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/raid1/www/Hosts/bankrupt/TCR_Public/991020.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, October 20, 1999, Vol. 3, No. 203 Headlines AMERICAN STANDARD: Frederic M. Poses Named Chairman & CEO AMERICAN STANDARD: Pursuing Sale Of Its Medical Systems Group ATC GROUP: Hearing to Consider Disclosure Statement BROOKE GROUP: Sets Annual Meeting Date For November 9th BRUNO'S: Seeks Approval from Creditors on Proposed Plan BRUNO'S: Summary of Second Amended Joint Disclosure Statement COMMERCIAL FINANCIAL: Order Grants Motion To Set Claims Bar Date COSTILLA ENERGY: Liedtke's Beneficial Ownership Falls Below 5% DOW CORNING: Michigan State Court of Appeal Upholds Verdict EQUITEX: Victoria Precision Acquired For $6 Million Canadian FORCENERGY: Objection to Disclosure Statement FWT INC: Hearing on Disclosure Statement GOSS GRAPHIC: Objections To Plan HARVARD INDUSTRIES: Contrarian Capital, Major Stockholder ICO GLOBAL: Investors Bail Out ICO Global Communications IMAGYN MEDICAL: Stipulation With Timm Medical Technologies INCOMNET INC: Final Order Approves Postpetition Financing LEASING SOLUTIIONS: Extends Forbearance Agreements With Lenders LOEHMANN'S: Seeks To Extend Time To Assume or Reject Leases MOBILE ENERGY SERVICES: Seeks Approval of Severance Program NEUROMEDICAL SYSTEMS: Seeks Extension of Exclusivity OWENS CORNING: Reports Record Third Quarter Results PANGBURN CANDY: Judge Upholds Contested Contingency Payment PARAGON TRADE: Hearing on Extension For Exclusive Solicitation PAYLESS CASHWAYS: Reports Quarter Net Income of $1.7M PLANET HOLLYWOOD: Wins Interim Use of Cash Collateral SCOOP: Court Approves Reorganization Plan SUN HEALTHCARE: Applies To Employ Professionals TRANSTEXAS: Emergency Motion to Extend Exclusivity ********* AMERICAN STANDARD: Frederic M. Poses Named Chairman & CEO --------------------------------------------------------- American Standard Companies Inc. reports that its Board of Directors has elected Frederic M. Poses, 57, Chairman and Chief Executive Officer. Mr. Poses is currently President and Chief Operating Officer of AlliedSignal, Inc. headquartered in Morristown, New Jersey. He succeeds Emmanuel A. Kampouris, who is retiring. The appointment is effective January 1, 2000. Mr. Poses was also elected to the company's Board of Directors. "We are delighted to have Fred Poses lead American Standard into the new century," said Mr. Kampouris. "Fred has a strong track record of driving business performance and enhancing shareowner value. He also has an intense focus on growing businesses and developing people. His global leadership abilities, coupled with broad management experience, will enable American Standard to profitably grow its businesses around the world." Mr. Poses has served with AlliedSignal for 30 years. In 1997, he was elected to AlliedSignal's Board of Directors and named Vice Chairman. He has also served as President of the company's Engineered Materials businesses. Mr. Poses is a graduate of New York University and spent two years in the Peace Corps and his entire business career with AlliedSignal." "Joining American Standard is an exciting opportunity," Mr. Poses said. "The company has an impressive combination of strong businesses and a wonderful heritage. I am looking forward to leading the company's future growth and building upon American Standard's record of success." Lawrence A. Bossidy, Chairman and Chief Executive Officer of AlliedSignal described Mr. Poses as "A strong, experienced, innovative leader with a wonderful will to win. He will make American Standard a great place." Emmanuel A. Kampouris joined American Standard's plumbing products Greek subsidiary in 1966 as General Manager of Manufacturing. He was elected President and Chief Executive Officer in 1989 and was elected Chairman of the Board of Directors in 1993. "Fred Poses has the opportunity to build on the tremendous legacy of Mano Kampouris who reengineered the company's manufacturing operations around Demand Flow(R) Technology, and transformed American Standard into one of the premier manufacturing companies in the world. It has become the defining culture of the company today," said Mr. Roger W. Parsons, a member of the Board of Directors. "American Standard's strong operating performance, accomplished management, high profitability, and robust cash flow place the company in a prime position to surge ahead in coming years. We believe Fred will make that happen." American Standard is a $6.7 billion global, diversified manufacturer of air conditioning, plumbing, automotive products and medical diagnostics systems. The company operates 116 manufacturing facilities in 33 countries and employs approximately 57,000 people worldwide. AMERICAN STANDARD: Pursuing Sale Of Its Medical Systems Group ------------------------------------------------------------- The Board of Directors of American Standard Companies Inc., has directed the company's management to pursue the sale of the Medical Systems Group. After careful consideration of all the alternatives, the Board's decision follows the recommendation of its Strategic Initiative and Management Development Committee and its advisors, Goldman, Sachs & Co. and Prudential Vector Healthcare Group. Both Goldman Sachs and Prudential Vector also have been engaged to assist in this directive. Mr. Emmanuel Kampouris, Chairman and Chief Executive Officer, stated: "We appreciate the hard work of the Strategic Initiative Committee and,in particular, its Chairman, David Roderick, in pursuing this action with a focus on maximizing shareholder value." Mr. Roderick, commented, "We have great confidence in the Medical Systems' current diagnostic products and even more in its new technologies and research initiatives. We believe that a sale is the best alternative to realize its value for our shareholders." The Medical Systems Group is engaged in the research, manufacture, and distribution of diagnostic products including fully automated testing and other diagnostic systems for autoimmunity, infectious disease, blood virus, fertility, prenatal, osteoporosis, nutritional analysis and transplantation. Its DiaSorin Biomolecular Research Center is a recognized leader in hepatitis and infectious disease research through enzyme immunoassay and advanced DNA probe technology. The Center's newly discovered SEN-V virus is highly associated with acute and chronic hepatitis, probably accounting for a majority of cases of viral hepatitis of previously unknown origin. The Medical Systems Group generates over $100 million in sales annually through a network of worldwide businesses, direct sales forces and distributors. It operates manufacturing and research and development facilities in Stillwater, Minnesota, Saluggia and Brescia, Italy and Jundiai, Brazil. ATC GROUP: Hearing to Consider Disclosure Statement --------------------------------------------------- A hearing shall be held before the Honorable Jeffry H. Gallet on October 26, 1999 at 11:00 AM, US Bankruptcy Court, Southern District of New York, to consider the entry of an order approving the debtors' third amended Disclosure Statement for the third amended joint consolidated plan of reorganization. ATC Group Services Inc., is a privately held provider of engineering and consulting services to environmental and construction materials industries. Its filing in federal bankruptcy court in New York, also listed parent Acquisition Holdings Inc., plus subsidiaries Hygeia Laboratories Inc., ATC InSys Technology Inc., ATC Environment Inc., ATC Constructions Services Inc. and Bing Yen & Associates. Under ATC's prepackaged filing, unsecured creditors would acquire 98.25 percent of the stock in a reorganized company. The company's old stockholders would receive the remaining shares. Earlier this month, New York-based ATC said it was suffering from liquidity problems and was negotiating with its creditors on restructuring. BROOKE GROUP: Sets Annual Meeting Date For November 9th ------------------------------------------------------- The annual meeting of stockholders of Brooke Group Ltd., a Delaware corporation, will be held at The Hyatt Regency Miami, 400 S.E. Second Avenue, Miami, Florida on Tuesday, November 9, 1999 at 11:00 a.m. local time, for the following purposes: To elect four directors to hold office until the next annual meeting of stockholders and until their successors are elected and qualified. Every holder of record of common stock of the company at the close of business on October 6, 1999 is entitled to notice of the meeting. BRUNO'S: Seeks Approval from Creditors on Proposed Plan ------------------------------------------------------- Bruno's, Inc. announced that the United States Bankruptcy Court for the District of Delaware has issued an order authorizing the Company to solicit votes from its creditors on the Company's proposed plan of reorganization. The proposed plan of reorganization, which was originally filed with the Bankruptcy Court in late May, contains the terms under which the Company will emerge from bankruptcy. The proposed plan of reorganization is subject to acceptance by the requisite vote of the Company's creditors and to confirmation by the Bankruptcy Court. James A. Demme, Chairman of the Board and Chief Executive Officer of Bruno's, said, "The Bankruptcy Court's decision to allow us to seek creditor acceptance of our plan of reorganization represents a significant step toward our goal of emerging from bankruptcy as an independent debt-free company. This is one of the final steps in the process of successfully reorganizing the Company. We are confident that we will receive the necessary acceptances from our creditors and the confirmation of our plan by the Bankruptcy Court." Bruno's has been operating as a debtor-in-possession under Chapter 11 of the United States Bankruptcy Code since February 2, 1998. Since the commencement of the bankruptcy proceeding, the Company has sold or closed 51 supermarkets and has become a smaller but more viable company. The solicitation of creditor acceptance for the Company's plan of reorganization was delayed when the Bankruptcy Court, in late June, granted a motion filed by the Indenture Trustee for the Company's Senior Subordinated Notes seeking the appointment of an independent examiner to investigate the 1995 leveraged recapitalization under which affiliates of Kohlberg Kravis Roberts & Co. L.P. ("KKR") acquired control of Bruno's. After granting the motion, the Bankruptcy Court appointed Harrison J. Goldin of Goldin Associates, L.L.C. to investigate the 1995 transaction to determine if there were any viable claims that could be asserted against participants in the transaction for the benefit of the Company's creditors. After an extensive investigation, Mr. Goldin filed a report with the Bankruptcy Court on October 5, 1999. The report concludes that there are " multiple legal and factual obstacles" to the assertion of claims against participants in the 1995 leveraged recaptialization involving Bruno's. As a result of such obstacles, Mr. Goldin advised the Bankruptcy Court that "the prosecution of such claims is extremely difficult to justify." In general, the report frequently uses the terms "unlikely" and "remote" in assessing the prospects of obtaining a recovery from the former stockholders of Bruno's and KKR. Bruno's said it would begin soliciting creditor acceptance for its plan of reorganization no later than October 30, 1999. All creditors will receive an approved disclosure statement summarizing the terms of the proposed plan of reorganization. The Bankruptcy Court has scheduled a confirmation hearing on the proposed plan of reorganization beginning on December 20, 1999. The plan of reorganization provides that all of the indebtedness owed by Bruno's to its senior creditors will be converted into shares of Common Stock, with the result that Bruno's, after emerging from bankruptcy, will be owned by approximately 20 financial institutions who currently hold the senior debt incurred prior to the commencement of the bankruptcy proceeding. The plan of reorganization provides that other general unsecured creditors will receive a cash disbursement equal to 30% of the allowed value of their claims. All distributions that would have been made to the holders of the Company's Senior Subordinated Notes will be distributed to the senior creditors in accordance with the governing subordination agreement. No distributions will be made to holders of shares of Common Stock of Bruno's. BRUNO'S: Summary of Second Amended Joint Disclosure Statement -------------------------------------------------------------- In support of their Second Amended Joint Plan of Reorganization, the Debtors present the Court with their Second Amended Joint Disclosure Statement, providing what they believe to be adequate information to permit creditors to decide whether they should vote for or against the Joint Plan. The Disclosure Statement explains that the Banks' Class 4 Claims are projected to recover 59.5% of their claims, allowed by stipulation in the amount of $462,154,419. That recovery will be in the form of 96% of the New Common Stock issued under the Joint Plan. Class 5 General Unsecured Creditors, holding allowed claims estimated at $135,000,000, will receive 26% of the Allowed Amount of their claims, in Cash. The Subordinated Noteholders, owed $421,121,590, take nothing under the Joint Plan. Old Equity Interests are canceled. The less-than-par recovery by the Bank Group reflects a settlement of the Debtors' claims that the security interests granted to the Banks in December 1997 -- less than 90 days prior to the Petition Date -- constitute a preferential transfer subject to avoidance under 11 U.S.C. Sec. 547. The Settlement reflects the Bank's release of its liens against Bruno's, Inc., but not against any Subsidiary. Entry of the Confirmation Order will ratify the terms of this Settlement. By virtue of the equity distribution to holders of the Bank Debt, the significant initial owners of New Bruno's will be: Oaktree Capital Management, LLC 13.75% B-III Capital Partners, L.P. 11.40% Van Kampen American Capital PRIT 10.37% Angelo, Gordon & Co., L.P. 10.30% Franklin Mutual Advisors Inc. 9.83% Daystar Special Situations Fund, L.P. 6.42% First Union National Bank 6.27% Goldman Sachs Credit Partners L.P. 6.43% For purposes of the Joint Plan, and based on advice rendered by Wasserstein, Perella & Co., Inc., the Company is valued at $351,000,000. After distribution of $76,000,000 in Cash on or shortly after the Effective Date, New Bruno's is valued at $275,000,000. That imputes a value of $11 per share to the New Common Stock. The Debtors assert that the Joint Plan is feasible and confirmation is not likely to be followed by a liquidation or the need for further reorganization. The Debtors supply creditors with their projected financial statements of operations through 2002: Bruno's, Inc., and Subsidiaries Projected Consolidated Statements of Operations (Amounts in Thousands) 30 Weeks 22 Weeks 52 Weeks 53 Weeks Ending Ending Ending Ending 31-Aug-99 29-Jan-00 31-Aug-01 03-Feb-02 -------------------------------------------- Net Sales 926,500 688,500 1,635,791 1,665,256 Cost of Products Sold 713,974 530,132 1,250,768 1,266,783 ------------------------------------------ Gross Profit 212,526 158,368 385,023 398,473 SG&A 189,970 139,424 330,523 332,973 ----------------------------------------- EBITDA 22,556 18,944 54,500 65,500 Depreciation & 7,724 23,933 32,106 25,704 Amortization Interest Expense, net 2,274 749 1,217 240 Reorganization Items 35,552 0 0 0 -------------------------------------------- (40,974) 10,471 29,350 33,154 Income Tax Provision 0 4,031 11,300 12,764 Fresh Start Adustments (9,998) 0 0 0 -------------------------------------------- Net Income (50,972) 6,440 18,050 20,390 ============================================ The growth in gross margins -- from 22.46% in 1999 to 23.93% in 2002 -- is said to be attributable to "reductions in shrink," without further explanation. The Debtors assert that the Joint Plan complies with the Best Interests Test because it distributes greater value to creditors than they would receive in a liquidation under chapter 7. In a chapter 7 liquidation, the Debtors estimate that their assets would be reduced to a $318,150,000 to $399,133,000 pile of cash. That cash would pay Trustee fees, Severance Claims, Wind-Down Expenses, Professional Fees, Reclamation Claims, Post- Petition Accounts Payable, and Accrued Post-Petition Liabilities in full, and $154,208,000 to $241,398,000 would remain. $129,225,000 to $202,289,000 would pay a 28% to 44% dividend to the Bank Group, resulting in a projected recovery by General Unsecured Creditors (excluding the Subordinated Noteholders) of 15% to 23%. To the extent that trade creditors enter into written agreements with New Bruno's agreeing to continue to provide the same credit terms and credit limits provided to their most favored customers, New Bruno's will grant a trade lien, junior to any lien granted to the Lenders under the Exit Financing Facility, for one year following the Effective Date. (Bruno's Bankruptcy News Issue 26; Bankruptcy Creditor's Service, Inc.) COMMERCIAL FINANCIAL: Order Grants Motion To Set Claims Bar Date ---------------------------------------------------------------- The US Bankruptcy Court for the Northern District of Oklahoma has set a Bar Date of January 31, 2000 for filing of all prepetition claims and postpetition administrative expense claims against and interests in, CFS and/or NGU, with certian exceptions. COSTILLA ENERGY: Liedtke's Beneficial Ownership Falls Below 5% -------------------------------------------------------------- Cadell S. Liedtke has reduced his beneficial ownership of Costilla Energy Inc.'s common stock to only 4.4% of the outstanding shares of the company. He has sole voting and dispositive power over 563,460 shares, shared voting and dispositive power over 60,000 shares. The aggregate amount beneficially owned by Mr. Liedtke is 623,460 shares. The changes in the percentage of beneficial ownership reported here are the result of shares beneficially owned by Mr. Liedtke which have been involuntarily sold due to financing Arrangements. As a result of the sales, his beneficial ownership of the common stock is now less than 5% of the outstanding common stock and he is no longer subject to the reporting requirements of the Securities & Exchange Commission. DOW CORNING: Michigan State Court of Appeal Upholds Verdict ----------------------------------------------------------- Dee-Ann Durbin, writing for the Associated Press, reports that the Michigan state Court of Appeals upheld Judge Colombo's ruling that Dow Corning's insurers are responsible for the cost of Dow Corning Corp.'s defense in its billion-dollar breast implant settlement. The issue, Ms. Durbin recalls, was one of several at stake in a case filed by Dow Corning against more than 20 insurance companies. The insurers, which sold policies to Dow Corning between 1962 and 1985, had refused to pay defense and indemnity costs that arose from Dow Corning's silicone implant litigation. In its decision, the Court of Appeals sided with Wayne County Circuit Court Judge Robert Columbo, who had ruled that Dow Corning didn't have to prove injury occurred in each of its silicone breast implant cases to obtain liability coverage from insurance companies. Instead, Dow Corning was only obliged to prove that liability claims had been filed against the company. The Court of Appeals also agreed that Dow Corning's $ 42.5 million payment to a global settlement fund was a cost that could be passed on to insurance companies. The insurance companies had argued the payment shouldn't be included because it was voluntary and covered administrative costs. Judge Columbo ordered the companies to pay their share of Dow Corning's $216.4 million in defense costs, a decision upheld by the Court of Appeals. In its decision, the Court of Appeals praised Judge Columbo's efforts. "In the face of some of the most expansive, complex litigation in the history of this state, Judge Columbo did not blink," the court wrote. Dow Corning spokesman T. Michael Jackson told the AP that the company is still reviewing the decision, but was pleased that the appeals court upheld most of the company's arguments. The decision doesn't mark an end to the case, Ms. Durbin notes. The appeals court returned the case to Judge Columbo because it wanted reconsideration on one issue. Several of the insurance companies in the case provided excess insurance, meaning their coverage isn't triggered until primary sources of insurance have run out. Judge Columbo ruled that excess policies could be triggered anytime after a primary source ran out. But the Court of Appeals said that if a claimant suffers injuries between certain dates, excess policies can be triggered only after all primary policies with within those dates are exhausted. EQUITEX: Victoria Precision Acquired For $6 Million Canadian ------------------------------------------------------------ Effective July 27, 1999, Equitex, Inc. through its majority owned subsidiary, VP Sports, Inc. and VP's wholly-owned subsidiary 9066- 8609 Quebec Inc., a Canadian corporation, acquired all of the outstanding common shares of Victoria Precision Inc., also a Canadian corporation, incorporated under the laws of the Province of Quebec. Through the transaction the rights to a four-year international consulting and non-compete agreement was acquired for $3,966,600 ($6,000,000 CDN). Of the total purchase price, $3,107,170 ($4,700,000 CDN) was paid in cash at the date of closing, and $859,430 ($1,300,000 CDN) was exchanged in the form of a 6%, promissory note, due in two equal installments of $429,715 at six months and twelve months following the closing date. In order to finance the acquisition, in June 1999 VP authorized a private placement of up to 40 units in exchange for cash of $5,000,000. Each unit consists of 100 shares of $1,000 per share 8% secured convertible preferred stock, 12,500 shares of VP common stock at $2 per share, and warrants to purchase 287,500 shares of VP common stock at $.10 per shares. As of June 30, 1999, VP had sold 18.37 units for $2,269,250, and warrants to purchase 575,000 shares of VP common stock had been exercised resulting in proceeds of $57,500. Subsequent to June 30, 1999, VP sold an additional 17.38 units for $2,172,500, and warrants to purchase 1,725,000 shares of VP common stock had been exercised in exchange for $172,500. As a result of the private placement of 35.75 units, the exercise of warrants to purchase 2,300,000 shares of VP common stock, and the issuance of 560,763 shares of VP common stock under an employment agreement entered in connection with the acquisition, the company's investment in VP was reduced from approximately 87% at December 31, 1998, to approximately 35.7%. FITZGERALDS GAMING: Purchase Warrants Converted Into 1.5M Shares ----------------------------------------------------------------- On September 29, 1999, Fitzgeralds Gaming Corporation, issued 1,495,236 shares of its common stock, pursuant to the exercise of common stock purchase warrants issued by the company in December 1995. Each Warrant was exercisable for one share of the company's common stock at an exercise price of $.01 per share. Warrants for the purchase of up to an additional 476,599 shares of the company's common stock expired unexercised. Including the 1,495,236 shares of common stock issued pursuant to the exercise of the Warrants, as of October 1, 1999, there were 5,508,082 shares of the company's common stock outstanding. The shares of common stock issued upon the exercise of the Warrants have not been registered under the Securities Exchange Act of 1933, as amended, and the company's common stock is not traded or listed on any exchange. FORCENERGY: Objection to Disclosure Statement --------------------------------------------- The following parties object to the debtors' first amended joint disclosure statement: Baker Hughes Oilfield Operations, Inc., Baker Petrolite Corporation, Western Atlas International, Inc., Cardinal Services, Inc., Production Management Industries, Inc., Fastorq, Inc., Nautilus Pipe and tool Rental, Inc., Stabil Drill Specialties, inc., Superior Well Service Inc., Cudd Pressure Controls, Inc., Patterson Rental Tools, Inc., Tidewater Marine, Inc., Sun Drilling Products Corp., and Downholde Specialties, Inc. The parties objecting to the Disclosure Statement allege that the plan is not confirmable as it violates the Absolute Priority Rule. In particular, the plan proposes a distribution to equity shareholders in shares of new common stock with a purported value in excess of $10 million. Meanwhile, the proposed plan only proposes to make a distribution to unsecured creditors - in stock only - in the approximate amount of 62% of their outstanding claims. "Unless the plan proposes a distribution to unsecured creditors in the full amount of their claims, equity should receive nothing." The parties object to the plan's failure to properly categorize secured claims, and they point out, that for purposes of voting the Bondholders and trade creditors should be separately classified. The parties also represent that the administrative expenses of the debtors should be identified and disclosed, especially in light of the estimate that these claims will be in the amount of $33 million. The parties also state that the alternative treatment of a bank group should be adequately disclosed, and that the anticipated disputed claims reserve should be disclosed; inter-company claims should not be given voting class, potential avoidance actions should be disclosed, claim objections should be disclosed, there is a lack of disclosure regarding Australian assets, the current status of Mr. Wennerstrom's employment contract status should be made, the SEC was not noticed as a party in interest and the notice of indemnification of officers and directors by the new company is inadequate. FWT INC: Hearing on Disclosure Statement ---------------------------------------- The hearing to consider the approval of the Disclosure Statement for the amended plan of reorganization of FWT, Inc., debtor, shall be held at the US Bankruptcy Court, 501 W. Tenth Street, Fort Worth, TX 76102, on November 16, 1999 at 9:30 AM. GOSS GRAPHIC: Objections To Plan -------------------------------- Rockwell International Corporation objects to confirmation of the second amended plan of reorganization of Goss Graphic Systems, Inc. and its debtor affiliates. Rockwell states that the amended plan invokes the cram-down provisions of the Code but is not fair and equitable with respect to certain impaired creditor and equity security classes that are deemed to have rejected the Amended Plan. Specifically, the debtors' amended plan is a "new value" plan that violates certain cardinal requirements of a recent Supreme Court ruling. Rockwell alleges that under the amended plan, holders of certain general unsecured claims neither receive any distributions nor retain any property and are deemed to have rejected the plan. Rockwell also states that the debtors may not confirm the amended plan over the objection of the Rockwell Preferred Equity Interests unless the holder of the interest receives or retains property of a value equal to the greater of the allowed amount of any fixed liquidation preference to which the holder is entitled, any fixed redemption price to which the holder is entitled, or the value of the interest. Pursuant to the plan, Stonington will receive 67.5% of the new stock in exchange for a $50 million capital contribution. Stonington has the exclusive opportunity to obtain equity and an equity interest in the reorganized debtors without providing in full for the dissenting class of unsecured claims and the dissenting class of senior equity represented by the Rockwell Preferred Equity Interests. Pre-petition equity holders are getting something under the plan on account of their prepetition position. "Not only is Rockwell or any interested or potentially interested party not getting the opportunity to bid for the new equity, it cannot , even judge if Stonington is paying a fair price." La Salle Bank also objects to confirmation of the plan, stating that Goss Realty can not reject the twenty year lease between Realty and Systems as tenant. Realty has assigned the lease to La Salle as additional collateral to secure repayment of a loan evidenced by a Mortgage Note upon which note approximately $30 million remains unpaid. To leave LaSalle unimpaired, according to LaSalle, System must pay to Realty cash equal to $2.8 million in unpaid pre-petition rent plus real estate taxes. LaSalle also alleges that Systems must show that its plan is feasible, which it has not done. The financial projections of Systems shows a substantial cash loss, and the court has not set a Bar Date. LaSalle also objects to Systems' attempt to adjudicate disputed claims outside of the case. HARVARD INDUSTRIES: Contrarian Capital, Major Stockholder --------------------------------------------------------- The following investment firms hold common stock of Harvard Industries in the quantity and percentages shown: Contrarian Capital Management, L.L.C., with sole voting power: 78,701, shared voting power: 2,165,818, sole dispositive power: 78,701, shared dispositive power: 2,165,818. The aggregate amount beneficially owned: 2,244,519 and the percent of the common shares outstanding: 21.93%. Contrarian Capital Advisors, L.L.C., sole voting power: 803,300, sole dispositive power: 803,300. The aggregate amount beneficially owned: 803,300 and the percent of common shares outstanding: 7.85%. Contrarian Capital Fund I, L.P., shared voting power: 524,103, shared dispositive power: 524,103. The aggregate amount beneficially owned: 524,103 and the percent of common shares outstanding: 5.12%. Contrarian Capital Fund II, L.P., shared voting power: 974,749, shared dispositive power: 974,749. The aggregate amount beneficially owned: 974,749 and the percent of common shares outstanding: 9.52%. ICO GLOBAL: Investors Bail Out ICO Global Communications -------------------------------------------------------- ICO Global Communications Ltd., a U.S. satellite phone venture which filed for chapter 11 protection in August, has raised $225 million from key shareholders in its first fund-raising tranche, according to Reuters. ICO expects to raise the remaining $975 million it needs to stay in business in two other rounds in the coming months. This financing would pave the way for ICO's emergence from chapter 11. The venture has raised about $3 billion to date from 60 investors, as well as $120 million on the Nasdaq market. ICO is seeking to provide a global phone service through a network of 12 satellites to be sent into orbit by the end of next year. (ABI 19-Oct-99) IMAGYN MEDICAL: Stipulation With Timm Medical Technologies ---------------------------------------------------------- A stipulation was entered into by and between Timm Medical Technologies and Imagyn Medical Technologies and its debtor affiliates. The debtor agrees to turn over the assets to Timm on or before October 14, 1999. Timm's claim is temporarily allowed for voting purposes in the estimated amount of $3.4 million with $1.5 million constituting a Class 3 claim and $1.9 million constituting a class 6 claim. INCOMNET INC: Final Order Approves Postpetition Financing --------------------------------------------------------- On October 7, 1999,The US Bankruptcy Court for the Central District of California, Santa Ana Division entered a final order approving the interim order approving postpetition financing and granting security interests and superpriority administrative expense treatment and modifying the automatic stay on a final basis. The $50,000 carve out for fees and expenses is approved. LEASING SOLUTIIONS: Extends Forbearance Agreements With Lenders -------------------------------------------------------------- Leasing Solutions, Inc.(NYSE:LSN) announced that the Company has concluded negotiations for a further extension of the forbearance agreements it had reached earlier this year with its U.S. secured lenders. On May 25, 1999, the Company announced that it had entered into forbearance agreements with its U.S. secured lenders through August 16, 1999; the agreement was subsequently extended through October 15, 1999. The extension announced today establishes a forbearance period through November 15, 1999. Under the terms of the extended agreements, the lenders have agreed to forbear from exercising their rights and remedies as a result of the Company's defaults under its loan agreements. The extended agreements do not provide for any additional borrowing availability. The terms and conditions of the extended forbearance agreements continue to impose substantial reporting and cash allocation obligations, and also include standard representations, warranties and covenants. In the event the Company were to breach any of these obligations under any of the forbearance agreements, and fail to cure such breach within a specified period of time, each of its lenders would have the right to exercise the remedies under their respective credit agreements. Additionally, unless all of the agreements are extended at the end of the forbearance period, each of the lenders will have the right to exercise their remedies at that time. Louis Adimare, Leasing Solutions' president and chief executive officer, said, `The extension of these agreements provides the Company the opportunity to continue discussions with the secured lenders regarding a potential financial restructuring. While there can be no assurances at this time that a restructuring agreement can be reached or successfully implemented, it would result in a capital structure that reduces future expense and cash flow obligations, This, in turn, should allow the Company to pursue new business opportunities that it has been exploring.` About the Company Since its founding in 1986, Leasing Solutions has specialized in leasing information processing and communications equipment, principally to large corporate customers. With headquarters in San Jose, Calif., the Company currently maintains sales offices in U.S., Europe and Canada. LOEHMANN'S: Seeks To Extend Time To Assume or Reject Leases ----------------------------------------------------------- The debtor, Loehmann's Inc. seeks a court order providing that the debtor's time to assume or reject unexpired leases of nonresidential real property be extended to January 13, 2000. The debtor states that it has been engaged in an ongoing evaluation of the profitability of its stores. The debtor has retained DJM Asset Management, LLC as a real estate consultant. DJM has analyzed and provided a marketing program for the GOB store leases and is reviewing and analyzing the profitability and value of the debtor's remaining leases. The debtor has also hired PricewaterhouseCoopers to provide consulting for the debtor. Due to the size of the case, and the fact that the leases are central to any reorganization, the debtor seeks the extension of time to adequately determine the value of each lease to the debtor's business. MOBILE ENERGY SERVICES: Seeks Approval of Severance Program ----------------------------------------------------------- The debtors, Mobile Energy Services Company, LLC and Mobile Energy Services Holdings, Inc. seek approval of a certain workforce reduction severance program for hourly employees. The program entails a lump sum payment, an employee transition program, and involuntary severance. The total cost of the three components of the program is $1,256,641. The debtors believe that the program is an appropriate exercise of the debtors' business judgment. Due to the Pulp Mill ceasing its operations, the debtors must reduce their hourly employee workforce. The debtors note that there is approximately $1 million currently in the debtors' approved budget for severance payments. NEUROMEDICAL SYSTEMS: Seeks Extension of Exclusivity ---------------------------------------------------- The debtor, Neuromedical Systems, Inc. seeks an order authorizing a third increase in the debtor's exclusive period to file a plan and solicit acceptances thereof. A hearing on the motion will be held before the Honorable Peter J. Walsh, November 3, 1999 at 3:00 PM, Bankruptcy Court for the District of Delaware. Through the AutoCyte sale and other asset sale efforts, the debtor has substantially completed its efforts to liquidate its assets. In order to complete such asset sales, the debtor has had to focus its efforts on a number of complex legal and administrative issues. The debtor is currently engaged in negotiations with the Creditors' Committee and with certain creditors which may affect the structure of the debtor's plan of reorganization; and the debtor believes that it may be able to conclude such negotiations within 33 days. The debtor seeks to extend the exclusivity period to file a plan by thirty three days, to November 15, 1999, and to extend the solicitation period also by thirty three days, to January 14, 2000. OWENS CORNING: Reports Record Third Quarter Results --------------------------------------------------- Owens Corning reports record net income and sales for the period ending September 30, 1999. Results were driven by strong performance in the company's North American Building Materials business. Net income for the third quarter of 1999 was up 13 percent to $89 million compared to 1998 third quarter results of $79 million for ongoing operations. Third quarter 1998 results exclude special items including a gain from the transfer of the yarns business into an unconsolidated joint venture, and restructuring and other charges. Sales in the third quarter of 1999 were $1.333 billion, a slight increase from $1.324 billion during the same period of 1998. Sales were up 6 percent quarter-over-quarter when adjusted for 1998 divestitures. For the first nine months of 1999, net income was $209 million compared to net income of $144 million for ongoing operations during the same period in 1998. Year-to-date sales were $3.773 billion, up from $3.747 billion in the comparable 1998 period. Adjusted for divestitures, sales were up 7 percent from the first nine months of 1998. "We are pleased with the performance of our company during the third quarter, particularly our Building Materials Business," said Glen H. Hiner, Owens Corning chairman and chief executive officer. "We also made progress during the quarter to improve our balance sheet and our cash flow. Debt was reduced and we are on target to meet our goal of no more than $2 billion of debt at year end," he said. Income from operations in Building Materials was $145 million, which is a record for the business and a 36 percent increase from $107 million during the same period in 1998. Building Materials sales were $1.107 billion during the third quarter of 1999, a 4 percent increase from $1.060 billion in the prior-year period. "We are pleased with our performance, especially in Insulating Systems and Roofing Systems which achieved yet another quarter of exceptional results," said Dom Cecere, president of Owens Corning's North America Building Materials Business. "Product and system demand was strong in the third quarter and while demand continues to be brisk, we have not yet seen the seasonal up-tick normal for this time of the year." "During the quarter, we began our fall advertising campaign starring the Pink Panther(R), and introduced our new Web site with Do-It-For-Me Service(TM), powered by ImproveNet(R)," Cecere said. "This new site provides homeowners with a simple, hassle- free way to find highly qualified, pre-screened, Owens Corning preferred building and home improvement professionals." "One of the keys to our continued success will be our ongoing investments in core products and high-margin architectural systems, including our Cultured Stone(R) product line, Acoustic Systems and our MiraVista(R) specialty roofing," Cecere added. The company announced that it plans to build a new Cultured Stone plant in the Southeastern United States, scheduled to open in mid-year 2000. This plant supports Cultured Stone's growth strategy with another regional facility to complement its existing plants in Napa, California and Navarre, Ohio. Composites Materials income from operations improved 30 percent over the third quarter of 1998, when adjusted for the Yarns transaction. "Composites volume was strong during the quarter, and productivity improved as both unit manufacturing costs and sales and administration spending were lower compared to the second quarter," said Heinz Otto, president of the company's Composites Systems Business. Adjusted for the Yarns transaction, sales were up 10 percent in the third quarter of 1999 due to strong unit volume in the reinforcements and roofing mat markets. Reported Composites sales in the third quarter of 1999 were $256 million, compared to $293 million in the prior-year period. In Eur ope, lower Composites sales reflect the impact of a stronger dollar and ongoing pricing pressure. Owens Corning and IKO Industries announced a joint venture to build and operate a factory that will make wet-formed glass fiber mat used mainly in the production of roofing shingles. The state-of-the-art factory will be capable of making about 75 million squares of mat annually, and will allow Owens Corning to support the growing demand for high style laminate shingle systems. The facility will be constructed at a yet-to-be-announced location in the Midwestern United States, and will be operational in 2001. General Motors and Ford said they will introduce new trucks in the 2001 model year that have pickup boxes made with advanced composite materials. The composite boxes will resist dents, scratches and rust - problems that have traditionally plagued pickup truck owners. The boxes are the largest composite parts ever made for light trucks. Owens Corning is a supplier for both applications. The company predicts the use of composites in this single application for light trucks will grow from zero today to more than 30,000 metric tons annually within the next five years. Owens Corning's proprietary Silentex(TM) muffler filling system has been specified by Toyota for five vehicle models built in Japan, the first applications of the technology in Asia. Silentex muffler technology is an integrated system using high-temperature glass fiber insulating material, patented muffler filling machinery and a cost-effective filling process. Owens Corning receives licensing revenue for the Silentex system as well as sales of composite materials. First introduced in Europe, Silentex muffler filling technology migrated to North America on its way to being adopted by Toyota. In September, Owens Corning launched a national advertising campaign to increase brand awareness for the company's expanded offering of products and systems. Featuring the Pink Panther, the fully animated ads present "Panther Tales" based on classic fairy tales with a new twist, as Owens Corning and the Pink Panther provide solutions to typical homeowner problems. "Our results during the first three quarters of the year reflect high demand for our products and systems, as well as cost savings from our ongoing productivity initiatives," Hiner said. "Going forward, we will continue to focus on capital efficient growth and on System Thinking as the major driver of our growth," he added. "We believe there are great opportunities for our higher margin businesses, including architectural systems, and for the partnerships we are forming within our Composites Systems business." The company is a world leader in high performance building materials systems and glass fiber composites with approximately 20,000 employees worldwide. PANGBURN CANDY: Judge Upholds Contested Contingency Payment ----------------------------------------------------------- In the Pangburn Candy Co. chapter 11 case, Bankruptcy Judge Massie Tillman has upheld a contested contingency payment to Arthur Andersen & Co. accountants in the case, according to The Star-Telegram. When Ft. Worth-based Pangburn Candy filed chapter 11 in February, Bank of America, its major creditor, retained Arthur Andersen to appraise Pangburn's assets; they estimated a value of $5.4 million, which was less than Bank of America's $6.8 million loan balance. The bank and Arthur Andersen made a deal that if the the accounting firm could increase the proceeds from selling the assets, it would get 10 percent of the amount over the $5.4 million estate. Pangburn's assets ultimately brought $6.9 million, a $150,000 payout for Arthur Andersen. This is slightly more than double what it would have received for hourly fees. Pangburn and its unsecured creditors said that it was their money that would be paid to the accountants, and Judge Tillman sought counsel from Bank of America attorney John D. Penn of Haynes and Boone L.L.P., Ft. Worth, on background on the fee structure and its application in bankruptcy. Penn cited a number of examples, none of which were completely similar, and Tillman made his decision. Quoting an 1899 speech by Theodore Roosevelt, he said, "The fact that Arthur Andersen was willing to 'gamble' on a favorable result rather than 'take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows not victory nor defeat' speaks well of its creativity in an otherwise 'gray' world." Negotiations continue on payment of loans and unsecured creditors' claims. (ABI 19-Oct-99) PARAGON TRADE: Hearing on Extension For Exclusive Solicitation --------------------------------------------------------------- The debtor, Paragon Trade Brands, Inc. filed a motion seeking to extend its exclusive period to solicit acceptances to its plan of reorganization. A hearing on the motion shall be held on October 26, 1999 at 2:00 PM in Courtroom 1204, US Courthouse, 75 Spring Street, SW, Atlanta, Georgia 30303. PAYLESS CASHWAYS: Reports Quarter Net Income of $1.7M ----------------------------------------------------- Payless Cashways Inc. reports, for the quarter ended August 28, 1999, revenues of $492,683, as compared to $524,416 for the same quarter of 1998. Net income for the third quarter of 1999, was $1.7 million compared to $1.0 million for the same period of 1998. For the first three quarters of 1999, on revenues of $1,378,348, net loss was $5.4 million compared to net loss of $23.2 million on revenues of $1,426,386, for the same period of 1998. According to the company, sales decreases in total for both periods are a result of closing seven stores in the first three quarters of 1999 and two stores in the first three quarters of 1998. PLANET HOLLYWOOD: Wins Interim Use of Cash Collateral ----------------------------------------------------- The U.S. Bankruptcy Court in Wilmington, Del., issued an interim order Oct. 13 authorizing Planet Hollywood International Inc. to use cash collateral in the course of its normal post-petition business. The request to use cash collateral was among the theme restaurant chain's "first day" motions filed on Oct. 12, the day the company sought chapter 11 protection. ProPlayer Inc., the retailer supplying T-shirts, clothing and other merchandise for the company, has agreed, along with pre-petition lenders SunTrust Bank and Bank of Nova Scotia, to accept the use of cash collateral generated from restaurant receipts and merchandise sales. (The Daily Bankruptcy Review and ABI October 19, 1999) SCOOP: Court Approves Reorganization Plan ----------------------------------------- 24 Store.com announced yesterday that the bankruptcy court in Santa Ana, Calif., has approved the Scoop Inc. reorganization plan, according to a newswire report. They will now move forward and complete the plan, which provides for the acquisition of 24 Store.com by Scoop and the acquisition of a majority interest (91.8 percent) in Scoop by Infinicom AB, which is the primary shareholder of 24 Store.com. The court entered its approval on Oct. 5 after a Sept. 30 hearing. Pursuant to the reorganization plan, Scoop will conduct business as an Internet commerce company with its main operations in the United Kingdom and Scandinavia. The company anticipates that it will change its name to 24 Store.com and apply for Nasdaq listing. Scoop filed chapter 11 in July 1998. (ABI 19-Oct-99) SUN HEALTHCARE: Applies To Employ Professionals ----------------------------------------------- Robert F. Murphy, Sun's General Counsel and Secretary, advised Judge Walrath at the First Day Hearing that the Debtors will be presenting, in short order, formal applications, pursuant to 11 U.S.C. Secs. 327 and 328, to the Court seeking authority to employ: Firm Purpose ---- ------- Weil, Gotshal & Manges, LLP Lead bankruptcy counsel Richards, Layton & Finger, P.A. Local bankruptcy counsel Arthur Andersen LLP Restructuring consultants, auditors and accountants Ernst & Young LLP Real estate, technology, litigation and reimbursement consultants Lazard Freres & Co. LLC Investment banker and financial advisor Shearman & Sterling Special corporate and litigation counsel Jackson Lewis Schnitzler & Krupman Special labor counsel Schaffnit & Fletcher Special criminal defense counsel Gardner Carton & Douglas Special regulatory counsel Sidley & Austin Special regulatory and litigation counsel The Nathanson Group PLLC Special business transactional counsel Kilpatrick Stockton Special litigation counsel Pillsbury Madison & Sutro LLP Special real estate counsel (Sun Healthcare Bankruptcy News Issue 2; Bankruptcy Creditor's Service Inc.) TRANSTEXAS: Emergency Motion to Extend Exclusivity -------------------------------------------------- The debtors, TransTexas Gas Corp. and its affiliates requested an extension of their exclusivity periods stating that this is a large and complex case, involving both public and private debt, multiple tiers of secured debt and substantial unsecured debt. The debtors filed their second amended plan and TARC and TEC filed their second amended plans of liquidation. To allow adequate time to conclude the hearings now set for Confirmation of the plan, the debtor requests that the court extend the exclusivity period until December 31, 1999, subject to a continuation of the debtors' DIP financing orders through that date. ********* 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 in each Friday edition of the TCR, is provided 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, Yvonne L. Metzler, Editors. Copyright 1999. All rights reserved. ISSN 1520-9474. 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