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/raid1/www/Hosts/bankrupt/TCR_Public/980921.MBXT R O U B L E D C O M P A N Y R E P O R T E R Monday, September 21, 1998, Vol. 2, No. 184 Headlines 405 W. 45TH ST: Files Chapter 11 Petition AHERF: Acts to Stem Defections AMERITAS LIFE: Files Supplement To Prospectus With SEC BARNEY'S INC: Asks To Pay Fee To Plan Investors BARNEY'S INC: Proposed Plan of Reorganization BARNEY'S INC: Seeks To Retain Ernst & Young Further BRADLEES: Quarterly Report Filed with SEC BRUNO'S: Quarterly Report Filed with SEC CONNECTIVITY TECHNOLOGIES: Subsidiary Sells Business CROWN BOOKS: To Post $28 Million Loss FORSTMANN: Quarterly Report for Period Ended August 2 GREATE BAY HOTEL: Order Extends Exclusivity To November 9 ITHACA INDUSTRIES: Files Quarterly Report With SEC KENAR ENTERPRISES: Case Summary and 20 Unsecured Creditors KENAR ENTERPRISES: Files Chapter 11 Petition LYNX GOLF: TearDrop Announces Definitive Agreement MEGO MORTGAGE: Ralser To Replace Moore MERIS LABORATORIES: Announces Acquisition By Unilab PACKAGING PLUS: Files Registration Statement TRAK AUTO: Sharp Losing Streak YAHAGI: Files For Bankruptcy ********* 405 W. 45TH ST: Files Chapter 11 Petition ----------------------------------------- Debtor: 405 W. 45th St., Inc. New York, New York 10036 Type of business: cooperative apartment corporation owning a 30 unit apartment building at 405 West 45th Street New York, NY Court: Southern District of New York Case No.: 98B46504 Filed: 09/10/98 Chapter: 11 Debtor's Counsel: Paul Dahlman 170 Broadway Suite 1208 New York, NY 10038-4154 (212) 964-2039 Creditors Holding Largest Unsecured Claims: Creditor Claim Amount -------- ----- ------ Phyllis Koffman court appointed receiver 10,000 Phyllis Solomon foreclosure sale William Kutner former attorney AHERF: Acts to Stem Defections ------------------------------ Seeking to stem defections, the parent foundation of Allegheny General Hospital is seeking U.S. Bankruptcy Court approval to give bonuses of up to 3 percent to 460 Philadelphia-area and 74 Pittsburgh-area administrators, doctors and other management-level employees. Attorneys for the Allegheny Health Education and Research Foundation say the enticements, which also would include up to 24 weeks' severance if they lost their jobs, are needed to keep employees from bailing out of the bankrupt affiliates before they are sold. The foundation has seen a rising tide of departures since its July 21 bankruptcy filing, the most recent being three respected Philadelphia orthopedists, known as the three B's, who this week said they were moving their coveted medical practice from AHERF's Graduate hospital to Pennsylvania Hospital. Graduate is one of eight Philadelphia hospitals being sold at a Sept. 29 bankruptcy auction. (Pittsburgh Post-Gazette; 09/17/98) AMERITAS LIFE: Files Supplement To Prospectus With SEC ------------------------------------------------------ Ameritas Life Insurance Corp. filed a supplement to its prospectus dated May 1,1998 with the SEC. The supplement states that on September 14, 1998, the Board of Directors of Ameritas Mutual Insurance Holding Company and Acacia Mutual Holding Company voted to merge the two mutual insurance holding companies and the two intermediate holding companies. The surviving mutual holding company will be Ameritas Acacia Mutual Holding Company. The merger will be effective January 1, 1999, subject to the approval of the various regulators and the members of both mutual holding companies. On the effective date of the merger, Ameritas Life and Acacia Life and all other corporate subsidiaries are unaffected. Ameritas and subsidiaries had total assets at December 31, 1997 of over $3.4 billion. Ameritas enjoys a long standing A+ rating from A.M. Best, an independent firm that analyzes insurance carriers. A.M. Best Co. has now placed the rating of Ameritas Life Insurance Corp. under review with developing implications. Ameritas also has been rated A- by Weiss Research,Inc., and an AA rating from Standard & Poor's for claims-paying ability. BARNEY'S INC: Asks To Pay Fee To Plan Investors ----------------------------------------------- The debtors, Barney's Inc., et al, together with the Official Committee of Unsecured Creditors are seeking entry of an order approving payment by the debtors of the cash fee and the reimbursable fees to Whippoorwill Associates, Inc. and Bay Harbour Management LC. The debtors request that the court enter an order authorizing the debtors to pay the plan investors a $2.5 million cash fee in the event that an alternative plan of reorganization to the plan is confirmed and such plan provides for higher or better treatment for unsecured creditors, subject to certain conditions. The debtors state that the proposed plan represents the most favorable economic alternative for the debtors to creditors that has been proposed to date. The efforts of the plan investors in negotiating and formulating the plan and the settlements that form the basis for the plan have conferred significant benefits on the debtors' estates and creditors, and that is why the debtors ask that the cash fee will only be payable if the plan is not confirmed and an alternative plan is confirmed. A hearing will be held on the motion on October 14, 1998 at 2:00 pm before the Honorable James L. Garrity, Jr. BARNEY'S INC: Proposed Plan of Reorganization --------------------------------------------- In the case of Barney's Inc., a plan of reorganization and an accompanying Disclosure Statement are proposed by the Creditors' Committee and the Plan Investors, Whippoorwill and Bay Harbour. Whipporwill and Bay Harbour are creditors of the debtors and hold approximately $133 million in claims against the debtors. The plan is primarily an "equity conversion" plan, pursuant to which all of the allowed General Unsecured Claims against Barney's and certain of its affiliates (including Barney's America, BNY Licensing, BNY Leasing and Preen) will be converted into Equity Interests in new Barney's, an entity to be created under the plan, which will own 100% of the equity in Barney's. The remaining minority equity interest in New Barney's will be owned by Isetan and the Pressman Family. The equity interests in new Barney's being distributed under the plan are based on a total reorganization value for New Barney's, on a consolidated basis, of $325 million and a net reorganization value of $194.5 million. The plan is premised on two primary settlements among the debtors, Isetan and the Pressman Family. All litigation will be settled. The plan provides for the infusion of up to $68.3 million in new equity, which when combined with bank financing is expected to enable the debtors to exit Chapter 11 with sufficient capital to support their new business plan and provide the necessary liquidity for future operations. The infusion of new equity will be in two forms; a $50 million subscription rights offering available to all holders of Allowed General Unsecured Claims and a $10 million equity investment by the Plan Investors. A hearing to consider approval of the Joint Disclosure Statement will be held before the Honorable James L. Garrity, Jr., on October 14, 1998 at 2:00 pm. The date and time fixed for voting on the Plan shall be November 23, 1998 at 5:00 pm. The final date and time for exercising subscription rights under the Subscription Rights Procedures shall be December 10, 1998. BARNEY'S INC: Seeks To Retain Ernst & Young Further --------------------------------------------------- Barney's Inc. is seeking court approval to have Ernst & Young perform the debtors' 1998 Audit at a fee of $350,000 plus out of pocket expenses not to exceed $15,000. In addition Ernst & Young will perform a certification of sales related to the debtors' World Financial Center store. The fee for such service is included in the Audit fee. Ernst & Young will continue to provide all other tax and accounting services required in the debtors' cases at it s regular hourly rates and will continue to apply for court approval of the fees. BRADLEES: Quarterly Report Filed with SEC ----------------------------------------- Bradlees Inc. filed its quarterly report with the SEC for the quarterly period ended August 1, 1998. Total sales for Second Quarter 1998 increased $11.3 million or 3.6% from Second Quarter 1997 due to an increase of 7.4% in comparable store sales (including leased shoe department sales), partially offset by the impact from closing six stores in February, 1998. The company reported that for the thirteen weeks ended August 1, 1998, the company had a net loss of $(2,722)on net sales of $310 million, and for the period ended August 2, 1997, the company experienced a net loss of $(16,864) on net sales of $297 million. Gross margin increased $3.7 million in Second Quarter 1998 compared to Second Quarter 1997 due principally to the strong comparable store sales. BRUNO'S: Quarterly Report Filed with SEC ---------------------------------------- Bruno's Inc. filed its quarterly report with the SEC for the period ended August 1, 1998. As of September 10, 1998, the Company operated 165 stores in four states, including 116 in Alabama, 13 in Florida, 33 in Georgia and three in Mississippi. In addition, the Company was continuing to operate nine retail liquor stores. Net sales decreased $153.1 and $336.6 million in the quarter and year-to-date periods ended August 1, 1998 as compared to the comparable periods of the prior year. Approximately $80.0 million and $165.0 million of the decrease in the quarter and year-to-date periods, respectively, was due to the reduction in the number of stores operated by the Company as a result of the company's divestitures. Comparable store sales decreased 13.7% and 15.7% in the quarter and year-to-date periods ended August 1, 1998 from the prior year due in part to increased competitive activity in the Company's trade areas. As a result of the distribution center accident, the Company was not able to supply its stores with perishable merchandise from the Company's distribution center from April 21, 1998 through May 24, 1998. Although the Company made temporary arrangements for perishable merchandise with third party suppliers and distributors, the Company was not able to maintain adequate levels of perishable inventories at all times in its stores. The reduction in store-level perishable inventories resulted in a loss of customers and sales. In addition, the Company's sales continue to be affected by the loss of customers in 1997 due to increases in the Company's prices to levels that were not competitive, a reduced level of promotional activity, product shortages in the Company's stores resulting from distribution problems and efforts to control inventory, and reduced levels of customer service due to the Company's efforts to control payroll costs. EBITDA decreased by $19.6 million in the quarter ended August 1, 1998 compared to the quarter ended August 2, 1997 and decreased by $41.2 million in the year-to-date period. Gross profit (net sales less cost of products sold) as a percentage of net sales for the second quarter was 21.4% compared to 22.6% in the prior year. CONNECTIVITY TECHNOLOGIES: Subsidiary Sells Business ---------------------------------------------------- On September 16, 1998, Connectivity Products Incorporated, a subsidiary of the issuer, Connectivity Technologies Inc. concluded a non-binding Letter of Intent to sell all of the business and assets of its Energy Electric Assembly division to a subsidiary of Orion Capital Partners, LP, a Boston-based private equity fund. The transaction is subject to due diligence and other conditions, including the conclusion of a mutually satisfactory asset purchase agreement. CTI anticipates that the closing will take place within 60 days of the date hereof, although no assurances can be given that the sale will be consummated. The Letter of Intent provides for a cash purchase price of $10,750,000, subject to upward or downward adjustment, and CTI intends to utilize the proceeds, net of expenses and taxes generated by the sale, to reduce its bank debt, now standing at $16,172,053. CROWN BOOKS: To Post $28 Million Loss ------------------------------------- Crown Books announced its earnings unofficially after requesting a filing extension from the Securities and Exchange Commission. The chain, which recently closed 79 stores, said it would post at least a $28 million loss for the quarter ended Aug. 1, a more than sevenfold increase from the comparable quarter last year. (WashingtonTimes- 09/17/98) FORSTMANN: Quarterly Report for Period Ended August 2 ----------------------------------------------------- Forstmann & Co. Inc. reports net sales for the 1998 Nine- Month Period of $117.6 million, a decrease of 21.5% from the 1997 Nine-Month Period. Total yards of fabric sold decreased 24.4% from the 1997 Nine-Month Period to the 1998 Nine-Month Period. However, the average per yard selling price increased to $7.57 per yard from $7.40 per yard due to shifts in product mix. Sales declined in all major product lines except for specialty fabric sales which increased by $2.7 million during the 1998 Nine-Month Period when compared to the 1997 Nine-Month Period. In addition, the Company added apparel sales of $1.6 million during the 1998 Nine-Month Period as a result of the acquisition of the Arenzano business. A net loss for the 1998 Nine-Month Period was $3.9 million as compared to a net loss of $6.4 million in the 1997 Nine-Month Period. Net sales for the 1998 Third Quarter were $39.0 million, a decrease of 27.6% from the 1997 Third Quarter. Net loss was $4.2 million in the 1998 Third Quarter compared to $1.1 million in the 1997 Third Quarter GREATE BAY HOTEL: Order Extends Exclusivity To November 9 --------------------------------------------------------- On August 24, 1998 the court entered an order extending the debtors' exclusive period of time within which to file a plan of reorganization to and including November 9, 1998. The debtors' exclusive period of time within which to solicit acceptances of a plan of reorganization is extended for an additional period of 60 days after the date within which to file a plan, to and including January 8, 1999. ITHACA INDUSTRIES: Files Quarterly Report With SEC -------------------------------------------------- Ithaca Industries Inc. reports net income of $174,000 on net sales of $127 million for the twenty six weeks ended August 1, 1998 as compared to net income of $854,000 on net sales of $119 million for the twenty six weeks ended August 2, 1997. Net sales increased from $60.9 million for the thirteen weeks ended August 2, 1997 to $67.2 million for the thirteen weeks ended August 1, 1998. The Company has entered into a $110 million in senior credit facilities that include a five-year bank credit facility consisting of a $25 million term loan and up to $70 million in revolving credit loans to be provided by a syndicate of banks led by NationsBank, N.A. The Senior Credit Facilities also include an additional $15 million term loan provided by Foothill Capital Credit Corporation and arranged by NationsBanc Montgomery Securities LLC. The Senior Credit Facilities were also used to refinance the Company's existing credit agreement with another bank syndicate, to fund the acquisition of Glendale, and will also be used for general corporate purposes. KENAR ENTERPRISES: Case Summary and 20 Unsecured Creditors ---------------------------------------------------------- Debtor: Kenar Enterprises Ltd. 555 7th Avenue - 12th Floor New York, NY 10018 Chapter: 11 Date Filed: 09/15/98 Case No.: 98-46607-ajg Court: Southern District of New York Type of business: Manufacturer, designer, importer, wholesaler and retailer of women's apparel Attorney to the Debtor: Bruce Frankel Jeffrey K. Cymbler Angel & Frankel, PC 460 Park Avenue New York, New York 10022-1906 Total Assets: $21,468,894 Total Liabilities: $27,993,166 Amount Holders ------ ------- Fixed Liquidated Secured Debt $24,211,007 4 Contingent Secured Debt $0 Disputed Secured Claims $0 Unliquidated Secured Debt $0 Fixed Liquidated Unsecured Debt $3,782,159 Contingent Unsecured Debt $0 Disputed Unsecured Claims $0 Unliquidated Unsecured Debt $0 Number of Shares of Preferred Stock 0 Number of Shares of Common Stock 200 1 Creditors Holding 20 Largest Unsecured Claims: Creditor Nature of Claim Amount -------- --------------- ------ No. 1 Fashion Factory Trade $406,755 Laspata Decaro Trade $343,368 23 International Ltd. Trade $303,364 Kronish Lieb Weiner Professional Services $263,327 Elite Model Mgmt Corp. Trade $162,500 Conde Nast (Vogue) Trade $153,643 Jade Century Co. Ltd. Trade $127,619 Top Tech Knitting Factor Trade $121,172 Zheniang Silk Import Trade $120,974 Starry Garment, Ltd. Trade $114,625 Regine Trade $101,272 1411 Trizechaln-Swig LLC Trade $82,277 TAFA Trade $82,077 Just Quality Fashion Trade $78,221 MCNY Trade $73,786 Chungweiming Knitting Trade $67,005 Mansion Garment Factory Trade $59,529 Cinzia Rocca Trade $59,211 Guide Fabrics Inc. Trade $57,736 Easy Tech Garment Inc. Trade $53,420 Affiliated debtor: Z. Frederick Enterprises Ltd.; Owner of two leasehold interests in two retail stores located in East Hampton and Central Valley New York. Z. Frederick Enterprises Ltd. subleases these stores to Kenar Enterprises Ltd. KENAR ENTERPRISES: Files Chapter 11 Petition -------------------------------------------- Unable to obtain credit for ongoing obligations to trade creditors, fashion company Kenar Enterprises Ltd. filed for chapter 11 this week in Manhattan and plans to liquidate. "[T]he interests of all parties would be best served by the continuation of [Kenar's] business operations as a debtor- in-possession under chapter 11 while it conducts an orderly liquidation with the possibility of attracting a suitor and thereby confirming a plan of reorganization," President and Chief Executive Kenneth Zimmerman said in an affidavit. He estimated that operations over the next 30 days would generate net profits of about $1.7 million. The company's petition lists total assets and liabilities of approximately $21.5 million and $28 million, respectively, as of May 31. Kenar manufactures, imports, and sells women's apparel. The company has showrooms in Manhattan, Dallas, and Atlanta, as well as retail outlets in East Hampton, N.Y., Totowa, N.J., and Central Valley, N.Y. (The Daily Bankruptcy Review and ABI Copyright c September 18, 1998) LYNX GOLF: TearDrop Announces Definitive Agreement -------------------------------------------------- TearDrop Golf Company (Nasdaq:TDRP) announced Friday that it has executed a definitive Asset Purchase Agreement with Lynx Golf Co. for the purchase of certain assets of Lynx Golf. At a hearing held on September 15, 1998, the U.S. Bankruptcy Court for the Southern District of California established October 14, 1998 as the hearing date for approval of the Asset Purchase Agreement between the companies. The acquisition by TearDrop Golf remains subject to competing bids from other interested parties and bankruptcy court approval. MEGO MORTGAGE: Ralser To Replace Moore -------------------------------------- On September 2, 1998, Mego Mortgage Corporation issued a press release announcing that Jeffrey Moore had resigned as a director of the Company and as its President and that William Paul Ralser had been appointed to replace Mr. Moore as President of the Company and as the Company's Chief Operating Officer. MERIS LABORATORIES: Announces Acquisition By Unilab --------------------------------------------------- Meris Laboratories Inc. (OTC Bulletin Board: MERS), a debtor in a Chapter 11 bankruptcy case pending in the United States District Court for the Central District of California, announced today that it has signed a definitive agreement for Unilab Corporation (Amex: ULB), a Delaware corporation ("Unilab"), to acquire substantially all of the assets (including the customer list) of Meris. The purchase price is $16,520,000 payable in the form of a convertible subordinated note for $14,000,000 ("the Note") and $2,520,000 in liabilities payable to Meris in equal installments over 72 months. The Note has an 8-year term with a $3.00 per share conversion price, and bears a 7.5% per annum interest rate. In addition to the customer list, Unilab will acquire substantially all of the assets of Meris and assume certain liabilities. The purchase price is subject to certain adjustments. Completion of this transaction is conditioned upon approval of the Bankruptcy Court and other customary closing conditions. The agreement obligates Meris to pay a substantial break-up fee to Unilab in the event the Unilab acquisition is not approved and a sale to another buyer is approved. If a sale is approved by the Bankruptcy Court and consummated, Meris expects to file a plan of reorganization under which it will distribute all of the net proceeds of the sale to its creditors, subject only to the satisfaction of certain administrative and other priority liabilities. It is unlikely that holders of Meris' common stock will receive any proceeds in the reorganization. PACKAGING PLUS: Files Registration Statement -------------------------------------------- Packaging Plus Services Inc. filed a Registration Statement with the SEC. 600,000 shares of the Company's Common Stock par value $.005 per share are being issued pursuant to a certain Consulting Agreement by and between Universal Express, Inc. and David Flynn, an individual. The general nature and purpose of the Agreement is for Flynn to provide public relations consulting services to the company on a non-exclusive basis from time to time in a variety of capacities. The Agreement is effective for 12 months, and can be terminated at will by either party upon thirty (30) days prior written notice. TRAK AUTO: Sharp Losing Streak ------------------------------ Trak Auto Corp. and Crown Books Corp. both announced sharp losses yesterday as their long-term viability continues to appear uncertain. Trak Auto, a 177-store auto-parts chain, said its net loss for the 13 weeks ended Aug. 1 deepened 86 percent to $1.75 million (30 cents a share) from $943,000 (16 cents) in the comparable period last year. Sales fell 35 percent to $59.1 million from $90.5 million in the comparable quarter in 1997. Trak attributed much of the sales drop to store closures in Pittsburgh and the sale of its California operations. Sales at stores open at least one year - one of the best measures of retail performance - dropped 5.6 percent during the quarter, as competitors such as Auto Zone, NAPA and Pep Boys beefed up their store counts in Trak's markets. The quarterly earnings were dampened by a $2 million escrow payment involving two class-action lawsuits earlier this year. Two groups of employees in California sued Trak over wage-and-hour practices, garnering a $4.5 million settlement. But even without the $2 million hit, Trak would have posted a $526,000 loss for the first six months of its fiscal year. Richfood Holdings Inc., the Richmond wholesaler that owns Crown Books and Trak's parent company, Dart Group Corp., has not been successful in efforts to sell Trak. (Washington Times; 09/17/98) YAHAGI: Files For Bankruptcy --------------------------- Yahagi Corp., an iron trader and software maker listed on the Tokyo Stock Exchange's First Section, said Friday it has filed for bankruptcy with the Nagoya District Court. Yahagi said it was forced to take the legal action to dissolve itself due to fund-raising difficulties as it lost public confidence when it announced on Aug. 19 plans to pull out of the steel business. The company reports debts of 3.6 billion yen. The August announcement led the Tokyo, Nagoya and Osaka stock exchanges to place Yahagi under monitoring. The company also cited a scandal over the distribution of copies of Yahagi promissory notes and checks in July and the recent issuance of promissory notes and checks by company executives without board approval. Yahagi dismissed the executives, including Vice Chairman Yukio Shimaze, on Sept. 4. Yahagi is the fifth listed company to fail this year and the third that is listed on the First Section of the Tokyo Stock Exchange, according to private credit research agency Teikoku Databank. The Tokyo Stock Exchange said it will delist shares in Yahagi on Oct. 3. (Kyodo News; 09/18/98) ********* The Meetings, Conferences and Seminars column appears in the TCR each Tuesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. 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. ISSN 1520-9474. 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 * * *