achieve the expeditious return of all of the leased equipment. It became clear to the Debtors that Comdisco did not desire to take repossession of the equipment, but wanted instead to have the Debtors purchase the equipment from Comdisco off-lease. The Debtors declined to do so, and began to return the equipment in accordance with the terms of the leases. The Debtors in fact sent some of the equipment leased from Comdisco back to the lessor in the months prior to the Petition Date, but halted because Comdisco was not satisfied with the location to which the equipment was being shipped. The remaining equipment was not returned to Comdisco because, the Debtors state, they never received adequate instructions from Comdisco regarding where the equipment should be sent. The Debtors described these leases as unprofitable and unnecessary for their reorganization. The equipment has not been in use since the Petition Date. In fact, the Debtors said, if they had received adequate instructions from Comdisco as to the location to which the equipment could be returned, the Debtors would have been able to return all of it prepetition. The Debtors currently store all remaining equipment at a single site near their headquarters. If the Motion is granted, they will notify Comdisco of the location of the equipment and provide any other information necessary to enable Comdisco to promptly retrieve the equipment from the Debtors, thereby relieving the Debtors of the burden of storing equipment which is of no use to them. Comdisco's Response Appearing through Kenneth E. Noble and Andrew D. Shaffer of the New York firm of Mayer Brown & Platt, and Joanne Wills of the Wilmington firm Klehr, Harrison, Harvey, Branzburg & Ellers, Comdisco told Judge Walsh it does not object to the Debtors' rejection of the equipment leases, but does object to the Motion to the extent that it fails to: (a) Require the Debtors to cooperate with Comdisco in good faith, and in a commercially reasonable manner, to enable Comdisco to promptly locate and retrieve the leased computer and related equipment; and (b) Provide for the immediate payment of administrative rent owed to Comdisco in the amount of $1,240,000. In response to the Debtors' claims of non-cooperation, Comdisco assured Judge Walsh the fault was the Debtors. Rather than complying with the terms of the Master Lease and schedules, ICG failed to give written notice of termination or to properly return the leased equipment. Further, although the Bankruptcy Code obligates debtors to timely perform all of their postpetition obligations under leases arising from a date 60 days from the Petition Date, the Debtors have failed to pay administrative rent, including $248,359.26 which arose after the sixtieth day. Further, Comdisco said the Debtors have failed to ensure that they will cooperate with Comdisco in good faith to promptly locate and retrieve the leased computer and related equipment, or to provide evidence to Comdisco of the existence of casualty insurance covering the leased equipment, as required by the Master Lease. Judge Walsh's Ruling Upon consideration of the Debtors' arguments, Judge Walsh authorized rejection of the equipment leases with Comdisco, saying only that nothing in his holding shall constitute an admission by any of the Debtors that, prior to the effective date of the rejection of the agreements, the Debtors had any payment obligations under these leases. (ICG Communications Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) IDOLLS CORP.: Shuts Down & Advertises Going-Out-Of-Business Sale ---------------------------------------------------------------- IDolls Corp., which had hoped to use the Internet to tap into a $2.7 billion a year market for dolls and accessories, reportedly has ceased operations, according to LocalBusiness.com. Although no formal announcement has been made, the Manchester, N.H.-based company's web site has advertised a going-out-of-business sale and says that iDolls is in "its final days of operations." Calls to the company's ordering number and "help" line number went unanswered. (ABI World, April 6, 2001) IMPERIAL SUGAR: Equity Committee Retains Bifferato As Counsel ------------------------------------------------------------- The Committee of Equity Security Holders in Imperial Sugar Company's chapter 11 cases applied to Judge Robinson for authority to retain the law firm of Bifferato, Bifferato & Gentilotti as local counsel. The requested retention is for the rendition as counsel of the following services: (a) Advising the Committee as to its rights, powers and duties; (b) Advising the Committee in connection with proposals and pleadings submitted by the Debtors or others to the Court; (c) Investigating the actions of the Debtors and the assets and liabilities of the estates; (d) Advising the Committee in connection with negotiation and formulation of any reorganization plan; (e) Reviewing all applications and motions filed by parties other than the Committee and to represent the interest of the Committee in and outside of court with respect to all applications and motions; (f) Generally advocating positions that further the interests of the unsecured creditors represented by the Committee; and (g) Performing such other services as are in the interest of the Debtors' unsecured creditors. Lawrence Spieth of Dimensional Fund Advisors, Chairman of the Equity Committee requested that Bifferato be compensated at the firm's normal hourly billing rates prevailing at the time services are rendered and that fees, any necessary and actual expenses incurred by Bifferato in the course of its representation, as well as advances for fees or expenses be allowed, subject to Court approval, as administrative expenses of the Debtors' estates. Ian Connor Bifferato, managing partner of the firm, declared that the firm changes its billing rates from time to time. The current hourly rates in effect for its professionals potentially involved in the Debtors' bankruptcy proceedings are: Name Rate ---- ---- Ian Connor Bifferato $250 Jeffery Gentiloti $250 Vincent A. Bifferato, Jr. $250 James Nutter $180 Megan Harper $180 Amy Kiefer $ 90 Mr. Bifferato assured Judge Robinson that the firm does not represent any entity having an adverse interest in connection with the Debtors' bankruptcy case. He represented that Bifferato is "disinterested" within the meaning of the law and does not hold any interest adverse to the Debtors' estates with respect to the matter on which it is to be employed. Bifferato has on connection with the Debtors, their creditors, any other party in interest, their respective attorneys and accountants, the U.S. Trustee or any person employed in the office of the U.S. Trustee. Mr. Bifferato claimed that, to the best of his knowledge, Bifferato has not in the past year represented any of the Debtors, creditors of Imperial Distributing, Inc., or the affiliates debtors. He acknowledged that, considering the Debtors have hundreds of unsecured creditors and other parties- in-interest whose identities are not currently known to Bifferato, the firm may have and may continue to represent some of those creditors in matters unrelated to these cases. However, Mr. Biggerato guaranteed that investigation continues regarding any other possible connection between Bifferato and other parties-in-interest and that a supplemental disclosure will be filed, if and when any additional material connections are discovered. (Imperial Sugar Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) INTEGRATED HEALTH: Rejecting LTC/Symphony Lease With McDonald ------------------------------------------------------------- Integrated Health Services, Inc. sought the Court's authority to reject a lease of nonresidential real property between the Debtors and McDonald. Cleburg. Wolf. pursuant to Section 365 of the Bankruptcy Code. As reported before, the Debtors operate three principal business segments: (a) skilled nursing and subacute care facilities; (b) contract rehabilitation and other contract services known as Symphony; and (c) home respiratory services through Rotech. The Debtors are the lessees of over 300 nonresidential real property leases relating to the Long-Term Care Business and/or contract business Symphony. The LTC/Symphony Leases cover property located throughout the United States. The subject lease in this motion, between the Debtors and McDonald, is related to one parcel of LTC/Symphony Leased nonresidential real property located at 1700 1500th Avenue, San Leandro, California. According to the Lease, the premises were to be used for "portable x-ray operation" and an office for the business. The original expiration date of the Lease was June 1, 1997. In addition, the Lease contained a five-year renewal option. The Debtors maintain that they exercised the Option prior to the initial expiration of the Lease. Although they do not have written confirmation of such action, the rent increase indicates this, the Debtors relate. In accordance with the exercising of the Option, the new expiration date of the Lease is May 31, 2002. The Debtors believe that the Lease should be rejected because it is of no value to the Debtors, constitutes a burden upon their estates and is unnecessary for the Debtors' continued operations. Robert Stephenson, the Debtors' Senior Vice-President, Treasury lends his support in his Affidavit. Mr. Stephenson represents that the Debtors thoroughly reviewed the Lease and have determined that it is above-market and does not provide them with any benefit. Efforts in finding a party to assume the Lease have produced nothing. Neither have efforts in renegotiating the Lease with McDonald. Moreover, and perhaps most important, Mr. Stephenson said, the Debtors have obtained a deal for a new lease which is similar to the Premises but which will cost the Debtors about $1,500 less per month, which amounts to a savings of $18,000 per year. Mr. Stephenson said he believes that the rejection of the Lease is a prudent and proper exercise of the Debtors' business judgment and is in the best interests of their estates and creditors. (Integrated Health Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) LERNOUT & HAUSPIE: KMPG Files Lawsuit Alleging Audit Obstruction ---------------------------------------------------------------- Accounting firm KPMG is suing some of Lernout & Hauspie's (L&H) staff for allegedly obstructing its audit of Belgium's troubled speech technology developer, according to Reuters. The company was commissioned last year to audit L&H's books amid reported discrepancies in the company's sales figures. KPMG alleged that several unidentified persons had provided false or incomplete information about L&H contracts and related companies. It said those persons allegedly obstructed its audit by pressuring third parties to make false statements. "KPMG Belgium has filed a civil action...against all persons within Lernout & Hauspie who have obstructed KPMG's auditing of the company, by withholding information or deliberately giving false, inaccurate or incomplete information to KPMG," the company said. L&H is in the process of restructuring after being approved for bankruptcy protection in both Belgium and the United States. (ABI World, April 6, 2001) LOEWEN: Teamsters Objects To Participating in ADR Procedures ------------------------------------------------------------ Teamsters Local 727 Health and Welfare, Pension, and Legal Assistance Funds objected to inclusion of their proofs of claim in The Loewen Group, Inc. Debtors' alternative dispute resolution procedures raises. Teamsters asserted that because the debtors have not rejected the labor contracts under 11 U.S.C. Section 1113, they are deemed to have assumed those contracts, and the Funds claims, if any, will be entitled to administrative priority. It is in an abundance of caution, Teamsters said, that the Funds filed proofs of claim against respective debtors. Teamsters advised the Court that those claims are all unliquidated, except those related to Weinstein Brothers where the Funds had conducted a prepetition audit. The Funds contend that three reasons show why the Funds' claims should not be included in Loewen's alternative dispute resolution procedure. First, courts have approved the inclusion in such procedures personal injury and wrongful death claims recognizing that those claims are expressly excluded from "core proceedings" over which bankruptcy courts have jurisdiction, but with the Loewen cases, the Court's "core proceedings" jurisdiction encompasses allowance of claims against the estate. Second, Loewen's alternative dispute resolution procedure requires each creditor subject to the procedure to make a settlement demand upon Loewen, which the motion refers to as "Settlement Offer." The Funds argue that while this may be appropriate for ordinary trade creditors who know the value of their claims, it is unacceptable for the Funds, whose claim depends on their ability to conduct a complete audit on the debtor's records. However, in their attempts to quantify claims that they assert to be administrative claims, the Funds' attempts to audit 10 years of records of funeral homes that are bound to the Union's collective-bargaining agreement have been stymied by Loewen's refusal to produce its Vancouver records, and claim that Loewen need not produce documents preceding its acquisition of the funeral homes, Teamsters told the Court. Without an audit, the objectors went on, the Funds cannot quantify their claims. Third, Loewen's motion says that the Settlement Offer may not improve the creditor's priority from that scheduled on its most recent proof of claim. The Teamsters asserted that as a matter of law, the Funds' claims will be entitled to administrative priority because Loewen has not employed 11 U.S.C. Section 1113 to reject the Union's contract. The Funds contend that they should not be precluded from having their claims paid as administrative priority under Loewen's alternative dispute resolution procedure. The Funds therefore requested the Court to exclude them from Loewen's proposed alternative dispute resolution procedure. The Debtors' Response The Debtors contend that reasons cited by the Funds as to why the Bankruptcy Claim should be excluded from the ADR Procedures are unpersuasive and without merit. First, the Debtors pointed out that the Funds incorrectly assert that the Bankruptcy Claims cannot be liquidated pursuant to the ADR Procedures because the Bankruptcy claims represent core matters over which the Bankruptcy Court has exclusive jurisdiction. The Debtors do not dispute the fact that the allowance or disallowance of claims against the Debtors' estates is a core matter pursuant to 28 U.S.C. 147(b)(2). The Debtors, however, contend that the Funds fail to recognize that the ADR Procedures do not abrogate the duty of the Court to allow or disallow a claim against the Debtors' estates. Second, the Debtors debunk that the Funds will be unable to submit a settlement offer timely as required by the ADR Procedures because they have been unable to quantify their claims without first completing audits of the books and records of the Debtor Funeral Homes. The Debtors told Judge Walsh that in fact the Funds have conducted and completed extensive audits of the books and records of the Debtor Funeral Homes for the entire period during which the Debtors owned the Debtor Funeral Homes, and they have no valid basis for asserting claims in respect of any earlier period. Moreover, if the Funds require further information, the ADR Procedures specifically authorize them to seek that information under the discovery provisions of the ADR Procedures, the Debtors reminded the Court. Third, the Debtors refute the Funds' claim that, because the CBAs have not been rejected, they should be deemed assumed, the Bankruptcy Claims under the CBAs should be payable as an administrative expense, and accordingly, the Bankruptcy Claims are not properly submitted to the ADR Procedures. The Debtors debunk the Funds' premise in this respect as dead wrong under settled bankruptcy law because it is well settled that it is the debtor's prerogative to ask the court to approve the assumption or rejection of an executory contract, including collective bargaining agreements. The deadline for the debtor's decision whether to assume or reject an executory contract such as the CBAs, the Debtors pointed out, is the confirmation of a plan under Section 365(d)(2) of the Bankruptcy Code. That deadline, has not yet arrived in Loewen's cases. Further, under section 365(d)(2) of the Bankruptcy Code, a creditor may petition the bankruptcy court to compel a debtor to assume or reject a contract. No such motion has been brought by the Funds or any other party in respect of the CBAs, the Debtors told the Court. The Debtors put forward the point that, the mere fact that the executory contracts at issue are collective bargaining agreements do not alter these settled rules, contrary to the Funds' assertions. The Court's Ruling Having entertained the request and argument on both sides and heard the statements of counsel with respect to this matter at a hearing, the Court ordered that the Funds' Objection is overruled, and proofs of claim numbered 4523, 4524, 4525, 4526, 4527, 4528, 4529, 4531, 4532, 4533 and 9522 filed by the Funds are submitted to the ADR Procedures for resolution pursuant to the terms of the Court's ADR Order. The ADR Injunction, the Court directed, will commence upon the entry of the Order with respect to this matter. The Court also directed, the Funds shall have 30 days from the date of this Order to return a completed ADR Notice. (Loewen Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) LONDON FOG: Court Confirms Chapter 11 Plan of Reorganization ------------------------------------------------------------ London Fog Industries, an international leader in rainwear and outerwear, announced the confirmation of its Chapter 11 plan of reorganization. London Fog Industries President and Chief Executive Officer William Dragon, Jr. declared that the company is both stronger and healthier with respect to its income statement and balance sheet, citing strong 2001 fiscal year earnings (year end February 2001) and the elimination of long term operating debt. "During the past 18 months, we have concentrated on eliminating over 100 retail and factory outlet stores, reducing our overhead and focusing on the business of producing high-quality, affordable rainwear and outerwear," said Dragon. Dragon added that both London Fog and Pacific Trail brands are showing double-digit increases for Spring/Fall 2001 orders in comparison to last year. Dragon also emphasized that the consistent support of all stakeholders, suppliers and retail partners was a major contributor to the successful reorganization. Dragon noted, "Our creditors in all classes voted overwhelmingly (greater than 90 percent) in favor of our reorganization plan." London Fog Industries voluntarily filed for reorganization under Chapter 11 in September 1999 to liquidate the majority of its retail outlets, eliminate excess overhead and reduce its long- term operating debt. As a result, the company has closed nearly all of its retail operations, keeping only 35 of its most profitable factory outlet stores strictly to aid in liquidating inventory. Dragon, who led the Pacific Trail subsidiary into record growth during his tenure as President of Pacific Trail, was tapped as CEO by the London Fog Industries board of directors in March of 1999 to lead the company's reorganization. One of Dragon's first initiatives was to file for Chapter 11 protection and launch an 18-month plan to return London Fog Industries to a leading position as a designer, marketer and distributor of high quality outerwear and rainwear for men, women and children. Established in 1922, London Fog Industries is one of the country's leading designers, marketers, and distributors of quality rainwear and outerwear which includes the London Fog(R), Pacific Trail(R) and Black Dot(R) brands as well as licensed brands, Dockers(R) and Levi's(R). London Fog Industries is based in Seattle, with offices in New York and a distribution center in Eldersburg, Maryland. The company has over 900 employees and currently operates 35 factory outlet stores throughout the country. London Fog Industries is located at 1700 Westlake Ave. N., Suite 200, Seattle, WA 98109. Telephone: 206/270-5300. MICROAGE: Plans to Sell Pinacor CTI Through Competitive Bidding --------------------------------------------------------------- MicroAge Inc. filed a motion in the U.S. Bankruptcy Court for the District of Arizona, proposing to sell the assets of its Computer Telephony Integration (CTI) business unit of Pinacor Inc. through competitive bidding procedures under Section 363 of the U.S. Bankruptcy Code. Pinacor is a distributor of voice and data communication products and a subsidiary of MicroAge Inc. In addition, the company announced that the MicroAge board of directors has approved an agreement with Gores Technology Group to purchase the assets of Pinacor CTI, subject to higher and better bids at an auction to be conducted before the court. The sale is subject to additional due diligence, court approval and other contingencies. Gores Technology Group is a private investment company which specializes in acquiring and managing technology companies. "We believe this is win-win for Pinacor customers, associates and the creditors," said MicroAge Chairman Jeffrey D. McKeever. "Gores is a well-respected company with a proven track record in buying technology companies and running them successfully. This transaction will provide on-going stability for Pinacor customers, employment for Pinacor associates, and additional cash for our creditors." On April 13, 2000, MicroAge and certain of its subsidiaries, including Pinacor Inc., commenced a voluntary Chapter 11 proceeding. Consistent with auction procedures under Section 363 of the Bankruptcy Code and a motion filed with the Bankruptcy Court by MicroAge, the deadline for third parties to submit documents supporting preliminary qualification of purchase will be April 25, 2001. A hearing on the motion has been tentatively set for May 1, 2001, at the U.S. Bankruptcy Court for the District of Arizona in Phoenix. About MicroAge Inc. MicroAge Inc. delivers technology to businesses through one-on- one relationships supported via electronic commerce and the Internet. The corporation is comprised of information technology companies that deliver technology solutions through ISO 9001- certified, multi-vendor integration services and distributed computing solutions to organizations and computer resellers. About Gores Technology Group With headquarters in Los Angeles, Gores Technology Group (GTG) is a privately held international acquisition and management firm that pursues an aggressive strategy of acquiring promising high-technology organizations and managing them for growth and profitability. GTG's established infrastructure currently manages a portfolio of more than 20 interrelated but autonomous technology-oriented companies that are located in 50 countries throughout the world. Those companies provide a broad range of technology-based products and services to a substantial customer base of 20,000 that represent over 2 million active users. Visit the company's Web site at http://www.gores.com. ORBITAL SCIENCES: Delays Filing of Form 10-K With SEC ----------------------------------------------------- Orbital Sciences Corporation is in the process of completing the 2000 year-end financial results which, among other things, is requiring additional time to assess the impact on 2000 results, if any, of NASA's March 1, 2001 termination for convenience of the X-34 reusable launch vehicle contract. In addition, the company is continuing with its efforts towards finalizing two major transactions regarding the sale of certain non-core businesses. Due to these circumstances the Company has advised the Securities & Exchange Commission that it will late in filing its year-end financial information on Form 10-K with the Exchange. The Company has incurred significant losses during 2000 from operations and the writeoff of its investment in ORBCOMM Global L.P. Orbital believes that significant charges associated with the X-34 contract termination, asset impairment charges associated with a potential divestiture, accounting for affiliate losses, and additional losses from operations, will be reported for the fourth quarter of 2000. PACIFIC GAS: Honoring Wage And Salary Obligations ------------------------------------------------- Pacific Gas and Electric Company's 19,978 Employees are vital to daily operations, maintaining positive employee morale is important, and the reorganization effort will fail if PG&E loses its valuable employees, Russell M. Jackson, Vice President of Human Resources for Pacific Gas and Electric Company, told the Court. A loss of personnel due to an interruption in the payment of employee wages and benefits will jeopardize the Debtor's operation and reorganization efforts, the steady supply of energy, and public health and safety, PG&E said. In fact, the Company continues, in this particular chapter 11 case, the loss of key personnel due to sagging employee morale may also result in irreparable harm to public health and safety. Each blackout carries with it the possibility of such tragedies as fires due to overturned candles or collisions due to the loss of traffic lights, in addition to the inevitable disruption in the economy. A reduction in the number of experienced linemen dedicated to preventing and repairing gas leaks could lead to disastrous results, as well. The public interest, accordingly, requires that the Debtor be allowed to pay pre-petition compensation and benefits to aid employee retention and hasten the Debtor's recovery. Faced with the need to issue payroll checks immediately for wage and salary obligations incurred during the latest two-week period and because certain employees don't promptly cash each paycheck they receive, the Debtor sought and obtained an emergency order from Judge Montali authorizing the Company to (A) issue payroll checks on account of accrued pre-petition wage and salary obligations and (B) move money between their bank accounts as necessary to fund those paychecks. Additionally, Judge Montali directed each Bank on which a payroll check is drawn to honor all payroll checks. Specifically, the Debtor sought and obtained permission to honor these pre-petition wage, salary and benefit obligations owed to their Employees: Number of Type of Employee Obligation Amount Owed Employees --------------------------- ----------- --------- PRE-PETITION EMPLOYEE COMPENSATION International Brotherhood of Electrical Workers, Local 1245 and International Union of Security Officers Members $36,111,700 12,300 Administrative & Technical 695,100 415 Engineering & Scientists Union 4,335,700 1,530 Diablo Canyon Workers (included in IBEW amount) 468,800 210 Management 8,809,600 5,500 Officers 134,700 23 ----------- ------ $50,555,600 19,978 EMPLOYER TAXES $3,870,497 EMPLOYEE BENEFIT OBLIGATIONS Medical insurance $19,627,584 Dental insurance 2,000,000 Vision insurance 605,800 Reimbursement accounts 229,059 Group life insurance 2,675,857 Short-term disability and Workers' compensation 3,341,956 Long-term disability 440,000 Savings Fund Plan and Retirement Savings Plan 1,851,019 Vacation payout 1,500,000 Employee assistance program 89,000 Adoption reimbursement 2,083 Child care 134,000 Tuition Refund Program 478,741 Business expense reimbursements 1,400,000 ----------- $34,375,099 ----------- TOTAL $88,301,196 =========== James L. Lopes, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, advised Judge Montali at the First Day Hearing that, on average, no single employee is owed more than the $4,300 priority accorded to employee compensation claims under 11 U.S.C. Sec. 507. PG&E does not seek to liquidate its operations, Mr. Lopes told Judge Montali Friday afternoon. "Rather, the Debtor seeks to avail itself of the protection and flexibility provided by the bankruptcy laws to weather the current regulatory impasse. In order to keep the lights on, however, the Debtor must retain its current work force. The Debtor therefore seeks this Court's permission to honor its pre-petition obligations to its employees in order to prevent employee defection and to implement a seamless transition." Nothing in this request, the Debtor made clear and Judge Montali confirmed, contemplates an assumption nor precludes a rejection of any agreement or policy that may be considered an executory contract. (Pacific Gas Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFIC GAS: Insurer MBIA Closely Monitoring Bankruptcy Case ------------------------------------------------------------ MBIA Inc. (NYSE: MBI) announced that it is closely monitoring the bankruptcy filing by Pacific Gas & Electric (PG&E) and has been in discussions with company officials at PG&E. "We are disappointed that a legislative solution could not be reached to solve the energy crisis in California. In accordance with our policies, MBIA-insured bondholders will receive all their principal and interest payments as scheduled," said Neil Budnick, Chief Financial Officer of MBIA. MBIA has direct net par exposure to Pacific Gas & Electric of approximately $590 million of which about 61 percent are secured by first mortgage bonds with the remainder being senior unsecured bonds. MBIA has posted on its web site the company's net debt service schedule by maturity date for the MBIA Pacific Gas & Electric exposure. MBIA Inc., through its subsidiaries, is the world's preeminent financial guarantor and a leading provider of specialized financial services. MBIA provides innovative and cost-effective products and services that meet the credit enhancement, financial and investment needs of its public- and private-sector clients, domestically and internationally. MBIA Insurance Corporation has a financial strength rating of Triple-A from Moody's Investors Service, Standard & Poor's Ratings Services, Fitch and Rating & Investment Information Service. Please visit MBIA's web site at http://www.mbia.com. PACIFIC GAS: Fitch's Ratings On Securities Dive To D Levels ----------------------------------------------------------- Fitch has lowered its ratings for Pacific Gas and Electric Company (Pac Gas) senior secured and preferred securities into the default category based on the utility's voluntary filing of a petition under Chapter 11 of the U.S. Bankruptcy Code. Fitch also believes that Pac Gas' bankruptcy filing could complicate Southern California Edison's (So Cal Ed) likelihood of accomplishing a sale of its transmission assets to the State of California. Consequently, Fitch has lowered So Cal Ed's senior secured debt rating and changed the Ratings Watch to Negative from Evolving. The Ratings Watch status of Edison International, the parent of So Cal Ed, is also changed to Negative from Evolving. The new ratings are: Pacific Gas and Electric Company First Mortgage Bonds to `DDD' from `B-`; Preferred Securities to `D' from `C'; Commercial Paper `D' Unchanged; Rating Watch Not applicable Negative. Fitch does not rate the securities of PG&E Corp. Southern California Edison Company Senior Secured Debt to `CCC' from `B-`; Senior Unsecured Debt `CC' unchanged; Preferred Stock `C' unchanged; Commercial Paper `D' unchanged; Changed to Rating Watch Negative from Rating Watch Evolving. Edison International Senior Unsecured Notes `CC' unchanged; Trust Preferred Securities `C' unchanged; Commercial Paper `D' unchanged; To Rating Watch Negative from Rating Watch Evolving. Pacific Gas and Electric Company is a wholly owned subsidiary of PG&E Corp., and is based in San Francisco, CA. Southern California Edison is a wholly owned subsidiary of Edison International, and is based in Rosemead, California. PG&E NATIONAL: S&P Affirms BBB Corporate Credit Rating ------------------------------------------------------ Standard & Poor's affirmed its triple-'B' corporate credit rating on PG&E National Energy Group Inc. (NEG) an indirect wholly owned subsidiary of PG&E Corp., following the bankruptcy filing of Pacific Gas & Electric (D/--/D), another wholly owned subsidiary of PG&E Corp. Standard & Poor's also affirmed its ratings on the following subsidiaries of NEG: PG&E Generating Co. L.L.C (PGen) at triple- 'B'; USGen New England Inc. (USGenNE) at triple-'B'; PG&E Gas Transmission-Northwest (GTN) at single-'A'-minus; PG&E Energy Trading Holdings Corporation. (ETH) at triple-'B'-plus; Indiantown Cogeneration Funding Corp.. at triple-'B'-minus; Selkirk Cogen Funding Corp. at triple-'B'-minus; Northampton Generation Co LP L.P. at triple-'B'-minus; and Panther Creek Partners at triple-'B'-minus. In the case of each subsidiary rating affirmation, the outlook is stable. The rating affirmations of NEG and its subsidiaries reflect Standard & Poor's belief that NEG and its subsidiaries will remain "ring-fenced" from the credit of PG&E Corp. and therefore would not be consolidated in any bankruptcy proceedings of PG&E Corp. The basis of Standard & Poor's belief is, first, the continuing economic viability of NEG and its subsidiaries and, second, the perceived disincentives of PG&E Corp. or its creditors to file NEG or its subsidiaries into bankruptcy (See related article date Jan. 18, 2001). In Standard & Poor's view, the effect of the ring-fencing is, at worst, neutral to the creditors of PG&E Corp. Under the ring- fencing structure in place, NEG has relieved PG&E Corp. of potentially significant liabilities as guarantor while still allowing PG&E to benefit from cash flow distributions (NEG and its subsidiaries account for approximately 10% of cash flow to PG&E Corp.) While such distributions may be subject to restriction, Standard & Poor's believes any loss of liquidity to PG&E Corp. resulting from such restriction is outweighed by the benefit of transferring its obligations as guarantor to NEG. NEG, a wholly owned subsidiary of PG&E Corp., has ownership and management responsibilities in 30 power plants in 10 states, with a combined generating capacity of nearly 7,700 MW and more than 10,000 MW under construction or in advanced development. NEG is also engaged in wholesale energy marketing and risk management, which is conducted by ETH and owns GTN, a 612-mile FERC-regulated pipeline, which extends from the Canadian border to the California/Oregon border and transports 2.7 bcf/day of natural gas. NEG's rating is based primarily on NEG's stand-alone creditworthiness. The triple-'B' rating reflects the following risks: -- Asset concentration in the Northeast region of the U.S., which is expected to contribute about 40% of the overall corporate 10-year average cash flow; -- Concentration in natural gas-fired generating stations, which are expected to comprise more than 50% of overall corporate cash flow; -- Debt at PGen is structurally subordinated to more than $1 billion of debt at the project level; -- Over the next 10 years, NEG will rely on merchant generation for more than 30% of its overall cash flow; -- An aggressive construction program with more than 30% of the 10-year average cash flow contributed by projects currently under construction; -- Use of Siemens Westinghouse 501G and ABB GT24B turbines in NEG's construction program, which are a less commercially proven technology; and -- Bullet maturities and significant guarantees that will have to be financed. However, the following strengths offset the risks: -- Strong quality of cash flow-18% of NEG's 10-year average cash flow coming from PG&E Gas Transmission, a single- 'A'-minus rated regulated pipeline; -- A portfolio of operating power projects, of which more than 50% of the cash flow is contributed by investments that have investment-grade characteristics; -- Over the past three years, NEG demonstrated a strong operating record with availability averaging 94%; and -- Strong projected consolidated funds-from-operations interest coverage at more than 4 times for the five-year period through 2005. Outlook: Stable The stable outlook reflects the strong, stable and predictable cash flow contributed from NEG's investments. Further, the outlook anticipates a financial profile that remains strong in comparison with its peers and demonstrates only gradual improvement. A demonstrated ability to operate in a restructured power market will be needed for any ratings upgrades, Standard & Poor's said. POLAROID CORP.: Fitch Cuts Senior Unsecured Debt Rating To B- ------------------------------------------------------------- Polaroid Corp.'s senior unsecured debt is downgraded to `B-' from `BB-' and its $350 million secured domestic bank facility is lowered to `B+' from `BB'. Both ratings are placed on Rating Watch Negative. These actions follow the company's announcement that it has received waivers on its bank loan covenants through May 15, 2001. In addition, while these waivers are not contingent on asset sales, asset sale proceeds will be substantially lower than previously expected. At March 23, 2001, Polaroid's total debt outstanding was about $970 million of which $544 million is due within one year consisting of $394 million in bank agreements and $150 million in senior notes. Fitch had expected Polaroid to complete certain asset sales during the first quarter 2001 in order to reduce borrowings. These sales have not materialized and the ultimate outcome and timing of these transactions remain uncertain. Polaroid has taken several steps to free up cash flow for debt reduction, including discontinuing its dividend of $27 million per year, reducing capital expenditures and working capital, and restructuring operations. Nevertheless, these efforts will not be sufficient to offset the reduction in asset sale proceeds. Furthermore, the company could be facing a liquidity crisis given the level of debt due within one year. In addition, Polaroid has received waivers of the leverage and interest coverage ratio covenants contained in its domestic and UK credit agreements through May 15, 2001. The waiver on the domestic facility grants the lenders a security interest in substantially all of the company's personal property, which has reduced asset coverage from the bondholders. Polaroid is currently negotiating an amendment to its credit agreements and pursuing new lending agreements. Of near-term concern is Polaroid's ability to obtain an amendment to its bank agreement by May 15. Currently, the bank facilities are secured by a material portion of Polaroid's corporate assets. Fitch's view is that this should provide sufficient asset protection for the bank facilities to receive full recovery. Thus there is a two notch differential in ratings between the bank facilities and the unsecured bondholders. The ratings also consider declining sales of the company's traditional core instant film product lines which are expected to continue to exert downward pressure on the company's earnings in 2001 and thereafter. Apart from the issues of inventory reductions in retail channels and a generally weaker economic outlook, the decline in traditional film sales are associated with a migration to digital imaging, particularly among the company's commercial customer base. These trends will continue to affect the company over the long term. While the company's efforts to expand instant photography products into new markets with youth-oriented products such as the JoyCam and I-zone cameras have achieved good success, growth in these areas has not been sufficient to offset the declines in the more traditional 600 and 1200-format product lines. Longer term, the company is developing new digital camera and media product lines. The timing, success, and profitability of these products, however, remains uncertain. Further, digital imaging markets are expected to remain intensely competitive, given the number of participants and the broad technological and financial resources of many of these participants. These factors will provide significant challenges to Polaroid in establishing a successful niche in the digital imaging market. Fitch will continue to monitor the company's refinancing plans and assess the credit impact of any changes. The Rating Watch Negative status is expected to be resolved following the resolution of the company's financing plans, the impact of any new terms on the company's unsecured bondholders, and the ability of the company to repay its debt due within the next 12 months. Also considered will be the potential for further earnings deterioration for the company and its ability to implement asset sales. SERVICE MERCHANDISE: Court Okays Procedures re Avoidance Actions ---------------------------------------------------------------- Pursuant to 11 U.S.C. Sections 102, 105, 101 and 554 and Rules 7016, 7026, 9007, 9018 and 9019 of the Bankruptcy Rules, Service Merchandise Company, Inc. the Debtors sought and obtained the Court's authority establishing omnibus procedures for: (a) initial filing and pretrial motion practice for adversary proceedings under 11 U.S.C. Sections 544, 545, 547, 548 or 553 and similar adversary proceedings, (b) compromising and settling such actions, and (c) abandoning certain de minimis and other claims and causes of action. The uniform procedures have been crafted in anticipation of the filing of more than 1,000 Adversary Proceedings related to the commencement of avoidance and other statutory actions pursuant to sections 544, 545, 547, 548 and 553, and the commencement of other causes of action under applicable law. The Debtors also intend to seek authority to stay some of the Adversary Proceedings in order to make a determination as to whether to abandon the Proceedings pursuant to section 554 of the Bankruptcy Code and/or to negotiate consensual resolutions or settlements with the defendants. About de minimis claims, the Debtors explained that they have identified specific claims which would prove burdensome to the estates to prosecute, either in terms of the likely recovery or in terms of the detrimental impact that bringing such actions would have on the Debtors' continuing business. The Debtors told the Court that the Committee concurs with their proposal. However, there are areas in which the Debtors' viewpoint differs from that of the Bank of New York, as Indenture Trustee for holders of the 9% Senior Subordinated Debentures issued by the Debtors. Specifically, the Bank requested that, (1) any action filed against the Trustee or the Bondholders be filed under seal and service of process be stayed for 30 days from filing of the Complaint; and (2) the Court specify that the Order granting the motion will not prejudice the rights of the Trustee or Bondholders to seek a modification of any procedure in the Order after the Action is filed. In their objection to the motion, the Trustee told the Court that if the Court grants the Trustee's request to seal the names of individual Bondholders named in the Complaint for 30 days, and stay service of process for the same period, the Trustee can give the Bondholders notice that they will be sued, the legal theories the Debtor is considering and provide contact persons for dissemination of further information. The Trustee believes that the Debtor will suffer no prejudice from implementing this procedure, and the due process rights of the Bondholders will he better served. The Trustee explained that because the vast majority of the beneficial interest in the Bonds is held in the hook-entry system maintained by DTC, the Trustee does not know how many beneficial owners of the Bonds exist, but the Trustee believes that the total number of potential defendants to the Lawsuit will be more than 1,000 and could be as high as 3,000 to even 12,000 individuals, many of whom the Trustee believes may be senior citizens. The case, the Trustee recaps, was originally filed as an involuntary Chapter 11 March 14, 1999. The Debtor has advised the Trustee that it intends to file suit to recover a payment of approximately $13.5 million allegedly made by the Debtor on the Bonds to the Trustee, in its capacity as Paying Agent, and disbursed by the Trustee to the Bondholders on or about January 12, 1999. The Debtor obtained an order from the Court dated February 8, 2001, pursuant to which the Trustee transmitted to the Debtor a list of holders registered with the Trustee at the time the Payments were sent. The List shows that approximately $600,000 of the Payment was payable to 756 individuals, companies and trusts, who were registered holders of the Bonds. A majority of the payments payable to the 756 parties were in increments of $225 and $450. The balance of the Payment (approximately $12,900,000) was transmitted to The Depository Trust Corporation (DTC), the registered holder of more than $286,000,000 in principal amount of the Bonds. DTC holds these Bonds in its name on behalf of the ultimate beneficial owners of the Bonds, who are individual and institutional investors with investment accounts at brokerage houses or other participants maintaining accounts with DTC. Many participants through the DTC system are brokerage firms. Presumably, many of the brokerage firms have the Bonds on account for their individual customers. Moreover, notwithstanding the fact that the Debtor has advised the Trustee it intends to bring the Lawsuit in one action, the Trustee believes that the specific facts and circumstances applicable to thousands of defendants may be significantly different. For instance, it is possible that some Bondholders who are shown on the List as having received some portion of the Payment sold their Bonds prior to receipt of the Payment and such Payment was in fact directed to the purchaser of the Bonds, in which case, such holder may not be a proper party to the Lawsuit. Some Bondholders who received a portion of the Payment may have passed away, making their estates the proper parties to the Lawsuit (and certain procedures under state law thc appropriate avenue of recovery). The Trustee also explained that they need to have the court acknowledge, in the Order, that the Trustee and Bondholders have reserved their rights to seek a modification of the Order until after the Complaint has been filed and the nature, extent and site of the Action is known because it is impossible, at this point, to know whether the procedures proposed by the Debtor will work given the number of the defendants in the Action. The Debtors contended that BNY's requests are unnecessary and inappropriate. First, BNY is free to notify the holders of the Debentures of the action. Moreover, the Debtors believe that sealing the action would effectively prevent class certification, which requires public notice. The Debtors indicate that they intend to request the Court to certify a defendant class pursuant to Fed. R. Bankr. P. 7023 and they intend to serve process on potential class representatives and act expeditiously to determine the issue of class certification, which, if successful, could eliminate the necessity of personal advice on thousands of defendants. The Debtors contended that the delay occasioned by a sealing or stay of the action prior to class certification could result in incurring administrative expense that could otherwise be saved by seeking class certification promptly. As for the request that the Court modify the Procedures, the Debtors contended that any party in interest is free to do so; carving special rights for individual parties such as BNY would undermine the Procedures and create uncertainty based on more speculative concerns. The Court's Order The Court ordered that the BNY Objection is sustained and the Debtors' motion is granted, as modified. Accordingly, the Omnibus Procedures for Adversary Proceedings provide for: (A) Commencement (1) The requirement set forth in Local Rule 7003-1, that an adversary cover sheet in the form prescribed by the Administrative Office of the United States Courts be filed is waived; the requirement set forth in Local Rule 7016-1, that a preliminary pretrial order in the form of Appendix H to the Local Rules must be filed with each complaint is also waived. (2) The Court permits the Parties to file only an original and 2 copies of any pleadings or other documents filed in the Adversary Proceedings, one of which will be provided by the Court to the approved official copy service. (3) The Debtors will work with the clerk of the Court in advance of the filing of the Complaints and other required papers, to identify a block of adversary proceeding case numbers for the SMCO chapter 11 case and will then assign such case numbers to the Adversary Proceedings prior to filing, with the corresponding case number already printed in the caption; upon filing of the Complaints, the Debtors will provide to the clerk of the Court a list that identifies which case number was assigned to which Adversary Proceeding. (4) The Debtors will be permitted, but not required, to assign a Category Designation to an Adversary Proceeding that the Debtors believe will assist them in quickly identifying certain common aspects of the nature of such Adversary Proceeding. If so designated, all documents and pleadings filed in the Adversary Proceedings shall thereafter contain such Category Designation in the Caption. (B) Filing under Seal (1) To the extent the Debtors have filed a motion requesting and/or obtained an order staying a particular Adversary Proceeding prior to or contemporaneously with the filing of the Complaint, the Debtors shall be permitted, but not required, to file such Adversary Proceeding and related documents under seal pursuant to Local Rule 9018-1; the Debtors shall be permitted to omit the name of the applicable Defendant from the caption of the case that is to be affixed to the front of any sealed envelope containing a protected document, and the clerk of the Court shall omit any such information from any docketing. (2) The Court directs the clerk of the Court to accept for filing documents in a Sealed Proceeding under seal in accordance with the terms of Local Rule 9018-1, as modified by the Court Order. (3) Only the Debtors and the Court shall have access to and be permitted to review documents filed, submitted and/or docketed in such a Sealed Proceeding. (4) The filings in a Sealed Proceeding will remain sealed and subject to the protections in the Court's Order until the earlier of: (a) entry of a final order denying a request to stay the Sealed Proceeding; (b) entry of a final order lifting, or any other proper termination of, a stay of the Sealed Proceeding; or, (c) entry of a final order unsealing the Sealed Proceeding, entered upon the request of the Debtors, without further notice or hearing, or upon the request of a party in interest, for good cause shown, after notice and a hearing. (5) Except for the procedures for the commencement and sealing of Adversary Proceedings, during the time that an Adversary Proceeding is sealed, the parties to such Sealed Proceedings will not be required to comply with the pretrial procedures set forth in the Court's Order. (C) Service of Process In addition to any other information required under Federal Rule 4(b) (made applicable by Bankruptcy Rule 7004(a)), the Debtors may present, for issuance by the Court, summonses addressed to the Defendants that are printed on one double-sided page, (substantially in the form as that presented in the motion as Exhibit 1), pre-printed on it: (a) all of the information, except the signature of the clerk and seal of the Court, that is required under Federal Rule 4(a); (b) the applicable Response Deadline, set in accordance with the terms of the Court's Order; (c) the applicable time, date and location set for the First Pretrial Conference, provided that such date is set in the terms of the Court's Order; (d) with respect to the certificate of service on the reverse side of the summons: (i) the manner of expected service of process, (ii) the person(s) and place(s) expected to be served, and (iii) the name of the person expected to accomplish service of process; provided that the certificate of service is to be signed and verified only after service of process is actually accomplished, and provided that a copy of the certificate of service, as signed and verified, is filed with the Court in accordance with Federal Rule 4(1) (made applicable by Bankruptcy Rule 7004(a)). The date of issuance of a summons shall be the date such summons is filed with the Court. (D) Notices The parties to the Adversary Proceedings are not required to serve any pleadings, discovery or other documents filed or required to be served in the Adversary Proceedings on any person or entity that is not a party to the applicable Adversary Proceeding. (E) Pretrial Schedule and Deadlines * Omnibus Adversary Proceeding Docket Dates Unless otherwise specially set by the Court, all matters to be heard at a hearing or a pretrial conference will be set by the Court to be heard beginning at 9:30 a.m. (prevailing Central Time) on [either the first or the third Wednesdays] of the month in which such matter is to be heard (the Available Hearing Dates). * Response Deadline The Response Deadline for each efendant to, under Bankruptcy Rule 7012, shall be set by the Debtors in the respective summons, provided that the Response Deadline will not be sooner than 45 days after the issuance of a corresponding summons that is actually served of the relevant Defendant. To the extent a motion is filed by a Defendant in accordance with Bankruptcy Rule 7012(b), the Debtors will respond to such Motion on or before 60 days following the Response Deadline. The Motion and any response will be set by the Court at the First Pretrial Conference for a hearing to occur on an Available Hearing Date not sooner than 40 days after the First Pretrial Conference. * Default Judgment Should a Defendant fail to file and serve a Response by the Response Deadline, the Debtors may file and serve on such Defendant a Notice of Default. If the Debtors file and serve such Notice of Default on or before 10 days before the First Pretrial Conference, and the Defendant to be defaulted fail to appear at the First Pretrial Conference and fail to persuade the Court that good cause exists for failing to timely file and serve a Response, then the Court will enter a default judgment against such Defendant for the sum set forth in the Notice of Default, and any accompanying affidavit, as provided in Federal Rule 55 (made applicable to the Adversary Proceedings by Bankruptcy Rule 7055). * First Pretrial Conference The Debtors will schedule each Adversary Proceeding for the First Pretrial Conference on one of the following dates (each an Available First Pretrial Date), each to begin at 9:30 a.m., (Prevailing Central Time in Courtroom 1, Customs House, 701 Broadway, Nashville, Tennessee: June 13, 2001 June 20, 2001 July 11, 2001 July 18, 2001 July 25, 2001 August 1, 2001 The Debtors will schedule no more than 300 Adversary Proceedings for each Available First Pretrial Date. Upon written request of a Defendant that has an actual scheduling conflict, the Debtors shall reschedule the First Pretrial Conference to one of the other Available Dates that is convenient for such Defendant and notify the Court accordingly; provided, the Debtors are not required to reschedule more than once for any particular Defendant. At the First Pretrial Conference, the Court or the clerk of the Court will call each of the Adversary Proceedings set on the docket for that pretrial conference, at which time, for each Adversary Proceeding, the clerk of the Court will: (a) if a Response has been filed by the Response Deadline, (i) set for the Second Pretrial Conference (as defined below), in accordance with in accordance with the procedures set forth in this Order and (ii) if applicable, set a hearing date and contingent answer deadline for any Adversary Proceeding in which Defendant has filed a motion permitted under Bankruptcy Rule 7012; or (b) if no Response was filed and if appropriate under the procedures set forth in the Court's Order, enter a Default Judgment against the applicable Defendant; or (c) if agreed to by the parties to the Adversary Proceeding prior to the First Pretrial Conference, accept for consideration by the Court an agreed order of compromise and settlement, in accordance with the settlement authority granted the Debtors by Court order or otherwise authorized by applicable bankruptcy law. * Second Pretrial Conference At the First Pretrial Conference, the clerk of the Court shall schedule & second pretrial conference for each Adversary Proceeding that is not resolved by default judgment or agreed order of compromise and settlement prior to the First Pretrial Conference. Such Second Pretrial Conferences shall be set on an Available Hearing Date, not sooner than 120 days after the First Pretrial Conference. At the Second Pretrial Conference, the Court, in consultation with the parties, will (i) set a trial date, (ii) establish any other necessary pretrial procedures, deadlines and hearing dates, including discovery deadlines and procedures and (iii) define and narrow the contested factual and legal issues to be tried. The Court will also entertain any requests by the parties for a settlement conference. (F) Discovery All discovery will be stayed until the Court orders otherwise at the Second Pretrial Conference or upon notice and hearing, for good cause shown; provided that, in any event, the parties to an Adversary Proceeding shall not be required to respond to any discovery requests sooner than 30 days following the last scheduled Second Pretrial Conference for all of the Adversary Proceedings, except as expressly provided for in the Court's order, or as the Court orders, after notice and hearing, for good cause shown. Not later than 60 days after the First Pretrial Conference in each Adversary Proceeding, unless such Adversary Proceeding has been resolved prior to such time, the Debtors will complete the required discovery disclosures in Local Rule 7026-lb(l)(i); provided that such disclosures are limited and the Debtors shall only be required to produce the Initial Debtor Documents, to the extent such documents exist, are reasonably locatable and are not subject to any privilege: -- copies of the Debtors' schedules, statements of financial affairs, with any amendments to these; -- printouts of historical payment information for such Defendant for the time period of December 1997 through the Petition Date, stored electronically in the ordinary course of the Debtors' business, including invoice numbers, invoice dates, invoice amounts, amounts paid, purchase order reference numbers, dates paid, and check numbers; and -- copies of any of the Debtors' audited financial statements for the last fiscal year ending prior to the Petition Date and the quarterly financial statements filed with the Securities Exchange Commission during the one (1) year period preceding the petition date. The Debtors will make the Initial Debtor Documents available for review, inspection and tagging for copying at the site where such documents are stored in the ordinary course of the Debtors' business, at the offices of Bass, Berry & Sims PLC or at some other reasonably accessible location in Nashville, Tennessee that the Debtors designate. The Initial Debtor Documents shall be made available to the applicable Defendant (or employee of or counsel for the Defendant), by appointment at a time that is mutually convenient for both parties. Before being permitted to review any documents, the individual(s) to perform the review may be required to provide adequate identification and sign a document for purposes of monitoring the custody of the documents. The Debtors will arrange for the copying of all documents tagged by a Defendant and then forward the copied documents to the Defendant as soon as practicable after the Debtors have received full reimbursement from the Defendants for the cost of such copies, which will not exceed 25 cents per page. In making the Initial Debtor Documents available, the Debtors may retain their records as they are kept in the ordinary course of business and will not be required to separate out the files or documents pertaining to a particular Defendant. The Debtors will also be allowed to preserve and maintain the security of the documents. The Debtors and the Defendants in each Adversary Proceeding will, not later than 60 days prior to trial, complete the required discovery disclosures in Local Rule 7O26-1b(l)(iii), and not later than 10 days prior to trial, complete the required pretrial disclosures in Local Rule 7026-lb(2), unless the Court orders otherwise or such Adversary Proceeding has been Resolved prior to such time. (G) Joint Pretrial Statement Unless such Adversary Proceeding has been Resolved prior to such time, -- Not later than 40 days prior to the Second Pretrial Conference, the Debtors will serve on the other parties in such Adversary Proceeding the Joint Pretrial Statement Draft. -- Not later than 30 days prior to the Second Pretrial Conference, each Defendant will serve on the Debtors, a written request for any requested modifications to the Joint Pretrial Statement Draft. -- Not later than 20 days prior to the Second Pretrial Conference, the Debtors and the Defendants will confer with each other concerning any unresolved or disputed language to be contained in the Joint Pretrial Statement. -- Not later than 10 days prior to the Second Pretrial Conference, the Debtors will file with the Court a Joint Pretrial Statement that contains: (i) a joint statement of admitted or uncontested facts; (ii) & brief joint statement of contested facts; (iii) a brief joint statement of contested legal issues; and (iv) a list of statements of contested facts or contested legal issues that were requested, but not agreed, to be included in the Joint Pretrial Statement, along with the identification of the party so requesting. (H) Stay of Other Pretrial Procedures Except to the extent expressly provided in the Procedures as approved by the Court, or by further order of the Court, upon the request of a party in interest after notice and hearing, for good cause shown, the filing of all pretrial motions and the applicability of all other pretrial deadlines and procedural requirements under the Bankruptcy Rules, Local Rules or prior orders of the Court in these Chapter 11 cases, will be stayed pending further order of the Court after the Second Pretrial Conference in an Adversary Proceeding. (I) Authority to Settle The Debtors are granted discretionary authority, without further notice or order of this Court, to compromise and settle Adversary Proceedings for amounts that the Debtors determine in their business judgment to be in the best interests of their estates not less than 90% of the amount demanded in the applicable Complaint. For amounts between 80% and 90% of the amount demanded in the applicable Complaint, such authority is subject to the debtors' prior review with the Official Unsecured Creditors' Committee, and if the Committee disagrees with the Debtors to such compromise, the Debtors will submit the proposed compromise by motion to the Court for approval. (J) Abandonment Authority The Debtors are granted authority to abandon all claims and causes of action arising under 11 U.S.C. Sections 544, 545, 547, 548 or 553, where the Debtors would assert a right to a judgment of $5000 or less, and all Debit Balance Claims where the Debtors would assert a right to a judgment of $2,500 or less. The Debtors are also granted authority to abandon all Landlord Claims, Customer Refund Claims and Employee Reimbursement Claims. (K) Authority for Third Parties to Certain Pursue Actions The Committee is authorized, without further notice or order of the Court, to pursue on behalf of the Debtors' estates and take over all case management and prosecution of Adversary Proceeding arising under 11 U.S.C. Sections 544, 545, 547, 548 or 553, (i) where at the Debtors' request, the Committee consents to pursue such action, or (ii) where the Debtors choose not to pursue such Adversary Proceeding and the Committee desires to pursue such Adversary Proceeding on behalf of the estates. The Court's order provides that the Committee is free to choose whether or not to pursue a particular Adversary Proceeding. The Court also authorized the Debtors, without further notice or order of the Court, to expand the previously approved scope of representation of the Debtors by Burch, Porter & Johnson, which has been retained as special counsel to the Debtors in other matters, to include Adversary Proceedings, provided that Burch, Porter is free to choose whether or not to accept representation of the Debtors in a particular Adversary Proceeding. (L) Modification of Pretrial Procedures Either the Debtors or any Defendant, including the Bank of New York, may file a motion to alter or amend these procedures for a particular Adversary Proceeding or for a particular set of Adversary Proceedings for cause shown. (M) Notice of Pretrial Procedures A copy of the Court's Order on the Procedures, and notice of this order, will be served on each Defendant, along with the service of the corresponding summons and Complaint in accordance with the terms of the Court's Order and the Bankruptcy Rules. (N) Temporary Stay and Sealing of Bondholder Actions The Court expressly specifies that any Adversary Proceeding filed against Bank of New York, as Trustee, or against any of the Bondholders with respect to recovery of any portion of the approximately $13.5 million in alleged payments made to Bank of New York on account of the Debentures in January, 1999 will be sealed and service of process will be stayed for 30 days following the filing of the complaint. During such period, the Debtors shall provide Bank of New York with a copy of such complaint and Bank of New York may send notice of the pendency of such action to the Bondholders. (Service Merchandise Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) SOURCE MEDIA: Posts 19.8 Million Net Loss For the Year 2000 ----------------------------------------------------------- Source Media Inc. had monetary revenues of $17.9 million and net loss attributable to common stockholders of $19.8 million in the year ended December 31, 2000, as compared to monetary revenues of $19.1 million and net loss attributable to common stockholders of $40 million for the year ended December 31, 1999. Total assets decreased to $31.1 million from $58.0 million during the year ended December 31, 2000, primarily as a result of the sale of Source Media's joint venture with Insight Interactive LLC to Liberate Technologies. The independent auditors' report upon the Company's consolidated financial statements for the year ended December 31, 2000 will contain an explanatory paragraph identifying certain factors that raise substantial doubt about the Company's ability to continue as a going concern. Source Media believes these factors include the net loss described in the previous paragraph, a potential requirement to provide additional funding for the SourceSuite joint venture during 2001, and the obligation to pay interest payments of approximately $5.3 million each due on May 1 and November 1, 2001. Due to these recent developments changes have been required to the disclosures contained in the Annual Report on Form 10-K. The Company was unable to make such changes within the prescribed time period without unreasonable effort or expense so Source Media has advised the SEC that filing of these documents will be delayed. STAMPEDE WORLDWIDE: Files For Chapter 11 Bankruptcy Protection -------------------------------------------------------------- Stampede Worldwide, Inc., (OTC Bulletin Board: STPW), (http://www.stampedeinc.com)filed a voluntary petition under Chapter 11 of the Bankruptcy Code. The Company is a holding company with two active subsidiaries, Stampede Network.com, Inc., an Internet solutions provider, and Chronicle Commercial Printing, Inc., a commercial cold set, web press operation in Tampa, Florida. On March 30, 2001, the Company announced the suspension of operations in its Internet solutions, flexible staffing and retail computer sales subsidiaries. Notwithstanding this suspension of operations, Stampede Network.com will continue its solutions business on a scaled down basis and its Web hosting services for existing clients. And, the Company intends to continue its emphasis on new sales for its commercial printing operation, which could double production. The bankruptcy filing does not include the subsidiary companies. Reductions in personnel over the past three months has reduced payroll expense by approximately $35,000 a week. Company management has determined that the continued sale of common stock to provide operating funds is a short term strategy which cannot be sustained in view of the general, dramatic and continuing downturn in the technology sector, including the retail computer market, and uncertainty as to when or if this sector will recover. Significantly, all of the Company's prospects and customers in Internet solutions and custom software development have delayed their projects beyond the next six months. As a new entrant into Internet and mail order catalog sales of computers and related goods, this line of business has been a casualty of general market conditions. On February 13, 2001, the Company announced a memorandum of understanding for a merger of its dormant information technology training subsidiary with Specialized Solutions, Inc., a provider of customized technical training. This subsidiary, i-Academy, Inc., expects to continue with the merger, including the relocation of Specialized's corporate offices and operations to the Company's facilities under a lease at current market rates. The Company's planned distribution to its stockholders of 2.5 million shares of the surviving company in the merger, pursuant to a registration statement, can only be accomplished within the framework of a reorganization under Chapter 11, in view of the Company's present financial condition. John V. Whitman, Jr., the Company's president and chairman, stated: "The market for information technology training seems to be holding steady despite other factors in the economy. We believe the merger and spin-off of Specialized represents the most expedient means of providing sustainable value to our stockholders. And, the value of Specialized's stock which the Company retains for investment is expected to enhance the value in the Company's stock and provide a foundation for a post reorganization strategy. The Chapter 11 filing and reorganization will provide time and a means for management to develop and implement a viable strategy for future operations. The Company's stock will continue to trade under the symbol (STPWQ). The Q will be placed at the end of our symbol by the NASD indicating we are in Chapter 11 reorganization and will remain there until we are dismissed by the court." In a related matter, the Company's three independent directors resigned on April 3, citing the lack of time which they would have available to devote to their responsibilities as directors while the Company works its way through reorganization. Stampede Worldwide, Inc. is engaged in the ongoing businesses of providing Internet solutions and commercial web offset printing through its Stampede Network.com and Chronicle Commercial Printing subsidiaries. The Company also owns three subsidiaries which were engaged in the technology sector: Spiderscape, Inc., i-Academy, Inc. and Stampede Quest. SUMMIT CBO: Moody's Places Four Classes Of Notes On Watch --------------------------------------------------------- Moody's Investors Service was forced to put on negative watchlist four notes issued by Summit CBO I, Limited for possible downgrade. The bond rating agency said the deterioration of the credit quality of the company's collateral pool and par losses due to defaults triggered the adverse action. Moody's noted that, in the latest monthly report of Summit CBO I (dated January 31, 2001), the weighted average rating factor, including Defaulted Securities, was 3256 (2600 limit) and the 5% limit on the securities rated Caa1 or lower, also including Defaulted Securities, was in violation (31.5% actual). The following are the notes placed on the negative watchlist: -- $37 million Class B second priority senior secured floating rate notes currently rated Aa3 -- $36 million Class C secured senior subordinate notes currently rated Baa2 -- $6 million secured subordinate notes currently rated Ba2 -- $13 million secured subordinate notes currently rated B1 SUNTERRA: Court Gives Nod On $160MM Loan From Greenwich Capital --------------------------------------------------------------- A bankruptcy court on Tuesday authorized Sunterra Corp. to borrow under a new $160 million debtor-in-possession (DIP) loan to be provided by Greenwich Capital Financial Products Inc., a subsidiary of Royal Bank of Scotland. Joel I. Sher of Shapiro Sher & Guinot P.A. in Baltimore, who serves as counsel for a committee representing the Orlando-based timeshare company's unsecured creditors, told DBR Tuesday that the new loan will allow Sunterra to take out its existing $46 million DIP loan with Ableco Finance LLC. Ableco Finance is a special situations lending company affiliated with Cerberus Capital Management L.P. and Gabriel Capital Group. (ABI World, April 6, 2001) TATHAM OFFSHORE: PwC Resigns As Independent Accountants ------------------------------------------------------- On March 28, 2001 PricewaterhouseCoopers LLP resigned as the independent accountants of Tatham Offshore, Inc. The reports of PricewaterhouseCoopers LLP on the financial statements of Tatham Offshore, Inc., for each of the past two fiscal years, contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle. New independent accountants have not been appointed by Tatham at this time. TRANS WORLD: Reaches Key Agreement On Contract Waiver With Union ---------------------------------------------------------------- Trans World Airlines Inc. (TWA) has reached an agreement on contract waivers with its largest union just days before its asset sale to AMR Corp's American Airlines is expected to close. The bankrupt airline needed the agreement with the International Association of Machinists and Aerospace Workers (IAM), which represents the vast majority of TWA's 20,000 workers, in order for the deal to close. The TWA branch of the Air Line Pilots Association reached a similar agreement with the airline on Tuesday. If an agreement had not been made with the IAM, the bankrupt airline was prepared to ask the federal bankruptcy court in Delaware, which is overseeing the sale, to reject its entire labor agreement with the IAM. A final hearing on the asset sale is scheduled for today before U.S. Bankruptcy Judge Peter Walsh in Wilmington, Del. (ABI World, April 6, 2001) URSUS TELECOM: Files for Chapter 11 Bankruptcy Protection --------------------------------------------------------- Ursus Telecom Corporation (Nasdaq:UTCC) along with Access Authority, Inc., one of its wholly owned subsidiaries, have filed for U.S. Bankruptcy Code Chapter 11 protection Friday. Luca Giussani, Chief Executive Officer of Ursus Telecom stated: "The Company is taking this step reluctantly, however, the filing will allow us to maintain our operation while the we develop and submits a plan of reorganization." About Ursus Telecom Ursus, a specialist in carrier grade VoIP solutions worldwide, is an international long distance carrier that provides VoIP, long-distance, direct-dial, value-added and Internet-based services. Ursus has retail operations throughout Latin America, the Middle East, Africa and Europe, along with wholesale and retail operations in the United States. Ursus is also a licensed national and international long-distance carrier in Argentina and Peru. WHEELING-PITTSBURGH: Cuts 50 Jobs To Reduce Costs ------------------------------------------------- Wheeling-Pittsburgh Steel Corporation reduced its management staff by approximately 50 employees. The action was taken in response to the negative economic environment within the steel industry. With these reductions, the company's salaried workforce has been reduced by nearly 15 percent since the Nov. 16, 2000, bankruptcy filing. "Steel markets continue to be adversely affected by the steel import crisis," said James G. Bradley, President and Chief Executive Officer of Wheeling-Pittsburgh Steel. "This reduction in our salaried workforce is a difficult but necessary measure that will lower our costs and help position Wheeling-Pittsburgh Steel as a strong and viable company when it emerges from bankruptcy." In addition to staff reductions, Wheeling-Pittsburgh Steel has reduced its capital expenditures for 2001, eliminated training and other discretionary spending, and had temporary layoffs of as many as 1,500 employees in its plants. Wheeling-Pittsburgh Steel is the ninth largest domestic integrated steelmaker. WORLD ACCESS: Noteholders Agree to Stay Involuntary Petition ------------------------------------------------------------ World Access, Inc. (Nasdaq: WAXS) reached a definitive agreement with the holders of its 13.25% Senior Notes to stay their previously announced petition for involuntary bankruptcy. Under the terms of the agreement, the noteholders, who filed a petition for involuntary bankruptcy in Delaware on April 4, would stay the petition indefinitely, allowing World Access to continue to operate outside the construct of a bankruptcy case. In exchange for the stay of the petition, World Access will afford noteholders an oversight opportunity and the ability to approve certain extraordinary expenditures. World Access' noteholders also approved a funding plan to meet the obligations of its subsidiary, TelDaFax AG, to Deutsche Telekom AG ("DT"), in accordance with previously discussed terms. The Company and DT have executed an agreement pursuant to which TelDaFax's circuits will be reconnected by Saturday, April 7. About World Access World Access is focused on being a leading provider of bundled voice, data and Internet services to small- to medium-sized business customers located throughout Europe. In order to accelerate its progress toward a leadership position in Europe, World Access is acting as a consolidator for the highly fragmented retail telecom services market, with the objective of amassing a substantial and fully integrated business customer base. To date, the Company has acquired several strategic assets, including Facilicom International, which operates a Pan- European long distance network and carries traffic for carrier customers, NETnet, with retail sales operations in 9 European countries, and WorldxChange, with retail accounts in the US and Europe. World Access, branding as NETnet, offers services throughout Europe, including long distance, internet access and mobile services. The Company provides end-to- end international communication services over an advanced asynchronous transfer mode internal network that includes gateway and tandem switches, an extensive fiber network encompassing tens of millions of circuit miles and satellite facilities. For additional information regarding World Access, please refer to the Company's website at www.waxs.com ********* 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. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658- 9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Debra Brennan, Yvonne L. 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