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E-lawyers Learning to Cope with Rise in Failed Online
Start-ups
With the recent domino-effect of failing dot-com companies, many
e-lawyers are beginning to find themselves increasingly on a roller
coaster ride, according to The American Lawyer. But tech lawyers say
they are unconcerned. 'This is not any different from the debt-induced
crunch of the early nineties,' said Anthony Richmond, a partner with
Latham & Watkins who has served as counsel to the recent health
information web site drkoop.com's bankruptcy case. 'What's unusual is
how fast the ride up has turned into the ride down. You try to support
these companies, stick with them through thick and thin, though you
don't take on an additional $3 million in account receivables risk.' He
says it would be a mistake to make too much of certain start-up
failures. 'Our exposure to loss is not significant,' he said. 'Our tech
strategy hasn't changed.'
Many tech lawyers say they use a standard that's similar to venture
capitalists: For every 10 start-ups taken on, the expectation is that
two will succeed, two or three will break even, and the rest will fail.
However, law firms say that one good thing has emerged from the dot-com
downturn: Many of the lawyers who had left to work for many of the
failed dot-coms are now returning to their former firms. 'I feel kind of
validated by that,' said Daniel Mummery, a partner with Milbank, Tweed,
Hadley & McCloy in New York. 'When they come back, they've really
learned something, and they're better than they were before.'
Ford Withdraws $6.9 Billion Bid to Purchase Daewoo
Ford Motor Co. today dropped its $6.9 billion bid to buy South Korea's
debt-laden car manufacturer Daewoo Motor, dealing a blow to the
country's attempts at corporate restructuring, according to Reuters.
Ford's ended a deal that would have gone through by the end of this
month, causing South Korea's share market to plummet. 'We believe that a
proposal was not possible that would be in the interest of Daewoo and
Ford and their respective shareholders,' said Ford Vice Chairman Wayne
Booker. 'Ford Motor called off its deal to take over Daewoo Motor
because it has its own problems, not because it found any hidden
liabilities during the due diligence,' said Richard Pyo, an auto analyst
with Credit Suisse First Boston in Seoul. Ford had reportedly offered
$6.9 billion for Daewoo in its preliminary bid in June after beating out
bids by GM, Fiat SpA, DaimlerChrysler and Hyundai Motor for the right to
conduct exclusive negotiations with Daewoo regarding a takeover of its
assets. Since Ford has now pulled out, under the original guidelines for
Daewoo's auction those companies, along with Ford, may be invited to
re-submit proposals. 'There is a strong possibility of another auction,'
a Daewoo Motor spokesman said. A year ago, creditors for Daewoo Group
took control of Daewoo Motor and 11 other core units as the group verged
on bankruptcy due to the Asian market crisis.
Premier Cruise Line Ceases Operations, Cancels Vacations
Premier Cruise Line announced that it ceased operations yesterday after
U.S. investment bank Donaldson Lufkin & Jenrette seized the company's
Big Red Boats and other ships, cancelling thousands of vacations,
according to Reuters. Premier Chief Executive Bruce Nierenberg said DLJ
held mortgages on five Premier ships, but the company had fallen behind
on debt payments, so DLJ had taken control of the ships with the intent
to sell them to recover $49 million in debts. 'There was no reason to do
this now,' said Nierenberg. 'Nothing had changed about Premier and its
operations. DLJ was overly collateralized on the ships. They'll sell
them for 60 cents on the dollar and probably make money.' Yet the
[rivately held company reported losses of $70 million in 1998 and $20
million last year, according to published reports. The company, a small
competitor in the cruise sector, forced 2,800 or more passengers to
disembark at ports in Cozumel, Mexico, the Bahamas and Halifax, N.S., on
Canada's Atlantic coast. Premier officials said many passengers had been
flown to home ports in Florida and Texas yesterday, and that others
would return to Boston and New York today. Company officials said it was
unclear whether or not Premier would seek bankruptcy.
LTC Properties, Lenders Continue to Negotiate for Credit
Renewal
LTC Properties Inc. is continuing talks with lenders to renew bank
credits that mature Oct. 2, saying that if it is unable to renew the
credits, it may have to seek other remedies, according to a Dow Jones
newswire report. The Los Angeles Times reported on Aug. 22 that the
health care real estate investment trust may have to file for bankruptcy
protection amid concerns that the company wouldn't be able to pay $168.5
million of debt due in October. Federal Filings Business News reported
on Aug. 30 that the Pacific Exchange planned to delist the company due
to negative net tangible assets and its failure to meet bid price
requirements.
Tricon Global Restaurants Supports AmeriServe's Reorganization
Plan
Tricon Global Restaurants Inc. announced yesterday that it views
Wednesday's filing of a proposed reorganization plan by AmeriServe Food
Distribution Inc. in bankruptcy court as a significant step in the
ultimate transition of AmeriServe's U.S. distribution business to McLane
Company Inc., according to a newswire report. AmeriServe, currently the
principal distributor of supplies to KFC, Pizza Hut and Taco Bell
corporate and franchised restaurants in the United States, has reached a
definitive agreement, subject to certain conditions, to sell its U.S.
distribution business to McLane. 'This is a very important milestone in
the resolution of the AmeriServe bankruptcy and the transition process
to McLane,' said David Novak, chief executive officer of Tricon Global
Restaurants. 'We have worked closely with our franchise community and
purchasing cooperative to find a positive solution to the AmeriServe
bankruptcy. We are pleased the sale to McLane will lead to better
service from a well-capitalized partner and, going forward, will not
have a significant, long-term economic impact on Tricon. A positive
resolution to the AmeriServe bankruptcy is now close at hand.'
As part of the proposed plan, Tricon will fund certain amounts to
AmeriServe to facilitate a global settlement with holders of allowed
secured and administrative priority claims in the bankruptcy. In
exchange, Tricon will receive the proceeds from AmeriServe's remaining
inventory, accounts receivable and certain other assets, which will be
primarily realized over the next 12 months. The plan also dimisses the
legal action previously filed by AmeriServe against Tricon seeking
payment of approximately $101 million in distribution fees for services
rendered by AmeriServe prior to the bankruptcy filing. Tricon is the
world's largest restaurant company with more than 30,000 restaurants in
over 100 countries and territories.
GC Companies May Seek Bankruptcy Protection
Textbook publisher Harcourt General Inc. said in a U.S. regulatory
filing yesterday that GC Companies Inc., the operator of General Cinema
Theatres, may have to seek bankruptcy protection unless it wins
concessions from creditors, according to Reuters. Chestnut Hill,
Mass.-based Harcourt said it carries a secondary liability on GC's
estimated $355 million in future rental payments due under theater
leases. GC last made an announcement on Aug. 21, when it reported a
$10.1 million loss for the third quarter, ended July 31, on revenue of
$108.6 million. According to Harcourt's most recent filing with the U.S.
Securities and Exchange Commission, unless GC is able to reach a deal
with creditors, it will not be in compliance on Oct 31 with certain
financial covenants contained in creditor agreements and it may need to
explore several alternatives, including selling assets or filing for
bankruptcy protection. GC, also based in Chestnut Hill, Mass., operates
more than 1,000 U.S. movie screens.
Bid4Assets.com to Liquidate Bankrupt Bridal Business
Bid4Assets.com announced yesterday that it has been commissioned to
auction the remaining assets of Stoneham, Mass.-based Wedding
Perfections Inc., which filed chapter 7 in May with the U.S. Bankruptcy
Court for the District of Massachusetts. The assets available for
auction include an inventory of approximately 500 bridal dresses, shoes,
computer and office equipment and other miscellaneous items. Pending
court approval, the assets are available for inspection before the
auction closes at 3 p.m. EST on Sept. 29, 2000. Interested buyers can
schedule a time to inspect the inventory and equipment through
Bid4Assets.com by sending an email to service@bid4assets.com or calling
toll free (877) 427-7387.
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