February 112003

The newswire said sources assert that Leahy is leaning toward a trust
fund scenario for dealing with the asbestos compensation dilemma.
However, primary asbestos defendants, many of whom are facing possible
bankruptcy, instead are advancing legislation to screen out litigants
through the use of medical criteria, according to CongressDaily.
The National Association of Manufacturers is leading that lobbying
effort, whose participants have said the trust fund concept is too
cumbersome and not politically viable. Meanwhile, the American Bar
Association's House of Delegates was slated to vote today on medical
criteria recommendations recently submitted by the ABA's commission on
asbestos litigation, the newswire reported. The recommended criteria
have stirred considerable controversy in the legal community.

Lumenon Seeks Bankruptcy Protection After Defaulting on
Notes

Lumenon Innovative Lightwave Technology Inc., a maker of optical devices
used in telecommunications and other industries, filed for bankruptcy
protection after defaulting on convertible notes, Bloomberg News
reported. The Saint-Laurent, Quebec-based company listed assets of
$171.2 million and debts of $7.1 million in its chapter 11 petition
filed on Sunday in the U.S. Bankruptcy Court in Wilmington, Del.
Lumenon, which has never reported a profit, said on Thursday it didn't
have enough money to pay noteholders owed $8.4 million. It said its
Canadian operating unit, LILT Canada, had sought protection from its
creditors in the Superior Court of Quebec, reported the newswire.

Inacom Files Liquidation Plan to End Its Chapter 11 Case

After roughly two and a half years in chapter 11 bankruptcy protection,
information technology company Inacom Corp. filed a proposed liquidation
plan and disclosure statement, Dow Jones reported. Inacom proposes to
liquidate its remaining assets and distribute the proceeds of the
liquidation to its creditors. The debtor company will cease to exist if
the proposed plan is confirmed. A hearing to consider the adequacy of
the disclosure statement is scheduled on March 25 at 9:30 a.m. in the
U.S. Bankruptcy Court in Wilmington, Del., reported the newswire.
Provided the debtor company wins approval of the disclosure statement,
Inacom will ask the court to schedule its confirmation hearing on May
22, according to court documents obtained Monday by Dow Jones
Newswires.

Danaher Corporation Successful Bidder for Gasboy International
Assets

Danaher Corp. was the successful bidder for the assets of Gasboy
International Inc., a unit of Tokheim Corp., in an auction conducted
pursuant to a bidding procedures order issued by the U.S. Bankruptcy
Court for the District of Delaware, Dow Jones reported. In a press
release, the company said its successful bid was about $38 million. The
bid remains subject to approval by the U.S. Bankruptcy Court for the
District of Delaware at a sale hearing scheduled for Feb. 25, reported
the newswire. Gasboy, with revenues of about $40 million, makes
commercial electronic and mechanical petroleum dispensing systems,
fleet-management systems and transfer pumps, primarily for non-retail
petroleum applications.

Essential Therapeutics Announces Director Resignations

Essential Therapeutics Inc. Directors Richard Aldrich and John Walker
resigned, following shareholders' defeat of their plan to meet Nasdaq
listing criteria, Dow Jones reported. In a press release on Monday, the
biopharmaceutical company said the two served on a special committee to
develop a long-term plan to comply with the Nasdaq listing criteria. The
plan was not adopted by shareholders at a special meeting on Jan.
23.

The defeated plan called for the conversion of series B preferred
stock to common stock. Under the terms of the series B preferred stock,
it may be redeemed for $1,000 a share in the event of a delisting. The
company said it would be unable to make payment if the shares were
redeemed, and it would have to dissolve or seek bankruptcy protection,
reported the newswire.

ENRON

Enron Opposes NewPower Request to Delay Examiner
Report

Enron Corp. and some of its units have opposed a request by NewPower
Holdings Inc. to extend the time its examiner has to file an initial
report, saying the proposed extension would unfairly delay payments to
Enron creditors for their claims in the NewPower case, Dow Jones
reported. While those payments are delayed, the assets of NewPower that
would fund the distributions would continue to dissolve, Enron said in
its objection, reported the newswire. Last Monday, NewPower filed a
motion that seeks an extension through Feb. 19 of the deadline by which
the examiner must file an initial report on alleged NewPower insider
claims. The company is asking to delay a hearing on the initial report
indefinitely, reported Dow Jones. NewPower was started by Enron to
provide electricity and natural gas in deregulated markets. It filed for
protection under chapter 11 of the U.S. Bankruptcy Code last June, and
filed a liquidation plan in October.

Judge Denies Prosecutor Request to Move Trial of Enron's
Fastow

U.S. District Judge Kenneth Hoyt rejected a request from federal
prosecutors to move the criminal case against former Enron Corp. Chief
Financial Officer Andrew Fastow to a different court, Bloomberg News
reported. Prosecutors had wanted the case to be transferred to Judge
Melinda Harmon, who presided over the case against Arthur Andersen LLP.
The judge agreed to give attorneys for both sides another 90 days to
sift through thousands of pages of documents, some of which may be used
as evidence. A pre-trial status conference is set for May 19, reported
the newswire.

Burlington Industries Seeks Plan-filing Extension

Saying it may submit a reorganization plan by the end of the month,
Burlington Industries Inc. has asked a bankruptcy court to block
creditors from filing competing plans to reorganize the company for
another four months, Dow Jones reported. The textile maker said that it
has had 'productive discussions' with its key creditors and third
parties about all restructuring alternatives. The company said it is
encouraged by these discussions and believes it may be able to file a
reorganization plan by Feb. 27, according to a late January filing with
the U.S. Bankruptcy Court in Wilmington, Del., reported the
newswire.

Investors Seek to Acquire SLI Assets in $86 Million Deal

A group of investors led by Cerberus Capital Management L.P. has said it
wants to purchase substantially all of SLI Inc.'s assets in an $86
million deal under a plan of reorganization, Dow Jones reported.
Cerberus, J.P. Morgan Securities Inc. and DDJ Capital Management LLC
have offered to recapitalize SLI with an $86 million investment in
exchange for debt and equity in the reorganized company, according to
court documents obtained by Dow Jones Newswires. The investors' proposal
also contemplates the extension of an exit facility of $15 million to
fund the reorganized SLI's operations, according to the documents.

KB Toys to Lay Off 40 at Massachusetts Headquarters

Privately held retailer KB Toys said it plans to lay off about 40
workers at its headquarters as it tries to trim costs in a slumping toy
market, the Associated Press reported. Company spokesman John Reilly
confirmed on Monday the company would reduce its headquarters workforce
from 460 to about 420 in the first economy-related layoffs in KB
history. Nationwide, the company operates 1,300 stores and employs about
13,000.

'Basically, we are just taking some prudent steps to make sure that
we don't wind up in the kind of trouble some of our competitors have
found themselves in,' Reilly said, reported AP. Last month, Paramus,
N.J.-based toy giant Toys 'R' Us Inc. announced plans to cut 700 store
management and supervisory positions, and King of Prussia, Pa.-based FAO
Inc. filed for voluntary bankruptcy protection. Kmart, a major toy
retailer, has also filed for bankruptcy protection. 'This is about the
economy and saying how, as a corporation, are we best going to move
forward,' Chief Executive Officer Michael Glazer said, reported the
newswire.

Ottawa Senators Creditor Protection Extended for Takeover
Talks

The National Hockey League's bankrupt Ottawa Senators won an extension
of its protection from creditors until April 17 so that majority owner
Roderick Bryden can negotiate a bid to buy the team, Bloomberg News
reported. Judge James Chadwick of the Ontario Superior Court of Justice
in Ottawa also permitted the team to seek as much as another $8.7
million in interim financing, which its creditors haven't yet agreed to
lend, according to Bloomberg. The team may not have enough money to pay
its players on Friday, said John O'Toole, a lawyer for court-appointed
monitor PricewaterhouseCoopers Inc., reported the newswire.

Amid Takeover Talk, DirecTV Launches Plan to Refinance
Debt

Satellite broadcaster DirecTV Holdings LLC unveiled a nearly $3 billion
debt-refinancing plan on Monday, even as parent Hughes Electronics Corp.
remains the center of takeover speculation, Dow Jones reported. The
junk-rated company announced plans to sell up to $1.4 billion of 10-year
senior notes and arrange $1.55 billion in new senior secured credit
facilities with maturities of five to seven years. The proceeds will go
to Hughes, a unit of GeneralMotors Corp., in part to replace $1.8
billion in secured bank debt that was amended in November and expires in
August. Hughes said it plans to use the rest to fund its business plan
'through projected cash flow break-even' and for other corporate
purposes, Dow Jones reported.

Kmart Stewardship Investigation Now Focusing on Board

Kmart Corp.'s internal investigation of management practices in the
months leading up to its bankruptcy filing moved into its final phase
this week, focusing now on the retailer's board of directors, Dow Jones
reported. Kmart last Thursday completed the deposition of former
divisional vice president Mark Moreland. This final phase, which is
expected to wrap up during the first quarter, will determine to what
extent the board was apprised of certain events and activities that
occurred at the company, according to court documents filed last month.
Attorneys for the three committees in Kmart's bankruptcy proceedings
will take the lead in examining individual directors, reported the
newswire.

SpectraSite Emerges from Chapter 11 Restructuring

SpectraSite Inc. emerged from chapter 11 bankruptcy protection after its
plan of reorganization was confirmed, Dow Jones reported. In a press
release on Monday, the wireless tower operator said its SpectraSite
Communications unit will use net proceeds of $73.5 million from the sale
of its interest in 545 towers to Cingular to repay debt under the unit's
senior credit facility. SpectraSite's old common stock and old notes
will be canceled on Tuesday when its new stock and warrants will become
available for trading under the ticker symbol SPCSV. SpectraSite filed
its voluntary chapter 11 petition, which listed assets of $742 million
and $1.8 billion in debts, in November, reported the newswire.

Horizon Natural Resources Asks to Extend Exclusivity

Horizon Natural Resources Co. has asked a bankruptcy court for a 60-day
extension of its exclusive period to file its reorganization plan and
disclosure statement, Dow Jones reported. The company said it won't be
able to file a plan within the required 120-day period without diverting
resources that it needs to preserve the value of its assets. The company
on Thursday asked the court overseeing its chapter 11 bankruptcy case to
extend the exclusive plan-filing period through May 13, according to
court documents. The U.S. Bankruptcy Court in Ashland, Ky., said it
would schedule a hearing on the matter if a party files an objection to
the motion by Feb. 21, Dow Jones reported.

Bankruptcy Court Approves DIP Loan for Ameripol Synpol

The U.S. Bankruptcy Court in Wilmington, Del., has approved a $4.5
million debtor-in-possession loan to fund operating expenses and buy
inventory for Ameripol Synpol Corp. The company filed for chapter 11
bankruptcy protection on Dec. 17, listing assets of $112 million and
liabilities of $98 million, reported the newswire.

AMR, American Ratings on $13 Billion Debt Cut by Moody's

AMR Corp., owner of American Airlines, had the ratings on about $13
billion in debt cut by Moody's Investors Service as losses mount without
a significant reduction in operating costs, according to Bloomberg News.
Moody's lowered its senior implied rating for AMR to B3 from B1, and its
senior unsecured rating for both AMR and American to Caa2 from B2, the
newswire reported. Ratings on the company's secured debt also were cut.
All of the ratings are below investment grade, and Moody's said it may
cut them further, Bloomberg reported.

U.S. Steel Begins Contract Talks with Labor Union

U.S. Steel Corp., North America's biggest steel producer, began contract
talks with the union representing 12,000 of its employees as well as
workers at the bankrupt National Steel Corp. mills it's seeking to buy,
reported Bloomberg News. The company, which is competing with AK Steel
Holding Corp. for the right to acquire National, is seeking a labor
contract that pays more money and less health-care and retirement
benefits, the newswire reported. The agreement would be similar to one
the United Steelworkers of America made with International Steel Group
Inc. in December. International Steel, created last year by investor
Wilbur Ross, agreed on Feb. 5 to buy bankrupt Bethlehem Steel Corp. in a
deal that would help it supplant U.S. Steel as the region's largest
producer, the newswire reported. To keep its top spot, U.S. Steel must
fend off AK Steel's higher $1.13 billion bid for National, which a
bankruptcy judge has ruled is the best offer, according to
Bloomberg.

Bethlehem Steel Directors Clear Sale of Firm's Assets

Bethlehem Steel Corp.'s board voted unanimously to sell its steel mills
to Cleveland-based International Steel Group Inc. in a $1.5 billion deal
that could bring the company out of chapter 11 bankruptcy and create the
nation's biggest steelmaker, according to The Wall Street
Journal. The Bethlehem, Pa.-based company said it would ask the
bankruptcy court to terminate health- and life-insurance benefits for
95,000 retirees and their dependents March 31, the online newspaper
reported. The United Steelworkers of America said it would attempt to
negotiate a benefit trust for Bethlehem retirees. But there is almost no
chance that the retirees will win back even a small portion of their
union-negotiated benefits from the company, according to the
Journal.

International Steel said that while it wouldn't pay the benefits for
Bethlehem's current retirees, the company has agreed to contribute a
small percentage of profit into a fund upon which future retirees will
be able to draw. That figure is unknown, but it will be far less than
future retirees would have had if Bethlehem had remained financially
strong, the newspaper reported. The deal is expected to go to bankruptcy
court for approval within the next three weeks.

Thanks for visiting
Today's Bankruptcy Headlines. New articles are posted here each business
day.