/raid1/www/Hosts/bankrupt/TCR_Public/010606.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, June 6, 2001, Vol. 5, No. 110
Headlines
AMERICAN PAD: Wants More Time To Assume/Reject Unexpired Leases
AMRESCO CAPITAL: Gives Update On Liquidation Activity
BRIDGE INFORMATION: Assumes DFS Agreement With Peter Coker
COVAD COMMUNICATION: Recurring Losses Raise Going Concern Doubts
CUMBERLAND TECHNOLOGIES: Receives Nasdaq's Delisting Notice
DAEHAN FIRE: S&P Revises Insurer's Rating to R From CCCpi
EINSTEIN/NOAH: New World's $190 Million Bid for Assets Prevails
FINOVA GROUP: Disclosure Statement Hearing Continued To June 13
FURRS SUPERMARKETS: Provides Update About Reorganization Effort
GENIUS PRODUCTS: Needs More Capital To Fund Operations
GLOBAL TELESYSTEMS: NYSE Suspends Trading of Shares
GOLDEN BOOKS: Files For Chapter 11 To Facilitate Asset Sale
GOLDEN BOOKS: Case Summary & 30 Largest Unsecured Creditors
HAVANA GROUP: Auditors Issue Negative Going Concern Opinion
INSTEEL INDUSTRIES: Falls Short of NYSE's Listing Requirement
INTEGRATED HEALTH: Taps Bifferato As Special Litigation Counsel
JUSTICE TELECOM: Files Chapter 11 Petition in Oakland, CA
LOEWEN: Claim Treatment & Classification Under 2nd Amended Plan
LTV: Moves To Enforce Stay Against Minnesota Dept. Of Revenue
NATIONAL AIRLINES: Talking To Icahn re Possible Refinancing Deal
NETSOL INT'L: Nominates DaimlerChrysler's Senior Rep To Board
OLYMPUS HEALTHCARE: Files Chapter 11 Petition in Wilmington
OLYMPUS HEALTHCARE: Case Summary & Largest Unsecured Creditors
PACIFIC GAS: Engages Dresdner Kleinwort As Financial Advisor
PACIFIC GATEWAY: Lenders Agree to Extend DIP Loan to June 29
PARACELSUS HEALTHCARE: Court Okays Employment of Merrill, Lynch
PAYLESS CASHWAYS: Files Chapter 11 Petition in W.D. Missouri
PILLOWTEX: Seeks Authority To Expand E&Y Capital's Services
PURINA MILLS: Board Amends Stockholder Rights Agreement
RHYTHMS NETCONNECTIONS: Fitch Changes Rating Outlook To Negative
SAFETY-KLEEN: Curry Ice & Coal Of Peoria Seeks Relief From Stay
SHEFFIED STEEL: S&P Cuts Corporate & Senior Debt Ratings to D
TRICO STEEL: Creditors' Meeting Is On June 15 In Wilmington
USG CORPORATION: Rising Asbestos Costs May Trigger Bankruptcy
US WOOD: Selling White City Branch to Sturdi-Craft For $2.6 Mil
VISKASE COMPANIES: S&P Slashes Credit Ratings to D
WINSTAR COMMUNICATIONS: Hiring Blackstone As Financial Advisor
WORLD ACCESS: Verso To Acquire NACT Telecommunications
WORLD ACCESS: Telemate.Net to Partially Fund Acquisition of NACT
* Meetings, Conferences and Seminars
*********
AMERICAN PAD: Wants More Time To Assume/Reject Unexpired Leases
---------------------------------------------------------------
American Pad & Paper Company and its debtor affiliates filed a
sixth motion for an order extending the time within which the
debtors may assume or reject unexpired leases of nonresidential
real property until September 30, 2001. A hearing with respect
to the motion will be held before the Honorable Roderick R.
McKelvie, US District Court, District of Delaware on June 14,
2001 at 12:15 PM.
The debtors have made substantial progress in assessing their
remaining contracts and leases and have filed motions to assume
or reject all of the real property leases that they had used in
their operating businesses. Nevertheless, the debtors believe
that a few unexpired leases may remain for review in connection
with, by way of example, certain complicated ground lease or
sale-leaseback transactions that are still being addressed as
part of the wind-down process.
Co-counsel to the debtors are Richards, Layton & Finger, PA and
Gibson, Dunn & Crutcher LLP.
AMRESCO CAPITAL: Gives Update On Liquidation Activity
-----------------------------------------------------
AMRESCO Capital Trust (Nasdaq: AMCT) disclosed that one of its
remaining loans was repaid on June 1, 2001. Prior to its
repayment, the $11.8 million loan was secured by an office
property in Houston, Texas. Additionally, the company announced
that it has extended the maturity date of a $15.3 million loan
from May 19, 2001 to June 14, 2001. The loan is secured by an
office property in Irvine, California. Previously, a six-month
extension option was available to the borrower under the terms
of its loan agreement. Pursuant to the terms of the recently
negotiated extension agreement, the borrower relinquished its
right to further extend the maturity date.
The company's investment portfolio is now comprised of three
mortgage loans and a residual interest in its unconsolidated
taxable subsidiary. Under the three loans, the Company has
commitments to fund $75.3 million, of which $72.9 million is
outstanding.
As previously communicated, the company is liquidating its
assets under a plan of liquidation and dissolution. Shareholders
approved the liquidation and dissolution of the company on
September 26, 2000.
For more information about AMRESCO Capital Trust, visit the web
site at http://www.amrescoct.com
BRIDGE INFORMATION: Assumes DFS Agreement With Peter Coker
----------------------------------------------------------
Peter Coker is a member of Bridge Information Systems, Inc.'s
Management Committee. Mr. Coker also serves as President of the
company's global eBridge division, the fastest growing business
unit of the company. Coker previously served as Managing
Director responsible for all of the Bridge group's operations in
Asia and Australia. Mr. Coker has been the officer of the Debtor
entities most directly involved with the Debtors' investment in
BridgeDFS Limited, a non-Debtor affiliate and a public company
in Australia.
With respect to BridgeDFS, Mr. Coker has been actively involved
in:
(a) the initial identification of BridgeDFS as a potential
investment opportunity for the Debtors;
(b) the Debtors' purchase of BridgeDFS;
(c) development and implementation of the business strategy
of BridgeDFS;
(d) general oversight of the business and operations of
BridgeDFS on behalf of the Debtors;
(e) the initial public offering of the shares of BridgeDFS;
and
(f) service as a non-executive chairman of BridgeDFS since
its initial public offering.
As a result of the initial public offering of the shares of
BridgeDFS, the Debtors currently own 55,000,000 shares of
BridgeDFS, constituting 55% of all outstanding shares of
BridgeDFS.
In December 2000, the Debtors entered into an agreement with Mr.
Coker, whereby the Debtors granted Mr. Coker, inter alia, an
option in 400,000 shares of BridgeDFS owned by the Debtors with
an exercise price of A$0.55.
By Motion, the Debtors want to assume the "DFS" portion of the
Agreement, conditioned upon the parties mutually agreeing prior
to the hearing on this Motion to delete the "Bridge" and
"EBridge" sections of the Agreement.
The Debtors explained that they entered into the Agreement with
Mr. Coker as an incentive for Mr. Coker's continued involvement
with matters related to some of the Debtors' most important
business operations, including BridgeDFS and e-Bridge.
Since the date of the Agreement, Mr. Coker has been (and
remains) actively involved with all matters relating to
BridgeDFS and the Shares, through:
(a) continued active service as non-executive Chairman of
BridgeDFS in providing general oversight of BridgeDFS' business
on behalf of its shareholders, including the Debtors;
(b) the Debtors' selection and engagement of Macquarie Bank
Limited, an Australian investment bank, for the purpose of
exploring a possible sale of the Shares;
(c) the Debtors' selection and engagement of Mallesons
Stephen Jaques, an Australian law firm, in connection with a
possible sale of the Shares;
(d) the development, in conjunction with Macquarie Bank and
Mallesons, of a strategy for the sale of the Shares;
(e) the identification and resolution of all regulatory and
corporate issues related to a sale of the Shares, including
obtaining releases from escrow arrangements that would otherwise
prohibit sale of the Shares.
A successful sale of the Shares is vital to the Debtors' estates
and their creditors. Based on the public trading price of
BridgeDFS shares on April 6, 2001, and the rate of exchange
between Australian and US dollars prevailing on that date, the
Shares would have a nominal value of approximately US$56
million.
The Debtors believe that Mr. Coker's continued involvement with
BridgeDFS and with the sale of the Shares is imperative to any
successful sale of the Shares and that such involvement may be
jeopardized if the Debtors are unable to honor the Agreement.
Considering the merits of the Debtors' request, and in the
absence of any objection, Judge McDonald granted the Debtors'
Motion in all respects. (Bridge Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
COVAD COMMUNICATION: Recurring Losses Raise Going Concern Doubts
----------------------------------------------------------------
Covad Communications Group is a provider of broadband
communications services, which it sells to businesses and
consumers directly and indirectly through Internet service
providers, enterprises, telecommunications carriers and other
customers. These services include a range of high-speed, high-
capacity Internet and network access services using digital
subscriber line ("DSL") technology and related value-added
services. The Company sells these services directly to business
and consumer end-users through its sales force, telephone sales
and its website. Internet service providers purchase these
services in order to provide high-speed Internet access to their
business and consumer end-users. Branded virtual service
providers purchase turnkey broadband or dial-up services from
the Company and sell these services to their existing customers
or affiliate groups. Enterprise customers purchase these
services directly or indirectly from the Company to provide
their employees with high-speed remote access to the
enterprise's local area network ("RLAN access"). Other
telecommunications carriers purchase these services for resale
to their Internet service provider affiliates, Internet users
and enterprise customers.
Covad believes it has the nation's largest DSL network that is
not owned by a traditional telephone company, encompassing more
than 1800 operational central offices and passing more than 40
million homes and businesses in 109 metropolitan statistical
areas. As of March 31, 2001, Covad had 319,000 DSL based high-
speed access lines in service and had received orders for its
services from more than 250 Internet service provider,
enterprise, and telecommunications carrier customers, including
AT&T Corporation, XO Communications (formerly NEXTLINK
Communications, Inc. and Concentric Network Corporation),
EarthLink, Inc., UUNET Technologies (a WorldCom company) and
Speakeasy.net, a privately owned company. Covad also provides
dial-up Internet access service to over 400,000 subscribers
through its Covad Integrated Services subsidiary.
In the course of preparing financial statements for the year
ended December 31, 2000, internal control weaknesses were
discovered which have been exacerbated by the Company's rapid
growth. As a result, the Company has restated its unaudited
interim financial statements for previously reported quarters in
2000. It also performed long-lived asset impairment tests and
determined that its long-lived assets were impaired. These
events caused the Company to delay the filing of Form 10-K with
the SEC until after the time permitted by the SEC's rules. Due
to the management resources devoted to the preparation of the
Form 10-K and because Covad did not have its year end financial
results for 2000, the Company also did not file its Form 10-Q
for the quarter ended March 31, 2001 within the time permitted
by the SEC's rules. Covad has received a notice of delisting
from Nasdaq because of the late filing of Form 10-K. Nasdaq
scheduled a delisting hearing on May 24, 2001 to address this
failure to comply with Nasdaq's marketplace rules. Covad's
failure to file timely Form 10-K, the 2001 first quarter Form
10-Q, or other reasons (such as the failure to satisfy the
minimum stockholders' equity requirement for continued Nasdaq
National Market listing) may result in Covad's stock being
delisted from the Nasdaq National Market after the May 24, 2001
hearing.
As a result of the Company's recurring operating losses,
negative cash flows, negative stockholders' equity, combined
with litigation against the Company by some of its noteholders
which seeks, among other remedies, rescission of their note
purchases, there is substantial doubt about Covad's ability to
continue as a going concern unless it can obtain additional
financing.
CUMBERLAND TECHNOLOGIES: Receives Nasdaq's Delisting Notice
-----------------------------------------------------------
The Company received a Nasdaq Staff Determination on May 29,
2001, indicating that the Company failed to comply with the
filing requirements for continued listing set forth in
Marketplace Rule 4310c(4), and that its securities are,
therefore, subject to delisting from The Nasdaq SmallCap Market.
The Company will request a hearing before a Nasdaq Listing
Qualifications Panel to review the Staff Determination. There
can be no assurance the Panel will grant the Company's request
for continued listing.
Cumberland Technologies, Inc. (Nasdaq: CUMB) is traded on Nasdaq
under the symbol CUMB. Pending the resolution of the Nasdaq
hearing, the Company's Nasdaq symbol has been changed to CUMBE.
Cumberland Technologies, Inc. and its subsidiaries provide
advanced software technology to insurance agencies, which focus
on the selling and delivery of surety insurance products to
consumers. Through our insurance subsidiaries, we provide
performance and payment surety bonds for the construction
industry and commercial surety bonds to federal and local
government agencies.
Cumberland Technologies, Inc. is headquartered in Tampa,
Florida, with offices in Atlanta, Georgia; Cleveland, Ohio;
Greenville, South Carolina; Dallas, Texas; Phoenix, Arizona and
Los Angeles, California.
Cumberland Technologies, Inc.'s (Nasdaq: CUMB) primary focus is
to develop software solutions, which more effectively and
efficiently deliver our own, as well as our customer's products
to the marketplace.
DAEHAN FIRE: S&P Revises Insurer's Rating to R From CCCpi
---------------------------------------------------------
Standard & Poor's revised its 'pi' financial strength and
counterparty credit ratings on Daehan Fire & Marine Insurance
Co. Ltd. to 'R' from triple-'Cpi' following the May 30, 2001,
announcement that Korea Deposit Insurance Corp. (KDIC) will
place the company up for public auction, along with two other
ailing insurers.
KDIC will accept letters of intent from potential bidders until
June 18, 2001, and will identify the final candidates by July 4,
2001. The bidding process is expected to be completed about two
months later, following a period of due diligence. If no
suitable buyer is identified, Daehan Fire will be liquidated or
resolved through the transfer of its assets and liabilities to
other financial institutions through a bidding process.
Daehan Fire's financial strength weakened significantly over the
past several years, primarily as a result of the insurer's poor
underwriting performance, continued asset problems, and weak
solvency. On May 10, 2001, Standard & Poor's lowered its 'pi'
financial strength and counterparty credit ratings on the
insurer to triple-'Cpi' from single-'Bpi', citing weakness in
Daehan Fire's balance sheet and business profile.
An insurer rated 'R' is under regulatory supervision owing to
its financial condition. During the period of supervision, the
regulators might have the power to favor one class of
obligations over others, or to pay some obligations and not
others. The rating does not apply to insurers subject only to
nonfinancial actions such as market conduct violations, Standard
& Poor's said.
EINSTEIN/NOAH: New World's $190 Million Bid for Assets Prevails
---------------------------------------------------------------
New World Coffee-Manhattan Bagel, Inc. (Nasdaq: NWCI) announced
that its affiliate companies, Einstein Acquisition Corp. and
Greenlight New World, LLC, emerged as the winning bidders for
the assets of Einstein/Noah Bagel Corp. ("ENBC") and
Einstein/Noah Bagel Partners ("ENBP"). The acquisition, which is
expected to close before June 20th, would create the nation's
largest bagel bakery company with approximately 800 locations
and manufacturing facilities on both coasts.
The winning bid consisted of $160 million in cash, plus the
assumption of up to $30 million of certain operating
liabilities. New World CFO Jerold Novack said the Company has
the financial commitments in place to complete the acquisition.
"This includes commitments for bridge financing from Jefferies &
Company, Inc. and equity investments from institutional sources,
including existing investors Halpern Denney and Co. and
Greenlight Capital," he noted.
The acquisition includes substantially all assets of ENBC and
ENBP, including 460 company-owned stores, a manufacturing
facility in Los Angeles, the company's support center in Golden,
CO, and all trademarks and intellectual property rights.
"We expect Einstein/Noah to continue to operate substantially in
the same manner as before," said Ramin Kamfar, New World
Chairman and CEO. "We also expect that virtually all members of
the Einstein/Noah management team will remain with the Company
following the acquisition. We hold the Einstein management team
in high regard and feel that they have done a great job in
growing the chain's average store sales, and improving store
level and corporate profitability during a difficult period
where the capital structure the Company had inherited created a
need to restructure its balance sheet through a Chapter 11
filing. We expect Einstein/Noah to become an important
contributor to our bottom line."
Kamfar noted that Einstein/Noah generated $30.8 million in
earnings before interest, taxes, depreciation and amortization
(EBITDA) before non-recurring expenses on $375.7 million in
revenues during the year ended December 31, 2000. During that
same period, New World, which derives most of its revenues from
manufacturing sales and franchise fees, reported EBITDA of $8.0
million on revenues of $45.7 million.
This announcement follows a process that began in April 2000
when ENBC and ENBP filed Chapter 11 petitions. In August 2000,
New World began to purchase debentures of ENBC. New World and an
affiliate, Greenlight New World, LLC, ultimately acquired in
excess of $61 million of the debentures, making the Company the
largest creditor of ENBC. In February 2001, ENBC and ENBP
abandoned their proposed plan of reorganization and began the
process that led to the Friday auction.
The $160 million of cash proceeds realized by the ENBC and ENBP
bankruptcy estates from the sale will be used to make payments
toward their allowed claims and other items as may be allowed
and determined by the Bankruptcy Court after subsequent court
proceedings. New World and Greenlight New World, LLC expect to
receive over $40 million on account of their debenture claims
against the ENBC estate. The order entered by the Bankruptcy
Court approving the sale to the winning bidder contained express
provisions which allowed New World's and Greenlight New World's
debenture-related claims against the ENBC estate.
New World Coffee-Manhattan Bagel, Inc. currently franchises,
licenses or owns stores under its four brands in 26 states and
Washington, D.C. The Company is vertically integrated in bagel
dough manufacturing and coffee roasting, with plants in New
Jersey, California and Connecticut.
FINOVA GROUP: Disclosure Statement Hearing Continued To June 13
---------------------------------------------------------------
The hearing originally scheduled to be held before the Honorable
Peter J. Walsh on June 7, 2001 at 3:30 p.m. to consider the
entry of an order, among other things, finding that the
Disclosure Statement of The FINOVA Group, Inc. contain "adequate
information" within the meaning of section 1125 of the
Bankruptcy Code and approving the Disclosure Statement has been
continued to June 13, 2001 at 10:00 a.m. or as soon thereafter
as counsel may be heard.
The deadline to file responses or objection, if any, to the
approval of the Disclosure Statement or related relief sought
has been continued to June 6, 2001 at 4:00 p.m. (Finova
Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
FURRS SUPERMARKETS: Provides Update About Reorganization Effort
---------------------------------------------------------------
While continuing to build on the positive momentum of the last
few months, the new management team at Furrs Supermarkets, Inc.
will file a motion in federal bankruptcy court establishing a
deadline for bids to purchase the company. In doing so, the
management team hopes to accelerate the company's emergence from
Chapter 11 as either a reorganized company with its existing
shareholders, or explore the options of a sale of Furrs to
another company or companies.
Recognizing the interest among investors in the purchase of the
company, Furrs will move for an order of the court to set a firm
deadline of June 20 to receive offers. At which time, Furrs
still has the option to reject all offers and reorganize as a
stand-alone company.
We want to evaluate all of our options in order to preserve the
value of the business and to protect the jobs of 4, 900
associates that are depending on us, says Steve Mortensen, Furrs
President/COO. The filing of this motion is part of the
evaluation process and will help us facilitate our
reorganization in a timely manner, adds Mortensen.
Headquartered in Albuquerque, New Mexico, Furrs is the state's
largest privately held company operating stores in New Mexico
and west Texas.
GENIUS PRODUCTS: Needs More Capital To Fund Operations
------------------------------------------------------
The auditing firm for Genius Products, Inc., a Nevada
corporation, has stated that the Company has incurred
significant net losses the last three years and requires
additional capital to fund its operations. They further state
that these conditions raise substantial doubt about the
Company's ability to continue as a going concern.
For the Year ended December 31, 2000 the Company suffered net
losses of $(2,633,292) on revenues of $1,344,016. For
comparison, the Year ended December 31, 1999, showed net losses
of $(2,079,398) on revenues of $2,302,015.
The Company has incurred significant losses from operations in
each of the last three years, and needs substantial capital to
implement its business plan. In addition, 76,888 shares of
common stock issued in private placements is subject to
redemption and the Company may be obligated to pay cash of up to
$473,860 to these investors.
The Company has retained a consultant to help raise funds
through private placements of common shares on a "best efforts"
basis, as well as to provide investor relations services. In
March 2001, the Company commenced a private placement of shares
under Regulation D of the 1933 Securities Act, to provide
financing for the production of new video and music products and
other working capital requirements. In addition, the Company
has the ability to factor its trade receivables. No assurance
can be made that the Company will succeed in raising any funds.
Failure to obtain financing will have a material adverse effect
on operations and financial condition.
GLOBAL TELESYSTEMS: NYSE Suspends Trading of Shares
---------------------------------------------------
Global TeleSystems, Inc. (GTS) (NYSE:GTS; EASDAQ:GTSG;
Frankfurt:GTS) announced that the New York Stock Exchange (NYSE)
has informed the Company that trading in GTS shares has been
suspended on the NYSE due to indications of an "abnormally low
selling price" for GTS's common stock.
The NYSE also informed the Company that it intends to seek to
delist the Company's shares with the Securities and Exchange
Commission. GTS does not believe that the NYSE's decision is
well founded in the Exchange's rules and is thus immediately
appealing the decision. Under NYSE rules, any prospective
delisting would be stayed pending resolution of the Company's
appeal. In the meantime, the Company will apply for immediate
quotation of its shares on the OTC bulletin board.
Robert Amman, GTS's chairman and CEO commented: "The day-to-day
operations of the Company, including Ebone, our core business
unit and Europe's leading provider of optical IP and broadband
services, should not be adversely affected by this development.
All relationships with customers, suppliers and employees will
continue in the normal course. In this regard, as of 31 May, the
Company had EUR 288 million in consolidated cash, of which EUR
50 million was subsequently used to reduce the outstanding
balance of its EUR 300 million bank credit facility to EUR 150
million. We also do not expect this development to interfere
materially with our restructuring plans. Upon completion of the
restructuring programme, we will consider various options for
the listing of our shares, including listing on a major bourse
in Europe, where our operations are based."
GOLDEN BOOKS: Files For Chapter 11 To Facilitate Asset Sale
-----------------------------------------------------------
DIC Entertainment Holdings, Inc. and Golden Books Family
Entertainment, Inc. have entered into an agreement whereby DIC
will purchase substantially all of the assets of Golden Books.
The approximate value of the transaction is $170 million. The
company will be privately held.
Under the terms of the agreement, Golden Books and its domestic
subsidiaries will file a Chapter 11 bankruptcy petition and seek
approval of the sale to DIC Entertainment under Section 363 of
the bankruptcy code. Golden Books' operations will continue as
usual during the court and sale process, which is expected to
take approximately 60 days.
DIC Entertainment will integrate the Golden Books library of
more than 500,000 titles, including an extensive comic book
collection, 3,000 movies, television series and specials and
cartoons into its existing library of over 2,500 episodes.
Golden Books' leading brands include Lassie, Underdog, Pat the
Bunny, the Poky Little Puppy and a variety of seasonal
franchises, including Frosty the Snowman, Rudolph the Red-Nosed
Reindeer and the Little Drummer Boy. DIC will maintain Golden
Books' worldwide distribution network with a retail presence in
more than 100,000 stores.
DIC Entertainment Chairman and CEO Andy Heyward said, "We
believe the business combination when implemented will further
extend our library of valuable branded characters as well as
provide additional opportunities to leverage the powerful Golden
Books brand and enormous collection of wonderful characters,
publications and programs that families have cherished for
nearly 60 years."
Richard E. Snyder, Chairman and Chief Executive Officer of
Golden Books Family Entertainment, said, "This partnership
launches a new era of greatly expanded reach and impact for
Golden Books' publications and programming. Combining the
expertise of Andy Heyward and his team, new capital to invest in
our programming and products, the trust that generations of
families continue to have in Golden Books and the improvements
to our franchise made in recent years will enable us to
capitalize on the tremendous growth opportunities before us."
DIC Entertainment was purchased in November 2000 by Andy Heyward
in partnership with Bain Capital, LLC. DIC Entertainment is a
leading children's entertainment company focused on developing,
producing, distributing, and merchandising children's animated
programming worldwide. Since its founding in 1983, DIC has
produced over 100 series and 3,000 episodes, averaging over 145
new half-hour episodes per year for the last ten years. With
approximately 2,500 episodes, DIC's catalog is one of the
largest and most valuable libraries of children's animation
television programming in the entertainment industry, boasting
beloved evergreen brands such as Inspector Gadget, Madeline,
Sailor Moon, Sabrina the Teenage Witch, Where on Earth is Carmen
Sandiego?, Action Man, Sonic the Hedgehog, and Super Mario Bros.
DIC's programs are watched by approximately 25 million kids in
the US each week.
Joe Pretlow, a Managing Director of Bain Capital said, "We are
looking forward to the successful integration of Golden Books
with DIC and are excited to play a part in the restructuring and
turnaround necessary to accomplish that goal. We will continue
to acquire other branded children's assets that fit our
strategic goals both domestically and internationally."
Bain Capital is a global investment firm managing several pools
of capital including private equity, high-yield assets,
mezzanine capital and public equity with over $12 billion in
assets under management. Since its inception in 1984, the firm
has made private equity investments and add-ons in over 225
companies, in a variety of industries, including technology and
communications, media and entertainment, healthcare, consumer
goods and industrial products. Bain Capital partners with
exceptional management teams in order to build long-term value
in its portfolio companies. Headquartered in Boston, Bain
Capital has offices in New York, San Francisco and London.
GOLDEN BOOKS: Case Summary & 30 Largest Unsecured Creditors
-----------------------------------------------------------
Lead Debtor: Golden Books Family Entertainment, Inc.
888 Seventh Avenue
New York, NY 10106-4100
Debtor affiliates filing separate chapter 11 petitions:
Golden Books Publishing Company, Inc.
Golden Books Home Video, Inc.
LRM Acquisition Corp.
Shari Lewis Enterprises, Inc.
SLE Productions, Inc.
Type of Business: Publishes, produces, licenses, and markets an
extensive range of children's books
in the North American retail market and has
published its flagship line, "Little Golden
Books," for over 50 years. The company
produces storybooks, puzzles, educational
workbooks, reference books, chapter books and
fiction, utilizing both owned and licensed
characters.
Chapter 11 Petition Date: June 4, 2001
Court: District of Delaware
Bankruptcy Case Nos.: 01-01920 through 01-01925
Debtors' Counsel: Mathew A. Feldman, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
(212) 728-8000
and
Robert Brady, Esq.
Young, Conaway, Stargatt & Taylor
Rodney Square North, Box 391
Wilmington, Delaware 19899-0391
(302) 571-6600
Total Assets: $170,193,000
Total Debts: $220,627,000
List of Debtors' Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Hung Hing Offset Trade $490,935
Printing Co.
Steven Lao
17-19 Dai Hei Street
Tai Po Ind Est, N.T.
Hong Kong
(203) 261-2977
Disney Licensed Publishing Trade $461,563
Vice President
500 S. Buena Vista Street
Burbank, CA 91521
(818) 560-1000
and
The Walt Disney Company
Kenneth Newman
500 Park Avenue
New York, NY 10022
Tel: (212) 593-8900
Fax: (212) 735-5066
Chief Container Co. Trade $435,990
Rueben Guthrie
PO Box 7958
Tel: (800) 650-4350
Fax: (770) 428-5062
The Bankruptcy Estate of Trade $345,369
Artech Printing, Inc.
US Bankruptcy Court for the
Eastern District of Wisconsin
Case No. 01-21924-JES
Attorney Virginia E. George
Gossens & George, S.C.
Suite 500
219 North Milwaukee Street
Milwaukee, WI 53202-5818
Tel: (414) 289-9400
Fax: (414) 289-7760
and
General Electric Capital
Corporation
Peter C. Blain
Reinhart, Boerner, Van Deuren,
Norris & Rieselback, S.C.
1000 North Water Street
PO Box 51400
Milwaukee, WI 53203-3400
Tel: (414) 298-1000
Fax: (414) 298-8097
GT Merchandising & Lic
Corp. Trade $322,036
Andy Greenberg
16 E. 40th Street
New York, NY 10016
Tel: (212) 951-3020
Fax: (212) 213-9319
Mattel, Inc. Trade $231,600
Stone Container Corp. Trade $226,313
Heidelberg USA, Inc. Trade $224,382
Lake Book Manufacturing, Inc. Trade $205,578
LAI On Plastic Products Trade $200,479
US Concepts, Inc. Trade $189,469
Rocket Books Trade $189,504
Leisure Concepts, Inc. Trade $178,460
The Computer Merchant Ltd. Trade $170,995
Brown Wells & Jacob Ltd. Trade $169,761
Sleepeck Printing Trade $164,109
Griffin Bacal, Inc. Trade $160,000
National Graphics Solutions Trade $158,188
Eden LLC Trade $152,818
Excel united Company Limited Trade $140,488
Screenvision Trade $135,150
Compuware Corporation Trade $134,305
CSC Consulting, Inc Trade $133,929
Primedia Cover Concepts Trade $130,000
Warner Bros. Consumer Trade $117,204
Products
Team Impressions, Inc. Trade $115,124
Advanced Web Technologies Trade $102,284
Horizon Paper Co. Inc. Trade $87,226
Hilton Scottsdale Resort Trade $86,746
& Villa
Tormont Publications Trade $81,875
HAVANA GROUP: Auditors Issue Negative Going Concern Opinion
-----------------------------------------------------------
The auditors opinion of Hausser+Taylor LLP, of Canton, Ohio, on
April 10, 2001, concerning their audit of the Havana Group
stated: "The Company incurred a net loss of $1,139,013 during
the year ended December 31, 2000, is in default on its loan
agreements and is in arrears on accounts with certain vendor
creditors, all of which raise substantial doubt about its
ability to continue as a going concern."
The Havana Group, Inc. owns Phillips & King International,
Incorporated as a wholly-owned subsidiary which it acquired on
August 4, 2000. P&K, which has been in business since it was
formed in 1906 by Mr. Harry Phillips, is a wholesale distributor
of tobacco, cigars, pipes and related smoking products. P&K
sells its products to approximately 3,000 retail shops. Havana
is engaged in the business of (i) operating a retail smokeshop
in Canton, Ohio which primarily sells make your own cigarette
kits, pipes, cigars and smoking accessories; (ii) marketing make
your own cigarette kits, pipes, cigars, tobaccos and related
accessories directly to consumers through its full color catalog
(the "Carey Smokeshop Catalog"); and (iii) providing a program
of automatic periodic shipments of pipe tobacco directly to
consumers (the "Carey Tobacco Club"). The Company has developed
a website under the name "Smokecheap.com" and markets certain of
its products through this website. The Company owns a second
wholly-owned subsidiary namely, Monarch Pipe Company. Monarch
manufactures smoking pipes that are exclusively sold by the
Company. Monarch is located in Bristow, Oklahoma. Monarch
employs three people and has the production capacity of 20,000
smoking pipes per year. The wood used to produce the smoking
pipes (i.e. briarwood) is purchased on a semi-finished basis and
Monarch completes the assembly and finishes the final product.
Products produced by Monarch are marketed as middle market
pipes, with retail prices ranging from approximately $20 to $40
and with factory costs of $8.00 to $12.00 per unit.
INSTEEL INDUSTRIES: Falls Short of NYSE's Listing Requirement
-------------------------------------------------------------
Insteel Industries, Inc. (NYSE: III), one of the nation's
leading manufacturers of wire products, announced that it has
been notified by the New York Stock Exchange (NYSE) that the
Company has fallen below the continued listing criteria relating
to total market capitalization over a 30 trading-day period.
Under the market capitalization requirement, the Company's total
market capitalization may not be less than $15.0 million over a
30 trading-day period. For the 30 trading-days ended May 14,
2001, the Company's total market capitalization was $14.8
million.
As required by the NYSE, the Company intends to submit a
business plan to the Listings and Compliance Committee of the
NYSE that the Company believes will demonstrate compliance with
the continued listing standards within eighteen months of the
NYSE's notification. If the Committee accepts the business plan,
the Company would be subject to quarterly monitoring for
compliance with the business plan. If the business plan is
rejected, the Company would be subject to NYSE trading
suspension and delisting and, in such event, the Company
believes that an alternative trading venue would be available.
Insteel Industries is one of the nation's leading manufacturers
of wire products. The Company manufactures and markets concrete
reinforcing products, industrial wire, nails and tire bead wire
for a broad range of construction and industrial applications.
INTEGRATED HEALTH: Taps Bifferato As Special Litigation Counsel
---------------------------------------------------------------
Integrated Health Services, Inc. asked the Court for
authorization to employ Bifferato, Bifferato & Gentilotti as
special litigation counsel with immediate effect because:
(a) the Debtors' Delaware counsel may be conflicted from
bringing and pursuing a certain action on behalf of the
Debtors;
(b) BB&G has extensive experience in and knowledge of
debtors' and creditors' rights, commercial litigation
and business reorganizations; and
(c) BB&G has expertise, experience and knowledge practicing
before the Court.
The Debtors believe that BB&G is well qualified to represent
them in an efficient and cost effective manner in certain
litigation proceedings.
BB&G is expected to render legal services which will include,
but are not limited to, assisting the Debtors on matters
relating to local custom and practice as well as in litigation
of the Debtors' claims against certain entities.
While employed by the Debtors, BB&G will not represent any other
entity having an adverse interest in connection with the case,
as required by Bankruptcy Code section 327(a) and is a
"disinterested person" within the meaning of Bankruptcy Code
section 101(14).
The Debtors requested that BB&G be compensated at the firm's
normal hourly billing rates prevailing at the time services are
rendered and that BB&G's fees, any necessary and actual expenses
incurred by BB&G in the course of its representation, as well as
any advances for fees or expenses be allowed subject to Court
approval as administrative expenses of the Debtors' bankruptcy
estate.
BB&G changes its billing rates from time to time. The current
hourly rates in effect for BB&G professionals potentially
involved in these matters are:
Ian Connor Bifferato $250
Jeffrey M. Gentilotti $250
Vincent A. Bifferato, Jr. $250
Megan N. Harper $180
James Nutter $180
George Lees $180
Amy Kiefer $ 90
Kristin Wright $ 90
Connor Bifferato, a director of the law firm of Bifferato,
Bifferato & Gentilotti, told the Court that BB&G has represented
certain of the Debtors' creditors in connection with obtaining
relief from the automatic stay. BB&G has concluded its
representation of each of these creditors and has confirmed with
each of the creditors that no conflict currently exists.
Mr. Bifferato said in his affidavit that BB&G does not represent
any other entity having an adverse interest in connection with
the IHS chapter 11 case in accordance with section 327(a) of
title 11 of the United States Code (the Bankruptcy Code), and
does not represent or hold an interest adverse to the Debtors'
estate with respect to the matter on which BB&G is to be
employed.
Mr. Bifferato submitted that the firm is "disinterested" within
the meaning of section 101(14) of title 11 of the United States
Code.
Moreover, disclosure will be supplemented if and when any
additional material connections are discovered, Mr. Bifferato
assured. (Integrated Health Bankruptcy News, Issue No. 17;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
JUSTICE TELECOM: Files Chapter 11 Petition in Oakland, CA
---------------------------------------------------------
TotalAxcess, Inc. (OTCBB:TXCS.OB) an Oakland, California-based
telecommunications service provider, reported that Justice
Telecom Corporation (JTC) filed for Chapter 11 reorganization on
May 31, 2001. The law firm of Luce, Forward, Hamilton & Scripps
has been engaged to administer the Chapter 11 in accordance with
the U.S. Bankruptcy codes.
TotalAxcess (TXCI) is a fully operational company and operates
its business completely independent of JTC. TXCI operates its
business from the Company's corporate offices in Oakland,
California, and maintains a separate sales department, switch
site and employees that are not affiliated with Justice Telecom
Corporation.
TotalAxcess reported that it is a majority shareholder and
creditor of JTC; the filing of JTC in no way impacts TXCI
operations or its current or future business strategies. TXCI
has maintained a completely separate organization and business
activities and will continue to develop its business plan and
financial objectives.
"I am personally saddened to see yet another telecommunications
company file for bankruptcy. Over the past few months there have
been a number of similar situations with companies much larger
and some much smaller. We at TXCI had high hopes for JTC, but
with continuing pressure on margins and escalating costs, we are
not surprised at today's announcement," stated Joseph
Monterosso, President and Chairman of TotalAxcess.
About TotalAxcess
TotalAxcess is a publicly traded facilities-based carrier
headquartered in Oakland, California. The Company owns and
operates a complete domestic and international network through
its state-of-the-art switch center in Los Angeles, California
and operates internationally under a Section 214 authority
granted by the Federal Communications Commission (FCC).
TotalAxcess is a fully reporting public Company with all filings
current with the Securities and Exchange Commission (SEC). Long-
standing client relationships characterize the Company's
commitment to superior service and product support. For more
information on the Company visit their Web site at
http://www.totalaxcess.com
LOEWEN: Claim Treatment & Classification Under 2nd Amended Plan
---------------------------------------------------------------
Description and Amount
of Claims or Interests Treatment
---------------------- ---------
Class 1 (Unsecured Priority
Claims)
Priority Claims against any Unimpaired; on the Effective
Debtor that are entitled to Date, each holder of an
priority under section 507(a)(3), Allowed Claim in Class 1
507(a)(4) or 507(a)(6) of the will receive cash equal to
Bankruptcy Code. The amount of such Claim.
Estimated Aggregate Claims Estimated Percentage
Amount: $1.8 million Recovery: 100%
Class 2 (Loewen Subsidiary Debtor
Convenience Claims):
Unsecured Claims against any Impaired; on the Effective
Loewen Subsidiary Debtor that Date, each holder of an
otherwise would be Allowed Claim in Class 2
included in Class 11, but with against any Loewen
respect to each such Claim, the Subsidiary Debtor will
applicable Claim either receive cash equal to the
(a) is equal to or less than amount of such Claim against
$10,000 or such Debtor (as reduced, if
(b) is reduced to $10,000 applicable, pursuant to an
pursuant to an election by election by the holder
such holder made on the thereof in accordance with
Ballot provided for voting Section II.B.1 of the Plan).
on the Plan by the Voting
Deadline.
For purposes of treatment under
Class 2, multiple Claims of a
holder against a particular
Debtor arising in a series of
similar or related transactions
between such Debtor and the
original holder of such Claims
will be treated as a single
Claim and no splitting of Claims
will be recognized for purposes
of distribution.
Estimated Aggregate Claims Estimated Percentage
Amount: $9.6 million Recovery: 100%
Class 3 (TLGI and LGII Convenience
Claims):
Unsecured Claims against TLGI or Impaired; on the Effective
LGII that otherwise would be Date, each holder of an
included in Class 11, but with Allowed Claim in Class 3
respect to each such Claim, the against TLGI or LGII will
applicable Claim either receive cash equal to the
(a) is equal to or less than amount of such Claim against
$1,000 or such Debtor (as reduced, if
(b) is reduced to $1,000 pursuant applicable, pursuant to an
to an election by such holder election by the holder
made on the Ballot provided thereof in accordance with
for voting on the Plan by Section II.B.2 of the Plan).
the Voting Deadline. For purposes of treatment
under Class 3, multiple
Claims of a holder against a
particular Debtor arising in
a series of similar or
related transactions between
such Debtor and the original
holder of such Claims will
be treated as a single Claim
and no splitting of Claims
will be recognized for
purposes of distribution.
Estimated Aggregate Claims Estimated Percentage
Amount: $0.4 million Recovery: 100%
Class 4 (Secured Claims Other than
CTA Note Claims):
Secured Claims against any Debtor Unimpaired(except for Claims
And Collateralized Accommodation as to which the applicable
Claims, in each case that are not Debtor elects Option C
otherwise classified in Class 5, treatment); on the Effective
6 or 7. Date, unless otherwise
agreed by a Claim holder and
each applicable Debtor or
Reorganized Debtor, each
holder of an Allowed Claim
in Class 4 will receive
treatment on account of such
Allowed Claim in the manner
set forth in Option A, B or
C below, at the election of
the applicable Debtor or, in
the case of Collateralized
Accommodation Claims,
Debtors.
The applicable Debtor or
Debtors will be deemed to
have elected Option B,
except with respect to any
Allowed Claim as to which
the applicable Debtor or
Debtors elect Option A or
Option C in a certification
Filed prior to the
conclusion of the
Confirmation Hearing. To the
Extent that the applicable
Debtor or Debtors elect
Option C treatment for any
Class 4 Claims, such Claims
will be deemed impaired and
to have rejected the Plan.
Option A: Each holder of an
Allowed Claim in Class 4
with respect to which the
applicable Debtor or Debtors
elect Option A will receive
cash in the full amount of
such Allowed Claim. For
purposes of Option A,
Collateralized Accommodation
Claims against multiple
Debtors in respect of a
particular transaction will
be treated as a single Claim
and no multiple recoveries
will be permitted.
Option B: Each Allowed Claim
in Class 4 with respect to
which the applicable Debtor/
Debtors elect or is deemed
to have elected Option B
will be Reinstated.
Option C: Impaired; each
holder of an Allowed Claim
in Class 4 with respect to
which the applicable Debtor
or Debtors elect Option C
will be entitled to receive,
& the applicable Debtor/s
(or Reorganized Debtor/
Reorganized Debtors) shall
release and transfer to
such holder, the collateral
securing such Allowed Claim.
Estimated Aggregate Claims Estimated Percentage
Amount: $43.8 million Recovery: 100%
Class 5 (Group I CTA Note
Claims):
All Group I CTA Note Claims. Impaired; on the Effective
Group I CTA Note Claims include Date, each holder of an
Claims under the BMO Revolving Allowed Claim in Class 5
Credit Facility, the MEIP Credit will receive in full
Facility, the Series D Notes, satisfaction of all of its
the Series E Notes, the Series 1 Group I CTA Note Claims: (a)
Notes, the Series 2 Notes or the a Pro Rata share of cash in
Series 5 Notes, including any an amount equal to the sum
and all Guaranties thereof, but of (i) $125,305,000 if the Exit
do not include any Claims that Financing Term Loan Closing
are treated under Section III.E occurs, (ii) 50.122% of the
or Section III.F of the Plan or Realized Asset Disposition
otherwise would constitute an Proceeds Amount and (iii)
Administrative Claim. 50.122% of the Excess Cash
Distribution Amount; (b) a
Pro Rata share of New Five-
Year Secured Notes in an
original principal amount of
$125,305,000, unless the
Exit Financing Term Loan
Closing occurs; (c) a Pro
Rata share of New Two-Year
Unsecured Notes in an
original principal amount
equal to 50.122% of the
Unrealized Asset Disposition
Proceeds Amount (i.e., an
amount equal to $165 million
minus the Realized Asset
Disposition Proceeds
Amount); (d) a Pro Rata
share of New Seven-Year
Unsecured Notes in an
original principal amount of
$162,897,000; and (e) a Pro
Rata share of 18,120,000
shares of New Common Stock.
Except as provided in
Section IV.F.2 or IV.F.3 of
the Plan, the foregoing
distributions shall be w/o
prejudice to the rights and
claims of any Indenture
Trustee or holder of a Group
I CTA Note Claim against
Tolling Parties (see
"Collateral Trust Agreement
Issues; Recovery Actions;
and Other Legal Proceedings
- Other Claims Related to
the Collateral Trust
Agreement") or other third
parties relating to the CTA.
Estimated Aggregate Claims Estimated Percentage
Amount: $914.8 million Recovery: 76.0%
Class 6 (Group II CTA Note
Claims):
All Group II CTA Note Claims. Impaired; on the Effective
Group II CTA Note Claims include Date, each holder of an
Claims under the Series 3 Notes Allowed Claim in Class 6
or the Series 4 Notes, including will receive in full
any and all guaranties thereof, Satisfaction of all of its
but do not include any Claims Group II CTA Note Claims:
that are treated under (a) a Pro Rata share of cash
Section III.E or Section III.F in an amount equal to the
of the Plan or otherwise would sum of (i) $46,003,000 if
constitute an Administrative the Exit Financing Term Loan
Claim. Closing occurs, (ii) 18.401%
of the Realized Asset
Disposition Proceeds Amount
and (iii) 18.401% of the
Excess Cash Distribution
Amount;
(b) a Pro Rata share of New
Five-Year Secured Notes in
an original principal amount
of $46,003,000, unless the
Exit Financing Term Loan
Closing occurs;
(c) a Pro Rata share of New
Two-Year Unsecured Notes in
an original principal amount
equal to 18.401% of the
Unrealized Asset Disposition
Proceeds Amount;
(d) a Pro Rata share of New
Seven-Year Unsecured Notes
in an original principal
amount of $59,803,000; and
(e) a Pro Rata share of
6,652,300 shares of New
Common Stock. Except as
provided in Section IV.F.2
or IV.F.3 of the Plan, the
foregoing distributions
shall be without prejudice
to the rights and claims of
any Indenture Trustee or
holder of a Group II CTA
Note Claim against Tolling
Parties or other third
parties relating to the CTA.
Estimated Aggregate Claims Estimated Percentage
Amount: $353.6 million Recovery: 72.2%
Class 7 (Group III CTA Note
Claims):
All Group III CTA Note Claims. Impaired; on the Effective
Group III CTA Note Claims include Date, each holder of an
Claims under the Series 6 Notes, Allowed Claim in Class 7
the Series 7 Notes or the PATS will receive in full
Notes, including any and all satisfaction of all of its
guaranties thereof, but do not Group III CTA Note Claims:
include any Claims that are (a) a Pro Rata share of cash
treated under Section III.E or in an amount equal to the
Section III.F of the Plan sum of (i) $78,692,000 if
otherwise would constitute the Exit Financing Term Loan
an Administrative Claim. Closing occurs, (ii) 31.477%
of the Realized Asset
Disposition Proceed Amount &
(iii) 31.477% of the Excess
Cash Distribution Amount;
(b) a Pro Rata share of New
Five-Year Secured Notes in
an original principal amount
of $78,692,000, unless the
Exit Financing Term Loan
Closing occurs;
(c) a Pro Rata share of New
Two-Year Unsecured Notes in
an original principal amount
equal to 31.477% of the
Unrealized Asset Disposition
Proceeds Amount;
(d) a Pro Rata share of New
Seven-Year Unsecured Notes
in an original principal
amount of $102,300,000; and
(e) a Pro Rata share of
11,379,500 shares of New
Common Stock. Except as
provided in Section IV.F.2
or IV.F.3 of the Plan, the
foregoing distributions
shall be without prejudice
to the rights and claims of
any Indenture Trustee or
holder of a Group III CTA
Note Claim against Tolling
Parties or other third
parties relating to the CTA.
Estimated Aggregate Claims Estimated Percentage
Amount: $770.1 million Recovery: 56.7%
Class 8 (O'Keefe Note Claims):
All O'Keefe Note Claims. Impaired; on the Effective
Date, each holder of an
Allowed Claim in Class 8
will receive in satisfaction
of all of its Class 8 Claims
against all Debtors:
(a) a Pro Rata share of
781,900 shares of New Common
Stock;
(b) a Pro Rata share of New
Warrants exercisable to
purchase 234,400 shares of
New Common Stock; and
(c) a Pro Rata share of a
15.04% interest in the
Liquidating Trust.
Estimated Aggregate Claims Estimated Percentage
Amount: $33.1 million Recovery: 41.3%
Class 9 (MIPS Debenture Claims):
Unsecured Claims against Impaired; on the Effective
LGII and TLGI under or in respect Date in full satisfaction
of the MIPS Junior Subordinated of all of its Class 9 Claims
Debenture and the MIPS Junior against LGII and TLGI, if
Subordinated Debenture Guarantee. Class 19 accepts the Plan,
LGCLP will receive New
Warrants exercisable to
purchase 486,800 shares of
New Common Stock, which New
Warrants will in turn be
distributed by LGCLP to the
holders of Allowed Interests
and Allowed Claims in Class
19. If Class 19 does not
accept the Plan, no property
will be distributed to or
retained by the holder of
Allowed Claims in Class 9.
Estimated Aggregate Claims Estimated Percentage
Amount: $79.2 million Recovery: 1.1%
Class 10 (Intercompany Claims):
Claims of any Loewen Company Impaired in part; except as
against any Debtor that are provided below, Claims in
not classified in Class 10 and Class 10 will be Reinstated.
are not Administrative Claims. Notwithstanding the
foregoing:
(a) on the Effective Date,
each holder of an Allowed
Claim in Class 10 in respect
of the MEIPs Debentures will
receive its Pro Rata share
of $10,000 in complete
discharge of any such Claim;
(b) no property will be
distributed to or retained
by any Loewen Company on
account of any Allowed Claim
in Class 10 with respect to
which, immediately prior to
the Effective Date, the
obligor is LGII or a wholly
owned, direct or indirect
subsidiary of LGII and the
holder is TLGI or a
non-United States, wholly
owned, direct or indirect
subsidiary of TLGI; and
(c) no property will be
distributed to or retained
by any Loewen Company that's
a member of the "affiliated
group" (as that term is
defined in section 1504(a)
of the Internal Revenue
Code) of which LGII is the
common parent with respect
to any Allowed Claim in
Class 10 on which the
obligor is also a member
of such affiliated group;
any such Claims referenced
in clauses (b) and (c),
after being offset by any
amounts owed by the holder
thereof to the particular
Debtor obligor, will be
discharged on the Effective
Date. For purposes of clause
(c) above, a Loewen Company,
all of the partners of which
are members of such
affiliated group, will be
deemed to be a member of
such affiliated group. Not-
withstanding the treatment
of Class 10 Claims, each of
the Loewen Companies holding
an Allowed Claim in Class 10
will be deemed to have
accepted the Plan.
Estimated Aggregate Claims Estimated Percentage
Amount: $6.2 billion Recovery: 0-100%
Class 11 (Unsecured Nonpriority
Claims):
Unsecured Claims against any Impaired; on the Effective
Debtor (including the unsecured Date, each holder of an
portion of any Claim that if Allowed Claim in Class 11 of
fully secured would have been any particular Debtor will
classified in Class 4 and as to receive, based upon the
which the applicable Debtor principal amount of such
shall have elected Option A or holder's Allowed Claim and
Option C treatment under Section the Division in which
III.B.2 of the Plan and including such Debtor is classified:
any claims in respect to the BMO (a) a Pro Rata share of the
Letter of Credit Facility and no. of shares of New Common
the UBS Option Contract) that Stock indicated below for
are not otherwise classified in such Division;
Class 1, 2, 3, 5, 6, 7, 8, 9, b) a Pro Rata share of
10, 12 or 13. New Warrants
exercisable to purchase the
number of shares of New
Common Stock indicated below
for such Division, if
any; and
(c) a Pro Rata share of the
percentage interest in
the Liquidating Trust
indicated below for such
Division, if any. The Div.
in which each Debtor has
been classified is set forth
on Exhibit I.
Estimated Aggregate Class 11
Claims: $211.2 million
Estimated Aggregate Claims
Amount by Division:
Division A Debtors: $ 30.1 mil Division A Debtors: 135,100
Division B Debtors: $104.6 mil shares of New Common Stock;
Division C Debtors: $ 15.4 mil New Warrants exercisable to
Division D Debtors: $ 2.4 mil purchase 454,400 shares of
Division E Debtors: $ 6.3 mil New Common Stock; and 13.68%
Division F Debtors: $ 18.5 mil interest in the Liquidating
Division G Debtors: $ 12.6 mil Trust.
Division H Debtors: $ 21.3 mil
Division B Debtors: 469,500
shares of New Common Stock;
New Warrants exercisable to
purchase 1,578,700 shares of
New Common Stock; and 47.51%
interest in the Liquidating
Trust.
Division C Debtors: 909,900
shares of New Common Stock;
no New Warrants exercisable
to purchase shares of New
Common Stock; and no
interest in the
Liquidating Trust.
Division D Debtors: 112,400
shares of New Common Stock;
no New Warrants exercisable
to purchase shares of New
Common Stock; and no
interest in the
Liquidating Trust.
Division E Debtors: 223,200
shares of New Common Stock;
no New Warrants exercisable
to purchase shares of New
Common Stock; and no
interest in the
Liquidating Trust.
Division F Debtors: 478,000
shares of New Common Stock;
New Warrants exercisable to
purchase 148,600 shares of
New Common Stock; and 8.41%
interest in the Liquidating
Trust.
Division G Debtors: 176,200
shares of New Common Stock;
New Warrants exercisable to
purchase 100,900 shares of
New Common Stock; and 5.71%
interest in the Liquidating
Trust.
Division H Debtors: 172,400
shares of New Common Stock;
New Warrants exercisable to
purchase 170,500 shares of
New Common Stock; and 9.65%
interest in the Liquidating
Trust.
Estimated Percentage
Recovery by Division:
Division A Debtors: 10.3%
Division B Debtors: 10.3%
Division C Debtors: 100%
Division D Debtors: 80%
Division E Debtors: 60%
Division F Debtors: 45.2%
Division G Debtors: 25.2%
Division H Debtors: 15.2%
Class 12 (MIPS Securities
Litigation Claims):
Unsecured Claims, including the Impaired; no property will
Securities Litigation Claims, be distributed to
against TLGI, LGII or LGCLP the holders of Allowed
arising: (a) from rescission of a Claims in Class 12.
purchase or sale of the MIPS;
(b) for damages arising from the
purchase or sale of the MIPS,
including Claims for damages for
fraud or misrepresentation or
otherwise subject to section 510(b)
of the Bankruptcy Code; or
(c) for reimbursement or contribution
allowed under section 502 of the
Bankruptcy Code on account of such
Claims.
Estimated Aggregate Claims Estimated Percentage
Amount: unknown Recovery: 0%
Class 13 (Other Securities
Litigation Claims):
Unsecured Claims, including the Impaired; no property will
Securities Litigation Claims, be distributed
against any Debtor arising: by the holders of Allowed
(a) from rescission of a purchase Claims in Class 13.
or sale of TLGI Old Preferred Stock,
TLGI Old Common Stock or any other
equity security of any Debtor
(other than the MIPS);
(b) for damages arising from the
purchase or sale of any such
security, including Claims for
damages for fraud or
misrepresentation or otherwise
subject to section 510(b) of the
Bankruptcy Code; or
(c) for reimbursement or
contribution allowed under
section 502 of the Bankruptcy Code
on account of such Claims.
Estimated Aggregate Claims Estimated Percentage
Amount: unknown Recovery: 0%
Class 14 (TLGI Old Preferred
Stock):
Interests in TLGI on account Impaired; no property will
of the TLGI Old Preferred be distributed to the
Stock. holders of Allowed Interests
in Class 14.
Estimated Percentage
Recovery: 0%
Class 15 (TLGI Old Common Stock):
Interests in TLGI on account of Impaired; no property will
the TLGI Old Common Stock. be distributed to the
holders of Allowed Interests
in Class 15.
Estimated Percentage
Recovery: 0%
Class 16 (LGII Old Stock):
Interests in LGII on account of Impaired; no property will
the LGII Old Stock. be distributed to
holders of Allowed
Interests in Class 16 & such
Interests will be canceled
on the Effective Date as
part of the Reinvestment
Transactions.
Estimated Percentage
Recovery: 0%
Class 17 (Third Party Owned
Old Stock in Non-
Ownership Regulated
Debtors):
Interests in any Non-Ownership Impaired; no property will be
Regulated Debtor held by any distributed to or retained by
person or entity other than the holders of Allowed
a Loewen Company. A Interests in Class 17 and
"Non-Ownership Regulated such Interests will be
Debtor" is any Debtor in which canceled on the Effective
a minority stock interest is Date; provided however, that
owned by a person or entity with respect to any
other than a Loewen Company Non-Ownership Regulated Debtor
and which minority interest that is determined by the
is not required for state Bankruptcy Court to be solvent
regulatory purposes. (as defined under the
Non-Ownership Regulated Bankruptcy Code) as of the
Debtors are identified on Confirmation Date, a holder
Exhibit I. of an Allowed Interest in
Class 17 in such Debtor will
receive, on the Effective
Date, New Common Stock with
an aggregate value, based on
the reorganization value per
share of $16.94, equal to the
value of such holder's
interest in such Debtor as
determined by the Bankruptcy
Court.
Estimated Percentage
Recovery: 0%
Class 18 (Loewen Company Owned
Old Stock in
Non-Ownership Regulated
Debtors):
Interests in any Non-Ownership Unimpaired; on the Effective
Regulated Debtor held by any Date, subject to the
Loewen Company. Non-Ownership Subsidiary Restructuring
Regulated Debtors are identified Transactions, Allowed
on Exhibit I to this Disclosure Interests in Class 18 will
Statement. be Reinstated.
Estimated Percentage
Recovery: 100%
Class 19 (LGCLP MIPS Partnership
Interests):
Interests in LGCLP on account of Impaired; if Class 19 accepts
the MIPS and any Claims of the the Plan, on the Effective
holders of such Interests against Date, each holder of Allowed
TLGI under the MIPS Guarantee. Interests and Claims in
Class 19 will receive a Pro
Rata share of New Warrants
distributed to LGCLP as the
holder of Class 9 Claims
and exercisable to purchase
486,800 shares of New
Common Stock. If Class 19
does not accept the Plan, no
property will be distributed
or retained by holders of
Allowed Interests and Claims
in Class 19.
Estimated Aggregate Interests: Estimated Percentage
3,000,000 shares Recovery: 1.1%
Class 20 (Other LGCLP
Partnership Interests):
Interests in LGCLP other than Impaired; no property will be
on account of the MIPS. distributed to or retained
by the holders of Allowed
Interests in Class 20 and
such interests will be
canceled on the
Effective Date.
Estimated Percentage
Recovery: 0%
Class 21 (Other Equity Interests):
Interests in any Debtor other Unimpaired; on the Effective
than Interests in Class 14, 15, Date, subject to the
16, 17, 18, 19 or 20. Subsidiary Restructuring
Transactions, Allowed
Interests in Class 21 will be
Reinstated.
Estimated Percentage
Recovery: 100%
The Loewen Group, Inc.'s transfer of assets to LGII as part of
the Reinvestment Transactions will occur before the cancellation
of the LGII Old Stock and the issuance of the New Common Stock.
The recovery of each holder of a Claim will be received first in
exchange for the principal amount of such holder's Claim and not
the unpaid pre-Petition Date interest, if any, on that Claim.
(Loewen Bankruptcy News, Issue No. 40; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
LTV: Moves To Enforce Stay Against Minnesota Dept. Of Revenue
-------------------------------------------------------------
Appearing through Kathleen B. Burke of the Cleveland office of
Jones, Day, Reavis & Pogue, joined by David G. Heiman, Richard
M. Cieri, and Nicole D. Stanger, and Jeffrey B. Ellman of the
Columbus office of Jones Day, the Debtors LTV Steel Company and
LTV Steel Mining Company asked Judge Bodoh to enter an Order
enforcing the automatic stay of creditor action, by granting
prospective relief to address and correct what the Debtors say
are ongoing violations of the stay by officials of the
Department of Revenue of the State of Minnesota. The Respondents
include Matthew G. Smith, Commissioner of Revenue of the State
of Minnesota, George K. Hoyum, Director, Special Taxes Division,
Minnesota Department of Revenue, Donald H. Walsh, Manager,
Minerals Tax Office, Minnesota Department of Revenue, and Lynn
C. Willenbring, Director, Minnesota Collection Enterprise,
Minnesota Department of Revenue. Specifically, the Debtors seek
an Order finding that the Respondents' actions in filing more
than $30 million in state tax liens against property of the
estate after the filing of the petitions in these cases violated
the automatic stay, declaring the liens to be of no force or
effect, ordering the respondents to remove the liens, and
enjoining the respondents from taking any further collection
action against the Debtors, including enforcement of the liens.
In addition, because these violations of the stay have been
willful, LTV Steel seeks an ancillary award of its costs and
attorneys' fees.
Under Minnesota law, taconite mining companies are subject to a
taconite production tax, imposed on a calendar year basis, which
is in lieu of the ad valorem property tax. The taconite
production tax is calculated on the basis of a flat statutory
rate per gross ton. As of the Petition Date, and continuing in
the present, LTV Steel has owned a taconite mine and related
facilities and property located in Cook, Lake, and St. Louis
counties in Minnesota. LTV Steel ceased operations at the mine
and initiated closure activities there on January 5, 2001,
8 days after filing its Chapter 11 petition.
After the conclusion of a tax year, a taconite mining company
such as LTV Steel is required to report its tonnage to the
Department by February 1, of the following year. The
Commissioner of Revenue is required to advise the company of the
tax due before February 15, and the tax must be paid on or
before February 24. The statutory assessment date is generally
the later of the date the Commissioner enters the taconite
production tax liability for the year in the records of the
Department. However, upon the issuance of a valid jeopardy
assessment, the statutory assessment date is accelerated to the
date of the assessment. The statute provides that the taconite
production tax imposed becomes a lien upon the taconite mining
company's real and personal property within the state as of the
statutory assessment date.
On January 9, 2001, after LTV Steel filed its Chapter 11
petition, and before its taconite production report for tax year
2000 was due, Respondent George K. Hoyum, Director of the
Department's Special Taxes Division, acting on behalf of
Respondent Matthew G. Smith, Commissioner of Revenue of the
State of Minnesota, issued an order assessing against LTV Steel
for taconite production taxes for tax year 2000 in the amount of
$14,885,000 against LTV Steel. The next day, Respondent Lynn C.
Willenbring, Director of the Department's Minnesota Collection
Enterprise, issued a "Notice and Demand for Immediate Payment
and Jeopardy Collection" to LTV Steel. Respondent Willenbring
threatened collection action against property of the estate with
respect to the tax year 2000 assessment with no further notice,
including levying upon the Debtor's bank accounts. By letter two
days after that, an attorney in the Appeals and Legal Services
Division of the Department, acting on behalf of Respondents,
advised LTV Steel that, on January 10, two days before,
Respondents took "jeopardy collection action" against property
of the estate by filing state tax liens in St. Louis, Cook and
Lake counties in Minnesota. The ground for filing these liens
under the jeopardy collection authority were stated to be
because of the taxpayer's bankruptcy proceedings, leading to a
Department determination that there was a substantially reduced
possibility of ever collecting the taxpayer's $14,885,000
taconite production tax liability unless liens were filed as
quickly as possible.
Respondents have refused to allocate the taconite production tax
for the year 2000 between the pre- and postpetition periods,
instead demanding that the Debtor pay the entire amount of the
tax. All of these actions ignore the fact that all but three
days of taconite production during the year 2000 occurred prior
to the filing of LTV Steel's bankruptcy petition. The Debtors
claim that the Department's current position is also
diametrically opposed to the position the Department took during
LTV Steel's prior bankruptcy. In that proceeding, the Department
prorated the taconite production tax and required payment in
1987 of only the postpetition amount, recognizing that it was
required to file a proof of claim with the bankruptcy court for
the prepetition amount.
LTV submitted a request for administrative review of the year
2000 jeopardy assessment, challenging the assessment on both
state and federal grounds. By the end of February, LTV Steel
paid by wire transfer the sum of $122,103, which is the
postpetition portion of the year 2000 taconite production tax.
On January 23, 2001, Respondent Hoyum, acting on behalf of the
Commissioner, assessed against LTV Steel taconite production
taxes in the amount of $15,423,589 for tax years 2001 and 2002.
The same day, an attorney acting on behalf of the Commissioner
issued a "notice of jeopardy assessment and Collection and
Demand for Immediate Payment" declaring both the tax years 2001
and 2002 ended; demanding immediate payment of the total amount
assessed; asserting that tax liens would be filed; and enclosing
copies of the liens. By letter two days later, an attorney
acting on behalf of the Commissioner advised LTV Steel that
Respondents took jeopardy collection action against property of
the estate on January 24, 2001, by filing state tax liens in St.
Louis, Cook and Lake counties in Minnesota. The same letter
provided as the bases for the jeopardy assessment for 2001 and
2002 LTV's shutdown of its Minnesota production facilities five
months earlier than initially announced; recent announcements by
LTV regarding the worsening effects of high levels of unfairly
traded foreign steel and record-low prices on its operations;
and discussions between LTV and the Department regarding LTV's
inability to pay taconite taxes for calendar year 2000 when due.
On February 23, 2001, LTV submitted to the Commissioner its
request for administrative review of the years 2001 and 2002
jeopardy assessment, challenging the assessment on both state
and federal grounds. The Debtors said that currently there is no
basis to calculate the tax liability for these years. In a year
in which a taconite facility is closed, an exception to the
general rule of basing the tax on average tons of taconite
produced in a current and two prior years exists. In that case,
the amount of taconite production tax is the higher of the
amount calculated under this general rule, or the amount of ad
valorem property tax that would otherwise be due on the
facility. Thus in order to properly calculate the taconite
production tax for the years 2001 and 2002, factors such as
actual taconite production for those years, which cannot be
known until the tax years in question have ended, would have to
be taken into consideration. Accordingly, Respondents'
assessment of taxes for 2001 and 2002 is not only invalid under
Minnesota law, but is also so arbitrary that the assessment
should not be accorded even a rebuttable presumption of
correctness.
The Debtors concluded that the Respondents will not voluntarily
remove the liens or agree to refrain from taking further
collection action against property of the estate. Counsel for
LTV Steel has advised Respondents that their actions violate the
automatic stay and has requested that they remove the liens and
refrain from further collection action. In response, Respondents
have neither agreed to remove the liens nor to refrain from
further enforcement action. They have agreed only that they will
give LTV Steel 30 days' notice before taking further enforcement
actions. Recently, a state official was quoted in a news report
as declaring that the liens will not be removed, saying "They're
[LTV] not happy with it [the lien]. But it will remain there."
The Debtor admitted that there is an exception in the Bankruptcy
Code to stay protection for the making of an assessment for any
tax and issuance of a notice and demand for payment of such an
assessment.
However, the Debtors said this exception also makes clear that
the Respondents' actions in filing the liens and threatening
enforcement action did violate the stay because the Code
expressly provides that any tax liens that arise from an
assessment shall not take effect. Thus Respondents were barred
by the Code from doing any act to perfect or enforce the
ineffective liens. As a result, their actions in filing the
liens in order to perfect them, and in threatening further
collection action, violates the automatic stay.
The Code also provides an exception for postpetition ad valorem
liens, which are removed from the scope of the stay. However,
the Debtors said this exception is inapplicable because
Minnesota's taconite production tax is not an ad valorem
property tax. Such a tax depends upon a determination of the
value of the property being taxed. Minnesota's taconite
production tax is imposed on taconite producers in lieu of the
ad valorem property tax that would otherwise apply, but the
taconite tax itself is not a property tax. This is shown by the
difference between the manner in which the tax is calculated and
the manner in which Minnesota's ad valorem property tax is
calculated. In general, the taconite production tax is
calculated based on a flat rate of tax per gross ton of
merchantable iron ore concentrate produced from the taconite
without regard to the market value of the taconite. Minnesota's
ad valorem property taxes, by contrast, are calculated based on
the market value of the property in question.
The Respondents' Reply
The Respondents told Judge Bodoh he should summarily deny LTV's
Motion because the Department has not waived its Eleventh
Amendment sovereign immunity against LTV's claims.
Alternatively, the Court should abstain from deciding this
matter because the motion presents complex and novel issues of
state law that will be decided in LTV's pending state tax
litigation proceedings. Every issue LTV has raised and every
argument it has made in this motion has been extensively briefed
by LTV and is currently under consideration in LTV's pending
state tax litigation proceedings. Furthermore, LTV's motion is
procedurally improper, as LTV is required to commence an
adversary proceeding to obtain the relief it seeks here.
First, Respondents said that LTV's objection to the Department's
jeopardy collection regarding the Debtor's 2000 taconite
production tax liability is effectively moot. Because the normal
statutory due date for this tax has since passed, there is no
longer a jeopardy collection situation. Second, the Department
was clearly entitled under Minnesota law to initiate a jeopardy
assessment/collection for LTV's 2001 and 2002 taconite taxes
where, as here, it had reasonable grounds to believe its
collection was in jeopardy. LTV, in fact, concedes that the
Department's jeopardy assessment/collection regarding these
taxes did not violate the automatic stay. The Court should also
reject LTV's erroneous argument that the Department's filing of
notices of its statutory tax liens violated the automatic stay.
Because the taconite production tax is an ad valorem property
tax under Minnesota law, the Department was entitled to file
notice of these liens under an express exception to the
automatic stay for such liens.
Finally, if the Court decides that the Department violated the
automatic stay, it should reject LTV's request for an award of
costs and attorneys' fees since there is no procedural or
substantive basis whatsoever upon which LTV is entitled to any
award.
The Department told Judge Bodoh its problems began in May 2000
when LTV announced its plans to cease operations at its Hoyt
Lakes mining facility and to close the facility in the summer of
2001, in large part because of competitive forces arising from
the growing importation of cheap foreign steel into the United
States. In December 2000, LTV "abruptly" changed its plans and
decided to close its Hoyt Lakes facility in January 2001 - some
six months earlier than LTV had announced in May. LTV also
requested that the Department allow it to pay its annual
taconite production tax on a delayed installment plan because of
its financial inability to make the full tax payment due in
February 2001. Later that same month, The LTV Corporation and 47
of its subsidiaries commenced these Chapter 11 cases.
The Minnesota taconite production tax is an ad valorem property
tax imposed in lieu of traditional property taxes. Mining
companies pay this tax on concentrates or pellets of taconite
they produce. The tax is levied annually on the average tons of
taconite produced during the current calendar year and the
previous two production years. The tax is determined by
multiplying the average tonnage for the three-year period times
a tax rate for that tax year.
Because of LTV's rapidly deteriorating financial condition and
its admission that it would be unable to timely pay its taconite
production taxes in full, the Department took appropriate steps
in January of this year, as permitted under the Bankruptcy Code,
to secure the local government entities' right to collect this
revenue. The Department assessed LTV's 2000 tax on January 9,
2001. Because the Department determined that its collection of
this tax was clearly in jeopardy, it gave LTV a jeopardy
collection notice on January 10. After LTV filed its production
report for 2000, the Department notified LTV on February 9 of
its revised and final 2000 tax assessment. On January 23, 2001,
the Department gave LTV a jeopardy assessment and collection
notice for its 2001 and 2002 taxes, and filed notices of its
statutory liens regarding these 2001 and 2002 liabilities. In
response to LTV's concerns about the Department's intentions
regarding its collection of these taxes, the Department's
counsel advised LTV's counsel by telephone and correspondence
that, although the Department took these necessary and lawful
steps to secure the right to collect this tax revenue, the
Department has taken on other steps to collect this tax and has
no plans to take any such additional steps.
Sovereign Immunity
The Department told Judge Bodoh that the State's Eleventh
Amendment sovereign immunity bars LTV's Motion in its entirety.
Following the Supreme Court's decision in Seminole Tribe of
Florida v. Florida, Ohio courts have found that Code 106, which
purports to include a waiver of the state's sovereign immunity,
is an unconstitutional exercise of Congress' power under Article
I of the Constitution. Eleventh Amendment immunity extends to
agencies of the state, including state taxing authorities like
the Department. This immunity applies to motions, like the
instant motion, to avoid tax liens, and to enforce the automatic
stay. A state can waive its immunity if it files a proof of
claim with the bankruptcy court or otherwise participates in the
bankruptcy case, but because it has not filed a proof of claim
or otherwise participated in these cases the Department clearly
has not waived its immunity.
The Young Exception
LTV cannot succeed in its apparent attempt to try to fit this
motion within the immunity exception recognized in Ex Parte
Young and its progeny. Under Young, a party can bring an action
against a state official in federal court for prospective
injunctive relief -- to bar future violations of federal law.
LTV's motion in the instant case does not fit within this narrow
immunity exception because it applies only to prospective
relief, and does not permit judgments against state officers
declaring that they violated federal law in the past. Thus, even
if the Department's actions violated the automatic stay, which
the Department strongly disputes, the Young doctrine does not
apply to a present violation of the stay. Because LTV seeks to
invalidate the Department's past conduct and recover attorney's
fees, the Young immunity exception simply does not apply.
Abstention
The Court should abstain, even if it denies the Department's
claim of sovereign immunity, because LTV's motion presents
complex and novel state tax law issues that will be decided in
LTV's pending state tax litigation proceedings. The resolution
of the issues raised in these pleadings involve matters of
substantial public interest, and there exists no state precedent
that would enable the bankruptcy court to predict with
reasonable certainty the result that the state courts would
reach were the issue before them. The state has a strong
interest in the proper administration of its tax laws, and the
state is far better suited to resolve the tax issues in this
matter.
Procedural Problems
The Court should also deny LTV's Motion because the relief LTV
seeks requires the commencement of an adversary proceeding. A
proceeding to determine the validity, priority or extent of a
lien, to obtain an injunction, or other equitable relief, and to
obtain a declaratory judgment must all be brought through an
adversary proceeding, with its more formal procedure - not a
summary procedure by motion, as LTV has done here. LTV's motion
is procedurally improper and should be denied.
The Taconite Tax is Ad Valorem & Within the Code's Stay
Exception
The Department insists that the taconite tax is an ad valorem
tax, so that the Department acted within its express statutory
authority with respect to the assessment and collection
activities it undertook. Minnesota's statutes authorize jeopardy
assessments and collections and grant the Commissioner broad
powers. While jeopardy assessments and collections are not often
invoked, the circumstances here clearly justified the Department
in believing the collection of this tax was in jeopardy. LTV was
having serious financial troubles in the spring of 2000, which
caused it to announce its plan to close the Hoyt Lakes Plant. By
December 2000, these financial troubles intensified to the point
where LTV greatly accelerated its plant closure schedule and
realized it could not timely pay its 2000 taconite production
taxes. It requested that it be allowed to pay these taxes late
and over time. Only days after it filed for bankruptcy it closed
the Hoyt Lake operations. Any one of these circumstances would
have justified the Department's jeopardy notices. In
combination, the Department insists they more than justified
those actions.
The Debtors' Reply
LTV repeated that Respondents' actions in perfecting by filing
more than $30 million in state tax liens against property of the
state after the commencement of this case violate the automatic
stay, and that the exception relied upon by the Respondents is
inapplicable because the production tax in issue is not an ad
valorem tax. The Debtors claimed that the Department's own
publication, the Minnesota Mining Tax Guide, admits it is not.
The violation of the stay is prospective and ongoing because the
liens remain on file. By keeping the liens on file, the
Respondents are continuing to maintain an obstacle to the
potential sale of LTV Steel's Minnesota property, and are also
purporting to give Minnesota's claims an unwarranted priority
over other creditors.
Further, the Debtors said that the Department's threats to take
collection action is also ongoing because these threats have not
been withdrawn, but only modified to promise that LTV will be
given notice before the Respondents take further enforcement
action.
The Immunity Argument and the Young Exception
The Debtors said this is not a suit against either a state or a
state agency. This Motion is instead similar to the facts in
Michigan Bell Tel. Co. v . Climax Tel. Co., decided by the Court
of Appeals for the Sixth Circuit, in which the Court of Appeals
held that the Ex parte Young doctrine operates as an exception
to the general rule of sovereign immunity where the suit is
brought against state officials. This exception has been
recognized and applied by the bankruptcy courts to prevent state
officials from violating federal law. Some bankruptcy courts
have expressly held that the Young doctrine authorizes a
bankruptcy court to prohibit state officials from violating the
automatic stay or a discharge order.
As to the Respondents' argument that Young is not available
because the Debtors seek costs and attorneys' fees, the Debtors
say that as the stay violations are ongoing, the relief that LTV
seeks - to stop these ongoing violations - is prospective, and a
request for attorneys' fees and costs does not take the Motion
outside the Young doctrine, against citing a Sixth Circuit
decision.
The Issues Involve Only Federal Law and Abstention is
Inappropriate
The Motion is a core proceeding, rendering mandatory abstention
inapposite and discretionary abstention only rarely appropriate.
The Debtors assured Judge Bodoh there is no reason for
abstention here. The Motion raises only federal issues. These
are whether the Respondents' actions in filing and maintaining
the liens and threatening collection action fall within the list
of actions stayed by the Code, and whether the Respondents'
actions fall within any of the exceptions to the stay. The
Respondents' arguments that the Court should abstain appear to
be directed at a motion LTV has not yet filed - a motion to
determine the estates' tax liabilities. The present motion does
not ask that the Court decide LTV Steel's liability to the State
of Minnesota for taconite production taxes, nor does it ask the
Court to determine whether Minnesota's actions in imposing
jeopardy assessments were appropriate.
The Motion is Procedurally Proper
This Court has previously considered the same arguments made by
the Respondents in this case regarding the procedural vehicle
for relief, and has rejected it. In the case of In re Phar-Mor,
Inc., the Court noted that while the vehicle was couched as a
motion for an injunction, its thrust is to enforce the automatic
stay. A motion is an appropriate vehicle for bringing these
issues before the Court. (LTV Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 609/392-00900)
NATIONAL AIRLINES: Talking To Icahn re Possible Refinancing Deal
----------------------------------------------------------------
Las Vegas-based National Airlines is in talks with financier
Carl Icahn regarding a deal to bail the airline out of
bankruptcy, according to Reuters. Icahn has reportedly been
looking to control his own airline and use his Lowestfare.com
web site as a distribution channel for airline tickets ever
since losing access to discounted Trans World Airlines (TWA)
tickets after it filed for bankruptcy and was bought by AMR
Corp.'s American Airlines.
National asked a judge on Friday to force casino operator
Harrah's Entertainment Inc. to extend a $16 million letter of
credit, allowing the airline to get paid immediately when it
makes credit card ticket sales. Without the letter, National's
bank would hold the money for a given sale until it completes
the flight. Harrah's wants to let the credit line expire, which
would be a blow to the struggling airline. Icahn said that his
offer to save National expired on Friday. A National spokesman
said the airline is still hoping to reach a deal with Icahn,
who, at the moment, is the only one with a financing offer. (ABI
World, June 4, 2001)
NETSOL INT'L: Nominates DaimlerChrysler's Senior Rep To Board
-------------------------------------------------------------
NetSol International, Inc. (NASDAQ: NTWK) announced the
nomination of Eugen Beckert, Senior Representative of
DaimlerChrysler Services and Chief Information Officer (CIO) in
Asia, to the Company's Board of Directors. Beckert has been
instrumental in DaimlerChrysler's development of global
technology in the Far East.
Separately, the Company filed on May 25 amended preliminary
proxy materials with the SEC in connection with the special
meeting to be held in response to Net Sol Shareholder Group
LLC's proxy solicitation.
"We are very pleased to add Eugen Beckert's name to our slate of
board candidates," said Najeeb Ghauri, NetSol's chief executive
officer. "His knowledge and background in global technology will
be a tremendous asset for NetSol, since he will truly understand
how to execute NetSol's business model." Beckert has a longtime
association with NetSol, which counts among its clients Daimler-
Chrysler offices in Singapore, Australia and Taiwan.
Beckert, a native of Germany, has been with Mercedes Benz
AG/Daimler-Benz AG since 1973, working in technology and systems
development. In 1992 he was appointed Director of Global IT
(CIO) for Debis Financial Services, the services division of
Daimler-Benz. In 1996 he was appointed Director of Processes and
Systems (CIO) for Financial Services Asia/Pacific. His office is
based in Tokyo.
NetSol's board of directors will be soliciting proxies in
opposition to the proposals of the NetSol Shareholders Group
LLC. The board of directors' interests in the Company are
disclosed in the preliminary proxy statement and other documents
filed with the SEC and available free of charge at the SEC's web
site www.sec.gov. The Company urges its stockholders to read the
entire proxy statement when it becomes available, because it
contains important information. Once finalized, additional
copies of the Company's definitive proxy statement will be
available free of charge from MacKenzie Partners, Inc. at (800)
322-2885 or proxy@mackenziepartners.com
NetSol International Inc. is an ISO-9001 certified software
developer in the global information technology industry. With an
international workforce of more than 400 employees, NetSol
specializes in software development, proprietary and asset-based
leasing and finance programs, IT consulting, and creation of
eBusiness and Web-based solutions for a growing list of blue-
chip customers worldwide. Clients include Daimler Chrysler
Taiwan; Mercedes Benz Financing, Australia; Mercedes Benz
Leasing, Thailand; CFS Groups U.K., St. George Bank, Australia;
GMAC in Australia, and Debis Porfolio Systems, U.K. For more
information about NetSol and its subsidiaries, visit the
company's web site at http://www.netsol-intl.com
OLYMPUS HEALTHCARE: Files Chapter 11 Petition in Wilmington
-----------------------------------------------------------
Olympus Healthcare Group, Inc. and subsidiaries--Pegasus
Management Company, Inc., Chiron Professional Services, Inc.,
and Pegasus Care of Massachusetts, Inc.--filed for Chapter 11
protection with the U.S. Bankruptcy Court in the District of
Delaware. The Company operates Olympus Specialty and
Rehabilitation Hospitals and runs nursing homes in Connecticut.
"This drastic but important action was necessary to permit our
employees to continue to care for the greater than 800 patients
and residents in our hospitals in Massachusetts and our nursing
homes in Connecticut," commented Daniel J. Kane, chief executive
officer. (New Generation Research, June 4, 2001)
OLYMPUS HEALTHCARE: Case Summary & Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Olympus Healthcare Group, Inc.
2001 Washington Street
Braintree, MA 02184
Debtor affiliates filing separate chapter 11 petitions:
Olympus of Massachusetts, Inc.
Chiron Professional Services, Inc.
Goddard Transnational Care Center, LLC
Demeter of MA, Inc.
Pegasus Management Company, Inc.
Perseus of N.E. MA, Inc.
Perseus of S.E. MA, Inc.
Pegasus Care of Massachusetts, Inc.
Perseus Healthcare, Inc.
Chapter 11 Petition Date: May 25, 2001
Court: District of Delaware
Bankruptcy Case Nos.: 01-1849 through 01-01858
Debtors' Counsel: Michael Lastorwki, Esq.
Duane, Morris & Hecksher
1100 North Market Street
Suite 1200
Wilmington, DE 19801-1246
(302) 657-4942
Estimated Assets: $0 to $50,000
Estimated Debts: $10 million to $50 million
Debtor's Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Wausau Insurance Company $1,421,194
Gary Royal
34 Crosby Drive
Bedford, MA 01730-9108
781-280-5218
Sheppard Riley Coughlin $ 227,840
Hutchins, Wheeler & Dittmar $ 124,259
Keane, Inc. $ 98,065
Transition Systems, Inc. $ 85,858
Dennis A. Smith and Associates $ 65,000
AT&T $ 62,323
Krokidas & Bluestein $ 55,716
AI Credit Corp. $ 49,506
GEAC Enterprise $ 30,775
Solutions, Inc.
Choate Hall & Stewart $ 30,145
Philip Jhonston $ 30,000
Ropes & Gray $ 21,180
MCI Worldcom Res Service $ 17,720
Entex Information $ 17,493
Services, Inc.
Achieve Software Corp. $ 15,282
Skoler Abbot & Presser $ 14,175
Nursing Resources, Inc. $ 13,554
ARK Associates $ 12,677
dba ARI Accounting Team
Fall River Gas Company $ 7,181
PACIFIC GAS: Engages Dresdner Kleinwort As Financial Advisor
------------------------------------------------------------
Pacific Gas and Electric Company seeks the Court's
authorization, pursuant to Sections 327(a) and 328(a) of the
Bankruptcy Code and Rule 2014 of the Bankruptcy Rules for
authority to retain Dresdner Kleinwort Wasserstein, Inc.
("DrKW") as financial advisor and investment banker, nunc pro
tune to the Petition Date.
The Debtor told the Court that, in seeking to retain DrKW as its
investment banker and financial advisor, PG&E has considered,
among other things, the excellent reputation of DrKW and its
senior professionals for providing high quality financial
advisory services to debtors and creditors in bankruptcy
reorganizations and other debt restructurings. For example,
Kenneth A. Buckfire, the Managing Director of DrKW who will be
primarily responsible for this engagement, has extensive
experience in the restructuring of utilities -- Mr. Buckfire
advised independent power producers in the 1998 restructuring of
$11 billion in power contracts with Niagara Mohawk Power
Corporation, and has also played a leading role in the
restructuring of EUA Power Corporation and Cajun Electric.
The Debtor noted that DrKW and/or its current professionals have
extensive experience working with financially troubled companies
in complex financial restructurings' out of court and in chapter
11 cases and have been involved as advisors to debtor, creditor
and equity constituencies and government agencies in many
chapter 11 reorganization cases.
In addition, DrKW is familiar with the Debtor's financial
affairs, its business, and the circumstances surrounding the
commencement of these chapter 11 cases. PG&E believes this will
minimize expenses to the Debtor's estates for the services
contemplated.
On January 3, 2001, DrKW became an indirect, wholly owned
subsidiary of Dresdner Bank AG and part of Dresdner Kleinwort
Wasserstein, the investment banking division of Dresdner Bank AG
(the "Investment Banking Division"). The Investment Banking
Division has over 8,000 professionals in more than 30 locations
around the world, including a major presence in the key
financial centers of London, Frankfurt and New York. In the year
2000, the Investment Banking Division ranked as one of the
leading global M&A houses, advising on M&A deals with a total
value in excess of $440 billion.
In rendering its services to the Debtor, DrKW will not assume
any responsibility for the Debtor's underlying business decision
to pursue (or not to pursue) any business strategy or to effect
(or not to effect) any Restructuring, Financing, and/or Sale or
other transaction. The Debtor and DrKW have agreed that DrKW
shall not have any obligation or responsibility to provide
accounting, audit, "crisis management," or business consultant
services for the Debtor and shall have no responsibility for
designing or implementing operating, organizational,
administrative, cash management or liquidity improvements, or to
provide any fairness or valuation opinions or any advice or
opinions with respect to solvency in connection with any
transaction. The Debtor will rely on its own counsel,
accountants and similar expert advisors for legal, accounting,
tax and other similar advice.
The services to be provided by DrKW in these cases include:
(A) Financial Advisory Services
(B) Restructuring Services
In the Debtor pursuit of a Restructuring, DrKW will:
(1) provide financial advice and assistance to the Debtor in
developing and obtaining approval of a Restructuring
plan, which will be a chapter 11 plan of reorganization;
(2) if requested by the Debtor, provide financial advice and
assistance to the Debtor in structuring any new
securities to be issued under the Plan;
(3) if requested by the Debtor, assist the Debtor and/or
participate in negotiations with entities or groups
affected by the Plan; and
(4) if requested by the Debtor, participate in hearings
before the Bankruptcy Court, the California Public
Utilities Commission and legislative bodies with respect
to the matters upon which DrKW has provided advice, and,
as relevant, coordinate with the Debtor's counsel with
respect to testimony.
Following the execution of the DrKW Agreement, the Official
Committee of Unsecured Creditors objected to the terms of DrKW's
requested fees. DrKW, the Debtor and the Committee then entered
into extensive negotiations over the terms of DrKW's fees. As a
concession to the Committee, DrKW has agreed to modify the terms
of the DrKW Agreement and apply for allowance of the Transaction
Fee) under Sections 327 and 330 of the Bankruptcy Code. The
Debtor has been advised that the Committee supports the
retention of DrKW under the terms of the DrKW Agreement (as
modified). DrKW has advised the Debtor that the economic
structure of these fees is typical of the arrangements entered
into by DrKW and other investment banks in matters of this type.
Under the terms of the DrKW Agreement, DrKW will be entitled to:
(A) Monthly Financial Advisory Fees under Section 328 of the
Bankruptcy Code of:
(1) $350,000 for each of the first two months of the
engagement, the initial payment of which is due upon the
execution of the DrKW Agreement, and the second payment
of which shall be due upon the one month anniversary
date of the DrKW Agreement,
(2) $300,000 for the third month,
(3) $250,000 for the fourth month, and
(4) $200,000 for each month thereafter so long as the
engagement continues, payments of which shall be due and
paid by the Debtor on each subsequent monthly
anniversary date of the DrKW Agreement.
(B) Transaction Fees
Upon consummation of a plan of reorganization in the
Debtor's presently pending bankruptcy case, DrKW shall be
entitled to apply for an additional transaction fee under
Sections 327 and 328 of the Bankruptcy Code of up to $20
million (the "Transaction Fee"). In no event will DrKW be
entitled to more than $20 million as a Transaction Fee.
(C) Indemnity
The DrKW Agreement provides that the Debtor will indemnify
and hold harmless DrKW and its affiliates, its respective
directors, officers, agents, employees and controlling
persons, and each of its respective successors and assigns
(collectively, the "indemnified persons"), to the full extent
lawful, from and against all losses, claims, damages,
liabilities and expenses incurred by them which
(1) are related to or arise out of
(i) actions or alleged actions taken or omitted to be
taken (including any untrue statements made or any
statements omitted to be made) by the Debtor or
(ii) actions or alleged actions taken or omitted to be
taken by an indemnified person with the Debtor's
consent or in conformity with the Debtor's actions
or omissions or
(2) are otherwise related to or arise out of DrKW's
activities under its engagement, provided, however,
that the Debtor will not be responsible for any losses,
claims, damages, liabilities or expenses which are
finally judicially determined to have resulted
primarily from the gross negligence or willful
misconduct of the person seeking indemnification.
The Debtor and DrKW believe that such indemnification
provisions are standard for engagements of this sort.
Monthly Advisory Fees are to be paid by the Debtor pursuant to
the Local Rules and orders of the Court when due without further
Order of the Court or interim application for allowance of The
Monthly Advisory Fees pursuant to Section 328 of the Bankruptcy
Code. Pursuant to Section 330 (incorporating Section 327(a)) of
the Bankruptcy Code, applicable Federal Bankruptcy Rules and
Local Rules), DrKW will file final applications for allowance of
the Transaction Fee and reimbursement of its reasonable expenses
in respect of its services.
DrKW also will be entitled to monthly reimbursement of its
travel and reasonable out-of-pocket expenses incurred in
connection with its activities under or contemplated by the DrKW
Agreement (including all fees, disbursements and other charges
of counsel to be retained by DrKW).
The Debtor believes that the terms of the proposed engagement
are consistent with those approved for other financial advisors
and investment banks in matters of similar scope and complexity.
The Debtor noted that Courts have approved success fees for
investment banks advising debtors in large chapter 11 cases that
range from 0.1% to 1.0% of the debtor's total liabilities. By
comparison, the maximum amount of the Transaction Fee pursuant
to the proposed retention of DrKW represents approximately one
tenth of one percent of the Debtor's total liabilities.
Moreover, because the Debtor's case presents novel issues that
must be resolved by various bodies, including state legislative
and regulatory agencies, and because the Debtor's case is among
the largest chapter 11 reorganizations with significant public
policy implications, the Debtor submits that the fees requested
by DrKW (including the Transaction Fee) are reasonable under the
circumstances.
The Debtor submitted that the appointment of DrKW on the terms
and conditions set forth herein is in the best interest of the
Debtor, its creditors, and all parties in interest The Debtor
has served copies of this Application on the United States
Trustee and counsel for the Official Creditor' Committee herein.
The Debtor also submitted that to the best of their knowledge,
information, and belief, DrKW has no connection with, and holds
no interest adverse to, the Debtor, its creditors, or any other
party in interest, or their respective attorneys or accountants
in the matters for which DrKW is proposed to be retained, except
as disclosed in the Buckfire Affidavit.
Kenneth A. Buckfire, Managing Director of Dresdner Kleinwort
submitted in his affidavit that DrKW is in a transition period
occasioned by the acquisition of DrKW by Dresdner Bank AG that
affects DrKW's ability to disclose all relevant relationships in
connection with the Debtor or parties-in-interest in these
cases.
Specifically, before the Acquisition, neither Dresdner Bank AG
nor the Investment Banking Division maintained records for the
purposes of the disclosures required.
On April 1, 2001, Dresdner Bank AG ("Dresdner Bank"), DrKW's
ultimate corporate parent, announced an agreement pursuant to
which it would combine with Allianz AG, an entity engaged in
diverse financial services businesses. That transaction has not
yet closed, and DrKW has neither access to Allianz's conflicts
databases nor any current relationship with Allianz or its
subsidiaries or affiliates.
Moreover, Mr. Buckfire noted, the Debtor is a large enterprise
with numerous unidentified creditors and other relationships.
Thus, DrKW is unable to state with certainty that every client
representation or connection has been disclosed despite the best
efforts afforded.
DrKW has, however, reviewed the lists of parties in interest
provided by the Debtor to determine if Allianz or any
subsidiaries or affiliates of Allianz known to DrKW (based on a
limited review of publicly available information) are parties in
interest in this case.
Mr. Buckfire told the Court that to the best of his knowledge,
information and belief, there are no such parties. DrKW believes
that the potential future indirect relationship between it and
Allianz or such entities is not material to DrKW's
representation of the Debtor; however, if the acquisition of
Dresdner Bank by Allianz is consummated prior to the
consummation of this chapter 11 case, DrKW will file a
supplemental affidavit with this court, disclosing any
relationships. As DrKW discovers additional information (if any)
that requires disclosure, DrKW will file supplemental
disclosures with the Court, Mr. Buckfire assured.
DrKW professionals currently expected to have primary
responsibility for providing services to the debtor are:
Name Position
---- --------
Kenneth A. Bucklire Managing Director
Michael B. Bruder Vice President
Samuel M. Greene Associate
Ellen C. Brown Analyst
In his affidavit, Mr. Buckfire states that:
-- DrKW is not and has not been employed by any entity other
than the Debtor in matters related to the PG&E chapter 11 case.
-- From time to time, DrKW may perform or may have performed
services for, or maintained other commercial or professional
relationships with certain creditors of the Debtor and various
other parties adverse to the Debtor in matters unrelated to
these chapter 11 cases.
-- DrKW has undertaken a detailed search to determine, and
to disclose, whether it is performing or has performed services
for any significant creditor, equity security holder or insider
in such unrelated matters.
-- DrKW and its affiliates that are part of the Investment
Banking Division have worked with, continue to work with and
share mutual clients with certain law firms and accounting firms
who represent parties in interest in these cases in matters
unrelated to these chapter 11 cases.
-- DrKW has several hundred employees and the Investment
Banking Division has over eight thousand employees. It is
possible that certitin of these individuals hold interests in
mutual funds or other investment vehicles that may own debt or
equity interests in the Deotor. Some of DrKW's employees may
hold a de minimis number of securities of PG&E Corp., the
Debtor's corporate parent. However, none of DrKW's employees who
will be active in this matter own any securities of PG&E Corp.
-- Dresdner Bank held a $37,532,440 participation interest
through its New York and Grand Cayman branches in the Debtor's
prepetition revolving credit facility. Dresdner bank has, as of
May 10, 2001, agreed to sell that interest to a third party.
-- In the ordinary course of its business, Dresdner Bank
has, directly or through one of its subsidiaries or affiliates,
extended loans or provided financing to creditors and parties in
interest in these cases. Such relationships include loans and/or
financing to other banks and loans and/or financing to power
generating entities or their affiliates. In each case, the loans
represent less than 0.00 1% of the outstanding principal amount
of all outstanding loans made by Dresdner Bank and its
subsidiaries and affiliates.
-- Dresdner Bank, in the ordinary course of its business and
unrelated to this case, may hold the securities or liabilities
of PG&E Corp., the Debtor's corporate parent or other parties in
interest in this case in accounts on behalf of its customers.
-- In order to maintain an investment strategy which tracks
the Standard & Poor's 500 Index, Dresdner Bank holds
approximately 103,000 shares of PG&E Corp., the Debtor's
corporate parent. In addition, Dresdner Bank also holds shares
of other Interested Parties which are listed on the Standard &
Poor's 500 Index for similar purposes.
-- Dresdner Bank holds interests in loans made to La Paloma
Generating Company, La Paloma Generating Trust, Harquahala and
Master Turbine Trust for the construction of power generating
facilities. These entities are subsidiaries of NEG Holdings LLC,
which is a sister company to the Debtor. The obligors on these
loans are separated from the Debtor through a holding company.
The loans held by Dresdner Bank are unrelated to the Debtor's
case.
-- Dresdner Kleinwort Wasserstein and its affiliates that
are part of the Investment Banking Division may from time to
time provide, or previously have provided, financial advisory
services to the following entities or their respective
affiliates, some or all of which may be creditors or other
parties in interest in this chapter 11 case in matters unrelated
to the PG&E chapter 11 case. In each case, the revenues received
(or expected to be received from the engagement are not
projected to exceed 0.02% of the Investment Banking Division's
projected annual revenues for calendar year 2001.
* ABB
* Agribrands
* Blue Cross of Kansas
* Blue Cross of Rhode Island
* Caripolo Bank
* Citigroup, eciti (a subsidiary of Citibank)
* Commerzbank (participated in an offering)
* Credit Lyonnais
* Deutsche Bank
* Duke Energy
* Enron
* Ernst & Young
* GATX
* General Electric, GE Capital Corp.
* JP Morgan
* KBC Bank
* Lehman Brothers (DrKW acted as an advisor to a
creditors committee of which Lehman Brothers was a
member)
* Merrill Lynch
* Natwest
* Sempra Energy Trading Corp.
* Societe Generale
* Sumitomo (participated in an offering)
* Texaco
* UBS
* Unicredito Italiano
* Union Bank of California
* United
* Westinghouse
-- Certain affiliates of DrKW that are part of the
Investment Banking Division have from time to time made a market
in and bought and sold or otherwise effected transactions for
customer accounts and for their own accounts in the securities
and/or liabilities of the Debtor but the Sales and Trading
Affiliates are not and were not an investment banker for any
outstanding security of the Debtor in connection with the offer,
sale or issuance of a security of the Debtor.
-- The Sales and Trading Affiliates may buy or sell or
otherwise effect transactions in the securities and/or
liabilities of the Debtor on an unsolicited basis for customer
accounts and a customary securities "information wall" exists
between DrKW and the Sales and Trading Affiliates.
-- The Sales and Trading Affiliates may have acted or may
from time to time act as an underwriter or may have made or may
from time to time make a market in, have a short or long
position in, buy or sell or otherwise effect transactions for
customers accounts and for their own accounts in the securities
of creditors or other parties in interest in this chapter 11
lease wholly unrelated to this case or DrKW's financial advisory
services for the Debtor.
-- An affiliate of DrKW that is part of the investment
Banking Division has from time to time acted as a broker for the
purchase and sale of the assets of creditors or other parties in
interest in this chapter 11 case which are subject to leasing
agreements, such as aircraft and railway cars.
-- An affiliate of DrKW that is part of the Investment
Banking Division has from time to time managed investments for
clients and purchased or sold securities on behalf of those
clients who may be creditors or other parties in interest in
this chapter 11 case. In addition, this affiliate has from time
to time purchased or sold the securities of creditors or other
parties in interest in this chapter 11 case on behalf of its
clients, and currently holds positions in the securities of
creditors or other parties in interest in this chapter 11 case
on behalf of its clients.
Mr. Buckfire also submitted that to the best of his knowledge,
neither DrKW nor any member or employee of the firm holds or
represents any interest adverse to the Debtor or its estate in
the matters for which DrKW is proposed to be retained.
Accordingly, Mr. Buckfire believes that DrKW is a "disinterested
person" as defined in Section 101(14) of the Bankruptcy Code.
(Pacific Gas Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
PACIFIC GATEWAY: Lenders Agree to Extend DIP Loan to June 29
------------------------------------------------------------
Bankrupt telecommunications company Pacific Gateway Exchange
Inc. said that the financial institutions that fund its debtor-
in-possession (DIP) loan have agreed to extend the arrangement
until June 29, according to Dow Jones. In February, Pacific
Gateway secured a $10 million DIP loan led by Bank of America
N.A., but that loan expired on Wednesday. The U.S. Bankruptcy
Court in San Francisco must approve the extension. The
Burlingame, Calif.-based company said that it would be unable to
continue its liquidation efforts if the extension is not
approved. (ABI World, June 4, 2001)
PARACELSUS HEALTHCARE: Court Okays Employment of Merrill, Lynch
---------------------------------------------------------------
The US Bankruptcy Court, Southern District of Texas, Houston
Division, entered an order on May 18, 2001, authorizing the
employment and retention of Merrill, Lynch, Pierce, Fenner &
Smith as financial advisors and investment bankers for
Paracelsus Healthcare Corporation.
PAYLESS CASHWAYS: Files Chapter 11 Petition in W.D. Missouri
------------------------------------------------------------
Payless Cashways, Inc. (OTC Bulletin Board: PCSH), a full-line
building materials and finishing products company focusing on
the professional builder, remodel and repair contractor,
institutional buyer, and project-oriented consumer, announced it
filed a petition for voluntary reorganization of its operations
under Chapter 11 with the U.S. Bankruptcy Court for the Western
District of Missouri.
An unusually harsh winter and poor 2001 economic conditions
resulted in disappointing sales and cash flow for the highly
leveraged company. Additionally, the company's asset based
lenders have continued to constrict credit, thereby reducing
cash availability under the company's current agreement. Late
vendor payments and increased "out-of-stocks" in the stores
contributed to further sales declines, and necessitated this
filing to make cash flow available for vendor payments.
Millard Barron, President and CEO commented, "We are extremely
disappointed that we had to take this step. However, this
convergence of negative factors forced us to take this drastic
action on behalf of our customers. Our organization and our
customers have been frustrated by the slow replenishment of
merchandise at this important time of year. Our customers
deserve the best service we can provide."
Mr. Barron continued, "Over the last 3 1/2 years, we have made
significant progress. Through the fall of 2000, our team
delivered 10 consecutive quarters of improved EBITDA. We have
also reduced our overall debt levels by over $120 million or
approximately 30% in this same time period. We have a great core
of employees and stores, and a real franchise relationship with
our customers. We will continue to focus on our vision, and
develop our business and profit models. With these actions,
simply having use of the revenues we generate daily will enable
us to pay for all new merchandise delivered on a priority basis.
Also, we are currently in negotiations with multiple potential
lenders, and expect to quickly have additional DIP funding in
place. I look forward to a timely and efficient reorganization
process, and a successful emergence as a profitable company with
a healthy balance sheet."
Payless Cashways is a full-line building materials specialty
retailer that concentrates on professional builders, contractors
and project-oriented customers. The company operates 110 retail
stores, five PCI Builders Resource stores and one Contractor
Supply store throughout 16 states. The chain operates under the
names Payless Cashways, Furrow, Hugh M. Wood, Lumberjack, Knox
Lumber, PCI Builders Resource and Contractor Supply. The company
also owns six manufacturing plants.
PILLOWTEX: Seeks Authority To Expand E&Y Capital's Services
-----------------------------------------------------------
Through William H. Sudell, Jr., Esq., at Morris, Nichols, Arsht
& Tunnell, in Wilmington, Pillowtex Corporation asked Judge
Robinson for authority to expand the scope of E&Y Capital
Advisors' engagement in these chapter 11 cases.
As previously reported, Judge Robinson allowed Debtors to retain
EYCA as the Company's financial and restructuring advisors.
Under a Supplemental Engagement Letter, Mr. Sudell relates, EYCA
will extend additional services in connection with the potential
sale of certain identified non-core assets by:
(a) Advising the Debtors on the strategy of transaction.
(b) Assisting in analyzing the financial effects of the
proposed transaction.
(c) If necessary, assisting in the preparation of a
descriptive memorandum regarding the transaction.
(d) Assisting the Debtors in contacting potential buyers
selected and approved by the Debtors; and
(e) Advising the Debtors in their negotiations regarding
the transaction.
Steven Simms, EYCA Managing Director, informs Judge Robinson
that EYCA will charge the Debtors $25,000 per month for these
additional services. Upon completion of the sale of the non-core
assets, Mr. Simms advised that EYCA will also charge a 2%
transaction fee, subject to a credit for all of the flat monthly
service fees. (Pillowtex Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PURINA MILLS: Board Amends Stockholder Rights Agreement
-------------------------------------------------------
Purina Mills, Inc. (Nasdaq: PMIL) has announced that its Board
of Directors has amended Purina Mills' stockholder rights
agreement. The amendment extends the expiration date of the
rights issued under the rights agreement from June 29, 2001 to
June 29, 2002.
Purina Mills is America's largest producer and marketer of
animal nutrition products. Based in St. Louis, Missouri, the
Company has 49 plants and approximately 2300 employees
nationwide. Purina Mills is permitted under a perpetual,
royalty-free license agreement from Ralston Purina Company to
use the trademarks "Purina" and the nine-square Checkerboard
logo. Purina Mills is not affiliated with Ralston Purina
Company, which distributes Purina Dog Chow brand and Purina Cat
Chow brand pet foods.
RHYTHMS NETCONNECTIONS: Fitch Changes Rating Outlook To Negative
----------------------------------------------------------------
Fitch has changed Rhythms NetConnections' Rating Outlook to
Negative from Stable. Rhythms' 12 3/4% senior notes due 2009, 13
1/2% senior discount notes due 2008 and 14% senior notes due
2010 are rated `CCC'.
The negative rating outlook reflects Rhythms' inability thus far
to raise capital to fund the company beyond 2001. Under the
current business plan, Rhythms needs to raise approximately $750
million to fund its business plan to free cash flow.
Rhythms is a DLEC that provides multiple DSL technologies to
large enterprises, telecommunication carriers and their ISP
affiliates and other ISPs. The company operates an overlay
network, leasing the majority of its network capacity from the
ILECs and WorldCom. Rhythms currently plans to focus on its top
40 U.S. markets across approximately 1,400 central offices. The
company also has a presence in Canada through its joint venture
(JV) with Optel Communications (now AXXENT Inc) and its JV in
Japan with Mitsui and other telecommunications companies.
SAFETY-KLEEN: Curry Ice & Coal Of Peoria Seeks Relief From Stay
---------------------------------------------------------------
Curry Ice & Coal of Peoria, Inc., a subcontractor, entered into
an agreement with the Debtor Safety-Kleen Corp., which in turn
contracted with General Motors, which in turn was acting at the
request of, and as agent for, Leeds Industrial Park, Inc., the
Owner, to furnish materials and labor on the real property
commonly known as 6817 Stadium Drive, Kansas City, Missouri.
Curry Ice claimed that it has fully performed its obligations
pursuant to its agreement with the Debtor by removing, hauling,
and disposing of contaminated soil from the real property.
Bayard J. Snyder, at Snyder & Associates, P.A., in Dela ware,
told Judge Walsh that Curry Ice asserts that, as of the Petition
Date, the Debtor owes $59,368.00, plus interest, pursuant to the
Subcontract. Curry Ice has filed a Mechanic's Lien statement on
the real property, with the Clerk of the Circuit Court of
Jackson County, Missouri, citing Missouri law, which provides
that the Debtor, as general contractor, is a necessary and
indispensable party in an action to foreclose the mechanic's
lien. The supporting invoices to the Mechanic's Lien statement
filed by Curry Ice contains the following data:
Invoice Date Invoice Number Amount Paid
------------ -------------- ------ ----
06-05-00 00776520-M $19,597.90 $ -0-
06-05-00 00776458-M $19,185.30 $ -0-
06-05-00 00776600-M $3,273.75 $ -0-
06-05-00 00776658-M $3,195.90 $ -0-
06-05-00 00776753-M $7,889.85 $ -0-
06-05-00 00020699-M $3,266.10 $ -0-
06-12-00 00783129-M $2,959.20 $ -0-
TOTAL $59,368.00 $ -0-
By motion, Curry Ice seeks relief from automatic stay to pursue
any and all rights it has against the real property and the
Owner of the real property, including without limitation,
foreclosing its mechanic's lien and applying such funds as it
receives from a foreclosure sale against the sums it is owed
under the subcontract. It further requests relief from the stay
to name the Debtor, in a competent Missouri Court, as a party to
any enforcement action on the mechanic's lien. However, Curry
Ice clarifies that it does not request relief, and does not
intend to request relief, to litigate its claim to judgment as
to the Debtor. Mr. Snyder reasoned with Judge Walsh that
bankruptcy law authorizes relief from stay where there is no
equity in the property and that property is not necessary for an
effective reorganization. Curry Ice suggested that the real
property is not an asset of the bankruptcy state, the Debtor has
no equity in the real property, and the real property is not
necessary for an effective reorganization of the Debtors.
(Safety-Kleen Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
SHEFFIED STEEL: S&P Cuts Corporate & Senior Debt Ratings to D
-------------------------------------------------------------
Standard & Poor's lowered its ratings on Sheffield Steel Corp.
These are:
Ratings To From
Corporate credit rating D CCC+
Senior secured debt D CCC+
The rating action follows the company's announcement that it has
decided to use the 30-day grace period provided in the indenture
for its $110 million of 11-1/2% First Mortgage Notes due 2005
rather than make the $6.4 million interest payment on the notes
due June 1, 2001.
Sheffield Steel is a mini-mill producer of SBQ and MBQ hot-
rolled bar products, concrete reinforcing bar and fabricated
products including fabricated rebar, steel fence posts, and
railroad track spikes. Cash flow generation and liquidity has
been severely affected by difficult steel bar industry
conditions due to intense pricing pressures from high import
levels and reduced demand from certain of its key markets. The
industry environment is expected to remain difficult for the
intermediate term, given high energy costs, and a slowing
economy, Standard & Poor's said.
TRICO STEEL: Creditors' Meeting Is On June 15 In Wilmington
-----------------------------------------------------------
On March 27, 2001, the debtor, Trico Steel Company, LLC filed a
voluntary petition under Chapter 11 of title 11 of the US Code.
The meeting of creditors will be held on June 15, 2001, at 1:00
PM, US Courthouse, Wilmington, DE.
Counsel for the debtor are James L. Patton, Jr., Michael R.
Nestor, and Edward J. Kosmowski of Young Conaway Stargatt &
Taylor, LLP, Wilmington, DE.
USG CORPORATION: Rising Asbestos Costs May Trigger Bankruptcy
-------------------------------------------------------------
USG Corporation (NYSE: USG) said that while it continues to
pursue asbestos legislation, the Company is evaluating other
strategic alternatives to address rapidly mounting asbestos
litigation costs.
To date, the Company's primary strategy has been to seek a
legislative solution to the asbestos litigation problem. In
light of significantly increased settlement demands in asbestos
lawsuits and the current political environment, including recent
changes in the Senate, the Company is considering additional
strategic alternatives. Those alternatives include a new secured
bank financing that would provide it with greater long-term
liquidity and a possible voluntary restructuring under Chapter
11 of the U.S. bankruptcy code.
Since the beginning of 2000, seven companies that were
defendants in asbestos lawsuits filed Chapter 11 petitions. As a
result, further litigation against those companies has been
stayed. In response, plaintiffs' lawyers have sharply increased
their settlement demands to other defendants, including USG's
subsidiary, U.S. Gypsum. The subsidiary's asbestos personal
injury costs, excluding insurance recoveries, have risen from
$100 million in 1999 to $162 million in 2000 and were estimated
to be $275 million this year in the Company's latest 10-Q
filing.
"We continue to believe that appropriate legislation would
provide the best solution to the asbestos problem," said William
C. Foote, Chairman, President and CEO. "We are making progress
on the legislative front, but the process is not moving as
quickly as we hoped. At the same time, settlement demands have
increased dramatically, to the point that they are completely
out of proportion to our legitimate liability."
Foote continued, "We have said repeatedly that that we cannot
shoulder the liability of other companies, but because of the
bankruptcies of other defendants, that is what many plaintiffs'
lawyers are seeking. We are examining every alternative that
will stop the value drain that is occurring as we are forced to
pay more than our fair share of the liability." He added that
the Company remains committed to pursuing a legislative solution
because it represents good public policy and because the tort
system is clearly incapable of dealing with the asbestos problem
in an equitable manner.
USG Corporation is a Fortune 500 company with subsidiaries that
are market leaders in their key product groups: gypsum
wallboard, joint compound, cement board and related gypsum
products; ceiling tile and grid; and building products
distribution. For more information about USG Corporation, visit
the USG home page at http://www.usg.com
US WOOD: Selling White City Branch to Sturdi-Craft For $2.6 Mil
---------------------------------------------------------------
U.S. Wood Products, Inc. sought approval of the sale of White
City Branch to Sturdi-Craft, Inc.
The debtor has entered into a detailed letter of intent to sell
the Branch to Sturdi-Craft, Inc. for an estimated aggregate
purchase price of approximately $2.6 million, subject to certain
adjustments. The Letter of Intent provides that with respect to
the Branch, Sturdy-Craft, Inc. will purchase all of the debtor's
finished goods and other merchandise inventory held for resale,
supply inventory, accounts receivable aged 60 days and under,
machinery, equipment, furniture, fixtures, customer lists,
customer/vendor files, telephone numbers, leasehold
improvements, right tot he name "Dow n River International,
Inc." and goodwill. Finished goods inventory will be valued at
82% of the debtors' sale price to customers. The proposed sale
is subject to higher and better offers.
VISKASE COMPANIES: S&P Slashes Credit Ratings to D
--------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
unsecured debt ratings on Viskase Companies Inc. to 'D' from B
and CCC+, respectively. At the same the ratings were removed
from CreditWatch, where they were placed on Dec. 21, 2000, in
recognition of heightened concerns about weak operating
performance and the resultant liquidity pressures.
The downgrades follow the company's announcement that the June
1, 2001, interest payment on its 10.25% senior unsecured notes
will not be made. Viskase also announced that it is planning an
exchange offer for the senior notes. It intends to include the
missed interest payment and has retained an adviser to provide
assistance.
Viskase, a leading producer of cellulosic food casings used for
processed meats, has been hampered by unfavorable industry
fundamentals, which include a fierce pricing environment, low
volumes, and rising raw material costs. In addition, the company
has been hindered by an onerous debt burden, which led to the
sale of its profitable shrink barrier film business to Bemis Co.
for $245 million in August 2000. Viskase utilized the majority
of the proceeds from that disposal to repay bank borrowings and
some leasing obligations, and there were cash balances of
approximately $60 million available on March 30, 2001 ($43
million was restricted). Still, the firm's bank facility
(currently unused) expires in June 2001 and the senior notes
mature in December, posing significant near-term refinancing
risks, Standard & Poor's said.
WINSTAR COMMUNICATIONS: Hiring Blackstone As Financial Advisor
--------------------------------------------------------------
Winstar Communications, Inc. asked Judge Farnan to approve their
employment of The Blackstone Group LP as financial advisors to
these debtors. The Debtors advised Judge Farnan that they first
retained Blackstone in this capacity in April 2001, in
connection with their restructuring efforts. Upon approval of
its postpetition retention, Blackstone will:
(a) Assist in the evaluation of the Debtors' businesses and
prospects;
(b) Assist in the development of the Debtors' long-term
business plan and related financial projections;
(c) Assist in the development of financial data and
presentations to the Debtors' Board of Directors, various
creditors and other third parties;
(d) Analyze various restructuring scenarios and the
potential impact of these scenarios on the values of the Debtors
and the recoveries of those stakeholders impacted by the
restructuring;
(e) Evaluate the Debtors' debt capacities and alternative
capital structures;
(f) Participate in negotiations among the Debtors and their
creditors, suppliers, lessors and other interested parties as
requested; and
(g) provide such other advisory services as are customarily
provided in connection with the analysis and negotiation of a
plan of reorganization as requested and mutually agreed.
In connection with its services, Blackstone will be paid:
(a) Monthly Advisory Fee in the amount of $200,000 in cash,
with the first fee payable in May, 2001;
(b) DIP Financing Fee in an amount equal to 0.50% of the
total facility size of any committed DIP financing obtained with
the assistance of Blackstone, net of any amounts of existing
senior secured debt refinanced in connection therewith;
(c) Restructuring Fee in an amount equal to 0.45% to the
total accreted value of any indebtedness of the Debtors that is
restructured, refinanced, acquired, modified, or amended as part
of a plan of reorganization in cash promptly upon the
consummation of the plan. Blackstone will credit the full amount
of any DIP Financing Fee received against the Restructuring Fee;
and
(d) reimbursement of all necessary expenses.
A successful restructuring entitling Blackstone to a fee means
the execution and confirmation of a plan of reorganization;
however, the term excludes any assumption at face value of
obligations in connection with any sale or disposition of any
subsidiaries, joint ventures, assets or lines of business of the
Debtors.
Prior to the Petition Date, Blackstone performed professional
services for the Debtors and received $200,000 in compensation
for services rendered for the month of April. If Blackstone's
employment is approved, it would not charge its monthly fee for
the period through May 5, 2001. Further, prior to the Petition
Date Blackstone received an advance of $25,000 against expenses,
and will credit the unused amount as of the Petition Date
against expenses incurred thereafter.
The engagement letter provides that nothing in this engagement
will limit the activities of the private equity businesses of
Blackstone and its affiliates in their businesses distinct from
the restructuring advisory business of Blackstone, provided that
the information is not shared with representatives of Blackstone
and its affiliates who are not involved in the restructuring
advisory business of Blackstone, and that appropriate Chinese
Wall measures are taken to ensure confidentiality.
The Debtors agree that any action or proceeding brought by the
Debtors against Blackstone based on or arising from the
engagement must be brought only in the United States District
Court for the Southern District of New York, or in the state
courts of New York. The Debtors irrevocably submit to the
jurisdiction of the state courts of New York and the United
States District Court for the Southern District of New York, and
their respective appellate courts, for the purpose of any such
action or proceeding. The Debtors waive any objection they may
have to this venue.
The Debtors also agree to indemnify Blackstone and its
affiliates, partners (general and limited), members, officers,
directors, employees, agents, and each other person controlling
the Debtors or any of the Debtors' affiliates from any losses,
claims, damages, expenses, and liabilities whatsoever, joint or
several, related to, arising out of, or in connection with the
engagement, and will reimburse the indemnified parties for all
expenses, including attorney's fees and costs as they are
incurred, in connection with the investigation, preparation,
pursuit, defense, or assistance in the defense, of any action,
claim, suit, investigation or proceeding related to, arising
out of, or in connection with this engagement or this agreement,
whether or not pending or threatened, whether or not any
indemnified person is a party, whether or not resulting in any
liability, and whether or not such action, claim, suit,
investigation or proceeding is initiated or brought by the
Debtors. The Debtors will not be liable for any indemnification
charges that are finally determined by a court of competent
jurisdiction to have primarily resulted from the bad faith,
gross negligence, or willful misconduct of Blackstone. No
indemnified party will have any liability to the Debtors, their
owners, parents, affiliates, security holders, or creditors for
or in connection with the engagement except for any liability
incurred by the Debtors that are finally determined by a court
of competent jurisdiction to have primarily resulted from the
bad faith, gross negligence, or willful misconduct of
Blackstone. If this indemnification is unavailable, the Debtors
must contribute an amount equal to the benefit received by these
estates. The Debtors may not settle or compromise any such claim
without the consent of Blackstone.
Arthur B. Newman, a Senior Managing Partner of Blackstone,
advised Judge Farnan that it is qualified for and meets the
requirements of the Bankruptcy Code in this matter but in the
interests of full disclosure, Blackstone may be represented by
attorneys and law firms who will appear in these Chapter 11
cases. Further, Blackstone may be working for or against
professionals employed in these cases. However, none of these
business relations constitute interests materially adverse to
the Debtors in the matters upon which Blackstone will be
employed, and none are adverse to these estates.
Arthur B. Newman advised Judge Farnan that Blackstone is a
disinterested party, neither holding nor representing any
interest adverse to the Debtors or these estates in the matters
for which employment is sought. However, affiliates of Credit
Suisse First Boston, who is an equity investor in the Debtors
through various affiliates have assisted and currently are
assisting Blackstone in raising capital for the Blackstone
Funds. The group at CSFB responsible for the Blackstone
assignment is separate from the party- in-interest. An
investment fund managing by Blackstone has in the past conducted
informal discussions with the Debtors regarding possible
transactions, none of which were consummated. Blackstone has a
large and diverse financial advisory practice, so that
Blackstone and certain of its members and employees may have in
he past represented, may currently represent, and likely in the
future will represent, in matters wholly unrelated to the
Debtors' cases, numerous entities that have interests in these
estates. Blackstone has not represented, does not represent, and
will not represent any entity in connection with the Chapter 11
cases, nor does it believe that any relationship it may have
with any of the Debtors' interested parties will interfere with
or impair Blackstone's representation of the Debtors in these
cases.
Affiliates of Blackstone serve as general partners for and
manage a number of investment vehicles. The investors in these
Blackstone Funds are principally unrelated third parties, but
also include affiliates of Blackstone and various of its
officers and employees, including employees working on the
Debtors' Chapter 11 cases. In addition, certain of the
employees, including employees working on the Debtors' cases,
are limited partners in the Blackstone Funds. In this capacity,
these employees have personal investments in the Blackstone
Funds, but no control over investment decisions or over business
decisions made at the Blackstone Funds. Nonetheless, to avoid
any appearance of impropriety, where the Blackstone Funds may
receive information about the Fund's investing in companies in
which Blackstone is acting as an advisor, Blackstone maintains
internal procedures designed to preclude the dissemination of
such information to the employees who are providing advisory
services. (Winstar Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WORLD ACCESS: Verso To Acquire NACT Telecommunications
------------------------------------------------------
Verso Technologies, Inc. (Nasdaq: VRSO), a leading provider of
technology infrastructure solutions that power complex business
environments announced that it has signed a definitive agreement
to acquire all of the outstanding capital stock of NACT
Telecommunications, Inc. from WA Telcom Products Co. Inc., a
wholly-owned subsidiary of World Access, Inc.
WA Telcom Products Co., Inc. and World Access, Inc. have
recently filed for bankruptcy protection pursuant to Chapter 11
of the United States Bankruptcy Code, and both are operating
their respective businesses as debtors in possession.
Consequently, the sale of the outstanding capital stock of NACT
pursuant to the stock purchase agreement is subject to the
approval of the Bankruptcy Court. The Bankruptcy Court
proceedings are expected to be completed within 60 days, at
which time, pending approval from the Court, Verso will proceed
with the transaction and will hold a conference call to discuss
the transaction as it relates to the company's business plan and
strategy.
About Verso Technologies
Since 1984, Verso Technologies, Inc. has been delivering best-
of-breed software, services and support that ensure the
reliability, scalability and availability of complex business
environments. Verso's solutions include enterprise management
services, enterprise application integration and customer
response services, each designed to integrate the people,
processes and platforms that keep businesses operating
efficiently and at peak performance. Based on each client's
needs, Verso's team of experts can plan, build and run
infrastructure solutions that improve efficiency, speed and/or
customer service capabilities. For more information on how Verso
can accelerate your business, contact the company at
http//www.verso.com
WORLD ACCESS: Telemate.Net to Partially Fund Acquisition of NACT
----------------------------------------------------------------
Telemate.Net Software, (Nasdaq: TMNT), an Atlanta-based provider
of proprietary Internet access, voice and IP network usage
management, and eBusiness intelligence applications, announced
that it has amended its stock purchase agreement with Verso
Technologies, Inc., a leading provider of technology
infrastructure solutions that power complex business
environments, to increase the amount of the preferred stock
investment in connection with Verso's acquisition of NACT
Telecommunications, Inc.
Telemate.Net announced on May 7, 2001 that it had entered into a
definitive merger agreement to be acquired by Verso
Technologies, Inc. In connection with the execution of the
definitive merger agreement, Verso and Telemate.Net entered into
a stock purchase agreement whereby Telemate.Net agreed to
purchase up to $10 million of a new series of Verso preferred
stock contingent upon Verso's successful negotiation of a
transaction to acquire NACT Telecommunications, Inc. from WA
Telcom Products Co., Inc., a subsidiary of World Access, Inc.
The stock purchase agreement was modified on June 1, 2001 to
increase the amount of the preferred stock investment to $15
million. Verso will use the proceeds to partially fund Verso's
acquisition of NACT as announced today by Verso. The Verso
preferred stock issuable to Telemate.Net will have certain
conversion and redemption rights but no voting rights.
Both WA Telcom Products and World Access have filed for
bankruptcy court protections; therefore, Verso's acquisition of
NACT is subject to the approval of the bankruptcy court. The
preferred shares will be purchased by Telemate.Net concurrently
with Verso's closing of the NACT transaction. Upon the expected
completion of Telemate.Net's merger transaction with Verso, the
preferred shares will be retired and will no longer be
outstanding. The preferred stock investment, along with imputed
interest, will be deducted from Telemate.Net's $20 million
unrestricted cash requirement as set forth in the merger
agreement between Telemate.Net and Verso.
About Telemate.Net Software, Inc.
Telemate.Net Software, Inc. develops and markets Internet access
and IP usage management, eBusiness intelligence and call
accounting solutions. By extracting relevant information from a
growing array of network sources, including firewalls, proxy
servers, email servers, web servers, VoIP routers, and PBXs,
Telemate.Net Software's reporting solutions deliver detailed
perspectives to manage those network assets critical to a modern
business. Telemate.Net Software solutions are available
worldwide through direct sales, global distribution channels and
partner programs.
Telemate.Net solutions have been installed in more than 14,000
customer sites worldwide, representing most commercial,
industrial and service categories. Telemate.Net customers
include: Arthur Andersen, Coca-Cola Bottling, Dayton-Hudson,
International Paper, the IRS, National Steel, Parke-Davis
Pharmaceutical Research, Sears Roebuck, and the U.S. Army.
* Meetings, Conferences and Seminars
------------------------------------
June 7-10, 2001
American Bankruptcy Institute
Central States Bankruptcy Workshop
Grand Traverse Resort, Traverse City, Michigan
Contact: 1-703-739-0800 or http://www.abiworld.org
June 13-16, 2001
Association of Insolvency & Restructuring Advisors
Annual Conference
Hyatt Newporter, Newport Beach, California
Contact: 541-858-1665 or aira@airacira.org
June 14-16, 2001
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts,
Taxations, Drafting, Securities, and Bankruptcy
Swissotel, Chicago, Illinois
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
July 17-20, 2001
INSOL International
6th World Congress
London, England
Contact: tina@insol.ision.co.uk or
http://www.insol2001.com
June 18-19, 2001
American Bankruptcy Institute
Investment Banking Program
Association of the Bar of the City of New York
New York, New York
Contact: 1-703-739-0800 or http://www.abiworld.org
June 21-22, 2001
RENAISSANCE AMERICAN MANAGEMENT & BEARD GROUP, INC.
Bankruptcy Sales & Acquisitions
The Renaissance Stanford Court Hotel
San Francisco, California
Contact: 1-903-592-5169 or ram@ballistic.com
June 25-26, 2001
TURNAROUND MANAGEMENT ASSOCIATION
Advanced Education Workshop
The NYU Salomon Center at the Stern School
of Business, New York, NY
Contact: 312-822-9700 or info@turnaround.org
June 27-30, 2001
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains, Advanced Bankruptcy Law
Jackson Lake Lodge, Jackson Hole, Wyoming
Contact: 770-535-7722 or Nortoninst@aol.com
June 28-July 1, 2001
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains, Advanced Bankruptcy Law
Jackson Lake Lodge, Jackson Hole, Wyoming
Contact: 770-535-7722 or Nortoninst@aol.com
June 28-July 1, 2001
American Bankruptcy Institute
Hawaii CLE Program
Outrigger Wailea Resort, Maui, Hawaii
Contact: 1-703-739-0800 or http://www.abiworld.org
June 30 through July 5, 2001
National Association of Chapter 13 Trustees
Annual Seminar
Marriott Hotel and Marina, San Diego, California
Contact: 1-800-445-8629 or http://www.nactt.com
July 12-15, 2001
American Bankruptcy Institute
Northeast Bankruptcy Conference
Stoweflake Resort, Stowe, Vermont
Contact: 1-703-739-0800 or http://www.abiworld.org
July 26-28, 2001
ALI-ABA
Chapter 11 Business Reorganizations
Hotel Loretto, Santa Fe, New Mexico
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
August 1-4, 2001
American Bankruptcy Institute
Southeast Bankruptcy Conference
The Ritz-Carlton, Amelia Island, Florida
Contact: 1-703-739-0800 or http://www.abiworld.org
August 10-11, 2001
Association of Insolvency and Restructuring Advisors
Distressed M&A Conference
Ocean Place Conference Resort, Long Branch, New Jersey
Contact: aira@airacira.org
September 6-9, 2001
American Bankruptcy Institute
Southwest Bankruptcy Conference
The Four Seasons Hotel, Las Vegas, Nevada
Contact: 1-703-739-0800 or http://www.abiworld.org
September 7-11, 2001
National Association of Bankruptcy Trustees
Annual Conference
Sanibel Harbor Resort, Ft. Myers, Florida
Contact: 1-800-445-8629 or http://www.nabt.com
September 10-11, 2001
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Fourth Annual Conference on Corporate Reorganizations
The Knickerbocker Hotel, Chicago, IL
Contact 1-903-592-5169 or ram@ballistic.com
September 13-14, 2001
ALI-ABA
Corporate Mergers and Acquisitions
Washington Monarch, Washington, D. C.
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
September 14-15, 2001
American Bankruptcy Institute
ABI/Georgetown Program "Views from the Bench"
Georgetown University Law Center, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
October 3-6, 2001
American Bankruptcy Institute
Litigation Skills Symposium
Emory University School of Law, Atlanta, Georgia
Contact: 1-703-739-0800 or http://www.abiworld.org
October 9-11, 2002
INSOL International
Annual Regional Conference
Beijing, China
Contact: tina@insol.ision.co.uk or
http://www.insol.org
October 12-16, 2001
TURNAROUND MANAGEMENT ASSOCIATION
2001 Annual Conference
The Breakers, Palm Beach, FL
Contact: 312-822-9700 or info@turnaround.org
October 16-17, 2001
International Women's Insolvency and Restructuring
Confederation (IWIRC)
Annual Fall Conference
Somewhere in Orlando, Florida
Contact: 703-449-1316 or
http://www.inetresults.com/iwirc
November 26-27, 2001
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Seventh Annual Conference on Distressed Investing
The Plaza Hotel, New York City
Contact 1-903-592-5169 or ram@ballistic.com
November 29-December 1, 2001
American Bankruptcy Institute
Winter Leadership Conference
La Costa Resort & Spa, Carlsbad, California
Contact: 1-703-739-0800 or http://www.abiworld.org
January 31 - February 2, 2002
American Bankruptcy Institute
Rocky Mountain Bankruptcy Conference
Westin Tabor Center, Denver, Colorado
Contact: 1-703-739-0800 or http://www.abiworld.org
January 11-16, 2002
Law Education Institute, Inc
National CLE Conference(R) - Bankruptcy Law
Steamboat Grand Resort, Steamboat Springs, Colorado
Contact: 1-800-926-5895 or
http://www.lawedinstitute.com
February 28-March 1, 2002
ALI-ABA
Corporate Mergers and Acquisitions
Renaissance Stanford Court, San Francisco, California
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
March 3-6, 2002 (tentative)
NORTON INSTITUTES ON BANKRUPTCY LAW
Norton Bankruptcy Litigation Institute I
Park City Marriott Hotel, Park City, Utah
Contact: 770-535-7722 or Nortoninst@aol.com
March 15, 2002 (Tentative)
American Bankruptcy Institute
Bankruptcy Battleground West
Century Plaza Hotel, Los Angeles, California
Contact: 1-703-739-0800 or http://www.abiworld.org
April 10-13, 2002 (tentative)
NORTON INSTITUTES ON BANKRUPTCY LAW
Norton Bankruptcy Litigation Institute II
Flamingo Hilton, Las Vegas, Nevada
Contact: 770-535-7722 or Nortoninst@aol.com
April 18-21, 2002
American Bankruptcy Institute
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
May 13, 2002 (Tentative)
American Bankruptcy Institute
New York City Bankruptcy Conference
Association of the Bar of the City of New York
New York, New York
Contact: 1-703-739-0800 or http://www.abiworld.org
June 6-9, 2002
American Bankruptcy Institute
Central States Bankruptcy Workshop
Grand Traverse Resort, Traverse City, Michigan
Contact: 1-703-739-0800 or http://www.abiworld.org
June __, 2002
American Bankruptcy Institute
Delaware Bankruptcy Conference
Hotel Dupont, Wilmington, Delaware
Contact: 1-703-739-0800 or http://www.abiworld.org
December 5-8, 2002
American Bankruptcy Institute
Winter Leadership Conference
The Westin, La Plaoma, Tucson, Arizona
Contact: 1-703-739-0800 or http://www.abiworld.org
April 10-13, 2003
American Bankruptcy Institute
Annual Spring Meeting
Grand Hyatt, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
December 5-8, 2003
American Bankruptcy Institute
Winter Leadership Conference
La Quinta, La Quinta, California
Contact: 1-703-739-0800 or http://www.abiworld.org
April 15-18, 2004
American Bankruptcy Institute
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via
e-mail to conferences@bankrupt.com are encouraged.
*********
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.
Metzler, Bernadette de Roda, Aileen Quijano and Peter A.
Chapman, Editors.
Copyright 2001. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $575 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 301/951-6400.
*** End of Transmission ***