/raid1/www/Hosts/bankrupt/TCR_Public/050119.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, January 19, 2005, Vol. 9, No. 15
Headlines
A.B. DICK: Creditors Must File Proofs of Claim by Jan. 31
A.C.E. ELEVATOR: Section 341(a) Meeting Slated for Jan. 24
A.C.E. ELEVATOR: U.S. Trustee Picks 3-Member Creditors Committee
ADELPHIA COMMS: Creditors' 341 Meeting Adjourned to March 16
AMCAST INDUSTRIAL: Committee Taps McDonald Hopkins as Counsel
AMCAST INDUSTRIAL: Wants More Time to Make Lease Decisions
ATA AIRLINES: Wants Stipulation Rejecting Simulator Pacts Approved
CAMCO INC: Sells Longwood Property to McMaster for $13 Million
CATHOLIC CHURCH: Portland's New Claims Bar Date is April 29
CATHOLIC CHURCH: Judge Perris Appoints Foraker as Futures Rep.
CENTURY/ML: Has Exclusive Right to File a Plan Until March 31
CHALK MEDIA: Grants Stock Options to Seven Executives
CLEARLY CANADIAN: Toronto Stock Exchange Suspends Stock Trading
CLEARLY CANADIAN: Issues 465,000 More Shares in Private Placement
COGECO CABLE: Posts $3.8 Million Net Income for First Quarter
COLLEGE PARTNERSHIP: Oct. 31 Balance Sheet Upside-Down by $4.7-Mil
CONTINENTAL AIRLINES: Inks $99-Mil Cost-Saving Pact with Employees
CRESCENT OPERATING: Consummates Chapter 11 Plan of Reorganization
ECU SILVER: Closes $2,863,651 Equity Private Placement
EXIDE TECH: Opens $1.7 Million Employee Facility at Kansas Plant
FEDERAL-MOGUL: Fixes Surety Claims at $29M for Voting Purposes
FEDERAL-MOGUL: Allows Sherrill Class Claim for Voting Purposes
FIBERMARK INC: May Withdraw Chapter 11 Plan if Creditors Disagree
FIVE STAR HAULING: Case Summary & 20 Largest Unsecured Creditors
FOOTSTAR INC: Appoints Jeffrey A. Shepard to Board of Directors
GLOBAL DATA: Dec. 31 Balance Sheet Upside-Down by $50,292
HARBORVIEW MORTGAGE: Moody's Puts Ba2 Rating on Class B-4 Certs.
HAYES LEMMERZ: Should Not Use Expert Materials, Says GE Capital
HUFFY CORP: Looks for Auditor Following KPMG Retention Withdrawal
INFOWAVE: Securityholders Approve Reorganization Transaction
INTERSTATE BAKERIES: Court Fixes March 21 as Claims Bar Date
KMART CORP: Asks Court to Direct Landlords to Return Overpayment
LAIDLAW INT'L: Healthcare Group Sale Spurs Bonus Payments
LIBERATE TECHNOLOGIES: District Court Dismisses Bankruptcy Appeal
LUBRIZOL CORP: Plans to Close U.K. Manufacturing Facility
MASTR SPECIALIZED: Moody's Rates $1.3M Class B Certs. at Ba1
MCNAMARA CUSTOM: Case Summary & 20 Largest Unsecured Creditors
MIRANT CORPORATION: Objects to PEPCO's Multi-Million Claims
MIRANT CORP: PEPCO Wants $17,921,376 Administrative Expense Paid
NATIONAL ENERGY: Inks Pact Reducing JPMorgan Claim to $9.4 Million
NORTEL NETWORKS: Declares Preferred Share Dividends
NOVELIS INC: Issues 2004 Fourth Quarter Earnings Guidance
NOVELIS INC: Alcan Provides Estimated Tax Basis for Spin-Off
OCTANE ENERGY: Pursuing Strategic Transactions Regarding Pronghorn
ORMET CORPORATION: USWA's Advisor Reviews Financial Projections
OWENS CORNING: Asbestos Committee Presents Valuation Expert
PARAMOUNT RESOURCES: Further Extends Sr. Debt Offer Until Today
PARKRIDGE PHASE: Combined Confirmation Hearing Set for Jan. 26
PARMALAT USA: Wants to Settle Prepetition Inter-Debtor Balances
PARMALAT USA: Asks Court to Approve Citibank Lease Settlement Pact
PEGASUS: Files Joint Chapter 11 Plan and Disclosure Statement
PRESIDENT CASINOS: Nov. 30 Balance Sheet Upside-Down by $54.4 Mil.
PSINET CONSULTING: Judge Gerber Confirms Amended Joint Plan
QWEST COMMS: Inks International Telephone Service Pact with BT
RASC SERIES 2004-KS12: Moody's Rates $5.5M Class B Certs. at Ba1
RCN CORPORATION: Administrative Claims Bar Date is Jan. 24
RCN CORPORATION: Paul Tudor Jones Discloses 19% Equity Stake
SAAN STORES: Obtains Court Order for CCAA Protection
SARDONYX ASSOCIATES: U.S. Trustee Asks Court to Dismiss Case
SENIOR LIVING: Court to Hear ZC Settlement Agreement on Jan. 25
SILICON VALLEY: Case Summary & 20 Largest Unsecured Creditors
STELCO INC: Court Extends Bid Deadline Until February 14
STRAWBERRY POINT: Case Summary & 20 Largest Unsecured Creditors
SUMMIT METALS: Creditors Must File Proofs of Claim by Feb. 15
TEMBEC INC: Shareholders' Meeting Scheduled for January 20
TEMBEC INC: Will Release First Quarter Results on January 20
TSI TELSYS: Taps Michael Gorham to Act as Chief Financial Officer
UAL CORP: Names Jeff Foland Vice President of North America Sales
UNITEDGLOBALCOM INC: Inks Merger Pact with Liberty Media
UNITED HOSPITAL: U.S. Trustee Picks 7-Member Creditors Committee
US AIRWAYS: Court Extends Cash Collateral Period to June 30
USG CORPORATION: Results of Status Conference with Judge Conti
USGEN NEW ENGLAND: Judge Mannes Approves Rockingham Consent Decree
W.R. GRACE: U.S. Government Wants Disclosure Statement Disapproved
W.R. GRACE: Everest Says Disclosure Statement is Inadequate
W.R. GRACE: BMW Constructors Says Claim is Secured
WEIRTON STEEL: DNI Has Until Jan. 21 to Transfer $524K from Sale
* Leonard Street Welcomes James Stein in Minneapolis Office
* Upcoming Meetings, Conferences and Seminars
*********
A.B. DICK: Creditors Must File Proofs of Claim by Jan. 31
---------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
set Jan. 31, 2005, at 5 p.m. as the deadline for all persons and
entities, owed money by A.B. Dick Company and its
debtor-affiliates, on account of claims arising prior to
July 13, 2004, to file proofs of claim and proofs of interest.
Creditors must file written proofs of claim on or before the
Jan. 31 Claims Bar Date and those forms must be delivered to:
The Trumbull Group, LLC
P.O. Box 721
Windsor, Connecticut 06095-0721
Tel: 860-687-7586
Any proof of claim or interest submitted by facsimile or e-mail
will not be accepted and will not be deemed filed until that proof
of claim is sent through the United States mail or through a
courier.
The Claims Bar Date applies to all claimants including
governmental units.
Headquartered in Niles, Illinois, A.B. Dick Company --
http://www.abdick.com/-- is a global supplier to the graphic arts
and printing industry, manufacturing and marketing equipment and
supplies for the global quick print and small commercial printing
markets. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. D. Del. Lead Case No. 04-12002) on
July 13, 2004. Frederick B. Rosner, Esq., at Jaspan Schlesinger
Hoffman, LLP, and H. Jeffrey Schwartz, Esq., at Benesch,
Friedlander, Coplan & Aronoff, LLP, represent the Debtors in their
restructuring efforts. Richard J. Mason, Esq., at McGuireWoods,
LLP, represents the Official Committee of Unsecured Creditors.
When the Debtor filed for protection from its creditors, it listed
over $10 million in estimated assets and over $100 million in
estimated liabilities.
A.C.E. ELEVATOR: Section 341(a) Meeting Slated for Jan. 24
----------------------------------------------------------
The U.S. Trustee for Region 2 will convene a meeting of A.C.E.
Elevator Co., Inc.'s creditors at 3:00 p.m., on Jan. 24, 2005, at
Office of the U.S. Trustee, 80 Broad Street, Second Floor in New
York. This is the first meeting of creditors required under
U.S.C. Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in New York, New York, A.C.E. Elevator Co., Inc., is
in the business of elevator and escalator maintenance, repairs,
construction and modernization. The Company filed for chapter 11
protection on Dec. 21, 2004 (Bankr. S.D.N.Y. Case No. 04-17994).
Jonathan S. Pasternak, Esq., at Rattet, Pasternak & Gordon Oliver,
LLP, represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed
$5,285,000 in total assets and $7,700,000 in total debts.
A.C.E. ELEVATOR: U.S. Trustee Picks 3-Member Creditors Committee
----------------------------------------------------------------
The United States Trustee for Region 2 appoints three creditors
to serve on the Official Committee of Unsecured Creditors of
A.C.E. Elevator Co., Inc.'s chapter 11 case:
1. Elevator Cabs of NY, Inc.
Attn: Thomas Aveni Mike Brady
15 Jane Street
Paterson, New Jersey 07522
Phone: 973-790-9100
2. Elevator Constructors Union
Attn: Rita Wiseiewski
Local No. 1 Annuity & 4 0 1 0 Fund
2185 Lemoine Avenue
Fort Lee, New Jersey 07024
Phone: 215-875-3132
3. Benfield Electric Supply Corp.
Attn: Robert DeFrancesco
25 Lafayette Avenue
White Plains, New York 10603
Phone: 718-706-8600
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in New York, New York, A.C.E. Elevator Co., Inc., is
in the business of elevator and escalator maintenance, repairs,
construction and modernization. The Company filed for chapter 11
protection on Dec. 21, 2004 (Bankr. S.D.N.Y. Case No. 04-17994).
Jonathan S. Pasternak, Esq., at Rattet, Pasternak & Gordon Oliver,
LLP, represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed
$5,285,000 in total assets and $7,700,000 in total debts.
ADELPHIA COMMS: Creditors' 341 Meeting Adjourned to March 16
------------------------------------------------------------
The meeting of Adelphia Communications Corp.'s creditors pursuant
to Section 341 of the Bankruptcy Code is adjourned to
March 16, 2005, at 2:00 p.m. to be held in the Office of the
United States Trustee for Region 2, at 80 Broad Street in New
York.
The 341 Meeting may be continued or adjourned from time to time
without further notice.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. The Company and its more than
200 affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr & Gallagher
represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No.
77; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AMCAST INDUSTRIAL: Committee Taps McDonald Hopkins as Counsel
-------------------------------------------------------------
The Official Committee of Unsecured Creditors of Amcast Industrial
Corporation and its debtor-affiliates asks the U.S. Bankruptcy
Court for the Southern District of Ohio for permission to employ
McDonald Hopkins Co., LPA, as its counsel.
McDonald Hopkins is expected to:
a) monitor the Debtors' chapter 11 cases and legal activities
and advise the Committee on the legal ramifications of those
actions;
b) provide the Committee with advise on its obligations and
duties in the Debtors' chapter 11 cases;
c) execute Committee decisions by filing motions, objections
and other documents to the Court
d) appear before the Court on all matters in the Debtors'
chapter 11 cases that are relevant in the interests of the
Committee and other unsecured creditors;
e) negotiate on the Committee's behalf the terms of a proposed
plan of reorganization; and
f) take other actions necessary to protect the right of the
unsecured creditors.
Jean R. Robertson, Esq., a Shareholder at McDonald Hopkins, is the
lead attorney for the Committee. Ms. Robertson will charge $360
per hour for her services.
Ms. Robertson reports McDonald Hopkins' professionals bill:
Designation Hourly Rate
----------- -----------
Shareholders $245 - 425
Associates 140 - 240
Legal Assistants 85 - 170
Law Clerks 75
Project Assistants 40 - 75
McDonald Hopkins assures the Court that it does not represent any
interests adverse to the Committee, the Debtors or their estates.
Headquartered in Dayton, Ohio, Amcast Industrial Corporation --
http://www.amcast.com/-- is a manufacturer and distributor of
technology-intensive metal products to end-users and supplier in
the automotive and plumbing industry. The Company and its
debtor-affiliates filed for chapter 11 protection on Nov. 30, 2004
(Bankr. S.D. Ohio Case No. 04-40504). Jennifer L. Maffett, Esq.,
at Thompson Hine LLP, represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed total assets of $104,968,000 and
total debts of $165,221,000.
AMCAST INDUSTRIAL: Wants More Time to Make Lease Decisions
----------------------------------------------------------
Amcast Industrial Corporation and its debtor-affiliates ask the
U.S. Bankruptcy Court for the Southern District of Ohio for an
extension, until the date on which a plan of reorganization is
confirmed, of the period within which they can elect to assume,
assume and assign, or reject their unexpired nonresidential real
property leases.
The Debtors filed a plan of reorganization on December 16, 2004.
The Disclosure Statement explaining that plan will be filed later
this month.
The Debtors tell the Court that they are parties to three
unexpired nonresidential leases located in Ohio, Michigan and
Indiana.
The Debtors explain to the Court that they are still attending to
multiple tasks relating to the administration of their chapter 11
cases, including the evaluation of their business needs in
relation to their reorganization efforts and the preparation of
their Schedules of Assets and Liabilities and Statements of
Financial Affairs.
Accordingly, the Debtors need additional time to evaluate each of
the unexpired leases and assess whether assuming, rejecting or
assigning those leases will be beneficial or detrimental to their
estates and creditors.
The Debtors assure the Court that the requested extension will not
prejudice the landlords of the leases because they are current on
all postpetition obligations under the leases.
Headquartered in Dayton, Ohio, Amcast Industrial Corporation --
http://www.amcast.com/-- is a manufacturer and distributor of
technology-intensive metal products to end-users and supplier in
the automotive and plumbing industry. The Company and its
debtor-affiliates filed for chapter 11 protection on Nov. 30, 2004
(Bankr. S.D. Ohio Case No. 04-40504). Jennifer L. Maffett, Esq.,
at Thompson Hine LLP, represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed total assets of $104,968,000 and
total debts of $165,221,000.
ATA AIRLINES: Wants Stipulation Rejecting Simulator Pacts Approved
------------------------------------------------------------------
On October 12, 2001, General Electric Capital Corporation and
ATA Airlines, Inc., as successor-in-interest to American Trans
Air, Inc., entered into a Flight Simulator Lease Agreement. GECC
leased to ATA a Boeing 737-800 aircraft simulator currently
located in Marietta, Georgia.
On December 23, 2003, the parties entered into a binding Letter of
Intent, pursuant to which GECC agreed to lease a Boeing 757-200
aircraft simulator currently located in Phoenix, Arizona.
Since the Petition Date, ATA Airlines and its debtor-affiliates
have conducted a review of their aircraft simulator usage
requirements and determined that the Simulators will no longer be
needed.
Accordingly, GECC and the Debtors stipulate that:
(a) the 737 Simulator Agreement will be rejected effective
May 31, 2005, and the 757 Simulator Agreement will be
rejected effective July 29, 2005;
(b) the Debtors will make all rental and other payments with
respect to the Simulators in the amounts and at the times
set forth in the Agreements from January 2005 through the
applicable Effective dates;
(c) the Debtors will pay $772,314, representing all then-
existing postpetition monetary defaults accruing under the
Agreements, including all interest, fees and other amounts
payable under the Agreements:
(1) $172,314, within five days after the Stipulation is
approved; and
(2) $100,000 on each of February 5, March 5, April 5,
May 5, June 5, and July 5, 2005.
A failure to timely pay any of the amounts will result in
the automatic acceleration of payment, without the
requirement of notice, of all remaining unpaid amounts;
(d) The $772,314 will be deemed an allowed expense of
administration pursuant to Sections 503(b)(1) and
507(a)(1) of the Bankruptcy Code;
(e) The Simulators will be returned to GECC on the applicable
Effective Dates in accordance with the Agreements; and
(f) GECC reserves its right to file any proof of claim in
respect of the Agreements, and to apply to the Court for
any order appropriate under the Bankruptcy Code, subject
to the right of the Debtors or any party-in-interest to
object thereto. GECC may file a proof of claim asserting
damages, if any, relating to the Debtors' rejection of the
Agreements and any other claim no later than September 15,
2005.
The Debtors ask the United States Bankruptcy Court for the
Southern District of Indiana to approve the Stipulation and the
rejection of the Simulator Agreements.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$745,159,000 in total assets and $940,521,000 in total debts.
(ATA Airlines Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CAMCO INC: Sells Longwood Property to McMaster for $13 Million
--------------------------------------------------------------
Camco, Inc., (TSX:COC) concluded a Purchase Sale Agreement with
McMaster University for the sale of its 36.7 acres of land on
Longwood Road South in Hamilton.
Under the terms of the Agreement, the ownership of the property
will pass in its current condition to McMaster University on
January 21, 2005, for a cash price of $13 million. Proceeds from
the sale will be used to help fund the closure costs of the
facility.
James Fleck, President and CEO commented: "While many parties
expressed strong interest in the property for commercial
development, we were encouraged from the beginning that McMaster
saw this land as a potentially attractive home for its new
Research Park facility. We strongly share the view that this a
great story for the University and community, and believe that it
will be a proud legacy for Camco and for the men and women who
have worked here over many years. We are pleased to have been
able to work closely with McMaster during the past eight months to
make the first step of this dream a reality."
Camco, Inc., is the largest Canadian manufacturer, marketer and
service provider of home appliances, with manufacturing operations
in Montreal, Quebec. The Company's product line includes such
popular names as GE, GE Profile, Hotpoint, Moffat, Monogram and
Samsung. Camco also produces and services private brands for
major Canadian department stores. For information regarding
Camco's products and services, please visit the Company's Web site
at: http://www.geappliances.ca/
At Sept. 31, 2004, Camco's balance sheet showed an $18,719,000
stockholders' deficit, compared to a $12,136,000 deficit at
Dec. 31, 2003.
CATHOLIC CHURCH: Portland's New Claims Bar Date is April 29
-----------------------------------------------------------
Judge Perris establishes April 29, 2005, at 5:00 p.m., as the last
day by which proofs of claim, including tort claims, must be
filed in the Archdiocese of Portland's chapter 11 case.
The previously established November 4, 2004, and March 7, 2005,
bar dates for filing claims in Portland's case will no longer
apply.
All proofs of claim received by BMC Group, Inc., Portland's
Claims Agent, which do not assert a claim based on child abuse or
knowingly allowing, permitting, or encouraging child abuse, will
be fully scanned by the Claims Agent and electronically filed
with the U.S. Bankruptcy Court for the District of Oregon via
Electronic Case Files system. The Proofs of Claim will be stored
by the Claims Agent in claim number order.
Proofs of claim based on child abuse or knowingly allowing,
permitting, or encouraging child abuse will not be scanned by the
Claims Agent. Instead, the Claims Agent will make a "dummy"
document in Portable Document Format, which will say
"Confidential proof of claim filed." The .pdf document will be
selected to attach when the Claims Agent electronically files the
Proof of Claim with the Court. The creditor's name will be
entered as "UNKNOWN -- CONFIDENTIAL" together with the claim
amount, if an amount is listed in the Proof of Claim. No other
information will be placed in the creditor record. The Proofs of
Claim will be segregated by the Claims Agent and kept under seal
to maintain confidentiality until further Court Order. Access to
the Proofs of Claim will be restricted to Portland, Portland's
insurers, the claimant, and their attorneys. Portland and its
insurers will be authorized to utilize the information contained
in the Proofs of Claim, including the claimant's name, in
conducting their investigations into the facts and circumstances
surrounding the claim.
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq. and William N. Stiles, Esq., at Sussman
Shank LLP, represent the Portland Archdiocese in its restructuring
efforts. In its Schedules of Assets and Liabilities filed with
the Court on July 30, 2004, the Portland Archdiocese reports
$19,251,558 in assets and $373,015,566 in liabilities. (Catholic
Church Bankruptcy News, Issue No. 14; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CATHOLIC CHURCH: Judge Perris Appoints Foraker as Futures Rep.
--------------------------------------------------------------
Judge Perris of the U.S. Bankruptcy Court for the District of
Oregon appoints David A. Foraker as the legal representative for
those injured persons holding claims against the Archdiocese of
Portland based on conduct that constitutes child abuse or
knowingly allowing, permitting, or encouraging child abuse, that
as of the April 29, 2005, Claims Bar Date:
-- are under the age of 18 and whose parent or legal guardian
has not filed a claim in Portland's case;
-- are suffering from "repressed memory" and cannot remember
the child abuse; or
-- have not discovered the injury or the causal connection
between the injury and the child abuse, nor in the
exercise of reasonable care should have discovered the
injury or the causal connection between the injury and the
child abuse.
Mr. Foraker is the vice-president of Green & Markley, P.C.
As Future Claimants Representative, Mr. Foraker will:
(a) file proofs of claim on behalf of all Future Claimants by
the Claims Bar Date, or any Court-ordered extension of the
Bar Date. The Claims may be filed in an unliquidated
amount and subject to amendment;
(b) negotiate, on behalf of the Future Claimants, their
treatment in any proposed plan of reorganization and will
vote on behalf of the Future Claimants to accept or reject
the plan;
(c) advocate the position of the Future Claimants in any
proceeding before the Court or in any appellate court;
(d) file pleadings and present evidence, as necessary, on any
issue affecting the Future Claimants;
(e) take all other actions as are reasonable necessary and
appropriate to represent the interests of the Future
Claimants;
(f) participate in the case on the same basis as a
professional person employed under Section 327 of the
Bankruptcy Code, with compensation to be paid on an hourly
basis at Mr. Foraker's normal hourly attorney fee rates,
subject to periodic adjustment, and further subject to
Sections 327 to 331 and Rules 2014 to 2017 of the Federal
Rules of Bankruptcy Procedure; and
(g) retain experts and other professionals as may be
reasonable and necessary to carry out his duties as
the Future Claimants Representative.
Neither Mr. Foraker nor Green & Markley represents any entity that
has an interest materially adverse to the interest of the Future
Claimants.
Objections to Mr. Foraker's appointment as Future Claimants
Representative must be filed with the Court on or before
January 20, 2005.
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq. and William N. Stiles, Esq., at Sussman
Shank LLP, represent the Portland Archdiocese in its restructuring
efforts. In its Schedules of Assets and Liabilities filed with
the Court on July 30, 2004, the Portland Archdiocese reports
$19,251,558 in assets and $373,015,566 in liabilities. (Catholic
Church Bankruptcy News, Issue No. 14; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CENTURY/ML: Has Exclusive Right to File a Plan Until March 31
-------------------------------------------------------------
The U.S. Bankruptcy Code for the Southern District of New York
extends the exclusive periods of Century/ML Cable Venture, ML
Media Partners, LP, and Century Communications Corp. during which
they may:
(a) file a plan of reorganization, through March 31, 2005; and
(b) solicit and obtain acceptances of their plan, through
May 25, 2005.
Century Communications Corporation filed for Chapter 11 protection
on June 10, 2002. Century's case has been jointly administered to
proceedings of Adelphia Communications Corporation. Century
operates cable television services in Colorado, California and
Puerto Rico. CENTURY is an indirect wholly owned subsidiary of
ACOM and an affiliate of Adelphia Business Solutions, Inc.
Lawyers at Willkie, Farr & Gallagher represent CENTURY.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. The Company and its more than
200 affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr & Gallagher
represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No.
77; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CHALK MEDIA: Grants Stock Options to Seven Executives
-----------------------------------------------------
Chalk Media Corp. has granted options under its Stock Option Plan
for the purchase of 100,000 shares to each of the following
directors and officers:
* Michael Agerbo,
* David Chalk,
* David Lewis,
* Calvin Mah,
* Grant Sutherland,
* Kris Sutherland, and
* Stewart Walchli.
Michelle Gahagan has been granted 200,000 options. The options
have an exercise price of $0.20 and are exercisable for five
years. The grant of options is subject to the approval of the TSX
Venture Exchange.
Chalk Media produces network television & in-flight entertainment
programming and online training & marketing solutions. The
company's television shows, ranging from Dave Chalk Computer Show
to Dave Chalk Connected, have won many awards and accolades and
have built a highly recognizable brand name. Leveraging this
brand has allowed the company to build relationships with a
blue-chip customer base and provide them with custom online
training and marketing solutions. Chalk Media's custom solutions
help industry-leading companies communicate more effectively with
their customers, distribution partners and employees.
With offices in Toronto, Ontario and Vancouver, British Columbia,
Chalk Media works with global organizations such as Samsung,
Intrawest, TELUS Mobility, RBC Financial, HSBC, Future Shop,
Terasen, Verizon, Sony, Bell Canada, Thomson Carswell and
Microsoft.
As of September 30, 2004, the Company had a CDN$225,559
stockholders' deficit compared to a $464,164 positive equity at
December 31, 2003.
CLEARLY CANADIAN: Toronto Stock Exchange Suspends Stock Trading
---------------------------------------------------------------
The Toronto Stock Exchange has been reviewing the common shares of
Clearly Canadian Beverage Corporation (TSX:CLV) (OTCBB:CCBC) with
respect to meeting the requirements for continued listing since
September. The Company was granted 120 days in which to regain
compliance with these requirements, pursuant to the TSX Remedial
Review Process. The TSX has now completed its review and has
decided to suspend the common shares of the Company from trading,
effective as of market close on February 16, 2005, for failure to
meet the continued listing requirements. The Company intends to
seek a listing of its shares on the TSX Venture Exchange, subject
to TSX-V approval. The shares of the Company also trade in the
United States on the OTC Bulletin Board.
Based in Vancouver, British Columbia, Clearly Canadian Beverage
Corporation markets premium alternative beverages, including
Clearly Canadian(R) sparkling flavored water, Clearly Canadian
O+2(R) oxygen-enhanced water beverage and Tre Limone(R) sparkling
lemon drink which are distributed in the United States, Canada and
various other countries. Additional information on Clearly
Canadian may be obtained on the World Wide Web at
http://www.clearly.ca/
At September 30, 2004, Clearly Canadian's balance sheet showed a
$681,000 stockholders' deficit, compared to $1,125,000 in positive
equity at December 31, 2003.
CLEARLY CANADIAN: Issues 465,000 More Shares in Private Placement
-----------------------------------------------------------------
Clearly Canadian Beverage Corporation (TSX:CLV)(OTCBB:CCBC) issued
an additional 465,000 private placement shares at a price of
Cdn$0.25 per share, generating additional proceeds of Cdn$116,250.
The private placement was originally announced by news release
dated Dec. 9, 2004, and at that time the Company indicated a
placement of up to 1,500,000 shares. Of the 1,500,000 shares,
1,035,000 shares were subsequently issued to directors, officers
and employees of the Company, which was the maximum number of
shares that such non-arms-length parties were permitted to acquire
under applicable Toronto Stock Exchange rules and policies.
Since the announcement of the completion of the 1,035,000 shares,
the Company received additional subscriptions for the remaining
465,000 shares from certain arms length parties. As a result, the
Company has completed and issued all of the 1,500,000 shares
allotted under the private placement. The proceeds from the
private placement were used to fund the Company's current
inventory production requirements. The private placement shares
are subject to a required four-month hold period and no discounts
or warrants were offered or issued in connection with the private
placement.
About Clearly Canadian
Based in Vancouver, British Columbia, Clearly Canadian Beverage
Corporation markets premium alternative beverages, including
Clearly Canadian(R) sparkling flavored water, Clearly Canadian
O+2(R) oxygen-enhanced water beverage and Tre Limone(R) sparkling
lemon drink which are distributed in the United States, Canada and
various other countries. Additional information on Clearly
Canadian may be obtained on the World Wide Web at
http://www.clearly.ca/
At September 30, 2004, Clearly Canadian's balance sheet showed a
$681,000 stockholders' deficit, compared to $1,125,000 in positive
equity at December 31, 2003.
COGECO CABLE: Posts $3.8 Million Net Income for First Quarter
-------------------------------------------------------------
Cogeco Cable, Inc., (TSX: CCA.SV) disclosed its financial results
for the first quarter of fiscal year 2005, ended November 30,
2004.
"Growth of our basic-service and digital-service customers was
higher than the same period last year while the addition of
high-speed Internet connections was slightly lower. Thanks to new
services such as top-end security services, included free of
charge with our Standard and Pro high speed Internet packages, we
have further strengthened the competitiveness of our high-speed
Internet service offer. Cogeco Cable currently offers the fastest
and most secure high-speed Internet service on the market. In
addition, our enhanced video-on-demand offer as well as the
introduction of subscription video-on-demand, have reinforced
Cogeco Cable's position as a leader in its markets," said Louis
Audet, President and CEO of Cogeco Cable Inc.
"Our financial performance continues to improve with net income
generated of $3.8 million. Our operating income before
amortization improved 12.7% due to increased revenue, tighter cost
control and an effective marketing strategy with Free Cash Flow up
32%. Fiscal 2005 has started on solid ground and is following the
expected course," concluded Louis Audet.
In the first quarter, revenue-generating units were higher than
the same period last year due to better digital-service customer
growth and greater basic-service customer gains. The strong
growth in digital-service customers is mainly attributable to the
success of an attractive digital terminal rental plan launched
last June and August in Ontario and Quebec, respectively and the
addition of MoviePix to the digital pay television service in
Ontario. The rollout of subscription video-on-demand and High
Definition services to 86% and 67% of the customer base
respectively this fall should contribute to the future growth of
digital services. The HD coverage will increase in the coming
months once the service is offered to most of Quebec's customer
base.
High-speed Internet customer additions were slightly lower than
last year due to a normal slowing-down of demand as the
penetration rate increases. To enhance the competitiveness of its
Internet service, Cogeco Cable will offer top-end security
services free of charge to all Standard and Pro high-speed
Internet customers in the coming months. The Internet security
services include anti-virus, personal firewall, parental control
and anti-spam, and will position Cogeco Cable's offering as the
fastest and most secure Internet service on the market.
* * *
As reported in the Troubled Company Reporter on Dec. 21, 2004,
Standard & Poor's Ratings Services affirmed its ratings including
its 'BB+' long-term corporate credit rating on Montreal, Quebec-
based Cogeco Cable, Inc. At the same time, Standard & Poor's
assigned its '1' recovery ratings on the company's senior secured
credit facility and other senior secured first priority debt. The
'1' recovery rating reflects expectations of full recovery of
principal in a default scenario. The outlook is stable.
COLLEGE PARTNERSHIP: Oct. 31 Balance Sheet Upside-Down by $4.7-Mil
------------------------------------------------------------------
College Partnership, Inc. (OTC BB: CGPA), a leading provider of
college entry and preparation services to students and their
parents, reported financial results for its fourth fiscal quarter
and for its first fiscal 2005 quarter which ended October 31,
2004.
Net loss for the first quarter decreased 47% to $0.24 million when
compared to the same period in 2003. The loss decreased 36% when
compared to the fourth quarter ending July 31, 2004. The improved
profitability is the result of substantially lower cost of sales,
because the company has optimized its mail campaigns. The October
quarter's gross profit margin improved 24% to a $1.5 million
profit compared to the same period a year earlier. Gross profit
margin improved 58% when compared to the fourth fiscal quarter
ending July 31, 2004.
"We are seeing a more streamlined company, where expenses are more
in line with revenues. Our next step is to re-invigorate our top
line growth. We anticipate the first results of our new
initiatives to occur in the third quarter, starting in February
2005. First indication for our second fiscal 2005 quarter which
ends January 31, 2005, is that sales continue to be sluggish, and
that the company will experience continuing operating losses.
Furthermore, our second quarter has historically been a weak
quarter, because of the holiday season," said John Schoonbrood,
Chief Financial Officer of College Partnership, Inc.
Total revenues for the first quarter of 2004 decreased 29%
compared to the same period in 2003 to $3.9 million. When
compared to the fourth quarter ended July 31, 2004, revenues
increased 1% to $3.9 million. The revenue decrease in the year
over year comparison reflects decreased mail campaign volumes.
Ed Doody, President of College Partnership, Inc., added: "We are
pleased College Partnership has shown solid profit improvement.
We believe that we have made significant progress in developing
new marketing channels and partnerships that will allow us to
reach a larger consumer share."
Earnings per basic and diluted share were negative $0.01 for the
first quarter of 2005, compared to earnings per basic and diluted
share of negative $0.02 for the first quarter of 2003. For the
fourth quarter of 2004, earnings per basic and diluted share were
negative $0.01.
About the Company
College Partnership, Inc. -- http://www.collegepartnership.com/--
is a full-service college planning company offering students and
their family integrated resources and services to guide them
through the college preparation process. College Partnership's
suite of products and services integrates career planning, college
major/field of study selection, college selection, preparation for
college entrance tests, aids for improving study skills as well as
searches for merit awards. The products consist of printed
materials, videocassettes, college major/field of study software,
career assessment software, databases accessible through CD-ROM
and one-to-one coaching. The Company provides educational
resources that assist families to save time, develop a plan,
decrease stress, and reduce college costs.
At Oct. 31, 2004, College Partnership's balance sheet showed a
$4,683,105 stockholders' deficit, compared to a $4,540,740 deficit
at Jan. 31, 2004.
CONTINENTAL AIRLINES: Inks $99-Mil Cost-Saving Pact with Employees
------------------------------------------------------------------
Continental Airlines has finalized wage and benefit reductions and
work rule changes for its Field Services Division, which includes
domestic airport ticket, gate, ramp, operations and cargo agent
employees. The reductions, which total $99 million annually, will
take effect on Feb. 28, 2005, and involve changes to wages, FLEX
credits, holidays, the 401(k) savings plan, overtime and other
work rules. These changes are part of Continental's previously
announced $500 million reduction in annual wage and benefit costs.
The work rule changes will increase productivity, resulting in
financial savings for the company. The work rule changes resulted
in smaller hourly rate reductions for the work group than would
otherwise have been necessary. Continental will be communicating
the details of the Field Services Division's reductions with the
employees of that division.
"Both directly, and through their employee involvement team, our
agents' suggestions and recommendations reduced what would
otherwise have been larger cuts in hourly rates and other
benefits," said Bill Meehan, Continental's senior vice president
of airport services. "In many cases, our agents identified
solutions that preserved benefits that were important to them and
their co-workers."
Continental announced $48 million of pay and benefits changes for
management and clerical employees on Dec. 14, and $22 million in
similar changes for reservation and Chelsea employees on Dec. 16.
The combined savings of management and clerical, reservations,
Chelsea and Field Services total $169 million of the $500 million
needed in annual pay and benefits reductions. Continental has
already identified $1.1 billion in annual cost-savings and revenue
enhancements prior to announcing the needed pay and benefit
reductions.
Continental continues to work with each of its other work groups
to develop a package of wage and benefit reductions and work rule
changes appropriate for each work group, as part of its previously
announced $500 million of annual reductions in wages and benefits.
Continental expects that the savings for each work group will be
effective Feb. 28, 2005.
As reported in the Troubled Company Reporter on Nov. 22, 2004,
Continental said it needs an annual $500 million reduction in
payroll and benefits costs. This reduction is necessary because
the company has lost hundreds of millions of dollars since 2001,
and expects to lose hundreds of millions of dollars more in 2004.
Continental must adjust its costs to a level that will let it
survive and grow; otherwise, it will have no prospect of returning
to profitability under prevailing market conditions.
Continental Airlines -- http://continental.com/-- serves 128
domestic and 111 international destinations -- more than any other
airline in the world -- and nearly 200 additional points are
served via codeshare partner airlines. With 42,000 mainline
employees, the airline has hubs serving New York, Houston,
Cleveland and Guam, and carries approximately 51 million
passengers per year. FORTUNE ranks Continental one of the 100
Best Companies to Work For in America, an honor it has earned for
six consecutive years. FORTUNE also ranks Continental as the top
airline in its Most Admired Global Companies in 2004.
* * *
As reported in the Troubled Company Reporter on May 21, 2004,
Standard & Poor's Ratings Services affirmed its ratings, including
its 'B' corporate credit rating, on Continental Airlines Inc., but
revised the long-term rating outlook to negative from stable.
CRESCENT OPERATING: Consummates Chapter 11 Plan of Reorganization
-----------------------------------------------------------------
Crescent Operating, Inc., (Pink Sheets:COPIQ) consummated its plan
of reorganization under the United States Bankruptcy Code. Under
the plan of reorganization, the stock transfer books were
previously closed at the close of business on June 22, 2004.
As provided by the plan of reorganization, all of the outstanding
shares of Company Common Stock have been cancelled and retired.
As further provided in the plan of reorganization described in the
Company's January 2003 proxy statement, holders of Company Common
Stock are entitled to receive 0.02 common shares of beneficial
interest in Crescent Real Estate Equities Company (NYSE:CEI) for
each share of Company Common Stock they hold valuing the Company's
common stock at $0.27 per share, using the average of the daily
closing prices per Crescent Real Estate shares for the ten trading
days immediately preceding June 22, 2004, of $16.268. The closing
price per share of Crescent Real Estate common shares was $17.13
on January 14, 2005. No certificate or scrip representing
fractional Crescent Real Estate common shares shall be issued, no
cash shall be paid in lieu of fractional shares, and all
fractional shares shall be rounded up or down to the nearest whole
Crescent Real Estate common share. The Company's transfer agent
will be mailing to each holder of record of Company Common Stock a
letter of transmittal and other information on how Company
stockholders should surrender their shares of Company Common Stock
and receive common shares of Crescent Real Estate.
The Company will file shortly a certification on Form 15 with the
Securities and Exchange Commission deregistering its common stock
under the Securities Exchange Act of 1934 and effecting the
suspension of all reporting obligations under the Securities
Exchange Act of 1934.
Crescent Operating, Inc., has been a debtor-in-possession in
proceedings under the United States Bankruptcy Code since
March 10, 2003.
ECU SILVER: Closes $2,863,651 Equity Private Placement
------------------------------------------------------
ECU Silver reported the closing of a private placement resulting
in gross proceeds of $2,863,651 being received in eight
installments.
ECU Silver issued an aggregate of 11,454,604 units at a price of
$0.25 per unit, each unit being comprised of one common share in
the share capital of ECU Silver and one common share purchase
warrant, with each common share purchase warrant entitling its
holder to acquire one common share at a price of $0.32 at any
time:
-- before November 29, 2006, for the subscribers of the first
closing held on November 29, 2004,
-- before December 1, 2006, for the subscribers of the second
closing held on December 1, 2004,
-- before December 3, 2006, for the subscribers of the third
closing held on December 3, 2004,
-- before December 14, 2006, for the subscribers of the fourth
closing held on December 14, 2004,
-- before December 15, 2006, for the subscribers of the fifth
closing held on December 15, 2004,
-- before December 23, 2006, for the subscribers of the sixth
closing held on December 23, 2004,
-- before January 5, 2007, for the subscribers of the seventh
closing held on January 5, 2005, and
-- before January 14, 2007, for the subscribers of the eighth
closing held on January 14, 2005.
Furthermore, the units are subject to a four (4) month hold period
during which no transactions are permitted. Such hold period will
end:
-- on March 29, 2005, for the units issued on November 29,
2004,
-- on April 1, 2005, for the units issued on December 1, 2004,
-- on April 3, 2005, for the units issued on December 3, 2004,
-- on April 14, 2005, for the units issued on December 14,
2004,
-- on April 15, 2005, for the units issued on December 15,
2004,
-- on April 23, 2005, for the units issued on December 23,
2004,
-- on May 5, 2005, for the units issued on January 5, 2005, and
-- on May 14, 2005, for the units issued on January 14, 2005.
In accordance with TSX Venture Exchange Policy 5.1 a finder's fee
was paid to three finders by way of the issuance of an aggregate
of 819,096 common shares of ECU Silver. A cash commission of
$10,000 was also paid to one of the finders.
ECU Silver is engaged in gold and silver development and
exploration in Mexico. The Company also has interests in mining
properties in Canada and has not yet determined whether those
properties contain economically recoverable ore reserves. The
recoverability of amounts for mining properties and related
deferred exploration expenses, and the capacity to meet all its
commitments depend on the discovery of economically recoverable
reserves, the ability of the company to obtain necessary financing
to complete the development, and the future profitable production
or proceeds from the their disposition.
As of September 30, 2004, the Company's equity deficit narrowed to
$4,647,942 compared to a $10,839,731 equity deficit at
December 31, 2003.
EXIDE TECH: Opens $1.7 Million Employee Facility at Kansas Plant
----------------------------------------------------------------
Exide Technologies, a global leader in stored electrical-energy
solutions, has completed a $1.7 million, 15,000-square-foot
employee facility at its manufacturing plant in Salina, Kansas.
The new employee facility, which was constructed by local
contractors in about nine months, was built to accommodate growth
at the plant and to replace the existing locker and lunchroom
facilities. Among the improvements are 80 private showers for
plant workers and a 100-percent expansion of lunchroom seating
capacity.
Exide's Salina plant currently employs more than 800 workers and
is considered the largest-volume manufacturer of lead-acid
batteries in the world. The plant's markets include automotive,
commercial, deep-cycle and starting marine, and lawn and garden.
"The Salina plant is a vital part of Exide's worldwide operations,
and this new employee facility demonstrates the value that we
place on the employees of Team Exide," said Salina Plant Manager
Dave Hutchinson. "In the future, we intend to use the upper level
of the facility for new offices, conference rooms and training
facilities. We're also going to use the old locker room to expand
our laboratory and add a new orientation facility."
Exide's Salina plant was constructed in 1975 to produce
approximately 12,000 lead-acid batteries per day with 225
employees. Today the plant - which is the third-largest employer
in the Salina area - produces approximately 40,000 lead-acid
batteries per day for such customers as NAPA, Wal-Mart, Sam's
Club, Checker Schucks Kragen, Kmart, Tractor Supply and PACCAR.
Headquartered in Princeton, New Jersey, Exide Technologies is the
worldwide leading manufacturer and distributor of lead acid
batteries and other related electrical energy storage products.
The Company filed for chapter 11 protection on April 14, 2002
(Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and
Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors
in their restructuring efforts. Exide's confirmed chapter 11 Plan
took effect on May 5, 2004. On April 14, 2002, the Debtors listed
$2,073,238,000 in assets and $2,524,448,000 in debts. (Exide
Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
FEDERAL-MOGUL: Fixes Surety Claims at $29M for Voting Purposes
--------------------------------------------------------------
On September 10, 2004, Travelers Casualty & Surety Company of
America, Safeco Insurance Company of America, National Fire
Insurance Company of Hartford and Continental Casualty Company and
certain of the Surety Bond Issuers filed a joint request for the
temporary allowance of their claims for voting purposes. The Plan
Proponents -- Federal-Mogul Corporation and debtor-affiliates, the
Official Committee of Asbestos Personal Injury Claimants, and the
Official Representative of Future Asbestos Personal Injury
Claimants -- opposed the estimation request,
One of the central issues raised by the Estimation Motion relates
to the dollar amount of the Surety Claims for voting purposes
under the Plan. The Surety Claims, with the exception of the
component of the Claims represented by the Sureties' unpaid
attorneys' fees and costs, are presently contingent and
unliquidated.
To avoid the cost, expense, delay and uncertainty of extensive
discovery and related proceedings, the Sureties and certain of the
Plan Proponents met and conferred to fix the amount of the Surety
Claims consensually for voting purposes only.
In a stipulation approved by the U.S. Bankruptcy Court for the
District of Delaware, the parties agree that the Surety Claims
will be temporarily allowed for voting purposes for $29 million,
consisting of:
(a) $1 million on account of accrued but unpaid attorneys'
fees and costs incurred by the Sureties or some of them;
and
(b) $28 million on account of the estimated maximum amount of
a potential draw on the CCR Surety Bonds, either as the
result of proceedings or potential settlement of claims
asserted in the CCR Litigation.
Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's larges
automotive parts companies with worldwide revenue of some
$6 billion. The Company filed for chapter 11 protection on
October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J.
Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at
Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $10.15 billion in
assets and $8.86 billion in liabilities. (Federal-Mogul
Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
FEDERAL-MOGUL: Allows Sherrill Class Claim for Voting Purposes
--------------------------------------------------------------
On March 3, 2003, Joseph Scott Sherrill filed Claim No. 7314
against Federal-Mogul Corporation's estate asserting a general
unsecured claim for $97 million, representing losses allegedly
suffered by Mr. Sherrill and a purported class of similarly
situated participants in Federal-Mogul's Salaried Employees'
Investment Program for whose accounts under the SEIP investments
were maintained in the Federal-Mogul common stock and preferred
stock funds at any time from June 30, 1999, to October 1, 2001.
In December 2003, the Debtors objected to the allowance of the
Sherrill Class Claim, and filed an adversary complaint alleging a
counterclaim for subordination of the Sherrill Class Claim. The
outcome of the litigation has not yet been determined.
While the Debtors and Mr. Sherrill were negotiating over the
amount and classification of the Sherrill Class Claim for voting
purposes, they entered into two successive stipulations extending
the time for Mr. Sherrill to file a motion for temporary allowance
of the Sherrill Class Claim for voting purposes.
The parties engaged in negotiations to reach an agreement on the
amount of the Sherrill Class Claim for voting purposes so that the
stipulated amount would fairly estimate the likely outcome of the
pending litigation involving the Sherrill Class Claim. So far,
the parties have been unsuccessful in reaching an agreement.
Actual determination of the Sherrill Class Claim would involve the
adjudication of complex issues of ERISA breach of fiduciary duty
law, class certification issues including the applicable class
period and statute of limitations, proximate causation, and
complex loss and alternative investment analysis. Substantial
discovery and expert analysis would also likely be required.
Nevertheless, Mr. Sherrill desires to vote on the Plan to preserve
and protect any rights or benefits of the Plan that are dependent
on his voting or on his checking applicable ballot provisions to
prevent the possible release of others against whom he has alleged
claims, including claims in a suit currently pending in the United
States District Court for the Eastern District of Michigan against
certain of the Debtors' present and former officers, directors,
and employees. The defendants in the Michigan Litigation, as well
as Federal-Mogul, dispute and deny the claims asserted by Mr.
Sherrill against them.
Pursuant to Rule 3018(a) of the Federal Rules of Bankruptcy
Procedure, the parties stipulate and agree that the Sherrill Class
Claim will be temporarily allowed, for voting purposes only as a
Class 1H Unsecured Claim under the Plan in the nominal amount of
$10,000 -- representing approximately $1 per member of the
purported class of persons Mr. Sherrill seeks to represent through
the Sherrill Class Claim.
Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's larges
automotive parts companies with worldwide revenue of some
$6 billion. The Company filed for chapter 11 protection on
October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J.
Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at
Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $10.15 billion in
assets and $8.86 billion in liabilities. (Federal-Mogul
Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
FIBERMARK INC: May Withdraw Chapter 11 Plan if Creditors Disagree
-----------------------------------------------------------------
FiberMark, Inc., (OTC Bulletin Board: FMKIQ) advises the U.S.
Bankruptcy Court for the District of Vermont that disagreements
among bondholder members of the company's Creditors Committee as
to a number of corporate governance issues could result in a
rejection of the Plan by the company's bondholders. Although the
Creditors Committee had agreed to support the Plan of
Reorganization filed on December 17, its bondholder members have
been unable to reach a consensus regarding certain implementation
documents, primarily related to corporate governance, which must
be filed in advance of the confirmation hearing and must be
approved prior to the Plan's effective date.
As indicated in the notice, the company intends to withdraw the
Plan of Reorganization on January 21 if agreement among the
creditors cannot be reached on these implementation issues prior
to that date. In that event, the company intends to file a new
Plan of Reorganization that would include typical governance
provisions. The company currently anticipates no other material
changes to its Plan. Any new Plan, if filed, may require a second
voting process, which would likely result in a delay in the
company's emergence from chapter 11 of approximately 30 to 60
days, or until late March or April.
Although the company was not a party to the discussions that
occurred among several of its major bondholders, it understands
that such discussions centered on issues related to post-emergence
corporate governance matters, including corporate charter and
by-law provisions related to shareholder rights. Since the
reorganized company is to be incorporated under Delaware law,
matters of corporate governance would be determined with reference
to such law. While an extensive array of shareholder protections
exist under Delaware law, such protections may vary by agreement
of the shareholders. Any such variation may impact positively or
negatively the rights of a particular shareholder, depending on
the size of its holdings. The company believes that its major
future shareholders were unable to agree unanimously on the degree
to which the company's future corporate governance provisions
should be changed from the standard provisions of Delaware law,
with the result that the company's Plan as filed on December 17
may not receive the votes required for Bankruptcy Court approval.
These rights relate to the new shareholders of FiberMark,
including current bondholders and trade creditors. The rights at
issue do not pertain to current shareholders, whose shares are
expected to be cancelled as specified in FiberMark's Plan of
Reorganization, with no recovery expected for such current
shareholders.
The company does not anticipate publicly reporting fourth-quarter
and year-end 2004 results if it emerges from chapter 11 as a
private company prior to year-end SEC filing deadlines. However,
should emergence from chapter 11 be delayed beyond March 30, the
company would anticipate publicly reporting these results and
filing an Annual Report on Form 10-K with the SEC.
Headquartered in Brattleboro, Vermont, FiberMark, Inc. --
http://www.fibermark.com/-- produces filter media for
transportation applications and vacuum cleaning; cover stocks and
cover materials for books, graphic design, and office supplies and
base materials for specialty tapes, wallcoverings and sandpaper.
The Company filed for chapter 11 protection on March 30, 2004
(Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D.J.
Baker, Esq., David M. Turetsky, Esq., and Rosalie Walker Gray,
Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $329,600,000 in
total assets and $405,700,000 in total debts.
FIVE STAR HAULING: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Five Star Hauling Service, Inc.
aka ABC Hauling Service Inc
10379 Central Park Drive, Suite 200
Manassas, Virginia 20110
Bankruptcy Case No.: 05-10131
Type of Business: The Debtor provides hauling services.
See http://www.fivestarhauling.com/
Chapter 11 Petition Date: January 14, 2005
Court: Eastern District of Virginia (Alexandria)
Judge: Robert G. Mayer
Debtor's Counsel: Alan Rosenblum, Esq.
Rosenblum & Rosenblum
228 South Washington Street, Suite 300
Alexandria, VA 22314
Tel: 703-548-9002
Fax: 703-548-8774
Total Assets: $2,571,237
Total Debts: $5,260,600
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Applegate Disputed claim $374,000
c/o Ives & Associates arising from effort
21145 Whitfield Place, #107 to purchase assets
Sterling, VA 20165
BB&T Bank Secured Value: $275,942
Business Loan Center $173,150
PO Box 580003
Charlotte, NC 28258
BB&T Bank Secured Value: $194,938
Business Loan Center $187,500
PO Box 580003
Charlotte, NC 28258
Waste Management of NOVA Trade debt $160,000
6994 Columbia Gateway Drive
Suite 200
Columbia, MD 21046
BB&T Bank Note #6 Line of $150,000
credit supporting
City of Manassas
performance Bond
BB&T Bank Secured Value: $138,941
$31,350
BB&T Bank Secured Value: $93,551
$63,150
BB&T Bank Secured Value: $73,670
$32,500
BB&T Bank Secured Value: $54,886
$23,250
BB&T Bank Secured Value: $36,384
$30,000
Donald Herndon Budget disposal - $30,000
acquisition note
Fairfax County Solid Waste Trade debt $11,098
Prince William County Trade debt - Landfill $10,329
Nextel Trade debt $9,899
Anthem Blue Cross Blue Employee HMO $9,697
Shield Insurance
McCarthy Tire Trade debt - Tires $8,527
R&R Battery Service Trade debt $8,018
Fernando & Leslie Simoes Rent and renovation $7,644
note
DMV $5,660
Northern Virginia Supply Trade debt $5,491
FOOTSTAR INC: Appoints Jeffrey A. Shepard to Board of Directors
---------------------------------------------------------------
Footstar, Inc., has named Jeffrey A. Shepard, President and Chief
Executive Officer of its Meldisco division to the Company's Board
of Directors.
Dale W. Hilpert, Chairman and Chief Executive Officer of Footstar,
commented, "Over the years, Jeff has done an excellent job of
leading Meldisco. Through our reorganization, we have refocused
on this core operation, which has long been a leader in the
discount footwear market. We look forward to having the benefit
of Jeff's experience and insights at the Board level."
Mr. Shepard, an industry veteran with 35 years of footwear
experience, joined Meldisco in 1994. Previously, he served as
President and Chief Executive Officer of Pic N Pay, a $300 million
footwear retailer, and held various positions with Payless
ShoeSource. He began his retailing career with Thom McAn in 1971.
Headquartered in West Nyack, New York, Footstar, Inc., retails
family and athletic footwear. As of August 28, 2004, the Company
operated 2,373 Meldisco licensed footwear departments nationwide
in Kmart, Rite Aid and Federated Department Stores. The Company
also distributes its own Thom McAn brand of quality leather
footwear through Kmart, Wal-Mart and Shoe Zone stores. The
Company and its debtor-affiliates filed for chapter 11 protection
on March 3, 2004 (Bankr. S.D.N.Y. Case No. 04-22350). Paul M.
Basta, Esq., at Weil Gotshal & Manges, represents the Debtors in
their restructuring efforts. When the Debtor filed for
protection, it listed $762,500,000 in total assets and
$302,200,000 in total debts. The Debtors remain in possession of
their assets and properties, and continue to operate their
businesses and manage their properties as debtors-in-possession
pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.
GLOBAL DATA: Dec. 31 Balance Sheet Upside-Down by $50,292
---------------------------------------------------------
GDI Global Data, Inc. (NEX: GDT.H) reported its financial results
for the second quarter of fiscal year 2005. All amounts are
expressed in U.S. dollars and are presented in accordance with
Canadian generally accepted accounting principles.
Previously, on Sept. 14, 2004, the Corporation said it has
completed a significant phase of its repositioning as a small cap
merchant bank providing financial advisory services and funding
for distressed/turnaround situations and had secured a C$1.0
million credit facility with Saturn Capital Corporation and
private investors to fund investments in distressed businesses
requiring investment capital and management resources. Since that
announcement, the Corporation has initiated discussions with
companies as well as third party intermediaries. Unfortunately,
the Corporation has not been able to advance its business case
with a third party to date and does not anticipate that it will be
able to conclude an investment in the foreseeable future.
Accordingly, the Corporation has terminated its credit facility
with Saturn Capital Corporation and will solicit businesses
seeking to effect a public listing by way of a reverse take over
transaction, subject to applicable securities and regulatory
restrictions.
Second Quarter 2005 Compared to Second Quarter 2004
Consolidated Statements of Operations
Net sales were $nil in the second quarter of 2005, compared to
$81,040 in the second quarter of 2004, a decrease of $81,040 or
100%. This reduction reflects the reorganization of the
Corporation's operations whereby income is derived primarily from
royalties rather than the sale of product.
Gross profit was $nil in the second quarter of 2005, compared to
negative $10,005 in the second quarter of 2004. The 2004 negative
gross profit reflected the sale and write down of product to
facilitate its timely disposition.
Operating expenses were $25,359 in the second quarter of 2005,
compared to $95,226 in the second quarter of 2004, a decrease of
$69,867 or 73% attributable to the change in business strategy.
Operating loss was $25,359 in the second quarter of 2005, compared
to $105,231 in the second quarter of 2004, a decrease of $79,872
or 76%.
Income from discontinued operations was $136,751 in the second
quarter of 2005, as compared to $nil in the second quarter of
2004. In the second quarter, the Corporation concluded that it
would be appropriate not to reflect the liabilities of one of its
operating subsidiaries as that subsidiary no longer carries on
business.
Net income was $124,536 in the second quarter of 2005, compared to
a net loss of $92,961 in the second quarter of 2004, an increase
of $217,497. Net income per share was $0.01 in the second quarter
of 2005, compared to a net loss per share of ($0.02) in the
comparable period in 2004.
Six Months Ended December 31, 2004
Compared to the Six Months Ended December 31, 2003
Net sales were $nil in the six months ended December 31, 2004,
compared to $336,050 in the six months ended December 31, 2003, a
decrease of $336,050 or 100%. This reduction reflects the
reorganization of the Corporation's operations whereby income is
derived primarily from royalties rather than the sale of product.
Gross profit was $nil in the six months ended December 31, 2004,
compared to $104,936 in the six months ended December 31, 2003.
The 2003 gross profit reflected the sale and write down of product
to facilitate its timely disposition.
Operating expenses were $48,482 for the six months ended
December 31, 2004, compared to $402,621 in the six months ended
December 31, 2003, a decrease of $354,139 or 88% attributable to
the change in business strategy.
Operating loss was $31,433 in the six months ended December 31,
2004, compared to $254,181 in the six months ended December 31,
2003, a decrease of $223,048 or 88%.
Income from discontinued operations was $136,751 in the six months
ended December 31, 2004, as compared to $nil in the six months
ended December 31, 2003. In the second quarter, the Corporation
concluded that it would be appropriate not to reflect the
liabilities of one of its operating subsidiaries as that
subsidiary no longer carries on business.
Net income was $105,318 in the six months ended December 31, 2004,
compared to a $254,481 net loss in the six months ended
December 31, 2003, an improvement of $359,799. Net income per
share was $0.01 in the six months ended December 31, 2004,
compared to a net loss per share of ($0.05) in the comparable
period in 2003.
December 31, 2004, Compared to June 30, 2004
Cash and cash equivalents were $4,554 at December 31, 2004,
compared to $36,347 at June 30, 2004, a decrease of $31,793 or
87%. This decrease was as a result of $303,879 expended in
operating activities offset by $1,529 received from investing
activities and $270,557 from financing activities.
Prepaid expenses and other assets were $6,720 at December 31,
2004, compared to $2,770 at June 30, 2004, an increase of $3,950.
This increase was attributable to increased tax recoveries.
Loan receivable was $58,551 at December 31, 2004, compared to
$53,981 at June 30, 2004, an increase of $4,570, due to changes in
the US exchange rate.
Accounts payable and accrued charges were $61,566 at December 31,
2004, compared to $460,714 at June 30, 2004, a decrease of
$399,148 or 87%. This reduction reflects a $73,415 decrease due
to the settlement of a litigation matter, a decrease of $186,206
due to the issuance of a promissory note to resolve a provision
for severance, a decrease of $136,751 due to the recission of
liabilities in discontinued operations, and a decrease of $2,776
in trade accounts payable and accruals.
Note payable was $58,551 at December 31, 2004, compared to $0 at
June 30, 2004, an increase of $58,551. On July 7, 2004, the note
was issued for C$248,000 to resolve a liability for severance. To
December 31, 2004, C$176,000 of the note was converted to
1,760,000 common shares leaving C$72,000 (US$58,551) outstanding.
Shareholders' equity was negative $50,292 at December 31, 2004,
compared to negative $367,616 at June 30, 2004, a decrease of
$317,324. This improvement was due to the issue of common shares
for $212,006 and net income for the six months of $105,318.
Liquidity and Capital Resources
Cash and cash equivalents used in operating activities were
$12,281 in the second quarter of 2005, compared to $6,651 in the
second quarter of 2004, an increase of $5,630 or 85%. This
increase is attributable to the net income for the second quarter
of 2005 of $124,536 compared to the net loss in the second quarter
of 2004 of $92,961, offset by an increase of $223,127 in
investment in non-cash working capital.
Cash and cash equivalents used in investing activities were $1,481
in the second quarter of 2005, compared to $55,534 in the second
quarter of 2004. The 2004 usage arose from the reclassification
of the loan to a long term asset.
Cash and cash equivalents provided by financing activities were
$1,481 in the second quarter of 2005, compared to $nil in the
second quarter of 2004. The increase was due to exchange rate
changes.
The Corporation continues to experience capital requirements to
fund its operations. The Corporation expects that it will
continue to experience operating losses and is dependent on third
party financing to continue to operate. There is no assurance
that the Corporation will be able to secure such financing.
At Dec. 31, 2004, Global Data's balance sheet showed a $50,292
stockholders' deficit, compared to a $367,616 deficit at
June 30, 2004.
HARBORVIEW MORTGAGE: Moody's Puts Ba2 Rating on Class B-4 Certs.
----------------------------------------------------------------
Moody's Investors Service has assigned a rating of Aaa to the
senior certificates issued in the HarborView Mortgage Loan Trust
2004-09 securitization of negative amortization loans secured by
first liens on one- to four-family residential properties. In
addition ratings of Aa2, A2, Baa2 and Ba2 were also assigned to
Classes B-1, B-2, B-3 and B-4, respectively.
According to Moody's analyst Amita Shrivastava, the ratings of the
certificates are based on the quality of the underlying mortgage,
the credit support provided through subordination, the legal
structure of the transaction, as well as the capability of the
servicers of the mortgage loans.
The underlying collateral consists predominantly of adjustable
rate negative amortization mortgage loans with an original term to
maturity of 30-years. All of the loans in the mortgage pool are
originated by Countrywide Home Loans, Inc. The loan pool is
divided into four loan groups. The prefix of the certificates
corresponds to the loan group they are associated with.
The complete rating actions are:
Certificates: Mortgage Loan Pass-Through Certificates
Series 2004-09
Seller: Greenwich Capital Financial Products, Inc.
Depositor: Greenwich Capital Acceptance, Inc.
Servicer: Countrywide Home Loans Servicing LP
* Class 1-A, $404,685,000, Aaa
* Class 2-A, $142,015,000, Aaa
* Class 3-A, $98,633,000, Aaa
* Class 4-A1A, $118,658,000, Aaa
* Class 4-A1B, $20,940,000, Aaa
* Class 4-A2, $250,000,000, Aaa
* Class 4-A3, $100,000,000, Aaa
* Class X, Notional Amount, Aaa
* Class A-R, $100, Aaa
* Class B-1, $23,783,000, Aa2
* Class B-2, $20,733,000, A2
* Class B-3, $14,634,000, Baa2
* Class B-4, $8,537,000, Ba2
HAYES LEMMERZ: Should Not Use Expert Materials, Says GE Capital
---------------------------------------------------------------
General Electric Capital Corporation's applications for allowance
and payment of administrative expenses relate to 50 Machines on 18
equipment schedules that ultimately were rejected by Hayes Lemmerz
International, Inc., at various times during its bankruptcy case.
GE Capital purchased the Machines for $15,222,464 before leasing
the Machines to Hayes.
According to Julianne E. Hammond, Esq., at Blank Rome, LLP, in
Wilmington, Delaware, the 50 Machines can be divided into two
groups for the purposes of trial:
(1) "Group 1 Machines" consist of 41 Machines on 16 Schedules,
which were part of the Lease and which were rejected by
Hayes more than 59 days after the Petition Date; and
(2) "Group 2 Machines" consist of the remaining nine Machines
on Schedules 38 and 40 to the Lease, which Hayes rejected
within the first 59 days of the Case.
With respect to each of the Group 1 Machines, pursuant to Section
365(d)(10) of the Bankruptcy Code, the Debtors were required to
timely perform all of its obligations to GE Capital under the
Lease until the Debtors rejected the Schedule relating to the
Machine. Under the Lease, the Debtors are obligated to:
(a) properly maintain the Machines in "good operating order,
repair, condition and appearance in accordance with the
manufacturer's recommendations, normal wear and tear
excepted";
(b) pay rent and other charges that arose under the Lease;
(c) maintain insurance on the Machines in accordance with the
terms of the Lease;
(d) "promptly and fully notify Lessor in writing if any unit
of Equipment will be or become worn out, lost, stolen,
destroyed, irreparably damaged in the reasonable
determination of Lessee, or permanently rendered unfit for
use from any cause whatsoever . . ." defined as a
"Casualty Occurrence" under the Lease; and
(e) comply with the return provisions of the Lease with
respect to any Schedule that reached the end of its Basic
Term prior to being rejected by the Debtors.
The Lease further provides for the damages that the Debtors are
obligated to pay GE Capital if the Debtors fail to abide by its
obligations under the Lease.
With respect to each of the Group 1 Machines, GE Capital alleges
that the Debtors defaulted under the terms of the Lease by
breaching one or more of the obligations. The Debtors' default
entitles GE Capital to recover, as an allowed administrative
expense:
-- the contractual stipulated loss value of each of the Group
1 Machines;
-- other damages as may be proven at trial less the sales
proceeds received by GE Capital; and
-- GE Capital's reasonable attorneys' fees, costs and expenses
incurred as a result of the default.
Ms. Hammond also argues that with respect to the Group 2
Machines, pursuant to Section 503(b)(1) of the Bankruptcy Code,
GE Capital is entitled to an allowed administrative expense claim
based on the Debtors' destruction of the Group 2 Machines
postpetition. GE Capital alleges that postpetition, the Debtors
caused damage to the Group 2 Machines by:
(a) cannibalizing parts from the Machines;
(b) improperly disconnecting, moving, and storing the
Machines; and
(c) failing to take commercially reasonable steps to preserve
the value of the Machines.
Ms. Hammond insists that GE Capital is entitled to an allowed
administrative expense claim, in an amount to be proven at trial,
calculated as the difference between what:
-- the Machines would have been worth absent the Debtors'
conduct; and
-- GE Capital was able to recover from the Group 2 Machines on
resale.
For these reasons, GE Capital asks Judge Walrath to allow its
administrative expense claims in the amounts to be proven at trial
and award GE Capital reasonable attorneys' fees and costs incurred
in pursuing those claims.
Prohibit Untimely Disclosed Materials,
GE Capital Asks Judge Walrath
Ms. Hammond points out that the deadline for the disclosure of
expert designations, reports and other disclosures required by
Rule 26(a)(2) of the Federal Rules of Civil Procedure expired on
July 9, 2004. The deadline for completing all expert discoveries
also ended on August 20, 2004.
According to Ms. Hammond, the Debtors delivered expert materials
to GE Capital on December 17, 2004, consisting of a videotape, 39
still photographs allegedly taken at the Debtors' Huntington,
Indiana plant on November 11, 2004, and a diagram. The Expert
Materials were delivered to GE Capital along with a letter from
the Debtors' counsel stating that the Expert Materials may be used
as illustrative aides during the testimony of the Debtors'
proffered expert witness, Frederick Kucklick. Ms. Hammond reminds
the U.S. Bankruptcy Court for the District of Delaware that by the
parties' agreement, GE Capital deposed Mr. Kucklick on August 26,
2004.
"The Expert Materials should have been disclosed to GECC by Hayes
on or before July 9, 2004," Ms. Hammond asserts. "The Expert
Materials were not timely disclosed by Hayes, which deprived GECC
of its opportunity to conduct discovery regarding the Expert
Materials and to present rebuttal expert testimony related to the
Expert Materials, prejudicing GECC. Therefore, Hayes should not
be allowed to use the Expert Materials for any purpose at trial."
Pursuant to Rule 37(c)(1) of the Federal Rules of Civil
Procedure, GE Capital asks Judge Walrath to:
(a) prohibit the Debtors from using the Expert Materials for
any purpose at trial; and
(b) require the Debtors to pay, on demand, GE Capital's
attorneys' fees, costs, and expenses incurred as a result
of the failure to disclose.
The trial will be held on January 31 though February 2, 2005, at
9:00 a.m.
Hayes Lemmerz International, Inc., is a world leading global
supplier of automotive and commercial highway wheels, brakes,
powertrain, suspension, structural and other lightweight
components. The Company filed for chapter 11 protection on
December 5, 2001 (Bankr. D. Del. Case No. 01-11490). The
Debtors' confirmed chapter 11 Plan took effect on June 3, 2003.
Eric Ivester, Esq., and Mark S. Chehi, Esq., at Skadden, Arps,
Slate, Meager & Flom, represented the Debtors in their
restructuring efforts. (Hayes Lemmerz Bankruptcy News, Issue No.
59; Bankruptcy Creditors' Service, Inc., 215/945-7000)
HUFFY CORP: Looks for Auditor Following KPMG Retention Withdrawal
-----------------------------------------------------------------
Huffy Corporation and its debtor-affiliates withdrew its
application for the retention of KPMG LLP following objections
from the Office of the United States Trustee and the Official
Committee of Unsecured Creditors. The Company disclosed that it
will file an application for the retention of alternative
independent auditors as quickly as possible.
KPMG LLP has been Huffy's auditors since 1962. In December 2004,
KPMG indicated that it wanted to continue to serve as the
Company's independent auditors. On Dec. 18, 2004, Huffy, with
KPMG's cooperation, filed an application with the U.S. Bankruptcy
Court for the Southern District of Ohio requesting permission to
retain KPMG as its principal independent accountants to audit
Huffy's financial statements for the year ended Dec. 31, 2003, and
to review Huffy's financial statements for the first quarter of
2004.
Subsequent to the March 5, 2004, filing of its financial
statements for the year ended Dec. 31, 2003, Huffy Corporation
said it expected to post a net loss for the first quarter of 2004,
in part due to significantly higher than normal charges to income
for customer returns and deductions related to Huffy's Canadian
business. In late April 2004, Huffy announced that it expected to
report a significant loss for the first quarter of 2004, including
the potential write-off of certain intangible and deferred tax
assets, and that the Company did not expect to return to
profitability until 2005.
In late May, Huffy reported that it was not able to file its first
quarter financial statements with the Securities and Exchange
Commission on Form 10-Q in a timely fashion, and hoped to file in
June 2004. In July 2004, the Company said it still had not
resolved all of its accounting issues. Throughout the period from
April through July, Huffy and KPMG had extensive discussions as to
the materiality of potential adjustments that related to 2003, and
the need to restate the Company's 2003 financial statements. In
early August 2004, Huffy said it intended to restate its 2003
financial results to reflect substantial charges related to
customer deductions, credits and reserves for inventory valuation,
and doubtful accounts receivable in the Canadian business, and
would review the appropriateness of recording a portion of the
write-off of certain intangible and deferred tax assets in 2003.
In late September and early October 2004, KPMG indicated that they
were concerned by a number of issues, including:
-- the substantial number of deductions,
-- requests to return or returned merchandise, and
-- credits taken by customers of the Canadian business during
the first and early second quarters of 2004.
In October 2004, KPMG met with the Audit Committee of the
Company's Board of Directors to discuss these concerns. KPMG
indicated that while they were not aware of any specific
improprieties, there was at least the possibility of
irregularities that should be examined, and they recommended that
the Audit Committee conduct an investigation, potentially
including the retention of an independent forensic auditor, to
determine whether in fact there had been any irregularities which
potentially impacted the presentation of information in Huffy's
2003 financial statements. The Audit Committee then approved the
retention of an independent forensic auditor to conduct an
investigation. Because of Huffy's subsequent Chapter 11 filing,
the retention is subject to bankruptcy court approval which has
not yet been obtained, and an investigation has not yet been
conducted. Since Huffy will now have to retain new independent
accountants, it expects to discuss the nature and scope of the
forensic investigation with its new auditors before the
investigation is commenced.
Huffy, through both its management and its Audit Committee, has
had extensive discussions with KPMG. Huffy does not believe these
discussions included any disagreements with KPMG on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope of procedure, which disagreement(s),
if not resolved to KPMG's satisfaction, would have caused it to
make reference to the subject matter of the disagreement(s) in
connection with its report.
The reports of KPMG, LLP, on Huffy's consolidated financial
statements for the years ended Dec. 31, 2003, and 2002 did not
contain an adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope, or
accounting purposes. During Huffy's fiscal years ended Dec. 31,
2003, and 2002 and the period from Dec. 31, 2003, to the present,
there were no disagreements with KPMG, LLP, on any matter of
accounting principles or practices, financial statement disclosure
or auditing scope or procedure which disagreement(s), if not
resolved to the satisfaction of KPMG, LLP, would have caused them
to make a reference to the subject matter of the disagreement(s)
in connection with their reports on the consolidated financial
statements for those years.
During the years ended Dec. 31, 2002, and 2003 and the period from
Dec. 31, 2003, to the present, KPMG did not advise Huffy that the
internal controls necessary for Huffy to develop reliable
financial statements do not exist. KPMG likewise did not advise
Huffy that information had come to KPMG's attention that led them
to no longer be able to rely on management's representations, or
that made them unwilling to be associated with the financial
statements prepared by Huffy's management. However, as previously
discussed, KPMG did inform the Audit Committee that there was at
least a possibility of irregularities that could have affected
Huffy's 2003 financial statements and therefore recommended that
Huffy's Audit Committee conduct an independent investigation to
determine whether any irregularities in fact occurred. KPMG
further informed the Audit Committee that depending on the results
of an investigation, it was possible that they might later
conclude that they could no longer rely on management's
representations or that they would be unwilling to be associated
with financial statements prepared by management or that the
internal controls necessary for the Company to develop reliable
financial statements do not exist.
Headquartered in Miamisburg, Ohio, Huffy Corporation --
http://www.huffy.com/-- designs and supplies wheeled and related
products, including bicycles, scooters and tricycles. The Company
and its debtor-affiliates filed for chapter 11 protection on
Oct. 20, 2004 (Bankr. S.D. Ohio Case No. 04-39148). Kim Martin
Lewis, Esq., and Donald W. Mallory, Esq., at Dinsmore & Shohl LLP,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$138,700,000 in total assets and $161,200,000 in total debts.
INFOWAVE: Securityholders Approve Reorganization Transaction
------------------------------------------------------------
Infowave Software, Inc. (TSX:IW) reported that the corporate
reorganization involving Infowave and 0698500 B.C. Ltd. -- the
Investor -- previously announced on November 19, 2004, has been
approved by Infowave's securityholders. Under the Reorganization,
which will be completed by way of two separate plans of
arrangement, Infowave will transfer all of its assets to a new
company -- Newco, all of the shares of which will be owned by the
existing shareholders of Infowave after exchanging their Infowave
shares for shares of Newco on a one-for-one basis under the first
plan of arrangement. The Investor will then acquire a majority
equity interest in Infowave by paying approximately C$5.45 million
to Newco. Thereafter, under the second plan of arrangement,
shares of Infowave, representing a minority equity interest, will
be distributed to the current shareholders of Infowave.
The first plan of arrangement was approved by a majority of the
securityholders of Infowave at a meeting of such securityholders,
and the second plan of arrangement was approved by a majority of
the shareholders of Infowave at a subsequent meeting of
shareholders.
The closing of the Reorganization remains subject to the
satisfaction of certain conditions precedent, including receipt of
court and regulatory approvals.
About Infowave
Infowave Software, Inc., (TSX:IW) provides enterprises with
scalable and robust mobile solutions for improving operational
efficiency and increasing the productivity of mobile workers.
Infowave's configurable enterprise mobile application (EMA) suite,
Telispark Mobile Enterprise, is designed to streamline and
integrate business operations required by mobile workers.
Infowave mobile solutions are sold directly and indirectly through
telecommunications carriers, independent software vendors and
systems integrator partners. Some of the world's most innovative
organizations, including Hydro One, Shell Oil, Unilever and the
U.S. Navy use Infowave solutions to increase the efficiency of
their large mobile workforces. For more information, please email
info@infowave.com or visit http://www.infowave.com/
* * *
Going Concern Doubt
In its Form 10-K for the fiscal year ended December 31, 2003,
filed with the Securities and Exchange Commission, the Auditor's
report on the Company's 2003 consolidated financial statements
includes additional comments for U.S. readers that states that
conditions and events exist that cast substantial doubt about the
Company's liability to continue as a going concern. The Company
said it is not currently profitable and has incurred operating
losses from continuing operations (calculated in accordance with
Canadian Generally Accepted Accounting Principles) of $5,797,515,
$9,763,740 and $19,413,246 for the years ended December 31, 2003,
2002 and 2001 respectively.
These losses have continued in 2004. For the nine-month period
ending Sept. 30, 2004, Infowave reported a $8,390,753 net loss.
Equity investments have funded these losses.
INTERSTATE BAKERIES: Court Fixes March 21 as Claims Bar Date
------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri
established:
(1) March 21, 2005, as the deadline for all persons and
entities, including governmental units, to file a proof
of claim in Interstate Bakeries Corporation and its debtor-
affiliates' Chapter 11 cases;
(2) the later of the General Bar Date or 30 days after an
affected claimant is served with notice that the Debtors
have amended their Schedules of Assets and Liabilities and
Statements of Financial Affairs, as the bar date for
filing a proof of claim in respect of the amended
scheduled claim; and
(3) the later of the General Bar Date or 30 days after the
effective date of any order authorizing the rejection of
an executory contract or unexpired lease as the bar date
by which a proof of claim relating to the Debtors'
rejection of the contract or lease must be filed.
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately
32,000 in 54 bakeries, more than 1,000 distribution centers and
1,200 thrift stores throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6.0% senior subordinated convertible notes due August 15, 2014,
on August 12, 2004) in total debts. (Interstate Bakeries
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
KMART CORP: Asks Court to Direct Landlords to Return Overpayment
----------------------------------------------------------------
Kmart Corporation seeks to recover mistaken duplicate payments
made to current and former landlords.
William J. Barrett, Esq., at Barack, Ferrazzano, Perlman, &
Nagelberg, LLP, in Chicago, Illinois, relates that in the course
of its bankruptcy proceeding, Kmart assumed certain leases with
some of its Landlords for retail store space. As a consequence of
the assumption, the Landlords had certain "cure" claims against
Kmart for any acreage owed by Kmart under the Assumed Leases.
Kmart also rejected certain leases for retail store space with
some of the Landlords. As a result of the rejection of the
leases, the Landlords had:
(a) administrative claims for any unpaid amounts that came due
between the Petition Date and the day on which the leases
were rejected; and
(b) unsecured claims for future rent that would have come due
under the Rejected Leases.
The Landlords timely filed their cure, administrative, and
unsecured claims in accordance with procedures established under
Kmart's Plan of Reorganization. The Landlords' total cure and
administrative claims -- excluding claims for deferred maintenance
-- did not exceed $3,000,000. Kmart timely objected to each of
the cure, administrative, and rejection claims filed.
In the ordinary course of administering its lease portfolio,
during 2002 through 2004, Kmart paid some of the charges that the
Landlords had included in their cure and administrative claims.
In addition, in October 2003, while the objections to the
Landlords' claims were pending, Kmart paid the uncontested
portions of the Landlords' cure and administrative claims. These
payments were made pursuant to a Court order on September 25,
2003, that directed Kmart to "pay, prior to October 24, 2003, the
undisputed portions of the cure claims. . . ." In total, apart
from any payments made under a settlement agreement, Kmart made
payments totaling $1,815,614 towards the cure and administrative
claims of the Landlords.
In January 2004, Kmart and the Landlords reached a global
agreement on the landlord's cure, administrative, and unsecured
claims. The agreement was incorporated into an Agreed Order that
was entered by the United States Bankruptcy Court for the Northern
District of Illinois on January 20, 2004.
The first full decretal paragraph on the Agreed Order addressed
the resolution of cure and administrative claims:
". . . as to the Landlord[s'] claims for Administrative and
'Cure' amounts on the Rejected Stores and the Assumed Stores,
Landlords shall have an allowed aggregate claim of $2,600,000,
to be paid within 15 days of the Order, by check payable to
Benderson Management Services, LLC, as agent for the
Landlords, and mailed to Benderson Management Services, LLC,
570 Delaware Avenue, Buffalo, New York, 14202. . . ."
Although Kmart had already paid $1,815,614 towards the Landlords'
administrative and cure claims before January 2004, Kmart
inadvertently failed to credit itself for those payments. On
February 5, 2004, Kmart sent a check for $2,600,000 to Benderson.
Benderson received and cashed the check.
As a result, Kmart overpaid the allowed administrative and cure
claims by $1,815,614. Mr. Barrett maintains that the Landlords
could not possibly be entitled to the Overpayment as it would
allow the Landlords to recover more than what they ever asserted
as their cure and administrative claims, excluding deferred
maintenance claims, which were handled separately by the January
2004 Agreed Order.
The January 2004 Order did not allocate the $2,600,000 paid on
administrative and cure claims among the several Landlords.
The entire amount was paid to Benderson "as agent" for the
Landlords.
Kmart demanded that the Landlords return the Overpayment. The
Landlords refused to do so.
Mr. Barrett tells Judge Sonderby that:
(a) the Landlords were paid, $4,415,614 for the allowed
administrative cure claim totaling $2,600,000. In
accordance with the language and intent of the Agreed
Order, the Landlords should be directed to disgorge the
Overpayment;
(b) the Overpayment was paid to the Landlords by mistake. The
Landlords have no legal or equitable right to the
Overpayment. The Overpayment should be returned to Kmart;
(c) by receipt of the Overpayment, the Landlords received, to
the detriment of Kmart, a benefit to which the Landlords
were not entitled to.
For these reasons, Kmart asks the Court to direct the Landlords to
return the Overpayment.
Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART
Holding Corporation) -- http://www.bluelight.com/-- is the
nation's second largest discount retailer and the third largest
merchandise retailer. Kmart Corporation currently operates
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam. The Company filed for chapter 11
protection on January 22, 2002 (Bankr. N.D. Ill. Case No.
02-02474). Kmart emerged from chapter 11 protection on May 6,
2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represented the retailer in its restructuring
efforts. The Company's balance sheet showed $16,287,000,000 in
assets and $10,348,000,000 in debts when it sought chapter 11
protection. (Kmart Bankruptcy News, Issue No. 88; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
LAIDLAW INT'L: Healthcare Group Sale Spurs Bonus Payments
---------------------------------------------------------
Laidlaw International, Inc., and two of its subsidiaries,
American Medical Response, Inc., and EmCare Holdings, Inc., are
parties to an employment agreement effective October 1, 2002,
with William A. Sanger under which Mr. Sanger serves as President
and Chief Executive Officer of AMR and as Chief Executive Officer
of EmCare.
Pursuant to the agreement, Mr. Sanger is entitled to a bonus
payment upon a sale, or an initial public offering, of the stock
of AMR or EmCare. The bonus is also payable if Mr. Sanger
remains employed on October 1, 2007, and neither a sale nor an
initial public offering has occurred.
With respect to AMR, the bonus is equal to 5% of the enterprise
value of AMR in excess of $410 million at the time of the event
that entitles Mr. Sanger to the payment. With respect to EmCare,
the bonus is equal to 5% of the enterprise value of EmCare in
excess of $125 million at the time of the event that entitles Mr.
Sanger to the payment.
EmCare is also party to an employment agreement effective
April 1, 2003, with Don S. Harvey under which Mr. Harvey serves
as President and Chief Operating Officer of EmCare. Pursuant to
the agreement, Mr. Harvey is entitled to a bonus payment upon a
sale of, or an initial public offering of, the stock of EmCare,
provided Mr. Harvey remains employed under the agreement upon the
occurrence of the event. The bonus is equal to 2% of the
enterprise value of EmCare in excess of $125 million at the time
of the event that entitles Mr. Harvey to the payment.
In December 2004, Laidlaw announced that it had entered into
definitive agreements to sell both of its healthcare companies,
AMR and EmCare. In a regulatory filing with the Securities and
Exchange Commission, Douglas A. Carty, Laidlaw's Senior Vice
President and Chief Financial Officer, relates that the
completion of the sales transaction, anticipated no later than
the end of March 2005, would trigger the payment of the bonuses
in accordance with the employment agreements.
Headquartered in Arlington, Texas, Laidlaw, Inc., now known as
Laidlaw International, Inc., -- http://www.laidlaw.com/-- is
North America's #1 bus operator. Laidlaw's school buses transport
more than 2 million students daily, and its Transit and Tour
Services division provides daily city transportation through more
than 200 contracts in the US and Canada. Laidlaw filed for
chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No.
01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents
the Debtors. Laidlaw International emerged from bankruptcy on
June 23, 2003.
* * *
As reported in the Troubled Company Reporter on Dec. 27, 2004,
Moody's Investors Service has placed the long-term debt ratings of
Laidlaw International, Inc., under review for possible upgrade.
The review is prompted by the recent announcement by the company
that it had entered into a definitive agreement to sell both of
its healthcare businesses to Onex Partners LP, an affiliate of
Onex Corporation, for $820 million. Net proceeds after fees and
assumption of a small amount of debt by the buyer is estimated at
$775 million, with a majority of the proceeds intended to be used
to repay substantial levels of Laidlaw's existing debt. Moody's
has also assigned a Speculative Grade Liquidity Rating of SGL-2 to
Laidlaw International, Inc. As part of the rating action, Moody's
has reassigned to Laidlaw International, Inc., certain ratings,
including the senior implied and senior unsecured issuer ratings,
originally assigned at Laidlaw, Inc., in order to reflect more
appropriately the company's current organizational structure.
As reported in the Troubled Company Reporter on Dec. 9, 2004,
Standard & Poor's Ratings Services placed its ratings, including
its 'BB' corporate credit rating, on Laidlaw International, Inc.,
on CreditWatch with positive implications. The rating action
follows Laidlaw's announcement that it has entered into definitive
agreements to sell both of its health care companies, American
Medical Response and Emcare, to Onex Partners L.P. for
$820 million. Laidlaw expects to receive net cash proceeds of
$775 million upon closing of the transaction, which is expected by
the end of March 2005. Naperville, Illinois-based Laidlaw
currently has about $1.5 billion of lease-adjusted debt.
LIBERATE TECHNOLOGIES: District Court Dismisses Bankruptcy Appeal
-----------------------------------------------------------------
Liberate Technologies (Pink Sheets: LBRT) reported that on
January 14, 2005, the U.S. District Court for the Northern
District of California issued an order pursuant to a stipulation
by the parties dismissing with prejudice Liberate's appeal from
the U.S. Bankruptcy Court for the Northern District of
California's order dismissing its chapter 11 case.
The asset purchase agreement pursuant to which Liberate has agreed
to sell substantially all of the assets of its North American
business to Double C Technologies, LLC, a joint venture majority
owned and controlled by Comcast Corporation with a minority
investment by Cox Communications, Inc., would only become
effective upon the dismissal of Liberate's bankruptcy appeal.
Accordingly, the asset purchase agreement and other related
transaction documents became effective as of Jan. 14, 2005.
The asset sale is subject to Liberate shareholder approval,
Hart-Scott-Rodino antitrust approval, and other customary closing
conditions.
Headquartered in San Mateo, California, Liberate Technologies
provides software and services for digital cable systems. The
Company filed for chapter 11 protection on April 30, 2004 (Bankr.
D. Del. Case No. 04-11299, transferred, May 12, 2004, to Bankr.
N.D. Calif., Case No. 04-31394). When the Company filed for
bankruptcy protection, it listed $257,000,000 in total assets and
more than $21,700,000 in total debts. Liberate filed a proposed
Plan of Reorganization providing for the payment of 100% of valid
creditor claims. The Landlord for the company's former San Carlos
headquarters complained that the Debtor's attempt to reject the
lease under 11 U.S.C. Sec. 365 and cap his rejection claim under
Sec. 506 of the Bankruptcy Code was an abuse of the system.
Seeing more cash than debt, the Honorable Thomas E. Carlson
agreed, and dismissed the solvent debtor's chapter 11 case on
Sept. 8, 2004. Liberate appealed that ruling (N.D. Calif. Case
No. 04-03854). In the Bankruptcy Court and U.S. District Court,
Crista L. Morrow, Esq., Desmond J. Cussen, Esq., Fred L. Pillon,
Esq., Jonathan Landers, Esq., and Jayesh Sanatkumar
Hines-Shah, Esq., at Gibson Dunn & Crutcher LLP, represent
Liberate. The disgruntled landlord, Circle Star Center
Associates, L.P., is represented by Douglas J. McGill, Esq.,
Andrew C. Kassner, Esq., and Michael W. McTigue, Jr., at Drinker
Biddle & Reath LLP, and Michael P. Brody, Esq., James R. Stillman,
Esq., and Diane K. Hanna, Esq., at Ellman Burke Hoffman & Johnson.
James L Lopes, Esq., Janet A. Nexon, Esq., and Jason Gerlach,
Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin,
represent an ad hoc equity holders' committee.
LUBRIZOL CORP: Plans to Close U.K. Manufacturing Facility
---------------------------------------------------------
The Lubrizol Corporation (NYSE: LZ) plans to close its
manufacturing facility in Bromborough, England. The facility
produces additives for fuels, additives for engine oil lubricants
and specialty monomers. Production phase-out is planned to begin
in the second quarter of 2005 and is expected to be completed by
late 2006. During this phase-out, U.K. production will be
transferred to higher capacity facilities in France and Texas.
A fourth quarter, 2004 non-cash restructuring charge of
approximately $17 million pre-tax will be recorded for the
impairment of property, plant and equipment. Also, restructuring
charges, consisting of employee severance and other plant closure
costs, are estimated to total approximately $15 million and will
be incurred in 2005 and 2006.
Some of the 69 affected employees at the U.K. plant will have an
opportunity to relocate to other Lubrizol facilities. Referring
to the manufacturing facility closure, Lubrizol Chairman,
President and Chief Executive Officer James L. Hambrick said,
"This move is consistent with Lubrizol's strategy of optimizing
our manufacturing infrastructure to lower our cost structure while
simultaneously improving our service capabilities for valued
customers. We expect the U.K. facility closure and transfer of
production to more efficient manufacturing locations to ultimately
generate annual cost savings of $10 million by 2007." In addition
to the restructuring charges, the company also expects to invest
$20 million over two years for capacity upgrades at alternative
manufacturing facilities that will absorb production previously
undertaken at the U.K. facility.
The Lubrizol Corporation (NYSE: LZ) is a global provider of
specialty chemicals and materials for a wide variety of markets
and end-use applications, such as lubricant additives for engine
oils, other transportation-related fluids and industrial
lubricants, as well as fuel additives for gasoline and diesel
fuel. In addition, Lubrizol makes ingredients and additives for
personal care products and pharmaceuticals; specialty materials,
including plastics technology; performance coatings in the form of
specialty resins and additives; and additives for the food and
beverage industry. Lubrizol's industry-leading positions in
additives, ingredients and compounds enhance the quality,
performance and value of customers' products, while reducing their
environmental impact.
Headquartered in Wickliffe, Ohio, The Lubrizol Corporation --
http://www.lubrizol.com/--owns and operates manufacturing
facilities in 22 countries, as well as sales and technical offices
around the world. Founded in 1928, Lubrizol has more than 7,700
employees worldwide. In June 2004, Lubrizol acquired Noveon
International, Inc. With Noveon, Lubrizol generated pro forma
revenues of $3.2 billion in 2003 and $2.8 billion in the first
nine months of 2004.
* * *
As reported in the Troubled Company Reporter on Sept. 14, 2004,
Standard & Poor's Ratings Services affirmed its 'BB+' corporate
credit and senior unsecured debt ratings on Cleveland, Ohio-based
Lubrizol Corp. and removed them from CreditWatch, where they were
placed with negative implications on April 16, 2004, following the
company's announcement that it had signed an agreement to acquire
Noveon International Inc. for approximately $1.8 billion. The
outlook is stable.
MASTR SPECIALIZED: Moody's Rates $1.3M Class B Certs. at Ba1
------------------------------------------------------------
Moody's Investors Service has assigned a rating of Aaa to the
senior certificates issued by MASTR Specialized Loan Trust
2004-02. Moody's has also assigned ratings ranging from Aa2 to
Ba1 to the mezzanine certificates in the deal.
The securitization is backed primarily by fixed-rate (64%) and
adjustable-rate (36%) scratch and dent mortgage loans originated
by various originators acquired by UBS Real Estate Securities,
Inc. In general, the loans backing scratch and dent
securitizations have appraisal, documentation, credit score,
loan-to-value ratio or other deficiencies.
The ratings are based primarily on the credit quality of the loans
and on the protection from excess spread and subordination. The
credit quality of the loan pool is weaker than the average loan
pool backing recent scratch and dent securitizations.
GMAC Mortgage Corporation and Wells Fargo Bank, N.A., will service
the loans.
The complete rating actions are:
* Class A, $75,573,000, Senior P&I, Variable, rated Aaa
* Class M-1, $4,940,000, Mezzanine P&I, Variable, rated Aa2
* Class M-2, $4,235,000, Mezzanine P&I, Variable, rated A2
* Class M-3, $3,764,000, Mezzanine P&I, 5.50%, rated Baa2
* Class M-4, $1,270,000, Mezzanine P&I, 5.50%, rated Baa3
* Class B, $1,317,000, Mezzanine P&I, 5.50%, rated Ba1
These securities have been sold in a privately negotiated
transaction without registration under the Securities Act of 1933
(the Act) under circumstances reasonably designed to preclude a
distribution thereof in violation of the Act. The issuance has
been designed to permit resale under Rule 144A.
MCNAMARA CUSTOM: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: McNamara Custom Service, Inc.
dba Pine Plumbing
dba MCS Refrigeration
dba MCS, Inc.
230 McNamara Lane
Waco, Texas 76708
Bankruptcy Case No.: 05-60076
Type of Business: The Debtor installs, repairs and maintains air
conditioning, heating, and refrigeration,
plumbing, chilled water and steam systems.
See http://www.acandplumbing.com/
Chapter 11 Petition Date: January 13, 2005
Court: Western District of Texas (Waco)
Judge: Larry E. Kelly
Debtor's Counsel: Erin B. Shank, Esq.
Erin B. Shank, P.C.
2309 Austin Avenue
Waco, TX 76701
Tel: 254-296-1161
Fax: 254-296-1165
Total Assets: $100,000 to $500,000
Total Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Merrill Lynch Business Loan $426,374
Financial Ser. Value of Collateral:
Attn: Martin A. Aguilera $307,129
222 N. LaSalle Street
17th Floor
Chicago, IL 60601
GE Capital Fleet Services Credit Card $133,053
P.O. Box 100363
Atlanta, GA 30384
Glenn and Petra McNamara Loans to corporation $125,810
230 McNamara Lane
Waco, TX 76708
Local 529 Union dues & pension $31,747
Advanta Business Cards Credit card $26,405
United Refrigeration, Inc. Parts $26,148
Internal Revenue Service 941 Taxes $25,034
CNA Commercial Insurance Insurance audit $23,094
Ferguson Enterprises Parts $17,521
Central National Bank Non-Purchase Money $58,000
Value of Collateral:
$45,750
Community Bank & Trust Loan $38,291
Value of Collateral:
$29,000
Comptroller of Public Sales Taxes $8,924
Affairs
Grainger, W.W., Inc. Materials $5,085
Johnson Supply Parts $4,306
Neal and Associates Parts $4,008
Garratt-Callahan Co. Subcontractor $1,705
Nextel Cell phone service $1,279
Bird Kultgen Services $1,113
Pioneer Steel and Pipe Parts $1,078
Company, Ltd.
Consumer Guide Advertising $1,020
MIRANT CORPORATION: Objects to PEPCO's Multi-Million Claims
-----------------------------------------------------------
Mirant Corporation and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Northern District of Texas to disallow 14
claims filed by Potomac Electric Power Company and one claim filed
by PEPCO Energy Services, Inc.:
(a) Claims Nos. 6474 to 6481 filed by PEPCO against:
-- Mirant Potomac River, LLC,
-- Mirant Piney Point, LLC,
-- Mirant Peaker, LLC,
-- Mirant Mid-Atlantic, LLC,
-- Mirant Mid-Atlantic Services, LLC,
-- Mirant MD Ash Management, LLC,
-- Mirant D.C. O&M, LLC, and
-- Mirant Chalk Point, LLC,
are each based on three elements for a total amount of
approximately $131.2 million. The Claims should be
disallowed in their entirety because the Mirant Parties
are not liable to PEPCO for this amount, either directly
or by assignment and assumption;
(b) Claim No. 6482 filed by PEPCO against Mirant Americas
Energy Marketing, LP, for $26.2 million should be
disallowed in its entirety because MAEM is not liable to
PEPCO for these amounts, either directly or by assignment
and assumption;
(c) Claim No. 6490 filed by PEPCO Energy against MAEM should
be disallowed in its entirety because PEPCO Energy has
been paid in full; and
(d) All PEPCO Claims -- Claim Nos. 190-191, 6474-6484, 6490
and 6496 -- should be disallowed pursuant to Section
502(d) of the Bankruptcy Code at least until PEPCO pays
the Debtors all amounts under avoidance actions.
PEPCO and PEPCO Energy filed the 15 proofs of claim against the
Debtors on or about August 25, 2003, and December 15, 2003:
(a) PEPCO filed Claim No. 190 against Mirant Corp. on
August 25, 2003, seeking $37,769.90 for "electrical
service rendered";
(b) PEPCO filed Claim No. 191 against Mirant Corp. on
August 25, 2003, seeking $78,180.70 for alleged emergency
maintenance and service rendered between March and June
2003;
(c) PEPCO filed Claim No. 6474 against Mirant Potomac River,
LLC, on December 15, 2003, for at least $131,242,446.93
plus interest and late charges based on obligations
allegedly arising under an Asset Purchase and Sale
Agreement, dated June 7, 2000, pursuant to Assignment and
Assumption Agreement dated December 19, 2000 including:
-- Goods and Services for $25,554,174.96,
-- Transition Power Agreements for $105,000,000.00, and
-- Indemnity Claims of $688,271.97;
(d) PEPCO filed Claim No. 6475 against Mirant Piney Point,
LLC, on December 15, 2003, for at least $131,242,446.93
plus interest and late charges based on obligations
allegedly arising under the APSA pursuant to Assignment
and Assumption Agreement dated December 19, 2000
including:
-- Goods and Services for $25,554,174.96,
-- Transition Power Agreements for $105,000,000.00, and
-- Indemnity Claims of $688,271.97;
(e) PEPCO filed Claim No. 6476 against Mirant Peaker, LLC, on
December 15, 2003, for at least $131,242,446.93 plus
interest and late charges based on obligations allegedly
arising under the APSA pursuant to Assignment and
Assumption Agreement dated December 19, 2000, including:
-- Goods and Services for $25,554,174.96,
-- Transition Power Agreements for $105,000,000.00, and
-- Indemnity Claims of $688,271.97;
(f) PEPCO filed Claim No. 6477 against Mirant Mid-Atlantic
Services, LLC, on December 15, 2003, for at least
$131,242,446.93 plus interest and late charges based on
obligations allegedly arising under the APSA pursuant to
Assignment and Assumption Agreement dated December 19,
2000, including:
-- Goods and Services for $25,554,174.96,
-- Transition Power Agreements for $105,000,000.00, and
-- Indemnity Claims of $688,271.97;
(g) PEPCO filed Claim No. 6478 against Mirant Ash Management,
LLC, on December 15, 2003, for at least $131,242,446.93
plus interest and late charges based on obligations
allegedly arising under the APSA pursuant to Assignment
and Assumption Agreement dated December 19, 2000,
including:
-- Goods and Services for $25,554,174.96,
-- Transition Power Agreements for $105,000,000.00, and
-- Indemnity Claims of $688,271.97;
(h) PEPCO filed Claim No. 6479 against Mirant D.C. O&M, LLC,
on December 15, 2003, for at least $131,242,446.93 plus
interest and late charges based on obligations allegedly
arising under the APSA pursuant to Assignment and
Assumption Agreement dated December 19, 2000, including:
-- Goods and Services for $25,554,174.96,
-- Transition Power Agreements for $105,000,000.00, and
-- Indemnity Claims of $688,271.97;
(i) PEPCO filed Claim No. 6480 against Mirant Chalk Point,
LLC, on December 15, 2003, for at least $131,242,446.93
plus interest and late charges based on obligations
allegedly arising under the APSA pursuant to Assignment
and Assumption Agreement dated December 19, 2000,
including:
-- Goods and Services for $25,554,174.96,
-- Transition Power Agreements for $105,000,000.00, and
-- Indemnity Claims of $688,271.97;
(j) PEPCO filed Claim No. 6481 against Mirant Mid-Atlantic,
LLC, on December 15, 2003, for at least $131,242,446.93
plus interest and late charges based on obligations
allegedly arising under the APSA pursuant to Assignment
and Assumption Agreement dated December 19, 2000,
including:
-- Goods and Services for $25,554,174.96,
-- Transition Power Agreements for $105,000,000.00, and
-- Indemnity Claims of $688,271.97;
(k) PEPCO filed Claim No. 6482 against Mirant Americas Energy
Marketing, LP, on December 15, 2003, for at least
$26,242,446.93, plus interest and late charges allegedly
arising under the APSA pursuant to Assignment and
Assumption Agreement dated December 19, 2000, including:
-- Goods and Services for $25,554,174.96, and
-- Indemnity Claims of $688,271.97;
(l) PEPCO filed Claim No. 6483 against Mirant Americas Energy
Marketing, LP, on December 15, 2003, for $105,000,000.00
related to an Amended Settlement Agreement and Release,
dated October 24, 2003;
(m) PEPCO filed Claim No. 6484 against Mirant Corp. on
December 15, 2003, for $105,000,000.00 related to an
Amended Settlement Agreement and Release, dated
October 24, 2003;
(n) PEPCO Energy filed Claim No. 6490 against Mirant Americas
Energy Marketing, LP, seeking at least $304,821.14 for
"sale of capacity and energy/contingent indemnity and
other claims" pursuant to a certain Amended and Restated
Transaction Confirmation dated May 6, 2003; and
(o) PEPCO filed Claim No. 6496 against Mirant Corp. on
December 15, 2003, for at least $26,242,446.93, plus
interest and late charges allegedly arising under the APSA
pursuant to Assignment and Assumption Agreement dated
December 19, 2000, including:
-- Goods and Services for $25,554,174.96, and
-- Indemnity Claims of $688,271.97.
PEPCO Responds
On December 23, 2004, PEPCO filed amended proofs of claim to Claim
Nos. 6474 to 6482 and 6496 in the Debtors' bankruptcy cases. The
amended claims revise the amounts due for goods and services from
$25,554,174.96 to $30,454,174.96.
PEPCO has filed a motion to withdraw the reference to the Claims
Objection because resolution of the Debtors' Claims Objection and
all existing APSA-related matters will require substantial
consideration of the Federal Power Act, 16 U.S.C. Section 792, et
seq., and the Bankruptcy Code. On December 29, 2004, the Court
entered its report and recommendation regarding PEPCO's motion to
withdraw the reference, which recommends that the reference to the
Claims Objection be withdrawn.
Jo E. Hartwick, Esq., at Stutzman, Bromberg, Esserman & Plifka, in
Dallas, Texas, notes that although the Claims Objection may be
withdrawn to the District Court, PEPCO seeks to preserve all of
its rights, remedies, claims and defenses.
PEPCO asserts that the Claims Objection should be overruled
because it fails to rebut the prima facie validity of its claims.
"The Debtors have not submitted any evidentiary material in
support of the Claims Objection. In any event, PEPCO will
substantiate the validity and amounts of its claims when the
merits of the claims are considered," Ms. Hartwick says.
Ms. Hartwick argues that the Claims Objection improperly attempts
to invoke Section 502(d) of the Bankruptcy Code to, inter alia,
avoid the terms of a Court-approved settlement agreement between
PEPCO, Mirant and Mirant Americas Energy Marketing, LP, whereby
PEPCO received an allowed claim for $105 million against each of
Mirant and MAEM. The settlement provides PEPCO with allowed
claims not subject to any offset or reduction for any reason. The
Debtors may not now seek to disallow claims, which were previously
allowed. Furthermore, the Debtors object to the remainder of
PEPCO's claims on the basis of Section 502(d). Yet, no causes of
action for an avoidable transfer have been filed or described with
specificity by the Debtors. Thus, Ms. Hartwick asserts, the
Section 502(d) objection is without merit and should be overruled.
Ms. Hartwick continues that the Claims Objection objects to
PEPCO's claims for prepetition amounts due -- $25,554,174.963 for
goods and services and $688,271.97 for known indemnity
obligations. "If the parties are unable to informally resolve the
goods and services issue, PEPCO will prove the correct amount of
its goods and services claims at a hearing or trial on the merits.
Moreover, there is a dispute between the parties as to the
Debtors' liability for the indemnity obligations, which is pending
before the United States District Court for the District of
Columbia. PEPCO intends to seek relief from the automatic stay so
that the prepetition litigation regarding the indemnity issue may
continue. The Debtors have indicated that they would consent to
the indemnity issue being resolved by the D.C. Court.
Accordingly, the indemnity issue should be carved out of the
Claims Objection."
In addition, Ms. Hartwick notes, the Claims Objection argues that
the so-called Buyer Parties did not agree to be jointly and
severally liable to PEPCO for all amounts due. "This argument
centers around the parties' disagreement over the interpretation
of an Assignment and Assumption Agreement, and whether that
agreement created joint and several liability among the relevant
Debtors for all amounts due to PEPCO. PEPCO believes the
Assignment and Assumption Agreement is clear on its face, and that
these claims can be resolved on motions for summary judgment by
solely referring to the language of that certain Assignment and
Assumption Agreement and other written agreements between the
parties."
Accordingly, PEPCO asks Judge Lynn to overrule Mirant's Claims
Objection.
Debtors' Request for Estimation
Pursuant to Section 502 of the Bankruptcy Code, Rule 3007 of the
Federal Rules of Bankruptcy Procedure and the Claims Estimation
Procedures, the Debtors ask the Court to estimate, in whole or in
part:
(a) Claim Nos. 6474, 6475, 6476, 6477, 6478, 6479, 6480, and
6481 -- Other Mirant Party Claims;
(b) Claim No. 6482 -- MAEM Claim; and
(c) Claim No. 6496 -- Mirant Claim,
filed by Potomac Electric Power Company.
Specifically, the Debtors want each of the Claims to be estimated
at $0.00, for all purposes, including voting on, feasibility of
and distribution under, a plan of reorganization.
The Debtors contend that because the Claims are, in whole or in
part, contingent and unliquidated, estimation is needed for all
purposes to consummate a timely and successful emergence from
chapter 11. The Debtors insist that the Claims are without merit.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- together with its direct and indirect
subsidiaries, generate, sell and deliver electricity in North
America, the Philippines and the Caribbean. Mirant Corporation
filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex.
03-46590). Thomas E. Lauria, Esq., at White & Case LLP,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$20,574,000,000 in assets and $11,401,000,000 in debts.
MIRANT CORP: PEPCO Wants $17,921,376 Administrative Expense Paid
----------------------------------------------------------------
Jo E. Hartwick, Esq., at Stutzman Bromberg Esserman & Plifka,
P.C., relates that the U.S. Bankruptcy Court for the Northern
District of Texas has unequivocally stated that Mirant Corporation
and debtor-affiliates may not stop performing their obligation
under their agreements to buy energy products unless the Court
enters an order to the contrary. But the Debtors did exactly the
opposite. They deliberately defaulted on their postpetition
payment obligations under the Asset Purchase and Sale Agreement.
The Debtors are obligated, among other things, to make payments
to Potomac Electric Power Company for power received from power
producers like Ohio Edison Company and Panda Brandywine, L.P. The
Debtors were obligated to pay PEPCO, by December 13, 2004,
$17,921,376 for the power that Mirant received from the Ohio
Edison facility in November 2004. The Debtors neither made the
payment nor obtained a Court order relieving them from their
contractual obligations. Instead, the Debtors declared that they
would not honor their obligations under the parties' Back-to-Back
Agreement.
Meanwhile, the Debtors continue to accept the benefits of the
APSA.
Thus, PEPCO asks the Court to grant it a $17,921,376
administrative expense claim for all unpaid payments due under the
APSA and all of PEPCO's costs incurred and damages relating to the
Debtors' breach of the Back-to-Back obligation under the APSA.
PEPCO wants the Debtors to immediately pay the claim.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- together with its direct and indirect
subsidiaries, generate, sell and deliver electricity in North
America, the Philippines and the Caribbean. Mirant Corporation
filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex.
03-46590). Thomas E. Lauria, Esq., at White & Case LLP,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$20,574,000,000 in assets and $11,401,000,000 in debts.
NATIONAL ENERGY: Inks Pact Reducing JPMorgan Claim to $9.4 Million
------------------------------------------------------------------
In November 1998, JPMorgan Chase Bank and some of NEGT Energy
Trading Holdings Corporation's debtor-affiliates -- ET Debtors --
entered into a $35,000,000 credit agreement. National
Energy & Gas Transmission, Inc., guaranteed the ET Debtors'
obligations.
JPMorgan filed a proof of claim against NEGT for $22,116,038 on
account of the Energy Trading LC Facility Guarantee.
Pursuant to NEGT's plan of reorganization, the JPMorgan Claim was
allowed as a general unsecured claim against NEGT. Since the
Plan was confirmed, the JPMorgan Claim was reduced to $9,400,316,
as a result of the expiration of various letters of credit, which
comprise the JPMorgan Claim.
Accordingly, in a stipulation approved by the U.S. Bankruptcy
Court for the District of Maryland, NEGT and JPMorgan agree to
modify Schedule 4.03 of the Plan. Specifically, the JPMorgan
Claim is reduced and allowed against NEGT as a general unsecured
claim for $9,400,316.
Headquartered in Bethesda, Maryland, PG&E National Energy Group,
Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas
Transmission, Inc.) develops, builds, owns and operates electric
generating and natural gas pipeline facilities and provides energy
trading, marketing and risk-management services. The Company and
its debtor-affiliates filed for Chapter 11 protection on
July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A.
Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G.
Callari, Esq., at Willkie Farr & Gallagher, and Paul M. Nussbaum,
Esq., and Martin T. Fletcher, Esq., at Whiteford, Taylor &
Preston, L.L.P., represent the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed $7,613,000,000 in assets and $9,062,000,000
in debts. NEGT received bankruptcy court approval of its
reorganization plan in May 2004, and that plan took effect on
Oct. 29, 2004. (PG&E National Bankruptcy News, Issue No. 32;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
NORTEL NETWORKS: Declares Preferred Share Dividends
---------------------------------------------------
The board of directors of Nortel Networks Limited declared a
dividend on each of the outstanding Cumulative Redeemable Class A
Preferred Shares Series 5 (TSX:NTL.PR.F) and the outstanding
Non-cumulative Redeemable Class A Preferred Shares Series 7
(TSX:NTL.PR.G).
The dividend amount for each series is calculated in accordance
with the terms and conditions applicable to each respective
series, as set out in the Company's articles. The annual dividend
rate for each series floats in relation to changes in the average
of the prime rate of Royal Bank of Canada and The Toronto-Dominion
Bank during the preceding month and is adjusted upwards or
downwards on a monthly basis by an adjustment factor which is
based on the weighted average daily trading price of each of the
series for the preceding month, respectively. The maximum monthly
adjustment for changes in the weighted average daily trading price
of each of the series will be plus or minus 4.0% of Prime.
The annual floating dividend rate applicable for a month will in
no event be less than 50% of Prime or greater than Prime. The
dividend on each series is payable on March 14, 2005, to
shareholders of record of such series at the close of business on
February 28, 2005.
Nortel Networks is a recognized leader in delivering
communications capabilities that enhance the human experience,
ignite and power global commerce, and secure and protect the
world's most critical information. Serving both service provider
and enterprise customers, Nortel delivers innovative technology
solutions encompassing end-to-end broadband, Voice over IP,
multimedia services and applications, and wireless broadband
designed to help people solve the world's greatest challenges.
Nortel does business in more than 150 countries. For more
information, visit Nortel on the Web at http://www.nortel.com/
For the latest Nortel news, visit http://www.nortel.com/news
* * *
As reported in the Troubled Company Reporter on Dec. 10, 2004,
Standard & Poor's Ratings Services placed its B-/Watch Developing
credit rating on Nortel Networks Lease Pass-Through Trust
certificates series 2001-1 on CreditWatch with negative
implications.
The rating on the pass-through trust certificates is dependent
upon the ratings assigned to Nortel Networks, Ltd., and ZC
Specialty Insurance, Co. This CreditWatch revision follows the
Dec. 3, 2004, withdrawal of the ratings assigned to ZC Specialty
Insurance, Co. Previously, the rating had a CreditWatch
developing status due to the CreditWatch developing status on the
rating assigned to Nortel.
The pass-through trust certificates are collateralized by two
notes that are secured by five single-tenant, office/R&D buildings
that are leased to Nortel ('B-'). Nortel guarantees the payment
and performance of all obligations of the tenant under the leases.
The lease payments do not fully amortize the notes. A surety bond
from ZC Specialty Insurance Co. insures the balloon amount.
The notes mature in August 2016, at which time a final principal
payment of $74.7 million is due. If this amount is not repaid,
the indenture trustee can obtain payment from the surety, provides
certain conditions are met.
The notes will remain on CreditWatch while Standard & Poor's
examines the impact of the withdrawal of the ratings on ZC
Specialty Insurance Co.
NOVELIS INC: Issues 2004 Fourth Quarter Earnings Guidance
---------------------------------------------------------
Novelis, Inc. (NYSE: NVL; Toronto) reported that fourth quarter
earnings as reported in accordance with Generally Accepted
Accounting Principles will reflect the negative impact of asset-
impairment charges totaling approximately $65 million (pre-tax)
relating to two rolling assets in Italy. These charges are
non-cash.
The Company expects operating earnings to be similar to those of
the year-ago quarter, but expects that they will decline compared
to the third quarter largely as a result of normal seasonal
effects.
"Fundamentals for the majority of the end-use markets we served in
2004 remain sound," said Brian W. Sturgell, President and CEO of
Novelis Inc. "Historically, there has been a consistent seasonal
pattern to rolled products shipments and earnings. Further, with
regard to the asset-impairment charges, these charges are not
indicative of a change to the outlook we hold for our business in
Europe," Mr. Sturgell concluded.
Novelis, which was spun-off by Alcan, Inc., effective Jan. 6,
2005, is the global leader in aluminum rolled products and
aluminum can recycling. The Company has 37 operating facilities
in 12 countries and more than 13,500 dedicated employees. Novelis
has the unparalleled capability to provide its customers with a
regional supply of high-end rolled aluminum products throughout
Asia, Europe, North America, and South America. Through its
advanced production capabilities, the Company supplies aluminum
sheet and foil to the automotive and transportation, beverage and
food packaging, construction and industrial, and printing markets.
For more information on the company, visit http://www.novelis.com/
* * *
As reported in the Troubled Company Reporter on Jan. 17, 2005,
Moody's Investors Service assigned a B1 rating to Novelis, Inc.'s
$1.4 billion senior unsecured, guaranteed note issue due January
2015 and affirmed the Company's existing ratings. The notes will
be guaranteed by all wholly owned subsidiaries in the U.S. and
Canada and certain wholly owned foreign subsidiaries. The
guarantee structure is the same as that provided in the Company's
recently placed senior secured bank facilities. The rating
outlook is stable.
As reported in the Troubled Company Reporter on Dec 1, 2004,
Standard & Poor's Ratings Services assigned its 'BB-' long-term
corporate credit rating to Novelis, Inc., the spin off of Alcan,
Inc.'s aluminum rolling businesses.
At the same time, Standard & Poor's assigned its 'BB-' rating to
Novelis' proposed US$2 billion senior secured credit facilities,
and a recovery rating of '3' to the facilities, indicating
meaningful recovery of principal (50%-80%) in a post-default
scenario. The outlook is stable.
NOVELIS INC: Alcan Provides Estimated Tax Basis for Spin-Off
------------------------------------------------------------
As undertaken in its proxy circular of November 23, 2004, Alcan,
Inc., (NYSE, TSX: AL) provided an estimate of the adjusted cost
base allocation resulting from the spin-off of its rolled products
assets into an independent company called Novelis, Inc., on
January 6, 2005.
For tax purposes, shareholders are generally required to allocate
the cost of their Alcan common shares held immediately before the
spin-off to their Alcan and Novelis common shares held immediately
after the spin-off in proportion to their respective fair market
values. Alcan has determined that it is reasonable for
shareholders to allocate 9 percent of the cost of their pre
spin-off Alcan common shares to their Novelis common shares and
91 percent to their post spin-off Alcan common shares.
Alcan's estimated allocation is not binding on tax authorities or
any individual shareholder, and a variety of methods may be used
to determine relative fair market values in different
jurisdictions. However, it is recommended that allocations made
by shareholders be consistent with Alcan's estimate, and that they
consult their own tax advisors with respect to the specific tax
consequences to them.
Alcan is a multinational, market-driven company and a global
leader in aluminum and packaging. With world-class operations in
primary aluminum, fabricated aluminum as well as flexible and
specialty packaging, aerospace applications, bauxite mining and
alumina processing, today's Alcan is well positioned to meet and
exceed its customers' needs for innovative solutions and service.
Alcan employs approximately 73,000 people and has operating
facilities in 56 countries and regions.
Novelis, which was spun-off by Alcan, Inc., effective Jan. 6,
2005, is the global leader in aluminum rolled products and
aluminum can recycling. The Company has 37 operating facilities
in 12 countries and more than 13,500 dedicated employees. Novelis
has the unparalleled capability to provide its customers with a
regional supply of high-end rolled aluminum products throughout
Asia, Europe, North America, and South America. Through its
advanced production capabilities, the Company supplies aluminum
sheet and foil to the automotive and transportation, beverage and
food packaging, construction and industrial, and printing markets.
For more information on the company, visit http://www.novelis.com/
* * *
As reported in the Troubled Company Reporter on Jan. 17, 2005,
Moody's Investors Service assigned a B1 rating to Novelis, Inc.'s
$1.4 billion senior unsecured, guaranteed note issue due January
2015 and affirmed the Company's existing ratings. The notes will
be guaranteed by all wholly owned subsidiaries in the U.S. and
Canada and certain wholly owned foreign subsidiaries. The
guarantee structure is the same as that provided in the Company's
recently placed senior secured bank facilities. The rating
outlook is stable.
As reported in the Troubled Company Reporter on Dec 1, 2004,
Standard & Poor's Ratings Services assigned its 'BB-' long-term
corporate credit rating to Novelis, Inc., the spin off of Alcan,
Inc.'s aluminum rolling businesses.
At the same time, Standard & Poor's assigned its 'BB-' rating to
Novelis' proposed US$2 billion senior secured credit facilities,
and a recovery rating of '3' to the facilities, indicating
meaningful recovery of principal (50%-80%) in a post-default
scenario. The outlook is stable.
OCTANE ENERGY: Pursuing Strategic Transactions Regarding Pronghorn
------------------------------------------------------------------
Octane Energy Services Ltd. (TSX:OES) has struck an independent
committee of its Board of Directors consisting of Dale Hodgson,
John Hooks and Myron Tetreault, to pursue a disposition of or
other strategic transaction relating to its wholly owned
subsidiary Pronghorn Controls Ltd. Ernst & Young Orenda Corporate
Finance, Inc., has been retained to solicit interest from the
market.
In addition to the independent committee of the Board of
Directors, it is anticipated that this process will be overseen by
the court-appointed Monitor, in close consultation with Octane's
secured lender. In view of the narrow focus of this activity and
the need to reduce expenses for the benefit of stakeholders, the
Board has accepted the resignation of Chief Executive Officer J.
Arthur Bray, who will continue as unpaid Chairman and a member of
the Board of Directors.
Management and the Board of Directors of Octane are committed to
maximizing value to all stakeholders and view this process as the
best method of achieving this result in the current circumstances.
Octane Energy Services Ltd. remains under management direction
under the protection of the CCAA filing and its wholly owned
subsidiary Pronghorn Controls Ltd. remains intact and outside of
the CCAA process. Pronghorn Controls Ltd. will carry on business
in the ordinary course as it has done since the filing under the
CCAA on October 15, 2004. Octane Energy Services Ltd.'s wholly
owned subsidiaries, Octane Energy Services, Inc., and Octane
Energy Services (BC), Inc., were placed into receivership by
consent after close of business on Friday, December 4, 2004. In
addition, the role of the court appointed monitor was expanded at
the parent company (Octane Energy Services Ltd.) and includes a
receivership over the equipment held in that corporate entity.
Octane is an oilfield services company whose main business is
providing electrical and instrumentation services through its
subsidiary Pronghorn Controls Ltd. The Company employs its core
base of assets and qualified personnel from its field offices
strategically located across western Canada. The common shares of
Octane trade on the TSX Venture exchange under the symbol "OES".
ORMET CORPORATION: USWA's Advisor Reviews Financial Projections
---------------------------------------------------------------
Creditor recoveries in the bankruptcy of Ormet Corporation could
shrink dramatically, and potentially evaporate entirely, under an
alternative operating plan submitted to the Bankruptcy Court,
according to a report released by the United Steelworkers of
America -- USWA.
"Based on financial projections submitted by the Company to the
Bankruptcy Court that take into account the USWA strikes at two
key facilities, it appears Ormet is on course to destroy the
potential value of equity to be issued to unsecured creditors
under its Plan of Reorganization," notes the report prepared by
Potok, Campbell and Co., LLC, financial advisor to the USWA.
Ormet filed a voluntary petition for relief under Chapter 11 in
January 2004. Workers at the Hannibal Reduction and Hannibal
Rolling facilities went on strike on November 22, 2004.
In conjunction with the confirmation hearings and in reaction to
the USWA strike at the two key facilities, the Company filed with
the Bankruptcy Court a single alternative set of financial
projections on November 19, 2004, labeled "Financial Projections
-- Strike Followed by Temporary Curtailment."
According to the Potok, Campbell report, the projections are based
on several assumptions that serve to pump up projected cash flows,
creating unrealistic expectations for recoveries by unsecured
creditors. According to the report, Ormet's New Projections are
critically flawed because of these numerous assumptions,
including:
-- The New Projections assume that required pension funding can
be deferred in 2006 and 2007. Such deferrals are not
permitted under current government regulations without IRS
approval, which approval is not guaranteed and, in any
event, has not even been sought.
-- The New Projections assume that retiree medical benefits can
be terminated after 2005. There is no certainty that the
Company can achieve any modifications in retiree medical
benefits since its ability to make such changes outside of a
Section 1114 filing has not been established and it has not
sought Section 1114 relief from the Bankruptcy Court.
-- The New Projections assume that inventories and receivables
can be liquidated over the next six months without any
deterioration in recoveries. Even a modest deterioration in
working capital liquidation rates from normal recovery rates
would severely reduce recoveries for unsecured creditors.
Commenting on Ormet's plan to idle the rolling mill and reduction
facilities, liquidate working capital from these facilities, and
circle the wagons around the Burnside Alumina Refinery, the report
notes that "In recent years Burnside has operated only during
periods of high alumina prices."
"It is worth noting," it adds, "that Burnside's labor agreement
with the USWA, which also represents the hourly employees on
strike at the two other facilities, will expire in Sept. 2005."
After correcting for Ormet's unrealistic assumptions, the report
concludes that "the equity to be issued to unsecured creditors
will likely be nearly if not completely worthless".
The USWA has over 600,000 members in the United States and Canada
and represents workers in steel, rubber and tire, aluminum, mining
and health care. Website: http://www.uswa.org/
Headquartered in Wheeling, West Virginia, Ormet Corporation --
http://www.ormet.com/-- is a fully integrated aluminum
manufacturer, providing primary metal, extrusion and thixotropic
billet, foil and flat rolled sheet and other products. The
Company and its debtor-affiliates filed for chapter 11 protection
on January 30, 2004 (Bankr. S.D. Ohio Case No. 04-51255). Adam C.
Harris, Esq., in New York, represents the Debtors in their
restructuring efforts. When the Company filed for bankruptcy
protection, it listed $50 million to $100 million in estimated
assets and more than $100 million in total debts.
OWENS CORNING: Asbestos Committee Presents Valuation Expert
-----------------------------------------------------------
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, called
Dr. Mark A. Peterson to the stand to testify on behalf of the
Official Committee of Asbestos Claimants in Owens Corning and its
debtor-affiliates' chapter 11 cases.
Dr. Peterson described his background and knowledge about asbestos
injuries and litigation to the Court. Dr. Peterson said that for
more than twenty years he has studied, written about and
participated as an expert in asbestos litigation and other mass
tort litigation. He has worked for four U.S. District and
Bankruptcy Courts as the Courts' expert on how asbestos claims are
valued and on asbestos claims procedures and trusts. For thirteen
years he's been the "Special Advisor to the Courts" regarding the
Manville Trust, serving Judges Jack Weinstein and Burton Lifland
for six years and the Manville Trust and all of its beneficiaries
for the past nine years. He is a consultant and expert for ten
asbestos trusts. He's developed claims procedures for ten
asbestos trusts. He is a trustee of an asbestos trust. He's a
director of a nonprofit corporation that administers the process
for allowing and paying claims for four asbestos trusts. He's
worked as an expert on asbestos litigation for defendants,
insurance companies, actuarial firms, other businesses, law firms
and claimants' committees in bankruptcy. Dr. Peterson has
participated as an expert on asbestos liabilities in over 20
bankruptcies of asbestos defendants.
Dr. Peterson studied asbestos litigation for over twenty years as
a founding member of the RAND Corporation's Institute for Civil
Justice. He has published peer-reviewed scholarly articles on
mass torts, asbestos litigation, claims facilities for paying
asbestos and other mass tort claims, workers compensation and how
medical and legal issues determine the values of asbestos bodily
injury claims and other subjects related to asbestos litigation.
He's taught courses on mass torts at UCLA Law School and the RAND
Graduate Institute. Dr. Peterson is a lawyer, a graduate of
Harvard Law School and has a doctorate in social psychology from
UCLA. He has been recognized by courts as an expert on
forecasting asbestos liability in bankruptcy cases involving
Oglebay-Norton, Western MacArthur, Armstrong, Babcock & Wilcox,
Fuller Austin, and Eagle-Picher.
"How does your methodology change based on who you represent?"
Mr. Inselbuch asked Dr. Peterson.
"It doesn't," Dr. Person replied.
"How do your estimates correlate with actual results over time?"
Mr. Inselbuch continued.
"I routinely underestimate liabilities," Mr. Peterson said.
"No forecast I've ever seen has overestimated asbestos-related
liability," Dr. Peterson told Judge Fullam. Dr. Peterson
explained that, with experience, his estimates appear to get
closer to reality and his estimates become valid when expressed in
a "no less than x" form.
Mr. Inselbuch proffered Dr. Peterson as an expert witness in Owens
Corning's chapter 11 cases. With no objection being raised, Judge
Fullam accepted Dr. Peterson as an expert witness in these
proceedings.
Dr. Peterson related that since 2001, he has reviewed Owens
Corning's claims data and refined his forecasts about the
company's asbestos-related personal injury liability. Dr.
Peterson said that Owens Corning has one of the best claims
databases, with data categorized by plaintiff, law firm, disease,
dates, jurisdiction, verdicts, payments, settlements, and much
more.
Referring back to a question last week by Judge Fullam about new
claims filed since Owens Corning filed for bankruptcy, Dr.
Peterson advised that he has that information from other
asbestos-defendants' claims databases. While the automatic stay
prohibited the filing of new claims against Owens Corning, other
asbestos-defendants have seen a decline in the rate of new claim
filings. Dr. Peterson believes that the talk about the FAIR Act
is what drives that decline. Defendants and insurance companies
have stopped paying claims to the extent possible and are in a
wait-and-see mode, anxious for a national legislative solution to
be put in place.
Mr. Inselbuch asked Dr. Peterson for his reaction to the factual
testimony about Owens Corning's asbestos manufacturing and
litigation history provided by Messrs. Leff, Tucker and Snyder
last week.
Dr. Peterson said it was "entirely consistent with what he would
have expected" to hear those gentlemen explain.
Dr. Peterson explained that all of his projections start by using
epidemiological research that tabulates and predicts cancer
deaths. He wishes there were epidemiological research available
to forecast non-malignancies, but that research doesn't exist.
Why doesn't it exist? Dr. Peterson explains that diagnoses and
deaths from non-malignant diseases aren't classic "signal events."
They are progressive diseases and the diagnosis may be delayed by
decades.
To value the Debtors' asbestos-related liability, Dr. Peterson
uses a simple set of equations:
Liability for Liability for
Present Claims + Future Claims = Total Liability
Liability for Number of Average
Present Claims = Present Claims x Settlement Amount
Liability for Number of Average
Future Claims = Future Claims x Settlement Amount
At October 5, 2000, when Owens Corning filed for chapter 11
protection, there were 180,842 pending (or present) claims in the
company's database and records of 333,422 resolved claims in the
company's database.
Dr. Peterson referred to the fact that Owens Corning settled 1/3
of a million claims many times in the course of his testimony.
Judge Fullam noticed in Dr. Peterson's Report that Owens Corning
paid multiples of what Armstrong, Babcock and others paid on
account of asbestos-related claims and asked Dr. Peterson for an
explanation of what that would be.
Dr. Peterson pointed to Owens Corning's:
-- high visibility in the market place;
-- history of large payments;
-- culpability;
-- availability to plaintiffs of Corporate Conduct Documents;
-- ubiquity of Kaylo and Papco products; and
-- high market share.
Judge Fullam asked Dr. Peterson whether the settlement amounts
might be high because the company tried to avoid punitive damage
verdicts.
Dr. Peterson referred Judge Fullam to last week's testimony by
Messrs. Tucker and Snyder. Those gentlemen testified that Owens
Corning ignored conversations about punitive damages.
* Valuing Owens Corning's Present Claims
Dr. Peterson explained that to value the Debtors' asbestos-related
liability on account of present claims, he looked at the 180,842
pending claims on a disease-by-disease basis and the average cost
to resolve those claims for the 5-year period from 1996 to 2000:
Lung Other Non-
Mesothelomia Cancer Cancer Malignant Unknown
------------ ------ ------ --------- -------
Number of
Pending
Claims 3,817 7,947 3,148 142,607 23,323
Average
Resolution
Cost $185,462 $40,883 $17,471 $7,080 $1,467
"Why would a mesothelomia claimant settle a claim for less than
$200,000 with Owens Corning?" Judge Fullam asked.
Dr. Peterson reminded Judge Fullam that other asbestos-defandants
contribute to the total settlement. Owens Corning only pays part
of any verdict.
"Why'd you pick the 1996 to 2000 period?" Judge Fullam queried?
Dr. Peterson explained that the five-year period prior to Owens
Corning's Petition Date is most likely to be similar to 2000, and
that a longer period would start averaging in irrelevant data.
Some of those unknown diseases can be classified based on other
information available and after that reclassification is
completed, the value of the present claims against Owens Corning
is calculated to be:
Number of
Reallocated Average
Disease Claims Resolution Indemnity
------- ----------- ---------- ---------
Mesothelomia 3,911 $185,462 $725,300,000
Lung Cancer 8,909 40,883 364,2000,000
Other Cancer 3,409 17,471 59,6000,000
Nonmalignant 156,433 7,080 1,107,5000,000
None 8,181 0 0
------- ---------------
Total 180,842 $2,256,6000,000
This table shows that Owens Corning's liability for claims pending
on October 5, 2000 was $2.26 billion in year 2000 dollars -- "the
conservative value of asbestos bodily injury claims that were
pending against Owens Corning at the time of its bankruptcy
petition," Dr. Peterson stresses.
Dr. Peterson took many opportunities throughout his testimony to
point out that he is making conservative estimates.
* Valuing Owens Corning's Future Claims
Dr. Peterson explains that his valuation of future claims starts
with Dr. Nicholson's projections about cancer-related deaths.
Judge Fullam interrupted to ask some questions:
"Is it reasonable to assume, Dr. Peterson, that all mesothelomia
plaintiffs dies by the time a claim was filed?"
"No, they typically die within a year of a diagnosis so there's
time to sue before they die."
"Do they die before their claims are resolved?"
"Generally, yes."
Dr. Peterson continued by explaining that cancer-related data is
collected by SEER from 14 sites around the United States. That
data is what Drs. Nicholson and Vasquez use to make their
projections about future cancer deaths.
Dr. Peterson commented that Dr. Nicholson's projections have
proven to be on the mark and the most striking long-range
forecasts in any area of the social sciences. Dr. Vasquez's
projections are also well correlated, but always less than actual
results.
Dr. Peterson correlates the number of cancer claims filed against
Owens Corning with the number of projected cancer deaths to
determine a claimants propensity to sue. As a general
proposition, about 1/3 of people dying from an asbestos-related
cancer sue Owens Corning. Dr. Peterson notes that, despite the
rhetoric about out-of-control asbestos-related litigation, a good
2/3 of cancer victims never sue any asbestos-defendant.
The number of claims alleging a non-malignant disease to the
number of cancer claims historically runs at a 9:1 to 10:1 ratio.
Applying that ratio to the projected number of cancer claims
produces an estimate of future claims against Owens Corning equal
to:
Lung Other Non-
Mesothelomia Cancer Cancer Malignant Total
------------ ------ ------ --------- -----
High Estimate 33,856 37,921 14,796 860,204 946,777
Low Estimate 25,206 26,942 8,926 551,626 612,700
Multiplying these numbers of claims by historical settlement
amounts, applying a 2.5% inflation factor to adjust for increases
in the Consumer Price Index over time, and discounting all of that
back to present value results in Dr. Peterson's estimate that
Owens Corning's liability on account of future claims is between
$8.9 billion and $6.3 billion.
* Valuing Fibreboard's Present & Future Claims
Using the same methodologies, Dr. Peterson computes Fibreboard's
liability on account of present claims at $1.3 billion and
Fibreboard's liability on account of future claims between $4.5
billion and $6.3 billion.
* The Debtors' Total Asbestos-Related Liability
IN DR. PETERSON'S EXPERT OPINION, the Debtors' total liability on
account of present and future asbestos-related personal injury
claims is $18.6 billion -- which is no less than $16 billion.
Because forecasts of asbestos liabilities are inherently
uncertain, Dr. Peterson relates that he performed a sensitivity
analysis to test his projections. Specifically, Dr. Peterson
systematically altered six types of parameters:
(a) The choice of epidemiological projections -- using Dr.
Vasquez's data rather than Dr. Nicholson's;
(b) Alternative base periods for determining propensities
to sue and the values of asbestos claims;
(c) Use of propensities to sue that increase and those with
no increase.
(d) Alternative assumptions about rates of decline for
nonmalignancy claims;
(e) Use of dollar amounts that change according to the
experiences of other defendants;
(f) Changes in filings and settlements that would result if
national legislation were passed that would treat most
nonmalignant claims as noncompensable.
Some changes could increase the final estimate by 20%; other
changes could decrease the final estimate by 20%. Some changes
would cause the final number to change only by 1% or 2%. At the
end of the day, Dr. Peterson is convinced that his $18.6 billion
(or no less than $16 billion) estimate is the best estimate.
Richard A. Rothman, Esq., at Weil, Gotshal & Manges LLP,
representing the Banks, began his cross-examination.
"You wouldn't call yourself a neutral expert, would you, Dr.
Peterson?" Mr. Rothman began.
"I would," Dr. Peterson responded, stressing that his methodology
does not vary from client to client.
"But you are a regular witness for claimants committees, aren't
you?" Mr. Rothman continued.
"I have testified on behalf of many parties in a variety of
settings," Dr. Peterson replied.
"When have you testified against asbestos claimants?" Mr. Rothman
asked.
"In the Ahern class action settlement proceedings," Dr. Peterson
said.
"Have you ever used Dr. Vasquez's model as a basis to estimate
asbestos liabilities?" Mr. Rothman asked.
"Yes," Dr. Peterson said. "In 1994, Dr. Vasquez's model was
superior at that time (meaning it produced projections closer to
actual results) and, now, Dr. Nicholson's model has proven to be
superior."
Mr. Rothman and Dr. Peterson sparred for a while over Dr. Dunbar's
report and conclusions. "In analyzing data," Dr. Peterson said,
"the statistical analyst needs to understand the underlying
phenomena and processes the numbers symbolize. To value claims
against Owens Corning, you have to understand how the Company
settled claims, their criteria and their processes. Dr. Dunbar's
conclusions reflect disregard or ignorance of any understanding
about how Owens Corning settled and resolved asbestos claims."
"Did you attempt to value Owens Corning's liability if its claims
were resolved in the Federal MDL proceeding?" Mr. Rothman asked.
"No," Dr. Peterson said, "and I don't know how one would do that,"
Dr. Peterson added after shifting in his seat.
Mr. Rothman asked Dr. Peterson if his estimates include
adjustments that deny payments to claimants on account of claims
that are backed-up by false medical records supplied by physicians
providing bogus x-rays.
Dr. Peterson said he recalls that Owens Corning reduced payments
to suspicious doctors' patients, so that would be included in the
averages. Dr. Peterson also recalls observing that the number of
claims from suspect doctors declined over time, so that trend
would also be incorporated in the average settlement amounts.
Mr. Rothman asked Dr. Peterson whether the increasing risk of
Owens Corning tumbling into bankruptcy would have accounted for
increases in the numbers of claims filed in 1999 and 2000.
"I don't think so," Dr. Peterson said, noting that he sees the
same trend in other defendants' claim history.
"Did you perform a sensitivity analysis that excludes NSP
settlement years?" Mr. Rothman asked.
"That would be totally inappropriate," Dr. Peterson responded.
"Where does the data come from to calculate propensity to sue
after 2000?" Mr. Rothman asked.
Dr. Peterson answered that the data comes from the National
Gypsum, Manville, UNR and other trusts in order to use the most
recent data that's available.
Mr. Rothman directed Dr. Peterson's attention to this table
included in his report:
Propensities to Sue Owens Corning,
by Disease: 1990-2000
Type of Cancer
Filing -----------------------------------------
Year Mesothelomia Lung Cancer Other Cancer
------ ------------ ----------- ------------
1990 31.8 29.9 34.9
1991 26.9 25.5 29.6
1992 26.2 27.0 33.8
1993 24.0 23.3 27.2
1994 33.2 32.0 36.1
1995 36.8 44.2 62.1
1996 33.4 31.5 36.2
1997 30.3 29.1 34.6
1998 33.2 28.7 40.2
1999 37.7 41.2 49.6
2000 57.5 48.8 58.9
"You have never assumed a decrease in the propensity to sue,
correct?" Mr. Rothman asked.
"Correct."
"Even though Owens Corning saw decreases in the propensity to sue
14 of 30 times from one year to another?"
"No analyst would make that analysis, Mr. Rothman," Dr. Peterson
responded. "Data is messy. The general trend is what's
important."
Mr. Rothman talked with Dr. Peterson about changes in the
Manville Trust Distribution Procedures that now require physical
examinations of claimants. Dr. Peterson confirmed that there is
now a new category of serious asbestosis that requires a 2/1 ILO
x-ray reading. The result has been a significant decrease in
claims, which is what prompted the change in the Trust
Distribution Procedures.
"And the TDPs in these cases. . . ," Mr. Rothman started to say
before Dr. Peterson interrupted.
"Estimation of Owens Corning's liabilities isn't based on to-be-
drafted TDPs. Rather, an estimation is based on claimants' rights
to payment in the tort system as of October 5, 2000, from Owens
Corning."
"Is that a legal opinion?" Mr. Rothman asked.
"That's his expert opinion," Judge Fullam interjected.
Kenneth Pasquale, Esq., at Stroock & Stroock & Lavan LLP,
representing the Five Dissident Bondholders, asked Dr. Peterson
about his testimony in the Armstrong and Babcock & Wilcox cases.
"Who contested your estimations in those cases?" Mr. Pasquale
asked.
Judge Fullam cut Mr. Pasquale off, and told him to argue the point
in closing arguments.
Mr. Inselbuch asked Dr. Peterson what percentage of their claims
claimants are receiving in the Manville cases.
"5%," Dr. Peterson responded, noting that means a $600 payment in
many cases, which is small enough to dissuade the filing of new
claims.
"So this court could discourage future claims by setting a low
pay-out amount?" Judge Fullam quipped.
"If the Court had that authority," Mr. Inselbuch said.
Future Claimants' Rep.'s Financial Witness
James Hass
Jane W. Parver, Esq., at Kaye Scholer LLP, called James E. Hass to
the witness stand to talk about interest rates and discount rates
appropriate for estimating future claims.
Mr. Hass works for Hamilton, Rabinovitz & Alschuler, Inc. He is
an investment banker with more than 25 years of experience in the
practice of financial and economic analysis. As part of his
professional responsibilities in investment banking, which have
focused on bond and other debt transactions, he regularly provide
advice and analysis on interest rates and discount rates. He has
also provided expert opinions on interest rates and discount rates
in recent litigation and is a published author.
Ms. Parver proffered Mr. Hass as an expert. With no objection
being raised, Judge Fullam said she could proceed under that
assumption.
Two of the key variables used in estimating the net present value
of asbestos personal injury liabilities are the inflation rate and
the discount rate, Mr. Hass explains. The inflation rate is used
to adjust the level of claim awards as they are paid over the next
50 years. The discount rate is used to adjust to a current dollar
value the annual claims payments estimated in Dr. Rabinovitz
Reports.
Mr. Hass believes the Congressional Budget Office's long-term
estimate of the percentage change in the consumer price index for
the inflation rate and also their estimate of the interest rate on
the U.S. Ten-Year Treasury Note is the appropriate discount rate,
which in 2000 were 2.5% and 5.7%, respectively.
Ms. Parver asked Mr. Hass to put these numbers into terms she and
other lawyers could understand.
Mr. Hass explained that to have $100,000 available in 50 years to
pay a claim, the Trust needs to be funded with less money up front
as the discount rate increases, like this:
Present Value of $100,000
Interest Rate 50 Years From Today
------------- -------------------------
4.2% $12,000
5.7% 6,000
8.0% 2,000
12.0% 300
The Treasury rate today, Mr. Hass advised, is about 4.2%.
Mr. Hass believes that a risk-free rate provides equal treatment
of all unsecured creditors in Owens Corning's cases.
Peter Friedman, Esq., at Weil, Gotshal & Manges LLP, representing
the Banks, asked Mr. Hass if he'd ever testified as an expert in a
bankruptcy case before.
"No," Mr. Hass responded.
"The Trust formed under Owens Corning's plan will not be required
to limit its investments to Treasury obligations, will it?" Mr.
Friedman asked.
"Correct," Mr. Hass responded.
"What if the Trust earned a significant return on its investments;
who recovers those excess funds?" Mr. Friedman asked.
"That's impossible," Mr. Hass said, reminding Mr. Friedman that
claimants only recover about 1/3 of what they're owed under the
current plan. "Claimants will never be paid in full."
"Could tort claimants recover higher percentages than commercial
creditors?" Mr. Friedman asked.
"No," Mr. Hass said, because all unsecured creditors receive the
same pro rata distribution on the Distribution Date and all
creditors can invest those funds however they want.
Mr. Friedman showed Mr. Hass a report from the Manville Trust
showing that Manville was sitting on $1.6 billion in cash and
securities at June 30, 2004, $1 billion of which is not invested
in cash or Treasury Notes.
Judge Fullam yawned.
The asbestos claims estimation proceeding will continue until
Jan. 21. The trial, held in Courtroom 15A at 601 Market Street in
Philadelphia, began on Jan. 13, 2005.
Headquartered in Toledo, Ohio, Owens Corning --
http://www.owenscorning.com/-- manufactures fiberglass
insulation, roofing materials, vinyl windows and siding, patio
doors, rain gutters and downspouts. The Company filed for chapter
11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom,
represents the Debtors in their restructuring efforts. At
Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in
assets and a $4.2 billion stockholders' deficit. The company
reported $132 million of net income in the nine-month period
ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No.
95; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PARAMOUNT RESOURCES: Further Extends Sr. Debt Offer Until Today
---------------------------------------------------------------
Paramount Resources Ltd.'s (TSX:POU) discussions with
representatives of the committee of noteholders formed to respond
to Paramount's exchange offer and consent solicitation for its
outstanding senior unsecured notes are continuing. Accordingly,
the offer expiration date has been extended to 5:00 p.m. New York
time today, Jan. 19, 2005. The minimum tender condition in the
offer has not yet been satisfied.
About the Company
Paramount is a Canadian oil and natural gas exploration,
development and production company with operations focused in
Western Canada. Paramount's common shares are listed on the
Toronto Stock Exchange under the symbol "POU".
* * *
As reported in the Troubled Company Reporter on Dec. 23, 2004,
Moody's affirmed the B3 senior implied and assigned a B3 rating to
the company's new senior unsecured exchange notes offering for
Paramount Resources, Ltd, following the company's announced
spin-off of the majority of its reserves into a yet to be created
Unit Trust.
While the ratings have been affirmed, the outlook remains negative
and the company's ability to retain the ratings will depend on how
soon after the transaction's close that management clearly
declares in what time frame it will monetize the units to reduce
debt to supportable levels. It is Moody's expectation that the
company will utilize the units to fund future acquisitions or
reduce debt, however, the timing and amounts of are key to the
ratings, especially given the amount of pro forma leverage
(approximately CAD $16.02/boe or US$13.60/boe) against the
company's very short PD reserve life of 4.4 years.
As reported in the Troubled Company Reporter on Dec. 15, 2004,
Standard & Poor's Ratings Services placed its 'B+' long-term
corporate credit and 'B' long-term senior unsecured debt ratings
on Calgary, Alberta-based Paramount Resources Ltd. on CreditWatch
with negative implications following the company's announcement of
its intention to seek shareholder and bondholder approval to
spin-off a portion of its existing asset base into a new Canadian
income trust. The proposed spin-off will affect the ratings on
the US$215 million of public debt remaining after the announced
repurchase of about US$85 million in debt.
PARKRIDGE PHASE: Combined Confirmation Hearing Set for Jan. 26
--------------------------------------------------------------
The Honorable Robert G. Mayer of the U.S. Bankruptcy Court for the
Eastern District of Virginia will convene a hearing at 11:30 a.m.,
on January 26, 2005, to consider the adequacy of the Disclosure
Statement explaining the Liquidating Plan of Reorganization filed
by Parkridge Phase Three Associates Limited Partnership. Judge
Mayer will also consider confirmation of the Debtor's Liquidating
Plan during that hearing.
The Debtor filed its Disclosure Statement and Plan on December 23,
2004.
The Plan groups claims and interests into four classes and
provides for these recoveries:
a) Class 1 impaired claims consisting of the Secured Claims of
REP PRK Realty, LLC will be paid with the Debtor
transferring all of its rights, titles and interests in its
assets free and clear of liens, claims, interests and
encumbrances to REP PRK on the Effective Date;
b) Class 2 unimpaired claims consisting of Priority Claims will
receive a distribution in cash in the Face Amount of their
Allowed Claims with 1% per annum interest and to be paid on
or after the Effective Date;
c) Class 3 unimpaired claims consisting of General Unsecured
Claims will receive distribution in cash in the Face Amount
of their Allowed Claims plus 1% per annum interest on or
after the Effective Date; and
d) Class 4 unimpaired claims consisting of Equity Interests
Holders will retain their Equity Interests and will
contribute funds to the Debtor to pay the Allowed
Administrative Expense Claims, Allowed Priority Claims and
Allowed General Unsecured Claims.
Full-text copies of the Disclosure Statement and Plan are
available for a fee at:
http://www.researcharchives.com/download?id=040812020022
Objections to the Disclosure Statement and Plan, if any, must be
filed and served to the Clerk of the Bankruptcy Court, 200 S.
Washington Street in Alexandria, Virginia 22314, on or before
January 24, 2005.
Headquartered in Reston, Virginia, Parkridge Phase Three
Associates Limited Partnership filed for chapter 11 protection on
September 3, 2004 (Bankr. E.D. Va. Case No. 04-13707). Jeffrey S.
Romanick, Esq., at Gross & Romanick, PC, represents the Debtor in
its restructuring efforts. When the Company filed for protection
from its creditors, it estimated $1 million to $10 million in
assets and $10 million to $50 million in liabilities.
PARMALAT USA: Wants to Settle Prepetition Inter-Debtor Balances
---------------------------------------------------------------
On April 23, 2004, Parmalat USA Corporation, Farmland Dairies LLC,
and Milk Products of Alabama LLC -- now known as Farmland
Stremicks Sub LLC -- each filed Statements of Financial Affairs,
Schedules of Assets and Liabilities, and Schedules of Executory
Contracts and Unexpired Leases. The Farmland Schedules reflected
a contingent and unliquidated intercompany liability due and owing
to Parmalat USA Corp. for $9,512,302, consistent with Farmland's
books as of January 24, 2004. The Milk Products Schedules
reflected contingent and unliquidated intercompany liabilities due
and owing to Farmland for $1,602,427, and to Parmalat USA for
$4,400,000, consistent with Milk Products' books as of January 24,
2004.
After the U.S. Debtors' bankruptcy filing, their financial
advisors, AlixPartners, LLC, commenced a detailed review and
investigation to reconcile the Inter-Debtor Balances. After an
initial determination that the Debtors' books and records were
inadequate, AlixPartners, together with the Debtors' other
professionals, and the Official Committee of Unsecured Creditors
and its financial advisor, BDO Seidman, LLP, spent several months
analyzing the Debtors' financial data and identifying
documentation to support certain reported transactions.
During that review, the U.S. Debtors determined that a large
portion of the inter-debtor transactions contributing to the
Inter-Debtor Balances resulted from an accounting methodology used
throughout their general ledger system which created an "out of
balance" condition between the separate Debtor entities. For
example, Farmland would record an administration fee as a debit on
its books and records, and Parmalat USA would record the same fee
as a credit.
Judy G.Z. Liu, Esq., at Weil, Gotshal & Manges, LLP, in New York,
relates that, to account properly for the transactions under the
generally accepted accounting principles, Farmland should have
used the "double entry" system by also including the
administration fee due to Parmalat USA on its books and records as
a credit due to Parmalat USA, and Parmalat USA should have
included an equal amount on its books and records as due and owing
from Farmland.
To correct the "out of balance" condition each quarter, the U.S.
Debtors' management made adjusting journal entries in the amounts
necessary to balance the ledger of each Debtor, but failed to
provide a reconciliation of the cause for the "out of balance"
condition. As of the Petition Date, the Debtors had not completed
the quarterly adjustment process and, accordingly, the amounts
listed in their Schedules had not been adjusted for the "out of
balance" condition. Therefore, the scheduled amounts are
different than the adjusted amounts, which have been corrected for
the "out of balance" condition as of the Petition Date:
Balance due Parmalat USA from Milk Products $4,400,000
Balance due to Parmalat USA from Farmland $9,816,316
Balance due to Farmland from Milk Products $3,938,493
Further Refinement of the Petition Date
Inter-Debtor Balances
In conjunction with settlement discussions among the U.S. Debtors,
the Creditors Committee and GE Capital Public Finance, Inc., the
lessor under a Master Lease Financing Agreement with Farmland,
concerning the Debtors' Plans, the Debtors and the Creditors
Committee agreed that it was appropriate to conducts a further
review and refinement of the Inter-Debtor Balances that had been
initially adjusted for the "out of balance" condition. The
Debtors and the Creditors Committee believe that the
Inter-Debtor Balances should be further adjusted and fixed at
these amounts:
Parmalat USA claim against Milk Products $4,967,846
Parmalat USA claim against Farmland $10,392,497
Milk Products claim against Farmland $2,705,407
Settlement of Inter-Debtor Claims
Based on their extensive review of the Inter-Debtor Balances, the
U.S. Debtors and Creditors Committee and their professional
advisors have agreed that it is in the best interests of all the
parties-in-interest to resolve all outstanding issues with respect
to the Inter-Debtor Balances and adjust those to reflect the
analyses performed by AlixPartners and reviewed by BDO. To avoid
potentially expensive and protracted litigation, the Debtors have
agreed to adjust the Inter-Debtor Balances, based on the analyses
and allow general unsecured claims.
In connection with the settlement of Inter-Debtor Balances in
their proposed allowed amounts, the U.S. Debtors have agreed to
fully and finally release, acquit and forever discharge one
another from any and all prepetition claims and causes of action,
of any nature or type, whether known or unknown, which any of them
may now have against one another. The release of all prepetition
claims and causes of action, however, will not extend to any
true-up payments as contemplated in the DIP Financing Order,
including, but not limited to, payments relating to Prepetition
Restructuring Fees and allocation of due diligence expenses
incurred and charged by the DIP Lender.
The U.S. Debtors and the Committee jointly seek the authority of
the U.S. Bankruptcy Court for the Southern District of New York to
settle the Prepetition Inter-Debtor Balances.
Ms. Liu tells Judge Drain that if a compromise and settlement of
the Inter-Debtor Balances is not approved, the U.S. Debtors will
be compelled to litigate the merits of their claims against each
other. Neither the Debtors nor the Creditors Committee can
predict with certainty the duration of the litigation or the
issues that could then become subject to appeal, but both agree
that expert testimony on various matters, including valuation of
services rendered for which an inter-debtor due to/from account
existed, would be required. The Debtors and the Creditors
Committee recognize that if their request is denied and litigation
is pursued, a concomitant increase in administrative expenses will
saddle the Debtors and their estates, resulting in a reduction in
distributions otherwise anticipated to be made to all creditors.
Resolving the Inter-Debtor Balances by allowing the Allowed
Inter-Debtor Claims would provide the Debtors with the opportunity
to preserve financial and human resources and administer their
estates without the distraction and cost of additional litigation.
Headquartered in Wallington, New Jersey, Parmalat USA Corporation
-- http://www.parmalatusa.com/-- generates more than 7 billion
euros in annual revenue. The Parmalat Group's 40-some brand
product line includes milk, yogurt, cheese, butter, cakes and
cookies, breads, pizza, snack foods and vegetable sauces, soups
and juices and employs over 36,000 workers in 139 plants located
in 31 countries on six continents. The Company filed for chapter
11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No.
04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at
Weil Gotshal & Manges LLP, represent the Debtors in their
restructuring efforts. When the U.S. Debtors filed for bankruptcy
protection, it reported more than $200 million in assets and
debts. (Parmalat Bankruptcy News, Issue No. 41; Bankruptcy
Creditors'
Service, Inc., 215/945-7000)
PARMALAT USA: Asks Court to Approve Citibank Lease Settlement Pact
------------------------------------------------------------------
Farmland Dairies, LLC, and Milk Products of Alabama, LLC, entered
into a Receivables Purchase Agreement with Eureka Securitization
Plc, and Citibank, N.A., London Branch, as agent. Unrelated to
the Receivables Purchase Agreement, on December 3, 2003, Farmland
made a $2 million payment to Citibank N.A., in satisfaction of a
totally separate unsecured line of credit.
Parmalat USA Corp. is party to seven photocopier and fax equipment
leases with Citicorp Vendor Finance, Inc. The equipment for six
of those Leases is located in Atlanta, Georgia and the remaining
equipment is in Wallington, New Jersey.
Since the bankruptcy filing, the U.S. Debtors and the Official
Committee of Unsecured Creditors have investigated:
* potential causes of action against Citibank relating to the
RPA, including whether the RPA could be recharacterized or
payments made under it could be avoided as fraudulent
transfers; and
* whether the December 3, 2003 Payment could be avoided as an
avoidable transfer.
As part of the Final DIP Order, the U.S. Debtors released all
claims against Citibank, subject to the Creditors Committee's
right to investigate certain claims.
In addition, the Debtors and the Creditors Committee investigated
whether the Equipment Leases should be assumed or rejected.
On September 9, 2004, the U.S. Bankruptcy Court for the Southern
District of New York approved a stipulation among the Debtors, the
Creditors Committee, General Electric Capital Corporation, and
Citibank amending the Final DIP Order and the RPA. Among other
things, the RPA Settlement extended the RPA termination date and
provided for a release of the Creditors Committee's claims against
Citibank, including Citibank's individual capacity and in its
capacity as Citibank Agent, including the RPA Claims, except that
the Creditors Committee retained the right to pursue the
Preference Claim.
On January 10, 2005, the U.S. Debtors, Citigroup, Inc., and all
its subsidiaries and affiliates, including Citibank, Citibank
Finance and Eureka, GE and the Creditors Committee signed a
Settlement Agreement and Release, which, among other things,
resolves the Preference Claims and certain issues regarding the
Leases.
On January 13, 2005, the Court approved three stipulations
extending the term of the RPA through February 28, 2005, and
modified certain terms, extending the term of the Postpetition
Credit Facility, and extending the term of the Supplemental Credit
Facility. It is a termination event under the RPA if the Citibank
Preference/Lease Settlement is not approved by the Court by
February 3, 2005.
The U.S. Debtors seek the Court's authority to enter into the
Citibank Preference/Lease Settlement.
Under the Terms of the Citibank Settlement:
(a) Citibank will pay Farmland $550,000 on account of the
Preference Claim;
(b) Citibank will assign to Reorganized Farmland a claim under
Section 502(h) of the Bankruptcy Code for $625,000.
(c) Parmalat USA will assume and assign four of the Leases, at
a reduced rental going forward after assumption, on the
earlier of:
(i) the effective date of the Plan, in which case the
Leases would be assigned to Reorganized Farmland;
or
(ii) the closing of the sale of Farmland's Atlanta
business, in which case the Leases would be
assigned to the purchaser of the Atlanta business;
(d) Parmalat USA will also reject one photocopier lease with
Citibank Finance and make contractual payments on the
rejected lease and two others until the leases have been
rejected or terminated and the equipment has been
returned; and
(e) Citigroup and the U.S. Debtors will exchange releases.
James M. Sullivan, Esq., at McDermott Will & Emery, LLP, tells the
Court that the Citibank Settlement will not become effective
unless the Court approves it on or before February 3, 2005, and
the Settlement Order has become a final and non-appealable order
on or before February 28, 2005, unless that condition is waived by
Citigroup.
If the Settlement is not approved, it will be an event of default
under the RPA and a cross-default under the original and
supplemental DIP financing facilities. Mr. Sullivan relates that
those defaults would prevent the U.S. Debtors from operating their
businesses due to a lack of adequate capital and would
significantly diminish the value of the Debtors' estates.
In addition, if the Citibank Settlement is not approved, the U.S.
Debtors will be compelled to litigate the merits of the Preference
Claim. The Debtors cannot predict with certainty the duration of
the litigation, the success of the litigation or the issues that
could then become subject to appeal. The Debtors recognize that
if the Settlement is not approved and litigation is pursued, a
concomitant increase in administrative expenses will saddle the
Debtors and their estates, potentially resulting in a reduction in
distributions otherwise anticipated to made to all creditors.
Resolving the Preference Claim would provide the Debtors with the
opportunity to preserve financial resources and administer their
estates, Mr. Sullivan says.
Headquartered in Wallington, New Jersey, Parmalat USA Corporation
-- http://www.parmalatusa.com/-- generates more than 7 billion
euros in annual revenue. The Parmalat Group's 40-some brand
product line includes milk, yogurt, cheese, butter, cakes and
cookies, breads, pizza, snack foods and vegetable sauces, soups
and juices and employs over 36,000 workers in 139 plants located
in 31 countries on six continents. The Company filed for chapter
11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No.
04- 11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at
Weil Gotshal & Manges LLP, represent the Debtors in their
restructuring efforts. When the U.S. Debtors filed for bankruptcy
protection, it reported more than $200 million in assets and
debts. (Parmalat Bankruptcy News, Issue No. 41; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
PEGASUS: Files Joint Chapter 11 Plan and Disclosure Statement
-------------------------------------------------------------
On January 7, 2005, Pegasus Satellite Communications, Inc., and
its subsidiaries filed with the United States Bankruptcy Court for
the District of Maine a joint Chapter 11 Plan and Disclosure
Statement. The Plan generally provides for the deposit of the
Debtors' assets, including the cash proceeds of the sale of their
satellite business and, potentially, proceeds of a sale of their
broadcast television business, into a liquidating trust charged
with resolving claims and making Distributions on account thereof.
The consideration and proceeds derived from those assets will be
used to make cash disbursements to holders of Allowed Claims in
accordance with the priority scheme established by the Bankruptcy
Code or as set forth in the Plan.
Substantive Consolidation
Solely for all actions associated with confirmation and
consummation of the Plan, the Debtors seek to substantively
consolidate:
(a) the estates of these Debtors into the Estate of Pegasus
Broadcast Television, Inc.:
-- Bride Communications, Inc.,
-- BT Satellite Inc.,
-- HMW, Inc.,
-- Pegasus Broadcast Associates, L.P.,
-- Pegasus Broadcast Towers, Inc.,
-- Portland Broadcasting, Inc.,
-- Telecast of Florida, Inc.,
-- WDSI License Corp.,
-- WILF, Inc.,
-- WOLF License Corp., and
-- WTLH License Corp; and
(b) the estates of these Debtors into the Estate of Pegasus
Satellite Television, Inc.:
-- Argos Support Services Company,
-- Carr Rural TV, Inc.,
-- DBS Tele-Venture, Inc.,
-- Digital Television Services of Indiana, LLC,
-- DTS Management, LLC,
-- Golden Sky DBS, Inc.,
-- Golden Sky Holdings, Inc.,
-- Golden Sky Systems, Inc.,
-- Henry County MRTV, Inc.,
-- Pegasus Satellite Television of Illinois, Inc.,
-- Primewatch, Inc.,
-- PST Holdings, Inc., and
-- South Plains DBS, LP
On the Confirmation Date:
(i) all intercompany Claims by, between and among the
Debtors within a Consolidated Group will be eliminated;
(ii) all assets and liabilities of the Debtors within a
Consolidated Group will be merged or treated as if they
were merged with the assets and liabilities of PBT or
PST, as applicable;
(iii) any obligation of a Debtor within a Consolidated Group
and all guarantees by one or more of the other Debtors
in a Consolidated Group will be deemed to be one
obligation of PBT or PST, as applicable; and
(iv) each Claim filed or to be filed against any Debtor in a
Consolidated Group will be deemed filed only against PBT
or PST, as applicable and will be deemed a single Claim
against and a single obligation of PBT or PST, as
applicable.
On the Confirmation Date, all Claims based on guarantees of
collection, payment or performance made by the Debtors in a
Consolidated Group as to the obligations of another Debtor in the
same Consolidated Group will be released and of no further force
and effect.
Pegasus Satellite Communications, Inc., and Pegasus Media &
Communications, Inc., will retain their separate identities for
all purposes and will not be substantively consolidated with
either Consolidated Group or with one another.
The separate deemed consolidation of the PBT Debtors and the PST
Debtors will not affect:
(i) the legal and organizational structure of the Debtors;
(ii) guarantees, liens and security interests that are
required to be maintained:
(A) in connection with executory contracts or unexpired
leases that were entered into during the Chapter 11
Cases or that have been or will be assumed; or
(B) pursuant to the Plan;
(iii) defenses to any cause of action or requirements for any
third party to establish mutuality in order to assert a
right to set-off; and
(iv) distributions out of any insurance policy or proceeds of
that policy.
Sale of the Broadcast Business
The Debtors and the Official Committee of Unsecured Creditors have
been engaged in negotiations with Pegasus Communications
Corporation regarding a sale of the Debtors' Broadcast Assets.
However, no agreement has yet been reached among the parties. If
an agreement is reached with PCC, the Debtors' obligations will be
subject to their ability to find higher and better offers and
Court approval. To the extent that no agreement is reached with
PCC, the Debtors and the Committee may decided to negotiate with
an alternative "stalking horse" bidder, hold an open auction for
the sale of the Broadcast Assets or otherwise provide for the
transfer of the Broadcast Assets to the Liquidating Trust.
If the Court approves a Broadcast Sale, whether to PCC or another
entity, the sale will be consummated pursuant to the transaction
documents approved by the Court and the terms of the order
approving the Broadcast Sale.
If the Committee, in consultation with the Debtors, decides not to
pursue a Broadcast Sale at this time, as soon as practicable after
the later of the date of that decision and the Effective Date of
the Plan, the Old PSC Common Stock will be cancelled and the New
PSC Common Stock transferred to the Liquidating Trust. If there
is a PCC Court-Approved Bid or an Alternate Court-Approved Bid but
the Broadcast Sale is not consummated on or before the Outside
Closing Date, which will be 120 days after the Confirmation Date
if PCC is the purchaser and six months after the Confirmation Date
if another entity is the purchaser on the Outside Closing Date,
the Old PSC Common Stock will be canceled and the New PSC Common
Stock transferred to the Liquidating Trust. In either case, the
equity interests of one or more of the Reorganized Debtors may
also be transferred to the Liquidating Trust or each Debtor or
Reorganized Debtor may be dissolved.
Liquidating Trust
On the Plan Effective Date, a Liquidating Trust Agreement will be
executed, and all other necessary steps will be taken to establish
the Liquidating Trust and the Reserves. The Liquidating Trust
will make Distributions to Holders of Allowed Claims pursuant to
the terms of the Plan. The Liquidating Trust Interests will be
for the benefit of the Holders of Allowed General Unsecured Claims
against PSC (Class 3A). The Committee will appoint a Liquidating
Trustee and a Liquidating Trust Board, which will consist of at
least one but not more than three directors. The Liquidating
Trustee and the Liquidating Trust Board will act in a fiduciary
capacity for the interests of all Holders of Liquidating Trust
Interests and Holders of Allowed Claims entitled to receive
Distributions pursuant to the terms of the Plan until
distributions are made.
On the Effective Date, the Debtors will transfer their assets that
were not sold or abandoned to the Liquidating Trust or the
Reserves. The Remaining Assets will vest therein free and clear
of all Liens, Claims and other interests.
After the Effective Date, the Liquidating Trust will:
(i) wind down the Debtors' affairs, including making
Distributions as contemplated in the Plan;
(ii) establish and maintain the Reserves in accordance with
the terms of the Plan;
(iii) liquidate or distribute directly to Holders of
Liquidating Trust Interests the Liquidating Trust
Assets, to maximize the recovery of Holders of
Liquidating Trust Interests;
(iv) investigate, enforce and prosecute litigation
claims;
(v) object to, settle, compromise, dispute and prosecute
disputed claims;
(vi) administer and take actions as are necessary to
effectuate the Plan;
(vii) file appropriate tax returns; and
(viii) retain professionals as are necessary and appropriate to
further its fiduciary obligations.
To the extent that the sale of the Debtors' Broadcast Assets does
not occur, the Liquidating Trustee, in consultation with the
Liquidating Trust Board, will:
(a) sell the stock or assets of Reorganized PSC or the
Reorganized PBT Debtors to third-parties and distribute
the proceeds of such sale or sales to Holders of
Liquidating Trust Interests;
(b) directly distribute the stock or assets of Reorganized PSC
or the Reorganized PBT Debtors to Holders of Liquidating
Trust Interests; or
(c) engage in combinations of distributions and sales of stock
or assets of Reorganized PSC or the Reorganized PBT
Debtors, which in the business judgment of the Liquidating
Trust Board, would be most likely to maximize the value of
recoveries to Holders of Allowed Claims in Class 3A.
Plan Is Feasible
Section 1129(a)(11) of the Bankruptcy Code provides that a
Chapter 11 plan may be confirmed only if the Bankruptcy Court
finds that the plan is feasible. A feasible plan is one that will
not lead to a need for further reorganization or liquidation of
the debtor, unless the reorganization or liquidation is proposed
in the plan.
Since the Plan provides for the liquidation of their estates, the
Debtors believe that the Plan is feasible because they will be
able to satisfy the conditions precedent to the Effective Date and
otherwise have sufficient funds to meet their post-Confirmation
Date obligations to pay for the costs of administering and fully
consummating the Plan and closing their Chapter 11 cases.
Best Interest
With respect to each impaired Class of Claims and Interests,
confirmation of the Plan requires that each holder of a Claim or
Interest either (i) accept the Plan or (ii) receive or retain
under the Plan property of a value, as of the Effective Date, that
is not less than the value the holder would receive if the
Debtors were liquidated under Chapter 7 of the Bankruptcy Code.
The Debtors believe that the Plan meets the "best interests" test.
In a Chapter 7 liquidation, the Debtors point out, the amount of
proceeds generated from the liquidation of their remaining assets
would be reduced by the costs of the liquidation, including costs
incurred during the Chapter 11 cases and allowed under Chapter 7
of the Bankruptcy Code, like professionals' fees and expenses, a
trustee's fees, and the fees and expenses of professionals
retained by a trustee. The potential Chapter 7 liquidation
distribution in respect of each Class would also be reduced by
costs imposed by the delay caused by conversion to Chapter 7. In
addition, inefficiencies in the claims resolution process in a
Chapter 7 would negatively impact the recoveries of creditors.
Given all these, the Debtors submit that each impaired Class will
receive under the Plan a recovery at least equal in value to the
recovery the Class would receive pursuant to a Chapter 7
liquidation of each Debtor.
The Debtors will file with the Court a liquidation analysis to
prove their case.
Risk Factors
Although the Debtors believe that the Plan will satisfy all
requirements necessary for confirmation, there can be no assurance
that the Court will reach the same conclusion. Moreover, there
can be no assurance that modifications of the Plan will not be
required for confirmation or that modifications would not
necessitate a re-solicitation of votes.
Should the Court fail to allow substantive consolidation, the
Debtors warn that the administration of the Plan, if still
possible, could be substantially more burdensome, time-consuming
and costly, and may result in a different distribution scheme than
that originally contemplated by the Plan.
The Debtors note that the projected distributions and recoveries
and the Liquidation Analysis they intend to file are based on
their initial estimate of Allowed Claims, without having
undertaken a substantive review of all filed Claims. The Debtors
project that the Claims asserted against them will be resolved in
and reduced to an amount that approximates their estimates.
However, there can be no assurance that the Debtors' estimates
will prove accurate.
Furthermore, the Plan provides for the Litigation Claims to be
conveyed into the Liquidating Trust, with the Liquidating Trust
Reserve available, in part, to facilitate the prosecution of the
Litigation Claims and Disputed Claims. Although the Debtors
anticipate that the Liquidating Trust will resolve the Litigation
Claims and Disputed Claims on a basis providing a substantial net
benefit to the Debtors' estates, there can be no guarantee that
the result will be favorable. There also can be no assurance that
Liquidating Trust Reserve will be sufficient to fund completely
the prosecution of the Litigation Claims and the Disputed Claims.
The Broadcast Sale, if any, may be subject to certain regulatory
approvals, including broadcast licensing and anti-trust issues.
There can be no guarantee that such regulatory approvals will be
acquired. If the Broadcast Sale does not occur, recoveries may be
limited by many factors affecting companies in the television
broadcasting industry, including the ability to operate the
broadcast business effectively, attract and retain executives and
management, comply with regulatory requirements and adapt to
adverse business conditions.
A full-text copy of the Debtors' Chapter 11 Plan is available for
free at:
http://bankrupt.com/misc/Pegasus_Chapter11_Plan.pdf
A full-text copy of the Debtors' Disclosure Statement is available
for free at:
http://bankrupt.com/misc/Pegasus_Disclosure_Statement.pdf
Disclosure Statement Hearing on Feb. 9
The Court will convene a hearing on February 9, 2005, at 11:00
a.m. to consider the Disclosure Statement. The Debtors are
continuing to review the Disclosure Statement and anticipate
making modifications and additional disclosures prior to the
Disclosure Statement Hearing.
Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite
Communications, Inc. -- http://www.pgtv.com/-- is a leading
independent provider of direct broadcast satellite (DBS)
television. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. D. Maine Case No. 04-20889) on
June 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and
Paul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and
Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein,
Shur, Sawyer & Nelson, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $1,762,883,000 in assets and
$1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue
No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PRESIDENT CASINOS: Nov. 30 Balance Sheet Upside-Down by $54.4 Mil.
------------------------------------------------------------------
President Casinos, Inc. (OTC:PREZ.OB) reported results of
operations for the third quarter ended November 30, 2004.
For the three-month period ended November 30, 2004, the Company
reported a net loss of $0.8 million, compared to a net loss of
$2.6 million for the three-month period ended November 30, 2003.
Revenues for the three-month period ended November 30, 2004 were
$9.2 million, compared to revenues of $11.1 million for the three-
month period ended November 30, 2003.
Revenues for the nine-month period ended November 30, 2004 were
$32.6 million, compared to revenues of $37.1 million for the nine-
month period ended November 30, 2003. For the nine-month period
ended November 30, 2004, the Company reported a net loss of
$2.1 million, compared to a loss of $2.2 million for the nine-
month period ended November 30, 2003.
As a result of the pending sale of the Company's St. Louis
operations and in accordance with accounting standards, the St.
Louis results of operations and balance sheet data are classified
as discontinued operations. Also included in discontinued
operations is the Company's former leasing segment.
On August 9, 2004, the Company entered into an agreement with Penn
National Gaming, Inc., for the purchase of its St. Louis
Operations. The agreement was submitted to the Missouri
Bankruptcy Court for review and was amended on September 17, 2004.
Under the terms of the agreements, the stock of the St. Louis
operations was to be sold for approximately $28,000, subject to
working capital adjustments and subject to a potential overbid.
On October 7, 2004, an auction was held in accordance with Section
363 of the Bankruptcy Code. Columbia Sussex, Inc., was the
winning over-bidder for the St. Louis casino operations for a
purchase price of approximately $57,000, subject to closing
adjustments. On October 13, 2004, the Missouri Bankruptcy Court
approved the terms of the agreement. The closing of the
transaction, which is contingent upon licensing by the Missouri
Gaming Commission and other typical closing conditions, is
anticipated to occur in the Spring of 2005.
The Company sold one of two vessels accounted for in its leasing
segment during May 2003 and the second vessel was foreclosed on by
the lender which held a Preferred First Fleet Mortgage
collateralizing debt owed to them.
About the Company
President Casinos, Inc. owns and operates dockside gaming
facilities in Biloxi, Mississippi and downtown St. Louis,
Missouri, north of the Gateway Arch.
At Nov. 30, 2004, President Casinos' balance sheet showed a
$54,412,000 stockholders' deficit, compared to a $52,349,000
deficit at Feb. 29, 2004.
PSINET CONSULTING: Judge Gerber Confirms Amended Joint Plan
-----------------------------------------------------------
The Honorable Robert E. Gerber of the U.S. Bankruptcy Court for
the Southern District of New York confirmed the First Amended
Joint Liquidating Plan of Reorganization filed by PSINet
Consulting Solutions Holdings and its debtor-affiliate, PSINet
Consulting Solutions Knowledge Services, Inc., on January 11,
2005.
Harrison J. Goldin, the Chapter 11 Trustee for the Debtors, filed
the Debtors' First Amended Joint Plan on November 18, 2004.
As reported in the Troubled Company Reporter on January 4, 2005,
the Joint Plan provides for the appointment of a Joint Plan
Administrator who will administer the Reorganized Debtors,
liquidate the remaining assets of the Debtors' estates, manage the
winding down of the Reorganized Debtors, administer distributions
in accordance with the Joint Plan, and pursue various litigation
claims.
The Plan provides for all of the Debtors' property to be
liquidated for the benefit of holders of Allowed Claims and
provides for these recoveries:
a) all Allowed Administrative Claims, Allowed Priority Tax
Claims and Allowed Other Priority Claims will be paid in
full;
b) holders of Allowed Secured Claims will either be paid in
full or will receive the collateral securing those Claims,
or a combination of both;
c) holders of PSINet Consulting Convenience Class Claims will
receive 42% of their Allowed Consulting General Unsecured
Claims;
d) holders of Allowed PSINet Consulting General Unsecured
Claims and Allowed PSINet Knowledge Services General
Unsecured Claims will receive a Pro Rata share of the
respective Debtor's remaining property after the Allowed
Administrative Claims, Allowed Priority Tax Claims, Allowed
Secured Claims, and PSINet Consulting Convenience Class
Claims have been paid in full; and
e) holders of Subordinated Claims, PSINet Consulting
Subsidiaries Claims, PSINet Equity Interests, PSINet
Knowledge Affiliates Claims and PSINet Knowledge Equity
Interests will not receive any distribution under the Joint
Plan.
Full text copies of the Amended Disclosure Statement and Amended
Joint Plan are available for a fee at:
http://www.researcharchives.com/download?id=040812020022
Judge Gerber also ordered that Mr. Goldin would be appointed as
the Joint Plan Administrator upon the Effective Date. Judge
Gerber declared that Mr. Goldin's appointment is in the best
interests of the Reorganized Debtors, the creditors and the claims
holders under the Plan.
PSINet Consulting Solutions Holdings is a subsidiary of PSINet,
Inc. Headquartered in Ashburn, Virginia, PSINet, Inc., is a
provider of Internet and IT solutions, offering hosting solutions,
and a full suite of retail and whole sale Internet services
through wholly owned PSINet subsidiaries. PSINet, Inc., filed for
chapter 11 protection on May 31, 2001. Months later, PSINet
Consulting filed for chapter 11 protection on Sept. 10, 2001
(Bankr. S.D.N.Y. Case No. 01-14916). William J. Perlstein, Esq.,
at Wilmer, Cutler & Pickering, represents the Debtors in their
chapter 11 cases. At the time of the filing, PSINet, Inc., had
total assets of $2.2 billion and total liabilities of $4.3
billion, of which $2.9 billion is bond debt.
QWEST COMMS: Inks International Telephone Service Pact with BT
--------------------------------------------------------------
Qwest Communications International, Inc., (NYSE:Q) and BT
disclosed an interconnection agreement to exchange international
voice telephone traffic between the two companies. The
interconnection agreement enhances the quality and reliability of
telephone services used by residential and business customers
making international long-distance calls between the United
States, the UK and other international destinations.
"BT is pleased to expand our range of global wholesale voice
partners to include this important new voice interconnect with
Qwest Communications," said Peter Morley, general manager product
centre, BT Global Services.
Around the world, service providers form a variety of
interconnection agreements with other providers to ensure that
customers' voice calls can be seamlessly transmitted across the
world, over different networks. Qwest has many interconnection
agreements in place to help provide worldwide long-distance
service. This particular agreement with BT will continue to allow
Qwest customers to make calls to the UK International voice
traffic between the UK and the U.S. is estimated to be more than 4
billion minutes of use per year.
"Qwest is continually focused on providing high-quality, reliable
and competitive international voice services to our customers,"
said Brian Stading, director, long-distance for Qwest. "Today's
announcement demonstrates our emphasis on establishing and
extending Qwest's direct interconnection agreements with the
world's premier international carriers."
About BT
BT is one of the world's leading providers of communications
solutions serving customers in Europe, the Americas and Asia
Pacific. Its principal activities include IT and networking
services, local, national and international telecommunications
services, and higher-value broadband and internet products and
services.
About Qwest
Qwest Communications International Inc. (NYSE:Q) --
http://www.qwest.com/-- is a leading provider of voice, video and
data services. With more than 40,000 employees, Qwest is
committed to the "Spirit of Service" and providing world-class
services that exceed customers' expectations for quality, value
and reliability.
At Sept. 30, 2004, Qwest's balance sheet showed a $2,477,000,000
stockholders' deficit, compared to a $1,016,000,000 deficit at
Dec. 31, 2003.
RASC SERIES 2004-KS12: Moody's Rates $5.5M Class B Certs. at Ba1
----------------------------------------------------------------
Moody's Investors Service has assigned a Aaa rating to the senior
certificates issued by RASC Series 2004-KS12 Trust, and ratings
ranging from Aa2 to Ba1 to the subordinate certificates in the
deal.
The securitization is originated by Residential Funding
Corporation -- RFC -- and the loans are backed by one pool of
fixed-rate and one pool of adjustable-rate subprime mortgage
loans. The ratings are based primarily on the credit quality of
the loans backing the certificates, and on the protection from
subordination, overcollateralization, and excess spread.
RFC, the transaction's master servicer, is rated SQ1 Moody's
highest master servicer rating.
The complete rating actions are:
Issuer: RASC Series 2004-KS12 Trust
Securities: Home Equity Mortgage Asset-Backed Pass-Through
Certificates, Series 2004-KS12
* Class A-I-1, $103,546,000, rated Aaa
* Class A-I-2, $107,140,000, rated Aaa
* Class A-I-3, $6,564,000, rated Aaa
* Class A-II-1, $195,525,000,rated Aaa
* Class A-II-2, $21,725,000, rated Aaa
* Class M-1, $48,400,000, rated Aa2
* Class M-2, $27,500,000, rated A2
* Class M-3, $8,250,000, rated A3
* Class M-4, $7,700,000, rated Baa1
* Class M-5, $6,050,000, rated Baa2
* Class M-6, $3,850,000, rated Baa3
* Class B, $5,500,000, rated Ba1
RCN CORPORATION: Administrative Claims Bar Date is Jan. 24
----------------------------------------------------------
All requests for payment of administrative expenses that accrued
beginning May 27, 2004, against RCN Corporation and its
debtor-affiliates must be filed before 4:00 p.m. on Jan. 24, 2005.
Administrative claim requests must be filed with the Court
together with a proof of service at http://www.nysb.uscourts.gov
with a hard copy delivered to the chambers of:
U.S. Bankruptcy Judge
Southern District of New York
Alexander Hamilton Customs House
One Bowling Green
New York, New York 10004-1408
and a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Attn: D.J. Baker, Esq.
Four Times Square
New York, New York 10036-6522
Judge Robert D. Drain approved RCN's Joint Plan of Reorganization
on Dec. 8, 2004. As previously reported, the Plan converted
approximately $1.2 billion in unsecured obligations into 100% of
new equity, and eliminated approximately $1.8 billion in preferred
share obligations.
RCN's emergence financing was comprised principally of borrowings
under a new senior secured financing facility syndicated by
Deutsche Bank AG Cayman Islands Branch in the amount of
$330 million. In addition, RCN issued $125 million of convertible
second-lien notes to certain investors and holders of the
company's prepetition bond obligations. The proceeds from the
Deutsche Bank facility and the convertible second-lien notes were
primarily utilized to pay in full-secured indebtedness held by a
syndicate of lenders led by JPMorgan Chase Bank.
RCN also completed the acquisition of PEPCO's 50% stake in the
StarPower Communications, LLC, joint venture, enabling RCN to take
full ownership of the Washington, D.C., market for bundled
telephone, cable television and high-speed Internet services.
Headquartered in Princeton, New Jersey, RCN Corporation --
http://www.rcn.com/-- provides bundled Telecommunications
services. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on
May 27, 2004. The Debtors' confirmed chapter 11 Plan took effect
on December 21, 2004. Frederick D. Morris, Esq., and Jay M.
Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed
$1,486,782,000 in assets and $1,820,323,000 in liabilities.
RCN CORPORATION: Paul Tudor Jones Discloses 19% Equity Stake
------------------------------------------------------------
Paul Tudor Jones, II, is the Chairman and Chief Executive Officer
of Tudor Investment Corporation of which he owns a majority of
the capital stock and voting securities.
Tudor Investment Corporation is a money management firm that
provides investment advice to The Tudor BVI Global Portfolio
Ltd., The Raptor Global Portfolio Ltd. and The Altar Rock Fund
L.P., among others. Tudor Investment is also the sole general
partner of Altar Rock.
Each of BVI, Raptor and Altar Rock is an investment fund, which
principally invests in debt, equity, derivative securities and
other financial instruments for the benefit of the holders of its
partnership, stock and other capital securities.
Tudor Proprietary Trading, L.L.C., is a proprietary trading
vehicle, which principally invests in debt, equity, derivative
securities and other financial instruments for the benefit of the
holders of its capital securities.
Because Tudor Investment is sole general partner of Altar Rock
and provides investment advisory services to BVI, Raptor and
Altar Rock, Tudor Investment may be deemed to beneficially own
the shares of Common Stock and New Notes owned by each Tudor
Party.
Because Mr. Jones is the controlling shareholder of Tudor
Investment and the indirect principal equity owner of Tudor
Proprietary, Mr. Jones may be deemed to beneficially own the
shares of Common Stock and New Notes deemed beneficially owned by
each Tudor Party. Mr. Jones may be deemed to beneficially own
6,981,507 shares of RCN Corporation Common Stock, which represents
19% of the total outstanding shares of RCN Common Stock.
Acquisition of Common Stock
On December 21, 2004, the Joint Plan of Reorganization of RCN
Corporation and certain subsidiaries under Chapter 11 of the
United States Bankruptcy Code became effective and the Company,
together with its affiliated debtors and debtors-in-possession,
emerged from reorganization proceedings under the Bankruptcy
Code.
Pursuant to the Plan, on the Effective Date, all of the then
existing securities of the Company were extinguished and deemed
cancelled. In accordance with the Plan, the holders of certain
outstanding indebtedness of the Company received, in exchange for
that indebtedness, shares of Common Stock of the Company.
In addition, in accordance with the Plan, among other things, on
the Effective Date the Company issued $125,000,000 aggregate
principal amount of its 7.375% Convertible Second-Lien Notes due
2012 under an Indenture, dated as of December 21, 2004, by and
among the Company and HSBC Bank USA, National Association. At
the election of the holders, the New Notes are immediately
convertible into Common Stock at a conversion price of $25.16 per
Share, subject to adjustment.
By virtue of their ownership of the Old Notes, on the Effective
Date, each of BVI, Tudor Proprietary, Raptor and Altar Rock
received, as a result of the Plan, shares of Common Stock. The
holders of the Old Notes initially received these distributions
of Common Stock per $1,000 principal amount of the Old Notes:
29.517439 Shares per $1,000 principal amount of the 10% Notes
29.714069 Shares per $1,000 principal amount of the 11 1/8% Notes
29.958631 Shares per $1,000 principal amount of the 9.80% Notes
29.027296 Shares per $1,000 principal amount of the 11% Notes
Specifically, the Tudor Parties received:
Party Shares of Common Stock
----- ----------------------
BVI 1,016,700
Tudor Proprietary 544,691
Raptor 4,571,423
Altar Rock 50,242
In addition, the Tudor Parties purchased New Notes:
Party Principal Value of New Notes
----- ----------------------------
BVI $3,303,000
Tudor Proprietary $1,770,000
Raptor $14,853,000
Altar Rock $163,000
As of December 30, 2004, the New Notes held by the Tudor Parties
are convertible shares of Common Stock:
Party Shares of Common Stock
----- ----------------------
BVI 131,280
Tudor Proprietary 70,350
Raptor 615,041
Altar Rock 6,479
Assuming conversion by each of BVI, Tudor Proprietary, Raptor and
Altar Rock of the New Notes, the Reporting Persons hold
approximately:
Party Percentage of Shares Held
----- -------------------------
BVI 3.1%
Tudor Proprietary 1.7%
Raptor 14.0%
Altar Rock 0.2%
In addition, as part of the Plan, the Company held back certain
shares of Common Stock otherwise distributable to the holders of
the Old Notes in the event that the Company is required to
satisfy certain contingent obligations. It is not known when or
if that Common Stock will ultimately be distributed to the
holders of the Old Notes. As of December 30, 2004, and pending
release of the held back Shares, the Tudor Parties have the right
to receive additional shares of Common Stock:
Party Shares of Common Stock
----- ----------------------
BVI 130,817
Tudor Proprietary 70,084
Raptor 588,197
Altar Rock 6,464
Assuming that the Tudor Parties receive those Shares in full,
following receipt of those Shares, they will hold:
Party Percentage of Shares Held
----- -------------------------
BVI 3.5%
Tudor Proprietary 1.9%
Raptor 15.6%
Altar Rock 0.2%
As of December 30, 2004, the Tudor Parties are deemed to
beneficially own these shares of Common Stock
Shares of
Party Common Stock Percentage
----- ------------ ----------
Paul Tudor Jones, II 6,981,507 19.0%
Tudor Investment Corporation 6,366,466 17.3%
The Raptor Global Portfolio Ltd. 5,161,765 14.0%
The Tudor BVI Global Portfolio Ltd. 1,147,980 3.1%
Tudor Proprietary Trading, L.L.C. 615,041 1.7%
The Altar Rock Fund L.P. 56,721 0.2%
Registration Rights Agreement
Each of BVI, Tudor Proprietary, Raptor and Altar Rock has entered
into a registration rights agreement, dated as of December 21,
2004, with RCN. Subject to certain limitations, the Company is
required to file with the Securities and Exchange Commission a
"shelf" registration statement with respect to the Common Stock
owned by the Reporting Persons for an offering to be made on a
continuous basis pursuant to Rule 415 promulgated under the
Securities Act of 1933, as amended, and to keep that registration
effective.
Headquartered in Princeton, New Jersey, RCN Corporation --
http://www.rcn.com/-- provides bundled Telecommunications
services. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on
May 27, 2004. The Debtors' confirmed chapter 11 Plan took effect
on December 21, 2004. Frederick D. Morris, Esq., and Jay M.
Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed
$1,486,782,000 in assets and $1,820,323,000 in liabilities. (RCN
Corp. Bankruptcy News, Issue No. 18; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
SAAN STORES: Obtains Court Order for CCAA Protection
----------------------------------------------------
SAAN Stores Ltd. sought and obtained a Court order for protection
under the Companies' Creditors Arrangement Act. The shares of
SAAN were acquired from Winnipeg based Gendis, Inc., the former
parent company of SAAN.
Historical Deterioration in SAAN Sales and Profitability
The financial performance of SAAN has been impaired by penetration
into its markets, including its core rural markets, by competitors
such as Wal-Mart and Giant Tiger and the resultant change in
consumer shopping patterns. These changes in the Canadian retail
dynamic are a primary factor in the significant deterioration in
sales and profitability experienced by SAAN over the last six
years of poor financial performance. SAAN has suffered with:
(1) weaker than anticipated sales;
(2) burdensome costs associated with the significant overhead
required to maintain the company's head office, warehousing
and other support systems;
(3) substantial costs associated with a number of unprofitable
and onerous contracts; and
(4) the lack of success of twenty-eight recently introduced,
new concept "power centres".
SAAN has accumulated net losses over this last six-year period,
combined with year-to-date losses, in excess of $47.7 million,
earning net profits in only two of the last six years.
SAAN's primary lender, Congress Financial Corporation (Canada),
owed approximately $17 million advanced pursuant to its first
ranking security over the inventory and accounts receivable of
SAAN, has expressed concern with respect to its outstanding debt
in the Company's current circumstances.
CCAA Protection Order for SAAN Sought and Granted
SAAN sought and obtained the CCAA protection, to facilitate a
reorganization of the Company. Pursuant to the Initial Order, RMS
Richter, Inc., has been appointed as the Monitor, an officer of
the Court, to monitor SAAN's affairs during the CCAA process. The
effect of the Initial Order is to stay SAAN's creditors from
enforcing their claims against the Company. It also provides a
means for SAAN to implement cost savings and to commence
negotiations with stakeholders, with a view to implementing a
restructuring through a plan of compromise and arrangement with
affected creditors.
The decision to seek protection under the CCAA was not one easily
made, but it ultimately was determined that it was responsible and
necessary if SAAN was to be restored as a viable and competitive
discount department store retailer on a national scale.
Proposed SAAN Restructuring
In order for SAAN to remain viable, the Company must rationalize
its current number of retail locations, which will require SAAN to
reduce the number of its stores, reduce its current number of
employees, and re-focus its operations in those markets where it
can be successful and profitable.
SAAN Liquidation Sale
It has been determined that the best option to ensure the survival
of SAAN is to engage the services of an agent to implement the
sale of the company's inventory by the end of March, 2005.
Accordingly, after undergoing a competitive bid process, SAAN has
entered into a liquidation Agency Agreement. The Agency Agreement
was approved by the Court as part of the Initial Order. The
inventory sale plan is an important part of SAAN's restructuring
process. The sale process will start immediately in all SAAN
stores and Red Apple Clearance Centres.
The Agency Agreement provides that SAAN immediately receive
between $25 and $26 million, part of which will be used to fully
repay the first ranking secured debt of approximately $17 million,
owing to Congress Financial Corporation (Canada). The Inventory
Plan is the only realistic method available to quickly realize
upon SAAN's inventory, allowing the Company to use the balance of
the monies received from the sale to continue the business and to
put forward a plan of compromise and arrangement to affected
creditors.
Restructuring Impact on SAAN Employees
The need to rationalize the number of SAAN stores will have
consequences for some SAAN employees. SAAN regrets this but it is
unavoidable if the core business is to be preserved.
The Benefits of the Proposed SAAN Restructuring
Once the inventory has been sold pursuant to the Inventory Sale
Plan, and SAAN has decided upon the retail locations it intends to
continue operating, the Company plans to restock all these
go-forward stores with new merchandise for sale commencing
April 2005.
Under the proposed SAAN Restructuring, the following benefits will
be derived:
-- SAAN will immediately be paid an estimated $25 million to
$26 million under the Inventory Sale Plan to assist in
financing the Company's restructuring process;
-- SAAN's senior secured creditor, Congress, will be fully re-
paid as required, avoiding a realization of its security;
-- SAAN will retain a significant number of store locations;
-- SAAN will retain the services of a number of employees, as
opposed to the result under a forced liquidation; and,
-- SAAN will preserve a number of important trade creditor and
supplier relations for going-forward operations.
SAAN's focus and priority through this restructuring process is to
emerge as a viable competitor in the discount department store
sector. The goal is for SAAN to emerge as a strong and
re-energized brand, with a national store and distribution
network, committed to its deeply rooted and loyal customer base
and the security of its dedicated employees.
It will be a challenging and sometimes very difficult undertaking
to revitalize the SAAN heritage and reputation for providing value
to communities and consumers across Canada.
SAAN Stores' turnaround objective can be achieved with the
majority of the Company's stakeholders sharing the vision of
reorganization and accepting compromise as the solution for
longer-term benefit.
Court related documents relating to the CCAA proceedings can be
found at http://www.blgcanada.com/saan
SARDONYX ASSOCIATES: U.S. Trustee Asks Court to Dismiss Case
------------------------------------------------------------
Felicia S. Turner, the U.S. Trustee for Region 21, asks the U.S.
Bankruptcy Court for the Middle District of Florida to dismiss the
bankruptcy case filed by Sardonyx Associates LP.
Ms. Turner presents four reasons why the Court should dismiss the
Debtor's bankruptcy case:
a) the Debtor has repeatedly delayed the filing of its previous
Monthly Operating Reports, and it has failed to file the
Reports for October and November 2004, and without those
reports, Ms. Turner is:
(i) unable to monitor the progress of the Debtor's
chapter 11 case, the Debtor's receipts, distributions
and related documents, and
(ii) unable to calculate the quarterly U.S. Trustee fees
owed by the Debtor;
b) the Debtor has not filed a Disclosure Statement and Plan of
Reorganization after its exclusive period to file a Plan
expired on December 21, 2004, and Ms. Turner believes
the Debtor will be unable to file a feasible Plan;
c) a state court allowed U.S. National Bank Association, one of
the Debtors' secured creditors and owed $4,800,000 by the
Debtor, to foreclose on its only primary asset, an assisted
living facility in Cape Coral, Florida after the Bankruptcy
Court granted U.S. National's motion for relief from the
automatic stay; and
d) since the Debtor's only principal asset and source of
revenue is gone, the Debtor has no more assets to satisfy
the claims of its creditors and rehabilitation or
reorganization is unlikely to happen.
Ms. Turner explains to the Court that these reasons demonstrate
bad faith on the part of the Debtor and constitute causes to
dismiss the Debtor's bankruptcy case under Section 1112(b) of the
Bankruptcy Code.
The Court will convene a hearing at 9:30 a.m., on Feb. 9, 2005, to
consider Ms. Turner's dismissal motion.
Headquartered in Pittsburgh, Pennsylvania, Sardonyx Associates,
filed for chapter 11 protection on August 23, 2004 (Bankr. M.D.
Fla. Case No. 04-08642). Albert H. Mickler, Esq. at Mickler &
Mickler, represents the Debtor in its restructuring efforts. When
the Debtor file for protection from its creditors, it listed
$5,381,000 in total assets and $6,577,203 in total debts.
SENIOR LIVING: Court to Hear ZC Settlement Agreement on Jan. 25
---------------------------------------------------------------
The Honorable Steven A. Felsenthal of the U.S. Bankruptcy Court
for the Northern District of Texas will convene a hearing on
Jan. 25, 2005, at 10:30 a.m. at 1100 Commerce Street, Courtroom 3
in Dallas, Texas to consider the settlement agreement between ZC
Specialty Insurance Company and Dan B. Lain, chapter 11 Trustee of
Senior Living Properties, LLC, Trust and its debtor-affiliates.
The Court will also consider issuing a permanent injunction
regarding the settlement agreement.
The Settlement Agreement settles all claims that ZC Specialty may
be liable for as a de facto partner of Senior Living Properties.
The Insurance company agrees to pay $47.5 million to the Trustee
in exchange for certain releases and injunctions in ZC's favor.
A full-text copy of the Settlement Agreement is available for free
at http://www.slptrust.com/or can be obtained through a written
or telephonic request to:
* the Trustee's counsel:
Jenkens & Gilchrist
Attn: Andrew E. Jillson, Esq.,
Lynnette R. Warman, Esq.
1445 Ross Avenue, Suite 3700
Dallas, Texas 75202
Tel: 214-855-4500, Fax: 214-855-4300
-- or --
* ZC's counsel:
Carrington Coleman Sloman & Blumenthal LLP
Attn: Fletcher L. Yarbrough, Esq.
Stephen A. Goodwin, Esq.
Jeffrey S. Levinger, Esq.
200 Crescent Court, Suite 1500
Dallas, Texas 75201
Tel: 214-855-3082, Fax: 214-855-1333
Senior Living Properties, LLC, with its principal offices
in Carmel, Indiana, was formed in 1998 and currently operates
48 skilled nursing and assisted living facilities in Texas and
24 skilled nursing facilities in Illinois. Like many other
health care facility operators, SLP was adversely affected by
changes in Medicare and Medicaid reimbursement, imposition of
regulatory penalties and personal injury litigation. As a result,
SLP filed for protection in the U.S. Bankruptcy Court on
May 14, 2002. SLP's confirmed chapter 11 plan was declared
effective on November 19, 2003, completing the Company's
emergence from bankruptcy.
SILICON VALLEY: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Silicon Valley Shelving & Equipment Company, Inc.
231 Charcot Avenue
San Jose, California 95131
Bankruptcy Case No.: 05-50225
Type of Business: The Debtor is a distributor of industrial
shelving, racks, mezzanines, handling equipment,
and ESD products including mats, straps,
flooring, and meters. See http://www.svseq.com/
Chapter 11 Petition Date: January 16, 2005
Court: Northern District of California (San Jose)
Judge: Arthur S. Weissbrodt
Debtor's Counsel: Henry B. Niles, III, Esq.
Law Offices of Henry B. Niles III
340 Soquel Avenue #105
Santa Cruz, California 95062
Tel: (831) 457-4545
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Intermetro Industries, Inc. Trade Debt $149,370
PO Box 100557
Pasadena, California 91189-0557
Kester Solder/ Trade Debt $140,494
Division of Litton Systems
1126 Paysphere Circle
Chicago, Illinois 60674
IAC Industries/ Trade Debt $99,384
Production Industries
895 Beacon Street
Brea, California 92821
Premier Metal Products Trade Debt $93,971
Company, Inc.
PO Box 671085
Dallas, Texas 75267-1085
Arlink Division of Arbell, Inc. Trade Debt $73,534
Penco Products Trade Debt $66,271
Tovar Industries Trade Debt $51,258
Cogan Wire and Metal Trade Debt $49,156
Products, Inc.
Desco Industries/ Trade Debt $46,895
CMG Division of Desco/Menda/
California Wire Products Trade Debt $46,507
Corporation
Heick's Cabinet Shop, Inc. Trade Debt $44,951
Techspray, Inc. Trade Debt $34,576
AKRO Mills/Myers International Trade Debt $34,484
Static Control Components, Inc. Trade Debt $32,754
High Point Control Trade Debt $30,316
Systems, Inc.
Tech Wear, Inc. Trade Debt $26,388
Clement Support Services, Inc. Trade Debt $25,605
Adanced Paper Systems, Inc. Trade Debt $24,530
Jergens, Inc. Trade Debt $23,351
Wildeck Trade Debt $22,456
STELCO INC: Court Extends Bid Deadline Until February 14
--------------------------------------------------------
The Superior Court of Justice (Ontario) has approved Stelco Inc.'s
(TSX:STE) application to amend the provisions of its capital
raising process.
At a hearing held Monday morning, the Court approved the Company's
application to extend the deadline for the filing of binding
offers for Stelco's core business, its non-core subsidiaries, or
both, 14 days to Feb. 14, 2005. The Court-appointed Monitor had
recommended approval of the extension on the basis of the high
level of interest shown in this process by prospective bidders and
the concern expressed by certain parties that the current timeline
may not provide enough time in which to conduct their due
diligence. The Monitor also cited the volume of work required to
assist parties engaged in this process.
The Court also authorized Stelco to admit two additional potential
bidders into the Stelpipe Ltd. sale process even though their
expressions of interest were submitted after the stated deadline
of Dec. 1, 2004. The Monitor had evaluated the proposals,
determined that it was in the best interests of Stelpipe and its
stakeholders to invite those late parties to participate in the
next phase of the process subject to Court approval, and had
recommended that the Company's application in this regard be
approved.
Hap Stephen, Stelco's Chief Restructuring Officer, said, "These
procedural adjustments will enhance the effectiveness of the due
diligence process as well as encourage well-informed and
competitive binding offers."
About Stelco
Stelco, Inc. -- http://www.stelco.ca/-- which is currently
undergoing CCAA restructuring proceedings, is a large, diversified
steel producer. Stelco is involved in all major segments of the
steel industry through its integrated steel business, mini-mills,
and manufactured products businesses. Consolidated net sales in
2003 were $2.7 billion.
STRAWBERRY POINT: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Strawberry Point Lutheran Home for the Aged
d/b/a NE IA Christian Retirement Community
313 Elkader Street
Strawberry Point, Iowa 52076-9004
Bankruptcy Case No.: 05-00155
Type of Business: The Debtor operates a nursing home.
Chapter 11 Petition Date: January 17, 2005
Court: Northern District of Iowa (Dubuque)
Debtor's Counsel: Michael P. Mallaney, Esq.
5015 Grand Ridge Drive, Suite 100
West Des Moines, Iowa 50265-5749
Tel: (515) 223-4567
Fax: (515) 223-8887
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Eastern Iowa Therapeutics $43,777
402 10th Street Southeast, Suite 700
Cedar Rapids, Iowa 52403
Swales, Earle $40,000
515 Park Avenue
Strawberry Point, Iowa 52076
ILTCRMA $38,906
Iowa State Bank Trust Department
612 Locust Street
Des Moines, Iowa 50309-3701
Northern Iowa Therapy, PC $38,586
118 1/2 East Bremer
Waverly, Iowa
Intelistaf Healthcare $36,843
Martin Brothers Distributing $32,018
Citizens State Bank $22,000
Strawberry Point Drug $18,796
Professional Staffing Services $18,396
Accessible Medical-Iowa $18,371
A-1 Staffing Solutions $16,270
MCKesson Medical Supply $14,511
Don & Walt, LLC $13,708
West Bank $13,000
Aquila $11,261
Gosling & Company PC $11,037
Wold, Don & Bernice $10,000
Hock, Albert & Martha $10,000
BCG Data Services $9,524
City of Strawberry Point $9,247
SUMMIT METALS: Creditors Must File Proofs of Claim by Feb. 15
-------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
set Feb. 15, 2005, at 4:00 p.m. as the deadline for all persons
and entities, owed money by Summit Metals, Inc., on account of
claims arising prior to Dec. 30, 1998, to file proofs of claim and
proofs of interest.
Creditors must file written proofs of claim on or before the
Feb. 15 Claims Bar Date and those forms must be delivered to:
Monzack and Monaco, PA
Attn: Francis A. Monaco, Jr.
1201 North Orange Street, Suite 400
Wilmington, Delaware 19801
Headquartered in Mountainside, New Jersey, Summit Metals, Inc.,
filed for chapter 11 protection on Dec. 30, 1998 (Bankr. D. Del.
Case No. 98-2870). Joanne B. Wills, Esq., at Klehr, Harrison,
Harvey, represents the Debtor in its restructuring efforts.
Francis A. Monaco, Jr., was appointed chapter 11 Trustee on
Sept. 17, 2004.
TEMBEC INC: Shareholders' Meeting Scheduled for January 20
----------------------------------------------------------
The annual meeting of shareholders of Tembec, Inc., will be held
on Thursday, January 20, 2005, at 11:00 A.M. at:
Omni Mont-Royal Hotel
ATRIUM Room
1050 Sherbrooke Street West
Montreal, Quebec H3A 2R6
The annual meeting of Tembec shareholders will be preceded by a
press briefing at 10:00 A.M. in the "Salon des Saisons" Ballroom
of the OMNI Mont-Royal Hotel. Frank A. Dottori, President and
Chief Executive Officer, and Michel Dumas, Executive Vice
President, Finance and Chief Financial Officer, will review the
corporate and financial activities of Tembec as at Sept. 25, 2004.
A video recording of the annual meeting of shareholders of Tembec
can be accessed as a delayed webcast after 4:00 P.M. on
January 20, 2005, via the Internet at http://www.tembec.com/in
the "Investor Relations" section.
Tembec is a leading integrated forest products company, well
established in North America and France. With sales of
approximately $4 billion and some 11,000 employees, it operates 50
market pulp, paper and wood product manufacturing units, and
produces chemicals from by-products of its pulping process.
Tembec markets its products worldwide and has sales offices in
Canada, the United States, the United Kingdom, Switzerland, China,
Korea, Japan, and Chile. The Company also manages 40 million
acres of forest land in accordance with sustainable development
principles and has committed to obtaining Forest Stewardship
Council -- FSC -- certification for all forests under its care by
the end of 2005. Tembec's common shares are listed on the Toronto
Stock Exchange under the symbol TBC. Additional information is
available at http://www.tembec.com/
* * *
As reported in the Troubled Company Reporter on Jan. 6, 2005,
Moody's Investors Service downgraded the senior implied, senior
unsecured and issuer ratings of Tembec Inc.'s key operating
subsidiary, Tembec Industries, Inc., to B2 from Ba3. The outlook
was changed to stable from negative.
As reported in the Troubled Company Reporter on Dec. 22, 2004,
Standard & Poor's Ratings Services lowered its long-term corporate
credit and senior unsecured ratings on Tembec, Inc., and its
subsidiary, Tembec Industries, Inc., to 'B' from 'BB-'. The
outlook is currently stable.
TEMBEC INC: Will Release First Quarter Results on January 20
------------------------------------------------------------
Tembec's first quarter results for the period ended Dec. 25, 2004,
will be released on January 20, 2005. Frank A. Dottori, President
and Chief Executive Officer and Michel Dumas, Executive Vice
President, Finance and Chief Financial Officer will be conducting
a conference call intended for financial analysts and
institutional investors.
The conference call is scheduled for Thursday, January 20, 2005,
at 4:00 p.m. (EST) and can be accessed on a listen-only basis:
-- Via the Iinternet at http://www.tembec.com/in the "Investor
Relations" section.
A recording of the conference call can be accessed after
6:00 p.m. (EST) on January 20, 2005;
-- Via recorded telephone call until midnight January 30, 2005,
at 1-800-408-3053 and by entering the password 3129286(pound
key).
Tembec is a leading integrated forest products company, well
established in North America and France. With sales of
approximately $4 billion and some 11,000 employees, it operates 50
market pulp, paper and wood product manufacturing units, and
produces chemicals from by-products of its pulping process.
Tembec markets its products worldwide and has sales offices in
Canada, the United States, the United Kingdom, Switzerland, China,
Korea, Japan, and Chile. The Company also manages 40 million
acres of forest land in accordance with sustainable development
principles and has committed to obtaining Forest Stewardship
Council -- FSC -- certification for all forests under its care by
the end of 2005. Tembec's common shares are listed on the Toronto
Stock Exchange under the symbol TBC. Additional information is
available at http://www.tembec.com/
* * *
As reported in the Troubled Company Reporter on Jan. 6, 2005,
Moody's Investors Service downgraded the senior implied, senior
unsecured and issuer ratings of Tembec, Inc.'s key operating
subsidiary, Tembec Industries, Inc., to B2 from Ba3. The outlook
was changed to stable from negative.
As reported in the Troubled Company Reporter on Dec. 22, 2004,
Standard & Poor's Ratings Services lowered its long-term corporate
credit and senior unsecured ratings on Tembec, Inc., and its
subsidiary, Tembec Industries, Inc., to 'B' from 'BB-'. The
outlook is currently stable.
TSI TELSYS: Taps Michael Gorham to Act as Chief Financial Officer
-----------------------------------------------------------------
TSI TelSys Corporation reported that Paul Sevigny, former Chief
Financial Officer, is no longer an employee of the Company.
Michael Gorham, VP for Business Development & Operations will act
as CFO until other arrangements are made.
Headquartered in Columbia, Maryland, TSI TelSys designs,
manufactures and markets high-performance data acquisition,
simulation and communication systems for the test range and
aerospace communities and provides related engineering services.
The Company has been a pioneer in utilizing reconfigurable
architectures (Adaptive Computing) for communications and data
processing, and has incorporated this technology into its product
line since 1996. The Company is a leader in providing multi-
mission satellite communications systems adaptable to virtually
any protocol format and that support data rates up to a gigabit
per second -- Gbps.
At September 24, 2004, TSI TelSys' balance sheet shows a
C$1,925,223 deficit, compared to a C$1,145,834 deficit at
December 26, 2003.
UAL CORP: Names Jeff Foland Vice President of North America Sales
-----------------------------------------------------------------
UAL Corporation, parent of United Airlines, named Jeff Foland as
its new vice president of North America Sales, effective
Feb. 1, 2005. Mr. Foland is joining United from ZS Associates,
where he is a principal at the global sales and marketing
consulting firm.
At United, Mr. Foland will lead the North America Sales
organization and oversee United's sales transformation strategy.
He will be based at United's world headquarters in Elk Grove
Village, Ill., and will report to Graham Atkinson, United's senior
vice president of Worldwide Sales and Alliances.
"We are delighted that Jeff has decided to join United," said
Mr. Atkinson. "This is an important time for our sales team and
our airline. Jeff is a high-caliber sales professional with
leadership and strategic expertise that will play a key role in
supporting our focus on corporate and travel management customers,
raising our sales organization to a new level and providing the
highest value and benefit for customers."
During his tenure at ZS Associates, Ms. Foland consulted with
sales organizations in more than a dozen industries and led large-
scale sales and marketing transformation initiatives. Prior to ZS,
he held positions at Detroit Diesel Corporation and General
Motors, Allison Gas Turbine Division.
"It is an exciting time to join the United team," said Mr. Foland.
"I am committed to ensuring that our sales organization performs
to the highest standards of sales excellence, working closely with
our customers to better understand their unique needs and
priorities, tailoring solutions that best align with those needs,
and ensuring delivery of our customer promise."
Mr. Foland has been a guest lecturer on sales organization topics
at both the Kellogg Graduate School of Management at Northwestern
University and the University of Chicago Graduate School of
Business, and has contributed to several books on sales force
performance and design. He holds a Bachelor of Science degree in
Mechanical Engineering from Purdue University and a Master of
Business Administration degree from the University of Michigan.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts.
UNITEDGLOBALCOM INC: Inks Merger Pact with Liberty Media
--------------------------------------------------------
Liberty Media International, Inc., (Nasdaq: LBTYA) and
UnitedGlobalCom, Inc., (Nasdaq: UCOMA) have reached an agreement
to combine the businesses under a single entity to be named
Liberty Global, Inc. Liberty Global will be one of the largest
owners and operators of broadband communications systems outside
the United States with ownership interests in companies serving
more than 14 million RGUs in 17 countries.
The merger will be accomplished as a result of a business
combination whereby each of LMI and UGC will become wholly owned
subsidiaries of a new holding company, Liberty Global, Inc. Each
issued and outstanding share of LMI common stock will be converted
into one share of the same series of common stock of Liberty
Global. Each issued and outstanding share of UGC common stock,
other than shares owned by LMI or its subsidiaries or by UGC, will
be exchanged into 0.2155 of a share of Series A common stock of
Liberty Global. A cash election alternative of $9.58 per UGC
share will be available to the UGC shareholders subject to
proration so that the amount of cash paid does not exceed 20% of
the total consideration received by the unaffiliated UGC
shareholders.
Liberty Global expects to have a 10-member board of directors with
five directors selected from each of the existing boards of
directors of LMI and UGC. Dr. John C. Malone will be the Chairman
of the Board of Directors and Mr. Michael T. Fries will assume the
post of President and Chief Executive Officer.
Given the substantial liquidity and free cash flow profile of the
combined company, the parties expect that Liberty Global's board
of directors will authorize a substantial stock repurchase program
following the combination. Any share repurchases would occur from
time to time in the open market or in privately negotiated
transactions, subject to market conditions.
John Malone, LMI's Chairman, President and CEO, stated, "As
demonstrated by the new name of our company, I view this
transaction as a merger of equals creating one of the largest
broadband services companies outside the United States." Dr.
Malone went on to say, "In a very short period of time, we have
disposed of non-strategic businesses and put in place a simplified
structure from which our operating businesses can focus on their
respective markets including Europe, Japan and Chile. From this
structure, I am confident that Mike Fries and the rest of the
management team can create value for our shareholders through
internal growth and prudent acquisitions."
Mike Fries, President and CEO of UGC, commented, "The benefits of
this transaction to both sets of shareholders are substantial.
Liberty Global will have one of the strongest balance sheets in
the industry, additional cash to pursue acquisitions and a
simplified and more liquid trading market for its stock. In
addition to rationalizing our respective interests in Chile and
clarifying future corporate opportunities, the deal also provides
UGC shareholders with an interest in the fast growing Japanese
market at an attractive valuation. We are very excited about the
global scale this transaction creates and the benefits that will
accrue to both parties. Lastly, the management teams from both
companies complement each other extremely well and are dedicated
to continuing our track record of 'best in class' growth."
The merger, which has been negotiated and approved by a special
committee of the independent directors of UGC, is subject to LMI
and UGC stockholder approval, which in the case of UGC will
include an affirmative vote of a majority of the shares not
beneficially owned by LMI and its affiliates, and other customary
consents and approvals. The transaction is expected to close in
the second quarter of this year.
LMI was advised by Banc of America Securities and Baker Botts LLP.
The UGC special committee was advised by Morgan Stanley and
Debevoise & Plimpton LLP.
In connection with the proposed transaction, LMI and UGC will file
a proxy statement/prospectus with the Securities and Exchange
Commission. Stockholders of each company and other investors are
urged to read the joint proxy statement/prospectus (including any
amendments or supplements to the joint proxy statement/prospectus)
regarding the proposed transaction when it becomes available
because it will contain important information. Stockholders will
be able to obtain a free copy of the joint proxy
statement/prospectus, as well as other filings containing
information about LMI and UGC, without charge, at
http://www.sec.gov/or by directing a request to:
Liberty Media International, Inc.
12300 Liberty Boulevard
Englewood, Colorado 80112
Attn: Investor Relations
Telephone: (877) 783-7676
-- or --
UnitedGlobalCom, Inc.
4643 South Ulster Street
Suite 1300
Denver, Colorado 80237
Attn: Investor Relations Department
Telephone: (303) 770-4001
Participants in Solicitation
The respective directors and executive officers of LMI and UGC and
other persons may be deemed to be participants in the solicitation
of proxies in respect of the proposed transaction.
About LMI
Liberty Media International, Inc. (Nasdaq: LBTYA - News, LBTYB -
News) owns interests in broadband distribution and content
companies operating outside the U.S., principally in Europe, Asia,
and Latin America. Through its subsidiaries and affiliates, LMI is
the largest cable television operator outside the United States in
terms of video subscribers. LMI's businesses include
UnitedGlobalCom, Inc., Jupiter Telecommunications Co., Ltd.,
Jupiter Programming Co., Ltd., Liberty Cablevision of Puerto Rico,
LLC and Pramer S.C.A.
Headquartered in Denver, Colorado, Old UGC, Inc.--
http://www.UnitedGlobalcom.com-- is one of the largest broadband
communications providers outside the United States and provides
full range of video, voice, high-speed Internet, telephone and
programming services. The Company filed for chapter 11 protection
on January 12, 2004 (Bankr. S.D.N.Y. Case No. 04-10156). David A.
Levine, Esq., at Cooley Godward, LLP, and Jay R. Indyke, Esq., at
Kronish Lieb Weiner & Hellman, LLP, represent the Debtors in their
restructuring efforts. When the Company filed for protection from
their creditors, they listed $846,050,022 in total assets and
$1,371,351,612 in total debts.
UNITED HOSPITAL: U.S. Trustee Picks 7-Member Creditors Committee
----------------------------------------------------------------
The United States Trustee for Region 2 appoints seven creditors to
serve on the Official Committee of Unsecured Creditors of
New York United Hospital Medical Center's chapter 11 case:
1. Sodexho Inc.
Attn: Dave Hayes
9801 Wachingtonian Blvd.
Law Dept., 12th Floor
Gathersburg, Maryland 20878
Phone: 781-372-6121
2. Allcare Nursing Services, Inc.
c/o ATC Healthcare, Inc.
Attn: David Savitsky
1983 Marcus Avenue
Lake Success, New York 11042
Phone: 516-750-1681
3. Consolidated Edison Company of New York, Inc.
Attn: Leon Z. Mener, Esq.
4 Irving Place
New York, New York 10583
Phone: 212-460-2916
4. New York's Health and Human Services
Union 1199/SEIU, AFL-CIO
c/o Levy Ratner, P.C.
Attn: Ted Berkowitz
80 Eighth Avenue
New York, New York 10011
Phone: 212-627-8100
5. Pension Benefit Guaranty Corporation
Attn: Ralph L. Landy
1200 K Street, N.W.
Washington, D.C. 20005-4026
Phone: 202-326-4020
6. Medical Billing Resources, Inc.
Attn: Jerry Castoria
600 Bloomfield Avenue
Bloomfield, New Jersey 07003
Phone: 973-429-8082 ext. 7125
7. Castle Oil Corporation
Attn: Michael M. Meadvin
500 Mamaroneck Avenue
Harrison, New York 10528
Phone: 914-381-6508
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in Port Chester, New York, New York United Hospital
Medical Center is a 224-bed, community healthcare provider and a
member of the New York-Presbyterian Healthcare System, serving
several Westchester communities, including Port Chester, Rye,
Mamaroneck, Rye Brook, Purchase, Harrison and Larchmont. The
Company filed for chapter 11 protection on December 17, 2004
(Bankr. S.D.N.Y. Case No. 04-23889). Lawrence M. Handelsman,
Esq., at Stroock & Stroock & Lavan LLP, represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed total assets of $39,000,000 and
total debts of $78,000,000.
US AIRWAYS: Court Extends Cash Collateral Period to June 30
-----------------------------------------------------------
As reported on the Troubled Company Reporter on Jan. 14, 2005,
US Airways Group, Inc., and the Air Transportation Stabilization
Board -- ATSB -- have reached an agreement that extends the
airline's use of cash proceeds from its federally guaranteed loan
through June 30, 2005, paving the way for the airline to continue
operations while it completes its restructuring and planned
emergence from Chapter 11 this summer.
Judge Mitchell of the U.S. Bankruptcy Court for the Eastern
District of Virginia extends the Supplemental Cash Collateral
Period through June 30, 2005. US Airways, Inc., and its
debtor-affiliates may use the Cash Collateral to pay the ordinary
and reasonable expenses of operating their businesses and to pay
professional and other administrative expenses.
The ATSB Lender Parties are granted adequate protection:
(a) Interest, Fees and Costs: The Debtors will pay the ATSB
Lender Parties all current interest, fees and reasonable
charges accruing or payable under the Loan Agreement.
(b) Replacement Collateral and Replacement Liens: The Debtors
grant, assign and pledge to the Collateral Agent, for the
ratable benefit of the ATSB Lender Parties, valid,
perfected and enforceable liens and security interests in
all property of the Debtors in which the Collateral Agent
does not hold a valid, enforceable and perfected Lien or
security interest.
(c) Automatic Perfection of Replacement Liens: The Replacement
Liens granted under previous Orders will be valid,
perfected, and enforceable against the Replacement
Collateral as of the Petition Date.
(d) Priority of Replacement Liens: The Replacement Liens will
be subordinate in priority to any liens, security interests
and other encumbrances, or those that attach to the
Replacement Collateral that are valid, perfected,
enforceable and unavoidable.
(e) Super-Priority Administrative Expense Claim: The ATSB Loan
Obligations are granted status as an administrative expense
claim pursuant to Section 507(b) of the Bankruptcy Code,
with priority over all other administrative expense claims.
(f) Professional Compensation Procedures: Every month, the
Debtors will pay reasonable fees, charges, expenses and
other amounts incurred or accrued, by the ATSB Lender
Parties or the Loan Administrator.
(h) Financial Covenants:
(1) Minimum Unrestricted Cash: The Debtors covenant
with the Lenders to maintain Unrestricted Cash in
amounts:
(A) measured as of the close of business Friday of
each week, not less than the weekly minimum of
Unrestricted Cash:
Weekly Minimum
For the Week Ending Unrestricted Cash
------------------- -----------------
01/21/05 $502,000,000
01/28/05 $498,000,000
02/04/05 $417,000,000
02/11/05 $369,000,000
02/18/05 $369,000,000
02/25/05 $371,000,000
03/04/05 $325,000,000
03/11/05 $325,000,000
03/18/05 $325,000,000
03/25/05 $380,000,000
04/01/05 $325,000,000
04/08/05 $326,000,000
04/15/05 $330,000,000
04/22/05 $342,000,000
04/29/05 $333,000,000
05/06/05 $338,000,000
05/13/05 $331,000,000
05/20/05 $342,000,000
05/27/05 $352,000,000
06/03/05 $332,000,000
06/10/05 $362,000,000
06/17/05 $381,000,000
06/24/05 $374,000,000
06/30/05 $341,000,000
(B) measured as of the close of business of each day
from and after January 15, 2005, through the end
of the Supplemental Cash Collateral Period, not
less than $300,000,000.
The Debtors may not have more than $35,000,000 in
deposit, investment or other accounts.
(2) Minimum EBITDAR: The Debtors will have a cumulative
Consolidated EBITDAR for each of the rolling four-
month periods of not less than:
Minimum Cumulative
Period Consolidated EBITDAR
------ --------------------
Sept. 2004 - Dec. 2004 ($171,400,000)
Oct. 2004 - Jan. 2005 ($192,700,000)
Nov. 2004 - Feb. 2005 ($242,900,000)
Dec. 2004 - Mar. 2005 ($238,500,000)
Jan. 2005 - Apr. 2005 ($84,700,000)
Feb. 2005 - May 2005 $103,100,000
(3) Maximum Capital Expenditures: The Debtors may not
make any Capital Expenditures if all Capital
Expenditures during the four-month rolling period
exceed:
Period Maximum CapEx
------ -------------
09/01/04 - 12/31/04 $25,000,000
10/01/04 - 01/31/05 $30,000,000
11/01/04 - 02/28/05 $32,500,000
12/01/04 - 03/31/05 $32,500,000
01/01/05 - 04/30/05 $32,500,000
02/01/05 - 05/31/05 $32,500,000
(i) Utilization of Slots: The Debtors will utilize Slots
consistent with the Slot Regulations and will not lease out
any Slots.
(j) Utilization of Gates and Gate Leases: The Debtors will
utilize Gates and Gate Leases so as to avoid termination,
rejection, revocation or loss of the right to use any Gates
or Gate Leases.
(k) Maintenance of Accounts: The Debtors will maintain their
cash management system similarly as of the Petition Date.
(l) No Surcharge on Collateral: Except for the Carve-Out, no
party will assert a claim for costs or expenses of the
administration of any of these Cases.
(m) Access to Books, Records and Premises: Upon notice by the
ATSB Lender Parties, the Loan Administrator, or the
Financial Advisor, the Debtors will permit access to their
books and records.
(n) Asset Sales: The Debtors will remit the proceeds of any
asset sales to the ATSB Lender Parties.
(o) Plan Negotiations: The Debtors will negotiate the ATSB
Lender Claims with the ATSB Lender Parties under a plan of
reorganization.
Carve-Out
The Super-Priority Claim and Replacement Liens for the benefit of
the ATSB Lender Parties will be subject and subordinate to the
payment of:
-- unpaid professional fees and disbursements; and
-- expenses of the Official Committee of Unsecured Creditors
and the Official Committee of Retirees appointed pursuant
to Section 1114 of the Bankruptcy Code.
The Carve-Out may not exceed $5,000,000.
Hearing on June 23
Judge Mitchell will convene a hearing on June 23, 2005, at 9:30
a.m. to consider any extension of the Supplemental Cash
Collateral Period, and the terms and conditions of the Debtors'
use of Cash Collateral and their use, sale or lease of the other
Prepetition Collateral during the Extended Supplemental Cash
Collateral Period.
Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:
* US Airways, Inc.,
* Allegheny Airlines, Inc.,
* Piedmont Airlines, Inc.,
* PSA Airlines, Inc.,
* MidAtlantic Airways, Inc.,
* US Airways Leasing and Sales, Inc.,
* Material Services Company, Inc., and
* Airways Assurance Limited, LLC.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts. In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue
No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000)
USG CORPORATION: Results of Status Conference with Judge Conti
--------------------------------------------------------------
During the status conference held on December 21, 2004, before
Judge Joy Flowers Conti of the U.S. District Court for the
District of Delaware, USG Corporation and its debtor-affiliates,
the Official Committee of Unsecured Creditors, the Official
Committee of Asbestos Personal Injury Claimants, the Futures
Representative, and the Official Committee of Asbestos Property
Damage Claimants, among other parties-in-interest, discussed:
(1) General status with respect to the Debtors' cases,
including a status report on related matters currently
pending before Judge Fitzgerald:
* Asbestos PI Committee and Futures Representative's
request to terminate the Debtors' exclusive right to
propose a plan of reorganization -- and the terms of the
plan they intend to propose if their motion is granted;
* the Debtors' request to extend their Exclusive Periods,
and the response of the Official Committee of Unsecured
Creditors;
* the Debtors' Declaratory Judgment Action to limit
asbestos liability to US Gypsum Co.;
* establishment of the Debtors' value, collectively and
as individual entities; and
* proposal to return the estimation aspect of the case, as
to which Judge Wolin had informally withdrawn the
reference, to Judge Fitzgerald;
(2) Report on the results of mediation efforts;
(3) The Debtors' Case Management Statement regarding Asbestos
Personal Injury Estimation, dated December 7, 2004;
(4) The Debtors' motion for a Case Management Order for
Substantive Estimation Hearings, dated June 21, 2002;
(5) The Debtors' motion for a declaration with respect to
voting rights of certain putative "claimants", dated
August 21, 2002, and the Creditors Committee's joinder in
that motion, dated August 30, 2002; and
(6) The motion of the Official Committee of Asbestos Property
Damage Claimants for a Case Management Order with respect
to all asbestos issues, filed on October 21, 2004, and the
joint objection and response of the Asbestos PI Committee
and the Futures Representative.
Proper Forum on Asbestos Matters
The District Court stated that it "believes that Judge Wolin's
intent was to withdraw the reference with respect to the
estimation of personal injury claims and also on the matter with
respect to the voting rights" of medically unimpaired asbestos
claimants. As a result, the District Court ruled that those two
matters are before it and will proceed there, subject to the
party's right to seek to have them referred back to the Bankruptcy
Court.
Subsequent to the status conference, Judge Conti formalized her
statements by entering two orders officially withdrawing the
reference on those two issues to the District Court and directing
the clerk of the court to establish separate civil action numbers
for those matters.
In accordance to the PD Committee's request that all asbestos
property damage issues and all asbestos personal injury matters be
heard in the same court, Judge Conti stated that, if the PD
Committee wanted asbestos property damage issues to be heard in
the District Court, it would have to file in the District Court a
motion to withdraw the reference.
"If you're already teed up before Judge Fitzgerald and that
procession is moving, you should weigh that in whether or not you
really wish to have the reference withdrawn and get caught up in
the strictures of a District Court proceeding with all that is
attendant to that," Judge Conti noted.
Asbestos Personal Injury Estimation Proceedings
Judge Conti instructed the parties to meet with each other and
attempt to agree on "decisional trees" with proposed discovery
plans that will set forth a process for the estimation of the
asbestos personal injury liability before the District Court. The
decisional trees are intended to assist Judge Conti in determining
"what decisions [the] Court needs to make and how that will affect
other decisions in the case" and "what decisions have to be made
in what sequence."
The Court also indicated that the parties would need to meet and
confer on discovery and think about whether at some point in the
estimation proceeding it would be appropriate for the parties to
attempt mediation again.
District Court Schedule
The District Court set these schedules:
(i) The parties' "decisional trees" and any motions regarding
withdrawal of the reference must be filed with the
District Court by February 11, 2005.
(ii) Responses to any filings are due by March 11, 2005.
(iii) Judge Conti will hold the next hearing on the asbestos
personal injury estimation and the other matters before
her on March 31, 2005.
Headquartered in Chicago, Illinois, USG Corporation
-- http://www.usg.com/-- through its subsidiaries, is a leading
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes. The Company filed
for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No.
01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at
Jones Day, represent the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $3,252,000,000 in assets and $2,739,000,000 in debts.
(USG Bankruptcy News, Issue No. 78; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
USGEN NEW ENGLAND: Judge Mannes Approves Rockingham Consent Decree
------------------------------------------------------------------
On July 23, 2004, after a vigorously contested adversary
proceeding, the U.S. Bankruptcy Court for the District of Maryland
approved a Consent Decree compromising the claims of the Town of
Rockingham, Vermont against USGen New England, Inc., through the
terms of an Option Agreement.
Subsequently, USGen sought and obtained the Court's permission to
enter into an Asset Purchase Agreement for its hydroelectric
facilities with TransCanada Hydro Northeast, Inc. In the
Purchase Agreement, TransCanada agreed to be bound by the terms
of USGen's contracts relating to its hydroelectric facilities,
including expressly, the Option Agreement.
Rockingham is arranging for a $72,046,000 funding, but there are
unanticipated wrinkles in proceeding. While there is an
assignment provision that allows assignment of the Option
Agreement to a Vermont state agency, the agency named in the
Option Agreement -- Vermont Public Power Supply Authority --
cannot participate. However, another Vermont state agency --
Vermont HydroElectric Power Authority -- can and is willing to
participate in a transaction that would secure the funding.
A second issue involves return of the $72,046,000 deposit from
the escrow agent under the Option Agreement, in the event the
Option Agreement is exercised, but, for any reason, Rockingham
fails later to close. Rockingham has asked USGen to consent to
minor changes to the Option Agreement to address the concerns,
but USGen, citing fear of claims by TransCanada under the
Purchase Agreement, has declined.
At Rockingham's behest, the Court orders that the substitution of
the Vermont HydroElectric for the Vermont Public Power Supply
does not constitute a material modification of the Option
Agreement. Rockingham may, if need be, assign the Option
Agreement to Vermont HydroElectric for the purposes set forth in
the Option Agreement.
Furthermore, Judge Mannes rules that TransCanada's consent to the
modification is not required under, and the Substitution and
Assignment will not constitute a breach of, the Purchase
Agreement.
Headquartered in Bethesda, Maryland, USGen New England, Inc., an
affiliate of PG&E Generating Energy Group, LLC, owns and operates
several electric generating facilities in New England and
purchases and sells electricity and other energy-related products
at wholesale. The Debtor filed for Chapter 11 protection on
July 8, 2003 (Bankr. D. Md. Case No. 03-30465). John E. Lucian,
Esq., Marc E. Richards, Esq., Edward J. LoBello, Esq., and Craig
A. Damast, Esq., at Blank Rome, LLP, represent the Debtor in its
restructuring efforts. When it sought chapter 11 protection, the
Debtor reported assets amounting to $2,337,446,332 and debts
amounting to $1,249,960,731.
W.R. GRACE: U.S. Government Wants Disclosure Statement Disapproved
------------------------------------------------------------------
The United States Government tells the U.S. Bankruptcy Court for
the District of Delaware that the description of the proposed
treatment of environmental claims related to asbestos cleanup in
the Disclosure Statement filed by W.R. Grace & Co., and its
debtor-affiliates is unclear and ambiguous. The Government has
asserted general unsecured claims against the Debtors based on
Section 107(a) of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. Section
9607(a), and other statutory provisions as a result of releases
and threatened releases of asbestos at sites at which the Debtors
are an owner or operator, either currently or historically.
Other creditors have claims against the Debtors for contamination
under Section 113 of CERCLA, and 42 U.S.C. Section 9613. The
Disclosure Statement properly suggests that the environmental
claims are general unsecured claims and treated as Class 9 General
Unsecured Claims. However, environmental claims related to the
cleanup of asbestos associated with the Debtors' vermiculite mine
in Libby, Montana also appear to fit within the definition of
"Asbestos PD Claim," as defined in the Disclosure Statement.
Treating the environmental claims as Asbestos PD Claims is
inconsistent with other provisions of the Disclosure Statement,
and, the Government understands, the Debtors' intent. As a
result, the Disclosure Statement does not provide an adequate
basis for the Government or the other creditors to make informed
decisions about the Plan.
Accordingly, the United States Government asks the Court not to
approve the Debtors' Disclosure Statement.
Headquartered in Columbia, Maryland, W.R. Grace & Co., --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally. The Company and its
debtor-affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at
Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in
their restructuring efforts. (W.R. Grace Bankruptcy News, Issue
No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000)
W.R. GRACE: Everest Says Disclosure Statement is Inadequate
-----------------------------------------------------------
Everest Reinsurance Company and Mt. McKinley Insurance Company
issued or allegedly issued to W.R. Grace & Co., and its
debtor-affiliates certain excess liability insurance policies.
The Debtors previously sought coverage under the Everest-Mt.
McKinley Policies with respect to asbestos-related personal injury
and property damage claims asserted against them. Everest, Mt.
McKinley, and the Debtors disputed the scope of coverage available
under the alleged policies, and litigation ensued.
In October 1993, the parties resolved their coverage dispute and
entered into a confidential settlement agreement. In exchange for
payment of significant sums by Everest and Mt. McKinley, the
Debtors agreed, among other things, to the "cancellation of any
and all coverage for Asbestos-Related Claims." The settlement
agreement broadly defined "Asbestos-Related Claims" as claims and
lawsuits asserted by or on behalf of persons alleging:
(i) bodily injury sickness, disease and death as a result of
an exposure to asbestos; and
(ii) damages for injury or damage to buildings and property
allegedly caused by asbestos or asbestos-containing
materials.
The Debtors specifically released Everest and Mt. McKinley from
all claims "in any way relating to the payment or handling of
Asbestos-Related Claims under the Policies."
Pursuant to the settlement agreement, Everest and Mt. McKinley
agreed to make certain payments to the Debtors over time,
commencing in 1994 and ending in 1999. Everest and Mt. McKinley
have fully performed all of their obligations under the agreement.
Everest and Mt. McKinley assert that the Disclosure Statement
fails to meet the requirements of Section 1125 of the Bankruptcy
Code in so far as it misleadingly suggests that insurance policies
issued by Everest and Mt. McKinley to the Debtors potentially
provide coverage for asbestos claims against the Debtors. Because
the Disclosure Statement suggests that certain coverage does or
may exist notwithstanding the Debtors' release of coverage rights,
the Disclosure Statement is misleading and fails to provide
"adequate information." Hence, the Disclosure Statement should be
disapproved by the U.S. Bankruptcy Court for the District of
Delaware unless it is first amended to either delete all
references to the Everest and Mt. McKinley released policies or
expressly state that coverage for asbestos-related claims is no
longer available to pay asbestos claims under those policies.
Headquartered in Columbia, Maryland, W.R. Grace & Co., --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally. The Company and its
debtor-affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at
Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in
their restructuring efforts. (W.R. Grace Bankruptcy News, Issue
No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000)
W.R. GRACE: BMW Constructors Says Claim is Secured
--------------------------------------------------
Prior to the bankruptcy filing of W.R. Grace & Co., and its
debtor-affiliates , BMW Constructors, Inc., entered into an
agreement with the Debtors where BMW agreed to supply labor and
materials for improvements at one of the Debtors' retail stores at
5215 Kennedy Avenue in East Chicago, Indiana. The property where
the improvements were made is owned by E I Du Pont De Nemours &
Co.
On May 29, 2001, BMW recorded a Notice of Intention to Hold
Mechanic's Lien with the Lake County Recorder in Indiana. The
Notice of Intention was served on E I Du Pont, at its Wilmington,
Philadelphia and East Chicago addresses. The Notice of Intention
was filed pursuant to Indiana Code Section 32-8-3-3, which
provides in pertinent part that "a person who wishes to acquire a
[mechanic's] lien upon any property, whether the claim is due or
not, shall file in the recorder's office of the county at any time
within ninety (90) days after performing labor or furnishing
materials."
On May 28, 2002, BMW asked the U.S. Bankruptcy Court for the
District of Delaware to lift the automatic stay so it could
maintain and enforce its Mechanic's Lien and foreclose on the
Debtors' interest in the property. On October 26, 2002, the Court
approved a stipulation resolving BMW's motion.
The Debtors' Disclosure Statement provides that secured claims
will be paid in their allowed amount. The Debtors estimate that
there are no allowed secured claims as of the effective date.
Pursuant to the BMW Stipulation, "BMW shall be allowed a secured
claim in the amount of $90,022.17, subject only to BMW filing a
Proof of Claim in such amount." On March 10, 2003, BMW filed a
Proof of Claim for $90,022.17.
Accordingly, BMW asks the Court not to approve the Disclosure
Statement to the extent that the Debtors represent that there are
no allowed secured claims as of the effective date.
Headquartered in Columbia, Maryland, W.R. Grace & Co., --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally. The Company and its
debtor-affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at
Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in
their restructuring efforts. (W.R. Grace Bankruptcy News, Issue
No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WEIRTON STEEL: DNI Has Until Jan. 21 to Transfer $524K from Sale
----------------------------------------------------------------
On June 22, 2004, the U.S. Bankruptcy Court for the Northern
District of West Virginia authorized the sale of certain
specified assets of Weirton Steel Corporation to DNI
International, Inc. However, DNI failed or refused to close on
the Sale. Thus, on December 6, 2004, the Weirton Steel
Corporation Liquidating Trustee asked the Court to terminate the
DNI Sale Agreement.
On December 28, 2004, the Court ruled from the bench that DNI had
until the end of business on January 13, 2005, to close on the
Sale. After that time, the Agreement would be terminated without
further Court order.
Since then, the Trustee has conducted ongoing conversations with
DNI. In reliance on the letter from DNI's ultimate customer, the
Trustee has agreed to extend the deadline of the Closing.
Accordingly, Judge Friend directs DNI or its ultimate purchaser
to close the sale by wire transfer of $524,000 to the Trustee's
account at The Huntington National Bank on or before 4:00 p.m.,
E.S.T., on January 21, 2005. Otherwise, the Agreement will be
terminated.
The Court directs the Trustee to file a notice with the Court by
January 26, 2005, indicating whether the Sale has closed.
Headquartered in Weirton, West Virginia, Weirton Steel Corporation
was a major integrated producer of flat rolled carbon steel with
principal product lines consisting of tin mill products and sheet
products. The company was the second largest domestic producer of
tin mill products with approximately 25% of the domestic market
share. The Company filed for chapter 11 protection on May 19,
2003 (Bankr. N.D. W. Va. Case No. 03-01802). Judge L. Edward
Friend, II administers the Debtors' cases. Robert G. Sable, Esq.,
Mark E. Freedlander, Esq., David I. Swan, Esq., James H. Joseph,
Esq., at McGuireWoods LLP, represent the Debtors in their
liquidation. Weirton sold substantially all of its assets to
Wilbur Ross' International Steel Group. Weirton's confirmed Plan
of Liquidation became effective on Sept. 8, 2004. (Weirton
Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
* Leonard Street Welcomes James Stein in Minneapolis Office
-----------------------------------------------------------
James A. Stein has joined Leonard, Street and Deinard as Of
Counsel in the firm's Minneapolis office. Mr. Stein will focus
his practice in the areas of commercial and business litigation,
corporate insurance law and telecommunications law.
Mr. Stein brings thirty years of experience in litigation,
regulatory and corporate counsel matters. Prior to joining the
firm, he was senior counsel and director of government affairs at
Onvoy, Inc., a Minneapolis-based provider of advanced
telecommunications solutions. While at Onvoy, Mr. Stein was
responsible for the management of litigation and regulatory
matters involving the telecommunications industry. He also
handled liability insurance issues and the execution of
legislative and government affairs strategies. Prior to Onvoy, he
was senior corporate counsel for the St. Paul Companies and
general counsel for the State Fund Mutual Insurance Company.
Leonard, Street and Deinard is Minnesota's third largest law firm,
with offices in Minneapolis, Saint Paul, St. Cloud and Mankato,
Minnesota, and in Washington, D.C. From its regional base,
Leonard, Street and Deinard serves clients throughout the United
States and world. The firm employs over 180 attorneys in more
than thirty practice areas and, since its founding in 1922, has
helped generations of clients achieve their business objectives
through astute legal advice complemented by good common sense.
Leonard, Street and Deinard is a proud member of TerraLex(R), a
global network of independent law firms in 93 countries. As the
exclusive Minnesota member, the firm can offer our clients access
to more than 10,000 attorneys from the 145 member firms. To learn
more about its tradition of exceptional service, visit Leonard,
Street and Deinard's Web site at http://www.leonard.com/
* Upcoming Meetings, Conferences and Seminars
---------------------------------------------
January 19, 2005
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February 9, 2005
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Due Diligence Symposium 2005
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February 10-12, 2005
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February 11, 2005
AMERICAN BANKRUPTCY INSTITUTE
Canadian-American Symposium on Cross Border Insolvency Law
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March 2-3, 2005
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27th Annual Current Developments in Bankruptcy &
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Bankruptcy Fundamentals: Nuts & Bolts for Young
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March 4, 2005
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12th Annual Bankruptcy Battleground West
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The Westin Century Plaza Hotel & Spa Los Angeles, Calif.
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March 9-12, 2005
TURNAROUND MANAGEMENT ASSOCIATION
2005 Spring Conference
JW Marriott Desert Ridge, Phoenix, Arizona
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March 10-12, 2005
AMERICAN BAR ASSOCIATION
Bench and Bar Bankruptcy Conference
Washington, DC
Contact: 800-238-2667-5147 or
http://www.abanet.org/jd/bankruptcy/
April 7-8, 2005
PRACTISING LAW INSTITUTE
27th Annual Current Developments in Bankruptcy &
Reorganization
San Francisco, CA
Contact: 1-800-260-4PLI; 212-824-5710 or info@pli.edu
April 13, 2005
TURNAROUND MANAGEMENT ASSOCIATION
Mediation in Turnarounds & Bankruptcies
Milleridge Cottage Long Island, NY
Contact: 312-578-6900 or http://www.turnaround.org/
April 14-15, 2005
BEARD GROUP AND RENAISSANCE AMERICAN MANAGEMENT CONFERENCES
The Sixth Annual Conference on Healthcare Transactions
Successful Strategies for Mergers, Acquisitions,
Divestitures and Restructurings
The Millennium Knickerbocker Hotel, Chicago
Contact: 1-800-726-2524; 903-595-3800 or
dhenderson@renaissanceamerican.com
April 28, 2005
AMERICAN BANKRUPTCY INSTITUTE
Bankruptcy Fundamentals: Nuts & Bolts for Young
Practitioners (East)
J.W. Marriott Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org/
April 28- May 1, 2005
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
J.W. Marriot, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org/
May 9, 2005
AMERICAN BANKRUPTCY INSTITUTE
New York City Bankruptcy Conference
Millenium Broadway New York, New York
Contact: 1-703-739-0800 or http://www.abiworld.org/
May 12-14, 2005
ALI-ABA
Fundamentals of Bankruptcy Law
Washington, D.C.
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org/
May 12-14, 2005
ALI-ABA
Fundamentals of Bankruptcy Law
Santa Fe, NM
Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/
May 13, 2005
AMERICAN BANKRUPTCY INSTITUTE
Bankruptcy Fundamentals: Nuts & Bolts for Young
Practitioners (N.Y.C.)
Association of the Bar of the City of New York, New York
Contact: 1-703-739-0800 or http://www.abiworld.org/
May 19-20, 2005
BEARD GROUP AND RENAISSANCE AMERICAN MANAGEMENT CONFERENCES
The Second Annual Conference on Distressed Investing Europe
Maximizing Profits in the European Distressed Debt Market
Le Meridien Piccadilly Hotel London UK
Contact: 1-800-726-2524; 903-595-3800 or
dhenderson@renaissanceamerican.com
May 23-26, 2005
AMERICAN BANKRUPTCY INSTITUTE
Litigation Skills Symposium
Tulane University Law School New Orleans, Louisiana
Contact: 1-703-739-0800 or http://www.abiworld.org/
June 2-4, 2005
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts, Taxation,
Drafting, Securities and Bankruptcy
Omni Hotel, San Francisco
Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/
June 9-11, 2005
ALI-ABA
Chapter 11 Business Reorganizations
Charleston, South Carolina
Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/
June 16-19, 2005
AMERICAN BANKRUPTCY INSTITUTE
Central States Bankruptcy Workshop
Grand Traverse Resort Traverse City, Michigan
Contact: 1-703-739-0800 or http://www.abiworld.org/
June 23-24, 2005
BEARD GROUP AND RENAISSANCE AMERICAN MANAGEMENT CONFERENCES
The Eighth Annual Conference on Corporate Reorganizations
Successful Strategies for Restructuring Troubled Companies
The Millennium Knickerbocker Hotel, Chicago
Contact: 1-800-726-2524; 903-595-3800 or
dhenderson@renaissanceamerican.com
July 14 -17, 2005
AMERICAN BANKRUPTCY INSTITUTE
Ocean Edge Resort, Brewster, Massachusetts
Contact: 1-703-739-0800 or http://www.abiworld.org/
July 27- 30, 2005
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Workshop
Kiawah Island Resort and Spa, Kiawah Island, S.C.
Contact: 1-703-739-0800 or http://www.abiworld.org/
September 8-11, 2005
AMERICAN BANKRUPTCY INSTITUTE
Southwest Bankruptcy Conference
(Including Financial Advisors/Investment Bankers Program)
The Four Seasons Hotel Las Vegas, Nevada
Contact: 1-703-739-0800 or http://www.abiworld.org/
September 26, 2005
AMERICAN BANKRUPTCY INSTITUTE
International Insolvency Workshop
Site to Be Determined London, England
Contact: 1-703-739-0800 or http://www.abiworld.org/
October 7, 2005
AMERICAN BANKRUPTCY INSTITUTE
Views from the Bench
Georgetown University Law Center Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org/
October 19-23, 2005
TURNAROUND MANAGEMENT ASSOCIATION
2005 Annual Convention
Chicago Hilton & Towers, Chicago
Contact: 312-578-6900 or http://www.turnaround.org/
November 2-5, 2005
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
Seventy Eighth Annual Meeting
San Antonio, Texas
Contact: http://www.ncbj.org/
December 1, 2005
AMERICAN BANKRUPTCY INSTITUTE
Bankruptcy Fundamentals: Nuts & Bolts for Young
Practitioners (West)
Hyatt Grand Champions Resort Indian Wells, California
Contact: 1-703-739-0800 or http://www.abiworld.org/
December 1-3, 2005
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Hyatt Grand Champions Resort, Indian Wells, Calif.
Contact: 1-703-739-0800 or http://www.abiworld.org/
March 30 - April 1, 2006
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts, Taxation,
Drafting, Securities, and Bankruptcy
Scottsdale, AZ
Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/
April 18-22, 2006
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
JW Marriott Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org/
June 15-18, 2006
AMERICAN BANKRUPTCY INSTITUTE
Central States Bankruptcy Workshop
Grand Traverse Resort Traverse City, Michigan
Contact: 1-703-739-0800 or http://www.abiworld.org/
July 13-16, 2006
AMERICAN BANKRUPTCY INSTITUTE
Northeast Bankruptcy Conference
Newport Marriott Newport, Rhode Island
Contact: 1-703-739-0800 or http://www.abiworld.org/
July 26-29, 2006
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Workshop
The Ritz Carlton Amelia Island Amelia Island, Florida
Contact: 1-703-739-0800 or http://www.abiworld.org/
October 11-14, 2006
TURNAROUND MANAGEMENT ASSOCIATION
2006 Annual Conference
Milleridge Cottage Long Island, NY
Contact: 312-578-6900 or http://www.turnaround.org/
November 30-December 2, 2006
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Hyatt Regency at Gainey Ranch Scottsdale, Arizona
Contact: 1-703-739-0800 or http://www.abiworld.org/
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via e-mail
to conferences@bankrupt.com are encouraged.
*********
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.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
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., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Dylan
Carlo Gallegos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie
Sabijon, Terence Patrick F. Casquejo and Peter A. Chapman,
Editors.
Copyright 2005. 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 $675 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.
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