February 8, 2000
Consumer Borrowing in December Grew at 9.7 Percent
Consumer borrowing, excluding mortgage debt, grew at a
higher-than-expected annual rate of 9.7 percent during December, rising
to a seasonally adjusted $1.399 trillion, according to the Federal
Reserve. Borrowing grew in December at a slimmer margin than in
November, when it grew a revised 13.8 percent, but the numbers are still
high by historical standards, according to analysts. The Wall Street
Journal reported that credit card usage remained strong in December
and that demand for revolving loans, such as those used for credit
cards, rose at an 8.4 percent annual rate, virtually unchanged from
November. Demand for non-revolving loans, for items such as cars or
boats, rose at 10.6 percent.
Hydroponic Tomatoes Producer Files Chapter 11
Colorado Greenhouse, a leading producer and marketer of
hydroponic tomatoes, announced yesterday that it, Colorado Greenhouse
Holdings and its related subsidiaries, have filed for chapter 11
protection, according to a newswire report. President and CEO Martin C.
Wehr said, 'We have developed a detailed plan for moving Colorado
Greenhouse's profitably into the future. This plan includes cost-cutting
measures, new production and sales strategies and a financial
rehabilitation plan under chapter 11.' Colorado Greenhouse will continue
producing hydroponic tomatoes in greenhouses throughout Colorado, and
its tomatoes will continue to be available at premium outlets throughout
North America. The company is based in Westminster, Colo., and employs
about 350 people.
PennCorp Financial Files Chapter 11 as Previously
Announced
PennCorp Financial Group Inc. announced that in order to
facilitate the previously announced sale of its Dallas-based life
insurance operations, it has filed for chapter 11 protection in the
District of Delaware, according to a newswire report. None of the
company's subsidiaries are included in the petition. In January,
PennCorp announced it had entered into a definitive agreement for the
sale of Southwestern Life Insurance Co. and Security Life & Trust
Insurance Co. to Reassure America Life Insurance Co. for $260 million in
cash, subject to certain adjustments. The sale agreement requires that
the company effectuate the sale through a voluntary chapter 11. Proceeds
of the sale will provide full payment of PennCorp's approximately $65
million of bank debt, about $115 million of subordinated debt and other
unsecured claims.
Court Confirms TransTexas Plan
TransTexas Gas Corp., Houston, announced that the U.S.
Bankruptcy Court for the Southern District of Texas has signed an order
confirming the company's reorganization plan, which will take effect and
be consummated on the effective date (expected to be as soon as
practicable), according to a newswire report. On the effective date,
TransTexas Gas' existing securities and all of its issued and
outstanding shares of common stock will be cancelled. The company will
issue $200 million in new senior secured notes and shares of new
stock.
Former U.S. Representative for Iowa Files for Bankruptcy
Protection
Former Rep. Edward Mezvinsky filed for bankruptcy protection on
Jan. 19, five days after his wife, former Rep. Marjorie
Margolies-Mezvinsky, dropped her campaign to seek the Democratic
nomination for the U.S. Senate, according to the Associated Press. She
said she dropped out of the race in part because of her 87-year-old's
mother's failing health and 'reasons too personal to discuss.' The week
before her announcement, First Union National Bank sued the couple,
alleging that they defaulted on a loan and owed $417,000. That action
followed lawsuits against the couple by Jefferson Bank in October,
seeking $1.1 million on a defaulted loan, by Peco Energy Co. in November
seeking $14,000 in past-due gas and electric bills, and by a
Pennsylvania investor, filed in early January, who said the couple
defrauded him of $1.15 million. In addition, Mezvinsky is fighting a
civil case in Tennessee in which he was accused of fraud, conspiracy and
breach of contract; he won the case, but it is on appeal.
Margolies-Mezvinsky has not filed for bankruptcy, but she has hired her
own attorney, who said she 'is coming to terms with the consequences of
the business decisions made by Ed. Generally, with respect to family
finances, that was all delegated to Ed.' Her husband's attorney,
Paul Maschmeyer of Ciardi, Maschmeyer & Karalis PC
in Philadelphia, said he has been talking with creditors to work out
agreements. Mezvinsky was a Congressman from Iowa from 1973-1977 and he
later was chairman of the Democratic State Committee in Pennsylvania.
His wife, who had been a network TV news reporter, served in the House
of Representatives from 1993 to 1995; she lost her bid for re-election
after casting the deciding vote in favor of President Clinton's
tax-raising budget in 1993.
Thermatrix Authorized to Continue Operating under Chapter 11
Protection
Thermatrix Inc. announced that the Bankruptcy Court for the
Central District of California has authorized the company to continue
operating under chapter 11, according to a newswire report. At a Feb. 3
hearing, the court ruled that the secured creditor's collateral is
adequately protected and that the company is permitted to continue
operations. The next hearing is scheduled for March 21; the company
expects to present its proposed business plan at that hearing. Thematrix
is an industrial company primarily serving the global market of
continuously operating facilities for a broad range of industries that
include the refining, chemical, steel, pharmaceutical, pulp and paper,
electric utilities, co-generation plans and industrial manufacturers.
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McCaw and Investors to Inject At Least $20 Million into
Iridium
A group of investors led by cellular pioneer Craig McCaw is
expected to inject at least $20 million of emergency financing into
Iridium World Communications Ltd., the satellite telephone company that
filed for bankruptcy protection last August, Reuters reported. The
investment is expected to be announced this week. McCaw agreed late last
year to take control of ICO Global Communications Ltd., another troubled
satellite phone company, and raise $1.2 billion to take it out of
chapter 11 protection.
Healthcare Services Group Increases Fourth Quarter
Reserves
Healthcare Services Group Inc., Bensalem, Pa., announced that
due to the changes in Medicare payments to its client base and other
industry trends, including recent bankruptcy petitions filed by some
national clients, it expects to increase its reserves for bad debt and
payroll-related insurance for the year ended Dec. 31, 1999, according to
a newswire report. The company estimates that the reserve charges are
expected to affect 1999 net income after taxes by about $3.8 million.
The company intends to exhaust all of its efforts and exercise all of
its rights in order to maximize its recovery, including from those
clients in bankruptcy.
Two Bankruptcy Judgeships Available in Eastern District of
California
The U.S. Courts for the Ninth Circuit is recruiting for two
positions on the Bankruptcy Court for the Eastern District of
California. Chambers for the new judges will be in Fresno and Modesto,
Calif. Completed applications must be received by March 31. Visit ABI's
bankruptcy court employment area for details at
href='/employment/listings.html'>http://www.abiworld.org/employment/listings.html.
USN Communications Wins Approval of Disclosure Statement
On Feb 2, USN Communications Inc. (USNC) won court approval of the
disclosure statement related to its reorganization plan, according to an
attorney for the telecommunications service provider. All objections to
the disclosure statement were resolved by the time of the hearing,
Robert Dehney of Morris Nichols Arsht & Tunnell said. The U.S.
Bankruptcy Court in Wilmington, Del., has scheduled a confirmation
hearing for March 15.
Courtesy of
href='http://www.fedfil.com/bankruptcy/developments.htm'>The
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February 8, 2000.
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