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T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, October 7, 1997, Vol. 1, No. 32
Headlines
BIG RIVERS: Court Approves Goldman Sachs
BIG RIVERS: Seeks Oral Argument in Appeal
EXPRESS RESOR: Nordic Tour Operator Faces Bankruptcy
GREAT AMERICAN: Court Approves Lots Dispute
GREAT AMERICAN: Agrees to Amount of Claims
GREAT AMERICAN: Summit Bank Responds
GUANGZHOU SPECIAL: Bankrupt Steel Plant in China Sold
HOW INSURANCE: Paying 50 Percent on Direct Claims
LEVITZ: Seeks to Employ Grubb & Ellis
NOVATEK INTERNATIONAL: SEC Investigation,Creditor Suit
MAIDENFORM: Seeks Approval of Jay Alix
MAIDENFORM: Seeks Employee Retention Plan
PAYLESS CASHWAYS: Promissory Notes
POWERAGENT: Faces Bankruptcy or Buyout
RYMER FOODS: Issues New Common Stock
US ONE COMMUNICATIONS:Seeks Court Approval
WESTERN PACIFIC: Airlines Files for Chapter 11 Protection
Meetings, Conferences and Seminars
-----
BIG RIVERS: Court Approves Goldman Sachs
----------------------------------------
Goldman Sachs & Co. has been approved by the Court as
Investment Banker and Rating Agent for Big Rivers Electric
Corporation.
BIG RIVERS: Seeks Oral Argument in Appeal
-----------------------------------------
Big Rivers Electric Corporation, the Rural Utilities
Service, LG&E Energy Corp., The Chase Manhattan Bank , The
Bank of New York, Alcan Aluminum Corporation and NSA, Inc.
are requesting that the Court hear oral arguments in the
Appeal.
On June 9, 1997, the Bankruptcy Court entered the Order
Confirming the First Amended Plan of Reorganization.
PacifiCorp Kentucky Energy Company and PacifiCorp Power
Marketing, Inc. filed an Appeal seeking reversal of the
confirmation order on allegations that the plan was proposed
by a means forbidden by law, and does not comply with
requirements for confirmation as provided in the Bankruptcy
Code.
The Appellees maintain that oral arguments should be allowed
in this appeal for several reasons. First, the size of the
case and the complexities of the plan confirmation and the
record would best be clarified by the Court’s hearing from
and posing questions to counsel for the parties to the
Appeal. Second, the Court should hear oral argument because
the Appellees, all of whom have a stake in the outcome of
the Appeal, desire to be heard. In particular, the Rural
Utilities Service is holding secured claims in excess of
$1.1 billion. The Bank of New York and The Chase Manhattan
Bank hold unsecured claims in excess of $100 million, and
there is a great impact of this case on the public interest.
Big Rivers serves over 90,000 residential rate payers, each
of whom have an interest in the outcome of this proceeding.
EXPRESS RESOR: Nordic Tour Operator Faces Bankruptcy
-----------------------------------------------------
Express Resor, one of the biggest Nordic tour operators,
faces bankruptcy, according to Agence France Presse. Four
thousand Scandinavian tourists were stranded in Greece and
Turkey and the booked flights for 10,000 more people were
canceled last week after the Swedish civil aviation agency
withdrew Sunways AB's flight license for security lapses..
Sunways AB and Express Resor, a subsidiary of Turkey's
biggest tour operator Tursem, known for cheap flights to
sunny holiday sites, have been dragged down by debts and owe
$600,000 dollars in outstanding taxes to the state,
according to a report by the newspaper Dagens Nyheter.
Tursem, which last reported a turnover of $800 million, has
offices in Scandinavia, Britain, and Germany. It flies half
a million tourists to Turkey every year.
"Express Resor and its parent company Tursem collapsed,"
said Kemal Yamanlar, Express Resor managing director, in a
statement published by the Swedish news agency TT.
The operator said $30 million would be needed to refloat
Express Resor but Tursem had difficulties borrowing the
money from Turkish banks as promised Friday. "Without this
money, we will have to file for bankruptcy," Express Resor's
marketing director Greger Tandberg said.
GREAT AMERICAN: Court Resolves Lots Dispute
-------------------------------------------
The Bankruptcy Court has approved a Stipulation agreed to by
Praedium Phoenix LLC , the Official Committee of Unsecured
Creditors of Great American Recreation, Inc., the Official
Committee of Unsecured Creditors of Princeton-NY Parent,
Inc., the Debtors and The Mulvihill Entities.
In consideration of the sum of $1,820,000 Great Mountain
Development Corp. transferred to Diamond 92 building lots
(Lots) located in Great Gorge Village, and various of the
above-entitled parties raised objections to the validity of
the transfer of some of the Lots. The Parties have now
entered into an agreement concerning a consensual resolution
of the Lots Dispute, whereby there is an avoidance of
transfer of certain of the lots.
GREAT AMERICAN: Agrees To Amount of Claims
------------------------------------------
To avoid costly litigation with regard to the claims of
Morgenroth and Parkway Power, the debtors stipulate and
agree, subject to approval by the Bankruptcy Court, two
Morgenroth proofs of claim in a total amount of $774,610.31
and two proofs of claim of Parkway Power in a total amount
of $2,057,314.04. The claims are against Princeton-New York
Parent, Inc. and Great American Recreation.
GREAT AMERICAN: Summit Bank Responds
------------------------------------
Summit Bank has objected to the claims motion of
the debtor, Great American Recreation, Inc., seeking
to expunge certain claims as “duplicative”, “multi
and “totally unsecured.” Thrsecured proofs of claim
in the amount of $1,737,641.21 together with four other
claims of the Summit Bank appear to be those that the
debtors are moving to expunge. While the
Summit Bank agrees that two of its claims have been
satisfied, it alleges that the remaining claims are due and
owing.
GUANGZHOU SPECIAL: Bankrupt Steel Plant in China Sold
------------------------------------------------------
The Guangzhou Special-Shaped Steel Plant in south China's
Guangdong province was sold at an auction for $6 million to
a local steel plant, drawing a smooth close to the first
case of bankruptcy since Guangzhou began to experiment with
the modern enterprise system, according to the Xinhua
English Newswire.
Money from the sale is expected to be used to aid the
displaced workers and to pay off debts, according to local
legal officials. The assets of the bankrupt firm were
evaluated at $6.6 million, including the land-use right, the
factory buildings, machinery, and some products in stock.
Managers of the bankrupt firm said their venture floundered
because of a bad investment, poor management, and limited
understanding of market competition. However, numbers of
buyers showed an interest in the firm at the auction, since
the company is considered to be well-equipped and its
products still have great market potential.
Bankruptcy is an inevitable result of the market competition
and allows for sound development of the market economy, said
the local leading legal official Deng Guoji, pointing to the
fact that it phases out incompetent enterprises and
redistributes the social assets more rationally.
HOW INSURANCE: Paying 50 Percent on Direct Claims
--------------------------------------------------
HOW Insurance Co. is still paying off claims of Texas
homeowners whose houses are found to have major structural
defects three years after insolvency forced the company into
receivership and ended its premium income, according to the
Austin American Statesman.
Virginia-based HOW's biggest market was Texas, where it was
insuring builders' warranties for more than 100,000 new
homes in 1994 when it was declared insolvent by $116 million
and placed in receivership by the Virginia State Corporation
Commission.
HOW warranties were issued for an estimated 2 million homes
constructed by 20,000 builders in the United States, and the
company has been rehabilitated sufficiently to pay 50
percent on direct claims, an increase from 40 percent.
"Our prime focus now is getting more money into the company
and turning things around so we can pay hopefully at some
point closer to 100 percent," said Austin attorney Patrick
Cantilo, special deputy receiver in the HOW case.
The possibility of being able to pay a bigger percentage of
a claim exists despite a prohibition of any future premium
collections after the receivership in 1994. If more money is
found, claimants who had previously been paid 40 or 50
percent would share in receiving an additional percentage,
according to Virginia Insurance Commissioner Alfred Gross.
Recent improvement in HOW's finances can be attributed to a
substantial decline in the volume of claims and a reduction
of operating costs, including measures to expedite and
reduce the costs of claims adjudication.
The company may also recover more money from former
directors and officers of the insurance company who were
sued for contributing to the demise of HOW, said Cantilo.
LEVITZ: Seeks to Employ Grubb & Ellis
-------------------------------------
Levitz Furniture Incorporated, et al., seeks authorization
to employ and retain Grubb & Ellis as real estate
consultants to the debtors. If objections are received, a
hearing will be held.
The debtors require the services of a real estate consultant
to assist them in evaluating their retail locations and
analyzing the underlying real estate values. The debtors
need broker opinions of value with respect to the debtors’
100 leased locations throughout the United States.
MAIDENFORM: Seeks Approval of Jay Alix
----------------------------------------
Maidenform Worldwide, Inc., et al., seeks authorization by
the Court for the employment and retention of Ted Stenger
and certain other employees of Jay Alix & Associates nunc
pro tunc to the petition date. If there are objections, a
hearing to consider the application will be held on October
23, 1997.
Since early May, 1997, Jay Alix & Associates has been
employed as the debtors’ restructuring consultants. Jay
Alix & Associates will receive monthly compensation for
Stenger’s services at the flat rate of $85,000. There is
also provision for a “success fee” based on EBITDA
improvements.
MAIDENFORM: Seeks Employee Retention Plan
------------------------------------------
On October 31, 1997 at 2:00 PM, the Court will consider the
motion of Maidenform Worldwide, Inc., et al., for an order
authorizing the implementation of an employee retention
program.
The employee retention program for a targeted 75 employees
is designed to minimize employee turnover, and to provide
adequate incentives for the employees to continue in their
employment. The debtors believe that the maximum liability
they are likely to incur under the employee retention
program is $300,000.
NOVATEK INTERNATIONAL: SEC Investigation, Creditor Suit
-------------------------------------------------------
Two of the principal insiders behind Novatek International,
the bankrupt Columbia company under federal investigation
have been accused of masterminding a stock-rigging scheme to
defraud the institution of $4 million and bilk "millions of
dollars from investors." The complaint against Florida
businessmen William P. Trainor and Vincent D. Celentano and
others connected to Novatek was Fled by one of Britain's
leading investment houses and a group of other creditors in
U.S. Bankruptcy Court in Baltimore.
"A lot of money has disappeared from this company. We intend
to find it and bring it back," said Edward Meehan, an
attorney with Skadden, Arps, Slate, Meagher, & Flom LLP,
which is representing Wood Gundy London Ltd. and a group of
other unsecured creditors. Wood Gundy, Novatek's largest
unsecured creditor, seeks the return of a $4 million
corporate debenture that it purchased in August 1996 and
damages "to be determined at trial."
The complaint accuses Trainor, Celentano, family trusts
connected to the two men, as well as others connected to
Novatek, of violations of SEC regulations, fraud, filing
false and misleading public documents, fraudulently
transferring property of the company, wasting company
assets, and breach of fiduciary duty and seeks the return of
$8 million paid out by Novatek.
Novatek, the complaint states, "engaged in a series of shell
transactions which masked the identities of certain
Defendants and their connection to the company, and allowed
these Defendants to siphon off corporate assets for their
own benefit."
No one has been charged with wrongdoing, and SEC
investigators don't yet have a tally of investors' losses.
Estimates of individual losses range as high as $1 million.
Buoyed by announcements of multimillion dollar deals,
Novatek's stock rose 75 percent in a six-month period last
year, hitting a trading high of $13.125 in mid-September.
Trading in the company was halted by the SEC and the
National Association of Securities Dealers last October
after questions arose about statements the company made
about large contracts in Latin America. As a result, the
value of the stock collapsed to pennies.
PAYLESS CASHWAYS: Promissory Notes
----------------------------------
Payless Cashways, Inc. is seeking an expedited hearing on
October 15, 1997 for its emergency motion for an order
approving discounted prepayment of certain promissory notes.
Great Plains Supply, Inc. (GPS) executed and delivered to
Payless a certain promissory note in the amount of $350,
000. The GPS Security Agreement granted to Payless a
security interest in the machinery and equipment purchased
by GPS in connection with the sale by Payless to GPS of two
stores. GPS Dickinson Partners executed and delivered to
Payless a certain Promissory note in the amount of $1.15
million and a mortgage and security agreement.
GPS and Dickinson Partners reached an agreement with Payless
under which they would pay Payless an amount which
represents a discount from the current respective balances
due under these notes, as payment in full. Payless believes
that the discounted prepayment in the amount of $887,500 as
full payment of the notes is in the best interest of the
estate. Payless’ interest in each of the notes is subject
to a first lien in favor of Canadian Imperial Bank of
Commerce. CIBC consents to the proposed payoff.
POWERAGENT: Faces Bankruptcy or Buyout
--------------------------------------
PowerAgent, a California software company with $17 million
in venture capital funds, is on the verge of bankruptcy,
according to the San Jose Business Journal.
Its trademark software products, designed to screen unwanted
e-mail, were scheduled to debut this summer but were
postponed until October. Now, although the software packages
have about six weeks of development left, they are on
indefinite hold. Revisions and suggestions resulting from
product testing cost about $8 million, enough to put the
company in the hole.
Company officials began asking for $10 million to $20
million more although PowerAgent had not released a product
yet. The PowerAgent board met with investors on September 24
to determine a way to stay afloat, but any agreement proved
impossible. Fifty-five employees were laid off the following
day.
"Chapter 11 is a vehicle for reorganizing," founder Dale
Sundby said. "I prefer to avoid it if I can, but if I get
undue pressure, I might. The intent will be to reorganize
and streamline."
Ever optimistic, Mr. Sundby said he is expecting financing
soon. This could come in several forms, including a buyout,
analysts said. PowerAgent officials also are said to be
talking to a number of companies about a possible merger.
Electronic Data Systems, the Plano, Texas-based electronics
company founded by Ross Perot, is a major investor in
PowerAgent and has been trying to gain major control of the
company, Mr. Sundby said.
RYMER FOODS: Issues New Common Stock
-------------------------------------
Rymer Foods Inc. announced that October 3, 1997 was the
effective date for the issuance of its new common stock, par
value, $.04 in accordance with its confirmed Chapter 11
Bankruptcy Plan.
Under the Chapter 11 Plan, Class 3 consisted of all allowed
claims of certain unsecured creditors including the holders
of Rymer’s 11 percent Senior Notes. Allowed claims in Class
3 including principal and accrued interest on the Senior
Notes totaled over $26 million. Class 3 was allocated
3,440,000 shares of new common stock for an exchange ratio
of 132.2 shares per $1,000 of allowed Class 3 claim.
Under the Chapter 11 Plan, Class 4 consisted of the allowed
interests of the holders of Rymer old common stock, par
value $1.00. The shareholders will receive one share of new
common stock in exchange for every 25 shares of old common
stock. Fractional shares of new common stock will not be
issued. Instead, the number of shares to be distributed to
a shareholder or noteholder will be rounded up to the next
whole number. Chase Mellon Shareholder Services LLC is the
Exchange Agent and Transfer Agent for the new common stock.
US ONE COMMUNICATIONS: Seeks Court Approval
--------------------------------------------
On October 15, 1997, a hearing will be held on the motion of
the debtors, US One Communications Corp., et al.,
authorizing the emergency sale of certain assets of the
debtors and approving an asset purchase agreement and an
escrow agreement.
The asset purchase agreement by and between the debtors and
WinStar Communications, Inc. and WinStar Switch Acquisition
Corp. embodies the agreement to sell and assign
substantially all of the debtors’ assets to the purchaser
for an aggregate purchase price of $100 million.
The agreement is subject to the receipt by the debtors at or
before the Auction of a “higher and better” offer to
purchase the business in an amount not less that $7 million
more than the purchase price. A break-up fee of $3 million
is included in the terms of the agreement in the event of a
termination of the asset purchase agreement.
WESTERN PACIFIC: Airlines Files for Chapter 11 Protection
----------------------------------------------------------
Western Pacific Airlines, Inc., has filed a Chapter 11
petition with the United States Bankruptcy Court for the
District of Colorado in Denver and is actively negotiating a
letter of intent for DIP financing. The bankruptcy process
will allow the airline to continue operating its business as
usual; the company says it will ensure its customers
uninterrupted service.
Western Pacific serves 17 cities with a fleet of 19 Boeing
737-300 aircraft. Its commuter affiliate Mountain Air
Express serves six cities with a fleet of five Dornier 328s.
"We regret the necessity of seeking protection under Chapter
11," says president and CEO Robert A. Peiser, who joined the
company last December. "Our filing should be no cause for
alarm to Western Pacific customers and employees. To the
contrary, it replaces uncertainty with an orderly process
that invokes the power of the court to protect our service
and our operations going forward."
Peiser has shown a solid track record in company
turnarounds. As vice chairman and CEO at FoxMeyer Drug
Company, he successfully engineered the sale of the company
to McKesson Corporation. Peiser was widely credited with
being the architect of TWA's 1995 financial restructuring;
as president and CEO at Orange-co., Inc., he engineered the
citrus producer's operating improvement; and as CFO, he
spearheaded the Borman's, Inc., recovery and sale to A&P.
According to Western Pacific, new management and a new
operating strategy have been the focus of the past year --
for instance, scheduling and product availability problems
were addressed with a move to Denver International Airport
and a new reservations system -- but the benefits of the new
business plan have not yet been fully realized. Peiser says
the company needs additional time and capital to accomplish
its business strategy.
The abrupt resignation of four members of the board of
directors, representing the Gaylord family and Hunt
Petroleum Corporation, is being reviewed by the company's
attorneys.
Meetings, Conferences and Seminars
----------------------------------
October 16-19, 1997
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
Annual Conference
Philadelphia Marriott, Philadelphia, Pennsylvania
Contact 1-803-957-6225
October 17-21, 1997
NATIONAL CONSUMER LAW CENTER
6th National Conference on Consumer Rights Litigation
New Orleans, Louisiana
Contact 1-617-523-8010
October 24-28, 1997
TURNAROUND MANAGEMENT ASSOCIATION
Annual Meeting
Breaker Hotel, Palm Beach, Florida
Contact 1-312-857-7734
October 30-31, 1997
TEXAS TECH UNIVERSITY SCHOOL OF LAW,
ASSOCIATION OF CHAPTER 12 TRUSTEES, and
WEST TEXAS BANKRUPTCY BAR ASSOCIATION
13th Annual Farm, Ranch and Agri-Business
Bankruptcy Institute
Holiday Inn--Lubbock Plaza, Lubbock, Texas
Contact 1-806-794-1215
November 13-14, 1997
MID-SOUTH COMMERCIAL LAW INSTITUTE
"The Changing Landscape for the Commercial Law
Practitioner"
Hermitage Hotel, Nashville, Tennessee
Contact 1-615-259-1450
November 17-18, 1997
BANKING LAW INSTITUTE,
BANK LENDING INSTITUTE, and
EXECUTIVE ENTERPRISES
Commercial Loan Workouts
Chicago, Illinois
Contact 1-800-831-8333
November 19, 1997
NASSAU COUNTY BAR ASSOCIATION and
SUFFOLK COUNTY BAR ASSOCIATION, jointly with
SUFFOLK AVADEMY OF LAW
1997 Annual Bankruptcy Law Update
Suffolk County Bar Center, Hauppauge, New York
Contact 1-516-747-4464
November 21-24, 1997
COMMERCIAL LAW LEAGUE OF AMERICA
77th Eastern District Meeting
New York Marriott World Trade Center, New York
December 3-4, 1997
STRATEGIC RESEARCH INSTITUTE
4th Annual Conference on Distressed Debt
Crowne Plaza Hotel, New York, New York
Contact 1-800-599-4950
December 4-6, 1997
AMERICAN BANKRUPTCY INSTITUTE
Winter leadership Conference
La Costa Resort & Spa, Carlsbad, California
Contact 1-703-739-1060
December 5-6, 1997
STETSON UNIVERSITY COLLEGE OF LAW
22nd Annual Bankruptcy Seminar
DoubleTree Surfside Resort Hotel,
Clearwater Beach, Florida
Contact 1-813-562-7830
DECEMBER 10-11, 1997
INSTITUTE FOR INVESTMENT RESEARCH
Investment Opportunities in Workouts & Turnarounds
Downtown Conference Center, New York, New York
Contact 1-212-661-3500
December 11-13, 1997
AMERICAN LAW INSTITUTE--AMERICAN BAR ASSOCIATION
9th Annual Advanced Court of Study,
The Emerged and Emerging New Uniform Commerical Code
Sheraton New York Hotel, New York, New York
Contact 1-800-CLE-NEWS, ext. 1630
January 29-February 1, 1998
COMMERCIAL LAW LEAGUE OF AMERICA
37th Southern District Annual Meeting
Plaza San Antonio, San Antonio, Texas
Contact 1-972-285-0391
February 22-25, 1998
NORTON INSTITUTES ON BANKRUPTCY LAW
12th Annual Norton Bankruptcy Litigation Institute I
Olympia Park Hotel, Park City, Utah
Contact 1-770-535-7722
March 26-29, 1998
NORTON INSTITUTES ON BANKRUPTCY LAW
10th Annual Norton Bankruptcy Litigation
Institute II
Flamingo Hilton, Las Vegas, Nevada
Contact 1-770-535-7722
May 22-25, 1998
COMMERICAL LAW LEAGUE OF AMERICA
50th New England District Annual Meeting
Ocean Edge Resort & Golf Club, Cape Cod, Massachusetts
Contact 1-617-720-1355
July 2-5, 1998
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains Bankruptcy Law Institute
Jackson Lake Lodge, Jackson Hole, Wyoming
Contact 1-770-535-7722
------
Meetings, conferences and seminars appear every Tuesday.
Bond pricing supplied by DLS Capital Partners, Dallas, Texas.
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., Princeton, NJ, and Beard Group, Inc.,
Washington DC. Debra Brennan and
Rebecca A. Porter, Editors.
Copyright 1997. All rights reserved. This
material is copyrighted and any commercial use,
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mail forwarding, electronic re-mailing and
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Information contained herein is obtained from
sources believed to be reliable, but is not
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The TCR subscription rate is $575 for six months
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