/raid1/www/Hosts/bankrupt/TCR_Public/980416.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, April 16, 1998, Vol. 2, No. 74
Headlines
2CONNECT EXPRESS: Requests Reconsideration of Auction Sale
ANCHOR RESOLUTION: Agreement Regarding Streator Facility
CONTEMPORATY INDUSTRIES: Fire Occurs 3 Days After Deal
ERD WASTE CORP: Requests Time to Assume or Reject Leases
FRETTER: Reply to Trustee's Motion for Global Settlement
FRETTER: Seeks Extension of Exclusivity
GENERAL WIRELESS: Court Recommends Cases Stay Put
GRAND UNION: Its Common Stock Makes Wallpaper
HESTER GUY: Unlikely Recovery for Unsecured Creditors
JINRO BEER: Asks Coors to Buy it Out
KIA MOTORS: Put Into Court Receivership
KIA MOTORS: Union Members Vote in Favor of Strike
MARVEL: Bondholders To Get Additional 21.5M Shares
MARVEL: Toy Biz Board of Directors May Not Be Proper
NAL FINANCIAL: Leases and Servicing Agreements Rejected
NAL FINANCIAL: Taps Mike Lau - Reporting Specialist
PARAGON TRADE: Kimberly-Clark Objects to Relief
PAYLESS CASHWAYS: Shareholders Meet Officers and Directors
POCKET COMMUNICATIONS: Creditors Plan New Wireless Firm
RDM SPORTS: Trustee and Foothill to Enhance Collection
RIVER OAKS: Applies for Authority to Employ Accountant
SEARCH FINANCIAL: Can Fund Collection/Operating Expenses
STRAWBERRIES INC: Seeks Exclusivity Extension To May 28
T.EATON: Expected to Begin Trading Publicly
TOWN & COUNTRY: Preliminary Report on Sales
WEBSECURE INC: Bankruptcy Court Freezes Assets
*********
2CONNECT EXPRESS: Requests Reconsideration of Auction Sale
----------------------------------------------------------
2Connect Express, Inc., debtor, is filing a motion for
rehearing or reconsideration of the court's oral ruling of
April 10, 1998 denying the debtor's motion for authority
to conduct an auction sale.
The court denied the motion on the grounds that any such
sale of inventory should more properly be considered by
the creditors as part of a plan of reorganization or
liquidation, and not through an auction on shortened
notice.
The debtor states that the Creditors' Committee fully
supports the auction. Furthermore, the creditors have
over 20 days to object to the auction, and finally, the
debtors point out that this auction is one of excess
inventory and no other assets. The debtors state that
there is no other avenue to sell this inventory, and that
it is collecting dust in a warehouse.
ANCHOR RESOLUTION: Agreement Regarding Streator Facility
--------------------------------------------------------
A Stipulation was filed among the debtor, Container
Holdings and New Anchor resolving a dispute regarding the
Streator facility.
In consideration of the sale of its manufacturing
facility, Anchor Resolution Corp., debtor received
$516,000 and a promissory note for $2.8 million payable in
yearly installments. The debtor was obligated to
indemnify Container Holdings. A dispute arose between the
debtor and New Anchor as a consequence of the closing.
Container Holdings has never paid on the Note, asserting a
right of offset for the debtor's failure to perform the
Remediation.
The parties have entered into an agreement stating that
the debtor and New Anchor release Container Holdings from
any further obligations. New Anchor has use of the central
machine shop rent-free until June 30, 1999. The liens of
record will be released and the Sale Contract is deemed
fully executed. In consideration of the agreements,
Container Holdings agrees that on the earlier of a transfer
of the Streator facility to an entity not an affiliate of
Container or June 30, 2001, Container shall have caused the
glass making furnaces located at the Streator Facility to
be demolished and removed.
CONTEMPORATY INDUSTRIES: Fire Occurs 3 Days After Deal
------------------------------------------------------
An early Saturday arson that a fire investigator described
as "definitely unusual" won't disrupt plans to sell a
financially troubled Omaha-based convenience food store
company, officials involved in the sale said Tuesday.
The fire in the Old Mill headquarters of Contemporary
Industries Corp. occurred three days after a West Des
Moines, Iowa, company agreed to buy the company for $20
million. Contemporary Industries operates 113 7-Eleven
stores in 11 states.
The fire might be linked to the sale, said Harry Dixon Jr.,
lawyer for the Omaha company, which is in Chapter 11
bankruptcy proceedings. It might have been set by someone
who wants to delay the sale or the bankruptcy proceedings,
he said. "It was so hot it melted the steel I-beams in the
(accounting) room," he said.
Damage to the building, estimated at $250,000, is covered
by insurance, said Steve Victor, chief financial officer of
a Chicago firm that was brought in three months ago to
manage Contemporary Industries. Contemporary Industries
was sold Wednesday to Kum & Go, a five- state convenience
food store chain. That sale needs approval from U.S.
Bankruptcy Judge Timothy Mahoney of Omaha. Meanwhile, all
7-Eleven food stores will remain open, Victor said. "We
are meeting our bills," he said. "Employees will be paid.
Everything is normal as can be."
Development Specialists Inc. of Chicago, a specialist in
business turnarounds, was hired in January to manage the
Omaha company. The Chicago company was hired by the
Indianapolis bank that is the Omaha company's main
lender. As part of the turnaround efforts, Bank One of
Indianapolis injected $2.5 million in capital. Shortly
before the Chicago company took over, most of the
top managers and all the directors of Contemporary
Industries resigned, Victor said.
Creditors are owed $36.5 million and would receive partial
payment if the sale receives court approval, Dixon said.
The main creditor, Bank One, would receive $14 million,
Dixon said. That bank is owed $21 million. Allied Capital
Corp. of San Francisco would get about $3 million of the $9
million it is owed, he said. Trade creditors, who are owed
$6.5 million, would get $2 million, with about $1 million
going to pay costs of the bankruptcy action, he said.
(Omaha World-Herald; 04/14/98)
ERD WASTE CORP: Requests Time to Assume or Reject Leases
--------------------------------------------------------
The debtors, ERD Waste Corp., et al, seek the issuance and
entry of an order extending the debtors' time to assume or
reject certain of their leases of nonresidential real
property until June 30, 1998. As of the Petition Date,
the debtors were lessees under approximately 14 leases.
The debtors rejected several properties, and continue to
lease 6 premises.
The debtors believe that most of the leases may prove to
be vital to the continuing operations of their businesses,
and to the viability of effectively seeking to restructure
their debts and to reorganize their affairs. Those leases
that may not ultimately be deemed to be integral for
operations may nonetheless prove to be "below market"
leases, the assumption and assignment of which will yield
value to the debtors' estates.
Until the debtors are given an opportunity to adequately
pursue the avenues available to them to restructure their
debts and develop a plan, however, they cannot determine
exactly which of the leases should ultimately be assumed or
rejected.
FRETTER: Reply to Trustee's Motion for Global Settlement
--------------------------------------------------------
The debtors, Fretter Inc. et al, filed a motion for an
order approving the Global Settlement. No objections to
the Global Settlement have been filed other than the
objection of the US Trustee. The debtors state that the
US Trustee's speculation about Jones Day's relationships
with the Silo Entities and BTCC should not delay a
settlement that appears to be in the best interests of
everyone.
The debtor states that the US Trustee persists in his
attempt to prove what does not exist, an undisclosed,
secret attorney-client relationship between Jones Day and
the Silo Entities. The debtor states that the US Trustee
has refused to meet with Jones Day to give it an
opportunity to provide the simple answers to many of his
questions. In his mission against Jones Day, the debtor
claims that the US Trustee demonstrates disregard for the
economic interests of the constituencies of these estates.
The Global Settlement is supported by every economic party
in interest.
The debtor fully describes Jones Day's relations with the
Silo Entities and BTCC. Finally, the debtor states that
the US Trustee's theories do not stand up to even the
mildest scrutiny.
FRETTER INC: Seeks Extension of Exclusivity
-------------------------------------------
On April 28, 1998 the court will conduct a hearing with
respect to the motion of debtors, Fretter, Inc. et al, for
an order further extending exclusive periods to file
Chapter 11 plans and obtain acceptances thereof. The
debtor is requesting that the period to file plans be
extended to September 1, 1998 and that the debtor be
permitted to solicit acceptances to the plan until November
2, 1998.
The debtors request that the court enter an order
extending the debtors' and creditors' committee exclusive
plan filing and solicitation periods by approximately 145
days. The debtor states that the extensions are justified
for a number of reasons. The complexity and size of the
cases make a further extension necessary. Secondly, the
debtors state that they have made significant progress on
numerous fronts.
To date, the debtors cite that they have closed
transactions with respect to 30 real property sites,
realizing in excess of $37 million a result of the sales.
Also, six of the debtors' remaining properties are subject
to signed contracts. The purchase prices in these
contracts total $10 million. And the debtors are marketing
their 2 remaining real property locations.
The debtors also state that they have sold their remaining
inventory and nearly all of their furniture and fixtures.
The debtors have collected substantial amounts of
outstanding accounts receivable, and the debtors have filed
a number of adversary proceedings designed to collect other
receivables. The debtors have been in continuing
negotiations regarding a potential plan of liquidation.
Most significantly, the debtors say is their process of
seeking approval of the Global Settlement.
The debtors believe that the next stage of these cases
will focus on obtaining court approval of the Global
Settlement and ensuring that the Global Settlement becomes
effective.
GENERAL WIRELESS: Court Recommends Cases Stay Put
-------------------------------------------------
The General Wireless Inc. bankruptcy cases and adversary
proceeding against the Federal Communications Commission
will stay in the bankruptcy court if U.S. Bankruptcy Judge
Steven A. Felsenthal has any say in the matter. Judge
Felsenthal issued a report to the U.S. District Court in
Dallas, recommending that the district court deny the FCC's
motion to withdraw reference. The request, if granted,
would mean that the bankruptcy cases for General Wireless
and its 14 units, as well as the adversary proceeding,
would be transferred to the district court for further
proceedings. (Federal Filings, Inc. 15-Apr-1998)
GRAND UNION: Its Common Stock Makes Wallpaper
-----------------------------------------------
"If you own common stock, you can use it as wallpaper,"
said one Manhattan analyst who follows the company,
speaking on condition of anonymity. Under the latest plan,
shareholders will see the value of their shares wiped away.
"Holders of the stock have some reason to be annoyed. {The
common stock} is just about worthless," said Hope Crifo, an
analyst for KDP Investment Advisors in Montpelier, Vt.
Robert Minahan, a Troy resident who owns 5,000 shares of
the company's common stock, agreed. "The shareholders are
taking a beating on this. They are writing off the
shareholders," he said.
The bad news in Grand Union's plan extends to many of the
15,000 employees of the company, who were actively
solicited by their employer to purchase the stock as
recently as January.
A plan for employees to purchase common stock at a 15
percent discount through payroll deductions was unveiled by
the company Nov. 1. The Associated Stock Purchase Plan
touted the opportunity to "take part in your company's
future."
When the company made its March 30 announcement, the
restructuring plan was laid out in bare-bones fashion, with
details yet to be worked out. At the time, Grand Union
announced that it had reached an agreement in principle
with a committee of holders of its senior notes.
Under the plan, $600 million in senior notes will be
canceled and exchanged for essentially all of the
reorganized company's new common stock. The existing
common stock will be canceled.
Holders of the stock, which closed on the National
Association Securities Dealers Automated Quotation System
Small-Cap market at 43.75 cents per share April 7, will
receive warrants in exchange for the canceled shares. The
five-year warrants will allow the holder to purchase up to
2 percent of the newly issued common stock at an exercise
price of $19.82. Existing shares of preferred stock also
will be canceled. The holders will be offered the right to
receive cash or new common stock.
The company had a net loss of $182 million for the 40-
week period ended Jan. 3, compared to a $106.1 million loss
for the comparable prior year period. There is a heavy
long-term debt load, which currently totals $800 a million.
Interest expense rose to $86 million for the 40-week period
ended Jan. 3, compared to $81.3 million for the comparable
prior year period. "This will extinguish $600 million in
debt and free up $72 million in annual interest payments.
Those funds will be used in growing the company.
"The $19.82 is a warrant price agreed upon with the senior
note holders. Discussions between the company and the note
holders were confidential. At this point in time, analysts
said, the warrants have little value. "The warrants could
have some value at some point in time, if the company is
bought out or if they {substantially} reverse their
decline," said Crifo, of KDP Investment Advisors.
But the company's track record on warrants is not good.
Grand Union issued warrants to common stock holders as part
of its 1995 Chapter 11 filing. That filing featured debt
cancellation and an exchange of bonds for common stock,
much as the current plan does. Five-year warrants with an
exercise price of $30 to $40 per share were issued in the
1995 filing to certain bondholders. However, while the
stock traded at $10 to $13 dollars a share in the fall of
1995, its value has steadily fallen and has not come near
the $30 mark. (Capital District Business Albany - 04/13/98)
HESTER GUY: Unlikely Recovery for Unsecured Creditors
-----------------------------------------------------
Hester Guy Foods Ltd faces a $2.1 million disaster, a
creditor's meeting was told in Palmerston North yesterday.
Liquidator Ken Howard said it was unlikely that unsecured
creditors, who had lost $1.75 million, would receive
anything from the collapsed food processing company.
Shutting down the plant after the February 27 collapse had
been his only option. Suppliers were not supplying, product
was not being freighted and wages weren't being paid. "The
staff were restless."
Mr Howard said the company had continued trading while it
was insolvent, and incurred debt that it knew it couldn't
pay. There were provisions for the liquidator and creditors
to make Anton Smith, the sole director, liable for the
company's debts. However, legal action was a costly
excercise, and might not be justified.
The two major creditors were Woolworths, at $77,000, and
Foodstuffs Ltd, at $40,000. In July last year, another
$150,000 was borrowed from an investor. Then the
company's financial accountant backed up the $100,000 he
had already loaned with another $150,000. He aimed to
participate in any share capital. (Evening Standard - 04/09/98)
JINRO BEER: Asks Coors to Buy it Out
------------------------------------
South Korea's Jinro Group said Wednesday it has asked Coors
Brewing Co. of the United States to take over its beer-
making subsidiary. In 1992, Coors, based in Golden, Colo.,
invested $22 million for a 33 percent interest in Jinro-
Coors Brewing Co., South Korea's third-largest brewer.
Struggling amid the country's financial crisis, Jinro now
is asking Coors to buy the rest of the brewery, Jinro
officials said. Jinro-Coors controls 20 percent of South
Korea's $2 billion beer market.
In a proposal now under discussion, Coors will first sell
its stake to Jinro, then buy the whole company. In such a
format, Coors can secure a better negotiating position,
Jinro officials said.
Jinro is South Korea's 22nd largest conglomerate, with 16
companies engaged in alcoholic beverages, food,
construction and retail businesses. Several companies
within the group went bankrupt last September.
(AP Online; 04/15/98)
KIA MOTORS: Put Into Court Receivership
---------------------------------------
South Korea's Kia Motors and Asia Motors were
put into court receivership on Wednesday, a judge at the
Seoul District Court told Reuters.
Creditors of the two carmakers applied for court
receivership last year after they were near failure.
The judge who declined to be identified said Yoo Chong-yul,
vice chairman of unlisted Hyosung Industries Co, had been
appointed by the court as the administrator for the two
carmakers.
Another affiliate of Kia Group, unlisted Kia Intertrade Co,
also was put into court receivership on Wednesday, an
official at Kia said. Kia Group was South Korea's eighth
largest conglomerate last year before financial
difficulties pushed it to the edge of bankruptcy. It was
removed from a list of the country's top 30 business groups
issued by the Fair Trade Commission. (Reuters; 04/15/98)
KIA MOTORS: Union Members Vote in Favor of Strike
--------------------------------------------------
All 1,000 management personnel of South Korea's
ailing Kia Motors Corp. resigned en masse Tuesday in a
desperate tactic to put pressure on creditors and foil a
possible sell-off bid. "The resignations were tendered to
Kia Motors President Park Je-Hyuk ... to show their strong
will," a Kia Motors spokesman said.
A statement by the labour union said 92.6 percent of the
union members voted in favour of striking. There were
reports that workers laid down their tools, but an official
for the union said no immediate plan for a full strike had
been set, and that details of the strike schedule would be
decided at a meeting at 6 p.m. on Wednesday.
"We are also waiting for comments by the court-appointed
administrator," the official said. "If he states
opposition to a third-party takeover we will welcome him."
The Kia labour union has been protesting possible third-
party takeovers and has been demanding job security.
The Seoul District Court appointed Yoo Chong-yul, vice
chairman of unlisted Hyosung Industries Co, as the court-
appointed administrator for Kia Motors and Asia Motors on
Wednesday. The court also approved court receivership for
the two carmakers.
The union official said the union was also demanding that
the court appoint another co-administrator from within the
company to reflect Kia's position. Another official said
Kia Motors union could launch an immediate full
strike if the government officially endorsed a third-party
takeover. (Reuters: Financial - 04/15/98)
MARVEL: Bondholders To Get Additional 21.5M Shares
--------------------------------------------------
Bondholders will receive an additional distribution of up
to 21.5 million shares of Marvel Entertainment Group Inc.
stock that were pledged to secure notes of Marvel's holding
companies. The court authorized the additional
distribution by indenture trustee LaSalle National Bank, on
top of the 12.5 million shares authorized for distribution
on March 4. The latest distribution is necessary to meet
the noteholders' requests for shares under a settlement
between the comic book publisher's holding companies and
LaSalle. The original settlement proposed to distribute
all 77.3 million Marvel shares that were pledged as
security for $894 million of bonds. (Federal Filings,
Inc. 15-Apr-1998)
MARVEL: Toy Biz Board of Directors May Not Be Proper
----------------------------------------------------
The Official Committee of Equity Security Holders of Marvel
Entertainment Group, Inc. through its counsel, Adelman
Lavine Gold and Levin, PC, announced that the Third Circuit
Court of Appeals entered an Order on request of the Equity
Committee staying the District Court's Order of March 30,
1998 which Order determined that Toy Biz, Inc.'s Board of
Directors was proper under law.
The Third Circuit Court of Appeals further stayed the
confirmation hearing on the Joint Second Amended Plan
propounded by Toy Biz and Marvel's secured lenders. The
Equity Committee believes that under applicable bankruptcy
law the Toy Biz corporate governance issue was wrongly
decided by the District Court and therefore requested
relief from the Third Circuit Court of Appeals. The
Equity Committee will continue its efforts to negotiate a
consensual plan of reorganization which will preserve the
interests of Marvel's equity holders.
NAL FINANCIAL: Leases and Servicing Agreements Rejected
-------------------------------------------------------
NAL Financial Group Inc. announced today that as part of
its reorganization efforts, NAL Acceptance Corporation, a
wholly owned subsidiary of the Company, has rejected
various leases and agreements deemed onerous to the
Company, including 6 separate Servicing Agreements
originally executed by NAL Acceptance with 6 different
securitization Trusts. Mercedes Padin, General Counsel
for the Company and NAL Acceptance stated that, "Under
these Servicing Agreements we were to receive a 3% annual
servicing fee and limited costs and expenses. However,
most of these Agreements also provided that if the loans
in a Trust portfolio hit a certain loss trigger, our
servicing fees would not be payable, if at all, until that
Trust was terminated and the Trust note and certificate
holders were paid in full. These default triggers were
reached quite early in each Trust. As a result, NAL
Acceptance has been servicing about $220 Million
in Trust loans but has received no servicing income from
most of these Trusts.
Current management believes this arrangement to be onerous
and elected to reject these agreements." The Company also
announced that a short term, interim Servicing Agreement
had been worked out with most of the Securitization Trusts
pursuant to which the Company will receive higher servicing
fees and its costs and expenses of servicing these loans
during the 90 day term of the new agreement. The interim
agreement received preliminary approval from the bankruptcy
court on April 14, 1998, and the Company's request for
final court approval will be heard in a few days. Andrew
Combs, Vice President of Finance commented "Short term, the
new agreement gives us additional income for 90 days and
gives us a platform to discuss a long-term permanent
servicing arrangement with representatives of the Trusts."
NAL FINANCIAL: Taps Mike Lau - Reporting Specialist
---------------------------------------------------
The debtor, NAL Financial Group, Inc. is seeking to retain
Mr. Mike Lau as a securitization trust reporting
specialist. As part and parcel to the servicing of the
Auto Trusts, NALA is required to compile data and to
produce the certain servicing certificates for each
securitization trust.
Lau would be retained at a rate of $100 per hour, and the
debtors expect to employ him for approximately one hundred
hours per month. The debtors further need to retain two
temporary loan/lease accountants for their accounting
department to replace employees who have left the company.
The debtors seek to retain the temporary accountants at
$25 per hour and expect to utilize the services of the
temporary accountants for approximately 50 hours per week.
PARAGON TRADE: Kimberly-Clark Objects to Relief
-----------------------------------------------
Kimberly-Clark Corp. (KC) objects to the entry of an order
granting relief from the automatic stay, which provides
relief to Paragon Trade Brands, Inc., debtor, with respect
to its Alternative Design Product. KC says that the
relief was not the subject of any motion and there was no
notice or opportunity for hearing, there was no
opportunity to present evidence, and KC has been denied
due process.
According to KC, the relief being provided the Debtor
essentially requires KC to obtain legal advice as to
whether a product designed by the debtor violates any of
the numerous patents held by KC and then requires KC to
disclose that legal advice to the debtor. (Kansas City
Star; 04/15/98)
PAYLESS CASHWAYS: Shareholders Meet Officers and Directors
----------------------------------------------------------
The biggest question confronting Payless is whether the
Kansas City-based home-improvement and building-supplies
retailer will stick with its market strategy called dual
path. Will the company abandon it, shift toward
professional builders, move toward do-it-yourselfers or
leave things as they are?
Dual path, in which Payless tries to serve the professional
and consumer markets, was imposed by the previous
management. The idea was to convert one or two stores in
each of Payless' major markets to primarily serve
contractors. The shift to dual path was halted in
midstride as the company went through Chapter 11
reorganization.
Another compelling question is who will run the company.
Donald E. Roller, the former president of United States
Gypsum, is running the day-to-day operations as acting
chief executive officer. (Kansas City Star -04/15/98)
POCKET COMMUNICATIONS: Creditors Plan New Wireless Firm
-------------------------------------------------------
Creditors of a bankrupt wireless phone company have forged
a deal with federal regulators that could bring a new
wireless-phone competitor to the Dallas area as early as
next year.
Lenders of Washington, D.C.-based Pocket Communications
Inc., which filed for Chapter 11 protection last year,
hammered out the pact in late March with the Federal
Communications Commission and the U.S. Department of
Justice.
Terms call for the formation of a new company - dubbed
"NEWGSM Co." to acquire Pocket's licenses to provide
wireless phone service in 14 markets, all centered in and
around Dallas and Chicago. The creditors said they will
file the proposed reorganization plan for Pocket by April
15. A judge will probably review the plan sometime in late
spring.
If all goes as planned, the new wireless phone service
could be up and running by the second half of 1999, said
Kenneth Irvin, an attorney with the Washington-based law
firm of Morrison & Foerster L.L.P., which represents
Siemens Telecom Networks, one of Pocket's creditors.
But there is more at stake than just the roughly $178
million that Pocket creditors poured into the company via
debt. Pocket's licenses call for the use of a digital
wireless technology called Global Standard for Mobile
Communications, or GSM.
GSM is the standard for wireless telecommunications in
Europe. But many American carriers - including Sprint PCS
and Westlake-based PrimeCo Personal Communications - use
another standard, called Code Division Multiple Access,
CDMA. The systems differ in how they send wireless calls
from one point to another. Proponents of the various
technologies each say their calls are clearer and more
secure than the others', although analysts say there's
little difference between them.
The problem for the eight American GSM carriers is that
there are many areas of the United States where no GSM
company operates. Two big holes in the GSM map are in
Dallas and Chicago. For the GSM industry, getting service
in those two cities is important. The growing number of
wireless phone carriers has created fierce competition for
customers, who want to be able to take their phones
anywhere. The prices of wireless-phone service are
increasingly growing similar, making it more
important than ever to have wide coverage areas.
The deal between Pocket's creditors and the feds calls for
NEWGSM Co. to be owned and operated independently of the
Pocket creditors. It will also have to meet all the
requirements that C-Block companies met for being - at
least in the government's eyes - a small, entrepreneurial
company. That means neither the creditors themselves nor
any large telecommunications companies could acquire
Pocket's licenses.
Now the creditor group is seeking proposals from candidates
to invest in and own NEWGSM, and a decision is expected in
a month or two. That means the creditors will be able to
choose the operator of the new entity, rather than
having the licenses put up for re-auction. The FCC will
have to approve the deal. NEWGSM will purchase the 14
Pocket licenses for about $518 million, or roughly 63% of
the $820 million that Pocket bid for them. (Dallas
Business Journal - 04/10/98)
RDM SPORTS: Trustee and Foothill to Enhance Collection
------------------------------------------------------
In the case of RDM Sports Group, Inc. and its affiliated
companies, as debtors, the Chapter 11 Trustee, William G.
Hays and Foothill Capital Corporation, as agent for a
group of lenders are filing a motion for a hearing on the
emergency joint motion filed by the Trustee and Foothill
seeking the approval of certain parameters to enhance the
collection of accounts receivable. The Trustee and
Foothill state that the longer the debtors' accounts
receivable remain outstanding the more difficult they will
be to collect.
Specifically, the Trustee wishes to compromise or settle
a receivable with Target Stores Inc. that is $1.3 million.
Without going into the details of how they will enhance
the collection of these accounts, since they ask that the
parameters be placed under seal, the Trustee and Foothill
are asking that the court set a hearing for the earliest
possible date for this emergency joint motion.
RIVER OAKS: Applies for Authority to Employ Accountant
------------------------------------------------------
The debtor, River Oaks Furniture, Inc. requests authority
to employ the accounting firm of Lefoldt & Co., PA.
Lefoldt & Co. has been working on the preparation of
schedules and various documents to be produced to the US
Trustee and the firm has met with the US Trustee and with
the debtor and is familiar with the debtor's business and
financial issues. The firm's accountants charge an hourly
rate between $50 and $140.
The debtors are seeking to advance $15,000 to the firm for
the advance against fees and costs, the sum to be
transferred from the debtor's line of credit and post-
petition financing from the Bank of New York.
The debtor is also seeking authority to employ Horne CPA
Group to complete an audit for the annual reports to
shareholders and a Form 10-K to be filed with the SEC. The
Horne Group is currently owed $93,832 under its contract
with the debtor and should be able to complete this audit
for an additional $50,000. The debtor seeks to pay the
Horne Group the amount currently owed and $9,749 for other
work done. In order to issue an opinion on the debtor's
financial statement, these fees must be paid, or the
accountants would not be considered independent. The
firm's hourly billing rates range from $60 per hour to
$250 per hour. The debtor also states that if it were to
hire a different accounting group to complete the audit and
the Form 10-K, all of the previous work would be lost, and
the time lost would be significant.
SEARCH FINANCIAL: Can Fund Collection/Operating Expenses
--------------------------------------------------------
Search Financial Services Inc. announced that the court has
approved its motion (1) allowing Search and MS Financial,
Inc. (MSF) to continue to use a portion of the collections
on the receivables portfolio pledged to Fleet Bank, N.A.
and the other banks party to the MSF loan agreement to fund
collection and related operating expenses and (2)
permitting MSF to sell all or substantially all of its
assets to a third party or, as a last resort, to Fleet
Bank, as agent for the bank group, in complete
satisfaction of MSF's indebtedness to the bank group.
That indebtedness is guaranteed by Search.
A hearing on Search's motion for final approval of the sale
of MSF's assets is scheduled for April 23, 1998. If a
higher and better offer is not received from a third party
and the assets are sold to Fleet, MSF will be entitled to
receive 65% of the proceeds from collections on the pledged
receivables portfolio after deducting therefrom an amount
equal to the obligations owed under the loan agreement,
estimated at approximately $62.2 million at March 6,
1998, the date of Search's bankruptcy filing, plus
continuing interest and certain costs, and a servicing fee
equal to the lesser of (1) all costs and expenses actually
incurred by Fleet Bank with respect to servicing and
liquidation of the assets conveyed to it and (2) the
greater of 4% per year of the principal balance of the
receivables serviced or $20 per month per receivable
serviced.
George Evans, Chairman and CEO of Search, stated, "This
approval from the court allows us to move ahead to complete
our exit from the subprime automobile business free of
bank debt related to that business and with the
opportunity to share in future collections on the MSF
portfolio. Once a sale is completed, we will focus on
reorganizing around our consumer finance operations."
STRAWBERRIES INC: Seeks Exclusivity Extension To May 28
-------------------------------------------------------
Strawberries, now known as Milford Resolution Inc., has
asked the court to extend the company's exclusive
period for filing a liquidating plan of reorganization to
May 28. The company noted that the unofficial committee of
secured trade vendors and the largest creditor, Equitable
Capital Private Income & Equity Partnership II L.P., have
agreed to a proposed plan term sheet. Strawberries is now
in discussions with the Official Creditors' Committee
regarding the term sheet. (Federal Filings, Inc.
15-Apr-1998)
T.EATON: Expected to Begin Trading Publicly
-------------------------------------------
Canadian retailer T. Eaton Co. Ltd., which only a year ago
teetered on the brink of bankruptcy, is expected to begin
trading publicly for the first time in its almost 130-year
history, industry insiders said Tuesday.
The venerable retailer, which has more than 50 department
stores nationwide, will file the necessary paperwork with
regulatory officials in the near future and then hit the
streets immediately in a country-wide roadshow, they said.
The issue is expected to be completed by the end of May.
Gross proceeds and the price per share remain unknown, but
newspaper reports valued the transaction at C$175 million.
Eaton's, which has been wholly owned by the Eaton family
since its founding, is expected to use the proceeds to
renovate stores as it battles back from bankruptcy.
(Reuters: International - 04/14/98)
TOWN & COUNTRY: Preliminary Report on Sales
--------------------------------------------
Town & Country Corporation, the international jewelry
manufacturer, today reported preliminary unaudited
consolidated net sales were $118.2 million for the year
ended Feb. 22, 1998, compared to $209.2 million for the
year ended Feb. 23, 1997. Gross profit was $9.1 million
for the year ended Feb. 22, 1998, compared to $26.2
million for the year ended Feb. 23, 1997.
The Company reported a loss from operations of $21.4
million for the year ended Feb 22, 1998 versus a loss from
operations of $54.8 million in the year ended Feb. 23,
1997. Operating results for the year ending Feb. 22, 1998
include nonrecurring charges relating to the Company's
continued efforts to restructure its core business.
Operating results for the year ended Feb. 23,
1997 include the effects of a $35.5 million inventory
charge and a $7.2 million restructuring charge.
The Company reported a net loss of $44.1 million for the
year ended Feb. 22, 1998, compared with a net loss of $62.3
million for the year ended Feb. 23, 1997. Net loss per
common share was $1.69 for the year ended Feb. 22, 1998
compared to a net loss per common share of $2.47 for the
year ended Feb. 23, 1997. The Company's net loss for the
year ended Feb. 22, 1998 includes a loss on its investment
in Solomon Brothers Limited of $11.0 million.
The comparability of consolidated results of operations for
the year ended Feb. 22, 1998 to consolidated results of
operations for the year ended Feb. 23, 1997 is affected by
the sale of the Company's Balfour business on Dec. 16,
1996 and the sale of the Company's Gold Lance business on
April 18, 1997. As previously announced, Town & Country
Corporation filed a voluntary Chapter 11 petition on Nov.
17, 1997. The Company's operating subsidiaries, Town &
Country Fine Jewelry Group, Essex International Public
Company Limited and Anju Jewelry Limited, are not in
bankruptcy.
WEBSECURE INC: Bankruptcy Court Freezes Assets
----------------------------------------------
The U.S. Bankruptcy Court in Worcester has frozen the
assets of WebSecure Inc. the troubled Saugus Internet
company linked to Centennial Technologies Inc. which has
already ceased operations. Last year, the company
disclosed that much of its reported revenue was based on
phony software transactions.
*********
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