/raid1/www/Hosts/bankrupt/TCR_Public/020614.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, June 14, 2002, Vol. 6, No. 117
Headlines
ANC RENTAL: Intends to Subordinate Belgium Subsidiary's Debt
ADELPHIA BUSINESS: Seeks 2nd Extension of Schedules Filing Time
AMERICAN SKIING: Violates Financial Covenants Under Credit Pact
AMERICAN SKIING: Performance Capital Reports 10.6% Equity Stake
ARMSTRONG HOLDINGS: Judge Newsome Okays Gibbons as NJ Counsel
BETHLEHEM STEEL: Commences OTCBB Trading Under New BHMS Symbol
BIRMINGHAM STEEL: Seeking Nod to Engage Young Conaway as Counsel
BURLINGTON: Seeks OK to Transfer Mexican Joint Venture Interests
CDG BOOKS: Closes Sale of Macmillan Canada Assets to John Wiley
CEYONIQ INC: Private Investor Purchases U.S. Business Operation
CONTOUR ENERGY: Sr. Noteholders Agree to Forbear Until July 15
COVANTA ENERGY: Court Grants Access to $463 Mill. DIP Financing
CROWN CORK: PA Court Dismisses 376 Philadelphia Asbestos Cases
DANA CORP: Mack Trucks Has No Plans to Extend Supply Agreements
EMAGIN CORP: Amends and Extends Convertible Promissory Note
ENRON: Two Units Sue Palm Beach Aggregates for $1.1MM in Damages
ENRON CORP: Mission Iowa Intends to Appeal Fund Allocation Order
EXIDE TECHNOLOGIES: Secures 3-Year Sole Supplier Pact with Tesco
EXODUS COMMS: Resolves Claims Disputes with 3 Secured Creditors
FEDERAL-MOGUL: Committee Pushing for Production of Documents
GENERAL DISTRIBUTION: Appeals Court Supports CCAA Restructuring
GENESISINTERMEDIA: Stephen A. Weber Steps Down as Interim CEO
GENSCI REGENERATION: Will File Financial Statements by June 28
GLOBAL CROSSING: 7.25% & 6% Noteholders Want Adequate Protection
GREKA ENERGY: Plans to Complete Debt Restructuring Deals in Q2
HARVARD INDUSTRIES: Accepting Bids for Assets Until June 19
HAYES LEMMERZ: Gets Nod to Implement Employee Retention Plan
HYBRID NETWORKS: Sells Assets to HYBR Wireless via Foreclosure
IT GROUP: Amending Asset Purchase Agreement with Shaw
INTERBANK FUNDING: Files for Chapter 11 Relief Amid SEC Probe
INTERBANK FUNDING: Case Summary & Largest Unsecured Creditors
INTERSTATE GENERAL: Defaults on $4.4 Million Promissory Note
KAISER ALUMINUM: Retirees Tap Brobeck Phleger as Primary Counsel
KAISER ALUMINUM: Wants to Extend Plan Exclusivity to Dec. 12
KMART CORP: Bags Approval to Reject Totality Services Agreement
KMART CORP: Court Permits Avmark License Agreement Assumption
LAIDLAW INC: Eligibility for TSX Listing Currently Under Review
LIGHT MANAGEMENT: Working Capital Deficit Tops $2MM at March 31
LODGIAN INC: Wins Court Approval of Stipulation with Criimi Mae
LODGIAN INC: Hires Gifford Hillegass to Replace Arthur Andersen
MEDALLION FUNDING: Fitch Junks Senior Secured Notes
MELTRONIX: Closes $1M Bridge Financing Arrangement with Solana
METRIS COMPANIES: Appoints John Witham as Senior VP for Finance
METROCALL: Brings-In Pachulski Stang as Bankruptcy Attorneys
METROMEDIA FIBER: Unit Signs Multiple Site Deal with Earthlink
METROMEDIA FIBER: SEC Commences Probe into Accounting Practices
MORGAN STANLEY: S&P Lowers Ratings on Several P-T Cert. Classes
NAPSTER: Employing Richards Layton as Local Bankruptcy Counsel
NATIONAL STEEL: Comerica Seeks Adequate Protection Payments
NET2000: Trustee Wants McShane Group as Liquidation Consultant
NEWPOWER: Sidley Austin Brown & Wood Hired as Bankruptcy Counsel
NEWPOWER: Southern Company to Acquire Georgia Customer Base
NORTEL NETWORKS: Closes 632.5 Million-Share Public Offering
PACIFIC GAS: U.S. Trustee Balks At Hiring Unsupervised Experts
PILLOWTEX CORP: Recruits David Perdue as New Chairman and CEO
PLANVISTA CORP: Annual Shareholders' Meeting Set for July 17
POLAROID: Asks Court to Extend Bar Date for Current Officers
PSINET INC: Bar Date for Intercompany Claims Set for Today
QUALITY DISTRIBUTION: S&P Cuts Credit Rating after Restructuring
SOFTWARE LOGISTICS: SYNNEX Wins Approval to Acquire All Assets
STARBAND COMMS: Seeking Approval to Pay Critical Vendors' Claims
TYCO: Restates Fin'l Statements to Reflect Goodwill Impairment
VALHI INC: S&P Ratchets Corporate Credit Rating Up One Notch
VERADO HOLDINGS: Del. Court Confirms Chapter 11 Liquidating Plan
VERTEX INTERACTIVE: Nasdaq Sets Appeal Hearing for Late July
WNC HOUSING: Auditors Express Substantial Going Concern Doubt
WARNACO: Court Approves Insurance Premium Financing Agreement
WILLIAMS COMMS: Court Approves Proposed Compensation Procedures
WILLIAMS CONTROLS: American Industrial to Invest $10MM or More
WORLDWIDE WIRELESS: Continues Reviewing Debt Workout Options
BOOK REVIEW: Bankruptcy Crimes
*********
ANC RENTAL: Intends to Subordinate Belgium Subsidiary's Debt
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ANC Rental Corporation, and its debtor-affiliates ask the Court
to authorize them to subordinate the inter-company debt of
Republic Industries Automotive Rental Group (Belgium) Inc., a
non-debtor subsidiary of ANC, to the debt of the Belgium
subsidiary of Bank Brussels Lambert (BBL).
Micheal D. DeBaecke, Esq., at Blank Rome Comisky & McCauley LLP
in Wilmington, Delaware, tells the Court the Debtors seek the
relief requested in order for BBL to agree to extend through
August 31, 2002 the approximately $5,000,000 fleet financing and
working capital facility. BBL has agreed to extend the facility
through June 30, 2002 to allow the Debtors to obtain the relief
sought in the Motion. BBL had requested that the Debtors obtain
Court approval to subordinate inter-company debt of the ANC's
Belgium subsidiary, which is approximately $3,300,000, to the
liabilities of the Belgium subsidiary to BBL (at present, there
is approximately $4,000,000 outstanding under the facility).
Mr. DeBaecke maintains that the relief sought in the motion is
necessary to provide BBL with the comfort necessary to approve
the Extension. The ongoing operations of ANC's Belgium
subsidiary is critical at this point since the Debtors project
it to be profitable this year.
Mr. DeBaecke assures the Court that the relief requested is in
the best interests of the Debtors' estates and their creditors.
The extension of the facility is critical to the ongoing success
of the Belgium Subsidiary. Any liquidity problems in the
Debtors' European operations may be viewed by the Debtors'
suppliers and customers as a sign of weakness in the Debtors'
global business, which is feared to impact negatively on the
Debtors' restructuring efforts.
Mr. DeBaecke informs the Court that the Debtors have received
and continues to receive, inquiries from prospective third
parties for the purchase of some or all of the Debtors' European
operations. In order to allow the Debtors to explore the
alternatives, it is important that the Debtors are authorized to
enter into the extension and forestall a potential liquidity
crisis for the Belgium subsidiary. (ANC Rental Bankruptcy News,
Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ADELPHIA BUSINESS: Seeks 2nd Extension of Schedules Filing Time
---------------------------------------------------------------
Adelphia Business Solutions, Inc. requests a further extension
of time within which to prepare and file their Schedules --
through and including July 25, 2002.
According to Judy G.Z. Liu, Esq., at Weil Gotshal & Manges LLP
in New York, New York, the ABIZ Debtors provide
telecommunications services nationwide to thousands of direct
customers. ABIZ also provides services to other companies who
in-turn provide the ABIZ Debtors' services to their direct
customers. These services are governed by a multitude of
agreements affecting a myriad of assets and equipment, in
different regional locations. The process of identifying all
such executory contracts and leases, and all potential claimants
is a formidable one, but necessary to ensure that all creditors
are notified of important developments in ABIZ's chapter 11
cases. In order to prepare the Schedules, Ms. Liu submits that
ABIZ has sought to gather extensive information on all such
services and clients throughout the country. Such a task has
required an enormous expenditure of time and effort on the part
of the Debtors and their employees.
Since the Commencement Date, Ms. Liu avers that ABIZ's
management has expended substantial efforts responding to the
many exigencies and other matters that are incident to the
commencement of any chapter 11 case, but which are compounded by
the size and complexity of these cases. ABIZ has had to, among
other things:
* stabilize its businesses,
* reformulate its business plan,
* expend substantial time and resources to identify and
negotiate extensively with potential post-petition
lenders,
* respond to requests for adequate assurance pursuant to
section 366 of the Bankruptcy Code,
* respond to motions seeking to compel it to assume or
reject executory contracts,
* identify for sale assets that are no longer economically
beneficial to the estates,
* identify leases for rejection to conserve administrative
costs,
* maintain current services necessary to the operation of
its businesses,
* conduct meetings with numerous vendors with respect to
continuing prepetition business relationships, and
* meet with the major creditor constituencies in these
cases to keep them apprised of major developments.
Moreover, the Debtors' ability to confront the various
exigencies incidental to their chapter 11 cases has been
adversely affected as a result of a significant workforce
reduction since the Commencement Date, which has been
necessitated by the Debtors' revised business plan. The loyal
employees who remain have had to shoulder the extra demands of
the chapter 11 process and a streamlined workforce, and are
working tirelessly to meet all of the requirements imposed by
the chapter 11 process to the best of their abilities.
Accordingly, in view of the size of the Debtors' cases, the
amount of information that must be assembled and compiled, the
location of such information, and the significant amount of
employee time that must be devoted to the task of completing the
Schedules, the Debtors submit that ample cause exists for an
extension of an additional 45 days to file their Schedules,
through and including July 25, 2002.
A hearing on the motion is scheduled on June 20, 2002. (Adelphia
Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
AMERICAN SKIING: Violates Financial Covenants Under Credit Pact
---------------------------------------------------------------
American Skiing Company (OTC Bulletin Board: AESK) announced
results for its third fiscal quarter and nine months ended April
28, 2002. The Company reported a rebound in business levels
following a slow start to the ski season and Olympic induced
weakness in the Park City, Utah market.
The Company's resort business continues to benefit from
aggressive cost control measures implemented as part of its
previously announced restructuring program. As a result, third
quarter EBITDA from core resort operations was only slightly
below the same period last year despite a decline in overall
visitation. Steamboat ski resort, which began the season with
significantly lower year-over-year reservation and call volume
as well as concerns about air travel following September 11th,
experienced more than a 5% increase in skier visits for the
quarter. Total skier visits for the quarter and season to date
across the Company's resort network were off 4.9% and 7.4%,
respectively, relative to excellent results achieved during the
2000/2001 ski season (excluding results from resorts recently
sold).
"Our resorts performed exceptionally well in the face of a
number of significant challenges," said CEO B.J. Fair.
"Aggressive marketing campaigns following the events of
September 11th, coupled with a focus on controlling costs, led
to a stronger third quarter than we would have anticipated after
9/11. Following a slow start to the season, we experienced
strong demand during critical holiday periods with skier visits
higher than during the comparable periods in the prior year.
Importantly, revenue per skier visit increased over the prior
year which is a direct reflection of our renewed focus on yield
management."
Accounting Changes and Non-Recurring Items
During the first nine months of fiscal 2002 and fiscal 2001, the
Company incurred $2.4 million and $2.1 million, respectively, in
non-recurring charges related to its previously announced
restructuring program. All of the non-recurring charges relate
to resort operations except for $0.2 million associated with
real estate operations incurred during the second quarter of
fiscal 2002. During the second quarter of fiscal 2002, the
Company also took a $25.5 million asset impairment charge
related to an agreement to sell Steamboat ski resort from which
the Company withdrew in March 2002. During the third quarter of
fiscal 2001, the Company incurred a $3.6 million charge related
to its withdrawn merger plan with MeriStar Hotels & Resorts. In
addition, the Company's real estate subsidiary incurred a $0.8
million loss from the sale of its interest in the Heavenly Grand
Summit Hotel development subsidiary during the third quarter of
fiscal 2001. During the first quarter of fiscal 2002, the
Company incurred an $18.7 million non-recurring charge from the
cumulative effect of a change in accounting principle related to
the impairment of goodwill resulting from the adoption of
Statement of Financial Accounting Standards (SFAS) No. 142. The
net loss for the first quarter of fiscal 2001 included $0.8
million in pre-opening expenses at the Steamboat Grand Hotel,
which opened in October 2000, and a $2.5 million benefit, net of
taxes, from the cumulative effect of a change in accounting
principle related to marking interest rate derivatives to their
market value as a result of the adoption of Statement of
Financial Accounting Standards (SFAS) No. 133. As previously
announced, the Company does not expect to recognize any income
tax expense or benefit in the foreseeable future. As a result,
the Company did not incur an income tax expense or benefit for
the third quarter or nine months of fiscal 2002. However,
during the third quarter of fiscal 2001, the company recognized
income tax expense of $13.7 million to reverse the income tax
benefits recognized in the first and second quarters of fiscal
2001.
Sale of Heavenly Resort
As previously announced, on May 9, 2002, the Company closed on
the sale of its Heavenly ski resort in South Lake Tahoe, a key
element of its restructuring plan. In accordance with Financial
Accounting Standards (SFAS) No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, the financial
statements for the three and nine month periods of fiscal 2001
and 2002 account for the operating results of Heavenly as income
from discontinued operations. For additional information,
please refer to disclosures made in the Company's Form 8-K,
dated May 24, 2002, and Form 10-Q, dated June 12, 2002, on file
with the Securities and Exchange Commission.
Fiscal 2002 Third Quarter Results
The net income available to common shareholders for the third
quarter of fiscal 2002 was $26.4 million, compared with net
income of $7.2 million for the third fiscal quarter of 2001.
Excluding non-recurring items, the operations of Heavenly and
adjusting for the Company's previously announced decision not to
recognize any tax benefit or expense, the net income available
to common shareholders for the third quarter of fiscal 2002 was
$16.5 million versus net income of $19.0 million during the
third quarter of fiscal 2001.
Total revenues were $131.6 million for the third quarter of
fiscal 2002, compared with $151.9 million for the previous
year's third quarter. Both quarters exclude Heavenly as it has
been reclassified as an asset held for sale. Resort revenue was
$124.1 million for the quarter, compared with $136.5 million in
the third quarter of fiscal 2001. The decline in resort
revenues reflects lower skier visits in the east than during the
prior year and the Company's strategic decision to sell its
Sugarbush resort during the first quarter of fiscal 2002.
Adjusting for the sale of Sugarbush, resort revenue for the
third quarter of fiscal 2001 would have been $128.1 million.
Real estate revenue from ongoing quartershare sales was $7.6
million for the third quarter of fiscal 2002, versus $15.4
million for the same period in fiscal 2001. A decline in real
estate revenues was expected as a result of the Company's
strategy to sell its remaining quartershare inventory prior to
commencing any new projects. In addition, western real estate
sales were adversely impacted by economic weakness following
September 11th and weakness in the Utah market resulting from
the Olympics. To date, quartershare inventory in the east has
been essentially sold out. The Canyons Grand Summit Hotel and
Steamboat Grand Hotel are 75% and 51% sold out, respectively.
The Company's total earnings from operations before interest,
income taxes, depreciation, and amortization ("EBITDA"), was
$47.3 million in the third fiscal quarter of 2002, compared with
$45.4 million in the same period in fiscal 2001. Resort EBITDA
for the current quarter was $48.0 million versus $46.5 million
for the previous year's third quarter. After adjusting for non-
recurring items and results from Sugarbush, resort EBITDA from
core operations was essentially flat, on substantially lower
revenue, at $48.0 million compared to $49.0 million for the
comparable period in fiscal 2001. Real estate EBITDA was a loss
of $0.8 million compared with a loss of $1.1 million in the
third fiscal quarter of 2001. Real estate EBITDA for the third
quarter of fiscal 2001 was a loss of $0.3 million, excluding the
loss on the sale of the Company's interest in the Heavenly Grand
Summit Hotel development subsidiary.
Fiscal 2002 Nine Month Results
The net loss available to common shareholders for the nine
months ended April 28, 2002 was $82.5 million compared with a
net loss of $27.4 million in the corresponding period of fiscal
2001. The higher net loss in fiscal 2002 primarily reflects the
$18.7 million charge for an accounting change and the $25.5
million asset impairment charge for Steamboat ski resort.
Excluding non-recurring items in both years and the operations
of Heavenly, the net loss available to common shareholders for
the first nine months of fiscal 2002 was $45.8 million versus a
net loss of $29.5 million during the comparable period to $7.1
million in fiscal 2001.
Excluding non-recurring items, real estate EBITDA was a loss of
$1.9 million for the first nine months of fiscal 2002 compared
to $7.9 million in fiscal 2001.
Real Estate Lending Agreements
As disclosed in the Company's Form 8-K filed with the Securities
and Exchange Commission on May 20, 2002, and Form 10-Q filed on
June 12, 2002, the Company's real estate development subsidiary,
American Skiing Company Resort Properties, Inc., is in payment
default under its senior secured credit facility with Fleet
National Bank. The Company continues to negotiate terms of the
agreement and is hopeful that a mutually agreeable revision to
the terms can be reached.
In addition, as a result of a cross default provision to the
ASCRP facility and non-payment of a $3.8 million note to the
general contractor at the Steamboat Grand Hotel, the Company's
hotel development subsidiary, Grand Summit Resort Properties,
Inc. was in default under its construction loan facility with
Textron Financial Corporation. The Company has reached a verbal
agreement with Textron and participating lenders regarding a
restructuring of that facility. In addition, Textron's and the
participating lenders' willingness to execute the restructuring
may be affected by the Company's ability to negotiate a
successful restructuring of the ASCRP facility.
"Reducing debt at both the resort and the real estate companies
was always a critical element of our restructuring program,"
said CFO Mark Miller. "We achieved a significant debt reduction
with the recent sale of Heavenly and remain committed to
restructuring our real estate debt agreements so we can continue
to reduce our real estate debt through the sale of remaining
quartershare inventory and through land sales. We are working
diligently with our real estate lenders to revise the terms of
the agreements and accommodate ongoing operations and future
growth opportunities."
On April 19, 2002, the Company completed an amendment to the
Indenture governing its $120 million senior subordinated notes
due July 2006. Pursuant to the amendment, the notes are no
longer subject to a cross-default resulting from a default by
the Company's real estate subsidiaries under certain debt which
is non-recourse to the Company, including the ASCRP and GSRP
facilities. As a result, management expects that defaults under
these agreements, or any actions that the lenders may take, will
not impact the operations of resorts or create defaults under
the Company's resort senior secured credit facility. For
additional information, please refer to the Company's 10-Q
filing dated June 12, 2002 on file with the Securities and
Exchange Commission.
Debt Reclassification
As a result of the slow start to the ski season and delays in
completing a major asset sale associated with its restructuring
program, the Company was not in compliance with several
financial covenants under its $156.1 million resort senior
credit facility as of the end of the third quarter of fiscal
2002. In conjunction with the sale of its Heavenly ski resort
on May 9, 2002, the Company completed an amendment to its resort
senior credit facility that revised covenants to reflect the
Company's ongoing operations and business plan and cured the
existing and pending financial covenant defaults. However,
since the sale of Heavenly closed after the end of the third
fiscal quarter ended April 28, 2002, long term resort debt was
classified as short term pending closing of the sale.
Management anticipates that in the future it will reclassify the
appropriate portion of resort debt as long term if it can
reasonably expect to remain in compliance with its covenants
based on internally developed forecasts.
As a result of defaults under lending agreements for its real
estate subsidiary, ASCRP and its hotel development subsidiary,
GSRP, the Company has classified all of the debt associated with
these real estate subsidiaries as short term. If the Company is
successful in restructuring its credit facilities, and can
reasonably expect to remain in compliance based on internally
developed forecasts, it will reclassify the appropriate portion
of real estate debt as long term.
Headquartered in Newry, Maine, American Skiing Company is one of
the largest operators of alpine ski, snowboard and golf resorts
in the United States. Its resorts include Killington and Mount
Snow in Vermont; Sunday River and Sugarloaf/USA in Maine;
Attitash Bear Peak in New Hampshire; Steamboat in Colorado; and
The Canyons in Utah. More information is available on the
Company's Web site, http://www.peaks.com
AMERICAN SKIING: Performance Capital Reports 10.6% Equity Stake
---------------------------------------------------------------
Performance Capital Group LLC beneficially owns 3,355,000 shares
of the common stock of American Skiing Company, representing
10.6% of the outstanding common stock of the Company.
Performance has sole voting and dispositive powers over the
stock.
American Skiing Company is the largest operator of alpine ski,
snowboard and golf resorts in the United States.
ARMSTRONG HOLDINGS: Judge Newsome Okays Gibbons as NJ Counsel
-------------------------------------------------------------
Judge Newsome approves Gibbons Del Deo's employment in all cases
commenced against any of Armstrong Holdings, Inc. Debtors in New
Jersey, nunc pro tunc to December 20, 2001, including a case
brought by Joan Maertin, Executor. Judge Newsome further
authorizes the Debtors to employ Gibbons Del Deo to appear in
New Jersey as local counsel before Judge Wolin on the same basis
as Richards Layton & Finger.
With the Court's approval, Gibbons Del Deo will be:
(a) taking necessary actions to preserve and protect the
Debtors' estates, including the prosecution of ations on the
Debtors' behalves, the defense of any actions commenced against
the Debtors, the negotiation of disputes in which the Debtors
are involved, and the preparation of objections to claims filed
against the Debtors' estates, as may be requested by the
Debtors.
(b) preparing on behalf of the Debtors as debtors-in-
possession the necessary motions, applications, answers, orders,
reports and papers in connection with the administration of the
Debtors' estates, as may be requested by the Debtors in
consultation with its other counsel in these cases; and
(c) performing such other necessary legal services in
connection with the Debtors' chapter 11 cases as may be
requested by the Debtors in consultation with its other counsel
in these cases.
The attorneys and their hourly rates with primary responsibility
to the Debtors in these cases are:
Michael R. Griffinger $525
Paul R. DeFilippo $450
James N. Lawlor $300
Adam G. Brief $150
In addition, other professionals and paraprofessionals may
perform services for the Debtors at their standard hourly rates.
(Armstrong Bankruptcy News, Issue No. 23; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
BETHLEHEM STEEL: Commences OTCBB Trading Under New BHMS Symbol
--------------------------------------------------------------
As previously announced, the New York Stock Exchange, Inc. has
suspended trading of Bethlehem Steel Corporation's common stock,
$5.00 cumulative convertible preferred stock, $2.50 cumulative
convertible preferred stock and 8.45% debentures due March 1,
2005.
Effective June 12, 2002, Wednesday, Bethlehem's common stock is
being quoted on the OTC Bulletin Board under the new ticker
symbol "BHMS." While the OTCBB has assigned ticker symbols for
Bethlehem's $5.00 cumulative convertible preferred stock (BHMSO)
and $2.50 cumulative convertible preferred stock (BHMSN), the
preferred issues are not currently being quoted on the OTCBB.
Bethlehem expects the preferred issues to be quoted on the OTCBB
and the 8.45% debentures to be quoted on the National Quotation
Service's "Yellow Sheets," provided market makers file the
appropriate applications with the OTCBB and "Yellow Sheets,"
respectively.
BIRMINGHAM STEEL: Seeking Nod to Engage Young Conaway as Counsel
----------------------------------------------------------------
Birmingham Steel Corporation and its debtor-affiliates ask the
Court for permission to hire Young Conaway Stargatt & Taylor LLP
as their local Delaware attorneys under a general retainer to
perform legal services that will be necessary during their
chapter 11 cases.
The Debtors tell the U.S. Bankruptcy Court for the District of
Delaware that they chose Young Conaway as local bankruptcy
counsel because of the firm's extensive experience and knowledge
in the field of debtors' and creditors' rights and business
reorganizations.
The principal attorneys proposed to be assigned on these cases
and their standard hourly rates are:
a) James L. Patton, Jr. $475 per hour
b) Michael R. Nestor $330 per hour
c) Edward J. Kosmowski $280 per hour
d) Sharon M. Zieg $240 per hour
e) Stefanie Hubloue (paralegal) $110 per hour
Inter alia, Young Conaway will:
a) provide legal advice with respect to their powers and
duties as debtors in possession in the continued
operation of their businesses and management of their
properties;
b) negotiate, prepare and pursue confirmation of a plan and
approval of a disclosure statement, and all relates
reorganizations agreements/documents;
c) prepare on behalf of the Debtors necessary applications,
motions, answers, orders, reports and other legal
papers;
d) appear in Court and to protect the interest of the
Debtors before the Court; and
e) perform all other legal services for the Debtors which
may be necessary and proper in these proceedings.
Young Conaway received a $200,000 retainer in connection with
the planning and preparation of initial documents and their
proposed postpetition representations of the Debtors.
Birmingham Steel Corporation manufacture and distribute steel.
Without limitation, the Debtors produce steel reinforcing bar
(rebar) for construction industry and merchant steel products
for fabricators and distributors across North America. The
Company filed for chapter 11 protection on June 3, 2002. James
L. Patton, Esq., Michael R. Nestor, Esq., Sharon M Zieg, Esq. at
Young Conaway Stargatt & Taylor, LLP and John Whittington, Esq.,
Patrick Darby, Esq., Lloyd C. Peeples III, Esq. at Bradley Arant
Rose & White LLP represent the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed $487,485,834 in assets and $681,860,489 in
total debts.
BURLINGTON: Seeks OK to Transfer Mexican Joint Venture Interests
----------------------------------------------------------------
Two entities, IGP-BGD General, LLC and IGP-BGD Limited, LLC --
the US Entities -- represent the domestic portion of a Joint
Venture between BII and J.C. Viramontes International, Inc. The
remaining portion of the Joint Venture, which consists of:
(a) Grupo IGP-BGP S.de RL CV;
(b) IGP-BGD S. de RL de CV; and
(c) Servicios IGP-BGD, S. de RL de CV.,
is held by certain Mexican Entities, including J.C. Viramontes
International and one of Burlington Industries, Inc.'s non-
debtor affiliates, Burlington Morelos, S.A. de C.V. The Joint
Venture was formed in January 1998 for the purpose of building
and operating a denim, garment and laundry processing facility
used to produce shelf-ready denim jeans. The total production
capacity of the Denim Processing Facility is estimated at
approximately 10 million units per year.
By this motion, Burlington Industries, Inc., BII Mexico Laundry
Holding Co. and Burlington Apparel Services Company -- the
Debtors -- seek the Court's authority to transfer its interests
in the Joint Venture.
"The Joint Venture represents a significant liability to the
Debtors and a significant drain of cash," according to Paul N.
Heath, Esq., at Richards, Layton & Finger, in Wilmington,
Delaware. Since its inception, Mr. Heath observes that the
Joint Venture has failed to produce a profit due mostly to its
failure to achieve certain necessary volume benchmarks. In
addition, there are a substantial amount of administrative costs
associated with the day-to-day operation and maintenance of the
Denim Processing Facility and other of the Joint Venture's
operations.
The Joint Venture's troubled financial performance is
exacerbated by its heavy use of debt. Mr. Heath relates that
the Joint Venture's primary funding has come through:
(i) the use of approximately $25,000,000 in borrowed funds
from Bank of America N.A.; and
(ii) funds from entities involved with the Joint Venture,
including advances from Burlington to the Joint Venture in
the aggregate amount of $7,300,000 in the form of
intercompany receivable and a subordinate note.
"Given the Joint Venture's current performance and future
prospects, it is unlikely that Burlington will recover any
portion of the advances," Mr. Heath adds. Burlington has also
guaranteed approximately half of the Joint Venture's obligations
to Bank of America as well as certain other obligations of the
Joint Venture.
Mr. Heath explains that as part of the Debtors' reorganization
strategy and their efforts to strengthen the financial
performance and operational efficiencies of their businesses,
the Debtors have decided to exit the garment business and to
sell substantially all of their assets. Accordingly, the
Debtors are engaging in the Transaction to exit the Joint
Venture and rid their estates of a significant portion of their
liabilities.
In particular, the Term Sheet provides that:
-- Burlington and BII will transfer all of their interest in
the Joint Venture, including the U.S. Entities, to J.C.
Viramontes International.
-- Bank of America will reduce its claim against the Guaranty
by $500,000 and the Guaranty will be limited to those
obligations that existed as of the Petition Date.
-- Burlington and J.C. Viramontes International will issue
mutual waivers and releases from all obligations and
liabilities under the Investment and Cooperation Agreement
as amended, and related agreements. The waiver, release
and discharge does not extend:
(a) to direct obligations of J.C. Viramontes International
or Burlington in respect of the Joint Venture to
parties other than the parties to the Joint Venture or
the Joint Venture itself; and
(b) the obligations of J.C. Viramontes International or
Burlington to Bank of America in respect of their
respective guarantees of the Joint Venture loan
obligations.
-- All of the prepetition receivables due from Burlington or
Burlington Apparel to the Joint Venture for certain
laundry operation services will be released.
-- The Advances made by Burlington to the Joint Venture
will be expunged.
-- All of the Joint Venture's obligations or liabilities
incurred, accrued, or arising from and after the Petition
Date will be the responsibility of the Joint Venture
without any guaranty or other liabilities or participation
by Burlington or any of its affiliates, which obligations
and liabilities will be assumed exclusively by J.C.
Viramontes International.
-- The Mexican employees' severance obligation of the Joint
Venture that will result if the Mexican operation of the
Joint Venture were closed and all ordinary course trade
payables and obligations of the Joint Venture will be
assumed and guaranteed by J.C. Viramontes International,
with specific indemnification to Burlington.
"The Debtors further seek authority to take all actions
necessary to facilitate the sale of the Mexican portion of the
Joint Venture to J.C Viramontes International," Mr. Heath says.
(Burlington Bankruptcy News, Issue No. 14; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
CDG BOOKS: Closes Sale of Macmillan Canada Assets to John Wiley
---------------------------------------------------------------
CDG Books Canada has successfully closed the transaction for the
sale of the Macmillan Canada list of titles to John Wiley & Sons
Canada Ltd. The purchase price was not disclosed.
Tom Best, President of CDG Books said, "We retained KPMG
Corporate Finance Inc. as an agent to undertake the sale of this
important asset. We are satisfied that the outcome produced the
best financial result for the company and its creditors. We are
also pleased that an important Canadian literary asset will
survive and prosper under new ownership."
The Macmillan list of authors will continue to be published by
John Wiley & Sons Canada Ltd.
Rick Goldsmith of KPMG added, "We worked to identify a number of
potential buyers and established an unbiased, competitive and
timely process to maximize the value of the asset to the
company."
The sale proceeds will be used to pay CDG creditors including
authors and printers.
Wiley and Gage Learning Corporation, the company's only
shareholders, announced the closure of CDG in March of 2002. CDG
was created in 1998, when Macmillan Canada, a division of Gage,
and Hungry Minds Inc. (formerly IDG Books Worldwide) joined
forces.
CDG Books Canada will close permanently within the next several
weeks.
CEYONIQ INC: Private Investor Purchases U.S. Business Operation
---------------------------------------------------------------
CEYONIQ, Inc., formerly known as TREEV, Inc., a leading provider
of Content and Document Management solutions, confirmed that an
agreement has been reached with parent company CEYONIQ AG for
the sale of the company's U.S. operation, based in Herndon,
Virginia. Under the terms of the agreement, the U.S. operation
will be sold to a private investor and will be legally
independent in its entirety from the former parent company
CEYONIQ AG.
The sale of the U.S. operation was approved by the court-
appointed receiver for the parent company, which filed for
insolvency in Germany on April 12, 2002. "I am happy to report
that this short-term distraction is now behind us," said David
E. MacWhorter, president and chief executive officer of CEYONIQ,
Inc. "We will progress forward with our business here in North
America with continued and absolute focus on our customers."
In July, 2002, the U.S. operation will assume the well-known
previous name of TREEV. MacWhorter confirmed, "Our customers,
partners and our market are very familiar with TREEV and
continue to recognize us by that name. Many of them were sad to
see the familiar TREEV name changed last year after the
acquisition."
As previously noted by MacWhorter, the twelve-year-old U.S.
business operation has always been operationally independent
from the parent company. MacWhorter stated, "We are an entirely
independent entity, with fully functioning and completely
staffed customer support, professional services, and product
development departments, complemented by a strong sales,
strategic marketing and executive leadership team." MacWhorter
summarized, "The TREEV name is back and our company and its
business solutions and services are here to stay -- along with a
renewed focus on our customers right here in North America."
Financing for the purchase was provided by a longtime investor
in the predecessor company TREEV. Detailed terms of the
transaction were not available.
The final purchase transaction with the parent company CEYONIQ
AG is expected to close soon.
CEYONIQ, Inc., formerly TREEV, Inc., is a leading provider of
innovative Content and Document Management and process
automation solutions that manage and link information and
processes across the enterprise. Our solutions span the entire
spectrum of the content lifecycle: from capture through
archival, including process automation, application integration,
and personalized delivery, to meet enterprise needs. With a
proven track record of over 2,800 successful implementations and
satisfied customers in the U.S., CEYONIQ's mission is to deploy
solutions that capitalize on the many benefits of e- business to
ensure success in today's demanding information environment.
CEYONIQ was recently named to KMWorld magazine's "100 Companies
That Matter In Knowledge Management" 2002 rankings and is a
recipient of the SAP FAQ Members' Choice Top 25 Tools and
Technologies Award.
CEYONIQ's solution portfolio is integrated to provide a cohesive
strategy. Our solutions include Content and Document Management,
Enterprise Application Portals, Enterprise-scale Content
Capture, Enterprise Report Management/Computer Output to Laser
Disk (ERM/COLD), Document Imaging, Workflow/Process Automation,
and Archiving solutions for SAP and Siebel. To learn more about
how CEYONIQ's solutions help to manage the Content Lifecycle,
call 800.254.0994 or 703.478.2260, or visit
http://us.ceyoniq.com
CONTOUR ENERGY: Sr. Noteholders Agree to Forbear Until July 15
--------------------------------------------------------------
Contour Energy Co. has reached agreement with the trustee for
its 14% senior secured notes to forbear from asserting its
rights under the indenture that include the right to foreclose
on the Company's assets. The forbearance agreement expires July
15, 2002. As previously reported, the Company received a notice
of acceleration from the trustee demanding immediate and full
payment of principal of $105 million plus accrued interest on
the Senior Notes.
In addition to the forbearance provisions, the agreement
provides for the orderly conduct of the Company's business while
providing the trustee with assurances regarding uses of cash.
The trustee has also been granted a security interest in the
Company's cash and certain of its bank accounts.
The Company previously negotiated a forbearance agreement with
certain holders of its 10-3/8% senior subordinated notes that
expires June 30, 2002. Negotiations continue that will effect a
conversion of that debt into substantially all the equity of the
Company. While the Company expects negotiations to be concluded
prior to expiration of the forbearance agreement on June 30,
there can be no assurance of that timing or of a successful
outcome.
Contour Energy Co. is engaged in the exploration, development,
acquisition and production of natural gas and oil.
Contour Energy Co. common stock is traded on the OTC Bulletin
Board under the symbol CONC.OB.
CORTS TRUST: S&P Cuts Rating to B- Following Xerox's Downgrade
--------------------------------------------------------------
Standard & Poor's lowered its rating on CorTS Trust for Xerox
Capital Trust I to single-'B'-minus from single-'B'. Also, the
rating remains on CreditWatch with negative implications, where
it was placed on April 24, 2002.
The lowered rating reflects the June 11, 2002 downgrade of Xerox
Corp.'s corporate credit and preferred stock ratings.
CorTS Trust for Xerox Capital Trust I is a swap-independent
synthetic transaction that is weak-linked to the underlying
collateral, Xerox Capital Trust I's preferred stock.
The CreditWatch placement reflects the credit quality of the
underlying securities issued by Xerox Capital Trust I.
CorTS Trust for Xerox Capital Trust I
$27 million corporate bond-backed certs
Rating
To From
Certificates B-/Watch Neg B/Watch Neg
COVANTA ENERGY: Court Grants Access to $463 Mill. DIP Financing
---------------------------------------------------------------
After reviewing the Amended DIP Facility Agreement and
conducting the Final Hearing of Covanta Energy Corporation's
Motion, Judge Blackshear overrules all objections to the DIP
Motion filed by:
-- Pollution Control Financing Authority of Warren County,
-- Wachovia Bank f/k/a First Union National Bank,
-- Financial Security Assurance Inc.,
-- U.S. Trustee for the Southern District of New York,
-- The City of Anaheim,
-- Bank One Trust Co., Inc.,
-- Alexandria Sanitation Authority,
-- Arlington Solid Waste Authority,
-- Deutsche Bank Trust Company Americas,
-- Pitney Bowes Credit Corporation,
-- Allstate Insurance Company,
-- Mission Funding Zeta,
-- GE Capital Services Structured Finance Group,
-- Official Committee of Unsecured Creditors,
-- Ford Motor Credit Company,
-- Mariner Investment Strategies, Inc. and
-- DCC Project Finance Nine, Inc.
The Court authorizes Covanta Energy Corp. and its debtor-
affiliates to:
(a) obtain loans and request the issuance of Letters of
Credit under the Tranche A Facility in an aggregate
amount not to exceed $48,000,000 for the Debtors' working
capital needs and capital expenditures;
(b) use the Pre-petition Secured Parties' Cash Collateral in
the operation of the Debtors' business;
(c) continue, replace, reissue or renew under Tranche B
Facility the expiring Letters of Credit in the maximum
aggregate principal amount of $240,862,730, in each case;
Furthermore, the objection of the Huntington and Onondaga
limited partners are reserved and shall be subject to further
order of the Court. Pending further order, the Interim Order
shall remain in effect with respect to the Huntington and
Onondaga Debtors entities and their limited partners, provided
however, that the Huntington and Onondaga limited partners
expressly reserve their rights, if any, to object to the entry
of the Interim Order and its effect on the Huntington and
Onondaga Debtors entities and their limited partners, and the
Debtors, the Pre-petition Secured Parties, the Committee and the
DIP Lenders expressly reserve all of its rights to contest the
Huntington and Onondaga limited partners' objections to the
entry and effectiveness of the Interim Order, including their
ability to still challenge the Interim Order. In the event that
the limited partners cannot agree on the final form of a
stipulation with the Debtors and the DIP Agents prior to May 22,
2002, the non-settling limited partners shall pursue their filed
objections at a hearing before the Court.
The Final Order shall not be deemed to prejudice the rights of:
(a) GE Capital Services Structured Finance Group, Inc.,
(b) General Electric Capital Corporation,
(c) any of Structured Finance Group's or GE Capital's
respective subsidiaries or affiliates, or
(d) any special trust or legal entity in which Structured
Finance Group, GE Capital and such subsidiaries or
affiliates is a debtor, loan or equity participant or
beneficiary under that certain Agreed Final Order
Authorizing Use of Cash Collateral of GECC. (Covanta
Bankruptcy News, Issue No. 6; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
CROWN CORK: PA Court Dismisses 376 Philadelphia Asbestos Cases
--------------------------------------------------------------
Crown Cork & Seal Company, Inc. (NYSE: CCK) announced that the
Philadelphia Court of Common Pleas has ruled favorably on
Crown's motion for summary judgment dismissing 376 pending
asbestos cases against Crown in Philadelphia based on recent
changes to Pennsylvania corporate successor liability law.
"Crown is simply in the bottle cap and can business," said
William Gallagher, General Counsel for Crown. "Yet, through the
technical application of corporate merger successor liability
law, thousands of asbestos claims have been filed against Crown
because of Crown's brief connection nearly 40 years ago with
Mundet Cork Company, a manufacturer of cork-lined bottle caps
that had also owned a small insulation division. Crown's
investment of $7 million in Mundet has already resulted in our
making more than $350 million in asbestos-related payments." In
1963, Crown purchased the stock of Mundet Cork Company, and
Mundet sold its insulation division within 93 days of this
purchase. Thereafter, Mundet, consisting of its bottle cap
business, was merged into Crown.
Gallagher continued: "Last fall, the Pennsylvania Legislature,
with overwhelming bi-partisan support, took strong public policy
action to restore some measure of fairness and equity by
amending Pennsylvania's corporate merger successor liability
law. The law caps a Pennsylvania successor company's merger-
derived asbestos liability at the total value of the merged
company's assets, adjusted for inflation. The Legislature fairly
and intelligently addressed the burden that unlimited liability
for asbestos claims imposes on the ability of blameless
successor companies such as Crown to operate profitably, expand
employment opportunities, meet debt obligations and maintain
benefits for employees and retirees. We are pleased that Judge
Tereshko, in his well-reasoned opinion, has upheld the validity
under the Pennsylvania and U.S. Constitutions of the recent
changes to the Pennsylvania corporation law."
Crown Cork & Seal is a leading supplier of packaging products to
consumer marketing companies around the world. World
headquarters are located in Philadelphia, Pennsylvania.
DANA CORP: Mack Trucks Has No Plans to Extend Supply Agreements
---------------------------------------------------------------
Dana Corporation (NYSE: DCN) has been informed by Mack Trucks,
Inc., a part of the Volvo Group, that the truckmaker does not
plan to extend its current agreements for supply of chassis
assemblies and groomed axles for Mack's on-highway and
vocational trucks. The current chassis assembly agreement with
Dana expires at the end of 2003, and the axle agreements expire
in May 2004.
"We are disappointed by this change of direction by Mack," said
Nick Cole, president of Dana's Heavy Vehicle Technologies and
Systems Group. "For more than 15 years, Dana has provided the
highest caliber of service to Mack -- as we will continue to do
in the future."
Cole said that Dana generated revenue of approximately $293
million in 2001 from the sale of the chassis assemblies and
groomed axles to Mack. Approximately $120 million of these sales
consisted of Dana-manufactured components, and the balance was
purchased parts, assembly, and other related fees. He said that
Dana continues to secure new business that is expected to exceed
this loss and is aggressively pursuing further opportunities for
its award-winning facilities in Lancaster, Pa., and Lugoff, S.C.
"Mack Trucks appreciates the products and services that Dana has
provided for more than 15 years. This is a difficult decision
due to tough market conditions and restructuring needs, and is
not a reflection on the people of Dana, who have delivered
quality chassis systems," said Carlos Hungria, Mack's vice
president of purchasing.
These Dana-Mack contract relationships date back to the mid-
1980s, when Dana began supplying fully assembled chassis to
Mack's Macungie, Pa., and Winnsboro, S.C., plants. By
effectively reducing Mack's supply base from 500 separate
component suppliers to just one, Dana was able to reduce the
truckmaker's administrative workload with regard to logistics,
purchasing, and quality control.
Mack Trucks, Inc., and its parent company, Renault V.I., were
acquired by AB Volvo in December 2000.
Dana Corporation is one of the world's largest suppliers of
components, modules, and complete systems to global vehicle
manufacturers and their related aftermarkets. Founded in 1904
and based in Toledo, Ohio, the company operates some 300 major
facilities in 34 countries and employs approximately 70,000
people. The company reported sales of $10.3 billion in 2001.
Dana's Internet address is http://www.dana.com
As reported in the March 01, 2002 edition of Troubled Company
Reporter, Standard & Poor's has assigned a BB rating to Dana's
new $250 million debt issue.
EMAGIN CORP: Amends and Extends Convertible Promissory Note
------------------------------------------------------------
eMagin Corporation and The Travelers Insurance Company entered
into a third amendment agreement to amend and extend the
maturity date of the Convertible Promissory Note dated August
20, 2001, issued under the Note Purchase Agreement entered into
August 20, 2001 between eMagin and Travelers. The amendment
agreement extended the maturity date of the Note from June 5,
2002 to June 7, 2002. eMagin and Travelers are engaging in
discussions in respect of the restructuring of the Note. There
can be no assurance that eMagin will be able to arrange a
restructuring of the Note on terms acceptable to eMagin, if at
all.
A leading developer of virtual imaging technology, eMagin
combines integrated circuits, microdisplays, and optics to
create a virtual image similar to the real image of a computer
monitor or large screen TV. These miniature, high-performance,
modules provide access to information-rich text, data, and video
which can facilitate the opening of new mass markets for
wearable personal computers, wireless Internet appliances,
portable DVD-viewers, digital cameras, and other emerging
applications.
At December 31, 2001, eMagin's balance sheet shows a total
shareholders' equity deficit of $5 million.
ENRON: Two Units Sue Palm Beach Aggregates for $1.1MM in Damages
----------------------------------------------------------------
Palm Beach Development Company LLC and Enron North America
Corporation, both debtors in Enron Corporation's chapter 11
cases, want:
(i) to avoid and recover pursuant to Bankruptcy Code Section
548(a) fraudulent conveyances it made to, or for the
benefit of, Palm Beach Aggregates Inc.;
(ii) to disallow any and all claims in favor of Palm Beach
Aggregates in these cases pursuant to Bankruptcy Code
Section 502(d);
(iii) to avoid and recover pursuant to the Bankruptcy Code
Section 544(b) and Fla. Stat. ch. 726.105(1)(b) fraudulent
conveyances it made to, or for the benefit of, Palm Beach
Aggregates; and
(iv) to recover actual damages it suffered as a direct result
of Palm Beach Aggregates' breach of its contractual
relationship.
PBD is a wholly owned subsidiary of Lauderdale Land Development
Company Inc., which is also a wholly owned subsidiary of ENA.
Lauderdale Land also owns Sawgrass Development Company LLC.
These companies are based in Houston, Texas.
Palm Beach Aggregates, on the other hand, is based in
Loxahatchee, Florida.
Neil Berger, Esq., at Togut, Segal & Segal LLP, in New York,
tells the Court that the Debtors leased approximately 40 acres
of land in Palm Beach County, Florida from Palm Beach
Aggregates. The Debtors have the option to purchase the
Property. The Lease is due to expire June 9, 2002.
The Debtors' obligations are guaranteed by ENA pursuant to a
Guarantee Agreement.
Mr. Berger relates that the Debtors intended to develop a power
generation facility on the Property. Under the Lease, Palm
Beach Aggregates was obligated to:
(i) cooperate with the Debtors' efforts to obtain necessary
zoning or governmental approvals for the construction and
operation of the Facility, and
(ii) join in and execute the Debtors' applications and other
documentation in connection with the Facility.
At the same time, Mr. Berger notes, PBD was granted the
exclusive right and obligation to obtain all permits and
authorizations to develop the Facility.
"Furthermore, Palm Beach Aggregates agreed to refrain from
engaging in any conduct that would adversely alter or modify the
condition or use of the Property as intended by the Debtors when
the Lease was executed," Mr. Berger adds.
So, in April 2000, the Debtors began a process to develop the
Facility including, without limitation to:
(a) making rent payments under the Lease,
(b) commissioning land surveys, use studies and environmental
impact studies,
(c) preparing applications for necessary permits and land use
approvals,
(d) obtaining gas and electrical interconnect studies
necessary for natural gas fuel supply and power production
deliveries, and
(e) incurring certain legal expenses.
The total cost for these efforts reach $1,107,907.
Mr. Berger reports that with funds provided to Lauderdale Land
and Sawgrass, ENA made transfers totaling $876,709 to satisfy
Development Costs. Of the total Development Transfers, Mr.
Berger says, transfers for $429,992 were made within one year
before the Petition Date. "Lauderdale Land and PBD paid funds
provided by ENA totaling $231,198 to third parties for legal
expenses associated with the Property.
However, on August 30, 2001, Palm Beach Aggregates informed the
Debtors it had entered into a lease with Mirant Corp., the
Debtors' largest power plan competitor in Florida. Palm Beach
Aggregates told the Debtors it intended to develop with Mirant a
"power park" on a 180-acre track immediately adjacent to the
Property. "The size of Mirant's proposed power facility dwarfs
the size of the Debtors' Facility," Mr. Berger says.
Palm Beach Aggregates advised the Debtors that it would file an
application on behalf of Mirant and the Debtors with the Palm
Beach County Board of Commissioners on October 23, 2001 for a
conditional land use approval that would apply not only to the
180-acre tract leased to Mirant, but also to the Debtors'
Property. Palm Beach Aggregates later changed its mind and
moved up the planned filing to September 13, 2001, without the
Debtors' involvement. "The plan that accompanied Palm Beach
Aggregates' Application was for its proposed power park to be
constructed immediately adjacent to the Property," Mr. Berger
tells the Court.
Moreover, Mr. Berger continues, Palm Beach Aggregates' proposed
site plan showed the placement of a lake, a 4.5-acre dry
detention area, electrical transformers, maintenance facilities,
an administrative controlled building and two chillers on the
Debtors' Property. "And if the Debtors' interest in the
Property and the Facility were eliminated from Palm Beach
Aggregates' proposed site plan, three exhaust stack or heat
dispensers and 850 megawatts of power output would be eliminated
from Palm Beach Aggregates' site plan," Mr. Berger observes.
Accordingly, it would ease Palm Beach Aggregates' and Mirant's
efforts to obtain zoning changes and governmental approvals for
its power facility.
A couple of weeks after the Petition Date, the Debtors told Palm
Beach Aggregates that it did not consent to the proposed
Application. "It improperly usurps the Debtors' exclusive right
to control the zoning and governmental approval process for the
Property," Mr. Berger complains.
Based on local, state and federal permitting requirements, and
the electric, gas and water infrastructure at the project site,
Mr. Berger says, the Debtors' project and Mirant's project
cannot both be successfully developed at this location.
"Clearly, Palm Beach Aggregates wants to eliminate the Debtors'
Facility," Mr. Berger contends.
The Debtors further protested that the Application would violate
the Lease, which prohibits Palm Beach Aggregates from altering
or modifying the condition or use of the Property because
approval of the Debtors' Application would dramatically change
the condition of the Property and impose a new and more rigorous
use approval process that did not exist when the Lease was
signed.
Still, Palm Beach Aggregates refused to delay its submission of
the Application.
Mr. Berger asserts that Palm Beach Aggregates has breached, and
is in default pursuant to, the Lease.
In addition, Mr. Berger accuses Palm Beach Aggregates of
violating the automatic stay by proceeding with the hearing
before the Commission to consider its application even though it
was advised of the Debtors' bankruptcy filing. "Palm Beach
Aggregates also lied when it told the Commission that the
Debtors had consented to the Application," Mr. Berger says.
As a result of Palm Beach Aggregates' breaches, the Debtors
claim they have been damaged in the amount of $1,107,907.
Thus, the Debtors ask the Court to:
(a) direct Palm Beach Aggregates to reimburse and return
$429,992 -- transfers made within one year before the
Petition Date;
(b) disallow the $270,000 fraudulent claim of Palm Beach
Aggregates;
(c) direct Palm Beach Aggregates to reimburse and return
$876,709 in Development Transfers made within four years
before the Petition Date;
(d) award them the Total Damages, pre-judgment interest and
attorneys' fees. (Enron Bankruptcy News, Issue No. 31;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ENRON CORP: Mission Iowa Intends to Appeal Fund Allocation Order
----------------------------------------------------------------
Mission Iowa Wind Company and Storm Lake Power Partners I LLC
give notice of their intention to take an appeal to the U.S.
District Court from Judge Gonzalez's order approving Enron
Corporation's allocation of purchase price of substantially of
assets relating to the Enron Wind Business.
Mission Iowa and Storm Lake put two questions for the District
Court to review:
1. Whether the Bankruptcy Court erred in entering the Order
signed on May 6, 2002 approving the Debtors' proposed
allocation of purchase price pursuant to paragraph 34 of
the Enron Wind Sale Approval Order, approving the sale of
substantially all of the U.S. and European Manufacturing
Assets relating to the Enron Wind Business; and
2. Whether in approving the Allocation, the Bankruptcy Court:
(a) erred by employing an incorrect legal standard (the
U.S. Asset Sellers' business judgment) in approving the
Allocation;
(b) erred in finding that the U.S. Asset Sellers exercised
their "business judgment" in considering the
Allocation;
(c) erred in failing to consider the liabilities of the
European Asset Sellers that were assumed by the Buyer
in allocating the cash proceeds of the Sale Agreement
between the U.S. Asset Sellers and the European Asset
Sellers;
(d) erred by allocating insufficient proceeds of the Sale
Agreement to the U.S. Asset Sellers;
(e) erred in its ruling concerning Appellant's motion in
limine and related evidentiary determinations,
including without limitation, the consideration given
to the evidentiary proffers concerning foreign law and
alleged terms of the sale transactions with the Buyer
that were not contained in the Sale Agreement; and
(f) erred in its rulings concerning Appellants' Discovery
and Scheduling Motions. (Enron Bankruptcy News, Issue
No. 31; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
EXIDE TECHNOLOGIES: Secures 3-Year Sole Supplier Pact with Tesco
----------------------------------------------------------------
Exide Technologies, (OTCBB: EXDT) the global leader in stored
electrical-energy solutions, has secured a three-year sole
supplier agreement for motive power products and services with
Tesco, the largest retailer in the United Kingdom.
Tesco, with more than 900 retail outlets worldwide and more than
700 locations in the UK, stocks more than 40,000 product lines,
including food and beverages; household items; garden products;
toiletries; domestic electrical goods; clothes; and fuel.
Founded in 1924, Tesco is the country's market leader with a 16
percent market share.
The exclusive agreement calls for the Exide Technologies Motive
Power Global Business Unit to supply a total stored energy
system solution for Tesco's fleets of electric forklift trucks
and warehousing equipment. It includes battery products and
services to manage the Tesco fleets for maximum efficiency and
cost effectiveness.
The Exide Motive Power Group, based in Manchester, England,
produces a complete line of lead-acid batteries for fork lift
trucks and other vehicles for the materials handling industry,
as well as batteries for wheelchairs, scissor-lifts, access
platforms, electric cleaning machines and airport utility
vehicles.
Since 1977, Exide has supplied Tesco's 24 regional distribution
centers in the UK with batteries, chargers and ancillary
equipment under the Chloride Motive Power brand.
To provide Tesco with a comprehensive stored electrical-energy
solution for its electric fork lift truck and warehousing
equipment fleets, Exide developed engineering and administrative
resources that completely rebuilt the Tesco battery fleet
database. During the next three years, Exide also will manage
the database to control Tesco's battery fleet and its inventory
of replacement batteries. In addition, Exide's new Charger
Management System will provide electronic monitoring and control
of battery charging operations. Finally, Exide has installed
state-of-the-art battery transfer systems to support the fleets
at Tesco distribution centers throughout the UK. Exide designed
and installed the systems to meet Tesco's projected expansion.
"Exide has reinforced its alliance with Tesco by being able to
provide consistently high quality products and services
worldwide, wherever Tesco has expansion plans," said Neil
Bright, president of the Exide Technologies Motive Power Global
Business Unit. "In working with Tesco, Exide has developed and
launched innovative, technologically advanced solutions to help
streamline our customer's supply chain operations."
The Tesco/Exide partnership in the UK is extending into new
growth markets in Central Europe and Asia. Tesco has expanded
its operations into the Czech Republic, Hungary, Poland, the
Slovak Republic, South Korea, Taiwan and Thailand. Exide is
already supplying a battery transfer system for Tesco's first
dedicated regional distribution center outside the UK. This
warehouse facility, currently under construction in Hungary,
also will be the first outside the UK to benefit from Exide's
newly developed Charger Management System.
"Tesco's strategy is to continue to increase its market share by
continuously reducing prices, offering the best value and
providing more choice and convenience for its customers," said
Craig H. Muhlhauser, Chairman and CEO of Exide Technologies.
"Exide's alliance with Tesco manages the energy use of the
retailer's distribution center fleet for maximum efficiency and
productivity, allowing Tesco to focus on its customers." (Exide
Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
EXODUS COMMS: Resolves Claims Disputes with 3 Secured Creditors
---------------------------------------------------------------
Exodus Communications, Inc., and its debtor-affiliates ask the
Court for approval of a stipulation that was entered into by the
Debtors and Transamerica Business Credit Corp., Wells Fargo
Equipment Finance Inc. and Linc Equipment Receivables Trust
1999, all secured creditors.
Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP in
Wilmington, Delaware, explains that the stipulation is for the
settlement of the Creditors' claims arising out of the Master
Loan and Security Agreement dated September 3, 1997 by and
between Transamerica and Exodus Communications Inc., which was
amended by the Amended and Restated Master Loan and Security
Agreement dated June 30, 1998. Pursuant to the Loan Agreement,
Exodus requested and Transamerica extended, financing through
eleven promissory notes including:
Promissory Note No. 1 $1,931,166
Promissory Note No. 2 2,170,882
Promissory Note No. 3 1,839,971
Promissory Note No. 4 390,229
Promissory Note No. 5 198,993
Promissory Note No. 6 2,294,563
Promissory Note No. 7 1,225,845
Promissory Note No. 8 1,081,413
Promissory Note No. 9 1,022,823
Promissory Note No. 10 1,940,941
Promissory Note No. 11 2,221,570
-----------
Total $16,318,396
Under the Loan Agreements, Mr. Chehi relates that Exodus
assigned and granted to Transamerica a continuing general, first
priority lien on and security interest in all of Exodus' right,
title and interest in all equipment to secure the payment and
performance of all obligations under each promissory note and
the loan agreements. Under the Loan Agreements, the security
interest granted to Transamerica by Exodus in the Promissory
Notes, among other things:
A. remains in full force and effect until the indefeasible
payment in full of Exodus' obligations under each promissory
note and
B. remains binding upon Exodus and its successors and
assigns and inure, together with the rights and remedies of
Transamerica and its successors, transferees and assignees.
Transamerica subsequently sold five of the promissory notes to
other lenders. One of them, Promissory Note No. 9 was sold to
Wells Fargo while Promissory Note No. 11 was sold to Linc.
Transamerica maintained ownership in Promissory Notes 2, 5, 7,
8, 10 and 12. To date, the Debtors owe these amounts to the
Creditors:
* Transamerica - $2,114,444 for all promissory notes plus post-
petition interest rate of 6% in the amount of
$75,889
* Wells Fargo - $326,987 plus post-petition interest rate of
6% in the amount of $11,664
* Linc - $632,840 plus post-petition interest rate of
6% in the amount of $23,488
Transamerica and Wells Fargo also incurred and paid $31,198 of
pre-petition and post-petition professionals' fees and expenses
with respect to enforcing and collecting their secured claims
against Exodus. Linc, meanwhile, incurred and paid $2,390 of
pre-petition and post-petition professionals' fees and expenses
for similar action against Exodus.
The Debtors have agreed to grant the Secured Creditors a secured
claim in the amount of the value of their collateral and an
unsecured claim equal to the difference between the amount of
the Secured Creditors' claims and the value of their collateral.
The Secured Creditors' claims will be resolved through these
procedures:
A. The Secured Creditors are entitled to recover $16,794 or 50
percent of prepetition and postpetition attorney's fees and
expenses incurred by the Secured Creditors and will waive all
claims to any other fees and expenses incurred in connection
with the Secured Creditors' claims.
B. Post-petition interest accrued on the Secured Creditors'
promissory notes will be deemed allowed Class 5 General
Unsecured Claims, subject to treatment and distribution
according to the terms of the Second Amended Joint Plan of
Reorganization of EXDS Inc. and its Debtor Affiliates.
C. Upon entry of the Order, the Debtors will wire the funds.
Within two business days following the entry of an Order
approving the stipulation, the Debtors will pay the secured
creditors in immediately available funds.
a. The Debtors will wire an amount not less than $2,130,043
to Transamerica at the following address:
Bank: Bank One N.A.
One Bank One Plaza
Chicago, IL 60670
Acct. Name: Transamerica Business Credit Corp.
Acct. Number: 55-75427
ABA Number: 071-000-013
b. The Debtors will wire an amount not less than $326,987 to
Wells Fargo at the following address:
Bank: Bank One, N.A.
One Bank One Plaza
Chicago, IL 60670
Acct. Name: Transamerica Business Credit Corp.
Acct. Number: 55-75427
ABA Number: 071-000-013
c. The Debtors will wire an amount not less than $634,035 to
Linc at the following address:
Bank: Associated Bank Chicago
200 E. Randolph Drive
Chicago, IL 60601
Acct. Name: Cash Recovery LLC
Acct. Number: 21-57013000
ABA Number: 071-002-147
(Exodus Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
FEDERAL-MOGUL: Committee Pushing for Production of Documents
------------------------------------------------------------
The Official Committee of Unsecured Creditors of Federal-Mogul
Corporation wants to compel the production of certain documents
and responsive emails that the Committee has requested from:
a. Federal-Mogul Corporation and its parents, subsidiaries and
affiliates;
b. The Chase Manhattan Bank; and,
c. The Consultant Companies: Credit Suisse First Boston
Corporation, National Economic Research Associates and
PricewaterhouseCoopers.
Charlene D. Davis, Esq., at The Bayard Firm, in Wilmington,
Delaware, tells Judge Newsome that, to date, despite repeated
efforts to use reasonable, non-privileged resources to test the
Debtors' blanket assertions of privilege, the Committee has no
more information than it had back in early April. The Debtors
have not only taken unreasonably broad positions in refusing to
produce these documents, but have ended up delaying these
proceedings by failing to deal fairly and promptly with the
Committee's suggestions for compromise.
Ms. Davis contends that the Debtors claim that the work of these
Consultant Companies was performed "in anticipation of
litigation." However, the Debtors cannot dispute that this work
was used primarily for much broader business purposes:
evaluating whether to file a Chapter 11 petition, providing
asbestos exposure valuations to banks in an arms-length
transaction, and valuing their asbestos exposure for public
financial filings. The Debtors have asserted this privilege in
blanket fashion, stating that "most (if not virtually all)" of
the documents sought from the Debtors and the Consulting
Companies are privileged.
"In significant respects, the period of discovery since December
has been marked by the Committee's efforts to move the process
along and Debtors' efforts to slow it down: failing to respond
to proposals, delaying the production of privilege logs,
blocking non-party discovery, delaying depositions, and
ultimately taking unreasonable positions that force motion
practice," Ms. Davis reveals. "These delay tactics have already
depleted the Debtors' estate needlessly and should end now."
The Committee is investigating the Debtors' Fourth Amended and
Restated Credit Agreement with their bank creditors, led by
Chase, which considers a sum of $350,000,000 in new borrowings.
The Debtors granted security interests not only on the new
borrowings, but on approximately $1,600,000,000 in already
existing, but largely unsecured, debt. "Far more than the
amount of loans they were meant to secure and which had the
resultant effect of subordinating the claims of all other
unsecured creditors to the $1,600,000,000 of antecedent bank
debt," Ms. Davis avers.
Accordingly, the Committee urge the Court enter an order
requiring that:
A. the Debtors complete whatever privilege review they deem
necessary of their own documents and of the Consultant
Companies' documents immediately;
B. by no later than July 15, 2002, the Debtors produce all
documents that describe in any way:
a. the circumstances, reasons, and purposes surrounding the
Debtors' retention of the Consulting Companies;
b. to the extent that the reasons and purposes surrounding
the Debtors' retention changed over time, the actual work
performed;
c. the names of all persons and entities who assisted,
advised or provided information to the Consulting
Companies in connection with their work for the Debtors;
and,
d. the name of all persons and entities provided with any
work performed by the Consulting Companies; and,
C. the Debtors provide privilege logs for all responsive
documents withheld on privilege grounds by no later than July
15, 2002.
Ms. Davis states that the Debtors have conceded that they have
not produced all of the responsive documents, claiming that
retrieving those documents will be difficult and costly. The
Debtors claimed that 28,000 potentially responsive emails
existed, and that a preliminary estimate of the cost to "design
a computer program that can eliminate duplicates and search this
data by key words or phrases" would cost between $75,000 and
$125,000.
Ms. Davis asserts that Electronic documents are no less subject
to disclosure than paper records. While there are some
additional considerations with respect to which party should
bear the costs of retrieving emails, these cases demonstrate
that the obligation to produce what does exist is subject to the
same evaluation of undue burden or cost as other documentary
evidence. "Thus, a party cannot avoid producing documents simply
by stating, in general terms, that production would cause undue
burden," Ms. Davis says. (Federal-Mogul Bankruptcy News, Issue
No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900)
GENERAL DISTRIBUTION: Appeals Court Supports CCAA Restructuring
---------------------------------------------------------------
Earlier Wednesday, the Ontario Court of Appeal dismissed the
appeal made by client publishers of General Distribution
Services. The distribution company's client publishers had
argued that they owned the receivables of GDS, but the court
upheld Mr. Justice Ground's original ruling of May 22, 2002. By
previous agreement there can be no further appeals.
"[Wednes]day's decision supports our restructuring process. It
confirms that we were acting properly with regard to the
receivables, and it enables us to get on with managing the
business," said David Murray, Chief Restructuring Officer of
parent company General Publishing Co. Ltd.
The Bank of Nova Scotia is committed to supporting the company
with additional interim financing now that the matter has been
resolved. The Bank was awaiting Wednesday's final determination
before advancing funds. "Now we can work with the bank to meet
the cash requirements of the business as we work through the
restructuring," Murray said.
As part of its restructuring, GDS implemented a new flow-through
payment model on May 1 that ensures client publishers will be
paid on all new sales going forward. GDS continues to receive
orders and they are being shipped. In addition, GDS has begun
receiving returns again from retailers.
Murray added that there continues to be very strong interest in
all parts of the company from prospective purchasers. "Several
parties are engaged in a due-diligence process, and we are in
continuing discussions with a view to completing transactions in
the next short while."
General Publishing Co. Limited has been operating in accordance
with a Court Order provided under the Companies' Creditors
Arrangements Act (CCAA) since April 30. General Publishing Co.
Ltd. is a privately-owned Canadian company engaged in
educational publishing, trade publishing and book distribution.
GENESISINTERMEDIA: Stephen A. Weber Steps Down as Interim CEO
-------------------------------------------------------------
On May 29, 2002, GenesisIntermedia, Inc. received a facsimile
dated May 1, 2002, noting that effective the close of business
April 30, 2002, Stephen A. Weber resigned as Interim Chief
Executive Officer, member of the Board of Directors, and all
committees upon which he sat. Michael R. Fugler also resigned as
member of the Board of Directors and his respective committee
positions. Prior to their resignation, Michel S. Tamer was named
Chief Executive Officer of GenesisIntermedia, Inc. and member of
the Board of Directors.
GenesisIntermedia, the consumer products marketer (formerly
GenesisIntermedia.com), operates the Centerlinq network of
information kiosks located in more than 30 shopping malls in 18
states. Shoppers can use the kiosks to enroll in rewards
programs, get discount coupons, and access services from online
vendors like Stamps.com and ValueClick. The company also
collects consumer information from the kiosks for use in its
direct marketing efforts. In addition, it markets several
products through traditional infomercials, such as videos based
on the book Men Are From Mars, Women Are From Venus. Chairman
and CEO Ramy El-Batrawi owns about 43% of the company.
At June 30, 2001, GenesisIntermedia reported a total
shareholders' equity deficit of about $9 million. The company
is delinquent in filing its annual report for the year ending
December 31, 2001.
GENSCI REGENERATION: Will File Financial Statements by June 28
--------------------------------------------------------------
GenSci Regeneration Sciences Inc. (Toronto: GNS) announced on
May 22, 2002 and May 27, 2002 that it was unable to file its
comparative financial statements for the fiscal year end
December 31, 2002, its Annual Information Form, and its interim
financial statements for the period ended March 31, 2002 as
required by the applicable securities laws in the jurisdictions
in which GenSci is a reporting issuer. The Company is issuing
this news release further to the requirements of OSC Policy 57-
603.
GenSci expects that the annual and interim financial statements
and its AIF and MD&A will be prepared and filed on or before
June 28, 2002. Other than the foregoing, GenSci confirms that
there has been no material change in the information disclosed
in the May 27, 2002 news release.
GenSci Regeneration Sciences Inc. has established itself as a
leader in the rapidly growing orthobiologics market, providing
surgeons with biologically based products for bone repair and
regeneration. Its products can either replace or augment
traditional autograft surgical procedures. This permits less
invasive procedures, reduces hospital stays, and improves
patient recovery. Through its subsidiaries, the Company
designs, manufactures and markets biotechnology-based surgical
products for orthopedics, neurosurgery and oral maxillofacial
surgery.
On December 20, 2001, the company filed for Chapter 11
reorganization in the U.S. Bankruptcy Court for the Central
District of California (Sta. Ana).
GLOBAL CROSSING: 7.25% & 6% Noteholders Want Adequate Protection
----------------------------------------------------------------
Wilmington Trust Company, as indenture trustee of the 7.25%
Notes due 2004 in the original principal amount of $300,000,000,
and the 6% Dealer Remarketable Securities due 2013 in the
original principal amount of $200,000,000, each issued by debtor
Global Crossing North America, Inc., f/k/a Frontier Corporation,
requests the entry of an order granting adequate protection of
its collateral interests.
According to Richard Levy, Jr., Esq., at Pryor Cashman Sherman &
Flynn LLP in New York, pursuant to an Indenture dated May 21,
1997, between Global Crossing North America and Wilmington's
predecessor indenture trustee, JPMorgan Chase Bank, the Debtors
issued the 7.25% Notes and the 6% Dealer Remarketable
Securities, all of which are secured by pledges of certain
collateral for the benefit of holders of the Global Crossing
North America (GCNA) Senior Notes. Wilmington became the
successor Indenture Trustee in place of JPMorgan Chase pursuant
to an Instrument of Resignation, Appointment and Acceptance by
and among the Debtors, JPMorgan Chase, as predecessor indenture
trustee, and Wilmington, as successor indenture trustee, dated
as of January 24, 2002.
On and after August 10, 2000, Mr. Levy relates that the Debtors
and other affiliated entities entered into an amended and
restated credit agreement with JPMorgan Chase, as administrative
agent for various lenders, and other agreements that created
security interests in various property of the obligors and their
subsidiaries and affiliates. In connection with the granting of
the collateral interests in favor of the Senior Lenders, the
Debtors caused certain subsidiaries or affiliates to pledge
certain securities owned by them to JP Morgan Chase for the
benefit of the Senior Lenders.
Mr. Levy informs the Court that the GCNA Senior Note Indenture
prohibits the Debtors and its subsidiaries from granting any
lien on their respective property or assets without equally and
ratably securing the GCNA Senior Notes. Accordingly, on and
after August 25, 2000, the Debtors and certain of its
subsidiaries and/or affiliates, including ALC Communications
Corporation and Global Crossing Telecommunications, Inc. (GCTI),
entered into collateral trust agreements and shared collateral
pledge agreements with JPMorgan Chase, in its capacity as
collateral trustee, for the benefit of the holders of the GCNA
Senior Notes. JPMorgan Chase continues to serve as Collateral
Trustee.
Pursuant to the Collateral Agreements, Mr. Levy submits that
each of ALC and GCTI pledged to the Collateral Trustee their
holdings of capital stock in certain other subsidiaries and/or
affiliates. The Stock Collateral consists of the following
pledged securities:
A. 100% of the shares of common stock of GCTI, whose registered
owner is ALC;
B. 100% of the shares of common stock issued by IxNet Inc.
(f/k/a GC Merger Sub 11-01, Inc.), whose registered owner is
GCTI; and
C. 100% of the shares of stock issued by Global Crossing
GlobalCenter Holdings Inc., whose registered owner is ALC.
Pursuant to the Collateral Agreements, Mr. Levy explains that
the Stock Collateral is pledged to and held by the Collateral
Trustee for the ratable benefit of the Senior Lenders and the
holders of the GCNA Senior Notes. Pursuant to an interim
stipulation dated January 28, 2002, the Debtors granted adequate
protection to the Senior Lenders of their security interests in
various property of the Debtors, including the Stock Collateral,
on account of the Debtors' continued operations. Among other
things, the Debtors agreed to provide the Senior Lenders with a
priority claim under Section 507(b) of the Bankruptcy Code to
the extent of the decline of the value of the collateral due to
the commencement or continuation of the Chapter 11 cases, and to
pay the documented fees and expenses of the Senior Lenders'
attorneys.
Mr. Levy fears that the continued operation of the Debtors whose
stock is pledged for the benefit of holders of the Global
Crossing North America Senior Note may adversely affect the
Stock Collateral and the note holders' ratable rights under the
shared pledges of the Stock Collateral to the Collateral
Trustee. The Collateral Trustee, however, failed to seek
adequate protection of those collateral interests. Accordingly,
Wilmington Trust, as Indenture Trustee for the Global Crossing
North America Senior Notes, is entitled to adequate protection
of those collateral interests.
Mr. Levy adds that Wilmington Trust, as indenture trustee, is
entitled to adequate protection in connection with the Debtors'
proposed centralized cash management system. Under that
arrangement, cash of one debtor may actually be transferred to
and/or used by another debtor, or even by a non-debtor. The
potential depletion of the value of the issuers of the Stock
Collateral pursuant to that system, through the use or transfers
of any of those entity's cash by another company in the Global
Crossing corporate family, also adversely affects the value of
the Stock Collateral and the interests of the holders of the
Global Crossing North America Senior Notes. Although the Cash
Management Order entered by the Court at the outset of this case
provides that entities which supply cash will receive
administrative expense priorities, there is no assurance that
any entity which receives cash and which is subject to the
obligation to satisfy the administrative expense claim will be
able to repay the cash.
As of the Petition Date, Mr. Levy contends that the aggregate
debt owed to the Indenture Trustee on account of the Global
Crossing North America Senior Notes was approximately
$507,750,000, including principal and accrued interest. In
addition, under the Global Crossing North America Senior Note
Indenture, Wilmington Trust is entitled to recover additional
costs and expenses, including its attorneys' professional fees
and costs.
The Indenture Trustee submits that, as a matter of law, it is
entitled to the immediate provision of adequate protection, and
to other and further relief as may be proper including, in the
absence of the provision of adequate assurance, lifting of the
automatic stay to permit the Indenture Trustee to exercise its
contractual and non-bankruptcy law remedies to realize upon the
Stock Collateral. The Debtors have already stipulated that the
Stock Collateral held ratably for the benefit of the Senior
Lenders entitles those lenders to adequate protection, in the
forms granted under the stipulation dated January 28, 2002. Mr.
Levy believes that there is no reason why the Indenture Trustee
and the holders of the Global Crossing North America Senior
Notes should be treated differently with respect to the
protection of their interests in that collateral. (Global
Crossing Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
GREKA ENERGY: Plans to Complete Debt Restructuring Deals in Q2
--------------------------------------------------------------
Greka Energy Corporation (Nasdaq: GRKA) closed the sale of its
75% exploration interest in the Jatiluhur Block, West Java to
Kumoco Energy Ltd. The terms of the sale provide for a $4
million production payment to the Company and a retained 5%
overriding royalty interest in the Block. Pertamina, the
Indonesian state-owned oil company, consented to the sale.
The Block covers 1.275 million of unexplored acres on the Island
of Java near a number of producing oil and gas fields. A
portion of the Block identified as the Jonggol area consisting
of 500,000 acres has two prospects and eleven leads.
The Company acquired the Indonesia prospect in the 1999 Saba
acquisition. More recently in March 2002, the prospect was
identified as a non-strategic asset under the Company's
restructured business plan that focuses on its Integrated
Operations in Santa Maria, California, and its long-term
interests in China.
Mr. Randeep S. Grewal, Chairman, CEO & President, stated, "The
sale of this prospect divests the Company's interests in
Indonesia in accordance with the objectives outlined in the
Company's restructured business plan initiated in early March.
At the same time, management has been focused on the previously
announced debt restructuring and asset acquisition which the
Company plans to conclude on schedule in the second quarter."
Greka is a vertically-integrated energy company with primary
areas of activities in California and long-term in China. The
Company is principally focused on exploiting the high cash
margin created from the relatively stable natural hedge by its
crude production and the asphalt market in Central California.
HARVARD INDUSTRIES: Accepting Bids for Assets Until June 19
-----------------------------------------------------------
IN THE UNITED STATES BANKRUTPCY COURT
FOR THE DISTRICT OF NEW JERSEY
IN RE: : CHAPTER 11
HARVARD INDUSTRIES, INC., ET AL.; : CASE NO. 02-50586
DEBTORS. : JOINTLY ADMINISTERED
NOTICE OF AUCTION AND SALE HEARING
PLEASE TAKE NOTICE, that Hayes-Albion Corporation, together
with Harvard Industries, Inc., and Harvard Transportation, Inc.,
the above-captioned debtors in possession, by motions dated May
30, 2002, have requested, among other things, (i) entry of an
order approving sale and bid procedures and buyer protections in
connection with a sale substantially all of the assets related
to Hayes-Albion's Trim Trends operating division and all of the
assets related to Harvard's operations facility located at
Farmington Hills, Michigan, and (ii) entry of an order approving
the sale of the Assets to Trim Trends Operations US< LLC and
Trim Trends Real Estate US, LLC or such other entity that
submits a higher or better offer, and approving the assumption
and assignment of certain executory contracts related to the
Assets.
PLEASE TAKE FURTHER NOTICE, that a hearing to consider
approval of, among other things, the Sale Procedures and Buyer
Protections is scheduled before the Honorable Kathryn C.
Ferguson, United States Bankruptcy Judge, in Court Room No. 2 of
United States Bankruptcy Court, 402 East State Street, Trenton,
New Jersey 08608 on June 10, 2002 at 10:00 a.m.
PLEASE TAKE FURTHER NOTICE, that the Proposed Buyer's bid
for the Assets is subject to higher and better offers and to
approval of the United States Bankruptcy Court for the District
of New Jersey. An auction of the Assets is scheduled to take
place at 11:00 a.m. (New York City Time) on June 21, 2002, at
the New York offices of Chadbourne & Parke LLP, 30 Rockefeller
Plaza, New York, New York, or such later time or other place as
the Sellers shall notify all Competing bidders (as defined in
the proposed Sale Procedures). The proposed Sale Procedures
provide that anyone wanting to participate at the auction must
submit a bid no later than 4:00 p.m. on June 19, 2002.
PLEASE TAKE FURTHER NOTICE, that the sale Hearing is
currently scheduled before the Honorable Kathryn C. Ferguson,
United States Bankruptcy Judge, in court Room No. 2 of the
United States Bankruptcy Court, 402 East Street, Trenton, New
Jersey 08608, at 10:00 a.m. (New York City Time) on June 24,
2002. The sale Hearing may be adjourned or rescheduled without
notice by an announcement of the adjourned date at the Sale
hearing. The Sellers will be deemed to have accepted a bid only
when the bid has been approved by the Bankruptcy Court.
PLEASE TAKE FURTHER NOTICE that anyone interested in
bidding on the Assets must contact J. Scott Victor of SSG
Capital Advisors, LP, the Debtors' financial advisors (telephone
number 610-940-5802) to enter into a confidentiality agreement
and receive a copy of the Sale Procedures. The Sellers have
established a data room for potential bidders seeking due
diligence.
PLEASE TAKE FURTHER NOTICE that any objection to the sale
of the Assets (including any objection to the Sellers'
assumption and assignment of certain executory contracts in
connection with the proposed sale of Assets) must be filed with
the United States Bankruptcy Court for the district of New
Jersey, 402 East State Street, Trenton, New Jersey 08608 and
served so as to be received by (i) Chadbourne & Parke LLP, 30
Rockefeller Plaza, new York, New York 10112, Attn: Joseph H.
Smolinsky, Esq.; (ii) Dale & Gordon LLP, 2050 Center Avenue,
Suite 560, fort Lee, New Jersey 07024, Attn: Bruce D. Gordon,
Esq.; (iii) Harvard Industries, Inc., 3 Werner Way, Lebanon, New
Jersey 08833, Attn: David a. White, Esq., (iv) Honigman,
Miller, Schwartz & Cohn, LLP, 2290 first National building, 660
Woodward Avenue, Detroit, MI 48226, Attn: Peter C. Bolton,
esq.; (v) Duane Morris LLP as counsel to the Committee, 744
Broad Street, Suite 1200, Newark, NJ 07102-3889 Attn: William
S. Katchen, Esq., (vi) Dewey Ballantine LLP, as counsel to the
post-petition lenders, 1301 Avenue of the Americas, New York,
Hilco Capital, 919 Third Avenue, New York, NY 10022, Attn:
Michael Cook, Esq., so as to be actually received by no later
than 4:00 p.m. prevailing Eastern time on June 17, 2002.
Copies of the Sale Motion, proposed bidding procedures and
form asset purchase agreement may be obtained by contacting
Chadbourne & Parke LLP, 30 Rockefeller Plaza, New York, New York
10112, Attention: Anne Suffern, Legal Assistant, phone (212)
408-5100; facsimiles; (212) 541-5369.
DATED: MAY 31, 2002
CHADBOURNE & PARKE LLP
Co-Counsel To The Debtors
30 Rockefeller Plaza
New York, NY 10112
Tel: (212) 408-5100
DALE & GORDON LLP
Co-Counsel to the Debtors
2050 Center Avenue, Suite 560
Fort Lee, New Jersey 07024
Tel: (201) 585-2600
HAYES LEMMERZ: Gets Nod to Implement Employee Retention Plan
------------------------------------------------------------
Hayes Lemmerz International, Inc., and its debtor-affiliates
obtained Court's authorization to implement its Critical
Employee Retention Plan.
The salient terms of the Critical Employee Retention Plan are:
A. Eligibility: The Critical Employee Retention Plan is composed
of two tiers:
* The Tier One Participants consist of:
-- the Debtors' Chief Executive Officer,
-- 11 officer that report directly to the CEO and
-- the Vice President of Sales for the Debtors'
European Wheels business.
* Tier Two Participants cover about:
-- 21 plant managers,
-- 42 director level employees, and
-- 10 junior manager level employees.
B. Retention Bonuses: The Critical Employee Retention Plan
awards retention bonuses to these critical employees who
remain employed during and throughout these chapter 11
cases.
a. For Tier Two participants, the bonus is equal to between
42% to 80% of their base salary;
b. between 80% to 120% of the base salary for Tier One
employees except the CEO; and
c. 200% for the CEO.
Retention bonuses will be paid within a reasonable amount
of time after the effective date of the substantial
consummation of a reorganization plan or by the closing of
a sale of all or considerably all of the Debtors' assets
minus any retention bonus that a participant will receive
for the same period pursuant to a Sign-In Bonus. However,
40% of the said bonus will be paid on September 1, 2002 if
the effective date of Restructuring has not occurred as of
that date. The maximum possible aggregate amount of the
bonus is about $8,500,000 excluding the reductions for
Sign-In retention bonuses.
C. Restructuring Performance Bonuses: These are designed to
replace the stock options that Tier One Participants ought
to receive from the original incentive plan and to
encourage Tier One Participants to generate increased
EBITDA alongside an increase in the Debtors' enterprise
value. The total amount of the Restructuring Bonus for Tier
One Employees would be 32 percent of the amount in excess
of the Debtors' last 12 months EBITDA as of Effective date
and the last 12 months EBITDA as of the period ended
November 30, 2001.
The performance bonuses will be given to Tier One
participants as soon as the Debtors deem practicable after
the Effective Date provided that the amount of the
performance bonus shall be reduced by the retention bonus
amount received by or owed to the Critical Employee, and
by the retention bonus amount the employee receives, which
covers the same period pursuant to the Sign-In agreement.
D. Equity Conversion Option: On the Effective Date, the Tier One
Employee can opt to convert up to one half of his
Restructuring Performance Bonus into restricted shares or
purchase options of the Debtors' common stocks that is
issued pursuant to a confirmed reorganization plan. In this
case, the Restructuring Performance Bonus amount is reduced
by the estimated value of the restricted shares or options
distributed to the critical employee as determined by the
Debtors' investment advisors. This option is not applicable
to Tier One participants terminated before the Effective
Date.
E. Termination: Any participant terminated for Cause or
voluntarily leaves employment without valid reason
automatically forfeits his rights to payment of any amount
under the Retention Plan. In such event, the Debtors shall
pay:
a. a pro-rated amount of the Employees Retention Bonus at
termination, minus 50 percent of the amount that
employee will get under the severance plan or any
other severance arrangements, provided that he will be
entitled to get at least 50% of his pro-rated
Retention Bonus;
b. if he is a Tier One Employee, as soon as practicable, a
pro-rated share of his Restructuring Performance
Bonus, if any.
The amount intended to be paid to the terminated Critical
Employee under the proposed Retention Plan will be returned
to the Debtors' estates to be divided among the Debtors'
secured and unsecured creditors. Unpaid retention or
restructuring performance bonuses shall be considered as
administrative expense and given priority. (Hayes Lemmerz
Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
HYBRID NETWORKS: Sells Assets to HYBR Wireless via Foreclosure
--------------------------------------------------------------
Hybrid Networks, Inc. reports that on May 31, 2002,
substantially all of its remaining assets were sold by
foreclosure to HYBR Wireless Industries Limited.
On April 30, 2002, Hybrid defaulted on its secured obligation to
pay the principal sum of $5,500,000 to London Pacific Life &
Annuity Company. On May 1, 2002, London Pacific sent Hybrid a
notice of the foregoing default under the terms of its
promissory note and security agreement with Hybrid. Pursuant to
its security agreement with Hybrid, London Pacific asserted a
first lien on substantially all of the assets of Hybrid, and on
May 21, 2002, London Pacific exercised its rights under the
terms of its security agreement and section 9609 of the
California Commercial Code to take possession of its collateral.
Pursuant to the terms of its security agreement and section 9610
of the California Commercial Code, London Pacific collected the
proceeds of Hybrid's accounts receivable, disposed of Hybrid's
furnishings through a private sale to a dealer in such assets,
and marketed Hybrid's equipment, inventory and intellectual
property, including through a formal bid solicitation procedure
conducted by bid4assets.com, resulting in the sale of all such
remaining assets to HYBR Wireless Industries Limited on May 31,
2002.
As a result of the foregoing, on May 31, 2002, Hybrid ceased its
business operations and terminated all remaining full-time
employees. Hybrid continues to employ professionals and former
employees on an hourly consulting basis for the purposes of
finalizing certain payments to vendors from the minimal
remaining cash on hand, surrendering its leased premises to the
landlord by the end of June 2002, finalizing payroll reporting
and completing and filing final tax returns. No funds or other
assets are available for any distribution to holders of
preferred and common stock, and Hybrid estimates that its unpaid
liabilities to unsecured creditors will total approximately
$1,000,000, substantially all of which will be owed to its real
property landlord.
IT GROUP: Amending Asset Purchase Agreement with Shaw
-----------------------------------------------------
Gary A. Rubin, Esq., at Skadden Arps Slate Meagher & Flom LLP in
Wilmington, Delaware, notifies the Court that The IT Group,
Inc., its debtor-affiliates and Shaw desire to amend the Asset
Purchase Agreement to join and bind additional subsidiaries of
the IT Group as Sellers. These subsidiaries will be bound by
all of the terms and obligations set forth in the agreement: 37-
02 College Point Boulevard, LLC, Advanced Analytical Solutions,
Inc., E-COM Solutions, Inc., Empire State I, LLC, Empire State
II, LLC, EVAP Technologies, LLC, Evergreen Acquisition Sub I,
Inc., Groundwater Technology, Inc., IT C&V Operations, Inc., IT
E&C Operations, Inc, IT Environmental and Facilities, Inc., IT
International Holdings, Inc., IT International Investments,
Inc., IT International Operations, Inc., IT Investment Holdings,
Inc., Jernee Mill Road, LLC, KIP I, LLC, Landbank Acquisition I,
LLC, Landbank Acquisition II, LLC, Landbank Acquisition III,
LLC, Landbank Environmental Properties, LLC, Landbank
Remediation Corp., Landbank, Inc., Landbank Wetlands, LLC,
Marconi Wartburg, LLC, Millstone River Wetlands Services, Inc.,
Northeast Restoration Company, LLC, Organic Waste Technologies,
Inc., Otaya Mesa Ventures I, LLC, PHR Environmental
Consultants, Inc., Raritan Venture I, LLC,, The Dorchester
Group, LLC, U.S. Wetland Services, LLC., Whippany Venture I,
KKC, Wyckoff's Mills, LLC American Landfill Supply Co., Inc.,
Emcon, Emcon Industrial Services, Inc., enterprise,
Environmental & Earthworks, Inc., Fluor Daniel Environmental
Services Inc.,(FDESI), Gradient Corporation, IT Alaska, Inc., IT
Baker LLC, IT Corporation, IT Corporation of North Carolina,
Inc., IT Tulsa Holdings, Inc., ITGTech, Jellinek, Schwartz &
Connolly, Inc., JSC International, Inc., Kato Road, LLC.,
Keystone Recovery, Inc., LFG Specialties, Inc., Monterey
Landfill Gas Company, National Earth Products, Inc., Northern
California Development Limited, Ohm Corporation, Ohm Remediation
Services Corp., Ohm Remediation Services of Canada, Ltd.,
Pacific Environmental Group, Inc. , Sielken, Inc., Submerged
Lands, LLC., W&H Pacific, Inc., Wehran New York, Inc., HL
Newhall, LLC, and, Chimento Wetlands I, LLC.
Mr. Rubin relates that the Asset Purchase Agreement is further
amended to include Expense Reimbursement provisions:
A. Based on the Accrued Expense Budget, the Buyer will reimburse
IT Group for these postpetition expenses which are incurred
or accrued but unpaid as of the Closing Date and are
subsequently paid by IT Group or its subsidiaries:
a. accrued payroll and employee payroll taxes;
b. "Loan forgiveness tax exposure" not to exceed $2,400,000;
c. Equipment Lease Payments not to exceed $5,500,000;
d. Utilities Expenses, Other Non-Payroll Taxes, Office
Expenses, Incremental Field Expenses & Petty Cash,
Postage, Fixed Maintenance Costs, Miscellaneous Fixed
Disbursements and others which shall not exceed
$4,020,000;
e. variable disbursements;
f. First Day Order Payments not to exceed $1,194,000;
g. professional fees not to exceed $10,600,000; and,
B. These Expense Reimbursements provisions will be subject to
certain terms and conditions:
a. the SG&A Payments, variable Disbursements and First Day
Order Payments will be subject to the reasonable prior
approval of the Buyer. The Sellers will establish a
segregated interest bearing account which the Buyer will
fund with $5,000,000. The Sellers may use the fund to pay
the Accrued Expenses. The Buyer will replenish the
account from time to time upon the Sellers' request as
necessary to pay the Accrued Expenses;
b. The Loan forgiveness tax exposure relates only to claims
of payment of taxes arising as a result of the Closing
for the Sellers' executive employees who executed
promissory notes in favor of IT Group under the Sellers'
1988 Executive Stock Ownership Program;
c. To the extent that settlement of the loan forgiveness tax
exposure or the equipment lease payments are less than
the amount that was accrued according to the Accrued
Expenses Budget, the cap on Buyer's reimbursement
obligations will be reduced dollar-for-dollar by an
amount equal to the difference between the amount accrued
and the amount actually paid;
d. To the extent the Professional Fees are less than
$10,600,000, the Sellers will be entitled to retain from
the segregated account the amount by which the expenses
are less than the Professional Fees Cap and that
retention amount will be distributed to the Sellers and
become property of the Sellers' estates provided that the
retention amount does not exceed $600,000; and,
f. Accrued Expenses will not include any expenses, fee or
other amounts that constitute fringe benefits. (IT Group
Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
INTERBANK FUNDING: Files for Chapter 11 Relief Amid SEC Probe
-------------------------------------------------------------
Despite an ongoing formal investigation by the Securities and
Exchange Commission, InterBank Funding Corp. and two of its fund
entities - IBF VI Secured Lending Corp. and IBF Collateralized
Finance Corp. - sought chapter 11 bankruptcy protection on
Friday with the U.S. Bankruptcy Court in Manhattan, reported Dow
Jones. Court papers said the companies have no secured
creditors. The newswire reported that IBF Collateralized
Finance Corp. listed assets of $179.6 million and debts of $182
million; IBF VI Secured Lending Corp. listed $8.6 million in
assets and $7.4 million in debts; and InterBank Funding listed
assets of $1.7 million and debts of $1.4 million. (ABI World,
June 11, 2002)
INTERBANK FUNDING: Case Summary & Largest Unsecured Creditors
-------------------------------------------------------------
Lead Debtor: InterBank Funding Corp.
630 Fifth Avenue
Suite 820
New York, New York
Bankruptcy Case No.: 02-41590
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
IBF VI Secured Lending Corporation 02-41591
IBF Collateralized Finance Corporation 02-41592
Type of Business: The Debtor is a Holding Company for companies
which invest and manage operating real estate
and other businesses through equity and debt
investments including asset securitizations.
Chapter 11 Petition Date: June 7, 2002
Court: Southern District of New York (Manhattan)
Judge: Burton R. Lifland
Debtors' Counsel: Neil P. Forrest, Esq.
Roger Frankel, Esq.
Debra Kramer, Esq.
Swidler Berlin Shereff Friedman, LLP
405 Lexington Avenue
New York, NY 10174
212-973-0111
Fax : 212-891-9598
Total Assets Total Debts
------------ -----------
InterBank Funding Corp. $1,679,000 $1,403,357
IBF VI Secured $8,550,728 $7,393,793
IBF Collateralized $179,612,272 $181,924,995
A. InterBank Funding's and IBF Collateralized's
20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
John J. & Paulette Guaranty $3,000,000
Callahan
1003 Ashlawn
Southlake TX 76092
817-410-1073
Thomas E. & Constance Guaranty $3,000,000
D'Ambra
370 Riverview Road
Rexford, NY 12148-1428
Richard M. & Elizabeth S. Guaranty $1,878,000
Cashin
c/o Tate Elliot, Geller
& Co.
800 Thrid Avenue, 20th Floor
New York, NY 10022
Waterside Limited Guarantee $1,200,000
PO Box 124, Langtry House
La Motte Street
St. Hellier
Isle of Jersey JE4 8QR
Jeffrey & Bernadette Guaranty $1,000,000
Bonner
104 Ellisen Road
Watchung NJ 07069
Anthony D. Ivankovich Guaranty $1,000,000
526 Woodland Drive
Glenview, IL 60025
312-942-3137
Survivor's Trust of the Guaranty $900,000
Lightfoot Rev. Trust
307 Island Creek Drive
Vero Beach, FL 32963
561-231-3207
Ramanath Iyer MD PA Guaranty $800,000
Target
Benefit Pension Plan
76 North Street
Saco, ME 04072
207-282-6124
The Umansky Family Trust Guaranty $750,000
818 N/ Roxbury Drive
Beverly Hills, CA 90210
310-278-5156
Jennie M. Chicarilla Guaranty $654,000
55 Fern Street
Edison, NJ 08817
Dalton L. Scovil Guaranty $650,000
PO Box 220
Blaine, ME 04734
D&F Bruce Family Ltd. Guaranty $640,000
3115 Cornell Avenue
Dallas, TX 75205
214-520-7504
Thomas M. Glavine Guaranty $625,000
Irrevocable Family
Incentive Trust
8925 Old Southwick Pass
Alpharetta, GA 30202
770-740-8010
David Weinberg Guaranty $606,000
139 W. 19th St., 75W
New York, NY 10011
212-807-8273
Richard & Elina Y. Leong Guaranty $600,000
4518 Prince Pine Trail
Houston, TX 77059
281-488-6414
John M. Cart Guaranty $600,000
174 Highway 56
Spartanburg, SC 29302-5633
864-585-3831
William R. Givens Guaranty $600,000
8 Coolidge Drive
Acton, MA 01720
978-263-3216
Thomas H. Grant Guaranty $600,000
360 W. Illinois Street,
Unit 10B
Chicago, IL 60610
312-695-5987
Wolf-Dieter & Claudia Voss Guaranty $600,000
14 Via Ambra
Newport Coast, CA 92657
Ernst E. Suter Guaranty $570,000
7-03 123rd Street
College Point, NY 11356
B. IBF VI's 19 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
David W. Thompson Subordinated Note $192,000
James A. & Barbara E. Subordinated Note $153,000
McLeod
Charlotte D. Botello Subordinated Note $150,000
Revocable Trust
Troy F. Begeman Subordinated Note $150,000
Dorothy P. Sapp Trust Subordinated Note $140,000
Elias Lehaf Subordinated Note $125,000
Leland C. Stokes Subordinated Note $125,000
Carmine Pagano, Jr. Subordinated Note $112,000
Military Chaplains Assn. Subordinated Note $110,000
Regis J. Reynolds $103,000
Patricia A. Reynolds Subordinated Note $102,000
Robert B. Stone Subordinated Note $100,000
Hawkins McCracken Zellner Subordinated Note $100,000
Alvin E. and Caroline M. Subordinated Note $95,000
Christensen
David Mudrick Subordinated Note $93,000
Martena Wong Subordinated Note $81,000
Margaret E. Lappin Subordinated Note $80,000
Sally J. Baldin Subordinated Note $80,000
Marilyn Munz Subordinated Note $80,000
INTERSTATE GENERAL: Defaults on $4.4 Million Promissory Note
------------------------------------------------------------
Interstate General Company L.P. (Amex: IGC; Pacific) has
received formal notification Wednesday from a lender that it is
in default under the terms of a promissory note in the principal
amount of $4,400,000. The default relates to unpaid interest.
The total interest due is $146,649.96 and must be remitted by
June 21, 2002. While the Company is aggressively working to
sell or refinance its land holdings (see IGC's 10K, and 10Q
filings) having an estimated gross value in excess of $38
million, it has not succeeded in raising sufficient funds
required to support its operations in a timely fashion. The
Company expects to remit payment and resolve the default by June
21st through advances from affiliated entities. The note is
secured by the Company's Town Center South parcels.
KAISER ALUMINUM: Retirees Tap Brobeck Phleger as Primary Counsel
----------------------------------------------------------------
The Official Committee of Retired Employees of Kaiser Aluminum
Corporation and its debtor-affiliates asks the Court to approve
its employment and retention of Brobeck, Phleger & Harrison LLP
as their primary counsel, nunc pro tunc to February 28, 2002.
Specifically, Brobeck will render:
A. research, analysis, and advice to the Retirees' Committee
relative to the February 8, 2002 letter from James E.
McAuliffee, Jr. vice President of Corporate & Fabricated
Products Human Resources for Kaiser Aluminum & Chemical
Corporation, to the "Kaiser Aluminum Retiree/ Surviving
Spouse" and all attachments contained in the letter;
B. research, analysis, and advice to the Retirees' Committee
relative to the March 27, 2002 letter from Kaiser Aluminum &
Chemical Corporation as Plan Administrator to "Salaried
Retiree/ Surviving Spouse and covered spouse/dependents, if
any" and all attachments contained in the letter; and,
C. any and all services authorized by the Court.
The Chairman for the Retirees' Committee, John E. Daniel,
informs the Court that the committee chose Brobeck as its
counsel because of the firm's considerable experience and
knowledge in the field of bankruptcy. Brobeck has particular
experience representing committees of retired employees in
Chapter 11 cases. In addition, Brobeck has experience with
issues relating specifically to retirement benefits. Moreover,
the retention of Brobeck is geographically desirable because
Frederick D. Holden, Jr., the attorney who will be primarily
responsible for representing the Retirees' Committee in these
cases, works out of the San Francisco office of Brobeck.
Accordingly, Mr. Daniel believes that Brobeck is well qualified
to represent them in these cases in an efficient and timely
manner.
Mr. Daniel proposes that Brobeck will be paid its customary
hourly rates for services rendered that are in effect from time
to time. The committee also intends to reimburse Brobeck of its
actual and necessary expenses. The attorneys presently
anticipated to be the persons primarily involved in representing
the committee and their current standard hourly rates are:
Attorney Position Rate
------------------------ -------------------- ------
Frederick D. Holden, Jr. bankruptcy partner $470
Barbara P. Pletcher benefits partner 470
Jennifer S. Yount bankruptcy associate 325
Frederick D. Holden, Jr., Esq., a member of the firm Brobeck,
Phleger & Harrison LLP, understands that, pursuant to an April
18, 2002 budget submitted by Brobeck to the Court, the Retirees'
Committee and its counsel are subject to a $95,000 fee cap --
unless the Court increases that limit.
Additionally, Mr. Holden ascertains that the firm and its
professionals have no connection with the Debtors or with their
major creditors and with other parties-in-interest to these
cases. Brobeck represents no adverse interest to the Retirees'
Committee in the matters in which it is to be engaged. (Kaiser
Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
KAISER ALUMINUM: Wants to Extend Plan Exclusivity to Dec. 12
------------------------------------------------------------
Kaiser Aluminum has filed a motion with the U.S. Bankruptcy
Court for the District of Delaware to extend to Dec. 12, 2002
its exclusivity period to submit a formal Chapter 11 Plan of
Reorganization.
Bankruptcy law generally provides that during the first 120 days
after filing, the reorganizing company has the exclusive right
to submit a Plan of Reorganization. In complex cases involving
large companies, this exclusivity period is usually extended
because the process of evaluating the company's options and
working with all the stakeholders in the reorganization process
requires more time to complete. Exclusivity prevents other
stakeholders from filing competing plans for the reorganization
that could be disruptive and distracting to the company's work.
"We believe the additional time is necessary in order for us to
be methodical and rigorous in the development of this plan,"
said Jack A. Hockema, Kaiser's president and chief executive
officer.
"In the interim, I am pleased to report that the company's day-
to-day operations have been largely unaffected by our Chapter 11
case. Our liquidity is strong; we continue to make and sell
products; and we continue to maintain 'Best in Class' service
for customers of our Fabricated Products businesses."
Kaiser Aluminum Corporation (OTCBB:KLUCQ) is a leading producer
of alumina, primary aluminum and fabricated aluminum products.
KMART CORP: Bags Approval to Reject Totality Services Agreement
---------------------------------------------------------------
Bluelight.com obtained Court's approval to reject its Master
Services Agreement dated September 1, 2001 with Totality
Corporation effective May 1, 2002.
As previously reported, Totality agreed to perform services for
Bluelight, including maintaining and administering certain
computer hardware, under this Services Agreement. In addition,
Totality provided Bluelight with production support and change
control for their software, servers and networks.
Bluelight.com has completed the outsourcing of certain business
e-commerce and ISP operations, which were supported by Totality.
The hardware that Totality was maintaining has been returned to
the lessors and Bluelight no longer needs the support services
for the operations that they have outsourced.
Bluelight.com was paying Totality approximately $170,000 a month
for the Services. (Kmart Bankruptcy News, Issue No. 24;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
KMART CORP: Court Permits Avmark License Agreement Assumption
-------------------------------------------------------------
Kmart Corporation and its debtor-affiliates secured the Court's
authority to assume the Curtis Mathes License Agreement dated
July 1, 2000 and as amended on April 23, 2002, with Avmark Inc.
According to Mark A. McDermott, Esq., at Skadden, Arps, Slate,
Meagher & Flom, in Chicago, Illinois, the Debtors pay Avmark
royalties within 10 days following the end of each month. As of
the Petition Date, Mr. McDermott admits that Kmart owed ordinary
course royalty payments to Avmark.
In connection with the assumption of the License Agreement,
Avmark has agreed to a 20% reduction in the annual minimum
royalty for the remainder of the term of the License Agreement.
Moreover, the Debtors shall promptly pay the outstanding royalty
payment of $1,900,796 to assume the License Agreement. It was
explained that the Curtis Mathes line of products represents a
value brand that offers functionality equivalent to the leading
national brands yet provides Kmart with better than average
gross margins. Thus, the Debtors are convinced that assumption
of the License Agreement and the payment of the Cure Amount will
ultimately benefit their estates.
The current term of the License Agreement will end on June 30,
2005. Thereafter, the License Agreement shall continue for
indefinite successive one-year terms unless terminated by either
party upon at least six months prior to the end of the initial
term or any such year extension. (Kmart Bankruptcy News, Issue
No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900)
LAIDLAW INC: Eligibility for TSX Listing Currently Under Review
---------------------------------------------------------------
Laidlaw Inc. announced that The Toronto Stock Exchange is
reviewing the eligibility for continued listing of the Common
Shares and the Convertible First Preferred Shares Series G of
the Company. The basis for the review by the TSE is stated to be
primarily related to the current market capitalization of the
Company given the current price at which the securities are
trading, the Company's current financial situation and the fact
that the Company is in formal insolvency proceedings.
An order was obtained by the TSE lifting the current stay of
proceedings under the Companies' Creditors Arrangement Act
against the Company in order to allow the TSE to conduct the
review.
The Company is being reviewed pursuant to the expedited review
process of the TSE. The TSE has advised the Company that a
meeting of the Listings Committee of the TSE is to be held on
Thursday, June 13, 2002 to consider whether or not to suspend
trading in the Common Shares and the Convertible First Preferred
Shares Series G of the Company.
Laidlaw Inc. is a holding company for North America's largest
providers of school and inter-city bus transportation, public
transit, patient transportation and emergency department
management services.
LIGHT MANAGEMENT: Working Capital Deficit Tops $2MM at March 31
---------------------------------------------------------------
The financial statements of Light Management Group Inc. have
been prepared assuming the Company will continue as a going
concern. The Company has had recurring losses and a working
capital deficiency of $2,160,000 at March 31, 2002 which create
substantial doubt about the Company's ability to continue as a
going concern. The recovery of assets and continuation of future
operations are dependent upon the Company's ability to obtain
additional debt or equity financing and its ability to generate
revenues sufficient to continue pursuing its business purposes.
The Company is actively pursuing financing to fund future
operations and acquisitions.
Light Management Group, Inc. was organized under the laws of the
State of Nevada on April 20, 1998 under the name Triton
Acquisition Corporation. Triton officially changed its name to
Light Management Group, Inc. on February 23, 2000.
LMG, through wholly owned subsidiaries, develops new
applications for optical and light technologies. LMG offers
products based on its proprietary acousto-optic deflection and
related non-diode laser, photonics and optic technologies.
These technologies are used in the fiber optic communications,
biomedical, out-of-home advertising, industrial and aerospace
markets. LMG's research and development provides ideation,
patenting and development of new products.
The Company had sales revenues of $427,797 for the three months
ended March 31, 2001 as compared to $158,863 for the three
months ended March 31, 2002. This decrease is primarily the
result of a decline in Laser Equipment Sales of $ 298,052 in the
first quarter of 2002.
Gross Profit decreased from $203,175 for the three months ended
March 31, 2001 to $85,663 for the three months ended March 31,
2002. This decrease is also the result of the decrease in Laser
Equipment Sales.
The operating expenses incurred by the Company for the three
months ended March 31, 2001 were $766,264 compared to
$1,453,140 for the three months ended March 31, 2002. The
general expenses increased by $47,345, and non-cash
compensation by $680,854. The increase in expenses are
attributed to the additional costs for the Head Office in
Georgia, which had not opened in 2001. Shares issued for new
consulting services agreements and salaries adjustments account
for the increase in non-cash compensation. In the first
quarter of 2001 the Company recorded an extraordinary loss of
$765,000 on extinguishment of debt.
As a result of the above, the net loss for the three months
ended March 31, 2001, was $1,335,443, as compared to a loss of
$1,389,382 for the three months ended March 31, 2002.
The Company has financed its cash requirements primarily through
borrowings from related parties and sales of common shares.
Net cash used in operating activities was $203,095.
As of March 31, 2002, the working capital deficiency was
$2,160,000. This lack of liquidity, in addition to the net
losses for the years ended December 31, 2001 and 2000, resulted
in the Company's independent auditors including an explanatory
paragraph in their report on the December 31, 2001 financial
statements about LMG's ability to continue as a going concern.
The Company's current assets as of March 31, 2001, were
$1,734,860 as compared to $575,404 as of March 31, 2002. The
bulk of this amount is in inventory of $306,193 and prepaid
expenses of $206,661.
Accounts payable increased to $989,747 and accrued expenses also
increased to $1,058,311 as of March 31, 2002, as compared to
$349,003 and $290,883, respectively, as of March 31, 2001.
Proceeds of borrowings from related parties were $67,227 during
the three months ended March 31, 2002. The Company also
borrowed $122,000 from unrelated third parties.
Shareholder's deficit as of March 31, 2002 was $427,239, as
compared to equity of $4,318,968 as of March 31, 2001.
At March 31, 2002, LMG had $25,710 in cash used to secure the
line of credit. It will need to raise additional capital to
fund its operations and future acquisitions and it is
anticipated that it will seek such additional funding through
public or private equity or debt financing. In response to
this, the Company has recently entered into an agreement to sell
stock to a foreign corporation. As of May 10, 2002, the Company
has received approximately $160,000 in financing through the
sale of 3,648,437 shares of the Company's common stock.
In addition, during April and May of 2002 the Company issued
100,000 shares of common stock in satisfaction of an outstanding
debt of the Company, and accepted subscription agreements from
various individuals for the sale of 850,000 shares of the
Company's common stock for an aggregate purchase price of
$85,000.
LODGIAN INC: Wins Court Approval of Stipulation with Criimi Mae
---------------------------------------------------------------
Lodgian, Inc., and its debtor-affiliates sought and obtained
Court approval of a stipulation with Criimi Mae Services L.P.
providing for the limited use of cash collateral by the Debtors
and for adequate protection.
Terms of the stipulation are:
A. Use of Cash Collateral: Except as set forth herein, the
Debtors are authorized to use the Cash Collateral of the
Trust through September 15, 2002 for the limited purposes
specifically set forth in the Final Cash Collateral Order.
This is provided, however, that the Specified Debtors may not
use any of the Specified Debtors' Cash Collateral to make any
Limited Inter-company Advances notwithstanding the Final Cash
Collateral Order, other than to a Specified Debtor. Criimi
Mae does not consent to the use of any of the Specified
Debtors' Collateral to:
1. prepare, prosecute or seek approval of any motion,
application or plan of reorganization or liquidation that
would substantively consolidate any of the Specified
Debtors with any of the other Debtors;
2. investigate, assert, commence, prosecute or otherwise take
any action with respect to any claim or alleged claim
against the Trust provided, however, that the Committee
may utilize up to $21,000.00 of the Specified Debtors'
Cash Collateral to investigate the Trust Debt, the liens
and security interests of the Trust securing the Trust
Debt and any potential claim for relief or cause of action
with respect to the Trust Debt;
3. challenge the amount, validity, priority or enforceability
of the Trust Debt or the security interests and liens of
the Trust in the Specified Debtors' Collateral or assert
any defense, claim, counterclaim or offset with respect to
the Trust Debt or the security interests and liens of the
Trust;
4. challenge in any manner whatsoever the Trust Debt and any
other rights, claims and entitlements of the Trust under
any of the Loan Documents;
5. change, amend or modify in any manner whatsoever any of
the Loan Documents; or
6. seek the modification, amendment or to vacate this
Stipulation.
B. Adequate Protection: As adequate protection for the Debtors'
use of the Specified Debtors' Cash Collateral, the Debtors
hereby grant to Criimi Mae these adequate protection:
1. a replacement lien on all of the prepetition and
postpetition property of the Specified Debtors subject
only to any Qualified Prepetition Liens on the property.
This is provided, however, the property subject to the
liens granted to Criimi Mae will exclude the Debtors' ]
claims and causes of action or any other avoidance
actions;
2. a replacement lien on all of the prepetition and
postpetition property owned by the High Leverage Debtors.
This lien will be pari-passu with other General AP Liens
granted to other lenders of such property, but subject to
the following liens:
a. any Qualified Prepetition Liens on the property and any
charges assessed against such liens,
b. any Specific AP Lien on the property,
c. any Primed Lender AP Lien on this property, and
d. any Specific I/C Lien on the property; provided,
however, if the holder of any Prepetition Mortgage has
the benefit of an express restriction or prohibition
contained in the certificate of incorporation or
similar constitutive document of the Debtor owning the
property that prevents the creation of the security
interest and lien. Then this General AP Lien will
become effective and enforceable only with the consent
of the creditor or upon the payment in full of the
claim secured by the Qualified Prepetition Lien. This
is provided, however, the property subject to the liens
granted to Criimi Mae excludes the Debtors' claims and
causes of action or any other avoidance actions;
3. the security interests and replacement liens granted to
Criimi Mae will be deemed validly and properly perfected
and enforceable against all other persons or entities upon
the entry of this Stipulation by the Court without the
necessity of filing, recording or serving any financing
statements, deeds, mortgages, or other documents which may
otherwise be required under federal or state law in any
jurisdiction or the taking of any other action to validate
or perfect the security interests and liens granted to
Trust herein;
4. to the extent they are able, the Specified Debtors will
make all monthly payments necessary to timely and fully
fund all Reserves required under the Loan Documents;
5. the Specified Debtors will timely perform and complete all
actions necessary or appropriate to protect the Specified
Debtors' Collateral against diminution in value, including
making Capital Expenditures necessary to:
a. maintain the Debtors' right to use franchise names and
trademarks under existing franchise or operating
agreements for the applicable hotels, to comply with
the Specified Debtors' obligations under the existing
Franchise Agreements and any rules or regulations
imposed upon the Debtors thereunder and to comply with
any PIPs as may be agreed to by the franchisor. This
is provided, however, that the Debtors are not required
to expend cash on in excess of the sum of the Reserves
and the Specified Debtors' net cash flow, or
b. replace, without interruption, the Debtors' right to
use Franchise Flags under existing Franchise Agreements
for the applicable hotels with comparable replacement
Franchise Agreements and Franchise Flags and comply
with the Specified Debtors' obligations with respect to
such matters under the Loan Documents;
6. the Debtors must provide Criimi Mae in a timely fashion
with a detailed budget or budgets with respect to the
Capital Expenditures. The budget will be subject to
Criimi Mae's reasonable approval. The Debtors must
remove or bond any postpetition lien or claim based upon
the furnishing of labor or materials in connection with
the Capital Expenditures. They must obtain all necessary
licenses, permits and approvals in connection with such
Capital Expenditures. They must comply with any law,
ordinance, rule or regulation, or building line or
restriction applicable to the Debtors' Hotel Properties.
The Debtors must provide Criimi Mae with written reports,
on or before the 5th day of each month, describing the
status of the Capital Expenditures. They must permit
Criimi Mae or any consultant retained by or on behalf of
Criimi Mae to inspect the Specified Debtors' Hotel
Properties during normal business hours;
7. the Debtors must timely furnish to Criimi Mae all
reports and other information required to be provided to
the Trust under the Loan Documents and a monthly statement
of operating results and sources and uses of cash with
respect to the Specified Debtors' Hotel Properties, no
later than 30 days after the end of each calendar month;
8. the Debtors must deposit all net operating cash generated
by the Specified Debtors into a segregated account within
three business days following the end of each month;
9. the funds in the Account will be used solely for these
purposes:
a. to pay the Specified Debtors' operating expenses in
accordance with budgets provided by the Debtors to
Criimi Mae from time to time. These will be subject to
Criimi Mae's reasonable approval;
b. to pay for Capital Expenditures for the Debtors;
c. to pay for the Specified Debtors' allocable share of
corporate overhead; and
d. to pay for the Specified Debtors' allocable share of
reorganization expenses;
10. the funds in the Account will be subject to the liens
granted to the Criimi Mae;
11. the Specified Debtors will comply with all postpetition
obligations under the Franchise Agreements and all rules
and regulations imposed upon the Specified Debtors by the
Franchisors in connection therewith;
12. the Specified Debtors will comply with their obligations
in respect of the Franchise Agreements and the Franchise
Flags under the Loan Documents;
13. other than in connection with the entry by the Specified
Debtors into a new Franchise Agreement, the Specified
Debtors will not reject any Franchise Agreement;
14. the Debtors will use their best efforts to obtain with
respect to existing Franchise Agreements standard comfort
letters or tripartite agreements acknowledging the Trust's
liens and the right of the Trust to continue such
Franchise Agreements in the event that the Trust or its
nominee or designee takes title to any Hotel Property; and
15. Criimi Mae may, but will not be required to, utilize the
appropriate Reserves to pay prepetition real estate taxes
in respect of the Specified Debtors' Collateral to the
extent that there are sufficient Reserves to do so.
D. Termination of Use of Cash Collateral: The Debtors' right to
use and the use of the Specified Debtors' Cash Collateral
shall expire on the earliest to occur of:
1. September 15, 2002;
2. the entry by this Court or any other court of an order
reversing, amending, supplementing, staying, vacating or
otherwise modifying the terms of this Stipulation;
3. the dismissal of any of the Debtors' bankruptcy cases or
the conversion of any of the Debtors' bankruptcy cases to
a case under Chapter 7 of the Bankruptcy Code;
4. the entry by this Court of an order granting relief from
the automatic stay to any entity other than the Trust
with respect to the Debtors;
5. the filing by the Debtors of any motion, application or
plan of reorganization or liquidation that would, if so
approved, substantively consolidate the Specified Debtors
with any of the other Debtors;
6. the filing by the Debtors of any motion, application,
adversary proceeding or plan of reorganization or
liquidation seeking to:
a. challenge in any manner whatsoever the Trust Debt and
any other rights, claims and entitlements under any of
the Loan Documents or under this Stipulation,
b. change, amend or modify in any manner whatsoever any
of the Loan Documents, or
c. seek the modification, amendment or to vacate this
Stipulation without the Trusts' express written prior
consent;
7. the appointment of a trustee or examiner or other
representative with expanded powers for any of the
Debtors;
8. the occurrence of the effective date or consummation of a
plan of reorganization for any of the Debtors;
9. the termination or rejection of any Franchise Agreement
for any of the Specified Debtors' Hotel Properties;
10. the existence of any material postpetition default under
any Franchise Agreement for any of the Specified Debtors'
Hotel Properties and, with respect thereto, the
expiration of any applicable cure period under the Loan
Documents or five calendar days, whichever is longer,
from notice to the Debtors of the occurrence of a
Termination Event;
11. the breach of any of the Debtors' obligations under the
Stipulation and the failure to cure such breach within
five business days of notice thereof;
12. an Event of Default under the DIP Credit Agreement;
13. a sale of any of the Collateral;
14. the Debtors' exclusive right to file a plan or solicit
acceptances thereof is terminated;
15. the occurrence of an Event of Default with respect to any
borrower that is not a Specified Debtor under the
applicable Loan Documents;
16. if, after the date of this Stipulation, any Specified
Debtor commences or becomes the subject of a bankruptcy
case, and the Debtor did not agree to be bound by the
terms of this Stipulation within ten days of the entry of
an order for relief in its case; and
17. the Specified Debtors fail to make all monthly payments
necessary to timely and fully fund all Reserves required
under the Loan Documents. (Lodgian Bankruptcy News, Issue
No. 11; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
LODGIAN INC: Hires Gifford Hillegass to Replace Arthur Andersen
---------------------------------------------------------------
On June 6, 2002, the trustee of the Lodgian, Inc. 401(k) Plan
under the direction of its Audit Committee, dismissed its
independent public accountants, Arthur Andersen LLP and on June
6, 2002, pursuant to the directions of the Audit Committee,
appointed Gifford Hillegass & Ingwersen, P.C. as its independent
auditors.
Lodgian, Inc. owns or manages a portfolio of 106 hotels with
approximately 19,893 rooms in 32 states and Canada. The hotels
are primarily full service, providing food and beverage service,
as well as meeting facilities. Substantially all of Lodgian's
hotels are affiliated with nationally recognized hospitality
brands such as Marriott, Holiday Inn, Crowne Plaza, Radisson and
Hilton. Lodgian's common shares are listed on the New York Stock
Exchange under the symbol "LOD."
Lodgian Inc. filed for Chapter 11 Reorganization on December 20,
2001 in the U.S. Bankruptcy Court for the Southern District of
New York (Manhattan).
MEDALLION FUNDING: Fitch Junks Senior Secured Notes
---------------------------------------------------
Fitch Ratings lowers Medallion Funding Corp.'s senior secured
notes to 'CCC' from 'B' and keeps the rating on Rating Watch
Negative. Debt securities rated in the 'CCC' category indicate
that default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon sustained,
favorable business or economic developments. Approximately $31
million of securities are impacted by Fitch's actions.
MFC is the principal operating subsidiary of Medallion Financial
Corp. Medallion is in default under the terms of its secured
bank facility. Specifically, this facility matured on May 15,
2002 and Medallion has been unable to repay the $56 million
outstanding under this facility. As a result, Medallion's
lenders have the right to accelerate the payment on $235,146,000
of its indebtedness as of March 31, 2002. Medallion is
negotiating terms of a waiver or forbearance with the holders of
MFC's senior secured notes, due June 28, 2002.
Medallion is in the process of refinancing all of its bank debt
with another lender, including MFC's senior secured bank loan
due June 28, 2002 and senior secured notes, due 2004. The Rating
Watch Negative reflects Fitch's view that the successful
completion of a new facility is uncertain and could result in
negative implications for the secured note holders of MFC.
Headquartered in New York City, Medallion Financial Corp. is a
specialty finance holding company focused on taxicab medallion
and lower middle market commercial lending as well as taxicab
rooftop advertising.
MELTRONIX: Closes $1M Bridge Financing Arrangement with Solana
--------------------------------------------------------------
MeltroniX, Inc. (OTC Bulletin Board: MTNX), a leader in high-
density semiconductor interconnect solutions, announced that
they have signed a Secured Promissory Note with Solana Capital
Partners, Inc. an institutional investment fund based in
Southern California. The terms of this Note provide $1.0
million in cash to MeltroniX, Inc. to assist in the company's
turn-around plans.
Robert Czajkowski, CEO of MeltroniX, Inc. stated, "This
financing enables the company to continue our program to re-
define MeltroniX's businesses around a balanced portfolio of
customers focused on commercial, military, and space
applications as well as sustaining ongoing operations." This
financing will allow MeltroniX, Inc. to execute on booked
contracts, as well as allow the company to book further revenues
with new orders, to further the expansion plans and meet
management's goals.
The financing arrangement is part of a larger effort including
Solana Capital Partners, Inc. and US Semiconductor, Corp. who
both continue to provide funding as part of the restructuring
plan previously announced and to be voted on at the Annual
Shareholder meeting on July 9th. Jim Cavataio of Solana Capital
stated, "This funding agreement with MeltroniX was made because
our investors believe in the new management team and their
vision for creating a profitable company with high gross
margins."
MeltroniX (OTC Bulletin Board: MTNX), founded in 1984, is a
premier provider of Advanced Electronic Manufacturing Services,
Products, Design, and Testing to high growth industries and
applications including: Internet equipment;
wireless/telecommunication; medical; satellites and military
systems; and broadband communication and other electronic
systems manufacturers. MeltroniX is placing renewed emphasis on
military and space applications by leveraging its capabilities
in offering devices which are radiation tolerant and qualified
to military specifications. The company provides design,
assembly and test services based on advanced electronic
manufacturing technologies, including BGA, flip chip, and multi-
chip modules (MCMs). Headquartered in San Diego, MeltroniX has
on-site manufacturing facilities, including a class 10,000 clean
room. Please visit the company's Web site at
http://www.meltronix.comfor more information about the company.
At December 31, 2001, MeltroniX reported a total shareholders'
equity deficit of about $8 million.
METRIS COMPANIES: Appoints John Witham as Senior VP for Finance
---------------------------------------------------------------
Metris Companies Inc. (NYSE:MXT) announced the addition of John
Witham as senior vice president, finance. The company also
announced that chief financial officer Benson Woo will more
aggressively pursue business development opportunities for
Metris.
"We're excited that John has decided to join Metris to augment
our finance and treasury operations," said Metris vice chairman
David Wesselink. "John brings over 25 years of finance
experience to our senior management team, including time at
Arcadia and PHH."
"I'm extremely pleased to be joining such a successful
organization," said Witham. "I look forward to working with both
Dave and Benson on managing our finance operations and pursuing
new business lines, including the diversification of our
consumer lending business."
Witham comes to Metris from Bracknell Corp. in Minneapolis,
where he served as Executive Vice President and Chief Financial
Officer. Prior to that, he held the same position at Arcadia
Financial Ltd. in Bloomington, Minn. He has also worked at PHH
Corp. in Hunt Valley, Md.; Gelco Corp. in Eden Prairie, Minn.;
Donaldson Company, Inc. in Bloomington; and Arthur Young & Co.
in Minneapolis. Witham holds a bachelor's degree in accounting
from Winona State University.
Metris Companies Inc. is one of the nation's leading providers
of financial products and services. The company issues credit
cards through its wholly owned subsidiary, Direct Merchants
Credit Card Bank, N.A., the 10th-largest bankcard issuer in the
United States. As a top-tier enhancement services company,
Metris also offers consumers a comprehensive array of value-
added products, including credit protection and insurance,
extended service plans and membership clubs. For more
information, visit http://www.metriscompanies.comor
http://www.directmerchantsbank.com
As previously reported, Fitch has downgraded Metris Companies'
bank facility and senior debt ratings to B+.
METROCALL: Brings-In Pachulski Stang as Bankruptcy Attorneys
------------------------------------------------------------
Metrocall, Inc., and its affiliates debtors ask the U.S.
Bankruptcy Court for the District of Delaware for authority to
employ and retain Pachulski, Stang, Ziehl, Young & Jones P.C. as
their bankruptcy counsel with regard to the filing and
prosecution of these chapter 11 cases.
The Debtors tell the Court that they wish to hire Pachulski
Stang in these cases because of the firm's extensive experience
and knowledge in this matter. In preparing for its
representation of the Debtors in these cases, Pachulski Stang
has become familiar with the Debtors' business and affairs and
many of the potential legal issues that may arise in these
cases.
The principal attorneys presently designated to represent the
Debtors and their current standard hourly rates are:
Laura Davis Jones $550 per hour
Brad R. Godshall $445 per hour
Rachel S. Lowy $260 per hour
Christopher J. Lhulier $5260 per hour
Michael P. Mighore $215 per hour
Melody J. Olsen $110 per hour
The professional services that Pachulski Stang will render to
the Debtors include:
a. providing legal advice with respect to the Debtors'
powers and duties as a debtors in possession in the
continued operation of their business and management of
their properties;
b. preparing and pursuing confirmation of a plan and
approval of a 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 interests of the
Debtors before the Court; and
e. performing all other legal services for the Debtors that
may be necessary and proper in these proceedings.
Pachulski Stang and the Debtors submit that Pachulski Stang is a
"disinterested person" as defined in section 101(14) of the
Bankruptcy Code.
Metrocall, Inc. is a nationwide provider of one-way and two-way
paging and advanced wireless data and messaging services. The
Company filed for chapter 11 protection on June 3, 2002. Laura
Davis Jones, Esq. at Pachulski Stang Ziehl Young & Jones
represents the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed
$189,297,000 in total assets and $936,980,000 in total debts.
METROMEDIA FIBER: Unit Signs Multiple Site Deal with Earthlink
--------------------------------------------------------------
PAIX.net, Inc. (PAIX), a leading carrier-neutral Internet
exchange and subsidiary of Metromedia Fiber Network, Inc. (MFN),
and EarthLink (Nasdaq: ELNK) announced that EarthLink has
established a presence in PAIX facilities as part of its network
expansion in three key metropolitan areas, including Atlanta,
where EarthLink is headquartered, and the San Francisco Bay
Area. In addition, EarthLink is participating in the recently
announced PAIX -- Seattle Internet Exchange connection to
exchange traffic with PAIX's Seattle customers.
As a participant in these three facilities, EarthLink, with an
established base of over 4.9 million customers nationwide, will
be able to utilize PAIX's comprehensive peering infrastructure
to meet its public and private peering interconnection needs.
EarthLink's selection of PAIX as a strategic Internet exchange
point will give it immediate access to a deep and wide customer
base of nearly 200 ISPs, ASP's, content providers and carriers
currently participating within the three metropolitan areas. In
Atlanta, EarthLink has contracted for a port on PAIX's Layer 2
switch fabric, allowing it to establish bi-lateral and public
peering agreements with other PAIX participants. Moreover, its
connection will provide access to Switch and Data customers who
connect to the PAIX switch fabric through a "Peering by PAIX"
alliance.
The agreement also establishes EarthLink as an important
customer in PAIX's Palo Alto facility. EarthLink's presence in
Palo Alto will give it the opportunity to exchange traffic with
all participants on PAIX's comprehensive Bay Area peering
infrastructure, which extends from San Francisco to San Jose.
"We see EarthLink's presence here as a win for both EarthLink
and our customers," said Tim Guarnieri, vice president and
general manager of PAIX.net, Inc. "Our participants in all
three facilities will realize an added value in having access to
EarthLink' s vast network and growing customer base. In turn,
EarthLink will have an open door to an array of Internet-
centric companies with which it can conduct business."
"EarthLink's participation at the PAIX facilities will play a
significant role in our commitment to provide the best service
to our customers," said Kevin Brand, vice president of network
services at EarthLink. "The PAIX open and neutral peering
facilities will enable Earthlink to cost-effectively establish
connectivity to many of the networks that our customers access
the most."
PAIX serves as a primary Internet peering and exchange point and
enables the exponential growth of the Internet through its
geographically dispersed facilities. Regional and national
service providers depend on PAIX to provide regional and
national carrier-neutral Layer 2 switching, promoting faster
network performance.
PAIX.net, Inc., headquartered in Palo Alto, California, began
operations in 1996 as Digital Equipment Corporation 's Palo Alto
Internet Exchange. Having proven itself as a vital part of the
Internet infrastructure, PAIX serves as a packet switching
center for ISPs. PAIX also offers secure, fault-tolerant co-
location services to ISPs. PAIX enables ISPs to form public and
private peering relationships with each other and choose from
multiple telecommunications carriers for circuits, all within
the same facility. For additional information about PAIX, call
877-PAIXnet (877-724-9638) or visit its web site at
http://www.paix.net
Metromedia Fiber Network, Inc. is the leading provider of
digital communications infrastructure solutions. The Company
combines the most extensive metropolitan area fiber network with
a global optical IP network, state-of-the-art data centers,
award-winning managed services and extensive peering
relationships to deliver fully integrated, outsourced
communications solutions to Global 2000 companies. The all-
fiber infrastructure enables MFN customers to share vast amounts
of information internally and externally over private networks
and a global IP backbone, creating collaborative businesses that
communicate at the speed of light.
Customers can take advantage of MFN's complete, end-to-end
solution or select individual components to complement their
existing infrastructures. By leasing MFN's metropolitan and
regional fiber, customers can create their own, private optical
network with virtually unlimited, un-metered bandwidth at a
fixed fee. For more reliable, secure and high-performance
Internet connectivity, customers can use MFN's private IP
network to communicate globally without ever touching the
public-switched network. Moreover, MFN's comprehensive managed
services enable companies to create a world-class Internet
presence, optimize complex sites and private optical networks,
and transform legacy applications, all with a single point of
contact.
PAIX.net, Inc., a subsidiary of MFN and the original neutral
Internet exchange, offers secure, Class A co-location facilities
where ISPs and other Internet-centric companies can form public
and private peering relationships with each other, and have
access to multiple telecommunications carriers for circuits
within each facility.
On May 20, 2002, Metromedia Fiber Network, Inc. and most of its
domestic subsidiaries commenced voluntary Chapter 11 cases in
the United States Bankruptcy Court for the Southern District of
New York.
METROMEDIA FIBER: SEC Commences Probe into Accounting Practices
---------------------------------------------------------------
Metromedia Fiber Network, Inc. has been advised that the staff
of the Securities and Exchange Commission has commenced a formal
investigation into the company's past accounting practices that
led to the previously announced expected restatement of the
company's operating results for each of the quarterly periods
included in the fiscal year ended December 31, 2001. As
previously announced, the expected restatements involve
revenue/sales credit recognition, timing of expense recognition
and non-cash lease accounting and purchase accounting issues.
The company has cooperated fully with the SEC in the
investigation, and will continue to do so.
MFN is the leading provider of digital communications
infrastructure solutions. The Company combines the most
extensive metropolitan area fiber network with a global optical
IP network, state-of-the-art data centers, award-winning managed
services and extensive peering relationships to deliver fully
integrated, outsourced communications solutions to Global 2000
companies. The all-fiber infrastructure enables MFN customers
to share vast amounts of information internally and externally
over private networks and a global IP backbone, creating
collaborative businesses that communicate at the speed of light.
Customers can take advantage of MFN's complete, end-to-end
solution or select individual components to complement their
existing infrastructures. By leasing MFN's metropolitan and
regional fiber, customers can create their own, private optical
network with virtually unlimited, un-metered bandwidth at a
fixed fee. For more reliable, secure and high-performance
Internet connectivity, customers can use MFN's private IP
network to communicate globally without ever touching the
public-switched network. Moreover, MFN's comprehensive managed
services enable companies to create a world-class Internet
presence, optimize complex sites and private optical networks,
and transform legacy applications, all with a single point of
contact.
PAIX.net, Inc., a subsidiary of MFN and the original neutral
Internet exchange, offers secure, Class A co-location facilities
where ISPs and other Internet-centric companies can form public
and private peering relationships with each other, and have
access to multiple telecommunications carriers for circuits
within each facility.
On May 20, 2002, Metromedia Fiber Network, Inc. and most of its
domestic subsidiaries commenced voluntary Chapter 11 cases in
the United States Bankruptcy Court for the Southern District of
New York.
MORGAN STANLEY: S&P Lowers Ratings on Several P-T Cert. Classes
---------------------------------------------------------------
Standard & Poor's lowered its ratings on classes F, G, H, and J
of Morgan Stanley Capital I Inc.'s commercial mortgage pass-
through certificates series 1998-CF1. At the same time, ratings
are affirmed on the remaining classes from the same series.
The lowered ratings were initiated as follows: class F was
lowered to double-'B' from double-'B'-plus; class G was lowered
to triple-'C' from single-'B'-plus; and classes H and J were
lowered to 'D' from single-'B' and single-'B'-minus,
respectively. The downgrade of the lower classes reflects
cumulative interest shortfalls and expected losses due to a
significant number of delinquencies and REO properties on health
care properties.
On a cumulative basis, interest shortfalls for the pool
affecting both the rated and unrated classes total $4.7 million,
with $791,000 due to nonrecoverable advances. A majority of the
shortfalls result from appraisal reductions, which currently
stand at $36.7 million from delinquent mortgages and REO
properties. Delinquencies for the pool total $65.8 million
(6.45% of the pool). In addition, there are five mortgages
totaling $45.9 million that are specially serviced, but current.
There are 11 delinquent mortgages that total $26.7 million. Of
these, four mortgages, totaling $14.4 million, are secured by
health care facilities located throughout the U.S. They have a
combined appraisal reduction of $9.1 million. Lennar Partners
Inc. (Lennar), the special servicer, is preparing to foreclose
on the four properties. In addition, there are four mortgages
secured by car wash facilities. The borrower has filed for
bankruptcy protection. However, Lennar has not yet agreed upon
the plan. The remaining delinquent mortgages include a variety
of property types, which are in the process of being worked out
by Lennar and the borrower.
There are another 11 REO properties that total $45.7 million of
loan exposure. Eight of the 11 mortgages, totaling $39.2
million, are secured by health care facilities located
throughout the U.S. Lennar is attempting to stabilize the
properties for sale. The remaining three properties, secured by
several different property types, are also being prepared for
sale. Lennar has applied appraisal reductions of $26.3 million
to the REO properties.
The affirmations on the remaining classes are largely the result
of stable financial performance. The debt service coverage ratio
(DSCR) for the pool has increased to 1.67 times, up from 1.55x
at the last review (May 2001) and 1.39x, at issuance. The
collateral characteristics have remained fairly stable with no
significant change in geographic or property type concentration.
Credit support has increased only slightly due to amortization
and loan payoffs. Moreover, the LEMBI portfolio, totaling $42
million, which comprises 4.1% of the pool, was recently
defeased.
As of May 2002, the trust has experienced losses of six loans,
totaling $5.5 million. The most significant loss resulted from a
$2.1 million loan secured by a health care facility located in
Nebo, N.C. The liquidation resulted in losses of $2.4 million,
which includes the $2.1 million mortgage, coupled with $360,000
in additional expenses, resulting in a severity of 111%. The
remaining five are loans secured by a variety of properties with
losses totaling $3.0 million.
CapMark Services L.P., the master servicer, has reported a total
of 45 watchlist items totaling $236 million. Of those, seven
loans totaling $31.3 million are of particular concern. Five of
the mortgages, totaling $15.9 million, are secured by lodging
properties located across the U.S. The remaining two mortgages,
totaling $8.3 million, are secured by health care facilities
located in various locations. All seven are suffering from low
occupancy levels.
As of May 2002, the loan pool consisted of 310 fixed-rate
mortgage loans with an outstanding pool balance of $1.019
billion-down from 323 mortgages and $1.107 billion at issuance.
Geographically diverse, the pool encompasses 30 states with a
concentration in California (22%) and Florida (11%). The
property type concentration includes multifamily (23%), retail
(23%), lodging (12%), health care (11%), and office (11%), with
the remaining 20% comprising a variety of property types.
RATINGS LOWERED
Morgan Stanley Capital I Inc.
Commercial mortgage pass-thru certs series 1998-CF-1
Rating
Class To From Credit Support (%)
F BB BB+ 10.34
G CCC B+ 7.08
H D B 5.99
J D B- 4.91
RATINGS AFFIRMED
Morgan Stanley Capital I Inc.
Commercial mortgage pass-thru certs series 1998-CF-1
Class Rating Credit Support (%)
A-1 AAA 31.78
A-2 AAA 31.78
A-MF-1 AAA 31.78
A-MF-2 AAA 31.78
X AAA 31.78
B AA 26.35
C A 20.38
D BBB 14.41
E BBB- 12.51
NAPSTER: Employing Richards Layton as Local Bankruptcy Counsel
--------------------------------------------------------------
Napster, Inc. and its debtor-affiliates ask for the Court's
stamp of approval to employ Richards, Layton & Finger, PA as
their bankruptcy co-counsel.
The Debtors request the U.S. Bankruptcy Court for the District
of Delaware to approve the employment of Richards Layton under a
general retainer to perform the extensive legal services that
will be necessary during these cases.
The Debtors assure the Court that the law firm of Jones, Day,
Reavis & Pogue and Richards Layton have discussed a division of
responsibilities regarding representation of the Debtors and
will make every effort to avoid duplication of effort in these
cases.
Richards Layton will:
a) advise the Debtors of their rights, powers and duties as
debtors and debtors in possession;
b) take all necessary action to protect and preserve the
Debtors' estates, including the prosecution of actions
on the Debtors' behalf, the defense of any actions
commenced against the Debtors, the negotiation of
disputes in which the Debtors are involved, and the
preparation of objections to claims filed against the
Debtors' estates;
c) prepare on behalf of the Debtors all necessary motions,
applications, answers, orders, reports, and papers in
connection with the administration of the Debtors'
estates;
d) negotiate and prepare on behalf of the Debtors a plan of
reorganization and all related documents; and
e) perform all other necessary legal services in connection
with the Debtors' chapter I1 cases.
The principal professionals and paraprofessionals designated to
represent the Debtors and their current standard hourly rates
are:
a) Daniel J. DeFranceschi $390 per hour
b) Russell C. Silberglied $310 per hour
c) Rebecca L. Scalio $220 per hour
d) Marc T. Foster $200 per hour
e) Tasha L. Ford $125 per hour
f) Simone J. Braxton $110 per hour
Napster, Inc. and its debtor-affiliates own and operate the
peer-to-peer music service known as Napster. The Napster service
has provided music enthusiasts with an easy-to-use, high quality
service for finding and discovering music and communicating
their interests with other members of the Napster community. The
Company filed for chapter 11 protection on June 6, 2002. Daniel
J. DeFranceschi, Esq., Russell C. Silberglied, Esq. at Richards,
Layton & Finger and Richard M. Cieri, Esq., Michelle Morgan
Harner, Esq. at Jones, Day, Reavis & Pogue represent the Debtors
in their restructuring efforts. When the Company filed for
protection from its creditors, it listed debts of more than $100
million.
NATIONAL STEEL: Comerica Seeks Adequate Protection Payments
-----------------------------------------------------------
"Comerica Leasing has agreed to forego its claim [against
National Steel Corporation] that the equipment is the subject of
a true lease," Kurt M. Carlson, Esq., at Tishler & Wald, in
Chicago, Illinois, states.
Both parties acknowledge that the Equipment is the subject of a
financing transaction and that Comerica has properly perfected
its security interest in the Equipment. "Comerica then
maintains that they are entitled to a modification of the
automatic stay," Mr. Carlson says. Alternatively, the Debtors
must provide sufficient adequate protection to Comerica in order
to continue using the Equipment. Mr. Carlson asserts that
Comerica is also entitled to cash payments equal to the amount
of the declining value of the Equipment.
Mr. Carlson further relates that the equipment's original cost
was $7,825,000. In determining the lease payments, Comerica
recognizes the true depreciation of the equipment and set the
monthly payments accordingly, so that should the Debtors default
with the terms of the lease, Comerica would realize on resale of
the Equipment the nearest dollar to the approximate value of the
Equipment.
Mr. Carlson asserts that Comerica is entitled to either a
modification of the automatic stay or monthly adequate
protection payments in the amount of $212,044. (National Steel
Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
NET2000: Trustee Wants McShane Group as Liquidation Consultant
--------------------------------------------------------------
Michael B. Joseph, the trustee of the estate of Net2000
Communications, Inc., wants to employ McShane Group as his
liquidation consultant, effective as of May 13, 2002.
The Trustee tells the U.S. Bankruptcy Court for the District of
Delaware that McShane Group will be directed:
a. to gather the Debtor books and records and arrange for
transfer of same to a site to be designated and/or
agreed upon by the Trustee;
b. to inventory the Debtor books and records;
c. to ascertain the status of the Debtor books and records,
i.e., the months through which the books have been
closed;
d. to inventory the Debtor fixed assets;
e. meet with and advise the Trustee and/or his counsel on
matters concerning case administration that require its
specific review;
f. to render such other assistance as the Trustee and his
counsel may deem appropriate;
g. perform a preference analysis and any other analysis as
required by the Trustee;
h. to research, pursue and collect funds owed to the
Debtors;
i. to arrange for contingency audits on workers'
compensation insurance policies and sales tax, to the
extent feasible; and
j. to administer and handle the claims process.
The Trustee selected McShane as his liquidation consultant
because of the Firm's experience in consulting and crisis
management. The Trustee believes that these professionals are
well qualified to represent him in this proceeding and such
retention would be in the best interest of the Debtors, their
estates and their creditors.
McShane's normal billing rates for consulting services of the
nature to be rendered to the Trustee are:
Partner $225 per hour
Senior Analyst $175-$220 per hour
Clerical $45 per hour
The principal consultants presently designated to undertake this
engagement and their current standard hourly rates are:
Robert F. Troisio $225 per hour
David Paddy $175 per hour
Net2000 Communications, Inc., providers of state-of-the-art
broadband telecommunications services to high-end customers,
obtained Court approval to convert these cases to chapter 7
Liquidation proceedings on May 13, 2002. Michael G. Wilson, Esq.
and Jason W. Harbour, Esq. at Morris, Nichols, Arsht & Tunnell
represent the Debtors as they wind up their operations.
NEWPOWER: Sidley Austin Brown & Wood Hired as Bankruptcy Counsel
----------------------------------------------------------------
The New Power Company and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Northern District of Georgia for
permission to employ Sidley Austin Brown & Wood LLP and its
affiliated law practice entities as its bankruptcy attorneys.
The Debtors assert that these cases are likely to be complex and
will require counsel with a national reputation and with
extensive experience in bankruptcy, insolvency, restructuring
and reorganization cases, as well as specialized and substantial
expertise in litigation, securities law, corporate law, and
regulatory matters.
The Debtors also remind the Court that they filed a separate
pleadings to retain the law firm of King & Spalding as local
counsel. The Debtors explain that it is necessary to employ King
& Spalding because the firm is experienced in practicing before
this Court, which will be cost effective and beneficial. The two
firms have agreed to avoid any duplication of services in their
duties.
As Counsel, Sidley Austin is expected to:
a) advise the Debtors with respect to their powers and
duties as debtors and debtors-in-possession in the
continued management and operation of their business and
properties;
b) attend meetings and negotiating with representatives of
creditors and other parties in interest and advising and
consulting on the conduct of the case, including all of
the legal and administrative requirements of operating
in chapter 11;
c) take all necessary action to protect and preserve the
Debtors' estates, including the prosecution of actions
commenced under the Bankruptcy Code on their behalf, and
objections to claims filed against the estates;
d) prepare on behalf of the Debtors all motions,
applications, answers, orders, reports and papers
necessary to the administration of the estates;
e) negotiate and preparing on the Debtors' behalf sales or
other disposition of assets, plan(s) of reorganization,
disclosure statement(s) and all related agreements
and/or documents and taking any necessary action on
behalf of the Debtors to obtain confirmation of such
plan(s);
f) appearing before this Court, any appellate courts, and
the U.S. Trustee, and protecting the interests of the
Debtors' estates before such courts and the U.S.
Trustee; and
g) performing all other necessary services in connection
with these chapter 11 cases.
Sidley Austin's billing rates currently range from:
-- $500 to $600 per hour for partners,
-- $260 to $375 per hour for associates, and
-- $120 to $150 per hour for paraprofessionals
The Debtors, a provider of electricity and natural gas to
residential and small commercial customers in markets that have
been deregulated to permit retail competition, filed for chapter
11 protection on June 11, 2002. Paul K. Ferdinands, Esq. at King
& Spalding and William M. Goldman, Esq. at Sidley Austin Brown &
Wood LLP represent the Debtors in their restructuring efforts.
When the Company filed for protection form its creditors, it
listed $231,837,000 in assets and $87,936,000 in debts.
NEWPOWER: Southern Company to Acquire Georgia Customer Base
-----------------------------------------------------------
NewPower Holdings, Inc. (PINK SHEETS: NWPW), parent of The New
Power Company, has signed a letter of intent for Southern
Company (NYSE:SO) to acquire the natural gas customers currently
being served by The New Power Company in Georgia.
Southern Company would pay $131 per flowing customer for the
customer contract and its customer care and billing systems,
plus an additional amount for NewPower's Georgia natural gas
inventory, accounts receivable and the right to use certain risk
management systems. Terms of the transaction will be subject to
Bankruptcy Court and regulatory approvals.
At the end of May 2002, NewPower provided natural gas in Georgia
to approximately 210,000 residential and small commercial
customers. Yesterday, NewPower announced that it had filed a
voluntary petition for reorganization under Chapter 11 of the
U.S. Bankruptcy Code in the U. S. Bankruptcy Court for the
Northern District of Georgia.
H. Eugene Lockhart, Chairman and Chief Executive Officer of The
New Power Company, said, "NewPower is pleased that Southern
Company has recognized the value of our business in Georgia and
we will continue to work with Southern Company to complete the
transaction and insure a seamless transition for these
customers."
Southern Company has formed a new entity, Southern Company Gas
LLC, which will seek certification from the Georgia Public
Service Commission to become a natural gas marketer in Georgia
and from which their Georgia natural gas operations will be run.
NewPower Holdings, Inc. through The New Power Company, is the
first national provider of electricity and natural gas to
residential and small commercial customers in the United States.
The Company offers consumers in restructured retail energy
markets competitive energy prices, pricing choices, improved
customer service and other innovative products, services and
incentives.
NORTEL NETWORKS: Closes 632.5 Million-Share Public Offering
-----------------------------------------------------------
Nortel Networks Corporation (NYSE:NT) (TSX:NT.) has closed its
previously announced public offering of 632.5 million of its
common shares. Nortel Networks expects the closing of the
previously announced public offering of 28,750 equity units(a)
will occur in the normal course later in the day on June 12,
2002.
Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges
information. The company is supplying its service provider and
enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and
multimedia services spanning Metro and Enterprise Networks,
Wireless Networks and Optical Long Haul Networks. As a global
company, Nortel Networks does business in more than 150
countries.
(a) Each equity unit will initially evidence its holder's
ownership of: (i) a prepaid forward purchase contract to receive
Nortel Networks common shares; and (ii) zero-coupon treasury
securities issued by the United States government. The
settlement date for each purchase contract will be August 15,
2005, subject to acceleration or early settlement in certain
cases. The aggregate number of Nortel Networks common shares
issuable on the settlement date will be between approximately
485 million and 583 million, subject to adjustment in some
circumstances, depending on the average of the closing prices of
Nortel Networks common shares on the New York Stock Exchange
during a defined period before the settlement date.
OWENS CORNING: Court Extends Lease Decision Period to December 4
----------------------------------------------------------------
Judge Fitzgerald gives Owens Corning and its debtor-affiliates
through and including December 4, 2002 to decide which unexpired
leases the Debtors intend to assume or reject. Pending their
decision, the Debtors will timely perform all of their
postpetition obligations under these leases. (Owens Corning
Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
PACIFIC GAS: U.S. Trustee Balks At Hiring Unsupervised Experts
--------------------------------------------------------------
In connection with the upcoming confirmation hearing on its plan
of reorganization, Pacific Gas and Electric Company anticipates
that using the advice of its counsel it will need to retain
certain experts. These experts would primarily be involved with
regulatory, feasibility, and financial issues stemming from the
plan of reorganization. Accordingly, the Debtor moves the Court
to authorize the retention of experts without further order of
the Court on the basis that these experts are not
"professionals" under Section 327 of the Bankruptcy Code, 11
U.S.C. Sec. 101-1330.
The Debtor contemplates that, initially, the Experts will act
solely in a consulting capacity and at some point, certain of
them may offer opinion testimony in proceedings before the
Court, at which time their identities will be disclosed in
accordance with the Court's procedure.
The Debtor indicates that it is out of an abundance of caution
that they seek the relief because the great weight of authority
holds that persons hired as experts in litigation are not
"professionals" whose retention must be approved by order of the
Court.
The United States Trustee, in response, says that the Retention
Motion cannot be approved because it is improper in form and
inconsistent with the Bankruptcy Code.
Debtor's Argument
If an individual is determined to be a "professional" within the
meaning of Section 327, the individual may not be hired until
application is made to the Court demonstrating, among other
things, that his or her employment is necessary to the estate.
The Debtor argues that the experts are not "professionals" under
Section 327 of the Bankruptcy Code because it is well
established that persons hired to provide expert opinion and/or
testimony are not "professionals" under Section 327. See, e.g.,
In re That's Entertainment Marketing Group, Inc., 168 B.R. 226,
229-231; In re Babcock Dairy Co. of Ohio, Inc., 70 B.R. 691,
692-94.
The Debtor draws the Court's attention to the "quantitative" or
"qualitative" test that courts generally employ to determine
whether a prospective employee in a bankruptcy case is a
"professional" within the meaning of Section 327. Under the
quantitative test, an individual must play a "central role" in
the administration of the estate to be a professional under
Section 327. Similarly, under the qualitative test, an
individual is considered professional only if he or she is
permitted to exercise discretion and autonomy in addressing the
administration of the estate.
The Debtor tells the Court that in the present case, the experts
do not play a central role in the administration of the estate
because the Experts will be retained for the limited purpose of
consulting with the Debtor regarding discrete topics relating to
financial and/or regulatory issues, and if necessary, some of
them may be asked to provide opinion testimony regarding these
topics in a proceeding before the Court.
The Debtor tells the Court that, although the Experts will play
a tangential role in proceedings to evaluate the plan of
reorganization, they are not "professionals" under Section 327
because:
-- the Experts will not play any role whatsoever in the
administration or management of the estate;
-- the Experts will be in no position to formulate strategy
regarding the reorganization plan.
-- the duties of the Experts will not even remotely include the
type of professionals' duties such as plan negotiations,
acquiring and disposing assets, or adjusting creditor
relationships.
The Debtor also argues that the Experts are not professionals
under Section 327 because they do not exercise autonomy or
independent discretion. The Debtors cites precedent cases In re
Fretheim, 102 B.R. 298, 299 (Bankr. D. Conn. 1989) (citing In re
Intech Capital Corp, 87 B.R. 232, 236 (Bankr. D. Conn. 1988); In
re Argus Group 1700, Inc.; In re Ponce Marine Farm, Inc., 259
B.R. 484, 494 (Bankr. D.P.R. 2001); In re Napoleon, 233 BR. 910,
913 (Bankr. D.N.J. 1999); In re First American Health Care of
Georgia, Inc., 208 B.R. 996, 998 (Bankr. S.D. Ga. 1996); In re
Sieling, 128 B.R. at 723; In re Babcock, 70 B.R. at 691 (Bankr.
N.D. Ohio 1987).
The Debtor recognizes that the cases cited involved experts
hired for litigation collateral to the reorganization
proceedings. "The result should be no different here," the
Debtor argues. "Whether retained for collateral litigation or
for the reorganization proceeding itself, an expert witness is
not in the position to formulate strategy or to manage the
estate and the liabilities of the estate."
The Debtor also notes that although the litigation itself could
be considered central to the administration of the estate, the
attorney controls the litigation and because the Court has
already approved the retention of the debtor's attorneys, those
attorneys must be allowed to exercise their best judgment by
retaining the experts they believe best represent the debtor.
The approval for the retention of the attorneys is required in
part because the position carries with it responsibility and
discretion to effectively carry out the necessary litigation,
including the responsibility of engaging necessary expert
witnesses for the litigation, the Debtor argues.
Accordingly, the Debtor requests that the Court issue an order
authorizing the retention of experts without further order of
the Court.
The U.S. Trustee's Objection
Linda Ekstrom Stanley, United States Trustee, tells the Court
that the Retention Motion cannot be approved because it is
improper in form and inconsistent with the Bankruptcy Code.
Debtor's Retention Motion is a roundabout effort to avoid having
to disclose the names of professionals assisting in debtor's
preparations for confirmation, the U.S. Trustee tells the Court.
The U.S. Trustee contends that the Bankruptcy Court should not
approve the motion for several important reasons.
The U.S. Trustee points out that the Debtor submitted no
evidence in support of the motion. The U.S. Trustee tells the
Court, "It is impossible to tell what kind of professionals the
order would apply to and the nature of the work these
professionals would perform. At bottom, an order like the one
debtor prays for would give debtor carte blanche to employ any
kind of professional, whether lawyer, accountant or economics
expert, solely at debtor's discretion rather than the Bankruptcy
Court's." The U.S. Trustee notes that the debtor relies on a
single line of argument in support of the motion. The line of
argument is that the Debtor anticipates that on the advice of
its counsel it will need to retain certain experts, primarily
with respect to regulatory, feasibility, and financial issues
raised by its plan of reorganization.
"The devil is in the details," the U.S. Trustee points out. "For
example, what is meant by the term "primarily"? By this, does
debtor suggest there are other, distinct areas for professional
employment? Does debtor intend to employ professionals in other
areas of its bankruptcy case pursuant to the order requested
here? The very nature of the term "expert" suggests the range of
professionals could be quite broad, including lawyers (with
regulatory expertise), accountants (with experience modeling
financial projections) or economists. The Retention Motion must
be denied because it is not supported by any evidence and
violates B.L.R. 9013-1(d). The Bankruptcy Local Rules for the
Bankruptcy Court of the Northern District of California require
motions be supported by facts."
The U.S. Trustee also points out that the Debtor has presented a
novel contention in arguing that the Bankruptcy Court need not
approve the employment of debtor's experts because the experts
will not be involved in the administration of the estate. "The
argument seems to say that so long as debtor's counsel sees fit
to retain an expert and debtor's counsel is employed under
Section 327(a), no separate employment request is necessary for
the expert," the U.S. Trustee notes.
This must be rejected, the U. S. Trustee says, for the following
reasons:
"First, it assumes (without providing any evidence) the expert
is not intimately involved in the administration of the
estate. How do we know that is so? Debtor's proposed plan is
enormously complex, calling for the disaggregation of a
multi-billion dollar public utility. Does debtor's counsel
really have the background to make the important decisions
that will take this company from its present state to its
hoped-for future? One might reasonably expect debtor and its
management would have a say in this, but no reference is made
to them, presumably because that would take the motion back
into the realm of Sec. 327(a) and its requirement of
disinterested advice.
Second, the motion calls on the court to abdicate its
traditional role of overseeing the employment of
professionals under 11 U.S.C. Sec. 327(a)-(e). If granted,
debtor's counsel, not the Bankruptcy Court, would have the
power to determine whether a professional needed a separate
employment order or not and that determination would,
apparently, be binding on even the Bankruptcy Court. The
Bankruptcy Code does not allow for this unprecedented shift
in authority. The employment of professionals in bankruptcy
cases is a central function of any Bankruptcy Court. The
Bankruptcy Court must determine whether professionals meet
the exacting standards of Section 327(a). "
The U.S. Trustee also contends that the Debtor has not proven
the proposed employment is consistent with the liberal standard
of That's Entertainment and Its Ilk. In That's Entertainment,
the District Court decided the narrow issue of whether a trustee
could refuse to pay an accountant employed as an expert in an
intellectual property action because her special counsel and not
the estate employed the accountant. In the present case, "Debtor
has not offered any facts to show what type of professionals
will be employed as experts let alone what kind of advice they
will offer, so it is impossible to tell whether the work is
central to the reorganization or not," the U.S. Trustee
observes. "That's Entertainment is distinguishable from PG&E in
one other respect. The trustee did not employ the professional
in That's Entertainment. The accounting firm was retained solely
as an expert witness by the estate's special counsel, suggesting
an unimportant role in the main bankruptcy case. Here, by
contrast, debtor seeks to employ the professionals as experts in
the main bankruptcy case. The professionals will be employed to
assist in the confirmation of debtor's innovative plan."
Finally, the U.S. Trustee notes that Debtor seeks to seal the
record of the identities of the professionals, but the Debtor
has not filed a motion to seal the record and the motion should
be denied on this ground.
The United States Trustee urges the Bankruptcy Court deny the
Retention Motion. (Pacific Gas Bankruptcy News, Issue No. 38;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PILLOWTEX CORP: Recruits David Perdue as New Chairman and CEO
-------------------------------------------------------------
Pillowtex Corporation (OTC Bulletin Board: PTEXQ) announced that
David Perdue, currently executive vice president of Reebok
International Inc. and president and CEO of Reebok Brand, will
be appointed its new chairman and chief executive officer.
Perdue officially joins employees at Pillowtex's Kannapolis,
N.C., headquarters on July 1.
"David has demonstrated outstanding leadership, marketing and
branding skills throughout his 30-year career," said Ralph
LaRovere, interim chairman of the Pillowtex board of directors.
"We conducted an extensive search to find a leader with the
appropriate mix of experience, operational expertise and vision.
David has the multifunctional skills, the commitment and the
results-oriented style we are looking for to lead our Company."
Perdue first joined Reebok International in 1998 as senior vice
president of global operations and played an integral part in
Reebok's turnaround. He quickly moved through the corporate
ranks and was part of a small team credited with the Reebok
brand turnaround. He was not only integrally involved in
Reebok's marketing, but in all aspects of the brand, including
product development, sales, manufacturing, sourcing, supply
chain, and operations.
"A significant component of Pillowtex's business strategy
involves building brands and global relationships," continued
LaRovere. "David's insight and expertise in this arena will
prove invaluable." Prior to Reebok, Perdue was senior vice
president of global operations for Haggar, a classic apparel
company, and before joining Haggar he was managing director and
senior vice president of Asian operations for Sara Lee. At both
Haggar and Sara Lee, Perdue was involved in creating supply
chain innovations and streamlining operations.
Perdue began his career with a 12-year stint at Kurt Salmon
Associates, an international management consulting firm
specializing in retail and consumer products.
"Joining Pillowtex is a tremendous opportunity and an exciting
challenge," said Perdue. "The Company has premier brands and a
heritage of quality and industry leadership. I see great
potential for its growth and success going forward." Perdue
added that his primary goal is to "establish the Company as the
textile industry's foremost provider of branded, high-quality
products."
Pillowtex Corporation successfully emerged from Chapter 11
bankruptcy in May 2002. The Company's 18-month reorganization
process resulted in a more solid financial position and a clear
strategy for the future. "We see many parallels between David's
experience in the apparel industry and challenges in the textile
industry, specifically with Pillowtex," said LaRovere. "He has
proven his ability to motivate and instill teamwork among his
employees and clearly understands the dynamics of a variety of
industries."
As stated in the Company's Plan of Reorganization, which was
confirmed by the U.S. Bankruptcy Court for the District of
Delaware on May 1, Perdue will replace LaRovere as chairman of
the board. Included among the management team reporting to
Perdue will be Tony Williams, president and chief operating
officer. "I'm most impressed with the deliberate and methodical
approach executed by the Company's management team throughout
its bankruptcy reorganization," said Perdue. "The positive
course set by this group for the future provides an excellent
foundation from which to build."
Russell Reynolds Associates, a global executive search and
management assessment firm, conducted the nationwide search for
a chief executive officer on behalf of Pillowtex.
Perdue earned a B.S. degree in Industrial Engineering and an
M.S. degree in Operations Research from Georgia Institute of
Technology, Atlanta, Ga. He is a member of the Georgia Tech
Advisory Board and a member of the Georgia Tech Academy of
Distinguished Alumni. Perdue is also a director of Alliant
Energy Corporation, an energy-service provider headquartered in
Madison, Wis.
Pillowtex Corporation, with corporate offices in Kannapolis,
N.C., is one of America's leading producers and marketers of
household textiles including towels, sheets, rugs, blankets,
pillows, mattress pads, feather beds, comforters and decorative
bedroom and bath accessories. The Company's brands include
Cannon, Fieldcrest, Royal Velvet, Charisma and private labels.
Pillowtex currently employs approximately 8,300 people in its
network of manufacturing and distribution facilities in the
United States and Canada.
PLANVISTA CORP: Annual Shareholders' Meeting Set for July 17
------------------------------------------------------------
The Annual Meeting of Stockholders of PlanVista Corporation, a
Delaware corporation formerly known as HealthPlan Services
Corporation, will be held at the Marriott Westshore, 1001 North
Westshore Boulevard, Tampa, Florida 33607 on Wednesday, July 17,
2002, at 9:00 a.m. local time, for the following purposes:
(i) to elect four (4) directors, each to serve until the next
annual election of directors and until his or her successor is
duly elected and qualified, or until his or her earlier
resignation or removal;
(ii) to approve an amendment to the Company's Certificate of
Incorporation to effect a one-for-five reverse stock split of
all of the authorized and outstanding common stock of the
Company;
(iii) to approve the PlanVista Corporation 2002 Employee Stock
Option Plan;
(iv) to ratify the 2001 sale of 553,500 shares of the
Company's common stock to certain stockholders; and
(v) to consider and act upon such other matters as may
properly be brought before the meeting or any adjournment(s)
thereof.
The close of business on June 13, 2002 has been fixed as the
record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting or any adjournment(s)
thereof.
PlanVista (formerly HealthPlan Services) provides cost-
containment services to health care payers and providers,
including integrated network access, electronic claims
repricing, and claims and data management services. The company
is selling its third-party administration and managing general
underwriter units to Sun Capital Partners; it had already shed
its workmens'- and unemployment-compensation businesses. Third-
party administration had accounted for a majority of revenue,
but that was declining, and New England Financial Life and Ceres
Group alone accounted for more than 40% of revenue.
At March 31, 2002, PlanVista reported having a total
shareholders' equity deficit of about $50 million.
POLAROID: Asks Court to Extend Bar Date for Current Officers
------------------------------------------------------------
Polaroid Corporation and its debtor-affiliates ask the Court to
extend the Bar Date to file certain proofs of claim for their
current officers and directors until July 31, 2002, pursuant to
Section 3003(c)(3) of the Bankruptcy Rule.
Mark L. Desgrosseilliers, Esq., at Skadden, Arps, Slate, Meagher
& Flom, LLP, in Wilmington, Delaware, notes that the current bar
date is May 31, 2002. However, for the past weeks, the Debtors'
officers and directors have been busy in the pending Sale of the
Debtors' assets. Hence, the Officers and Directors have had
insufficient time to determine the existence or extent of their
claim against the Debtors.
The Debtors believe that the ability of the Officers and
Directors to continue to "focus their efforts on the Debtors'
bankruptcy cases at this critical time would be enhanced by
granting the bar date extension." Otherwise, the Officers and
Directors will be distracted to the point that would likely be
detrimental to the Debtors, their estates and their creditors.
(Polaroid Bankruptcy News, Issue No. 18; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
PSINET INC: Bar Date for Intercompany Claims Set for Today
----------------------------------------------------------
The Court ordered that the bar date with respect to claims that
may be brought by the Holdings Trustee on behalf of PSINet
Consulting Solutions Holdings, Inc. (Consulting) and PSINet
Consulting Knowledge Services, Inc. (Knowledge) against the
PSINet Entities is extended through and including June 14, 2002.
(PSINet Bankruptcy News, Issue No. 23; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
QUALITY DISTRIBUTION: S&P Cuts Credit Rating after Restructuring
----------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on tank
truck carrier Quality Distribution Inc. to 'SD' (selective
default) from double-'C' after the company announced that it had
completed its distressed exchange of $140 million in
subordinated notes. The subordinated debt rating is lowered to
'D' from double-'C'. The ratings are removed from CreditWatch,
where they were placed on May 7, 2002. The single-'B'-plus
rating on the company's secured bank facility remains on
CreditWatch with negative implications.
"The rating actions reflect the fact that the exchange offer
resulted in the subordinated debt holders receiving less than
they were contractually entitled to receive," said Standard &
Poor's credit analyst Christopher DeNicolo. Each $1,000 face
value of subordinated note was exchanged for a combination of
$650 of new 12.5% senior subordinated notes due 2008, $150 of
new 12% junior subordinated payment-in-kind notes due 2009, and
1.59 warrants, each to purchase one share of Quality
Distribution's common stock at $10 per share, together worth
significantly less than the face amount of the notes and
accordingly representing a default under Standard & Poor's
criteria. In addition to the completed exchange offer, Quality's
controlling shareholder has invested $40 million in preferred
stock. In total, approximately $70 million in debt will be
repaid as part of the restructuring. Amendments to the company's
bank facility extended the maturity to 2005 and included less
restrictive financial covenants.
Tampa, Florida-based Quality Distribution is the largest bulk
tank truck carrier in North America, transporting chemical and
chemical-related products in specialized trailers. It also
provides specialized dry bulk handling, tank cleaning, and
freight brokerage.
Since the company's debt-financed acquisition of Chemical Leaman
Inc. in 1998, Quality Distribution's already weak financial
profile has been further hurt by the weak economy and reduced
demand. As a result, its earnings and cash flows have weakened,
and its equity account deficit has widened since the
acquisition, totaling $138 million as of March 31, 2002.
As a privately held company, Quality Distribution has limited
financial flexibility in that it is solely reliant on its $360
million in secured bank credit facilities. As of March 31, 2001,
the company had $18 million available under these facilities.
Standard & Poor's will evaluate the impact of the new capital
structure and recent operating performance on the corporate
credit and secured bank facility ratings.
SOFTWARE LOGISTICS: SYNNEX Wins Approval to Acquire All Assets
--------------------------------------------------------------
SYNNEX Information Technologies, Inc., a global IT supply chain
services company, has received bankruptcy court approval to
purchase substantially all the assets of Fremont, California-
based Software Logistics Corporation (dba iLogistix). The
acquisition is expected to be completed within 30 days, subject
to certain closing conditions.
iLogistix is an integrated design, implementation, and supply
chain management company, providing a comprehensive suite of
traditional and e-commerce supply chain services including
procurement, inventory management, assembly, fulfillment, and
distribution services through its global network of operation
centers. Worldwide locations include the United States, Ireland,
The Netherlands, Singapore, and Taiwan.
"We're excited to be acquiring iLogistix," said Robert Huang,
President and Chief Executive Officer of SYNNEX Information
Technologies, Inc. "SYNNEX is pleased to be able to offer its
business partners additional logistics and outsourcing services
available through the iLogistix worldwide organization. The
iLogistix operating model is synergistic to the SYNNEX business
model and further strengthens a true, one-stop solution for our
customers. We look forward to the closing of this transaction
and the integration of the iLogistix operations into SYNNEX."
Founded in 1980 and headquartered in Fremont, CA, SYNNEX
Information Technologies, Inc. is a global IT supply chain
services company providing a comprehensive range of design-to-
distribution services to original equipment manufacturers (OEMs)
and technology solution providers worldwide. The company has
strong expertise in IT distribution, electronics manufacturing
and logistics services. SYNNEX works with leading industry
suppliers in PCs and servers, motherboards, CPUs, memory,
storage, networking, communication and component products.
Additional information about SYNNEX may be found online at
http://www.synnex.com
iLogistix is a leading provider of global supply chain
management solutions. iLogistix supports its blue chip customer
base with supply chain design and consulting, as well as
outsourced operations solutions such as supply base and
inventory management, manufacturing, configuration, distribution
and fulfillment, e-commerce, order management and customer
service. More information about iLogistix can be found by
visiting http://www.ilogistix.com
STARBAND COMMS: Seeking Approval to Pay Critical Vendors' Claims
----------------------------------------------------------------
StarBand Communications Inc. asks for authority from the U.S.
Bankruptcy Court for the District of Delaware to pay prepetition
claims of certain critical trade vendors.
The Debtor asserts that paying the critical vendors' claims is
essential to the uninterrupted functioning of the Debtor's
business operations because:
-- the Critical Vendors are the only sources from which the
Debtor can procure certain goods or services,
-- failure to pay the Critical Vendor Claims would, in the
business judgment of the Debtor, likely result in the
Critical Vendors terminating their provision of goods
and/or services to the Debtor,
-- some of the Critical Vendors provide goods and services
to the Debtor on advantageous terms, or
-- the Critical Vendors are absolutely necessary to keep
the StarBand Product and Service operational.
The Debtor wants the Court to permit it to pay the critical
vendors up to $1,285,114, subject to the provisions of the DIP
Loan Agreement.
If a Critical Vendor refuses to supply goods or services on
Customary Trade Terms following receipt of payment on its
Critical Vendor Claim, or fails to comply with any Trade
Agreement entered into with the Debtor, then the Debtor may seek
authority to, without further order of the Court to:
a) declare that any Trade Agreement between the Debtor and
such Critical Vendor is terminated (if applicable), and
b) declare that provisional payments made to Critical
Vendors on account of Critical Vendor Claims be deemed
to have been in payment of then-outstanding postpetition
claims of such vendors without further order of the
Court or action by any person or entity.
The Debtor believes that payment of the Critical Vendor Claims
is necessary to effect their successful reorganization in these
Case. Otherwise, the Critical Vendors are likely to discontinue
providing goods to the Debtor on Customary Trade Terms, reducing
the amount of credit available to the Debtor. In the event that
certain of the Critical Vendors cease to do business with the
Debtor altogether, this will result in the Debtor's inability to
obtain certain essential goods and services and forcing the
Debtor's to incur higher costs.
StarBand Communications Inc. currently provides two-way, always-
on, high-speed Internet access via satellite to residential and
small office customers nationwide. The Company filed for chapter
11 protection on May 31, 2002. Thomas G. Macauley, Esq. at
Zuckerman and Spaeder LLP represents the Debtor in its
restructuring efforts. When the Company filed for protection
form its creditors, it listed $58,072,000 in assets and
$229,537,000 in debts.
TYCO: Restates Fin'l Statements to Reflect Goodwill Impairment
--------------------------------------------------------------
Tyco International Ltd. (NYSE: TYC, LSE: TYI, BSX: TYC), a
diversified manufacturing and service company, has restated
previously issued financial statements for the second quarter of
fiscal 2002 to report a $4.5 billion estimated goodwill
impairment related to its wholly- owned subsidiary, CIT Group
Inc. The Company has filed amendments to both Tyco's and CIT's
Forms 10-Q for the quarter ended March 31, 2002. An amendment
to the Registration Statement on Form S-1 related to the
proposed IPO of CIT Group Inc. (Del) has also been filed to
reflect this change.
Tyco International Ltd. is a diversified manufacturing and
service company. Tyco is the world's largest manufacturer and
servicer of electrical and electronic components; the world's
largest designer, manufacturer, installer and servicer of
undersea telecommunications systems; the world's largest
manufacturer, installer and provider of fire protection systems
and electronic security services; and the world's largest
manufacturer of specialty valves. Tyco also holds strong
leadership positions in disposable medical products, financing
and leasing capital, plastics and adhesives. Tyco operates in
more than 100 countries and had fiscal 2001 revenues in excess
of $36 billion.
VALHI INC: S&P Ratchets Corporate Credit Rating Up One Notch
------------------------------------------------------------
Standard & Poor's raised its corporate credit rating on Valhi
Inc. to double-'B' from double-'B'-minus as a result of
improvements to the company's financial profile. The outlook is
stable. Valhi has approximately $584 million of debt
outstanding.
At the same time, Standard & Poor's assigned its double-'B'
corporate credit rating to Kronos International Inc. (KII) and
its double-'B'-minus rating to KII's proposed ?270 million
senior secured notes due 2009. The corporate credit and senior
secured ratings on NL Industries Inc. were withdrawn. KII, a
majority-owned indirect subsidiary of Valhi, is a leading
European producer of titanium dioxide (TIO2). A substantial
portion of the proceeds from this financing will be used to
repay NL's senior secured notes due 2003.
"[Tues]day's rating actions recognize Valhi's improved financial
profile following the proposed refinancing as well as ongoing
efforts to reduce debt during the past few years," said Standard
& Poor's credit analyst Franco DiMartino.
The rating on KII's proposed senior secured notes, which are
secured by 65% of the shares of its first-tier subsidiaries, is
one notch below KII's corporate credit rating to reflect the
disadvantaged position of these creditors in the event of a
bankruptcy. Standard & Poor's expects that the security will
provide only limited protection to the noteholders, who are
structurally subordinated to the claims of creditors at key
operating subsidiaries. Ratings on KII also reflect its
strategic importance to, and the credit quality of its ultimate
parent, Dallas, Texas-based Valhi Inc.
Valhi's credit quality reflects a below-average business profile
derived from a solid market position among the leading global
TIO2 producers, a niche component products business (ergonomic
computer support systems, precision ball-bearing slides for
furniture, and security products) and an aggressive financial
profile. The firm also maintains equity positions in a titanium
metals business and a small waste management company.
Valhi is a holding company that derives the vast majority of its
revenue and operating profits from its ownership in NL
Industries, the world's fifth-largest producer of TIO2. KII,
which comprises NL's European TIO2 operations, is the second-
largest producer in this market. TIO2 pigments are used to
impart whiteness and opacity to a wide range of products
including paints, paper, plastics, and fibers.
Valhi and its subsidiaries are subject to ongoing litigation
related to allegations of personal injury caused by the
manufacture of lead pigments. While the company appears to have
defensible positions (company has neither settled nor lost a
case), Standard & Poor's will continue to monitor the outcome of
litigation proceedings, and the impact of this litigation, if
any, on the company's financial position. Over the course of the
business cycle, the ratios of total debt (adjusted to capitalize
operating leases) to EBITDA and funds from operations to total
debt should average near 3.0 times and in the 20%-25% range,
respectively. Dividend payments represent a meaningful use of
cash, although free cash flow from operations has generally been
more than sufficient to cover these payments. Liquidity is
provided by availability under committed bank facilities.
The ratings are supported by progress toward the improvement of
the financial profile, extension of debt maturities following
the proposed refinancing, and the expectation for improved TIO2
business conditions in the intermediate term.
VERADO HOLDINGS: Del. Court Confirms Chapter 11 Liquidating Plan
----------------------------------------------------------------
As previously reported, on February 15, 2002, Verado Holdings,
Inc. and its controlled subsidiaries filed voluntary petitions
under chapter 11 of title 11, United States Code in the United
States Bankruptcy Court for the District of Delaware (Case Nos.
02-10510 (PJW) through 02-10519 (PJW)). The Company and its
subsidiaries remain in possession of their assets and
properties, and continue to operate their businesses and manage
their properties as debtors-in-possession.
Also as previously reported, on April 18, 2002, the Debtors
received approval from the Court of the Disclosure Statement For
Debtors' First Amended Joint Plan of Liquidation Under Chapter
11 of the Bankruptcy Code.
On May 22, 2002, the Court entered an order confirming the Plan.
The effective date of the Plan is the later of (i) the first
business day at least eleven calendar days following the
Confirmation Date on which no stay of the Confirmation Order is
in effect and (ii) the date the Plan Documents are executed.
The Plan constitutes a liquidating plan for the Debtors. All of
the Debtors' assets have been or will be liquidated, and net
proceeds will be distributed to holders of Allowed Claims and
Allowed Equity Interests. The Plan designates five Classes of
Claims and one Class of Equity Interests. These Classes take
into account the differing nature and priority under the
Bankruptcy Code of the various Claims and Equity Interests.
VERTEX INTERACTIVE: Nasdaq Sets Appeal Hearing for Late July
------------------------------------------------------------
Vertex Interactive, Inc. (NASDAQ:VETX), a leading provider of
supply chain execution solutions, announced that the NASDAQ
Stock Market has granted its request for a hearing to appeal the
delisting of its common stock from the NASDAQ Stock Market
National Market System.
On March 4, 2002, Vertex received a NASDAQ Staff Determination
indicating that the Company failed to comply with Marketplace
Rule 4450(a)(5) for continued listing due to the fact that the
bid price of its common stock had closed at less that $1.00 per
share for 30 consecutive trading days prior to March 4, 2002. In
accordance with Marketplace Rule 4450(e)(2), NASDAQ granted
Vertex an additional 90 calendar days, or until June 3, 2002 to
regain compliance with the Rule. On May 24, 2002, NASDAQ
notified the Company that it did not comply with the net
tangible assets/stockholders' equity for the continued inclusion
requirement set forth in Marketplace rule 4450(a)(3). On June 5,
2002 the Company received additional notification from NASDAQ
that it had not rectified either of these events.
The Company requested, and the NASDAQ Stock Market granted, an
oral hearing before a NASDAQ Listing Qualifications Panel to
review these Staff Determinations. This hearing, set for late
July, 2002, stays the delisting of the Company's securities from
the NASDAQ National Market System until such time as the Company
is notified of the Panel's determination at some future time
after this hearing. However, on the NASDAQ National Market
Systems there can be no assurance the Panel will grant the
Company's request for continued listing.
Vertex Interactive is a global provider of business-to-business,
supply chain execution technologies and enterprise applications
integration. The company offers a comprehensive service
including consultancy and systems-integration as well as fixed
and mobile hardware, to support its broad range of software
systems. Vertex Interactive solutions enhance productivity
across the supply chain, with a portfolio of products ranging
from fixed and mobile order entry and processing, through
inventory and warehouse management to distribution and
transportation planning. Vertex's inventory and warehousing
applications include "light directed" technologies for picking
and packing and technology for handheld devices including auto
ID and printing solutions (for standard and 3d bar coding), and
a proprietary WMS tool that enhances the functionality of SAP/R3
implementations.
For additional information, please visit their Web site at
http://www.vertexinteractive.com
WNC HOUSING: Auditors Express Substantial Going Concern Doubt
-------------------------------------------------------------
WNC Housing Tax Credit Fund IV, L.P., Series 1 is a California
Limited Partnership formed under the laws of the State of
California on May 4, 1993. The Partnership was formed to
acquire limited partnership interests in limited partnerships
or limited liability companies which own multifamily housing
complexes that are eligible for low-income housing federal and,
in certain cases, California income tax credits.
The general partner of the Partnership is WNC Tax Credit
Partners IV, L.P. The general partner of TCP IV is WNC &
Associates, Inc. Wilfred N. Cooper, Sr., through the Cooper
Revocable Trust, owns 93.65% of the outstanding stock of
Associates. Wilfred N. Cooper, Jr., President of Associates,
owns 3.01% of the outstanding stock of Associates. The business
of the Partnership is conducted primarily through Associates as
neither TCP IV nor the Partnership have employees of their own.
As of March 31, 2002, the Partnership had invested in twenty-one
Local Limited Partnerships. Each of these Local Limited
Partnerships owns a Housing Complex that is eligible for the
federal Low Income Housing Credit. Certain Local Limited
Partnerships may also benefit from government programs promoting
low- or moderate-income housing.
At March 31, 2002, there were 732 Limited Partners.
Certain Local Limited Partnerships have incurred significant
operating losses and have working capital deficiencies. In the
event these Local Limited Partnerships continue to incur
significant operating losses, additional capital contributions
by the Partnership and/or the Local General Partners may be
required to sustain the operations of such Local Limited
Partnerships. If additional capital contributions are not made
when they are required, the Partnership's investment in certain
of such Local Limited Partnerships could be impaired, and the
loss and recapture of the related tax credits could occur.
The financial statements of one Local Limited Partnership were
prepared assuming the limited partnership will continue as a
going concern. The Partnership had a $256,705 and $441,770,
remaining investment in such Local Limited Partnership at March
31, 2002 and 2001, respectively. The Partnership's original
investment in the Local Limited Partnership approximated
$1,691,585. Through December 31, 2001, the Local Limited
Partnership has had recurring losses, working capital
deficiencies and has not been billed for certain property tax
expenses due since 1994. The Local Limited Partnership is
seeking abatement or an extended payment plan to pay down
certain of these liabilities; however, if the Local Limited
Partnership is unsuccessful, additional funding may be
requested from the Partnership. In the event the Local Limited
Partnership is required to liquidate or sell its property, the
net proceeds could be significantly less than the carrying value
of such property. As of December 31, 2001 and 2000, the
carrying value of such property on the books and records of the
Local Limited Partnership totaled $6,507,470 and $6,703,761.
The auditor for this entity has expressed substantial doubt as
to this entity's ability to continue as a going concern as a
result of the property tax issue.
WNC Housing Tax Credit Fund Partnership's assets at March 31,
2002 consisted primarily of $277,000 in cash and aggregate
investments in the twenty-one Local Limited Partnerships of
$2,234,000. Liabilities at March 31, 2002 were $137,000, of
which $133,000 was accrued annual management fees, and $2,000
was payables to limited partnerships.
The Partnership's net loss for the year ended March 31, 2002 was
$644,000, reflecting a decrease of $99,000 from the net loss
experienced for the year ended March 31, 2001. The decline in
net loss is primarily due to equity in losses of limited
partnerships which declined by $101,000 to $565,000 for the year
ended March 31, 2002 from $666,000 for the year ended March 31,
2001. Equity in losses of limited partnerships decreased from
prior year due to a reduction of the write-off of acquisition
fees and costs in the current year related to the investments
that have gone below zero.
WARNACO: Court Approves Insurance Premium Financing Agreement
-------------------------------------------------------------
Pursuant to the purchase of the Cargo Policy with ACE Group, The
Warnaco Group, Inc., and its debtor-affiliates have determined
that it is in their best interests to finance the Cargo Policy
through Cananwill, Inc. under these terms:
Premium : $1,285,000
Term : 12 months
Terms of Payment : monthly
No. of Payments : 9
First Payment due : June 1, 2002
Cash Downpayment : $321,250
Amount to be financed: $963,750
Interest rate/yr : 4.14%
In the same manner, the Debtors also believe that it is their
best interest to finance the Property Policies with Arrowhead
General Agency and Shore Management through Cananwill on these
terms:
Premium : $4,759,184
Term : 1 year
Terms of Payment : monthly
No. of Payments : 9 months
First Payment due : June 1, 2002
Cash Downpayment : $1,189,796
Amount to be financed: $3,569,388
Interest rate/yr : 4.84%
Since the premium for the Cargo Policy will be due on May 21,
2002 and May 30, 2002 for the Property Policy, the Debtors
stipulate with the United States Trustee, the Official Committee
of Unsecured Creditors and the Debt Coordinators for the
Debtors' pre-petition banks and lenders to waive the Notice
Requirement on the Insurance Coverage Order.
Judge Bohanon approves these transactions in all respects.
(Warnaco Bankruptcy News, Issue No. 26; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
WILLIAMS COMMS: Court Approves Proposed Compensation Procedures
---------------------------------------------------------------
Williams Communications Group, Inc., and its debtor-affiliates
obtained Court approval of its proposed uniform procedures for
monthly compensation and reimbursement of expenses for
professionals paid by the Debtors in the Chapter 11 cases.
With the Court approval, the Professionals be permitted to seek
monthly payment of compensation and reimbursement of expenses in
accordance with these procedures:
A. On or before the 20th day of each month following the month
for which compensation is sought, each professional seeking
compensation under these procedures will serve a monthly
statement, by hand or overnight delivery on
a. Williams Communications Group, Inc., One Technology Center,
TC 15L, Tulsa, OK 74103 (Attn: Donald Hellwege, Esq.);
b. Jones, Day, Reavis & Pogue, counsel for the Debtors, 222
East 41st Street, New York, New York 10017 (Attn: Erica M.
Ryland, Esq.);
c. Kirkland & Ellis, counsel to the Official Creditors'
Committee, 777 South Figueroa Street, Los Angeles, CA 90017
(Attn: Richard L. Wynne, Esq.);
d. The Office Of The United States Trustee for the Southern
District of New York, 33 Whitehall Street, 21st Floor, New
York, New York l0004 (Attn: Pamela Lustrin, Esq.); and
e. Clifford Chance Rogers & Wells, counsel to the Agent for
the Debtors' prepetition secured lenders, 200 Park Avenue,
New York, New York 10166 (Attn: Margot B. Schonholtz,
Esq.);
B. The monthly statement need not be filed with the Court and a
courtesy copy need not be delivered to the presiding judge's
chambers since these procedures are not intended to alter the
fee application requirements outlined in Sections 330 and 331
of the Bankruptcy Code and since professionals are still
required to serve and file interim and final applications for
approval of fees and expenses in accordance with the relevant
provisions of the Bankruptcy Code, the Federal Rules of
Bankruptcy Procedure and in compliance with the Local
Bankruptcy Rules for the Southern District of New York;
C. Each monthly fee statement will contain:
a. a list of the individuals who provided services during the
statement period;
b. their respective titles (e.g. attorney, accountant, or
paralegal);
c. their respective billing rates;
d. the aggregate hours spent by each individual;
e. a reasonably detailed breakdown of the disbursements
incurred; and
f. contemporaneously maintained time entries for each
individual in increments of 1/10 of an hour;
D. Each Notice Party will have at least 15 days after service to
review the monthly statement;
E. At the expiration of a 35-day period, the Debtors must
promptly pay 80% of the fees and 100% of the expenses
identified in each monthly statement to which no objection
has been served in accordance with paragraph (d);
F. If the Debtors receive an objection to a particular fee
statement, they may withhold payment of that portion of the
fee statement to which the objection is directed and promptly
pay the remainder of the fees and disbursements in certain
percentages;
G. If the parties to an objection are able to resolve their
dispute following the service of the Notice of Objection to
Fee Statement, and if the party whose statement was objected
to serves all of the Notice Parties with a statement
indicating that the objection is withdrawn and describing in
detail the terms of the resolution, then the Debtors must
promptly pay that portion of the fee statement which is no
longer subject to an objection;
H. All objections not resolved by the parties will be presented
to the Court at the next interim or final fee application
hearing to be heard by the Court in accordance with paragraph
(j) below;
I. The service of an objection in accordance with paragraph (d)
will not prejudice the objecting party's right to object to
any fee application made to the Court in accordance with the
Bankruptcy Code on any ground whether raised in the objection
or not. Furthermore, the decision by any party not to object
to a fee statement will not be a waiver of any kind or
prejudice that party's right to object to any fee
applications subsequently made to the Court in accordance
with the Bankruptcy Code;
J. Pursuant to Sections 330 and 331 of the Bankruptcy Code,
approximately every 120 days, but no more than every 150
days, each of the professionals must serve and file with the
Court an application for interim or final Court approval and
allowance of the compensation and reimbursement of expenses
requested;
K. Any professional who fails to file an application seeking
approval of compensation and expenses previously paid under
this motion when due:
a. will be ineligible to receive further monthly payment of
fees or expenses as provided herein until further order of
the Court and
b. may be required to disgorge any fees paid since retention
or the last fee application, whichever is later;
L. The pendency of an application or a court order that payment
of compensation or reimbursement of expenses was improper as
to a particular statement will not disqualify a professional
from the future payment of compensation or reimbursement of
expenses as set forth above, unless otherwise ordered by this
Court;
M. Neither the payment of, nor the failure to pay, in whole or
in part, monthly compensation and reimbursement as provided
herein will have any effect on this Court's interim or final
allowance of compensation and reimbursement of expenses of
any professionals;
N. Counsel for any official committee(s) appointed in these
cases are required to use these Compensation Procedures and
must, in accordance with the Compensation Procedures, collect
and submit statements of expenses, with supporting vouchers,
from members of any such committee(s) counsel represents;
provided, however, that the committee counsel ensures that
these reimbursement requests comply with the Court's
Administrative Orders dated June 24, 1991 and April 21, 1995.
(Williams Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
WILLIAMS CONTROLS: American Industrial to Invest $10MM or More
--------------------------------------------------------------
Williams Controls, Inc. (OTC Bulletin Board: WMCO) has signed a
definitive stock purchase agreement with American Industrial
Partners Capital Fund III, L.P. (together with its affiliates,
AIP) which provides for AIP to invest at least $10 million in
the Company. The agreement follows a previously announced
Letter of Intent between Company and AIP covering the investment
transaction. The AIP investment will take the form of
convertible preferred securities with an initial dividend at a
rate of 15% per year, compounded quarterly. The preferred
securities will initially be convertible into common shares at
$0.85 per share. Additionally, the Company has agreed to a
request by a group of the Company's existing secured
subordinated debenture holders to convert their debenture
holdings totaling $2.5 million into the new convertible
preferred securities under the same terms as AIP. Completion of
the AIP transaction is subject to a number of conditions,
including conversion of the $2.5 million of secured subordinated
debentures into convertible preferred securities, consent by
AIP to the disclosure schedules to the agreement and the consent
to the transaction by the holders of the Company's outstanding
convertible subordinated debt, secured subordinated debt and
Series A preferred stock. The Company expects to obtain all of
the necessary consents. Upon closing of the transaction, AIP
will be entitled to nominate a majority of seats on the
Company's Board of Directors, and Gene Goodson, former Chairman
of Oshkosh Truck and a Director of AIP's Executive Officer
Association, will join the Board as Chairman.
The Company expects to refinance its existing credit facilities
with its current bank, Wells Fargo Business Credit pursuant to a
new credit facility that will replace the Company's current loan
which expires on June 30, 2002. Closing on this new credit
facility is subject to several customary conditions as well as
completion of the AIP investment, and is scheduled to occur
simultaneously with AIP's funding. Wells Fargo has given the
Company an indication that it is prepared to extend the
Company's current credit facility beyond its June 30, 2002
expiration, if necessary, to allow completion of the AIP
transaction.
Commenting on these recent developments, President and CEO of
Williams Controls, Thomas K. Ziegler said, "The Company is
pleased to have finalized the terms of the AIP investment and
entered into a definitive agreement to complete the transaction.
We expect to close the transaction and receive funding as soon
as the necessary consents are obtained from AIP and the
Company's existing preferred shareholders and debenture holders,
which we are confident of receiving. We are also pleased to
have received a definitive proposal for a new and expanded
credit facility from our bank which satisfies the Company's
requirements." Mr. Ziegler continued, "These positive events
obviously demonstrate a high level of confidence in the
Company's future by both its investors and lenders. We are now
nearing completion of the Company's financial restructuring
plan, which when final, will provide a sound financial
foundation to support sustained future growth in our business.
With the addition of Gene Goodson's management expertise and
AIP's involvement in our business, the Company will be very well
positioned to take advantage of new business opportunities, and
continue improvements in its operations."
Kirk Ferguson, Managing Director of AIP stated, "We are
enthusiastic about becoming strategic as well as financial
partners with the Company. This is a classic AIP investment in
a niche manufacturing business in an industry known to us, where
the expertise of our firm's operating executives makes us an
attractive partner for Williams Controls. We are impressed with
Williams' market position in its core truck electronic throttle
control business, and are excited about the opportunities in
off-highway and automobile markets, which are beginning to
convert from manual to electronic throttle controls. With Gene
Goodson on board, we look forward to helping the company
streamline its corporate strategy and focus its growth in areas
that extend from its core franchise."
Williams Controls is a designer, manufacturer and integrator of
sensors and controls for the transportation industry. For more
information, you can find Williams Controls on the Internet at
http://www.wmco.com AIP manages private equity funds that have
been investing in private and public companies since 1989. With
over $1 billion in invested and committed capital in the funds
that it manages, AIP is actively investing its newly raised
third fund in middle market manufacturing and business services
companies, where it works collaboratively with management teams
to enhance operating performance and company prospects. AIP
distinguishes itself from other private equity funds through the
deep operating expertise of its leadership team made up of
approximately twenty former Presidents and CEOs of Fortune 200
companies, including such truck and automotive related companies
as Oshkosh Truck, Goodyear Tire and Rubber, Tenneco Automotive
and SANLUIS Corporation. For more information, you can find
American Industrial Partners on the Internet at
http://www.aipartners.com
At March 31, 2002, Williams Controls' balance sheet shows a
total shareholders' equity deficit of about $9.2 million.
WORLDWIDE WIRELESS: Continues Reviewing Debt Workout Options
------------------------------------------------------------
Worldwide Wireless Networks Inc. (OTC BB: WWWN), offered
insights into it's first quarter financials, ended March 31,
2002 and provided an update on Company activities.
For the quarter ended March 31, 2002, the Company reported
revenues of $475,529 compared to $514,025 for the first quarter
of 2001. Despite the decline in revenues, the Company reported a
major improvement in gross profits. The gross profits reported
for the period ended March 31, 2002 of $351,599 versus $150,568
for the same period in 2001 represents an increase of $201,031
or 134%. Resulting gross margins rose from 29% to 74% in the
first quarter of 2002 as compared to the first quarter of 2001.
This was the result of management's efforts in restructuring the
Company's operations and the Company's divestiture of less
profitable product lines and it's focus on the more profitable
core wireless business. The Company expects to maintain
significant margins during 2002 through continuing improvements
in operations and by increasing marketing efficiencies.
The net loss for the first quarter of 2002 was $413,449,
compared to a net loss of $1,434,344, for the first quarter of
2001. Contributing to the first quarter 2002 losses, were a
number of one-time write offs and other non-recurring expenses
associated with: restructuring operations to improve services;
reducing overall operating expenses; and eliminating business
activities or relationships that did not meet the companies
revised criteria for acceptable profit margins.
In regards to recent trading activity, the Company has not
conducted any activities that would influence recent selling or
buying volumes and can only speculate as to why the share prices
and volumes have been so volatile.
The Company is maintaining the same business plan and profile as
announced in recent months and continues to focus it's efforts
on acquiring small to mid-size business customers as well as
pursuing longer time frame public sector accounts that continue
to look positive. The local adverse economic conditions,
especially in the technology sector, are still contributing to
customer attrition as local businesses continue to cease
operations or downsize/consolidate operations. Even though
forward progress is being made, the Company does not expect
growth for the remainder of 2002 to be significant as the
Company lacks the excess cash resources to significantly expand
service areas and sales and marketing activities.
While the Company has been able to fund current recurring
operations without the support of outside investment, much of
the old debt carried forward has not been serviced. This past
debt amounts to more than $5 million and the majority of this
old debt is either overdue or in default. Even though the
Company has been able to manage it's creditor relationships and
has not been forced into any extreme actions, the old debt
continues to place the Company in a vulnerable position as
creditors could change their positions without notice. As
previously reported, the Company is evaluating various options
to restructure this debt but the choices are limited and this
situation continues to require the Company to use the "going
concern" designation.
In a much-anticipated decision, the Company announced it has
chosen Trango Systems as it's next generation wireless network
equipment provider. Trango equipment extends WWWN's transmitter
coverage area from five miles to 8 miles and increases the
maximum standard throughput from 1.5Mbps to 8Mbps. This new
robust system has recently been successful in providing existing
customers with increased bandwidth that translated into
increased Company revenues. Additionally, this new, higher
capacity equipment has created new sales opportunities for
fractional DS-3 connections and opens up new, high bandwidth
markets that WWWN can now be very competitive in.
It was previously announced that the Company was preparing to
defend a court case filed by 1st Universe as well as pursuing a
counter suit by WWWN against 1st Universe. The trial date for
the 1st Universe lawsuit and WWWN's counter suit has been
delayed until June 17th. The Company remains confident in it's
position but they continue to caution, that in any legal
proceedings there are no certainties.
"Although I am pleased with the first quarter margins and our
ability to sustain revenues in our adverse economic climate, we
need to continue increasing revenues to service our old debt and
reinvest in the growth of the Company," stated Mr. Jerry
Collazo, President and acting CEO of Worldwide Wireless
Networks. "This has been a challenging time for us and all
companies in the telecommunications and technology sectors. The
tightening of the capital markets, the dotcom implosion, the
recession, the stock market downturn have all contributed to our
challenges. For the past year, the same staff and management
team have continued to make progress in areas within our
control. Operationally, our network and internal systems have
never run better. Also, we continue to add new small and mid-
size business customers in an adverse business climate.
Additionally, we are aggressively pursuing large public sector
accounts that are part of our strategy in creating the
foundation for the Company's future growth. Our focus now has to
be on continuing to increase revenues and at the same time,
restructuring our old debt. This old debt of over $5 million has
been managed up to this point but we continue to receive
pressure from our creditors. While we have almost stabilized the
Company by reducing expenses and turning our almost $300,000
monthly burn into being cash flow positive on recurring
operations, we still have a challenging road ahead of us in
dealing with our past debt. We have been evaluating the various
debt restructure options but unfortunately they are limited.
Worldwide Wireless Networks is a data-centric wireless
communications company headquartered in Orange, California. The
Company specializes in high-speed, broadband Internet access
using an owned wireless network. Other products and services
include frame relay, collocation services and network
consulting. The Company serves all sizes of private and public
sector accounts. For more information, visit them on the Web at
http://www.wwwn.com
Trango Broadband Wireless, a division of Trango Systems, Inc.,
is a technology leader specializing in the development and
manufacturing of broadband wireless access solutions used
globally by service providers, municipalities and small
business. Trango Broadband products provide a wireless
alternative to wired Internet access solutions such as DSL and
cable modems. Ideal for numerous applications, including various
sized business, campuses, and residences, Trango Broadband
Wireless extends the "last mile," offering a multitude of
solutions addressing the demand for high-speed IP-based data
services. Trango Broadband Wireless is headquartered in San
Diego, CA where they conduct product development, manufacturing
and distribution activities. Trango Broadband Wireless is a
division of Trango Systems, Inc. a global supplier of advanced
wireless video transmission equipment for the security and
surveillance and transportation industries. Visit them on the
Web at http://www.trangosystems.comto learn more.
BOOK REVIEW: Bankruptcy Crimes
------------------------------
Author: Stephanie Wickouski
Publisher: Beard Books
Softcover: 395 Pages
List Price: $124.95
Review by Gail Owens Hoelscher
Order your personal copy today at
http://amazon.com/exec/obidos/ASIN/1893122832/internetbankrupt
Did you know that you could be executed for non-payment of debt
in England in the 1700s? Or that the nailing of an ear was the
sentence for perjury in bankruptcy cases in 1604? While ruling
out such archaic penalties, Stephanie Wickouski does believe "in
the need for criminal sanctions against bankruptcy fraud and for
consistent, effective enforcement of those sanctions." She
decries the harm done to individuals through fraud schemes and
laments the resulting erosion in public confidence in the
judicial system. This leading authoritative treatise on the
subject of bankruptcy fraud, first published in August 2000 and
updated annually with new material, will prove invaluable for
bankruptcy law practitioners, white collar criminal
practitioners, and prosecutors faced with criminal activity in
bankruptcy cases. Indeed, E. Lawrence Barcella, Jr. of Paul,
Hastings, Janofsky, and Walker, in Washington, DC, says, "If I
were a lawyer involved in a bankruptcy matter, whether civil or
criminal, and had only one reference work that I could rely
upon, it would be this book." And, Thomas J. Moloney with
Cleary, Gottlieb, Steen & Hamilton describes the book as "an
essential reference tool."
An estimated ten percent of bankruptcy cases involve some kind
of abuse or fraud. Since launching Operation Total Disclosure in
1992, the U.S. Department of Justice has endeavored to send the
message that bankruptcy fraud will not be tolerated. Bankruptcy
judges and trustees are required to report suspected bankruptcy
crimes to a U.S. attorney. The decision to prosecute is based on
the level of loss or injury, the existence of sufficient
evidence, and the clarity of the law. In some cases, civil
penalties for fraud are deemed sufficient to punish and deter.
Ms. Wickouski suggests that some lawyers might not recognize
criminal activity that the DOJ now targets for investigation.
She gives several examples, including filing for bankruptcy
using an incorrect Social Security number, and receiving
payments from a bankruptcy debtor that were not approved by the
bankruptcy court. In both of these real life examples, DOJ
investigations led to convictions and jail time.
Ms. Wickouski says that although new schemes in bankruptcy fraud
have come along, others have been around for centuries. She
takes the reader through the most common traditional schemes,
including skimming, the bustout, the bleedout, and looting, as
well as some new ones, including the bankruptcy mill.
The main substance of Bankruptcy Crimes is Ms. Wickouski's
detailed analysis of the U.S. Bankruptcy Criminal Code, chapter
9 of title 18, the Federal Criminal Code. She painstakingly
analyzes each provision, carefully defining terms and providing
clear and useful examples of actual cases. She ends with a good
chapter on ethics and professional responsibility, and provides
a comprehensive set of annexes.
Bankruptcy Crimes is never dry, and some of the cases will make
you nostalgic for the days of ear-nailing. This comprehensive,
well researched treatise is a particularly invaluable guide for
debtors' counsel in dealing with conflicts, attorney-client
relationships, asset planning, and an array of legal and ethical
issues that lawyers and bankruptcy fiduciaries often face in
advising clients in financially distressed situations.
Stephanie Wickouski is a partner in the Washington, D.C. firm of
Arent Fox Kintner Plotkin & Kahn, PLLC. Her practice is
concentrated in business bankruptcy, insolvency, and commercial
litigation.
This book may be ordered by calling 888-563-4573 or through your
favorite Internet bookseller or through your local bookstore.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2002. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $625 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***