January 4, 2002
Personal Bankruptcy Filers Will Be Required to Show Proof of
Identification
Every individual filing a personal chapter 7 or chapter 13 bankruptcy
claim will soon be required to show proof of identification, based on
the findings of a six-month pilot program conducted by the U.S. Trustee
Program, according to a Department of Justice press release. The
new requirement will be phased in this month. The Debtor
Identification Pilot Program ran in 18 judicial districts for the first
half of last year. The program found inaccurate names or social
security numbers in a number of chapter 7 and chapter 13 cases.
About 80 percent of the inaccuracies were due to typographical errors,
but the rest involved questionable names, identity documents or possible
misuse or falsification of social security numbers.
The full report can be found by pointing your browser to
href='http://www.usdoj.gov/ust/otherinitiatives/debtorid/report.html'>http://www.usdoj.gov/ust/otherinitiatives/debtorid/report.html.
Small Businesses Surviving Economic Downturn
Small businesses—which make up most of the incorporated entities
in the United States—are not in bad shape, according to eWEEK.
According to a recent survey of 976 “very” small
businesses—those consisting of 20 or fewer employees (the U.S.
Small Business Administration classifies small businesses as having 500
or fewer employees)—86 percent have confidence in the future of
their business and 67 percent are confident in the U.S. economy.
The survey was commissioned by small-business and consumer site
developer and host Homestead Technologies.
Shared Technologies Gets Court Preliminary
Approval For Exus Loan
Judge Robert L. Krechevsky of the U.S. Bankruptcy Court in
Hartford, Conn., granted Shared Technologies Cellular Inc. preliminary
approval of a post-petition loan from Exus Networks Inc. to supplement
the company’s use of a creditor’s cash collateral, according
to Dow Jones Newswires. The Hartford, Conn.-based company said
that it reached an agreement with Exus Networks to borrow $500,000 to
cover operating cash shortfalls for 45 to 60 days. Despite significant
cutbacks in its labor force, the loan is necessary to meet Shared
Technologies’ operating expenses. Along with its motion,
Shared Technologies submitted a budget for the two weeks ending Friday
that provides for $293,533 in expenses.
On Dec. 21, 2001, Judge Krechevsky signed a preliminary order that
allows the company to borrow the funds from Exus. The loan
agreement remains subject to final court approval at a hearing on Jan.
10. The financing will be granted administrative expense priority
in Shared Technologies’ chapter 11 bankruptcy case.
Shared Technologies’ unsecured creditors’ committee is
asking the court to convert the company’s chapter 11 bankruptcy
case to a chapter 7 liquidation. The matter will also be
considered at the Jan. 10 hearing. Shared Technologies, which
offers prepaid wireless, Internet, paging, long-distance and local
calling services, filed for chapter 11 bankruptcy protection on Sept.
28, 2001. The company listed assets of about $8.9 million and debts of
$38.5 million.
ENRON UPDATE
Enron Lawyer Calls For Consolidation of Congressional Probes
Congress should establish a special select committee to
consolidate the investigations into the financial collapse of Enron
Corp. that are now under way by at least four congressional committees,
the company’s outside counsel said yesterday, Dow Jones
reported. “I think there should be a select committee where
we’re responding to one entity and where we’re not
duplicating effort,” said attorney Robert Bennett. The
duplicative congressional probes also represent “an inefficient
waste of taxpayer dollars,” he added. In addition to
responding to numerous duplicative document requests, company officials
must deal with numerous requests to testify before the investigating
committees.
To date, four congressional committees have launched oversight
investigations into the financial collapse of Enron, which filed for
bankruptcy on Dec. 2.
Bankruptcy Judge Allows Enron To End
600-700 Power Pacts
A federal bankruptcy judge yesterday approved Enron Corp.’s motion
to end 600 to 700 power supply contracts, allowing the company to move
forward with its restructuring, Dow Jones reported. Under the
agreement, Enron provided power, gas and services to creditors,
including Quaker Oats, National Fuel Gas Supply Corp. and
utilities. The formal termination of these contracts will allow
the bankrupt company’s customers to seek other suppliers.
Also on Thursday, the bankruptcy court postponed ruling on a request by
Garden State Paper Co. — an Enron unit that filed for bankruptcy
on Dec. 17 — to require utility companies to continue providing
service, because of objections. A hearing regarding Enron’s
motion to end safe harbor contracts — which include clauses that
may allow Enron and its creditor to setoff their debts against one
another — without further court approval was rescheduled for Jan.
11.
Additionally, a hearing regarding whether insurance proceeds can be
paid out to Enron workers injured in a 1996 explosion at a Puerto Rico
factory has been delayed until March 7. The explosion injured 400
workers, some of whom have settled for more than $60 million in
insurance proceeds. But other insurance settlements totaling $40
million are still pending and will not be paid out until the bankruptcy
court grants approval.
New Enron DIP Leaves Transwestern
Alone
A new and smaller interim financing plan for Enron Corp. is shaping
up as J.P. Morgan Chase & Co. and Citigroup review the energy
company’s new business plan, Dow Jones reported. Under the
new deal, the Transwestern Pipeline, one of Enron’s prized
possessions, will remain out of bankruptcy. That means J.P. Morgan Chase
and Citigroup will not immediately recoup, as was expected, a $550
million loan made to Enron just weeks before the company filed for
chapter 11 protection in the U.S. Bankruptcy Court for the Southern
District of New York. So far, it’s unclear how much of the
originally planned $1.5 billion debtor-in-possession (DIP) financing
Enron will now get. So far, a $250 million installment has been
made available to Enron but has yet to be tapped by the company.
Federal Judge Postpones Enron Contract Hearing to Jan 15
A federal bankruptcy judge has delayed by two weeks a hearing to decide
whether Enron Corp. must accept or reject natural gas-delivery contracts
with two California public utilities, Dow Jones reported. Judge
Arthur J. Gonzalez, during a conference call yesterday with Enron and
some of the company’s creditors, rescheduled the hearing for Jan.
15. The hearing had been set for Thursday.
The decision came after Melanie Gray, of Weil, Gotshal & Manges
— which represents Enron — assured the judge on the call
that Enron would continue providing natural gas and services to San
Diego Gas & Electric Co. and Southern California Gas Co. at 80
percent of levels prior to the Dec. 2 bankruptcy filing.
Dynegy and Enron Reach Settlement In
Dispute Over Natural Gas Pipeline
Dynegy Inc. last night announced that it settled its lawsuit against
bankrupt Enron Corp. over the control of the failed energy giant’s
Northern Natural Gas pipeline, according to The Wall Street
Journal. Dynegy said it agreed to a deal to buy the pipeline
by the end of the month for $23 million, exercising an option it held to
acquire the pipeline in the event of the collapse of the proposed merger
of the two firms. As part of the settlement, Enron’s option
to repurchase the pipeline has been extended to June 30 from May 9.
The deal, however, doesn’t mean Dynegy will back down from its
$10 billion breach of contract suit, filed against Enron in
November. Enron said it would continue to pursue a separate
lawsuit against Dynegy that seeks $10 billion in damages after Dynegy
terminated its merger agreement with Enron.
Nextel Unit NII Ponders
Bankruptcy
Wireless telephone company Nextel Communications Inc. yesterday said its
NII Holdings Inc. subsidiary hired an adviser to help it weigh its
options, which include bankruptcy, after Argentine operating units
failed to make an $8.3 million bank payment, Reuters reported. In
a filing with the Securities and Exchange Commission, NII Holdings said
its operating subsidiaries in Argentina failed to make a Dec. 31 payment
to a group of banks under an Argentine credit facility.
Philadelphia-based NII Holdings said it made a $2.4 million interest
payment under the credit pact, and entered a pact with a majority of the
lenders, who agreed not to demand repayment of the principle until Jan.
22.
The lack of principal payment under the Argentina credit facility
trigged a cross default on NII’s vendor financing pact with
Motorola Credit Corp. NII, however, said Motorola Credit also agreed to
refrain from repayment demands until Jan. 22. As of Dec. 31, the
principal balance outstanding under the Argentine facility was about
$108 million, and the balance outstanding under the vendor financing
facilities was about $382 million, the filing said. NII said it is
in talks with lenders to restructure these obligations. NII said
it might be required to sell strategic assets, reorganize under chapter
11 or take other measures.
Anacomp Emerges From Bankruptcy, Cancels Common
Stock
Anacomp Inc., a company that handles documents and provides technical
services, yesterday announced that it had emerged from chapter 11
bankruptcy protection, Reuters reported. The San Diego,
Calif.-based company said the reorganization will leave bondholders in
control of the company and the company’s common stock has been
canceled. The company also appointed a new board of directors,
with Chief Executive Edward Smoot serving as chairman.
ACT Manufacturing Gets $9.5 Million DIP Financing
ACT Manufacturing Inc. announced that that on Wednesday it received $9.5
million debtor-in-possession (DIP), short-term financing under the first
stage of a two-part process with its lenders, reported Dow Jones.
The company said it already began negotiations for stage two, which
involves longer-term financing for a “substantially greater
amount.” The electronics manufacturing services provider
filed for chapter 11 bankruptcy protection on Dec. 21.
On Dec. 28, the Hudson, Mass.-based company disclosed in filings with
the U.S. Securities and Exchange Commission that it had laid off a
number of employees, including its chief financial officer. Nasdaq
halted ACT shares on Dec. 26 pending a request for information by the
exchange. They have not traded since then, when they closed at 35 cents,
well off a 52-week high of $30.
Valley Media Shares Delisted From Nasdaq
Valley Media Inc. yesterday said its shares would be delisted from the
Nasdaq Stock Market because the company can’t maintain minimum
requirements for listing, reported Dow Jones. The music and
video-entertainment products distributor said that in a letter it
received dated Dec. 18, Nasdaq stated that it would delist the
company’s securities from the Nasdaq Stock Market at the opening
of business on Dec. 27. On Nov. 20, Woodland, Calif.-based Valley
Media’s chapter 11 bankruptcy petition listed assets of $241.5
million and liabilities of $259.2 million.
PG&E Wants Lawsuits Moved Into Court
Pacific Gas and Electric (PG&E) yesterday urged a federal judge to
detour lawsuits alleging the utility’s operations contaminated the
water in three California counties — a request that spurred
allegations that the company is trying to use its bankruptcy case to
stonewall hundreds of suffering people, according to the Associated
Press. The San Francisco-based utility wants U.S. Bankruptcy Judge
Dennis Montali to transfer 15 lawsuits representing 1,250 people in
Kings, Riverside and San Bernardino counties from the state courts to
the federal courts.
Most of the allegations center on whether PG&E contaminated the
water at a Kettleman Hills facility in western Kings County.
PG&E believes it stands a better chance of winning a quick dismissal
of about two-thirds of the claims if the suits are moved to federal
court. Transferring the suits from Los Angeles Superior Court
would be an unfair setback to the people alleging PG&E made them
sick, according to the lawyers opposing the utility. Besides bogging
down a process, shifting the claims to a federal court in San Francisco
would make it difficult for the alleged victims to attend the trial, the
lawyers said. After hearing Thursday's final arguments, Montali
told attorneys he would issue a ruling by early next week.
Denny’s Chain Advantica Starts $265 Million Debt
Offer
Advantica Restaurant Group Inc., which runs the Denny’s,
Coco’s and Carrows restaurant chains, yesterday announced it is
offering to exchange up to $204.1 million of new 12.75 percent senior
notes for $265 million, or half, of Advantica’s existing 11.25
percent senior notes, Reuters reported. Spartanburg, S.C.-based
Advantica said it and Denny’s Holdings Inc. would jointly issue
the new notes, which would mature in 2007. The 11.25 percent notes
mature in 2008, and $529.6 million of principal remains outstanding.
Advantica said it is offering $770 in principal of the new notes,
plus accrued and unpaid interest in cash, for each $1000 in principal of
the old notes. It said the offer expires on Feb. 1 and that it
will complete the exchange if holders tender at least $160 million of
the old notes. Advantica said its FRD Acquisition Co. unit, the
parent of Coco’s and Carrows, filed for chapter 11 bankruptcy
protection last February.
Mark Weber Appointed Acting U.S. Trustee In Region 18
Mark H. Weber was appointed Acting U.S. Trustee for Washington, Oregon,
Montana, Idaho and Alaska (Region 18) for an interim period
effective on Dec. 29, 2001, according to a Department of Justice press
release. Weber had been the Regional Assistant U.S. Trustee for
Region 18 since 1992 and served as acting U.S. Trustee for the region
from 1993 to 1995. Weber replaced Jan S. Ostrovsky, who joined the
Seattle law firm Crocker Kuno LLC.
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