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/raid1/www/Hosts/bankrupt/TCR_Public/971027.MBX T R O U B L E D C O M P A N Y R E P O R T E R Monday, October 27, 1997 Vol. 1, No. 47 Headlines BIG RIVERS: Disqualification Motion Appeal CALDOR: Discussion on Extension of Exclusive period DOW CORNING: Tort Claimants Object to Disclosure Statement DOW CORNING: More Objections to Disclosure Statement DOW CORNING: Earning’s Rise FLAGSTAR: Hearing To Extend Exclusivity KENETECH WINDPOWER: Hearing on Rejection of Agreements LIL’ THINGS: Expedited Hearing on Loan Agreement MIDCON: US Replies to Objection of Louis Dreyfus WESTMORELAND COAL: Court Appoints Committee WESTMORELAND COAL: Crowell & Moring File Motion ------ BIG RIVERS: Disqualification Motion Appeal ------------------------------------------ Appellants, Pacificorp Kentucky Energy Company and Pacificorp Power Marketing, Inc. are appealing from an order wherein the judge, J. Wendell Roberts refused to recuse himself and to remove J. Baxter Schilling as examiner from the Big Rivers Chapter 11 case, despite the allegation by the appellants of pervasive ex parte communication between them throughout the bankruptcy case. On appeal, Pacificorp asks if a bankruptcy judge, by his own order can exempt himself and an examiner from the prohibitions on ex parte communications and whether the bankruptcy judge erred in denying the motion to disqualify him and to remove the examiner in light of the alleged undisputed evidence of the extensive ex parte communications with the examiner. CALDOR: Discussion on Extension of Exclusive period ---------------------------------------------------- As reported in the CALDOR BANKRUPTCY NEWS, Issue Number 22, published by the Bankruptcy Creditor’s Service, Princeton, New Jersey: "What's your sense on, realistically, when we can see a plan," Judge Garrity asked Michael Crames, Esq., at the uncontested hearing at which the Court granted the Debtors' Fourth Motion for an extension of their exclusive periods? "I fully appreciate the significance of the fall and Christmas seasons, and you know I understand that, but what's your feeling as far as whether we will see a plan in the spring?" "Realistically, your Honor," Mr. Crames replied, "we are going as far as we can with the constituents; making certain assumptions, which is not unusual in Chapter 11, as you know, including that the business plan will be realized, that the Debtor will achieve its projected results, that's a major assumption obviously. DOW CORNING: Tort Claimants Object to Disclosure Statement ---------------------------------------------------------- The Official Committee of Tort Claimants filed an objection to the proposed amended Disclosure Statement of Dow Corning Corporation. They argued that the amended plan should not be sent out for a vote because its treatment of voting, classification and other matters is patently defective. Particularly, that the debtor discriminates against individual tort claimants who vote no, that the Litigation Trust violates due process, that the “Best Interests” test can not be satisfied for claims in the Litigation Trust, that the releases of the debtor’s shareholders violate a provision of the Bankruptcy Code, that the classification of tort claimants violates a section of the Code, and that the proposed Plan cannot possibly satisfy the cramdown standards. The second basis of objection is that the proposed Disclosure Statement utterly fails to provide the information to which tort claimants are entitled. The Disclosure Statement fails to disclose that most claimants will not receive the recoveries advertised in the Symptom/Medical Condition Grid, and it fails to accurately disclose the aggregate nominal and present values of the contemplated distributions to tort claimants. They also claim that the Disclosure Statement does not contain adequate information regarding the releases included in the plan, and that it misleadingly suggests that if the plan is voted down it will be confirmed through cram down and claimants will face endless litigation of breast implant claims. DOW CORNING: Earning’s Rise ---------------------------- Dow Corning Corp. said third-quarter earnings rose fourteen percent mostly because of lower reorganization costs. Profits were $64.1 million vs. $56.4 million in the same period last year. For the three months ended Sept. 30, the company had sales of $677.8 million, up 5 percent from $644.3 million in the same quarter last year. "Sales volume growth was healthy in most product lines and geographies, but the strong U.S. dollar continues to reduce reported revenue," John Churchfield, Dow Corning's chief financial officer, said in a statement. He said earnings grew due mainly to lower reorganization costs and higher non-operating income. For the first nine months of 1997, Dow Corning earned $176.1 million, compared with $160.3 million for the same period in 1996. Sales were $1.97 billion, up from $1.89 billion for the first nine months of last year. Once the world's largest maker of silicone breast implants, Dow Corning is reorganizing in federal bankruptcy court. The Chapter 11 filing followed a flood of lawsuits by women who claim the implants caused health problems. DOW CORNING: More Objections to Disclosure Statement ---------------------------------------------------- The Common Benefit Litigation Expense Fund, the Mentor Settlement Fund and the Bioplasty Settlement Fund have also filed an Objection to the Amended Disclosure Statement of Dow Corning Corporation. They claim that the Disclosure Statement does not address the issue of payment of fees and expenses for the provision of common benefit services to breast implant recipients. They believe that there may be a conflict of interest for non-independent persons to serve as trustees for the Litigation Trust. They claim that the causation trial only benefits the Reorganized Debtor because if the Reorganized Debtor is successful in the trial, the outcome is binding on all Rejecting Claimants, however, if the Reorganized Debtor is unsuccessful, the Rejecting Claimants must still individually prove causation. The Objection also states that since the total number of Rejecting Claimants, even assuming acceptance of the Plan, could be in the tens of thousands, the provision for only ten trials per year is inadequate. And finally they claim that the use of a facility other than the Claims Office in Houston, Texas, to evaluate claims made under the Global Settlement would not be cost efficient. FLAGSTAR: Hearing To Extend Exclusivity --------------------------------------- A hearing will be held on November 6, 1997 to consider the motion by debtors Flagstar Corporation, Flagstar Companies, Inc., and Flagstar Holdings, Inc. to extend the time of the exclusivity period for 90 days. KENETECH WINDPOWER: Hearing on Rejection of Agreements ------------------------------------------------------ A hearing will be held on November 17, 1997 on the motion of the debtor, Kenetech Windpower, Inc., fka U.S. Windpower, Inc., seeking to reject specified agreements related to Altamont Pass Partnerships The agreements in question relate to the ownership and operation of wind-powered electric power plants in the Altamont Pass area of California. The debtor claims that the Agreements consist of the estate’s remaining burdensome agreements with respect to the partnerships’ windplants and agreements and contracts in conjunction therewith. The debtor argues that the rejection is in the best interest of the estates because the debtor no longer derives any benefit from any of the agreements. LIL’ THINGS: Expedited Hearing on Loan Agreement ------------------------------------------------ The Court has approved the debtor’s motion for an Expedited Hearing on its Motion to Approve a First Amendment to the Loan and Security Agreement between the debtor and BankBoston Retail Finance Inc. and to establish certain supplemental procedures in the event of default. The debtor is allowed to shorten the notice of hearing on its Amendment Motion which is set for hearing on October 28, 1997 to 13 days. The time period for responses to the Amendment Motion is reduced to 12 days making the deadline October 27, 1997. MIDCON: US Replies to Objection of Louis Dreyfus ------------------------------------------------ The United States of America, on behalf of the U.S. Department of the Interior, Minerals Management Service (MMS) filed a Reply to the Objection of Louis Dreyfus Natural Gas Corporation to the Proposed Use of Proceeds Arising From the Trustee’s Motion to Sell Estate’s Interests in South Marsh Island Block 141/144. The Trustee in this case had requested approval to sell the estate’s interests in the South Marsh Island Block 141 and 144 leases to Noram. According to the United States, Midcon is in default on the leases and owes $1,040,464.29 to the MMS plus $39,000 in civil penalties. Louis Dreyfus Natural Gas Corporation,(LDNG) a secured creditor whose claim against Midcon is disputed by the estate, objects to the use of the sale proceeds to cure the royalty default owed by Midcon to the MMS. LDNG argues that the Trustee need not cure the royalty default but may instead provide adequate assurance that the Trustee will promptly cure the default, but instead to pay LDNG’s secured claim in full. The US disagrees that the secured claim is entitled to payment before the cure of the defaults on the leases. WESTMORELAND COAL: Court Appoints Committee ------------------------------------------ The Court has appointed a Retired Salaried Employees’ Committee consisting of the following individuals: Steve J. Bobrosky Sr. 18 Third Avenue East Big Stone Gap, Virginia 24219 James D. Garrison 1746 Derby Road Appalachia, Virginia 24216 Howard H. Frey 236 Holmecrest Road Jenkintown, Pennsylvania 19046 Joseph C. Byrne 12 Margin Court Newtown, Pennsylvania 18940 Boyce W. Glover Jr. 4700 Emory Lane Charlotte, NC 28211-3064 The US Trustee shall convene a meeting with the members of the Retirees’ Committee as soon as practicable. The members of the Committee may request reimbursement of expenses. WESTMORELAND COAL: Crowell & Moring File Motion ----------------------------------------------- Crowell & Moring LLP filed a motion seeking a determination that the Firm can represent the UMWA Combined Benefit Fund in its pending negotiations with the Health Care Financing Administration (HCFA) without disqualifying the Firm from its current representation of Westmoreland Coal Company, Westmoreland Energy, Inc., Westmoreland Terminal Company, Westmoreland Resources, Inc., and Westmoreland Coal Sales Company, Inc., debtors. The Firm argues that the HCFA matter does not involve any issues that relate to the debtors’ Chapter 11 cases or the debtors’ disputes with the Funds. Moreover, the fees to be generated by the Firm in the proposed representation of the Combined Fund in connection with the HCFA matter will constitute less that .5 percent of the Firms’ revenues during the period of the proposed representation. The Firm agrees that employees of the firm working on one matter will not work on the other matter, and that the debtors have consented to the Firms’s proposed representation of the Combined Fund and have agreed to waive any conflict of interest such representation involves, conditioned on a determination by the Court that such representation by the Firm will not disqualify it from representing the debtors. Likewise, the Funds have waived any conflict of interest. ----------- 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 * * *