/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/991025.MBX T R O U B L E D C O M P A N Y R E P O R T E R Monday, October 25, 1999, Vol. 3, No. 206 Headlines ALLERGAN SPECIALTY: Farallon Group Holds 33.4% Of Stock AL TECH: Steelworkers and Committee Seek New Effective Date CONCORD ENERGY: Summary of Plan FIRST UNION REAL ESTATE: Approval Sought To Sell Properties FORCENERGY: Objection To Motion To Determine Value of Claims FORCENERGY: Opposition of Union Oil to Disclosure Statement FWT INC: Order Authorizes Employment of Stroock & Stroock GARDEN BOTANIKA: Seeks Amendment To Postpetition Financing HARVARD INDUSTRIES: Repurchases Notes/Stock, Pays Off Credit HARVARD INDUSTRIES: Kingston-Warren Sold For $115 Million HVIDE MARINE: Files Proposed Joint Plan Of Reorganization GENESIS DIRECT: Status Conference and Scheduling Order HOME HEALTH CORP: Seeks Order Amending Employment Agreements IMAGYN MEDICAL: Emerges From Chapter 11 LIVENT: Adjournment of Creditors' Meeting LIVENT: Hearing On Appointment of Responsible Officer NATIONSWAY TRANSPORT: Denver Objects To Post-Petition Financing PHC INC: Comparison Figures Show '99 Reduction In Total Loss PHP HEALTHCARE: Memorandum Of Law Supporting Confirmation of Plan PRECISION AUTO: Reports Net Loss Despite Revenue Increases PSI INDUSTRIES: Exploring Reorganization Options RUSSELL CORP: Dividend Yields Right To Buy Preferred Stock SINGER: Responds To IBJ Whitehall's Motion Seeking to Lift Stay SUN HEALTHCARE: SUN HEALTHCARE: Seeks To Pay Prepetition Critical Vendors TECHMEDIA: Trustee Seeks Sale of Real Property TIE/COMMUNICATIONS: Committee Seeks Extension TRANSTEXAS: Notice of Perfection of Mineral Property Lien UNITED COMPANIES: Principal Life Seeks Use Of Pre-Petition Money VENCOR: Court Approves Motion Seeking To Sublet Nursing Homes ********* ALLERGAN SPECIALTY: Farallon Group Holds 33.4% Of Stock ------------------------------------------------------- The following investment partnerships and their managers hold common stock shares in Allergan Specialty Therapeutics Inc. with shared voting and dispositive power, and in the amounts and percentages shown: Tinicum Partners, L.P., 22,500 or 0.7% Farrallon Capital (CP)Investors, L.P., 40,900 or 1.3% Farallon Capital Institutional Partners II, L.P., 49,300 or 1.5% Farrallon Capital Institutional Partners III, L.P., 61,700 or 1.9% Farallon Capital Institutional Partners, L.P., 245,700 or 7.5% Farallon Capital Management LLC, 435,800 or 13.3% Farallon Capital Partners, L.P., 236,021 or 7.2% Farallon Partners L.L.C., 656,121 or 20.1% Fleur E. Fairman, Same as above Andrew B. Fremder, David I. Cohen, Enriqui Boilini, Jason M. Fish, Joseph F Downes, William F. Duhamel, Richard B. Fried, William F. Mellin, Stephen L. Millham, Meridee A. Moore, and Thomas F. Steyer each, 1,091,921 or 33.4% The above hold an aggregate of 1,091,921 Shares, which is 33.4% of the outstanding common stock of Allergan. Of the shares held by the Management Company on behalf of the Managed Accounts, 9,500 shares (equal to approximately 0.3% of the total shares currently outstanding) are held by The Absolute Return Fund of The Common Fund, a non-profit corporation. The Management Company, as an investment adviser, has the power to direct the disposition of the proceeds of the sale of the shares held by the Managed Accounts. The individuals noted, other than Fairman, are managing members of the Management Company. AL TECH: Steelworkers and Committee Seek New Effective Date ----------------------------------------------------------- The United Steelworkers of America AFL-CIO-CLC, Atlas Steels, Inc. and the official committee of unsecured creditors, consented to by Al Tech Steel Corporation, debtor, seek an extension of time for the occurrence of the Effective Date. The debtor has successfully closed the sale of the debtor's extrusion operations to Altx, Inc. as contemplated under the plan. However, the sale of the Newco Purchased Assets to NewCo has not closed. One of the contingencies to the NewCo Sale was the securing of necessary financing by NewCo to fund the purchase and operation of the debtor's business. The closing of the NewCo Sale was delayed due to the fact that NewCo's financing arrangements with LaSalle Business Credit, Inc. were not finalized. NewCo and LaSalle have negotiated the modified terms of a financing arrangement. They expect that the documentation of the credit agreement will be completed on or about October 18, 1999. In addition the final execution of a consent decree by the NY State Department of environmental conservation and the establishment of the Newco Stock Plan should be completed no later than October 22, 1999. A closing is scheduled for October 22, 1999. Therefore, the movants submit that it is both necessary and appropriate, and in the best interest of the debtors and the creditors to extend the occurrence of the Effective Date to October 22, 1999. CONCORD ENERGY: Summary of Plan ------------------------------- In summary, the plan of reorganization of Concord Energy Incorporated and Knight Equipment & Manufacturing Corporation provides that the holders of the oil and gas secured notes and the 1994 and 1995 Secured Notes will retain their security interest in their collateral, which collateral will be transferred to and/or retained by CEI. In addition, on account of unsecured claims, the Reorganized CEI will issue shares of its common stock as set forth in any Restated Charter, to the holders of claims in Classes 6 and 7. The holders of claims in Class 3 will retain their security interests and will be paid from the proceeds of the sale of their collateral. Class 8 is the other holders of unsecured clams against Concord, which will receive their pro rata share of the Concord Fund. Class 10 is the holders of unsecured claims against KEMCO, which will receive their pro rata share of the Liquidating Trust. The equity interests and claims in respect of KEMCO's common stock are afforded no value under the plan and would be canceled. The plan also provides for the rejection of any pre-petition employment agreements. Summary of Treatment of Claims: Class 1A Unsecured Claims against Akashic/AKT that are entitled to priority. Not impaired. $120,000. Class 1B Allowed Unsecured Claims Against Incorporated, International or Strates that are entitled to priority - Not impaired. $120,000 Class 2 Priority tax claims - 0 Class 3A The Foothill Group - Impaired - Asserted Claim of $10.7 million Recovery is based on Maxtor Litigation Gross Recovery Class 3B Bank Group Secured Claim - Impaired Votes of holders of allowed claims in Class 3B are being solicited and holders of undisputed claims in Class 3B are entitled to vote on the plan. Asserted claim of $33.8 million after application of proceeds of collateral. Depending on the results of sale of Bank Group Collateral up through and including the confirmation date, and upon the results of the Maxtor Litigation, claims of the Bank Group may be undersecured or oversecured. With no recovery, debtors estimate that a further distribution of $6.5 million will be made. Class 3C - Other Secured Claims - 0 - Class 4 - Unsecured Claims 4A - Allowed StorMedia Unsecured Claims Estimate - $23,108,400. Share pro rata all distributions from the StorMedia Non- Maxtor Fund. Shall share pro rata all distributions from the StorMedia Maxtor Litigation Fund. 4B - Allowed Akashic Unsecured Claims - $8,941,000 - shall share pro rata all distributions from the Akashic Fund. 4C - Allowed Bank Group Deficiency Claim - Share pro rata all distributions from the StorMedia Non-Maxtor; Shall share pro rata all distributions from the Akashic Fund 4D - Alled Bank Group Limited Deficiency Claims Shall share pro rata all distribuitions fromt eh StorMedia Maxtor Litgation Fund. All class 4 Claims are impaired. The recovery on account of allowed claims in Classes 4A and 4B are based on a schedule of Maxtor Ltiigation Gross Recoveries. Class 5 - Intercompany claims - Impaired under the plan Class 6 - Subordinated claims - Impaired - All claims disputed by Debtors - no claims. Class 7 - Preferred stock Interests - After payment of classes 4 and 6, holders of allowed class 7 interests shall receive on a pro rata basis any surplus remaining in the AKT Fund, the Akashic Fund or the StorMedia Maxtor Litigation Fund. The debotrs estimate $8 million in allowed interests. There will be no recovey unless the Maxtor Litigation Gross Recovery is $100 million or more. Class 8 - Common stock Interests - Impaired. After payment of classes 4 and 6, holders of allowed class 8 interests shall receive on a pro rata basis any surplus remaining in the AKT Fund, the Akashic Fund or the StorMedia Maxtor Litigation Fund. There will be no recovery unless the Maxtor Litigation Gross Recovery is $100 million. FIRST UNION REAL ESTATE: Approval Sought To Sell Properties ----------------------------------------------------------- A special meeting of the beneficiaries of First Union Real Estate Equity and Mortgage Investments, a trust organized in Ohio, will be held in the Murray Hill Room at The New York Helmsley Hotel located at 212 East 42nd Street, New York, NY 10017, on Tuesday, November 16, 1999, at 10:00 a.m., local time. The purpose of the meeting is to consent to the sale of certain properties of the company in accord with a Purchase and Sale Agreement, dated July 14, 1999, as amended by a first letter agreement, dated August 11, 1999, by a second letter agreement, dated September 22, 1999, and by a third letter agreement, dated October 7, 1999, between Southwest Shopping Centers Co. II, L.L.C., a Delaware limited liability company and an indirect wholly-owned subsidiary of the company, and WXI/Z Southwest Malls Real Estate Limited Partnership, a Delaware limited partnership, for a purchase price of $191.5 million and to approve amendments to the company's Amended Declaration of Trust relating to the company's ability to (i) engage in certain activities in connection with the investment and financing of company assets and (ii) effectuate a reverse or forward split of shares of beneficial interest of the company. Consent to the Purchase and Sale Agreement requires the affirmative vote of holders of a majority of the outstanding shares. The Board of Trustees of the company is seeking beneficiary consent to the asset sale in accordance with the company's Amended Declaration of Trust, which provides that no sale of more than 50% of the company's property may be made without the consent of holders of at least a majority of the outstanding shares. The asset sale, together with prior asset sales that were part of a sales program initiated by the company in June 1998, would, in the aggregate, constitute a sale by the company of more than 50% of the company's property. Accordingly, a vote to consent to the asset sale will be deemed a vote to consent to the sale by the company of more than 50% of the company's property. Concurrently with the execution of the Purchase and Sale Agreement, beneficiaries who own, in the aggregate, approximately 20.79% of the outstanding shares, agreed to consent to the sale of the properties pursuant to the Purchase and Sale Agreement. Approval of each of the amendments requires the affirmative vote of holders of a majority of the outstanding shares. FORCENERGY: Objection To Motion To Determine Value of Claims ------------------------------------------------------------ Baker Hughes Oilfield Operations, Inc. dba Baker Oil Tools, Cardinal Services, Inc. and Fastorq, Inc. object to the debtor's motion to determine value of secured claims asserted on the South Marsh Island 11 Property and seeks entry of an order providing for the conversion of this matter to an adversary proceeding, entry of a scheduling order, and entry of an order for leave to join the Bank Group as a necessary party. The movants allege that debtor's motion is misidentified as a motion to determine value of secured claims. Rather, the motion seeks a determination by the court as to the validity and priority of competing liens. The movants state that this proceeding MUST be brought as an adversary proceeding. The movants state that this is a classic case for lien stripping of junior lien holders, and a classic case for an adversary proceeding to determine the validity and priority of competing liens on the same property, for determining the effectiveness of the Bank Group's attempts to perfect their consensual liens, for determining the value provided to the leasehold estates by the mineral lien claimants and the unjust enrichment provided to the Bank Group for determining the different effects of the failure to comply with relevant state laws on consensual lien claimants as to statutory lien claimants. The movants claim that prior to the debtor's apparent settlement with the Bank Group, the debtor raised questions as to the validity of the Bank Group's lien perfection on this property. "Apparently the sacrifice of the mineral lien creditors was the price of the settlement", according to the movants. The movants request that the court convert this matter to an adversary proceeding and establish a scheduling order for trial. FORCENERGY: Opposition of Union Oil to Disclosure Statement ----------------------------------------------------------- Union Oil Company of California opposes approval of the proposed first amended joint disclosure statement of Forcenergy, Inc. and Forcenergy Resources Inc. UNOCAL is the operator of mineral properties located in the State of Alaska, and Forcenergy Inc. owns an interest in Trading Bay Field and Trading Bay Unit and is a party to the joint operating agreement concerning the operations of these properties. According to UNOCAL, Forcenergy is obligated to both the State of Alaska and UNOCAL to satisfy its share of the plugging and abandonment costs related to these properties. UNOCAL alleges that the disclosure concerning the funding of the plugging and abandonment liabilities in the proposed plan is "woefully inadequate" in light of the commitment to the retirement of debt and the undeveloped nature of the Redoubt Shoal prospect where a well has not even been drilled. FWT INC: Order Authorizes Employment of Stroock & Stroock --------------------------------------------------------- The US Bankruptcy Court for the Northern District of Texas Fort Worth Division entered an order on October 12, 1999 authorizing retention of Stroock & Stroock & Lavan as counsel for the Official Committee of Noteholders, effective as of June 1, 1999. Stroock shall be compensated at its normal hourly rates subject to a cap on its rates of $350 per hour. GARDEN BOTANIKA: Seeks Amendment To Postpetition Financing ---------------------------------------------------------- The debtor, Garden Botanika, Inc. seeks authority to modify the terms of the postpetition financing. The debtor has been required by various suppliers to provide deposits in amounts substantially greater than projected. Such deposits were necessary in order to assure the delivery of custom-made goods to the debtor markets. The debtor believes that a $750,000 increase on loan availability in excess of the Borrowing Base authorized under the Final Finance Order will be adequate. The debtor requests that the court authorize a modification of the final finance order approving a temporary overadvance to be repaid and not renewed after November 7, 1999. The $7 million DIP Credit Facility maximum borrowing limit is not affected by the proposed loan modification. HARVARD INDUSTRIES: Repurchases Notes/Stock, Pays Off Credit ------------------------------------------------------------ On the day of the Kingston-Warren sale, Harvard Industries Inc. used part of the proceeds of the sale to repurchase all of its 14 1/2% Senior Secured Notes due 2003 for $30,585,361.11, a formula price which includes interest and prepayment premiums, as well as other adjustments. The company deposited the monies with the Trustee on September 30, 1999 and the Trustee discharged and released the Indenture and Collateral Agreement. The same day the company used part of the proceeds of the sale to satisfy all obligations under its $115 million senior secured revolving credit facility with General Electric Capital Corporation. The company paid $69,020,272.44 in satisfaction of outstanding principal balance, interest accrued through September 30, 1999 and other charges. GECC terminated the credit facility and issued a Pay-Off Confirmation Letter dated September 30, 1999. Additionally, on September 30, 1999, Harvard Industries put in place a new $50 million credit facility with General Electric Capital Corporation, secured by substantially all of the assets of the company and its domestic subsidiaries. The credit facility provides for up to $50 million of revolving credit borrowings with a $15 million sub-limit letter of credit facility. The proceeds will be used to finance working capital and other general corporate purposes and for acquisitions. The on October 5, 1999, the company used part of the proceeds of the sale of the assets of its Kingston-Warren subsidiary to purchase 762,000 shares of its common stock in a private transaction at an aggregate cost of approximately $4.95 million. As of September 30, 1999, the company had 10,234,222 shares of common stock outstanding. HARVARD INDUSTRIES: Kingston-Warren Sold For $115 Million --------------------------------------------------------- On September 30, 1999, The Kingston-Warren Corporation, a wholly- owned subsidiary of Harvard Industries, Inc., completed its previously announced sale of substantially all of its assets to KWC Acquisition Corp., a subsidiary of Hutchinson, S.A., a French corporation, for $115 million, less certain adjustments. On the day of the closing, Kingston-Warren received $108,800,000 in cash. Additionally, $2.5 million was deposited by the purchaser with an escrow agent to secure post closing adjustments, if any, and $3.1 million was deposited by the purchaser with an escrow agent to indemnify obligations, if any. Prior to the sale, The Kingston-Warren Corporation was principally engaged in the business of manufacturing, selling and distributing products for automotive window and body sealing systems, including glass run channels, belt strips and body seals. The assets purchased include all real property, capital assets, inventory, supplies, trademarks and patents, accounts receivable, contracts and leases, and all other rights and assets owned by The Kingston-Warren Corporation, except real property located at Lebanon, New Jersey and Farmington Hills, Michigan, certain computer systems and software, and cash on hand as of the day of the closing. The purchaser has assumed substantially all liabilities of The Kingston-Warren Corporation, except guarantees of the outstanding debt of Kingston-Warren's parent, Harvard Industries, Inc. HVIDE MARINE: Files Proposed Joint Plan Of Reorganization --------------------------------------------------------- As previously reported, on September 8, 1999, Hvide Marine Incorporated and certain of its subsidiaries filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. On October 1, 1999, the company and its subsidiaries filed a proposed Joint Plan of Reorganization and a related proposed Disclosure Statement with the Bankruptcy Court. Under the Plan, holders of the company's 8.375% Senior Notes due 2008 would exchange such Notes for 9,800,000 shares of common stock of the reorganized company, representing 98% of the common equity of New Hvide; holders of the Trust Convertible Preferred Securities issued by a subsidiary of the company would receive 200,000 shares of common stock of New Hvide, representing 2% of its common equity, together with warrants to purchase an additional 125,000 shares; and holders of the company's common stock would receive warrants to purchase 125,000 shares of common stock of New Hvide. The warrants would be exercisable at $38.49 per share and would have a term of four years. Completion of the Plan is subject to various conditions, including obtaining refinancing for the company's bank borrowings including those under its previously reported debtor-in- possession credit facility. To date, the company has been unsuccessful in its efforts to refinance these borrowings, and there is no assurance that it will be able to do so in the future. Completion of the Plan is also subject to approval by the Bankruptcy Court. GENESIS DIRECT: Status Conference and Scheduling Order ------------------------------------------------------ The US Bankruptcy Court District of New Jersey entered a scheduling order providing that a status conference will be held in this case on November 17, 1999 2:00 PM at which the court will rule on monthly operating reports, and the court will set a date by which the debtor shall file a disclosure statement and plan. By separate order the court held that the time within which the debtors shall file their Statements and Schedules be extended to October 18, 1999. The debtors' motion to extend time to assume or reject leases, and to reject an unexpired lease with Soccer Madness LLC and Courtyard Distribution Center and the debtors' motion to approve an employment arrangement have been adjourned by the court to November 1, 1999. HOME HEALTH CORP: Seeks Order Amending Employment Agreements ------------------------------------------------------------ The debtors, Home Health Corporation of America, Inc. et al. seek court approval of amendments to certain employment agreements and seek authority and approval for the assumption of those employment agreements. The employment agreements are between the debtor and David S. Geller, Colleen Lederer and James Weinstein. The agreements provide certain salary boosts to the three key employees together with bonus and severance arrangements. IMAGYN MEDICAL: Emerges From Chapter 11 --------------------------------------- Imagyn Medical Technologies, Inc. announced that it has successfully completed its emergence from Chapter 11, following confirmation on October 18, 1999 of its Plan of Reorganization by the U.S. Bankruptcy Court for the District of Delaware. The Company filed a petition for reorganization under Chapter 11 on May 18, 1999. As previously announced, the Plan, which was supported by holders of the Company's debt and its trade creditors, provides that all outstanding shares of common stock of Imagyn Medical Technologies, Inc. will be cancelled. Charles A. Laverty, Chairman & Chief Executive Officer of Imagyn, stated, "Imagyn has emerged from the Chapter 11 process with a more stable capital structure and stronger financial resources. Our business has made significant progress during the past five months. We will intensify our efforts to expand the market for our current line of innovative products. At the same time we will also be focusing on completing the development of several breakthrough products that are in various stages in the Company's R&D pipeline. Our ability to complete the reorganization in such a relatively short time has been a real positive and is a tribute to the dedication of our employees, the support and cooperation of our suppliers and customers, and the commitment of our financial investors." Imagyn Medical Technologies, Inc. is a manufacturer and marketer of products for the minimally invasive and general surgery market and of brachytherapy seeds for the treatment of cancer. LIVENT: Adjournment of Creditors' Meeting ----------------------------------------- The adjourned meeting of creditors in the case of Livent(US) Inc., et al. will be held on December 15, 1999 at 2:30 PM. LIVENT: Hearing On Appointment of Responsible Officer ----------------------------------------------------- The debtors, Livent (US) Inc., et al. seek an order appointing a responsible officer in lieu of a Board of Directors. A hearing will be held on November 3, 1999 at 2:00 PM. The debtors have selected Marc E. Richards, Esq. of the law firm Thelen Reid & Priest LLP to act as responsible officer. The debtors assert that now that the debtors have ceased to operate as a going concern, the costs of continued service of the Directors from both the estates and the Directors' personal perspectives are simply not warranted. The Board of Directors of Livent, Inc., the debtors' Canadian parent corporation has disbanded as a result of the appointment of a receiver in Livent Inc.'s CCAA proceeding. NATIONSWAY TRANSPORT: Denver Objects To Post-Petition Financing --------------------------------------------------------------- The city and county of Denver and its Manager of Revenue object to the debtors' motion for interim and final order approving post-petition financing, granting security interests and super- priority administrative expense treatment and modifying the automatic stay. According to the movants, the debtor seeks to obtain credit secured by a lien senior to existing liens on property of the estate. The City and its Manager claim to have liens on the property of the estate. The movants claim that the bankruptcy code only permits a senior lien to be given for such credit if there is adequate protection for the interests of the city and its manager. The movants claim that the debtors are arbitrarily providing for payment of post-petition expenses of the estates without mentioning payment of post-petition obligations to the city and its manager. PHC INC: Comparison Figures Show '99 Reduction In Total Loss ------------------------------------------------------------ PHC, Inc. with its subsidiaries is a national health care company specializing in the treatment of substance abuse, which includes alcohol and drug dependency and related disorders, and in the provision of psychiatric services. The company currently operates two substance abuse treatment facilities: Highland Ridge Hospital, located in Salt Lake City, Utah; and Mount Regis Center, located in Salem, Virginia, near Roanoke and eight psychiatric facilities: Harbor Oaks Hospital, a 64-bed psychiatric hospital located in New Baltimore, Michigan; Harmony Healthcare, a provider of outpatient behavioral health services at two locations in the Las Vegas, Nevada area; Total Concept EAP, a provider of outpatient behavioral health services in Shawnee Mission, Kansas; and North Point-Pioneer, Inc. which operates four outpatient behavioral health centers under the name Pioneer Counseling Center in the greater Detroit metropolitan area. The company also operates BSC-NY, Inc., which provides management and administrative services to psychotherapy and psychological practices in the greater New York City metropolitan area. Through its subsidiary, Behavioral Health Online, Inc., the company operates its web site, Behavioralhealthonline.com. Revenues for the fiscal year ended June 30, 1999 were $ 19,139,496. Earnings before taxes, interest, depreciation and amortization for currently operating facilities increased by $1,351,169 for the year ended June 30, 1999 to $845,747 from a loss for the year ended June 30, 1998 of $505,422. The company reduced its total loss by $5,090,703 for the fiscal year ended June 30, 1999 compared to June 30, 1998. PHP HEALTHCARE: Memorandum Of Law Supporting Confirmation of Plan ----------------------------------------------------------------- The debtor, PHP Healthcare Corporation states that due to the seizure of the debtor's primary operating subsidiary, and the substantial liabilities of PHP arising pre-petition, the debtor lacked the fundamental financial bases to reorganize its business. The plan allocates the debtor's assets between NationsBank, the debtor's primary secured creditor having blanket liens on the majority of the debtor's assets, the holders of certain other secured claims, and the holders of unsecured claims. It effects a substantive settlement and compromise of disputed claims among the Official Committee Representing Unsecured Creditors, the debtor, and NationsBank. It creates a liquidation vehicle, in the form of a Delaware limited liability company, to pursue causes of action and other assets not encumbered by NationsBank's liens. And the plan provides for the payment in cash, primarily from NationsBank's cash collateral, of allowed administrative and priority claims. The plan has the support of each of the impaired classes and subclasses of claims entitled to vote to accept or reject the plan. In its memorandum supporting confirmation of the plan, the proponents state that the plan complies with the bankruptcy code, that at least one class of impaired claims has accepted the plan, and that the plan is not likely to be followed by liquidation or the need for further financial reorganization. The debtor replies to each of the objections to the plan, and the debtor summarizes the modifications to the original plan. PRECISION AUTO: Reports Net Loss Despite Revenue Increases ---------------------------------------------------------- Precision Auto Care, Inc. is a provider of automotive maintenance services with franchised and company-operated centers located in the United States and in certain international locations. The company's services are provided to automobile owners and focus on those high frequency items required to properly maintain the vehicle on a periodic basis. The company supports its franchisees and company-owned centers by distributing certain automotive and car washing parts and supplies, and manufacturing and distributing pre-fabricated modular buildings and car wash equipment and chemicals. Revenue for the twelve months ending June 30, 1999 was $44.8 million, an increase of $3.0 million, or 7%, compared with revenue of $41.8 million for the prior year. The company recorded a loss of $21.0 million for the twelve months ending June 30, 1999, compared with net income of $1.2 million for the prior year. PSI INDUSTRIES: Exploring Reorganization Options ------------------------------------------------ On June 2, 1999, Dominick Seminara resigned as PSI Industries' Chief Executive Officer and Chairman of the Board and Ben Cohen, then the company's President and a Director, was appointed as Chairman of the Board and Chief Executive Officer. In addition, on June 4, 1999 Mirco Vietti resigned as a Director of the company and was removed as an officer of the company. Subsequent to the resignations of Mr. Seminara and Mr. Vietti, management discovered certain accounting irregularities. As a result of the foregoing, on July 29, 1999 the company filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Florida (West Palm Beach Division). Currently the company is being operated as a Debtor-in-Possession under court order and is exploring a number of reorganization possibilities. However, should it be unable to reorganize, the company may have to be liquidated under Chapter 7 of the United State Bankruptcy Code. PSI Industries net sales for the three and six months ended June 30, 1999 were $4,999,361 and $12,151,444, respectively compared to $6,713,286 and $13,628,846 for the three and six months ended June 30, 1998, respectively. Net loss for the three and six months ended June 30, 1999 was $13,894,502 and $13,806,783, respectively, compared to net income of $918,195 and $652,692 for the three and six months ended June 30, 1998, respectively. RUSSELL CORP: Dividend Yields Right To Buy Preferred Stock ---------------------------------------------------------- On September 15, 1999, the Board of Directors of Russell Corporation declared a dividend distribution of one Right for each outstanding share of common stock of the company. The distribution is payable to the shareholders of record at the close of business on October 25, 1999. Each Right entitles the registered holder to purchase from the company one one-hundredth of a share of the company's Series A Junior Participating Preferred Stock at a price of $85 per one one-hundredth of a share, subject to adjustment under certain circumstances The Rights are not exercisable until the distribution date and will expire at 5:00 P.M. (Alexander City, Alabama time) on October 25, 2009, unless such date is extended or the Rights are earlier redeemed or exchanged by the company. SINGER: Responds To IBJ Whitehall's Motion Seeking to Lift Stay --------------------------------------------------------------- IBJ Whitehall Bank & Trust Company seeks relief from the automatic stay in the Semi-Tech cases, but not in the Singer Chapter 11 cases, "to sell, lease, assign or otherwise dispose of the collateral." The collateral is the 49.6% interest in the common stock of The Singer Company NV purportedly owned by Graeme Limited, a debtor in the Semi-Tech cases. Singer states that the motion should not be granted because of the detrimental effect that the relief could have on the Singer reorganization. The foreclosure by IBJ Whitehall on the Semi- Tech Singer shares could have the effect of creating adverse tax consequences for the Singer enterprises. The foreclosure could also affect other business and contractual arrangements that the Singer companies have worldwide. Singer asserts that it and its constituencies should be given a reasonable period of time to determine their conclusions as to the effect of the proposed foreclosure on the tax and business arrangements of Singer. The motion also raises issues including what action IBJ Whitehall will take if it forecloses on the Semi-Tech Singer shares to exercise control over or interfere with the corporate governance of Singer. Although the motion seeks only relief for disposition purposes, it is unlikely IBJ Whitehall does not have some unannounced plan if successful on the motion, to call a meeting of Singer shareholders and exercise some control over Singer. Singer also states that if the effect of the proposed relief is to diminish NOLs currently available to Singer, then the relief should not be granted unless the automatic stay in the Singer Cases is lifted or modified. SUN HEALTHCARE: Seeks To Pay Prepetition Critical Vendors --------------------------------------------------------- The Debtors have identified hundreds of Critical Vendors supplying pharmaceutical drugs, medical supplies, equipment and other goods and services that are unique and cannot be duplicated by other suppliers. These Critical Vendors include back-up pharmacies, pharmaceutical delivery services, emergency answering services, medical waste disposal services, security services, consultants, oxygen suppliers, therapy services, clinical testing services, patient care supply services, laboratories, blood product suppliers, ambulance services, building safety services and equipment suppliers, outpatient surgery and diagnostic services, dialysis services, medical proficiency testing, drug screening, credential investigation services, and contracted medical professionals. By this Motion, the Debtors have sought and obtained the Court's authority to honor up to $20,000,000 of prepetition obligations to these creditors in the ordinary course of business. The Debtors are not, however, obligated or directed to honor any pre- petition obligation. Creditors accepting payment of a prepetition claim from the Debtors under this Critical Vendor Program must agree to (a) waive any pre-petition claim against the Debtors and (b) provide post-petition goods and services on trade terms acceptable to Sun. (Sun Healthcare Bankruptcy News Issue 2; Bankruptcy Crediotr's Service Inc.) TECHMEDIA: Trustee Seeks Sale of Real Property ---------------------------------------------- John M. Wolfe, Chapter 7 trustee for the bankruptcy estates of 7301 Orangewood LLC, Techmedia Lighting Inc., Techmedia Express, Inc., Techmedia Computer Systems Corp, Techmedia Lighting, Techmedia Express and Techmedia Computer seeks court approval for the sale of the real property located at 7301 and 7421 Orangewood Avenue, Garden Grove, California. The Trustee has obtained an offer to purchase the Garden Grove Property from Furon Company or its assignee for a purchase price of $13.75 million. The sale will enable the Trustee to generate substantial cash from the sale of an asset for its fair market value. The proposed sale shall be subject to overbid procedures. Overbidders must bid an initial amount of at least $150,000 over the purchase price, and minimum bid increments thereafter shall be $10,000. TIE/COMMUNICATIONS: Committee Seeks Extension --------------------------------------------- The official committee of creditors holding unsecured claims in the case of Tie/Communications Inc. seek an extension of an October 25 deadline to investigate and object to the insider claims and prosecute affirmative actions against the insiders. In addition, the Committee, the debtor, Moses, Nicols and Burton seek an amicable resolution of their disputes. The Committee asserts that cause exists for the court to extend the October 25 deadline for an additional 180 days. Despite the Committee's investigation, resulting in filing of the Litigation (by these objections, the Committee seeks to disallow in the entirety, and/or equitably subordinate, over $38 million in claims filed against the debtor's estate),the Committee has not completed its investigation into and analysis of whether to object to certain other Insider Claims or to file Affirmative Actions against other Insiders. The Committee has focused its attention on the resolution of the largest Insider Claims, and the extension will enable the Committee to tackle its investigation of the remaining claims. The Committee states that approval of the agreements with Moses, Nicols and Burton (former directors and trade creditor) are in the best interests of the estate. TRANSTEXAS: Notice of Perfection of Mineral Property Lien --------------------------------------------------------- CE Distribution Services, Inc., fka Continental Emsco Company served notice to the debtors, TransTexas Gas Corp. and its debtor affiliates, of perfection of its lien claims against the leasehold estate and other associated property owned by the debtor in Galveston County, Texas. UNITED COMPANIES: Principal Life Seeks Use Of Pre-Petition Money ---------------------------------------------------------------- Principal Life Insurance Company seeks a court order approving the use of pre-petition payments. Principal is the servicer under the United Companies Financial Corporation Employees' Savings Plan. Principal would prefer that its return of the remaining balance of the pre-petition payments and the interest earned on the pre-petition payments not jeopardize the status of the pension plan as a qualified trust and most of all Prinicpal wishes to insulate itself from any liability. Principal requests that the court approve retroactively the use of the pre-petition payments by Principal to the employees of the company. VENCOR: Court Approves Motion Seeking To Sublet Nursing Homes -------------------------------------------------------------- "These transactions may well be within the scope of the Debtors' ordinary business operations," John R. Garry, Esq., representing the Debtors, told Judge Walrath at today's hearing, "but the Debtors filed their Motion out of an abundance of caution," as he presented the Debtors' request to the Court for consideration. "I have a question about the Debtors' business judgment," Judge Walrath interjected. "Explain why subletting is preferable to rejection of the underlying leases," Judge Walrath said. The Debtors intend, Mr. Garry reminded the Court, to be in chapter 11 for only a short period of time. Further, it is the Debtors' intention that many unsecured claims will pass through to the reorganized company. With that in mind, the Debtors conclude that the relevant analysis is a comparison of the loss on the sublease against the amount of any rejection damage claim that would arise if the Debtors exercised their right to reject under 11 U.S.C. Sec. 365. Mr. Garry's comments do not mean that all creditor classes will be unimpaired under the Debtors' Plan, Lindsee P. Granfield, Esq., representing the Debtors, added. "There definitely will be an impaired class." Major creditor groups will be impaired, Ms. Granfield explained, but not lease rejection claims under the plan structure currently being talked about among the core parties in interest. "But what if this case doesn't return 100-cents-on-the-dollar to unsecured creditors," Judge Walrath pressed? In the event of a lease rejection, Mr. Garry continued, the Debtors would face significant litigation. Many of the Debtors' leases contain cross-default provisions that would be triggered by any attempt to reject one of these five leases. Again, Mr. Garry stressed, the Debtors have concluded that the benefits outweigh the burdens, these five leases should not be rejected at this time, and the subleases are the most prudent business deals to pursue at this juncture. Noting the absence of any objection to the Debtors' request, Judge Walrath Granted the Debtors' Motion in all respects. (Vencor Bankruptcy News Issue 5; Bankruptcy Creditor's Service Inc.) ********* The Meetings, Conferences and Seminars column appears in the TCR each Tuesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. 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