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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
Wednesday, February 25, 1998, Vol. 2, No. 38
Headlines
AL TECH: Seeks Authorization for Sale of NJ Property
AL TECH: Seeks Bar Date for General Claims
BRUNO'S: Receives $200M DIP Pact Proposal from PPM
CALDOR: To Close 12 Stores
GAYLORD: Seeks Authority to Extend Use of Cash Collateral
MIDCOM COMM: Hearing Set to Modify Exclusive Period
NORFOLK COMMUNITY HOSPITAL: Files Chapter 11
PARAGON TRADE: Receives OK for Joint Defense Agreement
Q-ENTERTAINMENT: Houston Firm Bids for Troubled Company
SMITH TECHNOLOGY: Respond to Committee on Filing Procedures
US ONE: Submits First Amended Disclosure and Plan
VENTURE STORES: Secures Favorable Agreements
WESTERN PACIFIC: Public Relations Brought Company Down
*******
AL TECH: Seeks Authorization for Sale of NJ Property
----------------------------------------------------
Al Tech Specialty Steel Corporation seeks authorization for
the sale of a Bergen County, New Jersey warehouse. The
Chase Manhattan Bank holds a fist mortgage lien on the
property, which secures the Debtor's indebtedness to Chase
in the principal amount of $5 million.
On November 14, 1997, the Debtor agreed to sell the
property to Mada Medical Products, Inc. for a purchase
price of $1.7 million. The Debtor is required to pay a
commission to Strategic Alliance Realty, Inc. of $85,000.
The net proceeds of the purchase price, after broker's fee
and closing costs, shall be delivered to Chase Manhattan in
exchange for Chase's execution of a release of the lien
created by the mortgage.
AL TECH: Seeks Bar Date for General Claims
------------------------------------------
Al Tech Specialty Steel Corporation seeks a general claims
bar date of April 20, 1998. The bar date order would
require all entities that have any claim against or
security interest in the Debtor which arose at or prior to
the December 31, 1997 petition date to file a written proof
of claim to the Western District of New York.
BRUNO'S: Receives $200M DIP Pact Proposal from PPM
--------------------------------------------------
PPM America Special Investments Fund L.P. gave Bruno's an
alternative $200 million debtor-in-possession financing
proposal with terms that are "far superior" to those in the
supermarket chain's proposed DIP agreement with Chase
Manhattan Bank. The final DIP hearing to approve Bruno's
$200 million DIP agreement with Chase was postponed from
Thursday to March 2 to give the company time to analyze the
competing offer.
(Federal Filings 20-Feb-1998)
CALDOR: To Close 12 Stores
--------------------------
The Caldor Corporation announced February 24, 1998 plans to
close twelve underperforming stores, including its seven
stores in the Washington, D.C. market, in order to better
focus on its core markets in New England and the Mid-
Atlantic states. The decision to close the stores was made
as the Company reviews its operations and develops a Plan
of Reorganization to emerge from Chapter 11. Caldor has
previously announced its intent to pursue a timetable to
emerge by the end of the 1998 Spring season.
Warren D. Feldberg, Chairman and Chief Executive Officer
noted that the implementation of Caldor's Business Plan has
led to significant improvements in the Company's
performance, including expected EBITDAR in excess of $50
million for fiscal 1997, an improvement of over $120
million from 1995. The Company will report its financial
results in April.
On February 13, 1998, the U.S. Bankruptcy Court granted
Caldor an extension of the period under which it has the
exclusive right to file a Plan of Reorganization with the
Court through September 1, 1998. Likewise, the period
in which the Company can solicit acceptances for the
reorganization plan has been extended through October 30,
1998. This six-month extension was supported by the
Company's creditor, bank and equity committees.
The closings are subject to bankruptcy court approval and
are expected to be completed in Spring 1998. The stores to
be closed, which include seven stores in the Washington,
D.C. market, two stores in the Baltimore market and three
stores in New York, are located at:
-- Falls Church, VA
-- Greenbelt, MD
-- Clinton, MD
-- Herndon, VA
-- Fairfax, VA
-- Silver Spring, MD
-- Forestville, MD
-- Baltimore, MD
-- Westminster, MD
-- Glens Falls, NY
-- Albany, NY
-- Jericho, NY
Including the stores to be closed, the Company currently
operates 157 stores in ten East Coast states.
GAYLORD: Seeks Authority to Extend Use of Cash Collateral
---------------------------------------------------------
Gaylord Companies, Inc. move for authority to further
continue use of cash collateral of its secured lender,
Greenfield Commercial Credit, L.L.C. through and including
March 31, 1998.
Following previous orders authorizing previous extensions,
the Debtors and Greenfield have continued to negotiate a
further extension of the Debtor's right to use cash
collateral through the end of March 1998. The Debtors are
no longer optimistic that an agreement can be reached.
Greenfield has informed the Debtors that if the Debtors do
not pursue a proposed sale of the assets of the Cookstore
Debtors to a certain entity brought to the Debtor by
Greenfield to the exclusion of other possible sales that
Greenfield will oppose the Debtor's continued use of cash
collateral.
The Debtors wish to pursue negotiations with, among others,
Cambridge Partners, L.L.C., for the Cookstore assets.
Therefore, Debtors seek a hearing to continue operations
for an additional 30 days in order to complete negotiations
for the possible sale or other disposition of the Bookstore
Debtors and the Cookstore Debtors and/or the development of
a Plan of Reorganization.
A hearing on this matter has been set for February 24, 1998
in the Southeastern District of Ohio, Eastern Division.
MIDCOM COMM: Hearing Set to Modify Exclusive Period
---------------------------------------------------
The Official Unsecured Creditors' Committee of Midcom
Communications, Inc. seeks authorization to modify the
Exclusive Period for Filing and Soliciting Votes for its
Chapter 11 Plan. A hearing is scheduled on March 6, 1998 at
10:30 a.m. at the Eastern District of Michigan, Southern
Division to consider this matter.
The Committee asserts that while the Debtor is currently in
negotiations regarding a plan, that plan may or may not
benefit creditors and/or shareholders. Therefore there is
no basis for not terminating the Debtor's exclusive right
to submit a plan since if the creditors determine that such
a proposed plan is also in their interests, creditors can
vote in favor of that plan if alternatively proposed.
There is nothing in the negotiations that require the court
to retain or extend the Debtor's exclusive right to submit
a plan. It is only because the Creditors' Committee
intervened, they assert, that such a plan may benefit
creditors, but the proponents have, as yet, failed to
provide any assurance that such a plan can meet any
requirements of the Creditors' Committee.
NORFOLK COMMUNITY HOSPITAL: Files Chapter 11
--------------------------------------------
Historic Norfolk Community Hospital, which has been
struggling to survive and recently laid off half its staff,
has sought protection from its creditors in U.S. Bankruptcy
Court.
The hospital's voluntary filing in Norfolk lists almost 500
creditors and $10 million in liabilities, including $3.2
million owed to the city and almost $1 million to the
Internal Revenue Service. Assets were not listed.
The hospital, which has already cut back its services, will
continue to operate for the time being, according to a
statement released Thursday evening by President Phillip D.
Brooks.
(Virginian Pilot Ledger Star 20-Feb-1998)
PARAGON TRADE: Receives OK for Joint Defense Agreement
------------------------------------------------------
As previously reported, Paragon Trade Brands filed a motion
to enter into a Joint Defense Agreement with the Committee
of Unsecured Creditors. The Court has approved the motion.
Any written objections should be filed with the Clerk of
the Court of the Northern District of Georgia, Atlanta
Division by February 27, 1998. Otherwise, the motion shall
be entered without further notice or hearing.
Q-ENTERTAINMENT: Houston Firm Bids for Troubled Company
-------------------------------------------------------
A Houston-based entertainment company has submitted a bid
to buy the assets of Q-Entertainment Inc. and its
subsidiaries a month after the Dallas corporation filed for
Chapter 7 liquidation under the U.S. Bankruptcy code.
Entertainment Technologies & Programs Inc. (OTC: ETPI) has
offered to buy the assets of Q-Entertainment - which
operated the Q-Zar laser tag centers - for $300,000 in
cash, according to filings with the Dallas division of the
U.S. Bankruptcy Court for the Northern District of Texas.
It has also agreed to assume $3 million of the Dallas
company's senior secured debt and certain obligations under
various contracts and leases, the filings said.
The court approved a bidding procedure for the sale of Q-
Entertainment's assets on Feb. 12. A hearing is slated for
March 11 to approve ETPI's proposed contract or another bid
selected by Dallas attorney Scott Seidel, who is acting as
the trustee of Q-Entertainment's estate. Bids must be
submitted to Seidel by March 6.
Attorneys are still trying to sort out Q-Entertainment's
financial status, Phelan said. It has not filed a complete
financial schedule, but initial court filings said Q-
Entertainment had $30 million in assets and $28.3 million
in liabilities. They also reported that subsidiaries like
Q-Zar USA Inc. had assets of $34.5 million and liabilities
of $35 million, and Entertainment Technologies Inc. had
assets of $1 million and liabilities of $15.05 million.
(Dallas Business Journal 20-Feb-1998)
SMITH TECHNOLOGY: Respond to Committee on Filing Procedures
-----------------------------------------------------------
The Debtors, Smith Technology Corporation et al., have
responded to a request involving filing procedures by the
Official Committee of Unsecured Creditors. The Committee
has moved that the Debtor file complete statements of
affairs and schedules; file complete inventories of
property of each estate; file monthly operating reports
with the U.S. Trustee; maintain separate records of
receipts and disposition of money and property received by
each Debtor; and furnish other information as requested by
the Committee.
The Debtors believe they can furnish financial statements
and schedules by the date sought. They are continuing to
furnish inventories, but need more than the 14 days
allocated for this time.
US ONE: Submits First Amended Disclosure and Plan
-------------------------------------------------
US One Communications Corp. filed its First Amended
Disclosure Statement and Plan of Reorganization with the
District of Delaware on February 18, 1998.
The Plan effectively distributes the remaining assets
subsequent to the Asset Purchase Agreement between the
Debtors and WinStar Communications, wherein WinStar agreed
to pay $100 million for substantially all of the Debtors'
assets.
The Debtor received approval of its Interim Distribution of
$61.8 million on December 19, 1997. This is the cash
component of the proceeds of the sale for all undisputed
priority and administrative expense claims, and a pro rata
distribution to all holders of allowed unsecured
prepetition claims. The proposed distribution represented
approximately 80% of each allowed unsecured claim, with a
$5 million holdback to furnish the same or better treatment
under a chapter 11 plan for the full amount of all disputed
claims.
The classes of claims and interests established by the plan
and the remaining distributions made to those classes are
listed below:
Class Claim Treatment
----- ----- ---------
Priority Tax Claims Not impaired--Receive
full amount in cash
1 Priority Non-Tax Impaired--Receive full
Claims amount in cash
2 Secured Claims Impaired--Receive full
amount either in (a)
cash, or (b) the
property securing the
claim will be abandoned
to the holder.
3 Unsecured Claims Impaired--Receive full
satisfaction of its Pro
Rata share of the Class
3 Distribution Amount
in Debtors' excess cash
4 Preferred Stock Impaired--Allowed
Interests Classes of these
interests shall receive
full satisfaction of
its Pro Rata share of
the Equity Interest
Distribution Amount
5 Other Interests Impaired--Includes
holders of Common
Stock; receive no
distribution
6 Interests of US One US One Services and US
One New York--will be
merged with and into
US One on the Effective
Date.
VENTURE STORES: Secures Favorable Agreements
--------------------------------------------
Venture Stores, Inc. today received court approval on
several items that will allow the company to make positive
progress in its reorganization. These include a plan to
provide expedited compensation to loyal vendors who shipped
merchandise to Venture immediately prior to its filing and
an enhanced bid that will generate more cash through the
sale of inventory from 20 stores that the company plans to
close.
Venture reached a quicker than normal agreement with its
creditors' committee on a reclamation plan to provide total
compensation to vendors who shipped merchandise to the
company shortly before its Chapter 11 filing. The plan
provides these vendors with immediate payment for 50
percent of their claim, with the remaining to be settled at
a later specified time. To qualify for the 50 percent
payment, vendors will need to provide Venture with mutually
agreed upon trade credit.
The court also approved a high bid for the sale of
inventory at 20 underperforming stores in non-core markets.
Venture previously announced that these stores would be
closed in order to reduce expenses and improve cash flows,
so that the company can successfully rebuild its business
in its key Midwestern markets. The enhanced bid submitted
by Hilco/Great American Group and Gordon Brothers Retail
Partners LLC provides for the purchase of the inventory at
52 percent of its retail value.
"This bid demonstrates the confidence Hilco/Great American
Group has in Venture's high-quality merchandise," said
Robert N. Wildrick, Venture chairman and chief executive
officer. "Our DIP financing, the additional liquidity from
Hilco's inventory purchase, improved cash flow and expense
reduction efforts will provide us with a stable foundation
on which to build for the future.
"We are pleased we were able to cooperate with the
creditors' committee to resolve the reclamation issue and
are encouraged by how quickly an agreement was struck," he
added. "Establishing and maintaining a good working
relationship with our creditors' committee is important in
pursuing our reorganization plan. It is through a team
effort that this process will be successful."
Following the planned closing of 20 locations, Venture will
operate 73 general merchandise stores in eight midwestern
states.
WESTERN PACIFIC: Public Relations Brought Company Down
------------------------------------------------------
The brief, stormy history of Western Pacific Airlines is a
study in public relations - good, bad and totally wrong-
headed.
Founder Ed Beauvais wanted to create a low-fare, no-frills
airline that could offer the travel public an alternative
to United and Denver International Airport. To keep costs
low the new airline would use Colorado Springs as a hub.
Wall Street bought the story. An IPO was oversubscribed and
Western Pacific was in business with six leased, fairly
new, efficient airplanes.
The principal publicity-gathering thrust was geared to the
"logo jet" program. This program was based upon selling the
exterior of Western Pacific planes for advertising
purposes. This was a blockbuster.
Then the crash of a ValuJet plane in the Everglades caused
travel consumers to take another look at low-fare carriers.
They were frightened. In their minds, low-fare meant
unsafe. The moment that crash happened Freeman Public
Relations Group urged WestPac management to run a national
advertising campaign based upon safety. But in this case
the same management that gave a go-ahead to every
irreverent promotion proved to be very conventional in
talking about safety.
The ValuJet crash killed WestPac. The board of directors
pushed Ed Beauvais upstairs, took away his power and
brought in alleged turnaround expert Bob Peiser and his
marketing colleague Mark Coleman. Peiser trashed the "logo
jet" program as unseemly.
(Denver Business Journal 20-Feb-1998)
*********
A listing of meetings, conferences and seminars appears
each 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
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