Banking Industry Planning Bankruptcy Override Campaign
The banking industry says it is preparing for an intense lobbying
effort if President Clinton vetoes the bankruptcy overhaul legislation
(H.R. 2415) as expected, according to the CQ Daily Monitor.
“I think it would be a very tough veto override fight,” said
Ed Yingling, executive director of government relations for the American
Bankers Association. He said his organization would fight
“all out. There would be a grass-roots effort much greater
than we saw last week.” Ken Guenther, executive vice
president of the Independent Bankers Association of America, agreed on
the intensity of the effort. Guenther said he was counting on the
president to try to avoid a veto override, as it would be one of his
last presidential acts.
The senate passed the bill 70-28 on Dec. 7 and sent it to the
president within hours of its passage. Supporters would need 67
votes to override a presidential veto. If Congress is still in
session, the President would have to veto the bill by Dec. 19 to prevent
it from becoming law. If Congress adjourns before then, the bill
would die without his signature.
Defunct HMO to Pay $3 Million in Suit
Owners of the defunct American Health Care Providers Inc. have agreed to
pay creditors $3 million to settle a lawsuit charging them with
mismanaging Illinois' fifth-largest HMO, according to the Associated
Press. In September, the Department sued Asif and Shaheen Sayeed
and companies they owned, accusing them of draining cash from the HMO
for their personal use, including buying a Lamborghini, two Bentleys and
an airplane. The Sayeeds have denied any wrongdoing. Old
Kent Bank, a major creditor of the Sayeeds' businesses, and the state
each will get half of the settlement, with the state's share going to
help pay the more than $20 million owed to Illinois doctors and
hospitals.
The Chicago-based American Health was forced into liquidation in
February after Illinois Department of Insurance Director Nat Shapo
claimed it had $25 million more in debts than assets. A Cook County
judge ruled the firm insolvent in May.
UniCapital Announces Bankruptcy Filing
UniCapital Corp. yesterday announced that it filed chapter 11 petitions
in the U.S. Bankruptcy Court for the Southern District of New York,
according to a newswire report. The chapter 11 petitions were
filed on behalf of UniCapital Corp. and substantially all of its
subsidiaries, not including certain special purpose entities related to
the company's conduit and securitization financings.
Prior to the chapter 11 filing, the Miami-based UniCapital sold its
lease servicing operations to Portfolio Financial Servicing Company.
UniCapital also sold certain assets composing a portion of the
businesses of five of its wholly owned operating
subsidiaries. UniCapital Corp. has provided asset-based
financing in strategically diverse sectors of the commercial equipment
leasing industry.
Mercury Air Business With National Airlines
Continues On a Fully Secured Basis
Mercury Air Group Inc. yesterday announced that it is continuing to
supply fuel services on a fully secured basis to National Airlines,
which recently filed chapter 11, according to a newswire report.
The Los Angeles-based Mercury is a secured creditor and the bankruptcy
court has issued an order, allowing National to pay certain pre-petition
debts including Mercury's and granting Mercury a continuing security
interest in its collateral. Mercury's Fuel Division will continue
to supply National under the bankruptcy filing solely on a secured basis
and in accordance with its fuel supply agreement.
Mercury is a provider of aviation petroleum products, air cargo
services, aviation information technology and support services for
international and domestic commercial airlines, general and business
aviation and U.S. government aircraft and facilities.
Drypers Corp. to File Motion Regarding DSG
International Limited Transition
Drypers Corp. and DSG International Limited yesterday announced that
Drypers will file a motion with the U.S. Bankruptcy Court for the
Southern District of Texas seeking approval of a proposed acquisition by
DSG of Drypers' domestic assets and foreign subsidiaries, according to a
newswire report. The court will address a letter of intent, an
expense reimbursement, a break-up fee and bidding procedures which
provide for the consideration of competing proposals from other
interested parties related to these assets and foreign subsidiaries.
The DSG proposal provides for a purchase price of $65 million in cash
and a $15 million subordinated note due in five years. In addition, the
proposal provides for an additional $5 million debtor-in-possession
(DIP) facility subordinated to existing secured DIP and term debt to
become immediately available to Drypers for working capital needs. If
DSG becomes the owner of Drypers' assets and foreign subsidiaries, the
$5 million will be added to the purchase price. Proceeds from this
transaction would be allocated to the Company's creditors according to
legal priority and, therefore, current shareholders would receive no
value.
L&H Weighs Options After Court Rejects
Bankruptcy
Lernout & Hauspie (L&H), the bankrupt Belgian speech technology
company, said yesterday that it was considering various options
following a local court's rejection on Friday of its request for
bankruptcy protection, according to a Reuters report. “The
board is going to consider all options related to chapter 11
[bankruptcy]... and see what it can give us in terms of additional
protection,” a company spokesman said. He said options
included appealing the court ruling, re-filing a new request for
protection from creditors with more detailed financial information and a
better business plan, as well as further options under the U.S.
bankruptcy protection granted two weeks ago.
The spokesman said the board of directors was investigating whether
the U.S. bankruptcy protection could be extended to grant protection in
Belgium. On Friday, Belgian Commercial Court Judge Michel
Handschoewerker refused L&H's request for bankruptcy protection,
saying the company had not given sufficient financial information.
L&H filed chapter 11 on Nov. 29 after its creditors called in their
loans when L&H defaulted on its payments. Handschoewerker said
the results of a special mid-year audit by independent auditor KPMG
would be essential in any new request for protection filed by the
company. The L&H spokesman said the company did not know when
the audit would be completed.
DIMAC Reaches Agreement With Creditors on
Reorganization Plan
DIMAC Corp. yesterday announced that it has reached an
agreement on the restructuring provided under its reorganization plan
with all its major creditor constituencies, according to a newswire
report. The Official Unsecured Creditors' Committee and DIMAC will
request court approval of this agreement at the confirmation hearing on
its plan before the U.S. Bankruptcy Court in Wilmington, Del. on Dec.
19.
The St. Louis-based DIMAC and its subsidiaries filed voluntary
chapter 11 petitions on April 6. Since then, DIMAC has undertaken
an operational as well as balance sheet restructuring. DIMAC
provides a comprehensive range of integrated direct response marketing
solutions.
UCLA Forecasters See Recession on the
Horizon for Nation
The nation's longest economic expansion is coming to an end,
according to the economists at the UCLA Anderson Business Forecast, in
their quarterly economic outlook released yesterday. Forecast
director and Anderson School professor Edward Leamer projects a 60
percent chance that the Bush/Clinton expansion will end in 2001, an end
brought on by the collapse of the stock markets and the dot-com
bankruptcy cycle. However, the greater stability of the nation's economy
since 1982 will most likely make the downturn short and shallow rather
than prolonged.
“The business cycle is not dead,” said Dr. Leamer, an
economist who assumed leadership of the Forecast in July 2000.
“The 'New Economy' has experienced a classic boom and bust cycle
that is extraordinary only in its amplitude and
brevity.” Among the warning signs Leamer sees as
signaling the end of this expansion are tight labor markets, scarce
capital, meager investment opportunities, and a dependence on foreign
capital. Those predictions are made more threatening by an
impending change in consumer behavior, as the wealth effect which has
driven this consumer-spending binge reverses itself, causing consumers
to feel less optimistic about the new economy.
Scour on Auction Block Today
Three companies will vie in federal bankruptcy court today for Scour
Inc., a bankrupt Internet search engine company that was sued by both
the music and movie industries for copyright infringement, according to
a Reuters report. Liquid Audio Inc. filed a bid last Thursday with
the bankruptcy court in Los Angeles, becoming the third company to bid
for the assets of Scour. The privately-held Listen.com, which
provides software for Internet music delivery, has offered to pay $5
million in cash and about 500,000 company shares for Scour assets.
It will not be known until today if Liquid Audio's bid will be
considered, however, because the company missed the official deadline by
two days. Industry sources have estimated the total value of its
bid at just under $13 million. CenterSpan Communications Corp., a
developer of peer-to-peer software, has also offered $5.25 million in
cash and whatever additional funds are required to exceed the value of
Listen.com's stock.
Scour, which is partly owned by Hollywood power broker Michael Ovitz,
filed for chapter 11 in early October. Scour said last month it
has about $4 million in debt, but could be liable for as much as $250
billion in damages stemming from pending lawsuits from movie and music
industry trade groups.
Matthews to Sell Assets
Matthews Studio Equipment Group, which filed for bankruptcy in April,
yesterday announced that it has signed an asset purchase agreement with
Hollywood Rental Production Services LLC to sell the company's Hollywood
Rentals, HDI, ESS, Olesen and Four Star West operations for $17 million,
according to a newswire report. The transaction is a sale of
assets, with Hollywood Rental’s assuming only specified
liabilities. The Burbank, Calif.-based company’s affiliates
are Raleigh Enterprises, Jules & Associates Inc. and CDM Interactive
Inc.
Matthews Studio Equipment Group supplies complete theatrical
equipment and supplies to entertainment producers. Hollywood
Rentals and HDI rent lighting and grip equipment to the entertainment
production industry. ESS and Olesen sell supplies and equipment used in
entertainment production and production of live theater. Four Star
West rents theatrical lighting equipment to producers of live
theater.
Dyersburg Seeks Court Nod For $1.7M Executive Retention
Plan
Almac Knit Fabrics Inc. and parent Dyersburg Corp. are seeking court
authorization pay 18 key employees under a $1.7 million executive
retention plan. Awards under the retention plan comprise an important
part of the key employee's compensation for fiscal year 2000, the
fabrics maker said in a recently obtained motion. Dyersburg says that if
it can't maintain and give incentives to current management, it could
lose valuable management resources, and its ability to successfully
reorganize will be 'severely hampered.'
Courtesy of
href='http://www.fedfil.com/bankruptcy/developments.htm'>The Daily
Bankruptcy Review Copyright © December 12,
2000.
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