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/raid1/www/Hosts/bankrupt/TCR_Public/971021.MBXT R O U B L E D C O M P A N Y R E P O R T E R Tuesday, October 21, 1997, Vol. 1, No. 43 Headlines AVTOVAZ: Lada Automaker Staves Off Bankruptcy CINCINNATI MICROWAVE: Hines’s High Bid Trumped by Home Depot COUNTY SEAT: Store Closings Approved ELEK-TEK: Sale to Creative Computers Complete ENVIRONMENTAL RECOVERY: Sale of Assets Authorized LORCIN ENGINEERING: Nears End of Bankruptcy, Lawsuits MASSIMO DA MILANO: Ooey Gooey Cookies Follow Bankruptcy MOBILEMEDIA: MobileComm Agreement with Fry's Electronics MOBILEMEDIA: Monthly Operating Report SILAS CREEK: Hancock Fabrics to Acquire Northwest Fabric Meetings, Conferences and Seminars ----- AVTOVAZ: Lada Automaker Staves Off Bankruptcy ---------------------------------------------- AvtoVAZ, maker of Russia's Lada cars, has rescheduled its $800 million in tax debt in a 10-year deal with the government, according to Agence France Presse. AvtoVAZ, one of Russia's biggest tax debtors, had been threatened with bankruptcy by the cash-strapped government, which put it on a tax black list last July when First Deputy Prime Minister Anatoly Chubais set up a special commission to hound tax defaulters. Russian Prime Minister Viktor Chernomyrdin signed a decree rescheduling AvtoVAZ's 2,850-billion-ruble ($490 million) debt to the federal budget and its 1,800-billion-ruble ($310 million) debt to regional budgets, company spokesman Vasily Titov said. The company put up over 50 percent of its shares as security against monthly $17 million repayments. The date for the first payment has not yet been agreed. "The government's decision ends all speculation about a possible bankruptcy of the factory," Titov said, adding, "we will have to, nevertheless, make enormous efforts to strictly adhere to the timetable set out by the government. If AvtoVAZ fails to meet the repayments, the government can auction the shares it holds." The deal will help resolve doubts over the company’s future cooperation with international partners, such as Germany’s Opel GM and Finland’s Valmet, which signed deals in May allowing AvtoVAZ to assemble 50,000 Opel Astras annually at a new $60 million plant in Vyborg, near Saint Petersburg. CINCINNATI MICROWAVE: Hines’s High Bid Trumped by Home Depot ------------------------------------------------------------ Cincinnati Microwave, Inc., sold its plant and headquarters at a wild auction in U.S. Bankruptcy Court before judge Burton Perlman, according to the Cincinnati Post. Retailing giant Home Depot bought the 177,000-square-foot building and adjacent land in Deerfield Township for $4.9 million. The amount was agreed to last month in a tentative contract between Home Depot and Microwave. But Home Depot was not the highest bidder. That was Houston- based real estate developer Hines Interests Limited Partnership, which offered $5.3 million. Hines's bid would have meant more money for Microwave's estate, but the company declined in court to proceed with the purchase. The Microwave-Home Depot purchase agreement prohibited Hines from having 30 days to inspect the property before closing the deal. Edmund Adams, an attorney representing Microwave, argued it might jeopardize the sale of one of Microwave's most valuable assets. "It gives Hines a 30-day window to bow out of the purchase and we don't know if Home Depot is still going to be around," Adams said. In other asset sales, Microwave and The Disposition Group are negotiating with Xsys New Media Group, a German company that has already purchased Microwave's Surelink II technology, over a licensing agreement between Disposition and Xsys that would allow the sale of Microwave’s Surelink I technology to Disposition. COUNTY SEAT: Store Closings Approved ------------------------------------- County Seat Stores, Inc., won a Dallas bankruptcy judge's approval to close 75 more clothing stores as part of its reorganization plan, according to the Rocky Mountain News. The move brings to 300 the number of County Seat outlets that have been closed to stem losses, lawyers for the company said. ELEK-TEK: Sale to Creative Computers Complete ---------------------------------------------- ELEK-TEK, Inc., announced it has consummated its $29 million sale to Creative Computers, Inc., pursuant to an order entered on October 9, 1997, by the U.S. Bankruptcy Court for the District of Delaware. As a result, limited funds will be available for distribution to general unsecured creditors; no funds will be available for distribution to stockholders. The company has been notified by the National Association of Securities Dealers (NASDAQ) that its common stock will be delisted on Thursday, October 23, 1997. ENVIRONMENTAL RECOVERY: Sale of Assets Authorized --------------------------------------------------- Environmental Recovery Systems of Somerset, Inc., the long- dormant plastics-recycling company, has had its sale of assets authorized by Judge Joan N. Feeney of the Massachusetts District of U.S. Bankruptcy Court, Boston, according to the Providence Journal. The sale, when completed, could bring some relief to the 300 people who claim they lost $10 million money investing in the company, said bankruptcy court trustee Andrew G. Lizotte. Former company head John Silvia Jr. claimed about $17 million in assets when he filed for bankruptcy last May, including: $2.1 million of "tax carry forwards." These options are transferable and could be used by a second company to reap tax savings, Lizotte said. Also included in the company's list of assets were $800,000 in unexplained partnerships and joint ventures; $8 million in civil suits, legal malpractice claims, and antitrust claims; $500,000 worth of proprietary plastics-recycling technology; and about $5 million worth of plastics- technology licenses. Judge Feeney's motion also grants authority to sell ERSS equipment, but a group of former investors in the plastics- recycling company, sued and forced an auction of the equipment in April at which it bought most of ERSS's equipment for $50,000. Silvia is challenging that sale, Lizotte said. LORCIN ENGINEERING: Nears End of Bankruptcy, Lawsuits ------------------------------------------------------ Lorcin Engineering Co., Inc., a gun manufacturer in Mira Loma, may be close to resolving its Chapter 11 bankruptcy case and $21.6 million in lawsuits and product liability claims, according to Business Press Ontario. Of that amount, sill outstanding is a $15 million lawsuit by victims of gun violence. Lorcin filed for bankruptcy a year ago to hear all the product liability claims in a single court, said Robert Pitts, a lawyer representing the company. So far, Lorcin has negotiated settlements with all but "maybe three" of the more than 20 claimants, Pitts said, adding he expects to reach settlement agreements with the remaining creditors, or have their claims dismissed, over the remainder of the bankruptcy case. A hearing on the company’s reorganization plan is scheduled for October 24. Pitts said he hopes to convince the court to throw out the $15 million claim by nearly two dozen victims of gun violence, who have filed lawsuits known as “the Hamilton claim” in U.S. District Court in New York against about 65 gun manufacturers in an attempt to hold them financially responsible for gun crimes. The plaintiffs argue that manufacturers should be held liable for acts of gun violence in proportion to their market share, but Lorcin counters that none of its products are necessarily tied to the crimes cited by the Hamilton claim. The company plans to move for a dismissal of the claim as early as October 28. In 1993, Lorcin's peak sales year, the company had 125 employees and $14.7 million in revenue, but now has roughly 30 employees and anticipates annual revenue of about $4.3 million, according to court documents. MASSIMO DA MILANO: Ooey Gooey Cookies Follow Bankruptcy ------------------------------------------------------- Massimo da Milano, Inc., has entered a marketing contract with Basic Sales Management Corp. to distribute “Roz’ Ooey Gooey Gourmet Cookies” under the Massimo’s label, with projected sales of over $500,000 for November and December and sales for 1998 expected to exceed $3 million. Massimo’s emerged from bankruptcy on June 20, 1997, and has brought in new management, closed all losing operations, and retired almost all its prepetition debt. Prior to filing Chapter 11, the company had losses of over $2 million. It announced its results for the quarter ending June 30, 1997, were sales of more than $700,000 and profits of about $125,000. MOBILEMEDIA: MobileComm Agreement with Fry's Electronics -------------------------------------------------------- MobileMedia Communications, Inc., d/b/a MobileComm, (a wholly-owned subsidiary of MobileMedia Corporation) announced it has signed an agreement with Fry's Electronics to be the retail chain's exclusive provider of paging equipment and services. Fry's Electronics is one of the largest electronics chains on the West Coast. MobileComm said the two companies have entered into a renewable one-year contract and that MobileComm would begin shipping product in October. MobileComm is one of the largest providers of paging and personal communications services in the United States. MobileComm offers local, regional and nationwide coverage in all 50 states, reaching markets of over 90 percent of the U.S. population, and in the Caribbean. The company operates two one-way nationwide networks and is licensed to operate two nationwide narrowband PCS networks. MOBILEMEDIA: Monthly Operating Report -------------------------------------- MobileMedia Communications, Inc.’s consolidated statement of operations for the month ended August 31, 1997, according to Bankruptcy Creditors’ Service, listed net revenue of $40,263,000, net loss of $16,576,000, total assets of $1,433,390,000, and total liabilities and stockholders' equity of $1,433,390,000. SILAS CREEK: Hancock Fabrics to Acquire Northwest Fabric --------------------------------------------------------- In the ongoing Silas Creek Retail L.P. Chapter 11 cases, Hancock Fabrics, Inc., announced it has agreed to acquire from Silas 48 Northwest Fabrics & Crafts stores for approximately $22.5 million in cash, pending approval of the U.S. Bankruptcy Court in the District of Delaware. Substantially all of Silas’s remaining assets will be sold to ABC Fabrics. Hancock, a retail and wholesale fabric merchant, currently operates 459 retail fabric stores in 33 states and supplies over 100 independent wholesale customers. Meetings, Conferences and Seminars ---------------------------------- 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 ACADEMY 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 Commercial Code Sheraton New York Hotel, New York, New York Contact 1-800-CLE-NEWS, ext. 1630 December 15-16, 1997 PRACTICING LAW INSTITUTE Basics of Bankruptcy and Reorganization PLI Conference Center, New York, New York Contact 1-800-260-4PLI or http://www.pli.edu 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 COMMERCIAL 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 The Meetings, Conferences and Seminars column appears in the TCR each Tuesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ----- A listing of meetings, conferences and seminars appears every Tuesday. Bond pricing, appearing each Friday, is 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, 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 $575 for six 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 301/951-6400. * * * End of Transmission * * *