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/raid1/www/Hosts/bankrupt/TCR_Public/980128.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 28, 1998, Vol. 2, No. 19 Headlines ANCHOR RESOLUTION: Noteholder Bid To Extend Stay Rejected BIG RIVERS: PacifiCorp Files Notice of Appeal BRADLEES: Fiscal Update BRADLEES: To Sell Hempstead Property CAMBEX: Announces Reorganization Plan CAMELOT MUSIC: Completes Successful Reorganization CINCINNATI MICROWAVE INC: Files Financial Statements CONSOLIDATED STAINLESS: Needs Time to Decide on Leases DOW CORNING: Applies to Retain Insurance Coverage Counsel FLOWIND: Asks To Extend Exclusivity GUY F. ATKINSON: Seeks Exclusivity Extension To February 23 HARVEY ELECTRONICS INC: Shareholders Declare Ownership MAIDENFORM: Enters into Outsourcing Agreements MOBILEMEDIA: Motion to Continue Post-petition Financing MOLTEN METAL: Applies to Employ Auctioneer MOLTEN METAL: Committee Object to Special Counsel MONTGOMERY WARD: Agrees to Refunds - Could Run $5 Million ONE PRICE CLOTHING: To Close Stores REEVES INDUSTRIES, INC.: Creditors Receive Disclosure RICKEL HOME CENTERS: Gets Two New Bids Over $35 Million STRAIGHT ARROW: Settlement of Proofs of Claim UNIROM-TECHNOLOGIES: Placing Subsidiary in Bankruptcy VENTURE: Hires Professionals to Lead the Way VENTURE: Organizational Meeting to Form Committees WORLD PLUS: Trustee Urges $16 Million Judgment * * * ANCHOR RESOLUTION: Noteholder Bid To Extend Stay Rejected --------------------------------------------------------- As reported by Federal Filings, Inc. on January 26, 1998, Anchor Resolution Corp.'s senior secured noteholders lost their bid to extend a stay pending appeal of the liquidating plan confirmation order, which expired Jan. 16, because "they have been cavalier in pursuing their cause." U.S. District Court Chief Judge Joseph J. Farnan Jr. chastised the noteholders for not heeding the bankruptcy court's advice when it granted a limited stay of confirmation on Dec. 11. BIG RIVERS: PacifiCorp Files Notice of Appeal --------------------------------------------- PacifiCorp Kentucky Energy Company and PacifiCorp Power Marketing, Inc. are appealing from the Bankruptcy Court's Order of January 12, 1998 disallowing two claims totaling in excess of $25 million. The appellants will raise among other issues, whether the Bankruptcy Court erred in disallowing the claims, whether the Court erred in ruling that the "Omnibus Agreement" was not an executory contract, whether Big Rivers had obligations under the Omnibus Agreement, and whether the Omnibus Agreement was void and unenforceable due to the No Shop Clause. BRADLEES: Fiscal Update ----------------------- For the month ended October 4, 1997, Bradlees Inc. reported that On Total Sales of $ 119,208,000 , the company reported Net income of $2,428,000. For the month ended November 1, 1997, the company reported that on Total Sales of $121,977,000, the company reported Net income of $3,490,000. The Debtors have filed a full-text copy of the New DIP Financing Agreement with the Securities and Exchange Commission. A copy is available at no charge via the Internet at: http://www.sec.gov/Archives/edgar/data/887356/0000887356- 98-000001.txt BRADLEES: To Sell Hempstead Property ------------------------------------ Bradlees, Inc., Bradlees Stores, Inc., and New Horizons of Westbury, Inc. tell the Court that they desire to sell certain unimproved real property located at the corner of Ellison Avenue and Taylor Avenue in the Town of Hempstead, County of Nassau, State of New York, to RM Westbury LLC under the terms of a Purchase Agreement as modified through January 22, 1998. Subject to any higher and better offers for the Westbury Property, RM Westbury offers to pay the Debtors $7,844,150. RM Westbury's payments are to be made in three stages, two of which have already occurred: a Non-Refundable $5,000 Ernest Payment, a $350,000 Deposit, and $7,395,000 at Closing. By this Motion, the Debtors ask the Court to approve notice and bidding procedures in connection with soliciting and higher and better offers. The Debtors request that the Court approve a $225,000 overbid, $100,000 bidding increments at any auction, a 10% cash deposit from any competing offeror, and a $50,000 Break-Up Fee to RM Westbury in the event its bid is upset. CAMBEX: Announces Reorganization Plan ------------------------------------- Cambex Corporation announced that it has reached agreement with the Official Committee of Unsecured Creditors on the terms of a reorganization plan in the company's Chapter 11 proceedings. Under the agreement, unsecured creditors will be paid in full over a period of 36 months or, at the option of each creditor, they can be paid 80 percent of their claims over the same period, and, in addition, receive common stock in Cambex. If all unsecured creditors elect to receive stock in lieu of a portion of their claims, creditors would hold approximately 18 percent of the outstanding common stock in the reorganized company. Existing Cambex common shareholders would hold the balance. Cambex expects to file its reorganization plan with the Bankruptcy Court within the next few days, and hopes to emerge from Chapter 11 at the conclusion of the court approval process in approximately 2 months. "I am pleased that we were able to reach agreement with the Creditors' Committee so expeditiously," said Joseph F. Kruy, president and chief executive officer of Cambex. "The Chapter 11 has given Cambex the opportunity to structure a full payout plan with creditors, and to strengthen our business." Gregory Mazmanian, chairman of the Creditors' Committee, said, "the members of the Committee believe the terms of the plan are in the best interest of Cambex's creditors and they support Cambex's reorganization efforts." CAMELOT MUSIC: Completes Successful Reorganization -------------------------------------------------- Camelot Music, Inc., a 305 store retail music chain, announced today its emergence from reorganization proceedings under Chapter 11 of the Bankruptcy Code. Camelot's Plan of Reorganization, which was supported by all of its major creditors, calls for substantially all of the company's indebtedness to be converted into equity in the reorganized company. Camelot Music, based in North Canton, Ohio, is primarily a mall-based music retailer operating in 34 states. During its restructuring, Camelot maintained extremely constructive relationships with its major creditors. The company's large trade vendors have agreed to provide Camelot with favorable trade terms and the company's landlords have agreed to modify certain lease obligations for Camelot stores. Creditor confidence was exemplified by their support of Camelot's purchase of The Wall, a 153 store music retail chain based in Philadelphia, Pennsylvania, prior to the confirmation of Camelots Plan of Reorganization. With locations throughout the Northeast and mid-Atlantic regions, the acquisition of The Wall will substantially improve Camelots presence in that geographic region. Once the acquisition of The Wall is complete, Camelot will be the third-largest music retailer in the United States with combined annual revenues in excess of $550 million. In referring to the purchase of The Wall, James E. Bonk, President and Chief Executive Officer of Camelot Music said, "This unprecedented transaction the acquisition of a major company by a company emerging from Chapter 11 has positioned Camelot as an even stronger competitor at this exciting time in the music industry." The company anticipates being publicly traded during the first half of 1998 on the Nasdaq exchange. CINCINNATI MICROWAVE INC: Files Financial Statements ---------------------------------------------------- Cincinnati Microwave, Inc. has informed the SEC that on January 20, 1998, it filed an Amended Operating Statement for the month ending December 31, 1997. Cincinnati reports a net loss of $800,433 on Total Revenue/Sales for December of $242,384. This brings the total net loss of $3,796,375 on $3,851,044 since filing. CONSOLIDATED STAINLESS: Needs Time to Decide on Leases ------------------------------------------------------ Consolidated Stainless, Inc., debtor filed a motion for an order extending the time within which the debtor may assume or reject unexpired leases of nonresidential real property. A hearing is scheduled for February 10, 1998. DOW CORNING: Applies to Retain Insurance Coverage Counsel --------------------------------------------------------- Dow Corning Corporation, debtor applied to retain Dickstein Shapiro Morin & Oshinsky as insurance coverage counsel as of August 1, 1997, to represent Dow Corning in connection with breast implant coverage litigation filed by Dow Corning against various insurance companies. Dickstein Shapiro will coordinate and be lead counsel in insurance settlement activities; and trial counsel in the New York D&O Coverage Litigation. The firm will assist the company in recovering the amounts owed it pursuant to a judgment rendered in a case initially involving over 80 insurer-defendants and more than 600 contracts of insurance. The specific individuals anticipated to be involved in the case bill at hourly rates ranging from $400 per hour to $195 per hour. No retainer has been paid. FLOWIND: Asks To Extend Exclusivity ----------------------------------- Flowind Corporation, debtor is seeking an order extending the exclusive period within which to obtain acceptances of the debtor's plan of reorganization. The debtor requests a three-month extension to April 30, 1998. The debtor states that this is a large and complex case. The debtor's wind power plants are encumbered by more than $24 million in debt, and the debtor's schedules list more than $4 million in unsecured claims. The debtors state that at this time it would be counter-productive for the court to deny this extension, and thereby allow the filing of a competitive plan. GUY F. ATKINSON: Seeks Exclusivity Extension To February 23 ----------------------------------------------------------- Federal Filings Inc. reported on January 26, 1998 that Atkinson planned to seek an extension of its exclusive period to file a reorganization plan through Feb. 23 at Friday's hearing. In addition, the construction company was to ask the court to set a Feb. 6 sale hearing date. Last month, Clark Construction Co. presented a term sheet for the acquisition of Atkinson that proposed to pay Atkinson $1 million for the company name and 15% of profits over the next four years, $6 million of which would be guaranteed by Clark. HARVEY ELECTRONICS INC: Shareholders Declare Ownership ------------------------------------------------------ Mr. Michael E. Recca and Harvey Acquisition Company have informed the SEC that they are the beneficial owners of 1.92 million shares, representing 85% of the class of shares of common stock, par value $0.01 per share, of Harvey Electronics, Inc., a New York corporation. Mr. Recca is a member and manager of Harvey Acquisition Company, LLC, a Delaware limited liability company ("HAC"). Mr. Recca filed the Schedule 13D because of his position with HAC. MAIDENFORM: Enters into Outsourcing Agreements ---------------------------------------------- Maidenform Worldwide, Inc. et al., debtors are seeking an order authorizing the debtors to enter into a mainframe outsourcing agreement with Litton Computer Services and an applications outsourcing agreement with Keane, Inc. The terms of the Litton bid provide for a three year contract, at an annual cost of $807,012 while Keane's bid, which is also for a three year term, will cost $985,600 annually. By entering into the Mainframe Outsourcing Agreement with Litton, the debtors state that they will significantly improve their current data processing capabilities. The debtors estimate that the efficiency and enhancement of the new agreement will save the debtors approximately $350,000 over the next year alone. Pursuant to the Legacy Applications Outsourcing Agreement, the debtor estimates the resulting savings at $10,923 per year. MOBILEMEDIA: Motion to Continue Post-petition Financing ----------------------------------------------------------- The debtors, Mobilemedia Communications, Inc., et al., are seeking approval of continued use of Cash Collateral and an extension of the post-petition financing to July 31, 1998. The extension is reflected in a Fourth Amendment to the credit agreement dated January 22, 1998. The key terms of the Amendment include extending the Maturity Date from January 30, 1998 to July 31, 1998; reducing the Commitment from $200 million to $100 million and an extension fee of one-quarter of 1% of the reduced Commitment - payable on February 2, 1998. The debtors must maintain specified EBITDA levels and are subject to restrictions on their capital expenditures. The debtors state that they are preparing to file the next several months of the debtors' bankruptcy proceedings will be critical to their successful reorganization. The debtors anticipate that they will spend approximately $30- 40 million per month to finance disbursements incurred in the course of operating its business. MOLTEN METAL: Applies to Employ Auctioneer ------------------------------------------ Molten Metal Technology, Inc., et al. applied to employ Continental Plants Corporation as auctioneer and broker to conduct public sales of certain excess manufacturing, computer and office equipment and furniture and other personal property and to act as broker in connection with the solicitation and negotiation of private offers for certain separate assets. The debtors are lessees of certain properties consisting of offices and warehouse space in Fall River, Massachusetts, Houston Texas, Washington, D.C. and Waltham, Massachusetts. The debtors anticipate vacating the properties and rejecting the leases. Before the debtors may abandon the premises and reject the leases, they must liquidate or remove the remaining items of manufacturing, computer and office equipment and furniture and other assets located at these premises. The firm, Continental Plants Corporation would advertise and conduct sales of the assets at public sales to be held beginning February 21 or 22, 1998. The firm would receive a certain percentage of gross sales proceeds from each public and private sale. MOLTEN METAL: Committee Object to Special Counsel ------------------------------------------------- The Official Unsecured Creditors' Committee filed an objection to the debtors' application for authority to employ special government counsel Latham & Watkins. The Committee states that the debtors allege they require assistance with "all aspects of nuclear and other service contracting with the federal government" and that they wish to employ special government counsel in connection with ongoing government investigations. However, the Committee argues that the debtors have not demonstrated any reason for employing the firm at this time. The application does not enumerate any government contracts with which the debtors might require assistance, nor dies it provide any detail concerning subpoenas which require a response by the debtors. The Committee claims that retention of Latham & Watkins at this time would be premature, and that the debtors' resources are extremely limited. MONTGOMERY WARD: Agrees to Refunds - Could Run $5 Million --------------------------------------------------------- The Fort Worth Star-Telegram reported on 01/24/98 that Montgomery Ward could refund up to $5 million to its credit card customers under a settlement with the Texas Department of Insurance, state regulators announced yesterday. At issue is the retailer's marketing of credit life insurance to shoppers who charged purchases. The policies pay a person's debt if he or she dies, becomes disabled or loses employment. Insurance department attorneys said Montgomery Ward did not disclose the insurance policies to shoppers. For example, regulators said the retailer encouraged shoppers "to buy the Credit Security Plan by signing a line on charge account sales slips without informing them that they were purchasing a package of insurance coverages." The company, in consenting to the order, disputed the agency's allegations that it violated Texas consumer protection laws. As part of the order, Ward agreed to pay $500,000 to reimburse the state insurance department for its costs, but that could be offset by up to $400,000 in credits for refunds made to customers. The insurance department said Ward customers who purchased the insurance between Nov. 1, 1994, and Feb. 28, 1997, will receive refund offers in the mail. To qualify they must say there were unaware they bought the coverage, ask to cancel it and request a refund, department officials said. ONE PRICE CLOTHING: To Close Stores ----------------------------------- One Price Clothing Stores Inc. Tuesday said it planned to close about 75 underperforming stores and cut 300 jobs from its work force of 5,300. The off-price women's and children's apparel retailer said the restructuring will save the company about $6.5 million a year. One Price, based in Duncan, S.C., also plans to add more merchandise priced at $7 in its stores. REEVES INDUSTRIES, INC.: Creditors Receive Disclosure ----------------------------------------------------- A Second Amended Disclosure Statement of the Reorganization Plan of Reeves Industries, Inc. has been distributed to creditors for acceptance. The Plan divides Claims and Equity Interest into six classes and sets forth the treatment afforded to each class: Class Type of Claim Treatment ----- ------------- --------- N/A Allowed Paid in full, in Cash, as Administrative allowed by the Court upon Claims the Effective Date. N/A Allowed Paid in full, in Cash, Priority Tax upon the later of the Claims Effective Date, the Final Order, the Effective Pre- petition date, or other terms. 1 Allowed Unimpaired -- Paid in full, Priority Claims in Cash, upon the later of the Effective Date or the Final Order. 2 Allowed General Unimpaired -- Paid in full, in Secured Claims Cash, on the Effective Date or Final Order. 3 Allowed General Unimpaired -- Shall be satisfied Unsecured Claims on the latest of the Effective Date, the date it becomes an allowed claim, the date it becomes due and payable, or any such other date agreed to. 4A Allowed Senior Impaired -- Old Senior Debt is Noteholder cancelled as of the Effective Date Claims and each noteholder shall receive its Pro Rata share of (a) $70 million of New Senior Notes, (b) $66 million of New Structurally Subordinated Notes, and (c) a 22.47% equity ownership in RI. 4B Allowed Impaired -- Old Subordinated Subordinated Debentures are cancelled as of the Debentureholder Effective Date and each claim Claims shall receive its Pro Rata share of (a) $4.6 million of New Senior Notes, (b) $7.4 million of New Structurally Subordinated Notes, and (c) a 2.53% equity ownership in RI. 5 Affiliate Impaired -- Shall be allowed as of Claims the Effective Date. 6 Equity Impaired -- Shall be retained and Interests continue to be held by RI as such in Reorganized Reeves. Upon the Effective Date, Equity Interest holders will be impaired through the dilution of RI Common Stock. A Confirmation Hearing has been scheduled before the Honorable Prudence Carter Beatty at the United States Bankruptcy Court, Southern District of New York, for February 26, 1998 at 2:30 p.m. RICKEL HOME CENTERS: Gets Two New Bids Over $35 Million ------------------------------------------------------- Federal Filings Inc. reported on January 26, 1998 that Rickel Home Centers Inc. is in ongoing discussions with two leading bidders who emerged in addition to the stalking horse bidder for the retailer's 53 remaining leases and truck and trailer fleet. Office supply chain Staples Inc. and Starwood Ceruzzi have submitted bids in excess of $35 million. Due to Rickel's ongoing talks with Staples and Starwood over non-economic terms of their bids, the court has continued the sale hearing. STRAIGHT ARROW: Settlement of Proofs of Claim --------------------------------------------- In the case of Straight Arrow Products, Inc., debtor, the following stipulations have been approved by the court: Claimant Original Amount Allowed Claim Bobby Allison Motorsports, Inc. $1.75 million $1.25 million Eugene Carter $1,348,139.83 $50,000 Ronald P. Huber $125,000 $26,500 California Air Resources Board $100,000 $40,000 Dermagen Veterinary Research Labs $1,970,528. $240,000 UNIROM-TECHNOLOGIES: Placing Subsidiary in Bankruptcy ----------------------------------------------------- On Jan. 26, 1998--Unirom Technologies (CANADIAN DEALING NETWORK:UROM.) Unirom Technologies Inc. announced that it is placing its subsidiary company Unirom Inc. in bankruptcy. Unirom Technologies Inc. is a public company and trades on the CDN under the symbol UROM and has approximately 10 million shares outstanding. VENTURE: Hires Professionals to Lead the Way -------------------------------------------- The Debtor, Venture Stores, Inc. received the Court's authority to employ the law firm of Pepper Hamilton LLP as bankruptcy counsel. Pepper Hamilton discloses that it received $143,455 in connection with the planning of this case and preparation of the initial documents. Pepper Hamilton further discloses that it received a $300,000 retainer for postpetition services. Pepper Hamilton will charge the Debtor its customary hourly rates. The Debtor also received authorization to employ the law firm of Kronish, Lieb, Weiner & Hellman as Special Counsel to the Debtor. In addition to providing routine legal services, the firm will negotiate and provide legal advice and guidance to the Debtor and prepare any necessary documents and take any other action, including litigation, if necessary, with respect to Kimco Realty Corporation and its affiliates. Kronish Lieb discloses that within the one- year period prior to commencement of this Chapter 11 case it received a $350,000 retainer from the Debtor. The Debtor proposes to pay Kronish Lieb its customary hourly rates. The Debtor is seeking authority to employ The Finley Group as its financial advisor and reorganization consultant in this chapter 11 case. The Finley Group received a $100,000 retainer for postpetition Services. Finley will bill for professional services at its customary hourly rates. VENTURE: Organizational Meeting to Form Committees -------------------------------------------------- The United States Trustee for Region III has tentatively scheduled an organizational meeting to be held in Wilmington at 1:00 p.m. on Monday, February 2, 1998. Contact Jack McLaughlin, Esq., at 215-597-2532 to confirm the time, date and place of the organizational meeting. WORLD PLUS: Trustee Urges $16 Million Judgment ---------------------------------------------- The Anchorage Daily News reported on 01/18/98 that the court-appointed trustee reviewing the defunct World Plus investment business says that it amounted to an illegal Ponzi scheme and that a $16 million judgment should be entered against former investors. But a lawyer representing several investors says the recommendation by bankruptcy trustee Larry Compton is premature because some legal issues are still unresolved. World Plus collapsed two years ago when it was forced into bankruptcy proceedings by the government. Ponzi, or pyramid, schemes pay old investors by recruiting new ones. An Anchorage federal judge in November characterized World Plus operations as a Ponzi and entered at $2 million judgment against RaeJean Bonham on behalf of the Securities and Exchange Commission. A formal recommendation by bankruptcy trustee Larry Compton adds another layer. His conclusion is based on a first-of- its kind accounting in the complex case, revealing how much money investors placed with World Plus and how much they earned. Experts say that could mean 500 of Bonham's investors may be forced to repay more than $16 million. "You can tell who the winners are and who were the losers," said Cabot Christianson, an Anchorage lawyer representing the bankruptcy estate. "This is the first time anybody, probably including RaeJean, has been able to give a number that was accurate." Bonham is under federal indictment on money laundering and mail fraud charges in connection with World Plus, a Fairbanks airline ticket brokerage. --------- 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 Lexy Mueller, Editors. Copyright 1998. 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 * * *