/raid1/www/Hosts/bankrupt/TCR_Public/010905.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, September 5, 2001, Vol. 5, No. 173
Headlines
360NETWORKS: Moves to Implement Employee Retention Program
AMES DEPT: Gets Approval to Pay Prepetition Employee Obligations
AMF BOWLING: Urges Court to Overrule Objections re Blackstone
ARMSTRONG HOLDINGS: PI Panel Retains Campbell as Local Counsel
ASHTON TECHNOLOGY: Subject to Delisting from Nasdaq Today
AT HOME: Cox and Comcast Intends to Terminate Distribution Pacts
AT HOME CORP: Sells Benelux Assets to Essent Kabelcom
AT HOME: Continues Talks with Promethean On Breach of Terms
ATLANTIC TELECOM: S&P Junks Ratings to Reflect Poor Liquidity
BRIDGE INFO: Court Deems Cal Harbor Claims as Timely Filed
CINEMARK USA: S&P Airs Concerns about Possible Covenant Breaches
COMDISCO INC: Seeks Okay to Assume Executive Employment Pacts
COVAD COMMUNICATIONS: Moves to Pay Prepetition Wages & Benefits
EDWARDS THEATRES: Creditors Approve Reorganization Plan
EB2B COMMERCE: Delisting Stayed Pending Nasdaq Decision
EBT INTL: Files Proxy Statement Re Special Shareholders' Meeting
EXIDE TECHNOLOGIES: S&P Concerned About Current Liquidity State
GENESIS HEALTH: Consents to Modify Stay for State Court Actions
HARNISCHFEGER: U.S. Trustee Presses On to Disqualify Jay Alix
HIGHWOOD RESOURCES: Net Loss Widens in Second Quarter
HOMELAND: Secures $65MM DIP Financing & Will Close 8 Stores
ICG COMMS: STA Wants NetAhead to Abandon Left-Behind Property
LOEWEN: Creditors to Vote on Fourth Amended Reorganization Plan
LOEWEN: Seeks 2nd Amendment to Asset Sale Deal with Rightstar
LTV CORP: Court Approves Sale of VP Buildings to Grupo IMSA
LTV CORP: Equity Panel Wants to Retain Kohrman as Co-Counsel
NATIONAL ENERGY: Profitable Post-Emergence & Leverage Still High
NETOBJECTS: Will Cease Operations & Intends to Dispose of Assets
OWENS CORNING: Cobb Estate Seeks Relief From Automatic Stay
PEAKSOFT: Strikes Deal With Lenders to Settle CDN$6.5MM In Debts
PILLOWTEX: Court Lifts Stay for Isham's Patent Appeal
PLAY-BY-PLAY: Hires SAMCO as Financing Arrangements Consultant
PROVANT: Agrees with Committee to Set Up StratPlan Panel
PSINET: Sept. 12 Hearing on Motion to Sell Canadian Assets Set
STEEL HEDDLE: Files for Chapter 11 Protection in Delaware
USG CORP: Court Approves Caplin as Counsel for PI Panel
VIASOURCE: Undertakes Further Restructuring & New CEO Takes Over
VICEROY RESOURCE: Executes Forbearance Agreement with Banks
VLASIC FOODS: Inks Set-Off Agreement with Bank of America
W.R. GRACE: PD Claimants Panel Balks At Proposed Kinsella Fees
WEGENER CORP: Shares Bid Price Falls Short of Nasdaq Requirement
WHEELING-PITTSBURGH: US Bank Moves to Give Priority to Card Fees
WINSTAR COMMS: Verizon Moves to Vacate Interim Utilities Order
* Meetings, Conferences and Seminars
*********
360NETWORKS: Moves to Implement Employee Retention Program
----------------------------------------------------------
Due to layoffs and additional reduction both before and after
the Petition Date, the responsibilities and work loads of the
360networks inc.'s remaining employees have doubled. Every
remaining employee has suffered a sizeable pay cut, and so
offers from the Debtors' competitors and from companies in other
industries would be attractive to them.
To remedy the effective pay cut and to address employee
attrition and morale issues typically associated with chapter
11, the Debtors now seek the Court's approval of a Retention and
Incentive Plan for its workforce. The Debtors also seek to
revise their Severance Policy to complete their proposed
retention and incentive package.
Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New
York, claims the Retention Program has the support of the Agents
for the Debtors' pre-petition secured credit facility. The
costs associated with the implementation of the Retention
Program are incorporated in the Debtors' current operating
budget that formed the basis for the Debtors' cash collateral
motion, which was approved by this Court on July 25, 2001, Ms.
Chapman adds.
The Retention and Incentive Plan
The Retention and Incentive Plan provides for a variety of
incentives to reward high levels of performance by individuals.
Covered Employees are divided into 5 tiers based upon each
Covered Employee's position in the Company, and, in management's
business judgment, the relative importance and indispensability
of that employee's contribution to the Company:
(a) Tier I consists of top senior executives.
(b) Tier II consists of other executives and key management.
(c) Tier III consists of management and key professional
work force.
(d) Tier IV consists of professional and technical
workforce, the majority of whom provide irreplaceable
technical support to the Debtors.
(e) Tier V consists of support and administrative staff.
The terms of the Retention and Incentive Plan are:
(1) Each Covered Employee would receive a "pay-to-stay"
bonus equal to a percentage of his/her annual salary
(the Annualized Pay-to-Stay Bonus). The first
installment, equal to 25% of the Annualized Pay-to-Stay
Bonus, is payable on September 28, 2001. The second
installment, equal to 25% of the Annualized Pay-to-Stay
Bonus, is payable on December 21, 2001. The remaining
50% would be payable upon the effective date of a
chapter 11 plan (the Effective Date) or sale or merger
of the Company.
(2) A fund of $4,000,000 would be available to be used in
the management's discretion to recognize extraordinary
efforts by Covered Employees in Tiers II, III, IV and V
(the Discretionary Bonus).
(3) A Value Creation Pool would be established to be
distributed, at management's discretion, to Covered
Employees (the Pool). The Pool would be payable on the
Effective Date. The amount of the Pool would be linked
to the aggregate value of consideration distributed to
creditors in respect of the indebtedness of 360networks
inc. and its subsidiaries, from whatever source
received. For an Effective Date after June 30, 2002 but
on or before December 31, 2002, the Pool would be paid
at 90% of the applicable amount as reflected in the
table below. For an Effective Date after December 31,
2002, but on or before June 30, 2003, the Pool would be
paid at 80% of the applicable amount as reflected in the
table below. For each 6-month period of additional
delay thereafter, the payout would be reduced by an
additional 10%. Additional payments in accordance with
the levels described herein would be made out of the
Pool for additional distributions to creditors after the
Effective Date.
The Pool Size would be:
Amount of consideration Amount of
distributed to creditors Value Creation Pool
------------------------ -------------------
$300,000,000 - 400,000,000 The prorated share of
$1 million (e.g. 1% of
each dollar over
$300,000,000)
$400,000,001 - 500,000,000 $1.0 million plus the pro-
rated share of $1.0
million
$500,000,001 - 600,000,000 $2.0 million plus the pro-
rated share of $1.0
million
$600,000,001 - 700,000,000 $3.0 million plus the pro-
rated share of $1.5
million
$700,000,001 - 800,000,000 $4.5 million plus the pro-
rated share of $1.5
million
$800,000,000 $6.0 million plus 2% of
each dollar over
$800,000,000
(4) Any employee who has voluntarily terminated his/her
employment at any time prior to distribution of a
particular payment would not be eligible to receive that
payment.
Proposed Severance Policy
The proposed Severance Policy would provide certain Covered
Employees certain benefits if they are terminated other than for
cause or if the Company liquidates. All Covered Employees
actually and involuntarily terminated without cause would be
entitled to a percentage of their annual salary:
(a) Tier I employees - 100% of their annual salaries;
(b) Tier II employees - 50% of their annual salaries;
(c) Tier III employees - two months' salary;
(d) Tier IV employees - two months' salary;
(e) Tier V employees - one month's salary.
In addition, certain "project employees" who are not Covered
Employees and have been retained to complete a particular
project for the Company will be given 1 week per month of
service since the Petition Date.
Ms. Chapman tells Judge Gropper that adoption of the Retention
Program represents a valid exercise of the debtors' sound
business judgment. Without such a program in place, many
employees may leave the Debtors' employ. This would paralyze
the Debtors' operations and place a greater burden on the
remaining employees, Ms. Chapman says. The Debtors contend that
approval of the entire Retention Program is essential to the
preservation and maximization of the value of the Debtors'
assets. (360 Bankruptcy News, Issue No. 6; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
AMES DEPT: Gets Approval to Pay Prepetition Employee Obligations
----------------------------------------------------------------
Ames Department Stores, Inc. sought and obtained authority from
the Court to pay pre-petition employee obligations, including
all tax obligations relating thereto, and to continue their
employee-related plans, programs, and policies, as they were in
effect as of the Commencement Date, and to pay amounts in
respect thereof as they come due in the ordinary course of
business. The Court's First-Day Order in this matter:
1. authorizes the Debtors to pay earned and unpaid wages,
salaries, vacation pay, and other compensation, and Employee
Benefits Obligations, and to satisfy and/or apply the
Employee Payroll Deductions (collectively, the "Prepetition
Employee Obligations");
2. authorizes the Debtors to pay earned and unpaid Payroll Tax
Obligations to the extent any such payments remain unpaid;
3. authorizes the Debtors to maintain their Employee Benefits
Programs, including their health, dental, life, accident and
disability insurance plans, severance, retirement, and
incentive plans, on an uninterrupted basis, consistent with
pre-petition practices, and to pay when due in the ordinary
course all pre-petition reimbursements, premiums,
administrative fees, Medical Plan Claims and other pre-
petition insurance obligations to the extent due and payable
post-petition, without such conduct and payment to be deemed
an assumption of said plans, policies, and programs;
4. authorizes the Debtors to continue to honor their plans,
policies, and programs with respect to vacation, sick pay,
severance, and Employee Deductions, as such plans, policies,
and programs were in effect as of the Commencement Date,
including the payment of pre-petition amounts as they come
due in the ordinary course of business without such conduct
and payment to be deemed an assumption of said plans,
policies, and programs;
5. authorizes and direct the Debtors' banks to honor and pay
all pre and post-petition checks issued or to be issued, and
fund transfers requested or to be requested, by the Debtors
in respect of the Pre-petition Employee Obligations and
Payroll Tax Obligations that were not honored or paid as of
the Commencement Date to the extent sufficient funds are on
deposit;
6. authorizes the Debtors to issue new post-petition checks or
effect new fund transfers on account of the Pre-petition
Employee Obligations or Payroll Tax Obligations to replace
any pre-petition checks or fund transfer requests that may
be dishonored or voided, and to reimburse their employees or
the applicable tax authority, as the case may be, for any
fees and costs incurred by them in connection with a
dishonored or voided check or funds transfer.
Martin J. Bienenstock, Esq., at Weil Gotshal & Manges, in New
York, relates that the Debtors currently employ approximately
29,700 employees. Of these, approximately 4,000 are salaried
employees and 25,700 are hourly employees. To maintain morale of
their employees, which is necessary to the success of
reorganization efforts, the Debtors seek the Court's authority
to pay their pre-petition employee obligations.
The composition of such pre-petition employee obligations are:
A. Wages, Salaries, and other Compensation
Regular Employees are paid weekly, one week in arrears, for
services rendered. The average weekly gross payroll for all
employees is approximately $8.7 million. The Debtors
estimate that, as of Commencement Date, approximately $10
million will be owed for services rendered by employees from
August 12, 2001 up to the Commencement Date.
The Debtors employ certain freelancer or casual employees
and independent contractors, which are classified and paid
separately from the Debtors' payroll accounting system. The
Debtors estimate that, as of Commencement Date, the amount
owed for services by these contractors will not exceed
$100,000.
The Debtors anticipate that certain checks issued for both
the employees and contractors' compensation may not have
been cleared as of the Commencement Date. The Debtors
estimate that the sum of such checks should be approximately
$4 million.
The Debtors are required by law to withhold and remit from
their employees' payrolls federal, state, and local income
taxes, state unemployment taxes, and social security and
Medicare taxes. The Debtors also pays their own Employer
Payroll Tax Obligations. The Debtors estimate, as of the
Commencement Date, approximately $2 million will be owed in
Payroll Tax Obligations.
The Debtors' employees have their annual vacation days in
June every year based on their length of service. The
Debtors' estimate that, as of the Commencement Date,
approximately $14.7 million will be owed to employees on
account of earned and unused vacation days. The Debtors
subsequently estimate that approximately $1.5 million in
Payroll Tax Obligations may be owed in respect of this.
However, because vacation time during the pendency of these
cases is paid out only if employment is terminated, the
Debtors do not believe actual payments for vacation time
during the these cases will approach the sum.
In addition to the allotted vacation time, the Debtors' non-
salaried employees working in excess of twenty hours each
week are entitled to several days of paid absence for sick
and personal time based on number of hours worked the
previous year. A typical full-time, non-salaried employee
would be entitled to six days of paid absence. The Debtors
estimate that as of the commencement date, the amount owed
and accrued for paid absences is $3.1 million.
B. Employee Benefits
In the ordinary course of business, the Debtors have
established various employee benefit plans and policies,
which provide employees with health, life and disability,
severance, retirement, incentive, and other miscellaneous
benefits. Mr. Bienenstock detail these benefits:
1. Health--The self-insured medical and health plans are
administered by Aetna US Healthcare and Highmark Blue
Cross Shield. The Debtors' employees submit their medical
claims directly to these two health carriers who in turn
issue payment to the employees. Subsequently, Aetna and
Bluecross submit bills to the Debtors for the amount of
medical claims they paid out. The Debtors estimate that,
as of Commencement Date, they have accrued approximately
$7.4 million in unpaid health benefits obligations.
2. Life and Disability-Debtors make cash payments for life
and disability benefits. As of Commencement Date, an
estimated aggregate $850,000 is accrued in unpaid Life
and Disability obligations.
3. Severance Benefits-The Debtors currently make cash
payments to 19 employees based on a discrete severance
program. The Debtors propose to cap this so that no
individual will receive more than $25,000 and
collectively, the aggregate payments will not exceed
$150,000. The Debtors also propose to continue this
program in the postpetition period.
4. Retirement Benefits-The Debtors currently have certain
retirement benefit plans that affect only a limited
population of employees and retirees. The Debtors
estimate the outstanding amount at approximately $1.7
million.
5. Incentive Benefits-The Debtors currently maintain several
distinct incentive programs designed as additional
compensation for employees at the retail and field
manager level. The estimated aggregate cost is
approximately $350,000.
6. 401(K) Benefits-The Debtors make cash payments for 401(K)
Benefits. The Debtors estimate that they have accrued
approximately $200,000 in unpaid 401(K) Obligations.
7. Miscellaneous Benefits-The Debtors estimate that they
have accrued and unpaid obligations for Miscellaneous
Benefits in an amount not to exceed approximately
$200,000.
8. Benefit Administration-The Debtors employ ADP, Inc. to
assist in the administration of employment benefits. The
Debtors estimate that, as of the Commencement Date, ADP
is owed approximately $125,000 for their services.
C. Employee Payroll Deductions
The Debtors are regularly presented with garnishment or
child support orders requiring the withholding of employee
wages. The average weekly amount withheld on account of such
orders is approximately $55,000.
The Debtors also withhold certain sums on a weekly basis as
requested. Such sums are applied to various programs like
additional life insurance or long-term disability coverage.
The debtors estimate the outstanding amount is approximately
$1.1 million.
David H. Lissy, Esq., Senior Vice President and General Counsel
of Ames Department Stores, Inc., states that it is evident the
continued operation of the Debtors' business and their
successful reorganization depends upon the retention of the
services of their employees and the maintenance of employee
morale. Mr. Lissy contends that deterioration of employee
morale at this critical time undoubtedly would have a
devastating impact on the Debtors' workforce, the value of the
Debtors' assets and businesses, and their ability to reorganize
successfully under chapter 11. Consequently, Mr. Lissy asserts
it is critical the Debtors be authorized to satisfy their
employee-related obligations and continue their ordinary course
employee plans, policies, and programs as in effect prior to the
Commencement Date.
Moreover, Mr. Lissy relates that if the checks issued and fund
transfers requested in payment of the Pre-petition Employee
Obligations are dishonored, Debtors' employees will suffer
extreme personal hardship and may even be unable to pay their
daily living expenses. Further, Mr. Lissy adds that it would be
inequitable to require the Debtors' employees to bear personally
the business expenses that were incurred on behalf of the
Debtors with the expectation they would be reimbursed.
Accordingly, Mr. Lissy asserts that payment of all Pre-petition
Employee Obligations in accordance with the Debtors' business
practices is in the best interests of the Debtors and their
estates, and will enable the Debtors to continue to operate
their business in an economic and efficient manner without
disruption. Mr. Lissy relates that the total amount to be paid
if the authorization sought herein is granted is relatively
modest compared with the size of the Debtors' estates and the
importance of the Debtors' employees to their rehabilitation
efforts. (AMES Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
AMF BOWLING: Urges Court to Overrule Objections re Blackstone
-------------------------------------------------------------
Dion W. Hayes, Esq., at McGuireWoods LLP in Richmond, Virginia
argues that the Court should overrule the U.S. Trustee's and the
Committee's objections, approve the application of AMF Bowling
Worldwide, Inc. to continue their retention of Blackstone, and
permit these cases to move forward.
Mr. Hayes contends that the indemnification provisions granted
to Blackstone are narrower than similar provisions this Court
approved for the debtor's financial advisors in the recent cases
and are consistent with applicable state law regarding the
indemnification of fiduciaries.
In addition, the Debtors disclose, the provisions are equivalent
to the provisions obtained by the Informal Committee's and the
Creditors' Committee's advisors.
Mr. Hayes contends that, contrary to the assertions of the U.S.
Trustee and the Committee, the majority of the authorities cited
in their objections support limited indemnification for
financial advisors in chapter 11 cases. Mr. Hayes adds that The
Court should follow the recent analysis of two New York Federal
Courts and the applicable State Law regarding the
indemnification of corporate fiduciaries, which support the
indemnification sought by Blackstone.
Mr. Hayes claims the indemnification provisions contained in the
Blackstone Engagement Letter are reasonable and in compliance
with the applicable state fiduciary common law and the
applicable state statutory law regarding indemnification of
corporate fiduciaries. Mr. Hayes relates that the Blackstone
Engagement Letter provides for indemnification for any
liabilities that might be incurred by Blackstone in connection
with the engagement except for those liabilities that are
"finally judicially determined by a court of competent
jurisdiction to have primarily resulted from the bad faith,
gross negligence or willful misconduct of Blackstone."
In addition, Mr. Hayes states the Blackstone Engagement Letter
provides for a release by the Debtors of any claims that the
Debtors, their owners, parents, affiliates, security holders or
creditors may have against Blackstone in connection with
engagement, except for any liabilities "that are finally
judicially determined by a court of competent jurisdiction to
have primarily resulted from the bad faith, gross negligence or
willful misconduct of Blackstone."
In sum and substance, the indemnification and exoneration
provisions proposed for Blackstone are in conformity with the
prevailing common and statutory law and should be approved.
Mr. Hayes argues that the Court should overrule the Committee's
and U.S. Trustee's Objections and grant the Debtors' Application
to employ Blackstone on the terms set forth in the Engagement
Letter because this Court has previously approved
indemnification and exoneration provisions which are broader
than the provisions sought by Blackstone and because the
relevant state law regarding the indemnification of fiduciaries
permits such provisions for fiduciaries.
Mr. Hayes adds that because the Court has authority to Review
the Appropriateness of Blackstone's Restructuring Fee at the Fee
Application Stage, the Committee's Objection to the
Restructuring Fee Proposed in the Blackstone Engagement Letter
Should be Overruled. Concerning the objection of the Committee
to the $7,000,000 Restructuring Fee, Mr. Hayes points out that
the Blackstone Engagement Letter specifically acknowledges that
Blackstone's compensation in these cases is subject to the
Court's review.
Blackstone's Response
Mark Thompson, Esq., at Simpson, Thacher & Bartlett in New York,
New York, presents these arguments in response to the Debtors'
application to employ Blackstone:
(1) Indemnification agreements are generally valid and are
compatible with professional responsibility
(2) Financial advisors to debtors in possession are not
fiduciaries of the estate
(3) Even if the court finds that financial advisors are
fiduciaries of the estate, fiduciaries are routinely
indemnified for their own negligence
In light of the overall benefit of Blackstone's services, the
customary nature of the clause in the Engagement Letter, and the
acquiescence of all other interested parties to the
indemnification clause, Mr. Thompson argues that the Court can
and should find that the indemnification of Blackstone is fair,
reasonable and in the best interests of the estate. (AMF
Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
ARMSTRONG HOLDINGS: PI Panel Retains Campbell as Local Counsel
--------------------------------------------------------------
The Official Committee of Asbestos Personal Injury Claimants of
Armstrong Holdings, Inc. asks Judge Farnan to approve its
employment of the law firm of Campbell & Levine as local counsel
nunc pro tunc to June 16, 2001. The professional services
Campbell & Levine will render are:
(a) providing legal advice as counsel regarding the rules
and practices of this Court applicable to the
Committee's powers and duties as an official
committee appointed under the Bankruptcy Code;
(b) providing legal advice as Delaware counsel regarding
the rules and practices of this Court;
(c) preparing and reviewing as counsel applications,
complaints, motions, answers, orders, agreements and
other legal papers filed against or on behalf of the
Committee for compliance with the rules and practices
of this Court;
(d) appearing in court as counsel to present necessary
motions, applications and pleadings and otherwise
protecting the interests of the Committee and the
asbestos-related personal injury claimants against
the Debtor;
(e) investigating, instituting and prosecuting causes of
action on behalf of the Committee and/or the Debtors'
estates; and
(f) performing such other legal services for the
Committee as the Committee believes necessary and
proper in these proceedings.
Subject to Judge Farnan's approval and the provisions of the
Bankruptcy Code, the committee proposes to compensate Campbell &
Levine on an hourly basis. The present hourly rates applicable
to the professionals in Delaware proposed to represent the
Committee are:
Professional Position Hourly Rate
------------ -------- -----------
Matthew G. Zaleski, III Member $275
Stephanie L. Peterson Legal Assistant $ 90
The present hourly rates applicable to the professionals in
Pittsburgh proposed to represent the Committee are:
Professional Position Hourly Rate
------------ -------- -----------
Douglas A. Campbell Member $300
David B. Salzman Member $300
Philip E. Milch Member $225
Michele Kennedy Paralegal $ 90
This list is not exclusive, and other professionals may perform
services for the Committee.
The Committee explains that it has requested approval of this
employment nunc pro tunc because it is necessary for Campbell &
Levine to immediately begin work on the Committee's behalf
immediately after the Committee approved the substitution of
Campbell & Levine for Ashby & Geddes, who have withdrawn.
Mr. Matthew G. Zaleski, a member of Campbell & Levine, assures
Judge Farnan that the firm is disinterested and neither holds
nor represents any interests adverse to the Committee or these
estates. Mr. Zaleski says that, prior to joining Campbell &
Levine, he was associated with the law firm of Ashby & Geddes.
During that association, he acted on behalf of the Committee.
Campbell & Levine presently represent the Official Committee of
Asbestos Claimants in the bankruptcy cases of the Pittsburgh
Corning Corporation, Owens Corning, and W. R. Grace & Co.
Additionally, Campbell & Levine is counsel to the H. K. Porter
Trust. For as long as it represents the Committee, Mr. Zaleski
assures Judge Farnan that Campbell & Levine will not represent
any entity other than the Committee in connection with these
chapter 11 cases.
Judge Farnan grants this Application and permits the
substitution of Campbell & Levine for Ashby & Geddes as local
counsel to the Committee. (Armstrong Bankruptcy News, Issue No.
9; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ASHTON TECHNOLOGY: Subject to Delisting from Nasdaq Today
---------------------------------------------------------
The Ashton Technology Group, Inc. (NASDAQ:ASTN) received a
Nasdaq Staff Determination dated August 27, 2001, indicating
that its securities are subject to delisting from The Nasdaq
National Market effective September 5, 2001.
Ashton has decided to appeal Nasdaq's decision.
Ashton's securities will be delisted for failing to meet the
minimum net tangible assets, minimum shareholders' equity and
minimum bid price requirements for continued listing on The
Nasdaq National Market, as set forth in Rule 4450(a)(3) under
the Nasdaq Marketplace Rules.
Ashton's request for an appeal will suspend the delisting
process pending a decision by the Nasdaq Listing Qualifications
Panel.
Ashton is an eCommerce company that develops and operates
electronic trading and intelligent matching systems for the
global financial securities industry. The Company's focus is to
develop and operate alternative trading systems, serving the
needs of exchanges, institutional investors and broker-dealers
in the U.S. and internationally.
The Company's goal is to enable these market participants to
trade in an electronic global trading environment that provides
large order size, absolute anonymity, no market impact and lower
transaction fees.
* * *
During the Company's annual meeting of stockholders, scheduled
for September 25, 2001, stockholders will consider and vote
whether to authorize the Company to exceed the Nasdaq 20%
limitation rule with respect to the equity line agreement with
Jameson. This rule requires a Nasdaq-listed issuer to obtain
stockholder approval prior to the issuance of securities in
connection with a transaction, other than a public offering for
cash, involving the sale or issuance by the Company of common
stock equal to 20% or more of the common stock or 20% or more of
the voting power outstanding before the issuance.
Approval of this proposal would allow the Company to issue an
as-yet-undetermined number of shares of common stock under the
equity line securities purchase agreement with Jameson. Should
stockholders fail to approve the proposal, the Company may
nonetheless issue shares up to such 20% amount, or 6,632,448
shares, under the equity line.
This restriction would severely limit the amount of money that
the Company could raise under the equity line, and it may
require additional financing, which may not be available on
terms that are acceptable to the Company, or at all.
Need For Additional Financing To Fund Operations
The Company may require financing in addition to the financing
available under the equity line with Jameson Drive LLC to
complete its strategic plans.
Such financing may take the form of equity offerings, spin-offs,
joint ventures, or other collaborative relationships which may
require the Company to issue shares or share revenue. These
financing strategies would likely impose operating restrictions
on the Company or be dilutive to holders of the common stock,
and may not be available on attractive terms or at all.
If such financing is available, there is no assurance that it
will be sufficient to meet the Company's anticipated cash needs
until it can generate enough cash from revenues to fund its
operations.
The Company may be unable to maintain the standards for listing
on the Nasdaq National Market, which could make it more
difficult for investors to dispose of the Company's common stock
and could subject the common stock to the "penny stock" rules.
The Company's common stock is listed on the Nasdaq National
Market. Nasdaq requires the Company to maintain standards for
continued listing, including a minimum bid price of $1.00 for
shares of its common stock and a minimum tangible net worth of
$4 million.
Currently, the Company does not meet either of these standards.
If the bid price for its shares does not reach at least $1.00
for ten consecutive trading days prior to October 25, 2001, the
Nasdaq National Market has advised the Company that it will move
to delist the Company's shares.
Further, pursuant to its request, the Company has submitted a
plan to the Nasdaq National Market to grow its tangible net
worth to over $4 million in the near future. If it determines
that it has not presented a definitive plan to achieve and
sustain compliance, the Nasdaq National Market will move to
delist the Company's shares.
If the shares are delisted from the Nasdaq National Market, then
trading in the Company's stock may potentially be conducted on
the Nasdaq SmallCap Market if it's able to demonstrate the
ability to meet its listing requirements. The SmallCap listing
requirements include, among other things, a minimum bid price of
$1.00 and net tangible assets of $2 million, neither of which
the Company currently has.
The Company cannot provide assurance that it will be able to
meet the continued listing requirements of either the Nasdaq
National Market or the SmallCap Market. If it is unable to meet
these requirements, its common stock would be traded on an
electronic bulletin board established for securities that do not
meet the Nasdaq listing requirements or in quotations published
by the National Quotation Bureau, Inc. that are commonly
referred to as the "pink sheets".
As a result, it could be more difficult to sell, or obtain an
accurate quotation as to the price of, its common stock.
In addition, if its common stock were delisted, it would be
subject to the so-called penny stock rules. The SEC has adopted
regulations that define a "penny stock" to be any equity
security that has a market price of less than $5.00 per share,
subject to certain exceptions.
Volatile Business
The Company's business is highly volatile and its quarterly
results may fluctuate significantly.
The Company has experienced an increase in the volume of trades
executed through its systems, and volatility of such trading
volume from session to session during the past year. These
fluctuations may have a direct impact on its operating results
and may cause significant fluctuations in its inter-day
profitability.
AT HOME: Cox and Comcast Intends to Terminate Distribution Pacts
----------------------------------------------------------------
Excite@Home (Nasdaq: ATHM) received formal notification from Cox
and Comcast that they will exercise their rights under their
existing distribution agreements with the company to terminate
those agreements effective June 4, 2002.
The company is continuing to engage in discussions with Cox and
Comcast concerning alternative arrangements for the continued
provision of the company's broadband Internet service to
subscribers of Cox and Comcast cable systems.
However, there can be no assurance that such discussions will
result in such alternative commercial arrangements.
Separately, Excite@Home's board of directors has authorized the
company to retain an investment banking firm as a financial and
restructuring advisor to assist the company in exploring its
options related to its financial position.
Excite@Home is the leader in broadband, offering consumers
residential broadband services and businesses high-speed
commercial services. Excite@Home has three joint ventures
outside of North America to deliver high-speed Internet services
and has localized versions of the Excite service in a number of
international markets.
AT HOME CORP: Sells Benelux Assets to Essent Kabelcom
-----------------------------------------------------
Essent Kabelcom, the second-largest cable operator in the
Netherlands and majority shareholder of @Home Benelux, and
Excite@Home (Nasdaq: ATHM), the leader in broadband, announced
that Essent has acquired the interests in @Home Benelux held by
its partner Excite@Home and investor Intel Capital.
Separately, Excite@Home and Essent also announced that they have
formed a new strategic alliance under which Excite@Home will
continue to provide core technologies and broadband services to
@Home Benelux.
The alliance enables broadband expert Excite@Home to focus on
its core competency -- providing core technologies and services
to cable operators -- and establishes cable leader Essent
Kabelcom as the customer that benefits from these state-of-the-
art offerings.
Under this new relationship, Excite@Home will receive recurring
revenue from technology licensing fees as well as from providing
technology solutions.
"[Thurs]day's news means that @Home Benelux will have a closer
relationship with Essent Kabelcom. We look forward to continuing
to serve customers who value high-speed Internet access and to
strengthening our current offerings," said Paul Ummels, acting
CEO Essent Kabelcom.
"This new partnership helps us to streamline our business and
showcase our next-generation business model," said Patti Hart,
Excite@Home's chairman and CEO. "We are entering into a business
relationship that will create benefits for our partners and us,
including ongoing, recurring revenue opportunities. This model
is a good example of how we envision other relationships with
cable operators could be structured; ultimately making
Excite@Home a provider of business-to-business services for
last-mile owners."
This transaction ensures continued services to customers of
@Home Benelux and @Work.
Nils Kijkuit, CEO of @Home Benelux added, "By strengthening our
ties with Essent and ensuring ongoing access to the @Home
technology, we are able to guarantee the continuity of services
to our clients and we are well positioned for further growth."
Essent Kabelcom is with 1.6 million customers the second largest
cable company in The Netherlands. The company exists since 2000
after a merger between two large Dutch cable operators: CasTel
and Palet Kabelcom. Besides @Home, it provides narowband
Internet and cable television/radio (analogue and digital).
Essent Kabelcom has around 1000 employees, a yearly revenue of
euro 230 million and is fully owned by Essent NV.
Excite@Home is the leader in broadband, offering consumers
residential broadband services and businesses high-speed
commercial services.
Excite@Home has interests in two joint ventures outside of North
America delivering high-speed Internet services, one of which
also operates a localized version of the Excite portal, and
three additional joint ventures outside of North America
operating localized versions of the Excite portal.
Excite@Home, @Home, Excite and the "@" stylized logo are service
marks or registered service marks of At Home Corporation in the
United States and other countries.
AT HOME: Continues Talks with Promethean On Breach of Terms
-----------------------------------------------------------
Promethean Asset Management LLC said it has not taken immediate
steps to pursue its remedies in connection with the breach of
the terms of $50 million of At Home Corp. senior secured
convertible notes due 2006.
Promethean said that in response to its notice given on Friday,
At Home has taken concrete steps that may form the foundation
for potentially constructive solutions to resolve the breach of
terms of the notes.
Promethean remains in constant contact with management and
certain board members of At Home, and will monitor the situation
closely to determine what actions may be necessary to protect
its rights.
Promethean is a private investment firm located in New York
City.
ATLANTIC TELECOM: S&P Junks Ratings to Reflect Poor Liquidity
-------------------------------------------------------------
Following a review, Standard & Poor's lowered its ratings on
Atlantic Telecom Group PLC a provider of direct and indirect
access telephony services to the residential and small and
midsize enterprise (SME) markets in the U.K., Germany, and
France.
The long-term corporate credit ratings on Atlantic were lowered
to triple-'C' from single-'B'-minus, and the senior unsecured
debt rating was lowered to triple-'C'-minus from single-'B'-
minus. At the same time, all ratings were placed on CreditWatch
with negative implications.
The downgrade of the corporate credit ratings on Atlantic
reflects the company's operational and financial
underperformance relative to Standard & Poor's expectations, as
well as its ongoing high cash burn rate, weak liquidity, and
limited financial flexibility.
Atlantic's unrestricted cash balances declined by 52.5 million
pounds ($76.1 million) in the three-month period ending June 30,
2001, due to EBITDA losses of 12.5 million pounds, capital
expenditure of 13.2 million pounds, and a substantial working
capital cash outflow.
As a consequence, the company's available unrestricted cash
balances declined to only 55.5 million pounds at June 30, 2001.
Furthermore, Atlantic's financial flexibility, or its ability to
access further capital, is considered to be very poor given the
ongoing extreme weakness of the company's share and bond prices,
and the generalized negative sentiment toward telecommunications
companies in the equity and credit markets.
Atlantic's senior unsecured debt rating has been notched down
once from the company's corporate credit ratings, following a
reassessment of the company's tangible asset value relative to
the amount of structurally senior liabilities.
Resolution of Atlantic's CreditWatch status is expected in the
short term, and this will focus on Atlantic's plans to
restructure its balance sheet to create a sustainable capital
structure, as well as on the company's operational performance,
liquidity, and cash burn rate.
BRIDGE INFO: Court Deems Cal Harbor Claims as Timely Filed
----------------------------------------------------------
Cal Harbor II and III Urban Renewal Associates, L.P. sought and
obtained an order declaring its proof of claim against Bridge
Information Systems, Inc. as being timely filed.
David A. Sosne, Esq., at Summers, Compton, Wells & Hamburg, in
St. Louis, Missouri, recounts that Cal Harbor's proof of claim
was mailed to the Post Office Box by Express Mail Service of the
United States Postal Service. US Postal Service attempted to
deliver Cal Harbor's proof of claim on June 28 and June 29, 2001
(Bar Date for Filing Proofs of Claim). But for unknown reasons,
the US Postal Service was unable to effectuate deliver until
July 3, 2001.
Mr. Sosne convinced Judge McDonald that there is no danger of
prejudice to the Debtors in granting the relief requested since
the Debtors already knew Cal Harbor was a creditor. The Debtors
even listed Cal Harbor as such in their schedule, Mr. Sosne
adds.
According to Mr. Sosne, the delay of only two business days
after the Bar Date is negligible. And it was not the result of
any malfeasance or nonfeasance on the part of Cal Harbor or
their counsel, Mr. Sosne emphasized. (Bridge Bankruptcy News,
Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CINEMARK USA: S&P Airs Concerns about Possible Covenant Breaches
----------------------------------------------------------------
Standard & Poor's affirmed its ratings on Cinemark USA Inc. and
removed them from CreditWatch where they were placed with
negative implications on July 11, 2000. The outlook is negative.
The ratings are being removed from CreditWatch because of
reduced concern that Cinemark will violate its financial
covenants in the current quarter despite the tightening of the
maximum leverage covenant.
Other factors considered in the action include the company's
reduced leverage in the first half of the year, the strong
industry box-office results so far in the third quarter, and an
improved position for the remainder of the current quarter
compared with the same period in 2000, when the Olympics and the
lack of major releases hurt attendance.
The ratings reflect Cinemark's relatively modern theater
circuit, its favorable operating performance relative to its
peers, and the benefit of profitable international operations.
These positives are balanced by the company's high financial
risk and the weak, albeit more stable, industry operating
environment.
Cinemark is one of the leading movie exhibitors in the U.S. with
approximately 2,210 screens in 33 states. The company also
operates 749 screens in 12 other countries, predominantly in
Latin America.
The company has grown rapidly over the past several years as it
has aggressively added megaplexes in the U.S. and expanded its
international circuit. At the same time, the operating
environment in the U.S. has deteriorated substantially as
aggressive expansion by all of the major exhibitors has led to
an oversupply of screens and accelerated the obsolescence of
older theaters.
Despite these issues, Cinemark's EBITDA has grown steadily along
with its screen count and its profitability compares favorably
to its peers. Standard & Poor's attributes this to the company's
relatively new and well-positioned domestic circuit as well as
the company's profitable international operations.
Still, the difficult industry environment has hurt profits and
operations as indicated by the impairment charges taken every
year since 1995. Also, the company's expansion has been
predominantly funded with debt and operating lease liabilities
that produced a steady decline in the company's key coverage
ratios through the end of 2000.
Strong performance in the first half of 2001, reflecting record
box-office results, has boosted revenue and profits while a
significant slowing of capital expenditures has helped cash flow
and reduced upward pressure on debt levels.
As a result, the immediate threat of a covenant violation has
been reduced, although a reversal of the positive operating
trends could still produce covenant violations in the near term.
EBITDA for the first six months of 2001 increased by 26% and
margins for this period increased to 17.4% from 15.1% based on
strong box-office results and increased screen count. The
increased profit combined with lower interest rates resulted in
an increase in EBITDA coverage of interest to 2.0 times on a
trailing 12-month basis compared with 1.8x at yearend 2000.
Debt to EBITDA has declined to 5.5x on a trailing 12-month basis
versus 6.0x at yearend. Lease adjusted coverage and leverage
ratios are weaker at about 1.4x and 6.3x, respectively.
Importantly, Cinemark was one of the first exhibitors to
significantly scale back its expansion and it has shifted its
focus to operations and debt reduction. The resulting decline in
capital commitments for the balance of the year, compared with
historical levels, could help the company generate positive cash
flow for the balance of the year and reduce debt.
This would help the company maintain compliance with financial
covenants, especially with additional covenant tightening in
early 2002. Cinemark continues to have borrowing capacity under
its line of credit, although financial flexibility is limited
due to financial covenants.
Outlook: Negative
Operating trends over the first half of 2001 have helped produce
modest improvements in key credit ratios and reduced the
immediate threat of a financial covenant violation.
Cinemark's ability to maintain this positive momentum and
execute its strategy to generate positive discretionary cash
flow and reduce debt will be key to maintaining compliance. A
deterioration in key credit measures in the near term would
likely result in a downgrade.
Ratings Affirmed & Removed From CreditWatch
Cinemark USA Inc. Ratings
Corporate credit rating B+
Subordinated debt B-
COMDISCO INC: Seeks Okay to Assume Executive Employment Pacts
-------------------------------------------------------------
Comdisco, Inc. seeks the Court's authority to assume the
Employment Agreements of Norman P. Blake, Jr., and Michael
Fazio.
Mr. Blake is the Chairman, President and Chief Executive Officer
of Comdisco. He has over 30 years of senior management
experience at various corporations:
Position Company Period
-------- ------- ------
Chairman, President and CEO Promus Hotel Corporation 98-99
Chairman, President and CEO USF&G Corporation 90-97
Chairman, President and CEO Heller International Corp. 84-90
Mr. Blake has also occupied various management positions at the
General Electric Company, including executive vice-president of
financing operations for General Electric Credit Corporation,
president of Top, Inc., a Detroit-based diversified financial
services company and most recently was the chief executive
officer and secretary-general of the United States Olympic
Committee.
Under the Amended and Restated Employment Agreement dated June
4, 2001, the principal economic terms of the Blake Employment
Agreement are:
(a) Terms and Duties: Mr. Blake will serve a three-year term
beginning February 27, 2001, report to the Board of
Directors of Comdisco and perform such duties as are
inherent in his positions and necessary to carry out his
responsibilities and the duties required of him.
(b) Salary and Bonus: Mr. Blake will receive an annual base
salary of not less than $700,000 and, pursuant to the
performance goals established by the Boards, shall
participate in an annual bonus program. The bonus
program shall provide for a maximum bonus amount of 200%
of Mr. Blake's annual salary. Mr. Blake shall not be
entitled to a bonus for the performance period ending
September 30, 2001.
(c) One-Time Cash Payment: Mr. Blake will receive a one-time
lump sum cash payment of $2,000,000 as soon as
practicable after April 13, 2001. The One-Time Cash
Payment is subject to termination for cause or
resignation prior to July 31, 2001, or the consummation
of a Strategic Transaction as defined in the Blake
Employment Agreement.
(d) Replacement of Equity Incentive Value: In exchange for
cancellation of any and all options granted to Mr.
Blake, Comdisco shall make charitable contributions
based upon achievement of corporate financial goals.
Such goals, if achieved at Target shall result in the
payment of an amount equal to $9,600,000.
(e) Creation of Shareholder Equity Incentive: Mr. Blake
shall be granted an equity incentive which shall be
equal in value to 2% of any equity value which shall
remain or be created for Comdisco's current shareholders
upon a date which is the first to occur of:
(1) emergence of Comdisco from a Chapter 11
reorganization, or
(2) liquidation of Comdisco.
(f) CEO Fringe Benefits: Mr. Blake shall receive welfare
benefits and other fringe benefits to the same extent
and on the same terms as those benefits which are
provided to other senior management employees at
Comdisco.
(g) Change of Control: Following a Change in Control,
Comdisco shall provide compensation (including bonus
opportunities) and benefits to Mr. Blake which, on an
aggregate basis, equal or exceed the compensation
(including bonus opportunities) and benefits in effect
immediately before the Change in Control.
(h) Termination without Cause: If Mr. Blake's last day of
employment occurs during the Agreement Term due to
Constructive Discharge or termination by the Company
without Cause, then he shall receive, in addition to his
general payment rights detailed in section 4(a) of the
Employment Agreement, in a lump sum payment, the sum of:
(i) the salary that would be payable if he
continued working until the End of the
Severance Period and received the rate of
salary in effect immediately prior to his Date
of Termination, plus
(ii) the total bonus payments he would have received
if he remained in the employ of Comdisco until
the End of the Severance Period, with the rate
of bonus payments to be not less than the
greater of $700,000 per year or the highest
annual bonus payment received by Mr. Blake for
his period of employment.
Mr. Fazio is the Executive Vice President and Chief Financial
Officer of Comdisco. He also has significant management
experience at the corporate level:
(1) President and Chief Executive Officer of Pretzel Logic
Software, Inc.
(2) Executive Vice President/Managing Director and Chief
Operating Officer of Americas for Deutsche Bank AG from
1999 to 2000, and
(3) Staring 1983, Mr. Fazio began his career with Arthur
Andersen, serving in increasingly responsible positions
in Andersen's Financial Market Industry Practice,
including partner-in-charge of its New York Banking
Brokerage and Investment Banking Industry Practice until
1999.
Under an employment agreement dated as of July 5, 2001, the
principal economic terms of the Fazio Employment Agreement are:
(a) Terms and Duties: Mr. Fazio will serve a two-year term
beginning July 5, 2001, report to the Chairman and CEO
of Comdisco and perform such duties as are inherent in
his position and necessary to carry out his
responsibilities and the duties required of him.
(b) Salary and Bonus: Mr. Fazio will receive an annual base
salary of not less than $500,000 and, pursuant to the
performance goals established by the Board, shall
participate in an annual bonus program. The bonus
program shall provide for a maximum bonus amount of 100%
of Mr. Fazio's annual salary. Mr. Fazio's bonus shall
be pro-rated for the 2001 fiscal year.
(c) One-Time Cash Payment: Mr. Fazio shall receive a one-
time lump sum cash payment of $500,000 as soon as
practicable after the Effective Date.
(d) Emergence Bonus: Mr. Fazio shall receive $1,000,000 in
cash or cash equivalents on the effective date of any
confirmed plan of reorganization in such cases provided
that:
(1) the reorganization plan provides for the
emergence and reorganization of at least one of
the three principal businesses in which the
Company is engaged as of the date of Agreement;
(2) Mr. Fazio is employed with the Company on the
date of such reorganization plan is first filed
in such cases in the executive position provided
for in this Agreement or a more senior position;
and
(3) Mr. Fazio meets reasonable performance criteria
as determined by the Chairman and CEO and the
Compensation Committee of the Board of Directors
during such cases.
(e) Constructive Discharge: Mr. Fazio shall be deemed to
have been Constructively Discharged by Comdisco if,
among other reasons, Mr. Fazio is not appointed to the
position of Chief Operating Officer (or a more senior
position) within six months following the Employment
Commencement Date and, within 12 months of the
Employment Commencement Date, appointed to the position
of Chief Executive Officer of Comdisco.
(f) Termination without Cause: If Mr. Fazio's last day of
employment occurs during the Agreement Term due to
Constructive Discharge or termination by the Company
without Cause, then he shall receive, in addition to his
general payment rights detailed in section 4(a) of the
Employment Agreement, in a lump sum payment, the sum of:
(i) the salary that would be payable if he
continued working until the end of the
Severance Period and received the rate of
salary in effect immediately prior to his Date
of Termination, plus
(ii) the total bonus payments he would have received
if he remained in the employ of Comdisco until
the End of the Severance Period, with the rate
of bonus payments to be not less than the
greater of $500,000 per year or the highest
annual bonus payment received by Mr. Fazio for
his period of employment.
Jack Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher &
Flom, relates that the Debtors have determined the assumption of
these Employment Agreements with Mr. Blake and Mr. Fazio is in
the best interest of their estates, creditors, and other
parties-in-interest, and critical to their prospects for a
successful reorganization.
According to Mr. Butler, the Senior Management Employees were
both specifically hired to engineer the restructuring and
reorganization of the Debtors. Mr. Butler says Mr. Blake and
Mr. Fazio's decisions have guided the filing of these cases.
Therefore, the Debtors contend that it is important that Mr.
Blake and Mr. Fazio's leadership be maintained in order for them
to continue the course they have set. (Comdisco Bankruptcy News,
Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900)
COVAD COMMUNICATIONS: Moves to Pay Prepetition Wages & Benefits
---------------------------------------------------------------
To maintain workers' morale and minimize the disruption to the
Debtor's reorganization efforts, Covad Communications Group,
Inc. seeks an order authorizing it to pay certain pre-petition
claims for, among other items, salaries, and other compensation.
In addition, the Debtor requests authority to pay to the
appropriate parties the amounts that are deducted and withheld
from the Employees' paychecks, which are in most instances not
property of the Debtor's estate.
Finally, the Debtor requests authority to reimburse the
Employees for expenses incurred by such Employees pre-petition
in the ordinary course of business.
The relief requested covers:
A. Compensation - In the ordinary course of business, the
Debtor issues payroll checks to employees on a bi-weekly
basis. The aggregate gross weekly payroll to all of the
Employees of Debtor is approximately $31,250.7. The Debtor
believes that, as of the Petition Date, all pre-petition
wages, salaries, and commissions, were paid and that all
such payroll checks have cleared the banking systems.
B. Vacation & Other Time Paid Off - The Debtor provides its
full and part-time employees with three weeks of paid time
off for vacation, sickness, jury/witness duty, bereavement,
and certain other forms of leave. As of the Petition Date,
certain employees have accrued unused vacation days, which
can be "cashed out" in the case of termination. The Debtor
requests authority to honor, in its discretion, its pre-
petition vacation and paid time off policy by permitting
employees to use and be compensated for vacation and other
accrued time off, in the ordinary course of the Debtor's
business including, without limitation, "cashing out"
accrued vacation or other paid time off upon termination.
C. Bonus - Under the various employment agreements, the
Employees are entitled to certain bonuses. The Debtor
believes that, as of the Petition Date, the Employees are
entitled to receive approximately $330,000 in bonuses
pursuant to the terms of their employment agreements. The
bonuses paid to the Employees are a significant component of
the Employees' compensation package and should be honored by
the Debtor because such bonuses are based on reaching
certain financial milestones. The Debtor believes that
payment of the bonuses to the Employees is critical to the
Employees' morale and the Debtor's reorganization efforts.
C. Employee Benefits - Most of the Employees participate in
various plans and policies that provide medical, dental,
vision, disability, life and accidental death and
dismemberment insurance, as well as retirement savings and
other similar benefits. These Employee Benefits include:
1. Health Benefits - An important element of the Employee
Benefits is medical insurance, which is provided
primarily through a premium-based insurance plan operated
by Great West. The medical insurance premiums paid
monthly in advance are approximately $490. The Employees
rely on the Debtor to provide continuing health care
coverage and the Debtor believes that the Employees
welfare, morale and expectations would be significantly
harmed if the Debtor failed to pay any due amounts with
respect to the insurance plans. Further, some of the
Employees have dental insurance and vision care insurance
through the carriers Great West and Vision Service Plan,
respectively. The monthly premiums in connection with
these programs average approximately $56.00 and $58.00,
respectively. As of the Petition Date, the Debtor does
not believe that there are any accrued but unpaid
premiums and related claims with respect to the Health
Benefits.
2. Employee Insurance Benefits - The Debtor offers certain
employees premium-based group life, accidental death and
dismemberment, and disability insurance. The yearly
expense for these is approximately $3,250. The Debtor
does not believe that any accrued premiums or claims
related to Employee Insurance Benefits are unpaid as of
the Petition Date.
3. Employee Assistance Programs - The Debtor offers to the
Employees and their eligible dependents a confidential
and professional counseling program, which does not
require a large expenditure of money by the Debtor, but
provides the Employees with important benefits, including
financial, tax, and legal counseling.
D. Pre-petition Amounts Withheld From Employee - The Debtor
deducts from Employees' paychecks (a) payroll taxes and the
Employees' portion of FICA and unemployment taxes; (b)
employee contributions for the Employee Benefits, flexible
spending accounts, and additional life insurance; (c)
employee contributions to 401(k) plans; and (d)
miscellaneous other items. Amounts equal to the Employee
Deductions are forwarded from operating accounts to
appropriate third-party recipients.
E. Retirement Savings Plan - The Debtor offers employees the
opportunity to participate in a 401(k) Retirement Savings
Plan. Although the Debtor does not make matching
contributions to this plan, it does pay for certain related
expenses. The Debtor believes that maintaining the program
is essential to employee morale. Any disruption in benefits
will call unto question the Debtor's commitment to its
employees.
F. Workers' Compensation Obligations And Related Insurance -
The Debtor provides workers' compensation insurance through
premium based workers' compensation insurance programs with
annual premiums approximately $720. Although such premiums
have been paid as of the Petition Date, the Debtor's
aggregate liability with respect to the workers'
compensation programs may be adjusted based on headcount
changes and/or other factors.
G. Reimbursable Business Expenses - Prior to the Petition
Date, the Debtor reimbursed workers, directors and officers
for certain expenses incurred in the scope of their
employment. As a result of the timing of the commencement of
this case, as of the Petition Date, the Debtor estimates
that it owes approximately $50,000 in expenses relating to
business-related travel expenses, business meals, or
miscellaneous business expenses to the Employees and the
Debtor's directors. All of these expenses were incurred on
the Debtor's behalf and with the understanding that these
expenses would be reimbursed.
Laura Davis Jones at Pachulski Stang Ziehl Young & Jones P.C. in
Wilmington, Delaware contends that it is critical that the
Debtor be authorized to maintain status quo with the employees
and directors as the Debtor expects to reorganize its financial
affairs and resolve its bankruptcy proceedings expeditiously.
The Debtor believes that employee morale and loyalty will be
jeopardized if it is unable to honor the obligations. Ms. Jones
states that the Debtor relies on its employees for the
management and operations of the Debtor's business and critical
to any successful reorganization as they are essential assets of
the Debtor. (Covad Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
EDWARDS THEATRES: Creditors Approve Reorganization Plan
-------------------------------------------------------
Creditors of the bankrupt Edwards Theatres Circuit Inc. approved
a reorganization plan on Wednesday to lift the theater chain out
of bankruptcy, TheDeal.com reports.
The plan calls for Edwards to raise $56 million by selling 51
percent of its equity to billionaire Philip Anschutz and Oaktree
Capital Management LLC, a Los Angeles-based distressed debt
specialist. Members of the Edwards family would control the
remaining 49 percent.
The company's secured creditors, who want cash as soon as the
plan takes effect, will be paid 90 cents on the dollar. They
will be paid in full if they are willing to take payment over
seven years.
Judge Lynne Riddle of the U.S. Bankruptcy Court for the Central
District of California scheduled a final confirmation on the
plan for Sept. 19. (ABI World, August 30, 2001)
EB2B COMMERCE: Delisting Stayed Pending Nasdaq Decision
-------------------------------------------------------
eB2B Commerce Inc. (Nasdaq:EBTB) announced that Nasdaq has
granted the Company's request for an oral hearing before a
Nasdaq Listing Qualifications Panel to review the Nasdaq Staff's
determination to delist the Company's stock from the Nasdaq
SmallCap Market. The hearing will be held on Thursday, Oct. 4,
2001.
At the hearing, the Company will be required to demonstrate that
it can comply in the long term with Nasdaq's minimum $1.00 bid
price requirement, as set forth in Marketplace Rule 4310(c)(4),
and all other Nasdaq maintenance criteria, in order to retain
its listing on the SmallCap Market.
The delisting of the Company's common stock is stayed, pending a
decision by the Nasdaq Panel. If the Company's common stock is
delisted from the Nasdaq SmallCap Market, the Company expects
that its common stock will continue under the symbol "EBTB" and
would trade on the NASD's OTC Bulletin Board.
eB2B's board of directors intends to seek stockholder approval
to authorize a one-for-five (1:5), one-for-seven (1:7), one-for-
ten (1:10), one-for-twelve (1:12) or one-for-fifteen (1:15)
reverse stock split of the Company's common stock. The Company's
board of directors believes that an appropriate reverse stock
split of eB2B's common stock could enable the Company to meet
Nasdaq's minimum $1.00 bid price requirement for continued
listing.
eB2B Commerce Inc. utilizes proprietary software to provide
services that create more efficient business relationships
between trading partners (i.e., buyers and suppliers).
The Company's technology platform allows trading partners to
electronically automate the process of business document
communication and turn-around, regardless of what type of
computer system the partners utilize.
EBT INTL: Files Proxy Statement Re Special Shareholders' Meeting
----------------------------------------------------------------
eBT International, Inc. (Nasdaq: EBTI) announced that it has
filed with the Securities and Exchange Commission a preliminary
proxy statement in connection with a special meeting of
shareholders to vote upon a proposal to approve a Plan of
Complete Liquidation and Dissolution.
The preliminary proxy statement indicates that, subject to the
conditions set forth therein, the estimated minimum net proceeds
available for distribution to shareholders will be approximately
$3.20 per share, of which $2.75 is expected to be paid in cash
on or before December 31, 2001.
The Company expects that the special meeting will be held in
October or November 2001. The date of the meeting will be set
following review of the preliminary proxy statement by the
Securities and Exchange Commission.
On May 22, 2001, the Board of Directors approved a plan to
liquidate and dissolve the Company, subject to the approval of
the holders of a majority of its shares.
In reaching its decision that the plan of liquidation and
dissolution was in the best interests of the Company and its
shareholders, the Board of Directors considered a number of
factors. The proxy statement describes these factors in detail,
including the Company's recent performance, the state of the
content management industry, prevailing economic conditions and
previous unsuccessful efforts to sell or merge the Company last
year and more recently.
The Board also considered restructuring the business in light of
the Company's unsatisfactory revenue performance in the fiscal
quarter ended April 30, 2001.
In connection with the intent to liquidate, the Company has
begun the orderly wind down of its operations, including laying
off the majority of its employees, seeking purchasers for the
sale of its intellectual property and other tangible and
intangible assets and providing for its outstanding and
potential liabilities. In addition, the Company will continue to
provide support and maintenance to existing maintenance
agreement holders for the duration of their current contracts.
Under Delaware law, the Company will remain in existence as a
non-operating entity for three years from the date the Company
files a Certificate of Dissolution in Delaware and will maintain
a certain level of liquid assets to cover any remaining
liabilities and pay operating costs during the dissolution
period. During the dissolution period, the Company will attempt
to convert its remaining assets to cash and settle its
liabilities as expeditiously as possible. The Company is
currently unable to estimate with certainty the amount
of proceeds that it will realize upon the sale of its
intellectual property and related assets, or the amount of
retained cash that will be needed to satisfy the Company's
liabilities.
If the Company's shareholders approve the plan of liquidation,
the Company will file a Certificate of Dissolution promptly
after the shareholders vote, and shareholders will then be
entitled to share in the liquidation proceeds based upon their
proportionate ownership at that time. The Company expects that
its shares will be delisted from the Nasdaq Stock Market in
connection with the dissolution, but the shares may be eligible
for trading on the NASD's electronic bulletin board pending the
liquidation.
The Company indicated in a May 23, 2001 press release that it
had begun the orderly wind down of its operations, including
seeking purchasers for its intellectual property and providing
for outstanding and potential liabilities. The following
transactions or events have taken place since that date:
-- In July 2001, the Company entered into an agreement with
Red Bridge Interactive, Inc. whereby we assigned to
Interactive its existing rights in the DynaBase and
engenda products and provided Interactive with a limited,
non-exclusive license of our rights in entrepid. In
addition, Interactive assumed its maintenance and support
obligations relating to DynaBase, engenda and entrepid.
Interactive is owned and managed by former eBT employees.
The Company's agreement with Interactive provides for the
payment of royalties to eBT in the event Interactive
earns gross revenue from the maintenance and support
business or from the future licensing of DynaBase,
engenda and entrepid. The royalty periods expire at
various times through July 1, 2004.
The agreement also requires the Company to provide
Interactive with an aggregate of $650,000 in funding from
July 1, 2001 through March 1, 2002. The payments are
made monthly and generally decline over this period,
which corresponds to the maintenance and support
obligations assumed by Interactive. In the event of a
default by Interactive, which specifically includes
performance of the obligations assumed by Interactive
under the Company's former maintenance and support
business, it may draw upon an irrevocable letter of
credit provided by Interactive.
-- In June 2001, the Company received notice from the staff
of the Boston Office of the Securities and Exchange
Commission that it has completed its investigation of the
Company pursuant to the Formal Order of Investigation
issued on June 2, 1999. The staff has advised the
Company that its preliminary recommendations with regard
to the Company involve no administrative sanctions,
financial fines or penalties. However, these
recommendations remain subject to the Commission's
review. The staff has also indicated that it may
recommend that the Commission file civil injunctive
actions with regard to three former officers of the
Company. In the event of liquidation, the Company plans
to establish a contingency reserve to make reasonable
provision for potential obligations, including amounts
that may be paid on behalf of the former officers
pursuant to the indemnification provisions of its By-
laws.
-- On August 31, 2001, with effect from August 29, 2001, the
Company and the bankruptcy estates of Microlytics, Inc.
and Microlytics Technology Co., Inc. reached a settlement
of the June 9, 1999 complaint filed against the Company.
In return for a payment of $2 million, the Company and
Microlytics have reached a compromise as to the validity
and amount of disputed claims. The terms of the
settlement are subject to the approval of the United
States Bankruptcy Court for the Western District of New
York.
Prior to May 23, 2001, eBT (Nasdaq: EBTI) developed and marketed
enterprise-wide Web content management solutions and services.
eBT's products were designed to satisfy certain key business
objectives - time-to-market, integration and ease of use - to
help organizations automate the creation, management and
publication of Web content. eBT's products are suited to work in
concert with other software solutions to enable the integration
customers require to build a cohesive, complete e-business
solution that maximizes the viability of an organization's Web
infrastructure. For more information, visit http://www.ebt.com
eBT is a trademark of eBT International, Inc. in the United
States and other countries. All other company, product or
service names are trademarks or registered trademarks of their
respective holders.
EXIDE TECHNOLOGIES: S&P Concerned About Current Liquidity State
---------------------------------------------------------------
Standard & Poor's placed its ratings on Exide Technologies
(formerly Exide Corp.) and related entity Exide Holding Europe
S.A. on CreditWatch with negative implications.
The rating actions reflect Standard & Poor's increased concerns
about the company's current liquidity situation and operating
outlook.
Exide is a leading producer of automotive batteries and
industrial batteries in North America and Europe. The company
achieved its current business position through a series of
acquisitions that left the company highly leveraged.
Exide's operating results and cash generation have been under
pressure for the past several years due to industry pricing
pressures and costs associated with internal restructuring
activities and legal issues.
As a result of these factors and the company's substantial debt
burden, cash flow protection measures have been quite weak.
Adjusted for operating leases and accounts receivable sales and
nonrecurring items, debt to EBITDA was more than 7 times in
fiscal 2001 (fiscal year ended March 31), and funds from
operations to debt was less than 10%. Both measures are weak for
the rating.
No material improvement in credit protection measures is
expected in the near term. Although Exide is benefiting from
cost-cutting initiatives and synergies from the integration of
its most recent acquisition, GNB Technologies, it is also
incurring various charges and expenses related to these
activities.
In addition, the company continues to face declining demand in
its automotive original equipment business and in its industrial
battery business (primarily related to the slowdown in the
telecommunications market), and weather related swings in demand
in its largest market segment, the automotive aftermarket.
Cash requirements of its restructuring program, seasonal
borrowing requirements, and slowing end-market demand have
combined to significantly constrain the company's financial
flexibility. Availability under its revolving credit facility
was just $44 million at June 30, 2001. Given market fundamentals
in recent months and continuing seasonal working capital
requirements, borrowing capacity is likely to become even more
constrained this quarter.
Exide has stated that it is pursuing various options to reduce
its debt burden and improve financial flexibility, including
debt to equity swaps.
Standard and Poor's will meet with management to discuss near-
term financing requirements and alternatives, and the potential
for improved operating results. If it appears that financial
flexibility will remain as constrained as it currently is during
the near to intermediate term, the ratings could be lowered.
Ratings Placed On CreditWatch Negative
Exide Technologies
Corporate credit rating B+
Senior unsecured rating B-
Senior unsecured bank loan B+
Subordinated debt rating B-
Exide Holding Europe S.A.
Senior unsecured debt rating B-
GENESIS HEALTH: Consents to Modify Stay for State Court Actions
---------------------------------------------------------------
Genesis Health Ventures, Inc. have consented to, and obtained
the Court's approval of their agreement with the claimants
listed below to modify the automatic stay to permit the
claimants to prosecute and defend against the respective State
Court Actions. Claimant may enforce or execute (a) settlement,
(b) judgment entered by a court of competent jurisdiction or (c)
other disposition of the underlying claims in the State Court
Action only to the extent such claims are covered by proceeds
from applicable GHV liability insurance policies.
(1) Claimant:
Marion Laubscher, as Personal Representative of the Estate
of Frieda Moeller
State Court Action:
Case No. 2000-32725 CICI in the Seventh Judicial Circuit of
the State of Florida, in and for the County of Volusia
against GHV and/or any of its debtor subsidiaries;
(2) Claimant:
Lisa Smith as Administrator for the Estate of Glenda F.
Spangenberg, deceased, and Lisa Smith, in her own right,
State Court Action:
Case No. 97-CIV-2789 in the Court of Common Pleas of the
State of Pennsylvania in and for the County of Lackawanna
against GHV and/or any of its debtor subsidiaries.
* * *
The Multicare Debtors have consented to, and obtained the
Court's approval of their agreement with the claimants listed
below to modify the automatic stay to permit the claimants to
prosecute and defend against the respectiv State Court Actions.
Claimant may enforce or execute (a) settlement, (b) judgment
entered by a court of competent jurisdiction or (c) other
disposition of the underlying claims in the State Court Action
only to the extent such claims are covered by proceeds from
applicable GHV liability insurance policies.
(1) Claimant: Christine Ann Pagan Administratrix Ad
Prosequendum, for the Estate of Olga Hull, Christine Ann
Pagan, individually and Elais Hull, Individually
State Court Action:
Case No. L-4319-98 in the Superior Court of NJ, Law
Division: Middlesex County of the State of NJ in and for
the County of Middlesex against Multicare AMC, Inc., and
Multicare Companies, Inc., and/or any of their debtor
affiliates and Emery Manor Nursing & Rehabilitation Center;
(2) Claimant: Sam Tave
State Court Action:
Case No. MID-L-8079-98 in the Superior Court of the State
of New Jersey in and for the County of Middlesex against
Multicare AMC, Inc., and Multicare Companies, Inc., and/or
any of their debtor affiliates;
(3) Claimant:
C. John Amstutz, Executor of the Estate of Paul McDowell
State Court Action:
Civil Action No. 00-CV-01893, in the Common Pleas Court of
Mahoning County, Ohio against Multicare AMC, Inc., and
Multicare Companies, Inc., and/or any of their debtor
affiliates;
(4) Claimant:
Barbara Brumfield, Administratrix of the Estate of Dorothy
G. Allen, Deceases
State Court Action:
Civil Action No. 00-C-129 in the Circuit Court of Mason
County, West Virginia against Multicare AMC, Inc., and
Multicare Companies, Inc., and/or any of their debtor
affiliates. (Genesis/Multicare Bankruptcy News, Issue No.
12; Bankruptcy Creditors' Service, Inc., 609/392-0900)
HARNISCHFEGER: U.S. Trustee Presses On to Disqualify Jay Alix
-------------------------------------------------------------
The U.S. Trustee tells Judge Walsh that the evidence presented
at trial overwhelmingly supports findings that (a) Jay Alix &
Associates systematically failed to disclose a myriad of
connections, (b) JA&A was unfit to serve as a section 327
professional because JA&A is not a "Disinterested Person," and
(c) JA&A has a disqualifying conflict of interest with the
estates of Harnischfeger Industries, Inc.
The UST asserts that, JA&A's connections with the Debtors are
crucial to evaluating JA&A's proffered disinterestedness, and
the connections rendered JA&A an interested person and, by
extension, disqualified JA&A from assisting the Debtors.
The UST notes that the Questor Entities and JA&A are affiliates,
and their close relationship is the background against which
JA&A's disclosure obligations with respect to its Questor
connections should be viewed.
Jay Alix, the President of JA&A, is also a board member and
JA&A's sole shareholder. Alix is also a principal with Questor
Management Company. Alix is the sole voting shareholder of
Questor Principals, Inc., the general partner of the general
partner of Questor Partners Fund, L.P. and the general partner
of Questor Side-by-Side Partners, L.P. Alix is one of two voting
shareholders of Questor Principals II, Inc., the general partner
of the general partner of Questor Partners Fund II, L.P. and the
general partner of Questor Side-by-Side Partners II, L.P. and
Questor Side-by-Side Partners II 3(c)(1), L.P. Alix owns general
partnership interests in Questor Partners Fund, L.P. and Questor
Partners Fund II, L.P., both of which are part of the Questor
funds, a group of private entity funds investing in "special
situations and under-performing companies."
All JA&A principals, including Alix, own general and/or limited
partnership interests in one or more of the Questor funds.
Certain Alix family trusts or other entities related to Alix are
limited partners in one or more of the Questor funds.
The UST makes charges as follows:
(A) Melvin R. Christiansen (a JA&A Principal who made
disclosures in the bankruptcy case United Companies
Financial Corporation) and/or other JA&A personnel were
aware of several JA&A connections with the Debtors for
nearly a year before they were disclosed and these
connections were not disclosed until nearly a month after
the UST filed the instant motion.
(B) Robert Dangremond of JA&A, who, as previously reported,
serves as Chief Restructuring Officer in the Debtors'
chapter 11 cases pursuant to the employment of JA&A was at
the October 7, 1999 Beloit Corporation board meeting when
John Hanson appointed him chair of the four-member Beloit
divestiture team and announced that he was named a Beloit
director. An addendum to JA&A's engagement letter
referencing Dangremond's Beloit directorship was executed
in October, 1999. Christensen understood that the addendum
had to be filed with the Court but did not file it.
(C) Dangremond failed to disclose the June 9, 1999 Joint
Marketing Presentation by JA&A and Questor to Harnischfeger
On June 9, 1999 (only two days after Harnischfeger filed
its Chapter 11 petition), Alix traveled with two JA&A
representatives (Koch and Dangremond) and two Questor
principals (Shields and Druker) to Harnischfeger's
corporate headquarters to pitch the combination of JA&A's
services and Questor's capital). This meeting was arranged
in a conference call several days earlier in which Shields
and Druker of Questor participated along with Dangremond of
JA&A, as well as as Alix himself. Prior to the meeting,
Debra Kuptz of JA&A's marketing department coordinated the
preparation of JA&A/Questor presentation materials. Every
page of the presentation materials has a footer containing
both the JA&A and Questor logos. The presentation materials
characterize Questor's "relationship" with JA&A as
"provid[ing] Questor with a number of benefits including
knowledge, resources and skills. JA&A professionals
regularly help Questor evaluate the merits of potential
transactions and develop and implement management plans
once acquisitions are completed."
JA&A and Questor's June 9, 1999 post-petition joint
marketing presentation can hardly be "de minimis" the way
JA&A characterizes it. JA&A and Questor pitched their
services to Harnischfeger post-petition and were fully
prepared to proceed with a double-barrelled advisory and
investment relationship if that was what Harnischfeger
wanted. In light of that, Dangremond's meager disclosures
in the initial application, which seem calculated to
suggest Questor had no involvement whatsoever with the
Debtors, can only be described as misleading.
Dangremond has no excuse for his failure to disclose JA&A
and Questor's joint marketing presentation on June 9 -- he
attended it on JA&A's behalf and the Debtors filed their
application to employ JA&A and the initial Dangremond
affidavit on July 9, 1999, a mere month after the June 9
presentation. Furthermore, as a limited partner in the
Questor Side-by-Side funds, Dangremond is familiar with the
manner in which Questor operates, and as co-chair of JA&A's
Turnaround and Crisis Management Group, Dangremond has
substantial experience with transactional work in Chapter
11 proceedings.
In light of these facts, a reasonable inference is that it
would have been obvious to Dangremond that Questor's
interest in Harnischfeger did not spring suddenly from the
ground on June 9 or even at the time of the New York
conference call a few days earlier. As further evidence of
the seriousness of Questor's interest, three of Questor
Management Company's six principals, including Alix
himself, attended the June 9 presentation.
Despite having a clear reason to ask further questions of
Alix and Questor after viewing Questor's display of
interest in Harnischfeger firsthand, JA&A did not bother to
ask Alix or Questor any questions, leading to more
disclosure troubles for JA&A.
(D) Dangremond failed to disclose the Confidentiality Agreement
between Questor Management Co. and Harnischfeger
On May 19, 1999, Questor Management Company entered into a
confidentiality agreement with Harnischfeger. Given that
the Questor Entities and JA&A are affiliates, the existence
of the confidentiality agreement is a connection which
should have been disclosed in Mr. Dangremond's initial
affidavit.
JA&A claims it did not learn of the confidentiality
agreement until discovery commenced on the UST's motion.
JA&A further contends that the terms of the confidentiality
agreement itself forbade Questor from disclosing the
existence of the confidentiality agreement to JA&A.
However, a section 327 professional supersede any
confidentiality interest related to a possible transaction
involving the Debtors' assets or securities. Disclosure of
"connections" is not optional under Federal Rule of
Bankruptcy Procedure 2014 - full disclosure is required.
Any interest that Questor and/or the debtor have in
labeling connections between them as "confidential" must
give way to the public interest in an open, fair bankruptcy
process, an interest which is served by compliance with
Rule 2014.
Nothing in the record supports a departure from the
principle that the disclosure obligations supersedes any
confidentiality interest.
First, the confidentiality agreement itself permits
disclosure by Questor where required by "applicable law."
Given that Rule 2014 imposes specific requirements upon
JA&A in connection with its retention by the Debtors, and
given Alix's affiliation with (and control over) both JA&A
and Questor, Rule 2014 constitutes "applicable law" for
purposes of the confidentiality agreement.
Second, although Questor's interest in the Debtors
evidently persisted, the specific confidentiality concerns
addressed by the "Non-Disclosure" provision were no longer
active by the time the Debtors engaged JA&A post-petition;
the confidentiality agreement was signed as part of a pre-
petition process which terminated at the time the Debtors
filed for bankruptcy protection.
The events leading up to the June 9 joint marketing
presentation by JA&A and Questor also demonstrate that
Questor itself was no longer keeping secret its interest in
Harnischfeger. Questor' s interest in a possible
transaction involving Harnischfeger was clearly disclosed
to persons not subject to the confidentiality agreement -
JA&A personnel.
Finally, the record suggests that, insofar as JA&A' s
disclosure obligations are concerned, "Jay Alix &
Associates" is a term of art which does not include Alix
himself. Christiansen never asked Alix or Questor about
Questor's interest in (or connections with) Harnischfeger.
Furthermore, since Christiansen testified that he never
reviewed the agreement, JA&A's feeble attempt to hide
behind the agreement's provisions lacks merit.
(E) In sum, there is a community of financial interest and a
history of cooperation which joins the two affiliates. Even
if an information barrier was in place, such a barrier
would not have addressed the community of financial
interest between JA&A's principals (Alix included) and
Questor which was the foundation for JA&A's disqualifying
conflict of interest in these cases. At bottom, JA&A and
Questor are not operated as separate businesses.
(F) Scope of JA&A's Relationship with Questor Entities
JA&A did not disclose its administrative services agreement
with Questor.
Pursuant to the agreement, JA&A provides a range of
services for Questor. JA&A monitors transfers of limited
partnership interests for Questor. JA&A allocates deal-
related expenses between the limited and general partners
of the Questor funds. JA&A manages distributions by Questor
to its limited partners. JA&A interacts with Questor' s
auditor. JA&A performs certain marketing-related services.
JA&A has provided administrative services to Questor since
1995; JA&A was aware of its administrative services
agreement with Questor at the inception of the
Harnischfeger engagement.
(G) JA&A did not disclose that Questor uses JA&A personnel as
advisors in evaluating potential transactions.
(H) JA&A Connections with Other Parties in Interest
JA&A has admitted that it failed to disclose its
connections with Kirkland & Ellis and Pachulski, Stang,
Ziehl Young & Jones, P.C., co-counsel for the debtors. Both
Kirkland & Ellis and Pachulski, Stang, Ziehl, Young &
Jones, P.C. represented JA&A during the pendency of the
cases. In addition, JA&A did not disclose that it provided
services to AEI Resources, Inc., a key supplier to Joy
Manufacturing (a Harnischfeger subsidiary), during the
pendency of the bankruptcy cases.
(I) JA&A, its principals, employees and/or agents served as
insiders of Harnischfeger and/or Beloit.
From the outset of its engagement, JA&A personnel assumed
positions as officers in contravention of the Bankruptcy
Code. Dangremond and Hiltz were elected Senior Vice
President/Chief Restructuring Officer and Senior Vice
President/Chief Financial Officer, respectively, at
Harnischfeger's July 8, 1999 board meeting. The UST
recognizes that no objections to those officer roles were
voiced at the time of the initial retention. However, the
insider character of JA&A's role grew by orders of
magnitude, without proper court approval or disclosure,
when Dangremond was installed as the leader of Beloit's
divestiture efforts and was placed on Beloit's board to
cement his authority.
Dangremond testified that the campaign to put JA&A in the
driver's seat at Beloit was driven by the Official
Committee of Unsecured Creditors.
JA&A did not voice any objection to taking the helm at
Beloit, rather, JA&A concerned itself with ensuring its own
back was "covered," the UST alleges. On October 7, 1999,
Dangremond was appointed as a Beloit director. As a Beloit
director, Dangremond was vested with authority to vote on
asset sales. Dangremond consulted with David Eaton, Esquire
of Kirkland & Ellis, co-counsel to the Debtors, regarding
his "unusual" appointment to the Beloit. Eaton advised
Dangremond that the arrangement was not problematic.
On October 26, 1999, Dangremond was elected Senior Vice
President and Chief Restructuring Officer (CR0) of Beloit.
As CR0, Dangremond had the authority to "(i) solicit bids
for the sale of [Beloit], either as a whole or in parts,
and (ii) liquidate the assets of [Beloit] to the extent he
is unsuccessful in soliciting bids for [Beloit] and its
parts." Hanson testified that Dangremond's assumption of
the CR0 position simply formalized what was already going
on in connection with the divestiture process.
A "person in control" of a debtor corporation and a
"managing agent" of a debtor are also insiders.
The record further indicates that, other than assuming
officer and director positions at Harnischfeger and Beloit,
the JA&A unit had wide-ranging responsibility. Carrianne
Basler assisted Hiltz, Hanson and other senior managers in
preparation of Harnischfeger's business p1an. Tony Horvath
was Beloit's "cash manager," a financial reporting position
which Dangremond indicated was "an absolutely critical
component of the organization." William Currer coordinated
major asset sa1es. In addition, both Dangremond and Currer
served on the four-member team which was authorized by
Beloit's board to "take all appropriate action to solicit
and obtain proposals for the purchase of businesses or
assets of [Beloit] . . ." Lawrence Young managed distressed
asset sales for Beloit. In sum, Dangremond and the other
JA&A personnel staffing Harnischfeger went from assisting
the trustee pursuant to section 327 to becoming part of the
trustee, creating the very circumstances which the
"disinterested person" requirement was designed to prevent,
the UST charges.
Given that JA&A can only act through its officers,
employees and/or agents, JA&A (the corporate entity) is or
was an insider in contravention of section 327(a).
Additionally, the record contains more than enough evidence
to impute Dangremond, et al.'s insider status to the entire
firm, the UST alleges. The JA&A personnel served as
insiders pursuant to engagement letters which JA&A executed
with Harnischfeger. Dangremond, et al. do not have
individual employment contracts with the Debtors.
Furthermore, Harnischfeger learned about the services which
each of the JA&A personnel could offer through Dangremond.
While JA&A uses words like "innocent" and "inadvertent" to
describe its failure to disclose numerous connections and
characterizes such connections as "immaterial," The UST takes
the position that JA&A's conduct in these cases was far from
"innocent" but its nondisclosures were systematic.
JA&A submits that its failure to disclose connections does not
warrant disqualification because there was no "harm" to the
Debtors' estates. The UST argues that the standard for
imposition of sanctions for Rule 2014 violations is not "gravity
of harm," the UST avers, "JA&A Combined (Pre-Trial) Response is
sanctionable and sanctions may be appropriate regardless of
actual harm to the estate."
THe UST notes that JA&A's Combined (Pre-Trial) Response
disregards two parts of the UST's position. JA&A's repeated Rule
2014 violations are not the only grounds for disqualification.
The UST is seeking to disqualify JA&A and to deny/disgorge
compensation and reimbursement due/paid because, in
contravention of the requirements of section 327(a), it lacked
disinterestedness and had a disqualifying conflict of interest
with the Debtors' estates. JA&A's Rule 2014 violations may be
remedied by denial of compensation without a showing of harm,
the UST remarks.
Disqualification on section 327 grounds is one of the remedies
the UST is seeking.
The UST recognizes that, as the moving party, she bears the
initial burden of producing sufficient evidence to raise a
triable issue as to the section 327 professional's fitness to
serve, and if the UST meets her initial burden of production,
JA&A ultimately bears the burden of persuading the Court that it
(1) is a "disinterested person" and (2) does not "hold or
represent an interest adverse to the estate." 11 U.S.C. section
327(a).
The UST asserts that an "insider" is not a disinterested person,
and Dangremond, et al.'s service as insiders is effectively
JA&A's service as insiders for purposes of evaluating JA&A' s
disinterestedness.
The UST thus asserts that JA&A has a disqualifying conflict of
interest with the Debtors' estates.
Reiterating the discussion in its Pre-Trial Memorandum, the UST
asserts that Dangremond's status as the Debtors' point person
with respect to the Beloit sales process, in combination with
Questor's post-petition consideration of a transaction involving
Beloit Corporation, renders JA&A unfit to serve the Debtors as a
section 327 professional. JA&A has a disqualifying conflict of
interest, the UST adds, because, through Dangremond's status as
an insider, it was the seller in connection with Beloit's sales
process while Questor considered bidding in that same sales
process.
The record supports a finding that JA&A had a disqualifying
conflict stemming from the combination of its disinterestedness
and Questor's post-petition consideration of transactions
involving Harnischfeger and/or Beloit, the UST reiterates. JA&A
and Questor are affiliated entities controlled by Alix. All of
JA&A's principals own general/and or limited partnership
interests in the Questor funds. From the very onset of iA&A's
involvement, JA&A's disinterestedness was marred because JA&A
and its principals entered with an undisclosed dual agenda of
advisor and investor, the UST tells the Court.
Then Questor, knowing that JA&A was engaged by the Debtors,
accepted the invitation of Debtors' counsel to meet with Adelman
and Tietgen to discuss participating in their plans to bid for
Beloit assets. Adelman's firm, Alliance Capital, was involved in
the Beloit due diligence process at the time of the Questor
post-petition meeting. Simultaneously, Dangremond was a director
and officer of Beloit with corresponding fiduciary duties.
Regardless of what JA&A knew or did not know about Questor's
post-petition interest in Beloit, the interests of JA&A and
Beloit were in undeniable conflict, the UST accuses.
Accordingly, the UST requests that the Court disqualify JA&A but
leaves the determination as to whether compensation or
reimbursement of expenses which from JA&A (and/or denied to
JA&A) to the sound discretion of the Court. (Harnischfeger
Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
HIGHWOOD RESOURCES: Net Loss Widens in Second Quarter
-----------------------------------------------------
Consolidated revenues for the second quarter of 2001 for
Highwood Resources Ltd. (OTC:HIWDF)(TSE:HWD.) were $4,302,863
compared to $3,799,782 in the same three-month period in 2000.
Year-to-date revenues were $8,769,197 compared with $8,667,417
for the first six months of 2000. Talc was the only product line
that did not achieve the sales target for the period.
All other lines of barite, silica, gypsum and zeolite met or
exceeded the Company's targets. The talc volumes have increased
from the first quarter, however the sales growth is still quite
slow with testing and product acceptance time frames much longer
than anticipated. The trend of talc sales remains upward and
positive. The Company has in place marketing and technical
expertise to support sales development. The sales and marketing
focus remains on increasing talc sales while at the same time
maintaining the volume and margins with all other business.
Gross margins for the six-month period are 13.6% compared to
17.8% for the same period in 2000. This decrease is a result of
the increased cost of imported barite ore for both fillers and
drill mud and high unit product costs related to lower than
anticipated sales volumes in talc. All facilities are geared for
processing high volumes of material and as volumes increase, the
resulting margins will increase particularly in the talc
products.
The Company experienced a net loss for the three-months ended
June 30, 2001 of $108,012 compared to a net loss of $64,842 for
the same period in 2000. Year-to-date there was a net loss of
$260,695 compared to net income of $21,381 for the same period
last year. This increased loss is again primarily the result of
lower gross margins. Overhead and administrative expenses
increased over the prior year due to the fact that in 2000,
certain payroll costs were capitalized to the Canada Talc
development while in the current year they are classified as
general expenses.
As well, additional marketing staff was brought on board in late
2000 that increased the first half payroll costs compared to
fiscal 2000. Reclamation costs that are included in general
expenses have also increased by $27,000 over fiscal 2000 with
the introduction of a formal reclamation plan for the Marmora
facility. Efforts are being made to reduce overheads in all
areas of the Company and improvements should be realized in the
second half of this year.
The Sino-Can barite joint venture in China has performed very
well and consistent with previous quarters. The international
sales component has decreased with global economic weakness, but
increases in domestic market sales have offset this change.
Indications are that sales will strengthen even further in the
second half.
All active business units are making a positive contribution to
the operating-cash flow. The Company is continuing in its
efforts to sell idle and redundant assets, with the intent of
applying all proceeds against its debt in an effort to improve
its financial condition. At June 30, 2001, the term debt is
$3,133,333 with an additional $3,254,303 drawn on a line of
credit for working capital needs.
Status of Thor Lake
Both the tantalum and beryllium deposits at the Company's Thor
Lake property have been extensively explored and evaluated. The
Company continues to seek joint venture partners or other
arrangements to advance both deposits towards commercial
exploitation. As announced June 8, 2001, the Company has entered
into a letter of intent to option the Lake Zone Tantalum deposit
to Navigator Exploration Corp. who can earn a 51% interest in
the property through the expenditure of $1.5M over four years.
* * *
On August 28, TCR reported that Highwood Resources' term loan
agreement with its principal lender required a payment of $1.5M
to be paid before July 31, 2001, which has not been made. The
lender has not waived the breach of this covenant and therefore
the Company is currently in default of its term loan agreement.
As a result, the Company anticipates it will be necessary to
secure new loan facilities.
The Company is in good standing with respect to all other
principal and interest payments for the existing term and
operating loans.
Highwood management is vigorously pursuing a refinancing plan,
which includes new debt financing, non-core asset sales and
placement of new equity.
HOMELAND: Secures $65MM DIP Financing & Will Close 8 Stores
-----------------------------------------------------------
Homeland Holding, Inc., (OTCBB:HMLD) parent company of the
Homeland grocery store chain, announced initiatives related to
its ongoing strategic reorganization plan, part of the company's
overall pursuit to improve its long-term financial performance.
"Today's announcement," stated David B. Clark, Homeland's
President and Chief Executive Officer, "marks progress in our
intention to concentrate our resources and energies on better
performing stores in order to emerge from our reorganization
financially stronger and better able to serve our customers."
Homeland filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code in early August. The company secured $65 million
debtor-in-possession financing through Fleet Retail Finance,
Back Bay Capital Funding, and Associated Wholesale Grocers. This
financing enables Homeland to conduct business as usual,
operating its stores without interruption.
The company will close seven stores in Oklahoma and one in Texas
over the next few weeks. "The stores being closed experienced
sales and profitability results significantly below our
expectations," Clark said. "While this is the right financial
decision, we nevertheless sincerely appreciate the efforts of
our associates and thank the loyal shoppers who shopped at these
stores." Employees at the stores being closed will be offered
positions at other Homeland stores wherever possible.
The stores being closed are:
- 7001 Northwest Expressway in Oklahoma City
- 2121 NW 23rd in Oklahoma City
- 415 SW 59th in Oklahoma City
- 2213 SW 74th in Oklahoma City
- 800 East Okmulgee, Muskogee, Oklahoma
- 6 East Shawnee, Muskogee, Oklahoma
- 1202 NW 40th in Lawton, Oklahoma
- 5811 S. Western in Amarillo, Texas
"We believe we have begun laying the foundation to emerge from
our reorganization in a stronger financial position," Clark
said. "[Tuesday's] action is necessary to improve the overall
financial performance of the company over the long term."
ICG COMMS: STA Wants NetAhead to Abandon Left-Behind Property
-------------------------------------------------------------
William F. Taylor, Jr., of the Wilmington firm of Elzufon Austin
Reardon Tarlov & Mondell, P.A., representing STA Development
Corporation, the owner of real property located at 900 East Lake
Street in Minneapolis, Minnesota, asks Judge Walsh to declare
certain personal property left behind by ICG NetAhead after it
vacated the leased premises, or in the alternative, require
NetAhead to abandon its interest in the property.
Debtor NetAhead is the lessee of certain commercial real
property subject to a lease dated February 21, 2000. On
February 9 of this year, NetAhead filed a motion seeking Judge
Walsh's authorization to reject this unexpired lease. Mr.
Taylor reminds Judge Walsh that he entered an Order granting the
Debtor's request to reject the lease for the premises.
Subsequent to the rejection of the lease, STA learned that
certain personal/physical property was left on the premises,
including, but not limited to:
(a) one generator,
(b) various HVAC equipment, and
(c) building materials.
On May 31, 2001, Mr. Taylor wrote on STA's behalf to counsel for
the Debtors requesting that they confirm that the physical
property is deemed abandoned and that they file a motion to
abandon the property.
Mr. Taylor again wrote on June 15, 2001 requesting confirmation
as to the status of the physical property NetAhead left behind
in the property. To date, no one has responded on NetAhead or
the other Debtors' behalves to the inquiries.
Due to the size and the nature of the physical property left on
the premises, STA is prevented from re-letting the premises.
Therefore, STA seeks an Order of the Court requiring NetAhead to
declare the property abandoned, such that STA may make every
effort to re-let the premises, and thus limit the amount of
rejection damages.
Pursuant to Federal Rule of Bankruptcy Procedures 6007(b), a
party in interest may file a motion requiring the trustee or
debtor in possession to abandon property of the estate.
In addition, pursuant to section 554(b) of Title 11 of the
United States Code, the Court may order the estate
representative to abandon any property of the estate that is
burdensome to the estate or that is of inconsequential value and
benefit to the estate.
In the Debtors' Motion to Reject the Lease, the Debtors
indicated their intent to abandon the premises. The Debtors have
been notified and have been made aware of the physical property
left on the premises. The Debtors' failure to respond to the
multiple inquiries regarding the physical property clearly
indicates to Mr. Taylor and STA, and, they hope, to Judge Walsh
that the physical property left behind on the premises is either
of inconsequential value or of no benefit to the estate.
Moreover, abandonment of the physical property would serve to
unburden the estate and to serve as a benefit to the estate by
releasing the estate's obligation to remove and dispose of the
physical property. As such the Debtor's failure to respond
should be presumed as its intent to abandon the physical
property.
Nonetheless, STA asks that Judge Walsh make the situation
certain by either finding the estate has abandoned its interest
in the personality left behind, or that he order NetAhead to
take affirmative steps to abandon that interest. (ICG
Communications Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LOEWEN: Creditors to Vote on Fourth Amended Reorganization Plan
---------------------------------------------------------------
The Loewen Group announced that the Disclosure Statement related
to its Fourth Amended Plan of Reorganization has been approved
by the United States Bankruptcy Court for the District of
Delaware. The approval, granted at a hearing held Tuesday,
clears the way for the Company to proceed with creditor voting
on the Plan of Reorganization and Disclosure Statement.
John Lacey, Chairman of The Loewen Group, said: "With this
approval, we are set to enter the final phase of the
reorganization process, a process that has involved extensive
negotiations over the past two years. We believe that through
these negotiations we've created a Plan of Reorganization that
is truly in the best interest of our stakeholders. The fact that
our principal creditor groups and the Official Unsecured
Creditors Committee have pledged their support for the Plan is
very encouraging, and we are pleased to be moving forward with
the vote."
Consistent with the schedule submitted to the Court, a Fourth
Amended Plan of Reorganization and Disclosure Statement will be
mailed to creditors no later than September 14, 2001 for the
purpose of voting.
Revisions included in the Fourth Plan and Disclosure Statement
reflect the availability of updated financial data, the impact
of additional negotiations with the Company's principal
creditors, and modifications to the Disclosure Statement ordered
by the Bankruptcy Court.
It is anticipated that creditor voting will be completed by
November 6th. The U.S. Bankruptcy Court is then expected to hold
a confirmation hearing, with the dates of November 27-29, 2001
having been set aside by the Court for this session.
"We are optimistic that our Plan of Reorganization will be
accepted by both our secured creditors and the Courts, according
to the schedule that has been established," said Mr. Lacey. "It
is a schedule that puts us on track to emerge from bankruptcy
protection before the end of 2001," he added.
Based in Toronto, The Loewen Group Inc. currently owns or
operates approximately 970 funeral homes and 350 cemeteries
across the United States, Canada and the United Kingdom.
The Company employs approximately 11,000 people and derives
approximately 90 percent of its revenue from its U.S.
operations.
LOEWEN: Seeks 2nd Amendment to Asset Sale Deal with Rightstar
-------------------------------------------------------------
Nakamura Mortuary, Inc. and other Selling Debtors seek the
Court's authority to enter into a Second Amendment to their
Asset Purchase Agreement with Rightstar International, Inc. that
The Loewen Group, Inc. believe will not materially alter the
transaction but will address the concern of the Purchaser's new
lender by providing a cap to the Purchaser's liability, thus
facilitating consummation of the sale.
During preparations to close the sale of the Sale Locations, the
Purchaser was required to secure replacement financing in order
to consummate the transaction.
Absent the Second Amendment, Section 2.7 of the Purchase
Agreement allows the Selling Debtors at anytime within one year
after closing to prepare and deliver to the Purchaser a Trust
Statement which effectively sets forth Selling Debtors'
calculation of the amount by which the trusts are over-funded
(subject to certain procedures to resolve any disputes between
Purchaser and Selling Debtors with respect to such calculation)
and contractually obligates Purchaser to pay such amount to
Selling Debtors, regardless of whether such amount can actually
be withdrawn from the Trusts.
The Debtors estimate that the Trusts are currently over-funded
by approximately $10 million.
However, because the Trust Statement has not been prepared, the
Purchaser's new lender views Section 2.7 as creating a
potentially undetermined and unlimited liability of Purchaser
following closing.
A condition of the Purchaser's new financing is that the Earned
Amount be Limited to $10 million. The practical effect of
limiting the Earned Amount to the Earned Amount Cap is the
provision of a limit on the liability of Purchaser pursuant to
Section 2.7 of the Purchase Agreement following closing.
The Selling Debtors submit that the Second Amendment will not
materially alters the transaction approved by the Sale Order but
absent this, the Purchaser will be unable to obtain financing to
consummate the sale, which will bring $35.25 million into the
Selling Debtors' estates.
Therefore, the Selling Debtors believe that the entry into the
Second Amendment is is critical to the closing of the proposed
sale and in the best interest of their respective estates and
creditors. (Loewen Bankruptcy News, Issue No. 45; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LTV CORP: Court Approves Sale of VP Buildings to Grupo IMSA
-----------------------------------------------------------
The LTV Corporation (OTC Bulletin Board: LTVCQ) announced that
the U.S. Bankruptcy Court has approved the proposed sale of VP
Buildings to Grupo IMSA SA deCV.
The sale includes all of the assets of VP Buildings, Inc. and
certain related VP Buildings subsidiaries. VP Buildings, an LTV
subsidiary, is the nation's second largest manufacturer of pre-
engineered steel buildings for low-rise commercial applications.
It operates 11 facilities in North America and has an interest
in three joint venture plants in Latin America. Revenues for
2000 were approximately $400 million. The company employs about
2,300 people in the United States.
The purchase price was $102 million plus the assumption of
certain liabilities.
"The sale of VP Buildings will provide LTV with additional
financial resources and is an important step in our
restructuring effort," said John D. Turner, executive vice
president and chief operating officer.
The LTV Corporation is currently operating under protection of
Chapter 11 of the U.S. Bankruptcy Code. The parties will close
the transaction as soon as possible after receiving regulatory
approvals.
The LTV Corporation is a manufacturing company with interests in
steel and metal fabrication. LTV's Integrated Steel segment is a
leading producer of high-quality, value-added flat rolled steel,
and a major supplier to the transportation, appliance,
electrical equipment and service center industries.
LTV's Metal Fabrication segment consists of LTV Copperweld, the
largest producer of tubular and bimetallic products in North
America.
LTV CORP: Equity Panel Wants to Retain Kohrman as Co-Counsel
------------------------------------------------------------
The Official Committee of Equity Security Holders of LTV Steel
Company, Inc., asks Judge Bodoh to authorize their employment of
the Cleveland firm of Kohrman Jackson & Krantz PLL as local
counsel, effective as of July 16, 2001. The Committee assures
Judge Bodoh that the nature and scope of these proceedings
warrant the appointment of co-counsel to address the variety of
issues expected to arise in the course of these proceedings,
saying that such appointments will provide for the most
efficient and economical method of handling these cases.
The services to be rendered by Kohrman Jackson are:
(a) providing legal advice with respect to the powers and
duties as an official committee appointed under the
Bankruptcy Code;
(b) assisting in the investigation of the acts, conduct,
assets, liabilities, and financial condition of the
Debtors, the operation of the Debtors' businesses,
and any other matters relevant to the case or to the
formulation of a plan of reorganization or
liquidations;
(c) preparing on behalf of the Committee necessary
applications, motions, complaints, answers, orders,
agreements and other legal papers;
(d) reviewing, analyzing, and responding to all pleadings
filed by the Debtors and appearing in court to
present necessary motions, applications, and
pleadings and to otherwise protect the interests of
the Committee; and
(e) performing all other legal services for the Committee
which may be necessary and proper in these
proceedings.
The Committee further assures Judge Bodoh that it intends to
work closely with Kohrman Jackson and Bell Boyd to ensure that
there is no unnecessary duplication of services performed or
charged to the Debtor's estate.
Kohrman Jackson's hourly rates for all clients range from $215
to $350 per hour for partners, from $140 to $195 per hour for
associates, and from $85 to $115 per hour for paralegals.
Mr. Jonathan M. Yarger, a partner at Kohrman Jackson, discloses
that prior to its retention by the Committee, Kohrman Jackson
represented four former employees of LTV in connection with
their severance negotiations with LTV.
The representation is completed and no future representation of
these individuals in relation to LTV Steel is contemplated.
Also, Mr. Yarger says that before its retention by the
Committee, Kohrman Jackson was retained to act as local counsel
for the law firm of Jacob & Weingarten who was representing
Wayne Industries, Inc., International Distribution Services of
Cleveland, Inc., and Wayne Steel Distribution Center, Inc., in
connection with this bankruptcy. This representation is
completed and no future representation of these clients or
affiliation with this law firm in connection with this case is
contemplated.
The father of an associate of Kohrman Jackson is the sole
shareholder of a corporation which is a creditor of LTV.
Kohrman Jackson has represented this corporation in other
unrelated matters, but has not been asked to represent nor have
we represented this corporation in connection with this case.
Several of Kohrman Jackson's other clients have provided certain
services to LTV in the past, and may be asked to supply LTV in
the future. Kohrman Jackson is representing these clients
currently in other unrelated matters, but has not been asked to
nor has it represented these clients in connection with this
case.
In 1993, the firm represented a shareholder of LTV in connection
with the sale of shares of stock of LTV. Korhman Jackson no
longer represents this particular client.
An associate of Kohrman Jackson several years ago practiced law
at Buckingham Doolittle & Borroughs in Akron Ohio. Buckingham
Doolittle has acted as counsel to LTV in the past. The
associate confirmed that she has not done legal work for LTV for
many years. Kohrman Jackson believes that the previous
affiliation between Buckingham Doolittle and the associate
currently at Kohrman Jackson has not affected and will not
affect its representation of the Committee in these proceedings.
In general, Mr. Yarger says that Kohrman Jackson is
disinterested and neither holds nor represents any interests
adverse to the Committee in the matters for which employment is
sought. (LTV Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service, Inc., 609/392-00900)
NATIONAL ENERGY: Profitable Post-Emergence & Leverage Still High
----------------------------------------------------------------
National Energy Group, Inc. remains highly leveraged after
confirmation of the Joint Plan. At June 30, 2001, the Company's
ratio of total indebtedness to total capitalization was 193%.
The Company's revenues, profitability and ability to repay its
indebtedness and related interest charges are highly dependent
upon prevailing prices for oil and natural gas.
As the Company produces more natural gas than oil, it faces more
risk related to fluctuations in natural gas prices. A sustained
period of depressed oil and natural gas prices could have a
material adverse effect on the Company's results of operations
and financial condition.
The price received by the Company for its oil and natural gas
production depends on numerous factors beyond the Company's
control. These factors include seasonal price fluctuation, the
condition of the U.S. and global economies, foreign imports,
political conditions in other oil and natural gas producing
countries, the actions of the Organization of Petroleum
Exporting Countries and domestic and foreign governmental
regulations, legislation and policies.
Total revenues decreased $.2 million (1.6%) from $12.3 million
for the second quarter of 2000 to $12.1 million for the second
quarter of 2001. The decrease in revenues was due to the
decrease in oil and natural gas production and the decrease in
oil prices during the second quarter of 2001 offset, in part, by
the increase in natural gas prices from the same period in
2000. Average oil prices decreased $.97 per barrel from $27.91
per barrel for 2000 to $26.94 per barrel for 2001 while average
natural gas prices increased $1.12 per Mcf from $3.41 per Mcf
for 2000 to $4.53 per Mcf for 2001.
Net income of $5.5 million was recognized for the three months
ended June 30, 2000, compared with net income of $.7 million for
the comparable 2001 period. Net income for the second quarter of
2000 (i) excludes $4.4 million in additional interest expense on
the Company's senior notes not accrued during the Bankruptcy
Proceeding, (ii) includes expenses of $.4 million, relating to
the Bankruptcy Proceeding and (iii) includes $.4 million in
interest income on cash accumulating during the Bankruptcy
Proceeding.
The second quarter of 2001 includes income of $.6 million
related to the Bankruptcy Proceeding. Excluding the effects of
these amounts, net income of $1.1 million would have been
recognized for the three months ended June 30, 2000 compared to
net income of $.1 million for the same period in 2001.
Total revenues increased $3.7 million (16.1%) from $23.0 million
for the six months ended June 30, 2000 to $26.7 million for the
same period of 2001. The increase in revenues was due to the
increase in oil and natural gas prices during the first six
months of 2001 offset, in part, by the decrease in production
from the same period in 2000. Average oil prices increased $1.23
per barrel from $27.30 per barrel for 2000 to $28.53 per barrel
for 2001 while average natural gas prices increased $2.55 per
Mcf from $3.00 per Mcf for 2000 to $5.55 per Mcf for 2001.
Net income of $9.9 million was recognized for the six months
ended June 30, 2000, compared with net income of $4.3 million
for the comparable 2001 period. Net income for the first six
months of 2000 (i) excludes $8.9 million in additional interest
expense on the Company's senior notes not accrued during the
Bankruptcy Proceeding, (ii) includes expenses of $.6 million,
relating to the Bankruptcy Proceeding and (iii) includes $.9
million in interest income on cash accumulating during the
Bankruptcy Proceeding.
The first six months of 2001 includes income of $.5 million
related to the Bankruptcy Proceeding. Excluding the effects of
these amounts, net income of $.7 million would have been
recognized for the six months ended June 30, 2000 compared to
net income of $3.9 million for the same period in 2001.
NETOBJECTS: Will Cease Operations & Intends to Dispose of Assets
----------------------------------------------------------------
NetObjects, Inc. announced that it will cease operations
effective September 1, 2001. The Company intends to sell its
assets as expeditiously as circumstances permit.
NetObjects, Inc. (OTC Bulletin Board: NETO), a leading provider
of e-business solutions and services, announced that the shares
of the Company's common stock are now traded on the Over the
Counter Bulletin Board (OTCBB) under the ticker symbol "NETO".
Due to a failure to meet certain continued listing requirements,
the Company's securities have been delisted from The Nasdaq
Stock Market effective with the open of business on August 29,
2001. NetObjects is appealing the delisting to the Nasdaq Stock
Market.
As previously reported, NetObjects has retained Broadview
International LLC to explore strategic alternatives, including a
significant investment by a third party.
NetObjects, Inc., an IBM affiliate (NYSE: IBM), is a leading
provider of e-business solutions and services, including
NetObjects Fusion and NetObjects Matrix. NetObjects has been
ranked by Softletter 100, NewMedia 500 and as one of Fortune's
25 Very Cool Companies.
Its products have won more than 75 awards, including Windows
Magazine's Win 100 award, InfoWorld's Analyst Choice award,
CNET's Internet Excellence award, PC Magazine's Editors Choice
award and InternetWorld's Industry Award. More information about
NetObjects and its products can be found at
http://www.netobjects.com/aboutus.
The company makes software tools for building and managing Web
sites, featuring NetObjects Fusion (nearly 70% of sales), which
integrates design and data publishing with site building
applications. The company also hosts Web sites (GoBizGo.com,
eFuse.com), which offer site building and management guidance.
NetObjects sold its Enterprise Division, which includes its e-
commerce and collaborative Web site design tools. IBM owns 48%
of NetObjects and accounts for nearly 20% of its sales. Despite
cost-cutting measures, the company has announced it is exploring
strategic alternatives, including a possible sale of the
company.
OWENS CORNING: Cobb Estate Seeks Relief From Automatic Stay
-----------------------------------------------------------
The estate of Kenneth Cobb, creditors with a judgment against
Owens Corning and a party to an appeal by the Debtors if an
adverse judgment arising from asbestos product liability claim
is warranted, requests relief from automatic stay to allow the
appeal to proceed in the Indiana Supreme Court to its final
conclusion and execute a supersedeas bond, if successful.
James E. Huggett, Esq., at Klehr Harrison Harvey Branzburg &
Ellers, LLP in Wilmington, Delaware discloses that the estate of
Kenneth Cobb was awarded $544,682 in compensatory damages and
$1,636,046 in punitive damages for asbestos product liability.
The jury determined that the Debtors' product was the proximate
and contributing cause of the lung cancer which ultimately lead
to Mr. Cobb's death. The Debtors then appealed the judgment and
was granted a stay of enforcement of the judgment pending
appeal.
To prevent delay in payment if Cobb were to prevail and the
Debtors was to default on the judgment, an appeal bond was filed
in the amount of filed in the amount of $2,440,288 to be paid by
Continental Casualty Company.
On July 22, 1999, the Court of Appeals reversed the trial
court's judgment, remanded the case to the trial court with
instructions to vacate the order denying the Debtors' motion for
summary judgment and enter an order granting the Debtors'
motion. On August 23, 1999 the estate of Cobb petitioned the
Supreme Court for a transfer and on January 19, 2000, the
Indiana Supreme Court granted such a transfer.
Mr. Huggett argues that while the automatic stay was designed to
protect the debtor while assuring an orderly administration of
the bankruptcy estate, in this case, the automatic stay's
purpose is not furthered by it's imposition. Mr. Huggett adds
that bankruptcy courts presiding over reorganization of debtors
with asbestos-related liabilities have often found cause to
allow appeals of bonded judgments to proceed to final resolution
for purpose of liquidating claims.
Mr. Huggett contends that the harm to the Debtors in lifting the
automatic stay in this case is minimal or none, in fact, the
estate could benefit from the resolution of the appeal. Mr.
Huggett states that the only determination to be made at this
time is whether the judgment should stand and the prejudicial
effect of the continuation of the automatic stay is a compromise
of Cobb estate's time value of money and delay of justice.
Debtors objects
The Debtors objects to the lifting of the automatic stay to
allow the appeal against the Debtors to continue in the state of
Indiana to proceed to their final decision due to:
a) Movants have not established a prima facie case of cause
for relief;
b) Lifting the stay would cause substantial prejudice to the
Debtors and creditors;
c) Balance of hardships favors maintaining the stay;
d) Movants have failed to show a probability of success on
the merits.
J. Kate Stickles, Esq., at Saul Ewing, LLP in Wilmington,
Delaware argues that the movants have not shown cause for relief
exists and base their motion on the prejudice that they will
suffer from losing time value of the trial court judgment.
Moreover, Ms. Stickles contends that movants does not have and
enforceable judgment against the Debtors as the Indiana Court of
Appeals reversed the trial court ruling. Ms. Stickles adds that
the Indiana Supreme Court did not reinstate the movants'
judgment, it simply suspended the Court of Appeals' decision
pending its own ruling.
Ms. Stickles states that lifting the stay in this case and
allowing movants to proceed would severely prejudice the
Debtors.
Ms. Stickles contends that litigation expenses in the immediate
appeal are the only initial and smallest harm the Debtors would
suffer and in the event of allowing movants to reopen litigation
would oblige the parties o re-litigate the entire case, it would
create even greater litigation expenses. Ms. Stickles argues
that the real prejudice to the Debtors in lifting the stay would
be reopening the litigation against the Debtors, the very thing
that drove them to file for bankruptcy protection.
Ms. Stickles states that creditor would also suffer from lifting
of the stay as litigation expenses would diminish the pool of
resources will diminish the resources in which other creditors
share as well as detract attention from the Debtors'
reorganization efforts. (Owens Corning Bankruptcy News, Issue
No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PEAKSOFT: Strikes Deal With Lenders to Settle CDN$6.5MM In Debts
----------------------------------------------------------------
Tim Metz, President and CEO of PeakSoft Multinet Corp.
(CDNX:PKS.V) (OTCBB:PEAMF) announced that PeakSoft has entered
into agreements with its creditors to settle debts to them which
aggregate to CDN $6,498,382 by the issuance of 21,154,374 common
shares priced at CDN $0.26 apiece. The settlement of these debts
will leave PeakSoft essentially debt free.
Of the CDN$6,498,382 of debt settled, CDN$5,121,429 is owed to
The Liverpool Limited Partnership and Elliott International,
L.P.
Liverpool and Elliott are institutional investment firms under
common management that together hold approximately 1.8 million
(47%) of the issued and outstanding shares of PeakSoft prior to
the debt settlement. The remaining $1,376,953 of debt is owed to
8 creditors. As a result of the debt settlement, Liverpool and
Elliott will receive an additional 15,858,395 PeakSoft Common
Shares.
In addition, PeakSoft will transfer 431,989 common shares of
Inculab.com Inc. to Liverpool and Elliott, together with
PeakSoft's interest in the agreement by which the Inculab.com
Inc. shares were acquired and a related registration rights
agreement.
In entering into the debt settlement agreement with Liverpool
and Elliott, PeakSoft relied on the "financial hardship"
exemption from the valuation requirements of Ontario Securities
Commission Rule 61-501 and the corresponding exemption in
Canadian Venture Exchange Policy 5.9.
The Rule states that the exemption is available if:
(1) PeakSoft is insolvent or in serious financial difficulty;
(2) the transactions are designed to improve the financial
position of PeakSoft;
(3) the "bankruptcy, insolvency or reorganization" exemption
under the Rule is not applicable; and
(4) the Board of Directors and not less than two-thirds of
the independent Directors of the Company acting in good
faith determine that paragraphs (1) and (2) are
applicable and that the terms of the transactions are
reasonable given the Company's circumstances.
In approving the above-described debt settlement transactions
(including those with Liverpool and Elliott) PeakSoft's Board of
Directors, all of whom are independent of Liverpool and Elliott,
determined that as of March 31, 2001, PeakSoft had a working
capital deficiency of approximately CDN$4.6 million and was
therefore technically insolvent, that the debt settlement
transactions were designed to improve the financial position of
PeakSoft in order that it could proceed with other transactions
described below and that the terms of the transactions were
reasonable given PeakSoft's circumstances.
The debt settlement transactions are subject to the approval of
CDNX and to approval by PeakSoft's shareholders by "minority
approval" under OSC Rule 61-501.
Enters Deal with Voyager
PeakSoft and Voyager Entertainment Inc. jointly announced that
they have signed a binding Memorandum of Understanding dated
July 24, 2001 for a transaction by which the shareholders of
Voyager will exchange their Voyager shares for shares in the
capital stock of PeakSoft.
It is proposed that at completion of the RTO, the current
shareholders of Voyager will own 80 percent of the shares of the
combined company, while the current shareholders of PeakSoft
will own the remaining 20 percent. This will result in PeakSoft
issuing 101,942,930 Common Shares at a deemed value of CDN$0.10
per share.
The RTO will constitute a "Reverse take-over" under the policies
of CDNX and is subject to the approval of PeakSoft shareholders
and CDNX. The RTO was negotiated at arm's length. In conjunction
with the RTO it is anticipated that there will be a
consolidation of PeakSoft's issued shares. The terms of the
consolidation have not yet been settled.
Tim Metz, PeakSoft's Chairman, explains, "It is understood that
the terms of the transaction will be definitively set out in one
or more agreements, to be prepared by our respective solicitors,
which will supersede and replace this Memorandum of
Understanding. It is our intention that until we have executed
such contracts this MOU will stand as a contract, which binds us
to the fullest extent permitted by law. We look forward to
working in concert with Voyager to maximize shareholder value in
the new company."
PeakSoft has entered into an agreement with Canaccord Capital
Corporation to sponsor its application to CDNX for approval of
the RTO and for a "commercially reasonable efforts" CDN $1.8
million financing of units consisting of one share and one share
purchase warrant.
The units and the exercise price of the warrants will be priced
at a later date, after a contemplated share consolidation of
PeakSoft. As sponsor for the RTO, Canaccord will be paid a fee
of $30,000 plus the issuance of 250,000 common shares.
As the agent for the financing, Canaccord will be paid a cash
commission of 9 percent of the gross proceeds and will receive a
number of agent's warrants equal to 20 percent of the units
subscribed, each agent's warrant having the same terms as the
warrant that form part of each unit. PeakSoft will also pay fees
of Canaccord's legal counsel and consultants as well as out of
pocket expenses.
Net proceeds of the financing are intended to be used for the
development and packaging of feature length theatrical
productions for submission to the major studios and independent
releasing companies, and for the acquisition of film libraries.
To date, PeakSoft has advanced approximately US$15,000 to
Voyager and it is contemplated that additional advances may be
made to fund Voyager's operations pending closing of the RTO.
Such advances will not exceed CDN$25,000 without the prior
consent of CDNX.
Following the completion of the RTO, PeakSoft will carry on
Voyager's current business, namely, developing, financing and
producing independent feature films, television movies and other
television product for distribution through United States
distributors and international sales agents. PeakSoft previously
carried on the business of publishing computer software and
operating a website designed to assist small business but
currently has no active operations.
Voyager is a privately held corporation incorporated in Delaware
with wholly owned production subsidiaries in Los Angeles
(Voyager, Inc., Voyager Television, Inc., Voyager Music, Inc.),
Vancouver (BTV Productions, Inc.) and London, England (Wykeham
Films Ltd.). It commenced operations in August of 2000.
Directors Of New Issuer
Mr. Nic Meredith, Mr. Mark Cassidy, Mr. Andrew Walker, Mr. Alex
Downie and Mr. Mike Sweatman will be directors of the resulting
issuer.
With a background in direct marketing, shareholder relations,
training and film production, Mr. Meredith has been executive
producer on a number of projects including an award-winning
television series in Canada. Mr. Meredith served as a director
with Techsite Strategies Corp. (formerly Cypango Ventures Ltd.)
(VSE), US Diamond Corp. (VSE) and recently co-founded and was
Vice President of Finance for internet streaming portal
PayForView.com (OTC:BB), raising over $5m in equity and $40m in
a credit line. He is also a control person in Eastern Meridian
Mining Corp. (ASE). Mr. Meredith holds approximately 98 % of the
shares of Voyager and will serve as President/CEO of the
resulting issuer.
Mr. Cassidy has been a director and a producer of film and
television productions, winning awards on both sides of the
Atlantic Ocean, and has served several companies in this
industry in an executive capacity. Mr. Cassidy is Chief
Operating Officer of Voyager and will continue in that position.
Mr. Cassidy has not served as an officer or director of a
publicly traded company in the past.
Mr. Walker is a solicitor who carries on the practice of law in
Vancouver, BC. Mr. Walker has served or is serving as an officer
or director of Global Teleworks Corp. (CDNX), iWave.com (CDNX),
Orko Gold Corp. (CDNX), White Hawk Ventures Ltd. (CDNX), Rio
Verde Industries Inc. (CDNX), Hymex Diamond Corp. (CDNX),
Crystal Recovery Systems Inc. (OTC:BB), U.S. Diamond Corp.
(CDNX) Techsite Strategies Corp. (CDNX), APAC Telecommunications
Corporation (CDNX) and Premier Minerals Ltd. (CDNX).
Mr. Alex Downie is President of Airwaves Sound Design Ltd., a
Vancouver, BC based audio postproduction company. Mr. Downie has
not served as an officer or director of a publicly traded
company in the past.
Mr. Mike Sweatman is a Chartered Accountant in Vancouver, BC and
is the principle of Michael Sweatman Limited, an incorporated
professional accounting firm. Mr. Sweatman has served or is
serving as an officer or director of Consolidated Texas Northern
Minerals Ltd. (VSE), Cypango Ventures Ltd. (VSE), iWave.com
(CDNX), RAT International Marketing Ltd. (CDNX), Octagon
Industries Inc. (CDNX), Treat Systems Inc. (CDNX), Maple
Minerals Inc. (CDNX), Brownstone Resources Inc. (CDNX) and
Return Assured Incorporated (OTC:BB).
The post-RTO issuer will have at least 2 additional directors,
the identities of which have not been determined at this time.
"The opportunity afforded by PeakSoft provides a vehicle for
Voyager to roll out its business plan and to begin to realize
the potential from being a publicly traded company listed on
both the CDNX and OTC exchanges", says Nic Meredith, CEO of
Voyager Entertainment.
Voyager has derived its projects so far from its British writing
and directing associations and has been developing the genre of
British film that has large international appeal and budgets
that maximize available European tax subsidies and co-production
treaties. Two feature films are slated for production with a mix
of well-known British and American cast members.
In Britain, three animated series are being co-produced plus one
animated feature. "Animation has a historically long shelf
life", says Meredith "and has increased revenue potential from
the spin off merchandising, toys, games and CD-ROM's.
Voyager is finalizing a detailed business plan, which will be
filed with CDNX as part of the document required to obtain
approval of the RTO. In accordance with CDNX policy PeakSoft is
preparing an Information Circular, which will provide full
disclosure of all material facts relating to the RTO. This
transaction is subject to both regulatory and shareholder
approval. A general meeting of PeakSoft's shareholders will be
convened in order to seek the latter.
PeakSoft will use its reasonable best efforts to remove from the
unit financing and compensation securities issued to the Agent,
any Canadian or US hold period imposed by securities regulations
within four months of closing the financing.
PeakSoft Multinet Corp. is an Internet development company and
is publicly traded on the Canadian Venture Exchange (PKS.V) and
on the OTC Bulletin Board (PEAMF); PeakSoft is headquartered in
Bellingham, WA. For more information please contact Mr. Tim Metz
at timm@peaksoft.com.
PILLOWTEX: Court Lifts Stay for Isham's Patent Appeal
-----------------------------------------------------
Prior to the Petition Date, Barbara Isham, a bed sheets
designer, sued Pillowtex Corporation for patent infringement
under the doctrine of equivalents.
In March 2000, the District Court granted the Debtors' first
Motion for Summary Judgment based on non-infringement of the
patent due to prosecution history estoppel. An appeal was taken
in the US Court of Appeal for the Federal Circuit in May 2000 to
determine whether Isham can obtain coverage of her patent under
the doctrine of equivalents.
Thus, Isham asks Judge Robinson to lift the stay for the limited
purpose of obtaining a decision from the Federal Circuit.
Monica Leigh Loftin, Esq., at Potter Anderson and Corroon LLP,
in Wilmington, Delaware, argues that the lifting of the stay is
warranted. According to Ms. Loftin, Pillowtex will suffer no
prejudice if relief from the automatic stay is granted since the
Debtors nor the bankruptcy estate will incur any further expense
nor expend any additional energy if the stay is lifted, because
there is nothing left to litigate.
All that remains is a final decision by the Federal Circuit to
construe the claims of the patent, Ms. Loftin notes.
Ms. Loftin adds that the balance of hardships falls in favor of
Isham. Ms. Loftin says the patent will expire in December 2004.
According to Ms. Loftin, the patent claims define and limit each
invention and set the boundaries of the patentee's right to
exclude. Yet, the patentee's right to exclude lasts only as
long as the patent does. Thus, Ms. Loftin argues, Isham needs
this decision by the Federal Circuit on the proper construction
of the claims of the patent in order to ascertain its
boundaries.
Ms. Loftin tells Judge Robinson that there is some probability
that Isham's appeal will succeed on the merits. Ms. Loftin says
Isham has previously defended her patent against another company
that she sued for infringement prior to suing Pillowtex. In
this case, Ms. Loftin notes, there is more than a slight
probability that the Federal Circuit will rule that the patent
claims do cover the Pillowtex product.
Judge Robinson agreed with Isham, and ordered that the automatic
stay is lifted and the appeal currently in front of the Federal
Circuit may proceed.
This ruling is on the condition that the automatic stay shall
remain in effect as to Isham's lawsuit against Pillowtex, Inc.
to the extent further proceedings are required in the District
Court. (Pillowtex Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PLAY-BY-PLAY: Hires SAMCO as Financing Arrangements Consultant
--------------------------------------------------------------
Play-By-Play Toys & Novelties, Inc. (OTC Bulleting Board: PBYP)
engaged SAMCO Resolution (Samco), a division of Service Asset
Management Company, as a consultant to the Chairman, Tomas
Duran, to assist with financing arrangements.
William B. Hudson, Samco's primary consultant for the Company,
began his career with Chase Manhattan Bank in the Global Credit
Department in New York City. He returned to Texas and held
various positions including President of Alamo National Bank in
San Antonio, Senior Vice President of Mercantile Texas
Corporation and Senior Vice President of First Interstate Bank
of Texas. He left the commercial banking business to engage in
various entrepreneurial pursuits. Before joining Samco, he was
instrumental in starting several businesses.
Also, The Hyslop Group, L.L.C., has been retained to assist with
the responsibilities of Chief Financial Officer, until a new
Chief Financial Officer is appointed. The position of Chief
Financial Officer was recently vacated by Joe M. Guerra who
resigned effective July 31, 2001.
The Hyslop Group acts in partnership with management in the
areas of corporate finance, accounting, strategic policy,
general business planning, asset management and financial
controls. The Company's principal consultant at the Hyslop Group
is James R. Hyslop, the consulting firm's founder and principal.
Prior to forming The Hyslop Group in 1994, Mr. Hyslop was Senior
Vice President and Chief Financial Officer for Swearingen
Aircraft, Inc. from 1992 to 1994. Before that, Mr. Hyslop served
in various financial roles up through Senior Vice President,
Finance and Treasurer for Tesoro Petroleum Corporation from 1977
to 1992.
Juanita Lozano, in addition to her position as Controller, has
been appointed to assist Tomas Duran and Samco in the Company's
restructuring and financing efforts. Ms. Lozano joined the
Company in March 1995 as the Financial Reporting Manager and
served briefly as interim Chief Financial Officer from July 1996
to January 1997. Ms. Lozano returned to her position as the
Financial Reporting Manager in January 1997 and was promoted to
Controller in February 1999. Prior to joining Play-By-Play, Ms.
Lozano was employed by Datapoint Corporation as Financial
Analyst, where she coordinated the Marketing Division budget.
Ms. Lozano is a Certified Public Accountant and received a BBA
in Accounting, cum laude, from St. Mary's University in San
Antonio, Texas.
Richard De La Llana, Executive Vice President for Latin America,
has been appointed to act as President and Managing Director of
the Puerto Rico office replacing Mr. Manuel Fernandez Barroso
who resigned his position as President of Caribe Sales &
Marketing effective August 2, 2001. Mr. De La Llana joined
Caribe Sales & Marketing in 1980 and served in various
capacities culminating in Executive Vice President for Latin
America at the time the Company purchased Caribe in March 1999.
Mr. De La Llana was transferred to Miami in November 1999 to run
the Company's Miami offices until their closure in November
2000, at which time he moved to the San Antonio office. Mr. De
La Llana is a 20-year veteran in the Puerto Rican and Latin
American retail sales markets where he has spent over 15 years
traveling to mainland China, Hong Kong and Taiwan to source new
vendors and to develop and market new products. Mr. De La Llana
is a graduate of Sacred Heart University in San Juan, Puerto
Rico with a degree in business administration and marketing.
The Company also announced that it has reduced labor costs by
approximately $900,000 domestically, as well as an approximate
$3.7 million reduction in other operating costs from June 2000
through June 2001. In addition, the Company's China and Hong
Kong offices were closed on July 31, 2001 in further efforts to
achieve cost savings.
Warner Bros. Consumer Products has issued "Notice of
Termination" for several entertainment character licensing
agreements due to non-payment by the Company of scheduled
royalties due.
One of the notices of termination applies to the Looney Tunes'
United States' mass market retail distribution entertainment
character licensing agreement. Associated with this licensing
agreement are certain voice contracts, which apply to characters
animated with licensed voices. Also included in the notices of
termination are the licensing rights for Looney Tunes and other
characters for distribution in Latin America and Canada.
Finally, on August 24, 2001, the Company completed the sale of
its Fun Services Franchise business to Giftco, Inc. of Chicago,
Illinois.
Play-By-Play Toys & Novelties, Inc. designs, develops, markets
and distributes a broad line of quality stuffed toys, novelties
and consumer electronics based on its licenses for popular
children's entertainment characters, professional sports team
logos and corporate trademarks.
The Company also designs, develops and distributes electronic
toys and non-licensed stuffed toys, and markets and distributes
a broad line of non-licensed novelty items. Play-By-Play has
license agreements with major corporations engaged in the
children's entertainment character business.
PROVANT: Agrees with Committee to Set Up StratPlan Panel
--------------------------------------------------------
Provant, Inc. (NASDAQ: POVT), a leading provider of performance
improvement training services and products, and the Provant
Committee to Restore Shareholder Value announced today that they
have reached an agreement to end the Committee's efforts to
elect their alternative slate of directors for Provant.
Under the terms of this agreement, Provant will increase the
size of the Board by immediately adding three nominees from the
Committee's alternative slate. The three new directors will also
be added to the slate of directors proposed by the Company at
Provant's 2001 Annual Meeting of Stockholders. As a result of
this agreement, Provant will establish a Strategic Planning
Committee of the Board to advise the Board on the Company's
strategic plan.
The Strategic Planning Committee, to be chaired by John E.
Tyson, will consist of at least three directors, two of whom
will come from the newly appointed members.
John E. Tyson, Chairman of Provant, said, "We are very pleased
to have reached an agreement with the Provant Committee to
Restore Shareholder Value which will allow us to add three
additional independent directors to the Board. Our agreement
emphasizes the commitment of both groups to come together to
satisfy the highest standards of corporate governance and help
ensure sustainable, long-term growth for the Company. We look
forward to coming together with our new board members and the
leadership of our CEO Curt Uehlein to continue our efforts to
restore shareholder value at Provant."
A spokesperson for the Committee said, "We are pleased that
Provant's Board has agreed to expand from five to eight
directors and to appoint three of our nominees to the Board. We
believe that this understanding is a major step forward for
Provant and a win-win for shareholders. This expanded Board of
knowledgeable and prominent leaders from the business community
will be instrumental in building a solid platform for future
growth. We commend Provant's Board for taking decisive action in
adopting these new initiatives."
The Company also announced that the 2001 annual meeting of
stockholders would be held on October 15, 2001.
As a leading provider of performance improvement training
services and products, Provant helps its clients maximize their
effectiveness and profitability by improving the performance of
their people. With over 1,500 corporate and government clients,
the Company offers blended solutions combining web-based and
instructor-led offerings that produce measurable results by
strengthening the performance and productivity of both
individual employees and organizations as a whole.
Financial Position
As of end of March 2001, Provant's current liabilities total
$97.6 million, as opposed to its current assets of $69.5
million.
Also, as of the same date, the Company had cash of approximately
$1.8 million and outstanding indebtedness of $72.3 million. The
Company has a $105.0 million credit facility with related
borrowings of $51.6 million at March 31, 2001.
The credit facility, which terminates on December 31, 2001, (i)
prohibits the payment of dividends and other distributions by
the Company, (ii) generally does not permit the Company to incur
or assume other indebtedness, and (iii) requires the Company to
comply with certain financial covenants.
Because of its maturity on December 31, 2001, borrowings under
the credit facility are reflected in current liabilities as of
December 31, 2000. Management of the Company is currently
addressing the maturity of the credit facility through the
exploration of alternative financing options.
Subject to the extension of the credit facility or completion of
other financing alternatives, the Company anticipates that its
cash flow from operations and availability under the credit
facility will provide cash sufficient to satisfy the Company's
working capital requirements, debt service requirements and
planned capital expenditures for the next 12 months.
In connection with the reorganization program, the Company
expects to make future cash payments of approximately $1.0
million in fiscal 2001, $640,000 in fiscal 2002, $230,000 in
fiscal 2003 and $450,000 in fiscal 2004.
The severance and exit costs will be disbursed over a period
based upon the terms of the severance and lease agreements.
PSINET: Sept. 12 Hearing on Motion to Sell Canadian Assets Set
--------------------------------------------------------------
The hearing on PSINet, Inc.'s motion to sell its Canadian assets
to Telus has been scheduled for September 12, 2001. The time for
Cisco to object to the motion is further extended through and
including August 24, 2001 as stipulated and agreed by the
parties.
In addition, the Debtors amended the IRU Schedule which lists
the IRUs that the Debtors intend to convey to Telus. The Debtors
attached the amended Schedule to a notice of August 6, 2001, to
replace that served on counter-parties served on July 9, 2001.
On July 27, 2001, the Debtors filed a Notice of Amendment of the
Canadian Business Sale Motion, notifying parties in interest of
the Debtors' intent to amend the Asset Purchase Agreement to add
PSINet USA as a party thereto.
The August 6, 2001 Notice include amendments, among which is the
addition of PSINet USA as a "Vendor" party to the Asset Purchase
Agreement to transfer certain assets and assign certain leases
used in the operation of the Canadian business. NTFC Capital
Corporation tells Judge Gerber that the Debtors made such
amendments after they discovered it was NTFC's position that the
NTFC Canadian Equipment was owned by PSINet Canada, and the
Debtors attempted to rewrite the facts.
NTFC's Objection
NTFC objects to the Sale Motion insofar as it pertains to the
NTFC Canadian Equipment. The equipment is owned by PSINet
Canada, not PSINet USA, NTFC asserts, because PSINet USA
transferred and contributed the NTFC Canadian Equipment to
PSINet Canada as capital and cannot now reclaim this property
for the benefit of its estate, based on the old maxim that
"equity treats as done that which in good conscience should be
done".
A significant portion of the equipment proposed to be sold is
covered by the NTFC Leases, NTFC tells the Court. By way of an
adversary proceeding Case No. 01-03017, the Debtors seek, inter
alia, to recharacterize these NTFC Leases as financing
arrangements rather than true leases.
While NTFC does not argue in this Objection whether the NTFC
Leases are true leases or financing arrangements, NTFC asserts
that, even if the NTFC Leases are recharacterized as financing
leases, NTFC holds valid and perfected security interests
against the NTFC Canadian Equipment because it properly filed
and perfected its security interests in the Equipment.
Accordingly, disposition of the Equipment is not under the
jurisdiction of the S.D.N.Y. Bankruptcy Court but should be
determined before the Ontario Superior Court of Justice, in
which PSINet Canada is the subject of a proceeding under the
Companies' Creditors Arrangement Act, NTFC argues.
In view of NTFC's perfected security interests in the NTFC
Canadian Equipment, under Canadian law, NTFC's consent to the
sale of such equipment free and clear of its security interests
is required. NTFC indicates that it is willing to grant its
consent to the sale of the NTFC Canadian Equipment free of liens
and security interests, but asserts that NTFC should receive a
satisfactory allocation of the proceeds of the sale of the
Canadian assets to be paid over to NTFC at the closing of such
sale.
NTFC also opposes any modification of the ten-day stay following
entry of an order approving the sale of the Canadian Assets
mandated by Fed. R. Bankr. No good basis exists to waive the 10-
day stay, NTFC asserts, because the proposed sale is of
sufficient magnitude and significantly and irreparably affects
the rights of NTFC. NTFC has got information that Telus, the
Purchaser, has consented to the adjournment of the hearing.
This, as NTFC sees, suggests that no such exigency as to warrant
the elimination of the 10-day stay.
In conclusion, NTFC objects to the Canadian Business Sale Motion
in respect of the NTFC Canadian Equipment and the NTFC U.S.
Based Canadian Equipment. NTFC requests that the U.S. Bankruptcy
Court enter an order (i) determining jointly with the Ontario
Court that the NTFC Canadian Equipment is property of PSINet
Canada and that the PSINet Bankruptcy Court in S.D.N.Y. lacks
jurisdiction to determine the disposition of the NTFC Canadian
Equipment; (ii) denying any modification of the 10-day stay
periods provided by Fed. R. Bankr. P. 6004(g) and 6006(d); and
(iii) granting NTFC such other and further relief as this Court
deems just and proper. (PSINet Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
STEEL HEDDLE: Files for Chapter 11 Protection in Delaware
---------------------------------------------------------
*** A Case Summary and list of the Debtors' 20 Largest
*** Unsecured Creditors appeared in the Wednesday, August 29,
*** 2001, edition of the TCR.
Steel Heddle Group Inc. and four affiliates filed for chapter 11
bankruptcy protection on Tuesday in the U.S. Bankruptcy Court in
Wilmington, Del., Dow Jones reported. The Greenville, S.C.-
based company said that as of July it and its bankrupt
affiliates had $64.3 million in assets and $176 million in
debts.
Jerry Miller, vice president of finance for the companies, said
that cyclical declines, reduced mill operating rates, reduction
in looms in service and increased domestic competition resulted
in operating losses from 1998 through the present.
Miller said that Steel Heddle Group and its bankrupt affiliates
entered into an agreement to sell the assets of the textile
business for $12.5 million, subject to certain adjustments. The
companies will also propose to sell the wire business through a
bankruptcy auction.
Steel Heddle Group, Inc. is a Delaware corporation incorporated
in 1998. SH Group is a holding company whose wholly-owned
subsidiary Steel Heddle Mfg. Co., a Pennsylvania corporation,
manufactures products and loom accessories used by textile
weaving mills and processes metal products from its wire rolling
facilities for use in the electronics, solar power and
automotive industries, among others.
The Company's manufacturing plants are located in the southern
United States, Mexico, and Belgium. The Company sells to foreign
and domestic companies. (ABI World, August 30, 2001)
USG CORP: Court Approves Caplin as Counsel for PI Panel
-------------------------------------------------------
The Official Committee of Asbestos Personal Injury Claimants of
USG Corporation sought and obtained authority from Judge Newsome
to employ Caplin & Drysdale, Chartered as its National Counsel
in the Debtors' chapter 11 proceedings, nunc pro tunc to the
date the Committee formed.
Elihu Inselbuch, Esq., at Caplin & Drysdale, states his firm,
with offices in New York and Washington, D.C., is experienced in
insolvency and corporate reorganizations and in complicated
corporate and litigated matters.
He tells the Court that Caplin is specially suited to assist the
Injury Claimants' Committee due to the firm's prior experience
as counsel to the committees of asbestos-related litigants
and/or creditors in the Chapter 11 proceedings involving the
Manville Corporation, Babcock & Wilcox Company, Pittsburgh
Corning Corporation, Owens Corning Corporation, Armstrong World
Industries, Inc., G-1 Holdings, Inc. and W.R. Grace & Company.
Currently, Caplin represents the Selected Counsel for the
Beneficiaries of the Manville Personal Injury Settlement Trust,
the Trust Advisory Committee to the Celotex Asbestos Settlement
Trust, the Trust Advisory Committee to the National Gypsum
Settlement Trust and the Trust Advisory Committee to the Raytech
Settlement Trust.
Mr. Inselbach advises that Caplin will charge for its legal
services at its customary hourly rates:
Elihu Inselbach $630
Peter Van N. Lockwood $500
Walter B. Slocombe $475
Julie W. Davis $365
Trevor W. Swett, III $360
Nathan D. Finch $290
Rita C. Tobin $265
Kimberly N. Brown $265
Beth Heleman $210
Kris Bess $160
Robert C. Spohn (paralegal) $135
Elyssa J. Strug (paralegal) $125
Heather Dowie (paralegal) $115
Sean O'Connell (paralegal) $115
Caplin services are expected to include:
- assisting and advising the PI Committee in its
consultations with the Debtor and other committees
relative to the overall administration of the estates;
- representing the PI Committee at hearings to be held
before this Court and communicating with the Committee
regarding the matters heard and issues raised as well as
the decisions and considerations of this Court;
- assisting and advising the PI Committee in its
examination and analysis of the Debtors' conduct and
financial affairs;
- reviewing and analyzing all applications, orders,
operating reports, schedules and statements of affairs
filed and to be filed with this Court by the Debtor or
other interested parties in this case; advising the PI
Committee as to the necessity and propriety of the
foregoing and their impact upon the rights of asbestos-
health related claimants, and upon the case generally;
and, after consultation with and approval of the PI
Committee or its designee(s), consenting to appropriate
orders on its behalf or otherwise objecting thereto;
- assisting the PI Committee in preparing appropriate
legal pleadings and proposed orders as may be required
in support of positions taken by the Committee and
preparing witnesses and reviewing documents relevant
thereto;
- coordinating the receipt and dissemination of
information prepared by and received from the Debtors'
independent certified accountants or other professionals
retained by it as well as such information as may be
received from independent professionals engaged by the
PI Committee and other committees, as applicable;
- assisting the PI Committee in the solicitation and
filing with the Court of acceptances or rejections of
any proposed plan or plans or reorganization;
- assisting and advising the PI Committee with regard to
communications to the asbestos-related claimants
regarding the PI Committee's efforts, progress and
recommendation with respect to matters arising in the
case as well as any proposed plan of
reorganization; and
- assisting the PI Committee generally by providing such
other services as may be in the best interest of the
creditors represented by the PI Committee.
Mr. Inselbuch assures the Court that Caplin has made every
effort to uncover possible conflicts or representations of any
interested party in these chapter 11 proceedings, but has yet to
discover any. He states Caplin does not represent the Debtor,
its creditors, equity security holders, or any other parties of
interest, or its respective attorneys and accountants, the
United States Trustee or any person employed in that office.
However, due to the size of the Debtor, Mr. Inselbuch relates,
it may now or in the future represent other creditors of the
Debtors in tax or other matters unrelated to the case. But Mr.
Inselbuch assures the Court that if, at any time, Caplin
discovers any further relationships it will supplement its
disclosure to the Court.
Mr. Inselbuch concludes by saying Caplin represents no interest
adverse to the PI Committee with respect to the matters for
which Caplin will be employed, and therefore is a "disinterested
person" as defined in section 101(14) of the Bankruptcy Code, as
modified by section 1107(b) of the Bankruptcy Code. (USG
Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
VIASOURCE: Undertakes Further Restructuring & New CEO Takes Over
---------------------------------------------------------------
Viasource Communications, Inc. (Nasdaq: VVVV), a leading
nationwide broadband technology deployment organization,
announces further details of its restructuring initiatives,
including the resignation of President and Chief Executive
Officer, Craig Russey, effective immediately.
On the heels of their significant restructuring and
reorganization initiatives of the second quarter, Viasource's
Chairman, William Sprague, has announced further developments in
the company's rightsizing efforts.
"Effective today, Craig Russey, one of our founders and the
Chief Executive Officer and President of the company is
resigning his position," said Sprague. "Mr. Russey will continue
with the company as a key member of the company's board of
directors and will serve on their executive committee. Craig's
decision to step aside is a testimony of his belief that
restructuring the company from top to bottom is the right thing
to do. His leadership and vision for the Company will continue
to be felt at the board level. We deeply appreciate Craig's
efforts and commitment to building Viasource during his tenure
of President and CEO."
The company has appointed Colin McWay, formerly Executive Vice-
President of Business Operations, as the new President and Chief
Operating Officer.
"Colin's tenacious approach will serve the company well as he
positions the company for a solid future," said Sprague.
"Viasource is taking every step necessary to build an industry
leader and the team here at Viasource is clearly up to the
challenge," said McWay.
"I look forward to working with the entire Viasource team in a
proactive environment and look to Craig's continued support at
the board level."
Viasource -- http://www.viasource.net -- is a leading
independent enabler of advanced broadband and other wired and
wireless communications technologies to residential and
commercial customers in the United States.
The Company provides outsourced installation, fulfillment,
maintenance and support services to leading cable operators,
direct broadcast satellite operators and other broadband
Internet access providers, including DSL and fixed wireless
companies.
The Company also provides network integration and installation
services to a variety of other companies. The Company's
services are focused on the "last mile," defined as the segment
of communications that connects the residence or commercial
customer. The Company is the only provider of these services
with a nationwide footprint, currently employing over 2,500
employees around the United States.
Second Quarter Results
For the three months ended June 30, 2001, the Company recognized
an operating loss of $22.6 million, as compared to an operating
loss of $4.7 million for the same period in fiscal 2000.
Included in the operating loss for the three months ended June
30, 2001 are $6.7 million and $12.6 million of restructuring
charges and impairment loss on intangible assets and goodwill,
respectively.
If the restructuring charge and the impairment loss on
intangible assets and goodwill had not been recorded, the
operating loss for the three months ended June 30, 2001 would
have been $3.3 million.
Operating income from Cable was $1.0 million for the three
months ended June 30, 2001 as compared to operating income of
$0.7 million for the same period in fiscal 2000.
Telephony and Internet operating loss was $6.8 million for the
three months ended June 30, 2000, as compared to operating loss
of $0.5 million for the three months ended July 1, 2000.
Operating income from Satellite and Wireless was $2.9 million
for the three months ended June 30, 2001 as compared to an
operating loss of $2.5 million for the same period in fiscal
2000, representing an increase of $5.4 million.
Restructuring
In light of the industry and economic environment and capital
market trends impacting both current operations and expected
future growth opportunities, the Company has refocused its
initiatives to optimize operating results, improve margins, and
drive efficiencies by further streamlining field operations and
administrative support functions.
The restructuring plan has generally included the reduction of
workforce, the reduction in divisional and regional field
offices and the consolidation of certain administrative
functions within the Company.
During the three months ended June 30, 2001, the Company
recorded approximately $6.7 million in restructuring charges,
which is included under the caption "Restructuring charge" in
the Consolidated Statements of Operations. The Company executed
and completed the major phases of the restructuring plan in the
three months ended June 30, 2001.
As part of the restructuring plan, the Company modified its
field operations from four geographic business divisions to two
major regional offices. As such, the Company modified its
Denver, Colorado and Murfreesboro, Tennessee facilities to
accommodate the new requirements of these two major regional
offices. Corporate functions, such as Accounting and Human
Resource, were combined into the headquarters facility in Fort
Lauderdale, Florida, as part of this consolidation.
The workforce reductions charge of $1.8 million for the three
months ended June 30, 2001 was related to the cost of severance
and benefits associated with 83 terminated employees. Of the
employees terminated, 42 were performing field support and
division functions and 41 were corporate administrative
employees.
Of the terminated employees, 6 employees had employment
contracts. As of June 30, 2001, $1.0 million of the $1.8 million
workforce reduction accrual had been decreased by cash payments.
The remaining accrual will be utilized by March 31, 2002.
In conjunction with the field office geographic realignment, the
Company identified a number of leased facilities, comprised of
office and warehouse space that were no longer required. As a
result, the Company recorded net lease termination costs of $3.9
million for the three months ended June 30, 2001.
The lease costs primarily relate to future contractual
obligations under operating leases. The lease costs are
partially offset by $3.7 million in expected sublease income
from existing sublease arrangements. As of June 30, 2001, the
lease costs and termination fees accrual had been decreased by
cash payments of $0.4 million. The remaining accrual is expected
to be utilized by June 30, 2005.
Other exit costs related to the restructuring plan are primarily
negotiated contract settlement costs of $0.5 million. As of June
30, 2001, the other exit cost accrual has been decreased by cash
payments of $0.5 million.
The fixed asset write-down of $0.5 million for the three months
ended June 30, 2001 consists of office equipment and fixtures
and leasehold improvements associated with the exiting of the
above noted leased facilities.
Although the Company's restructuring efforts have shown
favorable results, the Company recognize that it will likely be
required to raise additional capital to fund our future
operations. Its ability to raise such capital in amounts and on
terms which are satisfactory is uncertain, especially in light
of the current market conditions.
If the Company are unable to raise additional capital or are
required to raise capital on terms and conditions that are less
satisfactory, it could have a material adverse effect on the
Company's financial condition, which could result in additional
operational restructuring and/or a sale or liquidation of
Viasource.
Nasdaq Delisting Hearing on Sept. 7
On July 23, 2001, the Company received a standard notice of
delisting from the NASDAQ Stock Market, because of its common
stock's failure to maintain a minimum criteria of continued
listing on the NASDAQ National Market.
The Company has scheduled an oral hearing on September 7, 2001
with NASDAQ Listing Qualifications Panel to appeal this decision
and to seek continued listing. The delisting of our common stock
will be stayed pending the outcome of this hearing.
There are no assurances that the Company's request for continued
listing will be granted. A delisting could have a material
adverse effect on the Company's financial condition and inhibit
its future capital raising efforts.
VICEROY RESOURCE: Executes Forbearance Agreement with Banks
-----------------------------------------------------------
Viceroy Resource Corporation (TSE:VOY.) announces it has
executed an agreement with NM Rothschild & Sons (Australia)
Limited and Macquarie Bank Limited on a settlement arrangement
to relieve Viceroy and its North American subsidiaries of their
obligations under agreements guaranteeing certain borrowings and
hedging agreements relating to the Australian operations.
The arrangement requires the payment of $732,000 upon signing
($500,000 previously paid) with the further requirement for
delivery, within two business days of receipt of the Toronto
Stock Exchange approval, of 23 million common shares of Viceroy
Resource Corporation, common shares and a secured bond that
Viceroy holds in NovaGold Resources Inc. and a note for
$3,000,000.
The note accrues interest at libor plus 2% and is repayable from
60% of Viceroy's portion of the free cash flow from the Castle
Mountain Mine after November 30, 2001.
The notes outstanding after July 31, 2002 are convertible into
common shares at the average market price for the previous five
days with any remaining note outstanding as of December 31, 2003
converted to common shares. The outstanding conditions of the
agreement are expected to be completed by September 21, 2001 and
the issuance of the Viceroy common shares contemplated by the
arrangement will be subject to approval by the Toronto Stock
Exchange.
Viceroy believes that the agreement with Rothschild and
Macquarie will assist in the restructuring and disposal of the
Australian assets while leaving Viceroy with the ability to
pursue new business opportunities.
The voluntary administration of Viceroy's Australian
subsidiaries, Viceroy Australia Pty Ltd. and Bounty (Victoria)
Pty Ltd. is continuing. The Bounty Mine continues to operate
while the administrator reviews the affairs of the Australian
subsidiaries with a view to providing a report to creditors by
September 19, 2001.
Viceroy Resource Corporation is a gold producer with operations
in Canada and the United States. Viceroy shares, trading under
the symbol VOY on the Toronto Stock Exchange.
VLASIC FOODS: Inks Set-Off Agreement with Bank of America
---------------------------------------------------------
Vlasic Foods International, Inc. asks Judge Walrath to approve a
stipulation modifying the automatic stay to allow Bank of
America to setoff and foreclose against an investment account.
Robert A. Weber, Esq., at Skadden, Arps, Slate, Meagher & Flom,
in Wilmington, Delaware, relates that when the Debtors procured
insurance for workers compensation claims from the Travelers
Indemnity Company, it was part their arrangement that the
Debtors obtain letters of credit designating Travelers as
beneficiary.
Thus, Mr. Weber notes, the Debtors applied for a Standby Letter
of Credit with the Bank of America. The application was granted
and the Bank issued a Standby Letter of Credit in the amount of
$2,200,000. Last July 18, 2001, Mr. Weber discloses, Travelers
drew down the Letter of Credit. This entitled the Bank to a
drawing commission of $2,750.
According to Mr. Weber, the Debtors' obligations to the Bank are
secured under a Security Agreement dated July 2000. The Debtors
granted a security interest to the Bank in a "Bank of America
Investment Account", which has a present balance of $2,200,000.
Aside from the Security Agreement, Mr. Weber adds, the Debtors
and the Bank are also parties to an Amended and Restated Credit
Agreement dated September 1998.
In this Credit Agreement, Mr. Weber explains, the Debtors are
authorized to designate additional transactions arising outside
the Credit Agreement as "Guaranteed" and "Secured" Obligations
entitled to the same status and protections received by
transactions arising under the Credit Agreement. And the
Debtors did just that by designating the repayment obligations
owed to the Bank as "Guaranteed" and "Secured" Obligations.
Now that the Letter of Credit has been fully drawn, Mr. Weber
informs the Court that the Debtors' resulting reimbursement
obligations to the Bank is accruing interest at an annual
interest rate of prime plus 1%. Thus, the Debtors determined
that it would in the best interest estates and various other
stakeholders to apply the collateral in the Account to satisfy
their reimbursement obligations to the Bank.
Consequently, Mr. Weber notes, the Debtors and the Bank have
already inked a deal that will permit the Bank to receive prompt
payment on the Letter of Credit. The Debtors hope this will
minimize any related claim by the Bank against them. The
material terms of the Stipulation are:
(1) Upon approval of the Stipulation, the Bank shall be
permitted to immediately setoff and foreclose on the
Account and apply the proceeds to any and all of the
Debtors' repayment obligations;
(2) The Stipulation does not waive or modify any rights any
party may have under the Credit Agreement; and
(3) Notwithstanding anything in the Stipulation to the
Contrary, the Creditors' Committee will have 90 days
from the entry of an order granting this motion to
commence an adversary proceeding contesting the validity
or priority of the Bank's claim.
(4) Nothing contained in the Stipulation shall be deemed a
representation or an admission of the allowability or
priority of any claim, security interest or lien.
If this Stipulation would not be approved, the Debtors are
worried that the Bank will file a motion for relief from the
automatic stay to permit them to exercise its alleged right to
set off and/or foreclosure. Mr. Weber admits the Bank appears
to have a well-founded basis for its assertion of setoff rights.
So to avoid a Court-battle, the Debtors believe it would be best
to settle this matter on friendly terms. (Vlasic Foods
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
W.R. GRACE: PD Claimants Panel Balks At Proposed Kinsella Fees
--------------------------------------------------------------
The Official Committee of Asbestos Property Damage Claimants of
W. R. Grace & Co. makes a limited objection to the requested
relief, and in particular to the compensation structure proposed
in the Debtors' application to employ Kinsella as Notice
Advisor.
The Committee warns that it might object to the noticing
proposal in the Debtors' related motion, and it anticipates that
Kinsella might provide testimony in support of the Debtors'
proposed noticing plan.
As a result, if Kinsella was to provide such testimony, then in
response to this objection be ordered to implement a more
expansive plan, Kinsella would reap the benefits of a plan
against which it had testified.
Michael B. Joseph of the Wilmington firm of Ferry & Joseph
simply asks Judge Farnan to sustain the objection, without
stating what the result of that objection and its sustaining
might be. (W.R. Grace Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WEGENER CORP: Shares Bid Price Falls Short of Nasdaq Requirement
----------------------------------------------------------------
Wegener Corporation (Nasdaq: WGNR) announced that it has been
notified by the Nasdaq Listing Qualifications Department that it
is not in compliance for continued listing on Nasdaq as a result
of failing to met the minimum bid price requirement of $1.00 on
its common shares. On all other Nasdaq listing criteria, the
Company well exceeds compliance minimums.
The Company has been given 90 days by the Listing Qualifications
Department to regain compliance. Should the bid price not reach
the minimum acceptable level during this period, the Company
will request an appeal with Nasdaq.
Robert A. Placek, chairman and chief executive officer of
Wegener Corporation, commented, "While the Company is concerned
about this Nasdaq notification, we continue to be optimistic
about the future of the Company. As we stated in recent press
releases, we expect both increased revenues and improved
operating results in the current fiscal fourth quarter, and the
visibility of our revenue stream for the upcoming fiscal year is
the most promising in the history of the Company. Our continued
focus on research and development has yielded products that will
expand our backlog and increase revenues going forward."
Wegener Communications is an international provider of digital
solutions for IP data, video and audio networks. Applications
include IP data delivery, broadcast television, cable
television, radio networks, business television, distance
education, business music, satellite paging and financial
information distribution.
COMPEL, Wegener's patented network control system provides
networks with unparalleled ability to regionalize programming
and commercials through total receiver control.
WHEELING-PITTSBURGH: US Bank Moves to Give Priority to Card Fees
----------------------------------------------------------------
Thomas R. Allen, Esq., and Lisa M. Diem, Esq., of the Columbus
law firm of Thompson Hine LLP, acting on behalf of U. S. Bank
National Association, ask Judge Bodoh to award the Bank
administrative status for unpaid credit card charges in the
amount of $5,499.94 for postpetition charges incurred through
use of a corporate credit card by designated representations of
Wheeling-Pittsburgh Corporation.
Prior to the Petition Date, in January 2000, WPC and U.S. Bank
entered into a "U.S. Bank Visa purchasing Card Program
Agreement" whereby U.S. Bank agreed to issue credit cards to and
establish credit card accounts for use by the cardholders on
behalf of WPC in charging expenses incurred as part of their
employment.
The unpaid charges were made postpetition, and U.S. Bank asserts
it reasonably believes that these charges were made by
authorized users as part of their obligations as employees of
WPC, and clearly benefited the WPC estate, entitling these
charges to administrative status. (Wheeling-Pittsburgh
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WINSTAR COMMS: Verizon Moves to Vacate Interim Utilities Order
--------------------------------------------------------------
Verizon Communications, Inc. provides extraordinarily high
volume of telephone service to Winstar Communications, Inc.
Verizon continues to provide such service to the Debtors as the
Court has issued an order for utilities to continue rendering
services to the Debtors.
Verizon objects to the Interim Utilities Order and requests
relief to require a two-month deposit from the Debtors to
adequately protect Verizon against the significant risk of non-
payment.
Darryl S. Laddin, of Arnall Golden & Gregory, LLP at Atlanta,
Georgia discloses that Winstar's usage of Verizon's telephone
services exceeds $2.4 million per month. Mr. Laddin adds that
of the $13.9 million that Verizon is owed by the Debtors,
approximately 68% is delinquent.
This poor payment history by the Debtors, Mr. Laddin states,
does not support Winstar's contention that their "payment
history with respect to pre-petition bills" constitutes adequate
assurance.
In light of the opposition by Verizon of the Interim Utilities
Order, Winstar and Verizon met and reached into an agreement
wherein Verizon will withdraw its objection and continue to
render services to the Debtors.
Terms of the agreement approved by Judge Farnan are as follows:
1. Winstar shall wire transfer within 3 days the sum of
$916,429.22 as deposit for one-half of the average net
monthly bill for various wholesale services
2. Winstar shall wire transfer on the first and fifteenth day
of the month the sum of $916,429.22 as advance semi-
monthly deposit.
3. At the end of each 3-month interval, Verizon shall true-up
the advance semi-monthly payments made during the period
against actual charges incurred by Winstar. Upon
completion of the true-up, Verizon shall deliver a notice
to Winstar, Winstar's counsel and counsel for the
Committee on Unsecured Creditors setting forth the amount
of deficiency or excess payment for the period and dollar
amount of the future required advance monthly payments
based on the actual net charges incurred during the prior
3-month period. If a deficiency exists, Winstar shall
wire transfer the amount of deficiency within 2 business
days after the receipt of the notice. In case of an
excess payment, Verizon shall apply the excess sum towards
the next monthly payment of Winstar.
4. Within three business days, Winstar shall wire transfer
the amount of $1,832,858.43 representing the amount due
for the second half of April to the first half of May.
5. All post-petition charges owing to Verizon shall
constitute administrative expenses of the Debtors' estate.
6. In the event that the Debtors fail to comply with any
provision and does not correct default by 5:00 p.m. of the
second business day after notice by Verizon to the
Debtors, Verizon is authorized to terminate services to
the Debtors without further notice by the Court.
7. Within 3 business days after the date of this order, the
Debtors shall identify and provide Verizon with a listing
to Winstar's retail accounts. After receipt of the list
identifying Winstar Retail accounts from the Debtors, both
parties shall negotiate in good faith advance payments to
be made on the retail accounts. Unless otherwise agreed,
such deposit is to be calculated in the same manner as
wholesale charges unless otherwise agreed by both parties.
Verizon shall provide notice to the Debtors of the amount
necessary for the deposit and the Debtor shall wire
transfer the requested sum to Verizon within 3 business
days upon receipt of such notice.
8. With respect to any requests by the Debtors for
disconnection or additional service from Verizon, Winstar
shall comply with the terms set forth in the
interconnection agreements with Verizon and applicable
tariffs. In the event of request for additional service,
Verizon shall have the right to recalculate amount of
deposit and advance semi-monthly payments. Verizon shall
provide notice to the Debtors and its counsel of the
amount necessary and the Debtors shall wire transfer the
requested sums to Verizon within 3 business days of the
receipt of such notice. (Winstar Bankruptcy News, Issue
No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900)
* Meetings, Conferences and Seminars
------------------------------------
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 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
Orlando World Center Marriott, Orlando, Florida
Contact: 703-449-1316 or
http://www.inetresults.com/iwirc
October 28 - November 2, 2001
IBA Business Law International Conference
Including Insolvency and Creditors Rights Sessions
Cancun, Mexico
Contact: +44 (0) 20 7629 1206
http://www.ibanet.org/cancun
November 15-17, 2001
ALI-ABA
Commercial Real Estate Defaults, Workouts, and
Reorganizations
Regent Hotel, Las Vegas
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
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, CA
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 8, 2002
American Bankruptcy Institute
Bankruptcy Battleground West
Century Plaza Hotel, Los Angeles, California
Contact: 1-703-739-0800 or http://www.abiworld.org
March 20-23, 2002
TURNAROUND MANAGEMENT ASSOCIATION
Spring Meeting
Sheraton El Conquistador Resort & Country Club
Tucson, Arizona
Contact: 312-822-9700 or info@turnaround.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
April 25-27, 2002
ALI-ABA
Fundamentals of Bankruptcy Law
Rittenhouse Hotel, Philadelphia
Contact: 1-800-CLE-NEWS or http://www.ali-aba.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 27-30, 2002
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains, Advanced Bankruptcy Law
Jackson Lake Lodge, Jackson Hole, Wyoming
Contact: 770-535-7722 or Nortoninst@aol.com
July 11-14, 2002
American Bankruptcy Institute
Northeast Bankruptcy Conference
Ocean Edge Resort, Cape Cod, MA
Contact: 1-703-739-0800 or http://www.abiworld.org
August 7-10, 2002
American Bankruptcy Institute
Southeast Bankruptcy Conference
Kiawah Island Resort, Kiawaha Island, SC
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 24-28, 2002
TURNAROUND MANAGEMENT ASSOCIATION
Annual Conference
The Broadmoor, Colorado Springs, Colorado
Contact: 312-822-9700 or info@turnaround.org
December 5-8, 2002
American Bankruptcy Institute
Winter Leadership Conference
The Westin, La Paloma, 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 3-7, 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
December 2-4, 2004
American Bankruptcy Institute
Winter Leadership Conference
Marriott's Camelback Inn, Scottsdale, AZ
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, Ronald Villavelez and Peter A.
Chapman, Editors.
Copyright 2001. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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*** End of Transmission ***