T R O U B L E D C O M P A N Y R E P O R T E R Friday, February 22, 2002, Vol. 6, No. 38 Headlines 360NETWORKS: Will Provide Documents to SEC Re Global Crossing ANC RENTAL: Lease Decision Deadline Hearing Continues on Apr. 12 ADVANTICA RESTAURANT: Sr. Notes Exchange Offer to Expire Today ALGOMA STEEL: Begins Trading 20MM New Shares on TSE in Canada ALLCITY INSURANCE: Nasdaq to Delist Shares Effective Monday ALLEGIANCE TELECOM: Fitch Affirms B+ Senior Secured Debt Rating AMAROQ INC: T.H. Lehman Terminates Warrant Purchase Agreement ASHTON TECHNOLOGY: Faces Imminent & Likely Bankruptcy Risk ATLAS AIR: Pilots & Engineers Reject Proposed Labor Agreement BALANCED CARE: Meditrust Will Acquire 12 Facilities for $43MM BELL CANADA: Issues 4.7BB Shares as Part of Recapitalization BRIDGE INFO: Court Approves Savvis Settlement Agreement BURLINGTON INDUSTRIES: Wants More Time to Remove Civil Actions CALICO COMMERCE: Delays Form 10-Q Filing Due to PeopleSoft Deal CAPTAIN D'S SEAFOOD: S&P Affirms Junk Rating on Planned Merger CHIQUITA BRANDS: Liquidation Analysis Underpinning Amended Plan CLASSIC COMMS: Committee Brings-in Walsh Monzack as Co-Counsel CONOCO CANADA: Commences Consent Solicitation for Senior Notes CONTINENTAL AIRLINES: Vanguard Windsor Holds 8.96% Equity Stake ENRON CORP: Continental Casualty Seeks Appointment of Examiner ENRON CORP: James Derrick Retires as Exec. VP & General Counsel ENRON: Court Lifts Stay for Severed Employees' Suits to Proceed ENRON WIND: Case Summary & Largest Unsecured Creditor ETOYS INC: Will Delay Financial Statements Filing with SEC EXODUS COMMS: Seeks Approval of Stipulation with Phoenix Leasing FEDERAL-MOGUL: Court Okays Bayard as Committee's Co-Counsel FRUIT OF THE LOOM: UST Asks Court to Disqualify Ernst & Young GT GROUP TELECOM: Slashing 350 Jobs to Save CDN$30MM Annually GALEY & LORD: Seeks OK to Pay Prepetition Critical Vendor Claims GALEY & LORD: Wants Schedule Filing Deadline Moved to April 22 GLOBAL CROSSING: Schedule Filing Deadline Extended to May 13 GOLDMAN INDUSTRIAL: Taps Greenberg Taurig as Bankruptcy Counsel GOLDMAN INDUSTRIAL: Hires Morris Anderson as Financial Advisors HARVARD SCIENTIFIC: 341 Meeting of Creditors Set for March 7 HINES HORTICULTURE: Plan to Sell Unit Has S&P Watching B+ Rating HUBBARD HOLDING: 2 Subsidiaries File for Receivership in Canada HYBRID NETWORKS: Reviewing Options Including Bankruptcy Filing IT GROUP: Secures Approval to Hire Logan & Co. as Claims Agent ITC DELTACOM: Increased Liquidity Concerns Spur S&P's Downgrade INACOM CORP: Wants Plan Filing Exclusivity Extended Until June 1 INDIGO BOOKS: Working Capital Deficit Tops $7MM at Dec. 29, 2001 INTEGRATED HEALTH: Gets Sixth Extension of Exclusive Periods KAISER ALUMINUM: Wins Nod to Pay $9.5MM Critical Vendor Claims KMART: U.S. Trustee Appoints Financial Institutions' Committee KMART CORP: Store Closing List Expected to Surface by March 11 LAIDLAW INC: Taps PricewaterhouseCoopers as External Auditors LODGIAN INC: Obtains Open-Ended Lease Decision Period Extension LUBY'S INC: Dimensional Fund Discloses 7.03% Equity Stake MAGNNUM SPORTS: Nasdaq to Delist Shares Effective Monday MCLEODUSA: Seeks Approval of Proposed Solicitation Procedures PACIFIC GAS: Says CPUC's Plan Doesn't Have Snowball's Chance PRIMIX: Closes Sale of NA Consulting Business to Burntsand PSINET INC: Holding Creditors' Meeting Set for March 19, 2002 QUALITY STORES: Alamo Group to Acquire Valu-Bilt for $7.5 Mill. RCN CORPORATION: Says Key Accomplishments Slip Moody's Analysis STEAKHOUSE PARTNERS: Case Summary TALK AMERICA: Lack of Capital Spurs S&P to Further Junk Ratings TIDEL TECH: Pursuing Talks to Restructure $18MM Conv. Debentures TOWER AIR: Dimensional Fund Discloses 5.9% Equity Stake UCAR INT'L: Dec. 31 Balance Sheet Upside-Down by $316 Million W.R. GRACE: Peninsula Entities Disclose 9.83% Equity Stake VALEO ELECTRICAL: French Unions Condemn Attempt to Break Pact WINSTAR: Citicorp's Omnibus Objection to Admin. Expense Claims YORK RESEARCH: Court Names Buchwald as NEAC Chapter 11 Trustee * BOOK REVIEW: The ITT Wars: An Insider's View of Hostile Takeovers ********* 360NETWORKS: Will Provide Documents to SEC Re Global Crossing ------------------------------------------------------------- 360networks said that it has received a third-party subpoena from the United States Securities and Exchange Commission seeking documents in connection with the SEC's investigation of Global Crossing Ltd. The Company intends to cooperate fully with the SEC's request for such documents. 360networks offers optical network services to telecommunications and data communications companies in North America. The company's optical mesh fiber network spans approximately 36,000 kilometers (22,000 miles) in the United States and Canada. On June 28, 2001, the company and several of its operating subsidiaries voluntarily filed for protection under the Companies' Creditors Arrangement Act (CCAA) in the Supreme Court of British Columbia. Concurrently, the company's principal U.S. subsidiary, 360networks (USA) inc., and 22 of its affiliates voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. In October 2001, four operating subsidiaries that are part of the 360atlantic group of companies also voluntarily filed for protection in Canada. Insolvency proceedings for several subsidiaries of the company have been instituted in Europe and Asia. For more information about 360networks, visit http://www.360.net ANC RENTAL: Lease Decision Deadline Hearing Continues on Apr. 12 ---------------------------------------------------------------- The hearing on the motion of ANC Rental Corporation, and its debtor-affiliates seeking an order extending its lease decision period until Confirmation hearing is continued to April 12, 2002, and by application of the Local Bankruptcy Rules applicable in the District of Delaware, the deadline within which the Debtors must assume or reject leases is extended through the conclusion of that hearing. (ANC Rental Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392- 0900) ADVANTICA RESTAURANT: Sr. Notes Exchange Offer to Expire Today -------------------------------------------------------------- Advantica Restaurant Group Inc. (OTC BB:DINE), announced that it has extended to 5:00 p.m., New York City time, on February 22, 2002, its offer to exchange up to $204.1 million of registered 12.75% senior notes due 2007 to be jointly issued by Denny's Holdings Inc., and Advantica for up to $265.0 million of Advantica's 11.25% senior notes due 2008 (the "Old Notes"), of which $529.6 million aggregate principal amount is currently outstanding. The exchange offer was scheduled to expire at 5:00 p.m., New York City time, on February 19, 2002. Except for the extension of the expiration date, all other terms and provisions of the exchange offer remain as set forth in the exchange offer prospectus previously furnished to the holders of the Old Notes. To date, an aggregate of approximately $64.8 million Old Notes have been tendered for exchange. Advantica Restaurant Group Inc., is one of the largest restaurant companies in the United States, operating over 2,300 moderately priced restaurants in the mid-scale dining segment. Advantica owns and operates the Denny's, Coco's and Carrows restaurant brands. FRD Acquisition Co., the parent company of Coco's and Carrows and a wholly owned subsidiary of Advantica, is classified as a discontinued operation for financial reporting purposes and is currently under the protection of Chapter 11 of the United States Bankruptcy Code effective as of February 14, 2001. For further information on the Company, including news releases, links to SEC filings and other financial information, please visit Advantica's Web site at http://www.advantica-dine.com DebtTraders reports that Advantica Restaurant Group's 11.250% bonds due 2008 (ADVRES1) are trading between 73 and 76. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ADVRES1for real-time bond pricing. ALGOMA STEEL: Begins Trading 20MM New Shares on TSE in Canada ------------------------------------------------------------- Algoma Steel Inc., (TSE:ALG) announced that its 20,000,000 new Common Shares created and issued pursuant to the implementation of the Company's Plan of Arrangement and Reorganization will be listed and posted for trading on the Toronto Stock Exchange on Thursday, February 21, 2002. The new Common Shares will trade under the symbol AGA. Under the Plan, former holders of the Company's First Mortgage Notes received 15,000,000 new Common Shares; employees received 4,000,000 new Common Shares; and unsecured creditors who did not elect to receive cash in respect of their unsecured claims received 1,000,000 new Common Shares. The Company's old Common Shares (symbol ALG) were cancelled under the Plan and holders of the old Common Shares are not entitled to receive any new Common Shares. Certificates representing the old Common Shares have no value and will not be accepted in settlement of trades of Common Shares of the Company. Algoma Steel Inc., based in Sault Ste. Marie, Ontario, is Canada's third largest integrated steel producer. Revenues are derived primarily from the manufacture and sale of rolled steel products, including hot and cold rolled sheet and plate. DebtTraders reports that Algoma Steel Inc.'s 12.375% bonds due 2005 (ALGC05CAR1) are trading between 22 and 24. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ALGC05CAR1 for real-time bond pricing. ALLCITY INSURANCE: Nasdaq to Delist Shares Effective Monday ----------------------------------------------------------- Allcity Insurance Company (ALCI-NASDAQ) said it has received notice from Nasdaq Stock Market, Inc., indicating that the Nasdaq staff has determined that its shares will be delisted, effective February 25, 2002, due to the Company's failure to hold its annual shareholders' meeting and to otherwise meet Nasdaq's proxy solicitation requirements for the fiscal year ended December 31, 2001, as required by Nasdaq's Marketplace Rules 4350(e) and 4350(g), respectively. The Company was also advised by Nasdaq that for the last 30 consecutive days it has failed to meet the minimum market value of publicly held shares and the minimum bid price per share as required by Nasdaq's Marketplace Rules 4450(a)(2) and 4450(a)(5). The Company anticipates that its common shares may be quoted on the over-the-counter bulletin board commencing on February 25, 2002 under a new ticker symbol. As part of the Empire Group, Allcity is a property casualty insurer that formerly specialized in commercial and personal property and casualty insurance business primarily in the New York metropolitan area. ALLEGIANCE TELECOM: Fitch Affirms B+ Senior Secured Debt Rating --------------------------------------------------------------- Fitch Ratings has affirmed Allegiance Telecom's (ALGX) 'B+' senior secured rating assigned to its $500 million secured credit facilities and its 'B' senior unsecured ratings assigned to its 11-3/4% senior discount notes due 2008 and 12-7/8% senior notes due 2008. The Rating Outlook for this credit is Stable. The rating confirmation reflects ALGX's ability to continue to generate strong sequential revenue growth while managing its expenses in light of a weaker economy and negative industry sentiment. This performance can be attributed to its strong management team and relatively conservative financing strategy, pre-funding its business plan. Fitch believes this performance should continue, driven by the revenue and cost benefits of its Integrated Access Service (IAD) offering. Fitch will continue to monitor the success of this offering from a demand and provisioning perspective as ALGX's funded business plan and liquidity position relies upon its success. IAD is important to ALGX as it generates significantly more revenue per customer while decreasing SG&A costs as a percentage of revenue. Fitch will also continue to monitor ALGX's ability to manage its working capital, expecting a slight improvement in accounts receivable day sales outstanding (DSO) from further enhancements to its back office. Although Fitch is comfortable with the performance of IAD in 2001, the continued success of the product is critical in order for ALGX's business model to succeed and for the company to remain in compliance with its revenue covenant in 2002. Fitch believes this is possible as IAD line sales have been increasing at an accelerated pace and ALGX's back office provisioning has improved to satisfy the demand. However, Fitch will be closely monitoring the performance of this product and ALGX's ability to generate positive EBITDA in 4Q'02. Accordingly, if ALGX is unable to perform as expected, a rating action will be taken. Unlike many of its CLEC peers, ALGX's revenue mix was not heavily weighted toward wholesale, reciprocal compensation and Web hosting, leading to a more stable and predictable revenue stream. That being said, ALGX provides data services to Genuity Solutions, a dial-up Internet Service Provider (ISP) that generates material revenue and EBITDA for ALGX. Inherent in the rating is the company's exposure to this material customer. Thus, a material adverse change in the nature of this relationship would have a dramatic affect on the financial performance of Allegiance. A major factor that led to the bankruptcy filings and recapitalizations of many of ALGX's competitors was their inability to meet bank covenants. To date, ALGX has not been in danger of violating any of its covenants. Its most stringent covenant in 2002 is its quarterly revenue covenant, requiring $755 million in revenue for 2002 ($155 million 1Q'02; $180 million 2Q'02; $200 million 3Q'02; $220 million 4Q'02). The current public forecast is $800 million, and Fitch believes if demand for IAD remains strong and the company is able to continue to successfully provision the service, it will satisfy its revenue covenant. The company is on track to turn EBITDA positive in 4Q'02 and full-year EBITDA positive in 2003. ALGX entered 2002 with $399 million in cash on its balance sheet and has $150 million remaining outstanding under its credit facility, which it does not expect to draw upon further in 2002. Given that its 36- market buildout is complete, ALGX expects to reduce capital expenditures from $364 million in 2001 to $225 million in 2002. By Fitch estimates, the current business model is fully funded. At the end of 2001, ALGX purchased Intermedia's Internet backbone assets from WorldCom for an undisclosed amount. This effectively enabled Allegiance to achieve Tier 1 Internet status, essentially reducing the company's transit costs. AMAROQ INC: T.H. Lehman Terminates Warrant Purchase Agreement ------------------------------------------------------------- T.H. Lehman & Co. Incorporated (OTCBB:THLM) said that Amaroq Inc., filed for bankruptcy under Chapter 7. On Nov. 20, 2001, THLM and Amaroq entered into a Warrant Purchase Agreement for 50% of the outstanding shares of Amaroq Inc. THLM is currently exploring the effect of Amaroq's filing regarding THLM's rights under the Warrant Purchase Agreement. T.H. Lehman & Co. Incorporated was organized in March 1983 as a Small Business Development Company and was an SBDC until April, 1988. From April, 1988 to August, 1990 it operated through subsidiaries as a broker/dealer and investment advisor. THLM continues to maintain certain of its investments. In 1992 THLM entered the business of medical accounts receivable financing and furnishing medical providers with non-medical management services. ASHTON TECHNOLOGY: Faces Imminent & Likely Bankruptcy Risk ---------------------------------------------------------- The Ashton Technology Group, Inc., said that to date, the Company has recognized recurring operating losses and has financed its operations primarily through the issuance of equity securities. As of December 31, 2001, it had an accumulated deficit of $82,605,379, a working capital deficiency of $315,324, and stockholders' deficiency of $2,435,982, all of which raise substantial doubt as to its ability to continue as a going concern. The Company developed a plan which it believes will enable it to continue operating for at least the next 12 months. The plan includes the purchase of approximately 80% of its common stock and the execution of a secured convertible note by OptiMark Innovations, Inc. for total consideration of $30 million, and interim bridge financing from HK Weaver Group, Limited for $500,000. The $30 million consideration to be paid by OptiMark Innovations includes $10 million in cash and intellectual property and other non-cash assets valued, for purposes of the securities purchase agreement, at $20 million. Closing of the OptiMark Innovations transaction is contingent upon, among other things, shareholder approval of an amendment to the Company's certificate of incorporation to increase the number of authorized shares of common stock and to define its interest and expectancy in specified business opportunities, completion of certain creditor negotiations, closing of a private equity investment in OptiMark Innovations, OptiMark Innovations' satisfaction with its due diligence investigation of Ashton, and installation of a new board of directors of Ashton reflective of OptiMark Innovations' ownership stake in Ashton. Should the securities purchase agreement with OptiMark Innovations not close, Ashton would not have access to the capital or intellectual property being sought through the transaction. Without such additional capital, it will not have sufficient financial resources nor access to alternative resources that would permit continued business operations. Accordingly, Ashton would face the imminent and likely potential for bankruptcy or liquidation. As of December 31, 2001, Ashton's operating subsidiaries and joint ventures included: * Universal Trading Technologies Corporation (UTTC), and its subsidiaries, Croix Securities, Inc. and REB Securities, Inc. * ATG Trading LLC, * Ashton Technology Canada, Inc., and * Kingsway-ATG Asia, Ltd. (KAA). Total comprehensive loss, which includes net loss, unrealized gains and losses on available-for-sale securities, and foreign currency translation adjustments, amounted to $3,048,534 and $5,284,049, respectively, for the three months ended December 31, 2001 and 2000, and $9,951,351 and $12,661,073, respectively for the nine months ended December 31, 2001, and 2000. Ashton incurred a net loss from continuing operations totaling $3,031,012 for the three months ended December 31, 2001, compared to $4,475,159 for the three months ended December 31, 2000. The decrease in the net loss from continuing operations is primarily due to a $699,703 increase in revenues and a $645,057 decrease in total costs and expenses. Other expenses, interest expense and equity in income (losses) of affiliates, net of interest income, decreased by an aggregate of $99,387. Revenues totaled $750,296 for the three-month period ended December 31, 2001, and $50,593 for the three-month period ended December 31, 2000. The revenues in each period were generated entirely by the Company's intelligent matching systems business through the operation of eVWAP and securities commissions on trades executed through Croix. The increase in revenues is a result of the increase in the aggregate number of shares executed to 69 million during the three months ended December 31, 2001 from 6.2 million shares during the same period last year. During the three months ended December 31, 2001, Croix accounted for 50.1 million of the total shares executed in the eVWAP system. Croix also executed an additional 7.6 million shares away from eVWAP at a volume-weighted average price. During December 2001, due to limited cash resources and the inability to maintain higher than the minimum required net capital, Ashton has limited its trading activities until such time that it has sufficient cash available to increase its capital levels. The Company incurred a net loss from continuing operations totaling $10,545,464 for the nine months ended December 31, 2001, compared to $11,077,700 for the nine months ended December 31, 2000. Revenues for the nine months ended December 31, 2001 increased $2.0 million from the prior year period. The increase in revenues was partially offset by a $1.1 million increase in total costs and expenses, primarily as a result of increased brokerage, clearing and exchange fees. Additionally, there was an increase in other expenses, which includes interest expense, equity in income (loss) of affiliates, and net of interest income, of $405,229. Total revenues were $2,162,760 for the nine-month period ended December 31, 2001, and $134,488 for the nine-month period ended December 31, 2000. The revenues in each three-month period were generated entirely by the Company's intelligent matching systems business through the operation of eVWAP and securities commissions on trades executed through Croix. The increase in revenues is a result of the increase in the aggregate number of shares executed to 218.5 million during the nine-month period ended December 31, 2001 from 17.5 million shares during the same period last year. During the nine months ended December 31, 2001, Croix accounted for 135.4 million of the total shares executed in the eVWAP system. Croix also executed an additional 23.5 million shares away from eVWAP at a volume-weighted average price. At December 31, 2001, Ashton's principal source of liquidity consisted of cash and cash equivalents of $960,250, compared to cash and cash equivalents of $6,028,883 and securities available for sale of $1,483,350 at March 31, 2001. The decrease in cash and cash equivalents and securities available for sale is primarily a result of the net loss for the nine months ended December 31, 2001 of $9,951,140. Included in the December 31, 2001 cash and cash equivalents balance was approximately $476,957 required to meet the minimum net capital requirements of Ashton's broker/dealer subsidiaries, and $450,000 set aside to collateralize a letter of credit. At December 31, 2001, Ashton had total assets of $4,002,266 compared to $13,065,778 at March 31, 2001. Current assets at December 31, 2001 totaled $1,473,871, and current liabilities from continuing operations were $1,657,856. Stockholders' equity (deficiency) decreased to ($2,435,982) at December 31, 2001 from $2,898,089 at March 31, 2001 due primarily to the increase in accumulated deficit as a result the net loss of $9,951,140 for the nine months ended December 31, 2001. Other changes in stockholders' equity (deficiency) during the period were a $1,800,000 increase related to the issuance of 12,132,865 shares of common stock in three equity line transactions, a $704,334 increase related to conversions of a secured convertible note into 4,360.081 shares of common stock, a $3,000,000 increase related to the conversion of the UTTC series KW convertible preferred stock into 18,489,274 shares of common stock, a decrease of $109,437 in issuance costs related to the equity line, and a decrease of $747,809 related to the accrued premium on the series F preferred stock, which was exchanged for a secured convertible note on July 10, 2001. The premium was included in the principal amount of the note and reclassified from additional paid-in-capital to long-term liabilities at the time of the exchange. Should Ashton's securities purchase agreement with Optimark Innovations not close, Ashton has indicated that the Company would not have access to the capital or intellectual property being sought through this transaction. Without such additional capital, it will not have sufficient financial resources nor access to alternative resources that would permit continued business operations. Accordingly, the Company has said it would face the imminent and likely potential for bankruptcy or liquidation. The Ashton Technology Group, Inc., was formed as a Delaware corporation in 1994. It is an eCommerce company that develops and operates electronic trading and intelligent matching systems for the global financial securities industry. It develops and operates alternative trading systems, or ATSs. It is in the business of providing equity trading services to exchanges, institutional investors and broker-dealers in the U.S. and internationally. It enables these market participants to trade in an electronic global trading environment that provides large order size, absolute anonymity, no market impact and low transaction fees. The services offered by the Company compete with services offered by brokerage firms and with providers of electronic trading and trade order management systems. Its eVWAP also competes with various national and regional securities exchanges and execution facilities such as ATSs and electronic communication networks, or ECNs. ATLAS AIR: Pilots & Engineers Reject Proposed Labor Agreement ------------------------------------------------------------- DebtTraders reports Wednesday that Atlas Air pilots and engineers have rejected a tentative labor agreement reached with the Company on January 25. Further talks are expected to resume early next month. In addition, the report says that the Company recently reported a fourth quarter loss of $8.1 million, which included aircraft impairment charges and U.S. government grants. The Company had EBITDAR of $79.7 million for the quarter. However, Atlas Air's total block hours fell 18% to 37,488. The Company took a $44.9 million impairment charge on six aircraft that Atlas had previously parked. DebtTraders analysts Daniel Fan, CFA, and Blythe Berselli, CFA, advise that Atlas Air's 9.25% bonds due 2008 was last quoted at a price of 84. For real-time bond pricing, go to http://www.debttraders.com/price.cfm?dt_sec_ticker=ATLAS BALANCED CARE: Meditrust Will Acquire 12 Facilities for $43MM ------------------------------------------------------------- On February 6, 2002, Balanced Care Corporation, certain subsidiaries of the Company, IPC Advisors S.a.r.l., Meditrust Acquisition Corporation II LLC and La Quinta TRS II, Inc. entered into an Option, Settlement and Release Agreement. Under the Option Agreement, (i) Meditrust granted an option to IPC to acquire the real estate and improvements of 12 assisted living facilities for an aggregate purchase price of $43,000,000, which is currently leased from Meditrust by 11 third party lessees and one wholly-owned subsidiary of the Company pursuant to individual Facility Lease Agreements, (ii) La Quinta agreed to dismiss the "Pending Litigation" against the Company and IPC, and (iii) the Company, IPC, Meditrust and La Quinta agreed (a) to release each other from certain claims as more specifically set forth in the Option Agreement and (b) not to commence or otherwise participate in any suit or other proceeding adverse to the other party in connection with the matters covered by the respective Releases. In consideration for the grant of the Option, the dismissal of the Pending Litigation, and the exchange of the Releases and the Covenants-Not-To-Sue, among other things, IPC paid $13,000,000 to Meditrust. The Option Payment is non-refundable, subject to certain exceptions provided in the Option Agreement. If IPC exercises the Option and consummates the purchase of the Leased Property in accordance with the provisions of the Option Agreement, the Option Payment will be credited against the Purchase Price at Closing. The Option is exercisable by IPC until July 26, 2002, and closing must occur on or before August 5, 2002 (subject to extension as provided in the Option Agreement). Once exercised, the Option is irrevocable. IPC has the right to designate one or more nominees to take title to the Leased Property at Closing. The Closing and IPC's obligations under the Option Agreement are conditioned upon the satisfaction of certain conditions precedent unless waived by IPC. Similarly, Closing and Meditrust's obligations under the Option Agreement are conditioned upon the satisfaction of certain conditions precedent unless waived by Meditrust, including, without limitation, (i) the acquisition of the stock of the 3rd Party Lessees by Balanced Care Tenant (MT), Inc., a wholly owned subsidiary of the Company, (ii) the merger of the 3rd Party Lessees into Balanced Care Tenant (MT), Inc., and (iii) provided Closing on the Option has not yet occurred, simultaneously with consummation of the Stock Transfers and the Mergers, the amendment, restatement and consolidation of the Existing Leases into a Master Lease Agreement to be executed between Balanced Care Tenant (MT), Inc. and Meditrust for the lease of the Leased Property. In the event that, after IPC exercises the Option in accordance with the terms of the Option Agreement and all conditions precedent to the Closing are satisfied or waived, Meditrust fails to consummate the Closing, the sole remedy, at law or in equity, of IPC shall be, at IPC's option, to (i) institute an action for specific performance against Meditrust or (ii) receive a full refund of the Option Payment from Meditrust. In the event that, after IPC exercises the Option in accordance with the terms of the Option Agreement, IPC fails to consummate the Closing, Meditrust's sole remedy, at law or in equity, shall be to terminate the Option Agreement and retain the Option Payment. Meditrust has no right to institute an action for specific performance. As noted above, the Option Agreement contains certain Releases and Covenants-Not-To-Sue: - IPC/BCC Release and Covenant Not-To-Sue - In general, each of the Meditrust Parties (as defined in the Option Agreement) released the Released IPC/BCC Parties (as defined in the Option Agreement) from, and agreed not to commence or otherwise participate in any suit or other proceeding pertaining to, any claims relating to (i) that certain Promissory Note (as defined in the Option Agreement), (ii) that certain Option Agreement dated December 30, 1999, as amended, among the Company, IPC and New Meditrust Company, LLC, and (iii) that certain lawsuit styled La Quinta TRS II, Inc. v. Balanced Care Corporation, et al., in the Superior Court Department of the Trial Court of the Commonwealth of Massachusetts at Civil Action No. 01-2810C. - BCC Release and Covenant-Not-To-Sue - In general, Meditrust released the Released BCC Parties (as defined in the Option Agreement) from, and agreed not to commence or otherwise participate in any suit or other proceeding pertaining to, any claims relating to certain Existing Defaults (as defined in the Option Agreement), including without limitation, the Company's failure to (i) pay past due rent under the Existing Leases as more specifically set forth on Exhibit G to the Option Agreement, (ii) pay rent as the same comes due under the Existing Leases, and if applicable, the Master Lease, during the term of the Option, (iii) pay other payment obligations, and (iv) comply with certain financial and operational covenants. - Meditrust Release and Covenant-Not-To-Sue - In general, the IPC/BCC Parties (as defined in the Option Agreement) released the Released Meditrust Parties (as defined in the Option Agreement) from, and agreed not to commence or otherwise participate in any suit or other proceeding pertaining to, any claims relating to (i) the Promissory Note, (ii) the 1999 Option Agreement, (iii) the Existing Lease Documents (as defined in the Option Agreement), (iv) the Leased Property, (v) the Existing Indebtedness (as defined in the Option Agreement), and (vi) the Pending Litigation. The IPC/BCC Release, the BCC Release and the Covenant-Not-To-Sue granted by the Meditrust Parties are conditional and will be void and of no further force and effect upon the occurrence of certain conditions subsequent. In general, the Conditions Subsequent include (i) if the Company and/or IPC or any affiliate or other party claiming by or through any of them ever commences or otherwise participates in any suit or other proceeding against any Released Meditrust Party (as defined under the Option Agreement") as an adverse party or adverse witness relating to any of the matters covered by the Meditrust Release, (ii) the Option Payment is rendered void or is rescinded by operation of law or a final non-appealable court order, and (iii) the Meditrust Release is rendered void, is rescinded or adjudicated unenforceable by operation of law or a final non-appealable court order. The Meditrust Release and the Covenants-Not-To-Sue granted by the IPC/BCC Parties are unconditional; provided, however, IPC shall not be prohibited from commencing any action to enforce its rights and remedies under the Option Agreement, including a refund of the Option Payment. The company operates about 65 assisted living and skilled nursing facilities for middle and upper income seniors in 10 states. Its Outlook Pointe assisted living facilities offer 24- hour personal and health care services, including help with bathing, eating, and dressing. The Balanced Gold program provides services aimed at improving residents' cognitive, emotional, and physical well-being. Like many assisted-living providers, Balanced Care is having trouble paying its rent, due in part to an increase in supply that grew faster than demand. A Luxembourg-based investment firm owns more than 50% of the company. At June 30, 2001, Balanced Care's balance sheet showed a total shareholders' equity deficit of $9 million. BELL CANADA: Issues 4.7BB Shares as Part of Recapitalization ------------------------------------------------------------ Bell Canada International Inc., (Nasdaq:BCICF) (TSE:BI.) announced that it issued 4,718,290,245 common shares on February 15 pursuant to the recapitalization plan announced by BCI on December 3, 2001. The weighted average price of BCI shares for the 20-day trading period of January 14, 2002 to February 8, 2002 was $0.2888 per share. Upon the automatic exercise of the principal warrants issued to BCI shareholders who exercised their rights in the recently- completed rights offering of BCI, 2,988,986,201 common shares were issued at a price of $0.147288 per share, representing a 49% discount to the Weighted Average Price. In addition, 1,457,938,474 common shares were issued in payment of the principal amount of $400 million owing under BCI's 6.75% and 6.50% convertible debentures at a price of $0.27436 per share, representing a 5% discount to the Weighted Average Price, and 271,365,570 common shares were issued to BCE Inc., with respect to the conversion of the principal and interest of approximately $78 million owing under a convertible loan to BCI at a price of $0.2888 per share. BCE's percentage ownership interest in BCI is 62.2% following the issuance of these shares. The number of BCI common shares issued on February 15 does not reflect any shares that may be issued to American International Group, Inc. or any of its affiliates in satisfaction of its put right and pursuant to the exercise of the anti-dilutive secondary warrants which were issued to BCI shareholders who exercised their rights. BCI, through Telecom Americas, owns and operates 4 Brazilian B Band cellular companies serving more than 4.3 million subscribers in territories of Brazil with a population of approximately 60 million. BCI is a subsidiary of BCE Inc., Canada's largest communications company. BCI is listed on the Toronto Stock Exchange under the symbol BI and on the NASDAQ National Market under the symbol BCICF. Visit our Web site at http://www.bci.ca BRIDGE INFO: Court Approves Savvis Settlement Agreement ------------------------------------------------------- SAVVIS Communications Corporation provides Bridge Information Systems, Inc., and its debtor-affiliates with network services needed to deliver financial information services to their the customers. Kurt A. Mayr, Esq., at Cleary, Gottlieb, Steen & Hamilton, in New York, New York, relates that this relationship between the Debtors and SAVVIS supported the Debtors' global operations and involved numerous contracts and past agreements. It gave rise to claims asserted between the parties, including but not limited to claims relating to: (a) the Network Services Agreement, (b) a promissory note pursuant to which SAVVIS owes the Debtors approximately $23,000,000, and (c) various accounts receivable. In addition, Mr. Mayr continues, Savvis leased certain space from the Debtors and made improvements that gave rise to certain mechanics lien claims, which are subject of an adversary proceeding pending before the Court. Mr. Mayr reminds the Court the some of the issues between the Debtors and Savvis were resolved pursuant to the: (1) Agreement Regarding the Supplemental Terms of the Interim Savvis Financing, and (2) Sharing Agreement between and among Savvis, the Debtors, General Electric Capital Corporation, and the Debtors' secured lenders. But despite these agreements, Mr. Mayr notes that significant disputes remain to be resolved by the parties. Thus, the Debtors and SAVVIS have agreed and now seek the Court's approval of a Settlement Agreement, which is a final and global settlement of all outstanding issues between them. The salient terms of the Settlement Agreement provides that: (i) in lieu of the issuance of SAVVIS Preferred Stock required by the Supplemental Agreement, the Agreeing Parties shall setoff the monetary obligations owing between each other which shall result in a net cash payment to the Debtors of $11,850,000, upon the closing of SAVVIS' currently contemplated refinancing; (ii) SAVVIS shall assign to the Debtors all remaining claims held by SAVVIS against the Debtors or its affiliates outside the United States other than Canada; (iii) at the closing, SAVVIS shall make an additional payment of approximately $900,000 to the Debtors, as required by the Sharing Agreement; (iv) the Agreeing Parties shall work to resolve the Mechanics Liens Claims pending in the adversary proceeding pursuant to certain agreed upon parameters; (v) the Debtors shall assign to SAVVIS, at no additional charge, the smart rack patent and set top box patent and any interest the Debtors have in any plans, drawings and warranties respecting the Data Center; (vi) the Debtors shall have one board representative on the SAVVIS Board of Directors for a term ending on: (a) the earlier of 3 years; (b) the date upon which the Debtors' ownership of SAVVIS' outstanding common stock falls below 20%; or (c) the date upon which the SAVVIS shares held by the Debtors are distributed to its creditors. (vii) the Agreeing Parties' obligations and liabilities to one another arising up to and including the date of the Agreement shall be limited to those obligations specifically set forth in the Agreement and the Agreeing Parties mutually release one another from all other claims and liabilities; and, (viii) SAVVIS shall support Bankruptcy Court approval of the Debtors' disclosure statement and plan of liquidation and shall not object to the rejection by the Debtors of any executory contracts and unexpired leases between the Debtors and SAVVIS. SAVVIS has further agreed to waive, release and forever discharge the Debtors from any claims including any claim for indemnity or contribution regarding any claims of third parties, resulting from the rejection of any executory contract or unexpired lease between the Agreeing Parties. According to Mr. Mayr, the Lenders' agent supports the Agreement. Mr. Mayr further asserts that the Agreement serves the best interests of the Debtors' estates and their creditors. "The Agreement globally resolves a wide range of issues between the Agreeing Parties, which, if litigated, would likely consume significant estate resources and involve lengthy litigation with an unpredictable outcome," Mr. Mayr adds. Moreover, the Agreement provides that SAVVIS will support confirmation of the Plan, which serves the interests of all parties because it will facilitate the Debtors' timely emergence from chapter 11. The Agreement further benefits unsecured creditors by resolving significant potential unsecured claims and administrative claims that SAVVIS might have asserted. "The payments to be received from SAVVIS under the Agreement shall also reduce the Lenders' deficiency claims against the Debtors thus, increasing unsecured creditors' potential recoveries," Mr. Mayr says. Considering the merits of this Settlement, Judge McDonald gave it his stamp of approval. (Bridge Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURLINGTON INDUSTRIES: Wants More Time to Remove Civil Actions -------------------------------------------------------------- As of the Petition Date, Burlington Industries, Inc., and its debtor-affiliates were parties to numerous civil actions pending before multiple courts and tribunals. By this motion, the Debtors ask the Court for an order extending their time to remove these actions from those remote venues to the District of Delaware to the later of: (a) June 13, 2002, or (b) 30 days after the entry of an order terminating the automatic stay with respect to the particular Action sought to be removed. To determine whether to remove any particular Action, Patrick M. Leathem, Esq., Richards, Layton & Finger PA, in Wilmington, Delaware, explains that the Debtors must examine and evaluate a variety of issues. "At this early state of their chapter 11 cases, the Debtors have not yet had an opportunity to evaluate these matters and determine which of the Actions they will seek to remove," Mr. Leathem informs Judge Newsome. As a result of the nature and complexity of these chapter 11 cases, Mr. Leathem reports that the Debtors have devoted substantially all of their time and resources since the Petition Date to: -- completing a smooth transition to operations in chapter 11, -- engaging in discussions with key constituencies, and -- fulfilling their various administrative and reporting obligations arising in connection with the commencement of these cases. For these reasons, Mr. Leathem explains, the Debtors have not had sufficient time to analyze each of the Actions. Accordingly, the Debtors assert that an extension of the time period during which they may determine which Actions should be removed is warranted. Mr. Leathem assures the Court that such an extension will not prejudice the rights of the adverse parties in the Actions. If the Debtors remove any Action to federal court, Mr. Leathem says, the affected Adverse Party will retain its right to seek remand of the removed Action back to state court. By application of Local Bankruptcy Rule 9006-2, the current deadline is automatically extended through the February 27, 2002, hearing date when the Court will consider this Motion. (Burlington Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) CALICO COMMERCE: Delays Form 10-Q Filing Due to PeopleSoft Deal --------------------------------------------------------------- For the following reasons, Calico Commerce, Inc., delayed in filing its most current financial information with the SEC. The Company recently completed a sale of substantially all of its intellectual property and operating assets to PeopleSoft, Inc. The negotiation of this sale required a significant commitment of time and effort on the part of the Company's management personnel and finance staff, particularly its Chief Financial Officer. This commitment left Calico Commerce with insufficient management resources to complete the necessary forms by February 14, 2002 without unreasonable effort and/or expense. Calico Commerce, Inc. (OTCBB:CLIC) is a provider of interactive selling software for organizations selling complex products or services. CAPTAIN D'S SEAFOOD: S&P Affirms Junk Rating on Planned Merger -------------------------------------------------------------- Standard & Poor's, Feb. 20 Standard & Poor's said today it affirmed its triple-'C'-plus corporate credit rating on Captain D's Seafood Restaurants after Shoney's Inc., the parent of Captain D's, announced that it will merge with an affiliate of Lone Star Funds and that Lone Star has acquired the $135 million bank loan of Captain D's from the existing bank group. At the same time, Standard & Poor's removed the ratings from CreditWatch. The outlook is negative. The bank loan was scheduled to mature on March 31, 2002, but has been extended until Oct. 31, 2002. The final agreement, which is subject to approval by Shoney's shareholders, is expected to close in the second quarter of 2002. The rating reflects the potential that the deal may not close thereby leaving the risk of default if Captain D's is unable to refinance its $135 million bank loan. CHIQUITA BRANDS: Liquidation Analysis Underpinning Amended Plan --------------------------------------------------------------- Chiquita Brands International, Inc., believes that the Plan is most beneficial to the creditors compare to the option of liquidating the Company. Under Chapter 7, Chiquita Brands International Senior Vice-President Robert W. Olson notes that unsecured creditors and interest holders are paid from available assets generally in the this descending order: (1) Secured creditors -to the extent of the value of their collateral; (2) Priority creditors; (3) Unsecured creditors; (4) Debt expressly subordinated by its terms or by order of the Bankruptcy Court; then (5) Equity Interest Holders. In fact, fewer Equity Interests Holders will have a chance to recover their claims compared to when the Plan is approved as shown in this comparison: Summary of Projected Recoveries ------------------------------- Class No. Under the Plan Under Chapter 7 --------- -------------- --------------- Class 1 100% 100% Class 2 100% 100% Class 3 100% 43.2% Class 4A 87.4% 43.2% Class 4B 46.5% 0% Class 5 $16,000,000 0% Class 6 $36,900,000 0% Class 7 $0 0% Mr. Olson states that the value of any distributions in a Chapter 7 case would be less than the value of distributions under the Plan because, among other reasons, such distributions in a chapter 7 case may not occur for a longer period of time thereby reducing the present value of such distributions. In this regard, Mr. Olson says, it is possible that distribution of the proceeds of a Liquidation could be delayed for a period in order for a Chapter 7 trustee and its professionals to become knowledgeable about the Bankruptcy Case and the Claims against Debtor. In addition, Mr. Olson continues, the proceeds received in a Chapter 7 liquidation are likely to be significantly discounted due to the distressed nature of the sale, and the fees and expenses of a Chapter 7 trustee would likely exceed those of the Estate Representative, thereby further reducing Cash available for distribution. Accordingly, Mr. Olson says, the decrease in the amount of debt on Debtor's balance sheet will substantially reduce Debtor's interest expense, improving its cash flow. Based on the terms of the Plan, at emergence Reorganized Debtor will have $250,000,000 of debt in contrast to more than $950,000,000 of debt and accrued interest prior to the restructuring. Furthermore, Mr. Olson adds, the Projections on the feasibility of the Plan indicate that Reorganized Debtor should have sufficient cash flow to pay and service its debt obligations, including the New Notes, and to fund its operations. Thus, the Debtor concludes that the Plan complies with the financial feasibility standard of section 1129(a)(11) of the Bankruptcy Code. (Chiquita Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) CLASSIC COMMS: Committee Brings-in Walsh Monzack as Co-Counsel -------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the chapter 11 cases of Classic Communications, Inc. asks the U.S. Bankruptcy Court for the District of Delaware to authorize its retention and employment of Walsh, Monzack and Monaco, P.A. nunc pro tunc as of November 28, 2001 as their co-counsel. Judging from WM&M attorneys' experience on these matters, the Committee is confident that WM&M is qualified to represent them in these Chapter 11 cases. At the Committee's request, WM&M has rendered services since November 28, 2001, the date the Committee selected WM&M to represent them as their co-counsel. Specifically, WM&M will: a) generally attend hearing pertaining to the cases; b) periodically review applications and motions filed in connection with the cases; c) communicate with OH&S the Committee's lead counsel; d) communicate with and advise the Committee and periodically attend meetings of the Committee, as necessary; e) provide expertise on the substantive law of the State of Delaware and procedural rules and regulations applicable to these cases; and f) perform all other legal services for the Committee, as needed. The rates applicable to the principal attorneys and paralegal proposed to represent the Committee are: a) Francis A. Monaco, Jr. $325 per hour b) Joseph J. Bodnar $255 per hour c) Kevin J. Mangan $220 per hour d) Heidi Sasso $100 per hour To ensure that there is no unnecessary duplication of services, WM&M intends to work closely with lead counsel to the Committee. Classic Communications, Inc., a cable operator focused on non- metropolitan markets in the United States, filed for Chapter 11 petition on November 13, 2001 along with its subsidiaries. Brendan Linehan Shannon, Esq. at Young, Conaway, Stargatt & Taylor represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $711,346,000 in total assets and $641,869,000 in total debts. CONOCO CANADA: Commences Consent Solicitation for Senior Notes -------------------------------------------------------------- Conoco Canada Resources Limited, a subsidiary of Conoco Inc. (NYSE: COC), announced that it has commenced a consent solicitation with respect to its US$8.1 million in outstanding 8.375 percent senior notes due 2005, its US$3.9 million in outstanding 8.35 percent senior notes due 2006 and its US$8.2 million in outstanding 8.25 percent senior notes due 2017 to eliminate its financial reporting obligations under these notes. Conoco Inc. has irrevocably guaranteed the Corporation's payment obligations on the U.S. Notes and has agreed to provide the trustee for the notes copies of Conoco's required U.S. SEC filings. The Corporation also is providing a redemption notice to the holders of the remaining US$375,000 outstanding 7.125 percent notes due 2011. Substantially all of the original principal amount of the U.S. Notes was repaid by the Corporation by way of tender offer completed in September 2001. If the requisite noteholder consents are obtained, the U.S. Notes and the trust indentures under which they were issued will be amended to eliminate the contractual requirement of the Corporation to file periodic reports with the Alberta Securities Commission or provide equivalent financial information to the noteholders. The consent solicitation is scheduled to expire on March 1, 2002. The Corporation is effecting these transactions, plus the redemption of its preferred shares and medium term notes as announced on Feb. 14, 2002, in order to simplify its capital structure and eliminate its public reporting obligations along with the costs associated with reporting. Questions concerning the terms of the consent solicitation may be directed to the solicitation agent for the consent solicitation, Credit Suisse First Boston Corporation (CSFB), at (800) 820-1653 or (212) 325-2537. Questions concerning the procedures for consenting or requests for the Consent Solicitation Statement may be directed to the Information Agent, Mellon Investor Services LLC, at (212) 269- 5550 or (800) 431-9643. Conoco Canada Resources Limited is a Canadian based exploration and production company with primary operations in Western Canada, Indonesia, the Netherlands and Ecuador. Conoco Inc., is a major, integrated energy company active in more than 40 countries. CONTINENTAL AIRLINES: Vanguard Windsor Holds 8.96% Equity Stake --------------------------------------------------------------- Vanguard Windsor Funds-Windsor Fund beneficially owns 8.96% of the outstanding common stock of Continental Airlines. The Funds hold sole power to vote, and shared power to dispose of the 4,964,700 shares beneficially held. Continental Airlines serves more than 135 US cities and more than 95 cities. The #5 US carrier (trailing United, American, Delta, and Northwest) has hubs in Cleveland, Houston, and Newark, New Jersey. Continental Micronesia serves the western Pacific from Guam, and regional carrier Continental Express serves 70 US cities. Continental code-shares with airlines such as Air France, Alitalia, and Virgin Atlantic. It has a major alliance with Northwest Airlines, which includes code-sharing as well as shared frequent-flyer programs. In the wake of terrorist attacks in 2001, the airline is paring down flights and laying off more than 21% of its workforce. DebtTraders reports that Continental Airlines' 8% bonds due 2005 (CAL2) are trading between 88 and 90. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CAL2for real-time bond pricing. ENRON CORP: Continental Casualty Seeks Appointment of Examiner -------------------------------------------------------------- As previously reported, Continental Casualty Company, National Fire Insurance Company and Federal Insurance Company -- as well as certain other sureties -- issued various surety bonds to Enron North America Corporation and Enron Natural Gas Marketing Corporation prior to the Petition Date. David S. Tannenbaum, Esq., at Duane Morris LLP, in New York, tells the Court that the face amount of the bonds issued by the Sureties on behalf of Enron Natural Gas is over $1,200,000,000. According to Mr. Tannenbaum, Enron Corporation guaranteed the obligations of Enron Natural Gas and Enron North America pursuant to certain General Agreements of Indemnity with the Sureties. Mr. Tannenbaum relates that Enron Natural Gas and the American Public Energy Agency entered into a gas purchase agreement that calls for Enron Natural Gas to supply natural gas directly to various delivery points on behalf of American Public's customers from April 1999 to April 2011. American Public paid 100% of the contract price -- $300,000,000 -- to Enron Natural Gas. Accordingly, the Sureties issued bonds on behalf of Enron Natural Gas and in favor of American Public. But then, Mr. Tannenbaum notes, Enron Natural Gas defaulted on its obligations under the Gas Purchase Agreement. This led American Public to terminate the Gas Purchase Agreement and make a demand on the Sureties for a "Termination Payment" in the amount of $251,755,201 by January 16, 2002. Thus, Mr. Tannenbaum says, Federal Insurance paid $126,000,000 to American Public on January 16, 2002 -- representing its 50% allocation of the Termination Payment. The other half was paid by American Home Assurance Company, Mr. Tannenbaum explains. As a result of Federal Insurance's payment, Mr. Tannenbaum asserts that the Sureties hold fixed, liquidated and non- contingent claims against Enron Natural Gas in the corresponding amount of $126,000,000. Mr. Tannenbaum reminds the Court that the Sureties also previously issued bonds on behalf of Enron Natural Gas in favor of Mahonia Natural Gas Limited, which relate to certain oil and natural gas forward sales contracts. All in all, Mr. Tannenbaum informs Judge Gonzales, the Sureties currently hold: (i) fixed, liquidated and non-contingent claims against Enron Corporation in excess of $252,000,000 as a result of the payments on the American Public and other miscellaneous bonds; and (ii) contingent claims against Enron Corporation in excess of $2,000,000,000 as a result of the issuance of the Mahonia bonds. Mr. Tannenbaum points out that Enron Natural Gas allegedly has limited assets of $79,000 and limited creditors. All funds which Enron Natural Gas received pre-petition were allegedly "upstreamed" Enron North America, Mr. Tannenbaum reports. Considering the Sureties' fixed, liquidated, unsecured claims against Enron Natural Gas, Mr. Tannenbaum asserts that the Court should appoint an examiner. Mr. Tannenbaum adds that the immense disparity between Enron Natural Gas' stated assets of $79,000 and its liabilities of $1,300,000,000 is in itself noteworthy. "What happened to the American Public funds of $300,000,000?" Mr. Tannenbaum asks. According to Mr. Tannenbaum, these questions cannot be answered without the assistance of an examiner to investigate this and the other likely irregularities in Enron Natural Gas' pre-petition activities. "Even assuming that Enron Natural Gas expended a portion of the American Public Funds to enter into other contracts or for other activities, more than $79,000 should remain from a prepayment of $300,000,000 made less than three years ago!" Mr. Tannenbaum contends. Clearly, the Sureties insist that the best interests of the creditors, equity security holders, and other interests of Enron Natural Gas' estate mandate the appointment of an examiner. (Enron Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON CORP: James Derrick Retires as Exec. VP & General Counsel --------------------------------------------------------------- In connection with the restructuring and reorganization of Enron Corp. (OTC: ENRNQ), the company announced that James V. Derrick, Jr., executive vice president and general counsel, will retire from Enron, effective March 1, 2002. Derrick, 57, has served the company since June 1991. Additionally, the Enron Corp. Board of Directors announced that Robert H. Walls, Jr., currently deputy general counsel, has been named Derrick's successor. To ensure an orderly transition, Walls will serve as acting general counsel, effective immediately. "I am profoundly grateful to have been afforded the privilege of serving for many years as a member of a legal team comprised of truly outstanding women and men for whom I have the deepest respect and the greatest admiration," Derrick said. "I am extremely pleased that Rob Walls has been chosen to succeed me. Rob is an individual of great integrity, a superb leader, and a very able lawyer. I look forward to working closely with him to effect a seamless transition of responsibilities." Enron markets and delivers energy products to customers around the world. Enron's Internet address is http://www.enron.com DebtTraders reports that Enron Corp.'s 9.125% bonds due 2003 (ENRON2) are trading between 16 and 18.5. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON2for real-time bond pricing. ENRON: Court Lifts Stay for Severed Employees' Suits to Proceed --------------------------------------------------------------- Attorneys for the Severed Enron Employees Coalition (SEEC) applauded Wednesday's decision by a bankruptcy judge in New York to allow lawsuits pending in federal court in Houston to move forward. Those claims were placed on hold when Enron (OTC: ENRNQ) filed for Chapter 11 bankruptcy protection. Such a "stay" is automatic in the case of bankruptcy filings. Attorneys for SEEC had filed suit against Enron's directors and administrators of its 401K plan, but the stay had prevented them from naming Enron itself. But attorneys representing other Houston federal court plaintiffs had asked U.S. Bankruptcy Judge Arthur Gonzalez to consider lifting the stay on the Houston cases. On Wednesday, Judge Gonzalez agreed to do so, following a hearing on the motion. In court Wednesday, Martin Dies, an attorney for SEEC, argued in favor of lifting the stay. Mr. Dies told the court that the Enron situation has created an extraordinary hardship for former employees, and that it was in their interest to move forward with the litigation. Judge Gonzalez ordered for the stay to be lifted in 120 days, or on Friday, June 21, subject to Enron filing a motion prior to that date to show cause why the stay should not be lifted. As soon as the federal judge overseeing the Houston case implements a trial plan, Judge Gonzalez also ordered Enron to begin making available all documents it has produced to Congress and the federal regulatory agencies for discovery to the parties who made the motion to lift the stay. Richard Hile, one of the attorneys representing SEEC, applauded the ruling and said SEEC expects to amend its lawsuit against Enron's directors to include Enron itself. "We anticipate filing an amended complaint naming Enron as an additional defendant after the court enters its written order in this matter," says Hile. The SEEC legal team is made up of the following attorneys and law firms: George Whittenburg, Whittenburg Whittenburg & Schachter, P.C.; Randy McClanahan and Scott Clearman, McClanahan & Clearman, L.L.P.; Martin Dies, III and Richard Hile, Dies & Hile, L.L.P.; Broadus Spivey, Spivey & Ainsworth, P.C.; and Scott Baena, Bilzin Sumberg Dunn Baena Price & Axelrod LLP. ENRON WIND: Case Summary & Largest Unsecured Creditor ----------------------------------------------------- Lead Debtor: Enron Wind Corp. 13000 Jameson Road P.O. Box 1910 Tehachapi, CA 93581 Bankruptcy Case No.: 02-10743 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Enron Wind Systems, Inc. 02-10747 Enron Wind Energy Systems Corp. 02-10748 Enron Wind Maintenance Corp. 02-10751 Enron Wind Constructors Corp. 02-10755 EREC Subsidiary I, LLC 02-10757 EREC Subsidiary II, LLC 02-10760 EREC Subsidiary III, LLC 02-10761 EREC Subsidiary IV, LLC 02-10764 EREC Subsidiary V, LLC 02-10766 Type of Business: To Manufacture and Sell Wind Turbines and Develop Independent Power Projects Utilizing Wind Turbines Chapter 11 Petition Date: February 20, 2002 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzales Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 212-310-8602 Fax: 212-310-8007 Melanie Gray, Esq. Weil, Gotshal & Manges LLP 700 Louisiana, Suite 1600 Houston, Texas 77002 Tel: (713} 546-5000 Total Assets: $292,018,954 Total Debts: $293,326,069 Debtor's Largest Unsecured Creditor: Entity Nature Of Claim Claim Amount ------ --------------- ------------ SG-J, Inc. Contract Obligation Approx. C/o General Electric $9,000,000 Capital Corporation 120 Long Ridge Road Stamford, Connecticut 06927-1560 ETOYS INC: Will Delay Financial Statements Filing with SEC ---------------------------------------------------------- eToys Inc. will not be filing its required financial statements with the Securities & Exchange Commission on a timely basis because the Company has advised the SEC that on March 7, 2001, the Company filed a petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware, ceased all operations and terminated all its employees except for certain employees needed to manage the orderly liquidation of its assets. The Company is currently managing its assets as a debtor in possession and is in the process of liquidating its assets for the benefit of its estate and creditors. The Company anticipates filing a plan of liquidation with the Bankruptcy Court calling for the disposition of its remaining assets and distributing all of the proceeds therefrom to its creditors. There is no possibility that any net liquidation proceeds will be available for distribution to the Company's stockholders. eToys indicates that it will endeavor to file its Quarterly Report for the quarter ending December 31, 2001 within a reasonable period of time after it is able to file its Annual Report for the fiscal year ended March 31, 2001, its Quarterly Report for the quarter ended June 30, 2001 and its Quarterly Report for the quarter ended September 30, 2001, taking into account the limited human resources currently available to the Company. However, to date eToys has not closed its books for the quarters ended June 30, 2001, September 30, 2001 and December 31, 2001 or for the fiscal year ended March 31, 2001. Until such time as the Company is able to file such quarterly reports and annual report, the Company intends to file with the Securities and Exchange Commission under cover of Current Reports, copies of the monthly reports that are required to be filed by it with the United States Trustee pursuant to the United States Trustee's "Operating Guidelines and Financial Reporting Requirements." eToys, Inc., now known as EBC I Inc, is a web-based toy retailer based in Los Angeles, California. The Company filed for Chapter 11 Petition on March 7, 2001 in the U.S. Bankruptcy Court for the District of Delaware. Robert J. Dehney, at Morris, Nichols, Arsht & Tunnell and Howard Steinberg at Irell & Manella represents the Debtors in their restructuring efforts. When the company filed for protection from its creditors, it listed $416,932,000 in assets and $285,018,000 in debt. EXODUS COMMS: Seeks Approval of Stipulation with Phoenix Leasing ---------------------------------------------------------------- Exodus Communications, Inc., and its debtor-affiliates ask the Court for approval of a stipulation and agreement with Phoenix Leasing Incorporated to allow the transfer of leased equipment to Digital Island. John P. Sheahan, Esq., at Skadden Arps Slate Meagher & Flom LLP in Wilmington, Delaware, informs the Court that prior to the Petition Date, Service Metrics Inc. and Phoenix entered into a Master Equipment Lease Agreement No. 6233 and certain attached schedules. The Debtors asserted that the Phoenix Lease is not a true lease, but a capital lease or a disguised financing arrangement. Phoenix does not dispute the characterization of its lease and has filed Uniform Commercial Code Financing Statements to perfect a first priority security interest in the Equipment. The salient terms of the stipulation are: A. Subject to the terms and conditions of this Stipulation and of the Sale Order, Phoenix consents to the sale of the Phoenix Equipment pursuant to the Agreement free and clear of all claims, liens and security and other interests of Phoenix therein; B. At the Closing, the Debtors shall deposit the sum of $1,000,000.00 out of the Cash Consideration into a segregated, interest-bearing deposit account with a federally-insured depositary institution approved to hold funds of a Debtor's Bankruptcy estate in the District of Delaware. The set aside account shall be titled in such a manner as to reflect that it contains the Cash Consideration attributable, in whole or in part, to the Phoenix Equipment; C. Upon the deposit of the set-aside amount into the account, Phoenix shall have a fully perfected security interest in such account in the same priority and to the same extent as the security interests of Phoenix in the Phoenix Equipment, and such security interest in such account shall be fully perfected without further act of any party, including without the necessity of the entry of Phoenix and the Debtors into a security agreement or a deposit account control agreement with respect thereto; D. As soon as practicable after the deposit of the set-aside amount into the account, Service Metric shall notify counsel to Phoenix in writing of the name and location of the depositary and of the title and number of such account. Such depository is authorized and instructed hereby to verify such deposit and such information to Phoenix on its request; E. The Debtors shall not commingle in the account with the set-aside amount funds subject to the security interests or liens of any other party; F. Phoenix and the Debtors shall attempt within the 45 days (the following the Closing to agree on the value, on a going concern basis, of the Phoenix Equipment as of the Petition Date and the validity and priority of the security interests of Phoenix therein as of the Petition Date as valid and first priority; G. The Debtors shall as soon as practicable after the Closing notify counsel to Phoenix in writing of the date of the Closing; H. If Phoenix and the Debtors are unable within the Attempted Resolution Period to agree on both the Equipment Value and the Security Interest Matters, either Phoenix or the Debtors may bring before the Court on regular notice a motion to determine the same to the extent there has been no agreement thereon. Prior to the hearing on any such motion, Phoenix and the Debtors may present documentary and testimonial evidence, including the opinions of expert appraisers, in support of or in opposition to such motion; H. As soon as is practicable after either the agreement of Phoenix and the Debtors on the Equipment Value and the Security Interest Matters or the entry of a Final Order of the Court determining such of those on which the Debtors and Phoenix had not been able to agree, the Debtors shall pay to Phoenix the lesser of the Equipment Value determined as set forth above and the Set-Aside Amount to the extent that Phoenix had a valid, first priority security interest in the Phoenix Equipment as of the Petition Date' by a federal funds wire transfer under such transfer instructions as Phoenix may give in writing to the Debtors' counsel; I. The maximum amount of the secured claim of Phoenix against Service in respect of the Phoenix Lease and the Phoenix Equipment shall be $1,000,000. Any amounts due Phoenix by Service in respect of the Phoenix Lease and the Phoenix Equipment in excess of the lesser of the Equipment value determined as set forth' above and Set-Aside Amount shall be an allowed unsecured claim of Phoenix against Service in the Case; (Exodus Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) FEDERAL-MOGUL: Court Okays Bayard as Committee's Co-Counsel ----------------------------------------------------------- The Official Committee of Unsecured Creditors of Federal-Mogul Corporation, and its debtor-affiliates obtained Court authority to employ and retain The Bayard Firm as its co-counsel nunc pro tunc to October 23, 2001, in the Debtors' chapter 11 cases. The services Bayard has rendered and may be required to render for the Committee include, without limitation: A. providing legal advice with respect to its powers and duties as an official committee appointed under bankruptcy Code section 1102; 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 matter relevant to the case or to the formulation of a plan of reorganization or liquidation; C. preparing on behalf of the Creditors Committee necessary applications, motions, answers, orders, reports 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 Creditors Committee in connection with these chapter 11 cases. Bayard will be compensated on a hourly basis, plus reimbursement of the actual and necessary expenses that Bayard incurs, in accordance with the ordinary and customary rate which are in effect on the date the services are rendered. The primary attorneys and paralegals expected to represent the Committee, and their respective hourly rates are: Charlene D. Davis $375 per hour Ashley B. Stitzer $250 per hour Eric M. Sutty $225 per hour Heidi Snyder (paralegal) $125 per hour In addition, other attorneys and paralegals will render services to the Committee as needed, whose current hourly rates are: Directors $300 to $415 per hour Associates $175 to $260 per hour Paralegals $115 to $125 per hour Charlene D. Davis, a Director of The Bayard Firm, relates that neither Bayard nor any of its members, counsel or associates has had or presently has any connection with the Debtors, their creditors, equity security holders, or any other party in interest, or their respective attorneys, accountants, the United States Trustee, or any person employed in the Office of the United States Trustee, in any matters relating to the Debtors or their estates, except that: A. Past or current clients of The Bayard Firm in matters unrelated to the Debtors' Chapter 11 Cases: 1. The Bank of New York - prior, unrelated representation of The Bank of New York in the capacity as indenture trustee in Centennial Coal bankruptcy case; prior representations of agents for bank syndicates in which The Bank of New York had an interest in unrelated cases. 2. Bank of America - prior and current representation of the Bank of America as agent bank or lender in several unrelated bankruptcy cases in the District of Delaware including the Owens Corning and the W.R. Grace bankruptcy cases. B. Past or current parties that The Bayard Firm may be currently, or in the past may have been, adverse to General Electric Capital Corporation and affiliates in matters unrelated to the Debtors' Chapter 11 Cases. Ms. Davis asserts that Bayard has not received any retainer from the Debtors, the Creditors Committee, or any other entity in this case. (Federal-Mogul Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) FRUIT OF THE LOOM: UST Asks Court to Disqualify Ernst & Young ------------------------------------------------------------- The United States Trustee reminds the Court that Fruit of the Loom Ltd., applied to retain E&Y as its Tax Accountants and Auditors. An Affidavit by James J. Doyle in support E&Y's Retention under an engagement letter agreement dated November 30, 1999, were attached to the E&Y Retention Application. That Engagement Agreement provides that E&Y will: (a) assist and advise the Debtors with respect to general tax matters, prepare Federal and state corporate income tax returns, review and evaluate proposed income tax assessments, represent the Debtors before taxing authorities, and provide additional tax services as requested by the Debtors; (b) audit the annual consolidated financial statements and review the quarterly filings for Fruit of the Loom, and other auditing services in connection therewith, as requested by the Debtors; (c) provide Internal Audit Services; and (d) consistent with the above, provide such other accounting, tax and consulting services as may be requested by the Debtors. The Court approved the Debtors' retention of E&Y under Sections 327 and 330 of the Bankruptcy Code. Around July 23, 2001, E&Y filed a supplement to the Doyle Affidavit. In the Supplemental Disclosure, Mr. Doyle stated that E&Y "serves as auditors for a publicly traded company that is potentially interested in purchasing certain assets from the Debtors." The Supplemental Disclosure organized into three categories the services E&Y was providing and would provide to the Potential Purchaser in the future upon the occurrence of certain events. The first category relates to services prior to submission of an offer. E&Y indicated that they would provide the following pre- offer services for the Potential Purchaser: (a) assisting [Potential Purchaser] in gathering information as necessary to compute the post-combination effective tax rate for pro formas and forward-looking information and (b) providing advice on tax structuring for the Proposed Transaction, including, but not limited to, (i) determining the optimum form of the Proposed Transaction (e.g., asset acquisition vs. stock purchase); (ii) determining whether the acquired interests and assets should be owned by an existing subsidiary, a newly formed subsidiary or some combination thereof; (iii) determining the country of domicile for any new entity to be formed to effect the Proposed Transaction, (iv) considering transfer pricing alternatives and structures; (v) identifying opportunities to use APB Opinion No. 23 indefinite investment criteria for financial reporting purposes and (vi) integration of target operations into existing state and local tax structures of the Potential Purchaser. Mr. McMahon reminds the Court that if the Potential Purchaser elected to submit an offer, E&Y indicated that it would provide the following services: (1) providing assistance in with [sic] the development of pro forma balance sheets and income statements to depict the acquisition as if it had occurred as of an earlier date (as required by Regulation S-X, Article 11 of the federal securities laws); (2) providing assistance in the preparation of financial sections of prospectus, placement memoranda, or other documents as may be necessary to secure financing and comply with the federal securities laws; (3) providing Ernst & Young's consent for the use of its report on the Potential Purchaser in various SEC filings and (d) providing comfort letters to underwriters and/or placement agents with respect to equity or debt financings. If the Potential Purchaser were the successful bidder and consummates the Proposed Transaction, E&Y indicated that it would provide the following services: (a) providing assistance in preparation of Form 8-K filing(s) with respect to the transaction; (b) providing assistance with allocation of the purchase price (not to include any valuation work); and (c) providing post-merger integration services. The UST has been advised that the Potential Purchaser is not the party currently seeking to purchase the Debtors' assets. As a result, it appears that E&Y has not rendered services within the scope of the Supplemental Disclosure. The UST is not certain whether the Potential Purchaser's expressions of interest in, and preliminary steps toward, a transaction rose to the level of an "offer" for purposes of the Supplemental Disclosure. However, the UST believes it is undisputed that, at a minimum, E&Y rendered pre-offer services to the Potential Purchaser within the scope of the Supplemental Disclosure. Therefore, Joseph J. McMahon, Jr., Esq., on behalf of Donald F. Walton, the Acting United States Trustee for Region 3, wants three things: (a) Ernst & Young partially disqualified; (b) Ernst & Young to disgorge compensation and reimbursement that has been paid; (c) prospective denial of compensation and reimbursement due to E&Y. Mr. McMahon informs Judge Walsh that Section 327 of the Bankruptcy Code requires that professionals retained under Section 327 "do not hold or represent an interest adverse to the estate." This Court is required to disapprove a proposed retention under section 327 "if there is an actual conflict of interest." Mr. McMahon argues that representation of both sides to a potential transaction is the classic example of a conflict of interest. E&Y rendered services to the Potential Purchaser, and stood ready to render additional services, which placed E&Y in a conflict of interest. E&Y was obligated to recommend to the buyer what would be in the buyer's best interest regarding, for instance, the optimal form of a transaction, while at the same time it remained obligated to render tax and accounting advice to the Debtors who are adverse parties in the transaction. As a result of E&Y's conflict and adverse interest, Mr. McMahon holds that this Court has the authority under sections 327(a) and 328(a) of the Bankruptcy Code to disqualify E&Y in whole or in part, and/or to order disallowance and disgorgement of any portion or all of the compensation sought by E&Y. Also, E&Y was in a conflict and represented an interest adverse to the estate for the duration of the period from when it was first approached by the Potential Purchaser to represent its interests in the matter, through the date when the Potential Purchaser withdrew any interest in a transaction with the Debtors or involving the Debtors' assets. Mr. McMahon suggests that E&Y should disgorge and/or not be paid any compensation from the Debtors during the time it was engaged in the conflicting representation of the Potential Purchaser. (Fruit of the Loom Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 609/392-0900) GT GROUP TELECOM: Slashing 350 Jobs to Save CDN$30MM Annually ------------------------------------------------------------- DebtTraders reports that GT Group Telecom is reducing its workforce by 28% or 350 people. The Company will take a one-time cash charge in the second quarter of C$20 million and expects the layoffs will result in annual savings of C$30 million. The Company also announced its goal of achieving positive EBITDA by the fourth quarter of 2002. DebtTraders analysts Daniel Fan, CFA, and Blythe Berselli, CFA, advise that GT Group Telecom's 13.25% bonds due 2010 was last quoted at a price of 7.5. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=GTGR10CAR1 GALEY & LORD: Seeks OK to Pay Prepetition Critical Vendor Claims ---------------------------------------------------------------- Galey & Lord, Inc., and its debtor-affiliates ask authority from the U.S. Bankruptcy Court for the Southern District of New York to pay pre-petition claims of critical vendors and service providers to avoid adverse effects on the Debtors' businesses. The Debtors seek discretionary authority to pay the Yarn Vendors, Dyes and Chemicals Vendors, Cotton Vendors and Warehousing and Freight Services Provider. The Debtors also seek authority to require that in order to receive payment on account of any pre-petition claim, each of the Critical Vendors must agree to supply goods/services to the Debtors during the course of these bankruptcy cases in their usual and customary fashion. Yarn Upon closing their Yarn facility, the Debtors negotiate and entered into a Yarn Contract to replace the lost production capacity. The Debtors are most concerned that without the authority to pay the Yarn Vendors' pre-petition claims, the Yarn Vendors would refuse to continue ship yarn. The Debtors also have favorable pricing terms with the other Yarn Vendors and believe that they would not be able to obtain similar rates and terms from any alternative yarn suppliers. This alone, would not materially affect the amount of payment available to other creditors. In addition to yarn, dyes and chemicals are also vital ingredients in the Debtors' on-going operations. Without these dyes and chemicals, much of the Debtors' business would cease. Dyes and Chemicals The two important chemical suppliers to the Debtors' businesses are Buffalo Color Corporation and Nano-Tex, LLC. Buffalo Color Corporation is the sole supplier of indigo, which the Debtors' are using in denim production. If the Debtors will have to replace Buffalo indigo, they would be forced to reformulate their entire product mix and may be forced to cease operations temporarily which is potentially devastating on the Debtors' denim business. Nano-Tex, LLC, on the other hand supplies proprietary chemicals (and trademark) vital to the Debtors' marketing and product strategies. The Debtors would suffer enormous harm if their production were disrupted by a failure to receive Nano-Tex's products. The Debtors estimate that as of the Petition Date, the aggregate outstanding amount of the Dye and Chemical Claims is approximately $3.4 million. Cotton Another primary and critical raw material used in the Debtors' business is cotton. The Debtors assert that they should maintain their current cotton supplier because cotton from alternative sources would introduce variations in product qualities, creating significant manufacturing inefficiencies and additional delays. In addition, the Debtors purchase cotton pursuant to the Southern Mill Rules, as adopted by the American Textile Manufacturers Institute, Inc. and the American Cotton Shippers Association. In accordance with the Southern Mill Rules, the Debtors pay for all cotton five days after delivery. As of the Petition Date, the only amounts owed for cotton relate to cotton delivered during the five or six days immediately before the Petition Date. The payment of such claims pursuant to this Motion would not deplete the Debtors' assets generally available to general, unsecured creditors. Warehousing and Freight Unless the Debtors continue to receive delivery of goods on a timely and uninterrupted basis, their manufacturing operations (including subcontractors) will shut down within a matter of days, causing irreparable damage to the Debtors' business and their reorganization efforts. The Debtors expect that the Shippers and the Warehousers will argue that they are entitled to possessory liens as of the Petition Date and will refuse to deliver or release such goods unless their claims are satisfied. The Debtors anticipate that as of the Petition Date, the aggregate amount of pre-petition claims of the Shippers and Warehousers is approximately $482,000. DebtTraders reports that Galey & Lord Inc.'s 9.125% bonds due 2008 (GNL1) are trading between 19 and 21. See http://www.debttraders.com/price.cfm?dt_sec_ticker=GNL1for real-time bond pricing. GALEY & LORD: Wants Schedule Filing Deadline Moved to April 22 -------------------------------------------------------------- Galey & Lord, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to extend their deadline -- through April 22, 2002 -- to file schedules of assets and liabilities, statements of financial affairs, and schedules of executory contracts and unexpired leases. The Debtors relate to the Court that with the critical matters which the Debtors' finance department is dealing, they have not yet had sufficient time to collect and assemble all of the requisite financial data and other information to complete all of the Schedules and Statements required by the Bankruptcy Rules -- and they won't within the next 15 days. The Debtors assure the Court that they have already begun and will continue to work diligently to compile the information necessary to complete the Schedules and Statements. They expect to complete the posting of the Debtors' books of account on the date requested. G&L, a leading global manufacturer of textiles for sportswear, including cotton casuals, denim, and corduroy, and is a major international manufacturer of workwear fabrics, filed for chapter 11 protection on February 19, 2002 together with its affiliates. Joel H. Levitin, Esq., Henry P. Baer, Jr., Esq., Anna C. Palazzolo, Esq. at Dechert represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $694,362,000 in liabilities. GLOBAL CROSSING: Schedule Filing Deadline Extended to May 13 ------------------------------------------------------------ Global Crossing Ltd., and its debtor-affiliates sought and obtained an extension through May 13, 2002, of the deadline by which they must file comprehensive schedules and statements, without prejudice to their ability to request additional time should it become necessary. Harvey R. Miller, Esq., at Weil Gotshal & Manges LLP in New York, tells the Court that due to the complexity and diversity of their operations, the Debtors anticipate that they will be unable to complete their Schedules and Statements in the time required under Bankruptcy Rule 1007(c). To prepare their required Schedules and Statements, the Debtors must compile information from books, records, and documents relating to a multitude of transactions at numerous locations throughout the world, which requires an enormous expenditure of time and effort on the part of the Debtors and their employees. Mr. Miller states that while the Debtors, with the help of their professional advisors, are mobilizing their employees to work diligently and expeditiously on the preparation of the Schedules and Statements, resources are strained. Unavoidably, the primary focus thus far has been on getting these large complex cases filed and reacting to the trauma of filing. In view of the amount of work entailed in completing the Schedules and Statements and the competing demands upon the Debtors' employees and professionals to assist in efforts to stabilize the business operations during the initial postpetition period, the Debtors will not be able to properly and accurately complete the Schedules and Statements within the 15 day time period imposed by the Bankruptcy Code. The Debtors submit that the vast amount of information that must be assembled and compiled, the multiple locations of such information, and the hundreds of employee and professional hours required for the completion of the Schedules and Statements all constitute good and sufficient cause for granting the extension of time requested herein. Mr. Miller adds that employee efforts during the initial postpetition period are critical and the Debtors must devote their time and attention to business operations in order to maximize the value of the Debtors' estates during the first critical months. (Global Crossing Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) GOLDMAN INDUSTRIAL: Taps Greenberg Taurig as Bankruptcy Counsel --------------------------------------------------------------- Goldman Industrial Group, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to retain and employ Greenberg Taurig, LLP as counsel for the Debtors in their chapter 11 cases. The Debtors relate to the Court that their choice of retaining Greenberg Taurig is based on the firm's extensive general experience and knowledge in the field of debtors' and creditors' rights and business reorganizations under chapter 11 of the Bankruptcy Code. The Debtors also considered the firm's expertise, experience and knowledge practicing before this Court, its proximity to the Court, and its ability to respond quickly to emergency hearings and other emergency matters in this Court which will be efficient and cost-effective for the Debtors' estates. The Debtors desire to retain Greenberg Taurig under a general, advance payment retainer because of the extensive legal services that may be required by the Debtors and the fact that the nature and extent of such services are not known at this time. The professional services Greenberg Taurig is expected to render to the Debtors include: a) providing legal advice with respect to the Debtors' powers and duties as debtors-in-possession in the continued operation of their business and management of their property; b) negotiating, drafting and pursuing confirmation of a plan of reorganization and approval of an accompanying disclosure statement; c) preparing on behalf of the Debtors necessary applications, motions, answers, orders, reports and other legal papers; d) appearing in Court and to protect the interest of the Debtors before the Court; e) assisting with any disposition the Debtors' assets, by sale or otherwise; and f) performing all other legal services for the Debtors, which may be necessary and proper in these proceedings. The Debtors propose that Greenberg Taurig will be compensated in an hourly basis plus reimbursement of expenses in accordance with the firm's ordinary and customary rates. The hourly rates applicable to the principal attorneys and paralegals are: Nancy A. Mitchell $450 per hour Jeffrey M. Wolf $375 per hour Christopher M. Cahill $325 per hour Todd L. Boudreau $300 per hour Laurie A. Krepto $300 per hour Victoria Watson Counihan $285 per hour Robert W. Lannan $275 per hour Yolanda Henderson $150 per hour Elizabeth Thomas $95 per hour Generally, Greenberg Taurig's hourly rates ranges in: Title Rate per Hour ----- ------------- Shareholders $350-$500 Associates $280-$340 Legal Assistants/Paralegal $85 -$170 Greenberg Taurig received an advance payment in the amount of $520,000, which will be applied to pre-petition fees. Goldman Industrial Group, Inc., with its affiliates, provide metalworking machinery to manufacturers; marketing and selling original equipment primarily to the aerospace, automotive, computer, defense, medical, farm, construction, energy, transportation and appliance industries. The Company filed for chapter 11 protection on February 14, 2002. Victoria W. Counihan at Greenberg Traurig, LLP represents the Debtors in their restructuring efforts. GOLDMAN INDUSTRIAL: Hires Morris Anderson as Financial Advisors --------------------------------------------------------------- Goldman Industrial Group, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to retain and employ Morris-Anderson & Associates, Ltd. as their financial and restructuring advisor during these chapter 11 cases effective as of the Petition Date. The Debtors claim that Morris Anderson is well suited to provide the type of services they require. The Debtors anticipate that Morris Anderson will act effectively to provide financial advisory and restructuring services as needed throughout the course of these Cases. The professional services that Morris- Anderson will render to the Debtors are: a) manage the day-to-day operations and businesses of the Debtors; b) manage the chapter 11 process for the Debtors and interface directly with chapter 11 counsel; c) supervise the banking relationships, cash management and budgeting process for the Debtor; d) supervise the management employees of the Debtor; e) make recommendations regarding the hiring and firing of management personnel of the Debtor; f) develop restructuring plan, including plans for restructuring assets and for sale divestitures, liquidations or disposition of assets of the Debtors; g) implement strategic direction and alternatives for the Debtors; and h) perform such other functions consistent with the Agreement and as directed by the Debtors On February 13, 2002, the Debtors provided a $150,000 retainer to Morris Anderson in connection with Anderson's services. With the Court's permission, Morris Anderson will reduce future professional fees payable by the Debtors. Morris Anderson shall receive a monthly fee of $148,000 during its engagement, pro- rated for any partial month, the Debtors proposed. Goldman Industrial Group, Inc., with its affiliates, provide metalworking machinery to manufacturers; marketing and selling original equipment primarily to the aerospace, automotive, computer, defense, medical, farm, construction, energy, transportation and appliance industries. The Company filed for chapter 11 protection on February 14, 2002. HARVARD SCIENTIFIC: 341 Meeting of Creditors Set for March 7 ------------------------------------------------------------ Harvard Scientific Corp. (OTC Bulletin Board: VGEN) announced that a 341 meeting of creditors will be held on March 7, 2002 with the court-appointed trustee to present its plan of reorganization and proposed merger with Smart Access, Inc. A spokesperson for the company stated, "We anticipate that the merger will move forward with the blessing of both the trustee and the court and are hopeful that the merger will be completed soon." Harvard Scientific Corp, (OTC Bulletin Board: VGEN) previously announced that it has entered into a letter of intent to acquire all issued and outstanding shares of Smart Access, Inc. an Airport Security Company founded in 1984 to provide state-of- the-art access control systems for Airports and Commercial Establishments. To date, Smart Access has installed access control systems for: Fort Wayne International Airport (Indiana), General Ford International Airport (Michigan), Bush Field Airport (Georgia), Pensacola Regional Airport (Florida), Nassau International Airport (Bahamas) Cherry Capital Airport (Michigan) as well as numerous manufacturing facilities, correctional facilities, chemical and industrial plants, hospitals, government facilities, utility companies, medical facilities, newspaper offices, police stations, courthouses, business offices, universities, banks and credit unions. More information about Smart Access can be found at http://www.smartaccess.com Smart Access designs and manufacturers both simple and complex micro controller based access and security systems for airports and commercial establishments. They are an industry leader in innovative electronic security products featuring fully integrated card access and computer based identification badging systems. Smart Access continues to lead the way in technology with their newly developed twelve-channel fiber optic multiplexer and digital, self-healing fiber optic modems. Their Access Control Manager (ACM) is a Multi user software, running in a Microsoft(R) Windows environment that offers complete control of access monitoring and response of alarms. The user- friendly system also provides a sophisticated computer-based photo identification badging system, as well as an integrated personnel manager that stores a photo of each individual, his/her employer and other pertinent information. HINES HORTICULTURE: Plan to Sell Unit Has S&P Watching B+ Rating ---------------------------------------------------------------- Standard & Poor's said that it placed its single-'B'-plus corporate credit rating on one of the largest North American suppliers of horticulture products, Hines Horticulture Inc., on CreditWatch with positive implications. This follows the company's announcement that it plans to sell its Canadian subsidiary, Sun Gro Horticulture Canada Ltd., and the business and assets of Sun Gro Horticulture Inc., to the Sun Gro Horticulture Income Fund, a newly established Canadian income fund. Total rated debt is about $425 million. Sun Gro Horticulture Income Fund has filed a preliminary prospectus for the initial public offering of units in the fund with the Canadian securities authorities. The net proceeds from the offering of units will be used by the fund to acquire the common shares of the Sun Gro subsidiaries from Hines Horticulture. "Standard and Poor's will monitor the situation and meet with management to discuss the impact of this transaction on Hines Horticulture's capital structure over the near term," said Standard & Poor's credit analyst Jayne Ross. Hines Horticulture is a supplier of a wide variety of horticulture products, with three operating divisions: color, nursery, and growing media products. HUBBARD HOLDING: 2 Subsidiaries File for Receivership in Canada --------------------------------------------------------------- Hubbard Holding Inc., a Montreal-based textile manufacturer and converter of fabrics, announces that its wholly owned subsidiaries, Hubbard Fabrics Inc., and Hubbard Dyers (1991) Inc., have filed a Notice of Intention with the Official Receiver stating their intention to make a proposal under the provisions of Section 50.4(1) of the Bankruptcy and Insolvency Act and appointing KPMG Inc., Licensed Trustee, to act as trustee under the proposal. Consequently, and unless the Court grants an additional delay, the Subsidiaries must file a proposal to their creditors within thirty (30) days following the filing of the Notice. The Subsidiaries plan to continue operations during this period, knitting, dying, finishing and shipping goods to their customers in the normal course. The common shares of HUBBARD are listed on The Canadian Venture Exchange and trade under the symbol "HUB". HYBRID NETWORKS: Reviewing Options Including Bankruptcy Filing -------------------------------------------------------------- Hybrid Networks Inc. (Nasdaq: HYBR), the worldwide leader in high-capacity MMDS fixed broadband wireless Internet access systems, reported financial results for the Company's fourth quarter and fiscal-year ended December 31, 2001. Net sales for the fourth quarter were $7.6 million compared with $12.9 million in the year-ago fourth quarter. The Company reduced its net loss to approximately $347,000 on 22.5 million shares outstanding for the fourth quarter from a net loss of approximately $5.6 million on 21.8 million shares outstanding in the year-ago quarter. Net sales for the twelve months ended December 31, 2001 were approximately $27.9 million compared with $22.8 million in the year-ago period. The Company reduced its net loss for the twelve-month period to approximately $10.7 million on 22.4 million shares outstanding from a net loss of approximately $37.2 million on 18.3 million shares outstanding in the year-ago period. "We faced a number of challenges in 2001, including a slowing domestic economy, weakening telecommunications industry, and dramatically reduced demand for the Company's products by our key customers as a result of their revised business strategies. Nonetheless, we were able to increase our year- over-year annual revenues and decrease our net losses," said Michael D. Greenbaum, President and CEO of Hybrid Networks. "During 2001, the Company refocused its targeted opportunities to the <