March 28, 2000
Sen. Wellstone Blocking Efforts to Allow S. 625 to Proceed
Sen. Paul Wellstone (D-Minn.), a strong opponent of S. 625, is
apparently standing in the way of efforts by top leaders to get the
bankruptcy reform bill into conference, the CQ Daily Monitor
reported. If he chooses, Wellstone can kill the measure himself, sending
the Senate leaders back to square one. At issue with Wellstone are the
minimum wage and tax break provisions, which both Majority Leader Trent
Lott (Miss.) and Minority Leader Tom Daschle (S.D.) would like to split
off from the bankruptcy bill, sending them to one conference committee
and the bankruptcy bill to another. The move does require a unanimous
vote from the Senate, and while 83 senators voted in favor of S. 625,
Wellstone blocked the move last Thursday, stating, 'As of today, I've
made it clear that I'm determined to make it hard to try to pass
anything, because I think it's a horrible bill.' Daschle has reported
that if Wellstone refuses to budge, he was willing to start over and
invoke cloture on the separate bills. But historically in the Senate,
those under pressure to yield to the majority opinion ultimately do, and
Senate members have been keeping the pressure on Wellstone. 'Ultimately,
though, I don't think you can keep 83 senators who voted for this bill
down,' said Daschle. 'We'll find a way to get it done, either the easy
way or the hard way.'
Supreme Court Skirts Around Student Loan Discharge
The Supreme Court sidestepped a dispute yesterday over people who
file for federal bankruptcy protection and then try to avoid paying back
student loans from state-run colleges and universities, the Associated
Press reported. Without comment, the court rejected an appeal in which
Kansas officials said state schools are immune from such maneuvers
because the U.S. Constitution's 11th Amendment shields them from being
sued in federal court. Lower courts had ruled against such immunity, but
Kansas' appeal was supported by a friend-of-the-court brief filed on
behalf of 24 other states.
The case was brought about as a result of the bankruptcy of Mark and
Genevieve Innes, who received student loans while attending Kansas State
University under a program in which public and private schools receive
federal funding for the purpose of extending such loans. After
graduation, the couple filed for bankruptcy in Topeka, seeking to have
the loan debts wiped out. Relying on the university's 11th
Amendment immunity, Kansas State officials asked a federal bankruptcy
judge to dismiss that effort, but the bankruptcy judge, a federal trial
judge of the 10th U.S. Circuit Court of Appeals ruled that the
university, as an agent of the state government, had waived its immunity
by signing an agreement with the Department of Education to participate
in the Perkins Loan program, which requires participating universities
to oppose any borrower's bankruptcy-court request for a discharge of the
loan debt.
In the appeal, supported in a brief filed the Texas attorney
general's office and joined in by officials from Alabama, Alaska,
Arkansas, California, Delaware, Florida, Illinois, Louisiana, Michigan,
Missouri, Montana, Nebraska, Nevada, New Jersey, North Dakota, Oklahoma,
South Carolina, South Dakota, Tennessee, Utah, Vermont, Washington and
Wyoming, Kansas lawyers argued that the state-run school had not waived
its immunity simply by agreeing to follow federal regulations, and
stated, 'The 11th Amendment can only be waived by express waiver...not
by mere contractual agreements to follow federal regulations.' The
federal bankruptcy judge is set to rule in April on whether the debt
from the Innes' student loans can be erased.
Jitney Jungle Closes Stores in Little Rock, Ark. and Memphis,
Tenn.
Jitney Jungle Stores of America Inc., Jackson, Miss., announced
yesterday the sale of six stores and the closure of three grocery stores
and two companion gas stations in the Memphis, Tenn., and Little Rock,
Ark., markets, according to a newswire report. Included in the sale are
four companion Pump & Save gas stations. Plans are set to sell four
more grocery stores and three companion gas stations in Memphis on April
4. President and Chief Executive Officer Ron Johnson said, 'The exit
from the Little Rock and Memphis markets through the sale and closure of
these 13 grocery stores is part of our transition into a smaller more
viable company. Our objective since the bankruptcy filing back in
October has been to use the reorganization process to strengthen our
business operation, and this exit is an important step in achieving this
objective.'
Johnson added, 'Jitney expects to emerge from bankruptcy by the end
of the year without debt and with a financial structure in place that
will enable us to compete successfully in the years to come.' In exiting
the Little Rock and Memphis markets, Jitney Jungle Stores of America
closed the three stores located in Southhaven, Miss., Cordova, Tenn.,
and Little Rock, Ark., and closed two Pump & Save gas stations
adjacent to those stores. The company currently operates 163 grocery
stores, 48 gas stations and 10 liquor stores throughout Mississippi,
Alabama, Louisiana and Florida.
Pacific International Enterprises Granted Summary Judgment
A summary judgment motion was granted to Pacific International
Enterprises Inc., Long Beach, Calif., by the Los Angeles Bankruptcy
Court on Wednesday, according to a newswire report. According to Pacific
International's chief financial officer, Anthony Broughton, the company
was forced to file chapter 11 to preserve its rights to use the land and
building for its ongoing board-manufacturing operation as a result of a
dispute with KCDK, Pacific International's landlord. 'Since the
execution of the various agreements acquiring the assets and businesses
in January…management's ability to operate effectively has been
totally restricted by third-party interests and was never given the
chance to participate in and optimize its 1999 orders,' he said. 'The
various parties, at one stage or another, blocked financing efforts by
refusing to cooperate, have not agreed on the business plan, have
reneged on promises and generally interfered in the attempts by
management to operate this business.' The bankruptcy court declared the
company's security interests, as adopted in the states of Washington and
to be senior in priority to competing security interests claimed by
France Sports Mfg. and KCDK, and that the company is entitled to
exercise its default remedies. Pacific International manufactures snow,
wake and skateboards.
Excelsior-Henderson Announces Proposed Plan Agreement
Excelsior-Henderson Motorcycle Manufacturing Co., Belle Plaine,
Minn., announced it had reached an agreement with E.H. Partners
regarding a proposed plan of reorganization in its chapter 11 case,
according to a newswire report. The company said it anticipates it will
file the proposed plan of reorganization in the near future; a term
sheet regarding the proposed plan has been filed with the bankruptcy
court, and key creditor groups also support the proposed plan, which
calls for the company to receive a substantial capital infusion from
E.H. Partners and the company's outstanding securities will be deemed
cancelled and terminated. The proposed plan will not provide for the
company's current stockholders to retain or obtain any equity interest
in the company going forward, but its secured creditors will receive
restructured notes and its unsecured creditors will receive, among other
things, a pro rata distribution of cash and the right to receive
certain royalties based on the company's gross sales. E.H. Partners will
own all of the issued and outstanding equity of the company following
the effective date. Excelsior-Henderson anticipates it will be filing a
current report on Form 8-K within the next two weeks.
Manatron to Purchase Selected CPS Systems Assets
Manatron Inc., Kalamazoo, Mich., announced yesterday that the U.S.
Bankruptcy Court for the Northern District of Texas in Dallas has
approved its bid for the purchase of selected assets and the assumption
of certain contracts of Dallas-based CPS Systems Inc., according to a
newswire report. Manatron, which designs, develops, markets and supports
a family of web-based and client/server applications for county, city
and township governments, successfully bid $1.8 million in cash for the
Florida, Texas, Oklahoma, Colorado and North Carolina property tax,
appraisal and integrated voice response source code, software support
and licensing agreements, and other related assets at CPS's March 24
auction. CPS filed for chapter 11 on Jan. 19. Manatron expects to close
the transaction and begin operations of this business subsequent to a
final court hearing on March 30.
Standard & Poor's Offers Exception to SPE Limit on Additional
Debt
Standard & Poor's announced yesterday that by implementing
certain disincentives to filing a bankruptcy petition against the
special purpose entity (SPE), a single SPE can be used for multiple debt
transactions collateralized by discrete pools of assets—the
ratings of which will not be linked, according to Standard & Poor's
CreditWire. The global ratings service is amending its criteria for SPEs
to reflect this exception. A full description of the new multiple-use
SPE criteria can be found in the current edition of Standard &
Poor's CreditWeek.
Thanks for visiting Today's Bankruptcy
Headlines. New articles are posted here each business
day.
