style='mso-fareast-font-family:'Times New Roman''>Bankruptcy
Bill Attacked for Consumer Harshness
Several
members of Congress and a group of
interest groups today attacked the
pending bankruptcy reform bill for
its harsh effect on consumers who
file for bankruptcy protection while
also condemning the secret process
by which the bill is being negotiated.
Sen.
Paul Wellstone (D-Minn.) organized
the event, and was joined by Sens.
Ted Kennedy (D-Mass.), Russ Feingold
(D-Wis.) and Rep. Jerrold Nadler (D-N.Y.).
The event also included representatives
from a coalition of labor, religious,
and women's groups.
Wellstone said, "There's
no doubt this is a bad bill.
It punishes the vulnerable
and rewards the big banks and credit
card companies for their own poor
practices.
It will be a bitter irony if
creditors are able to use a crisis
- largely of their own making - to
convince Congress to cut off borrowers'
access to bankruptcy relief."
Wellstone and others focused more
attention on the proposed change in
S. 625 to the anti-alienation rule
for pensions, which would allow creditors
to reach retirement savings to pay
debts if debtors waived their protections.
The sponsors of the pension provision
(§303(c)) in the Senate bill have
signaled they will drop the waiver
in favor of a $1 million cap on the
amount debtors can shield from the
reach of creditors, similar to the
$100,000 cap on homestead exemptions
in the Senate bill.
Kennedy opposes the cap, saying,
"It is impossible to make a determination
on what is the correct amount of retirement
income, given increased life expectancies
and substantial health-related expenses."
Another
focus of the press briefing was the
nature of the "non-conference
conference." Conferees have not
been officially appointed on either
side of the Capitol, as S. 625 remains
mired in procedural problems since
it passed in February. The delay has
led Senate leaders to seek to informally
conference the bill with likely House
conferees, with the agreed-upon product
to be attached to another unrelated
conference report. Nadler, Feingold
and others, including former Senator
Howard Metzenbaum (D-Ohio), criticized
this secret method, which Metzenbaum
stated had been used only once before
in Senate history. Nadler and Rep.
John Conyers (D-Mich.), ranking member
of the House Judiciary Committee,
have written to Chairman Henry Hyde
(R-Ill.) objecting to the procedure
and insisting upon the regular order.
House staff members are reportedly
close to responding to an offer sent
over by the Senate several weeks ago.
The
legislation, to which any bankruptcy
"conference" bill would
be attached, dealing with electronic
signatures, is also controversial.
The conference on the "e-sigs"
bill is not complete and some of the
conferees on that bill have also expressed
opposition to becoming the vehicle
for bankruptcy reform.
Meanwhile,
the Clinton administration's long-awaited
views letter on the bankruptcy bill
may be ready to reach the Hill this
week. The letter is expected to go
into some detail on the changes the
administration would like to see in
any final product.
The
full statements from yesterday's event
are posted on ABI World in "What's
New."
style='color:black'>Texas Cargo Airline Kitty Hawk Declares Bankruptcy
style='color:black'>
Kitty Hawk, an air cargo business
based at Dallas/Fort Worth Airport,
announced it and all of its subsidiaries
had filed for chapter 11 Monday in
the Northern District of Texas in
Fort Worth, the Ft.
Worth Star Telegram reported.
The company, which operates out of
the west cargo area of D/FW Airport,
reported book value assets of $907
million and debts of $512 million
as of March 31, citing a soft market
for air freight and maintenance costs
that ran higher than expected. "This
was a cash flow problem," said
Fort Worth bankruptcy attorney John
D. Penn of Haynes and Boone LLP,
which represents Kitty Hawk. A day
earlier, the company's board dismissed
founder M. Tom Christopher as chairman
and chief executive, who founded the
airline in 1975. His dismissal came
shortly after the abrupt resignation
of Paul Tate, who joined Kitty Hawk
on April 1 as senior vice president
and chief financial officer. In addition,
Kitty Hawk announced that Conrad Kalitta
had resigned from the Board of Directors
on Saturday. The company said it cannot
make a $17 million interest payment
on debt due May 15, and is in default
on $35 million in plane repairs. The
company operates 105 owned and leased
aircraft, has 2,290 employees and
runs a freight cargo service to 50
cities through its hub in Fort Wayne,
Ind. Kitty Hawk announced Friday that
it was suspending its international
business, which primarily included
daily service between Los Angeles
and Honolulu and weekly service to
the Pacific Rim. Haynes and Boone
attorneys Robert
D. Albergotti and Sarah
B. Foster are also working on
the case.
style='color:black'>NutraMax Products Files Chapter 11
NutraMax
Products Inc. and its units filed
petitions for chapter 11 in the District
of Delaware, according to a Dow Jones
newswire report. The consumer health
care products company said it has
arranged a pre-negotiated agreement
with its existing bank lenders, subordinated
lender and principal equity holders,
and its submitted plan provides for
an $18 million junior loan from NutraMax's
principal shareholders, which may
be converted into equity upon its
emergence from bankruptcy. NutraMax
also said it has secured a commitment
for $5 million in interim debtor-in-possession
financing from one of its existing
bank lenders, which will be replaced
by a $30 million commitment from The
CIT Group/Business Credit Inc. upon
final approval by the court. The company
has reached agreements to restructure
its debt to about $30 million from
about $80 million, subject to court
approval, which will provide its unsecured
creditors to receive up to 50 percent
of the amount of their claim in the
form of a note. NutraMax's court hearing
is scheduled for today.
style='color:black'>Roberds Announces Liquidation
Roberds
Inc., West Carrollton, Ohio, announced
yesterday it is going out of business
and that it has closed all of its
stores, which operate in three states
and employ 1,300 workers, the Associated
Press reported. "This is a very
sad day for the company and its associates,"
said Roberds president Melvin Baskin.
"The inability to reach credit
terms with our major vendors resulted
in our inability to provide merchandise
for our customers." The furniture
and appliance retailer, which has
operated under chapter 11 protection
since January, said it closed its
15 stores and two distribution centers
in Ohio, Georgia and Indiana to conduct
an inventory to prepare for liquidation;
it said it expected to have a going-out-of-business
sale within three months. Two weeks
ago, a trustee in the case moved to
have Roberds face possible court-ordered
liquidation. Baskin said its financial
problems arose from increased competition
in the furniture, appliance and electronics
market, citing pressure from Best
Buy, Circuit City, Lowes and Rhodes.
Founded in 1971, Roberds recently
tried to expand its market, opening
a megastore in suburban Cincinnati.
However, Roberds reported a loss of
$13.9 million, or $2.26 per share
in 1999; the company later closed
its Cincinnati store and eight stores
and a warehouse in Florida.
style='color:black'>Newer Technology Turns Around with Upgrade Products
Less
than three months after narrowly avoiding
bankruptcy, Newer Technology,
which manufactures computer processor
chips, has
resurrected its PowerPC G3 L2 cache
and NuBus CPU upgrades for the Macintosh,
MacWEEK magazine reported. The company's Maxpowr G3-L2 features a
400MHz PowerPC G3 running at 200MHz.
Previously, the company offered three
versions of the upgrade, which plugs
into the L2 cache slot on consumer
Macs sold circa 1996 and 1997, including
the Power Macintosh 4400 through 6500
models, the Performa 5400 through
6420 models, the 20th Anniversary
Mac, the UMAX C500 and C600 models,
Motorola's StarMax 3000 through 5500
models, and all of Power Computing's
PowerBase Systems. In February, Newer
Technology said that it had averted
bankruptcy thanks to an equity investment
by Tri-M Technologies, the company's
Singapore-based manufacturing partner.
Newer said that low prices for G3
chips are fueling a second boom in
CPU upgrades as older beige Power
Macs fall further behind Apple's latest
G4 systems.
style='color:black'>NYSE Suspends Fruit of the Loom Trading
Chicago
apparel maker Fruit of the Loom Ltd.,
which filed for bankruptcy protection
in December, said yesterday that the
New York Stock Exchange has suspended
trading in its shares and will file
to have the stock delisted, according
to a Reuters. The company said its
shares will continue to trade in the
over-the-counter market, and said
that the decision by the NYSE to file
an application to delist the company's
common stock is not expected to affect
its operating performance and reorganization
plan.
style='color:black'>Axiohm Transaction Reorganization Plan Confirmed
Axiohm
Transaction Solutions Inc., Blue Bell,
Pa., and its U.S. subsidiaries announced
that the U.S. Bankruptcy Court in
District of Delaware in Wilmington
confirmed the company's reorganization
plan on Thursday, according to a newswire
report. The plan, which received the
overwhelming support of the company's
creditors and shareholders, is expected
to take effect in mid-May. In addition,
the court approved the company's exit
financing in the form of a new revolving
line of credit in the amount of up
to $23 million provided by Lehman
Commercial Paper Inc. Upon commencement
of the plan, the company's senior
secured term indebtedness in the amount
of $62,650,000 will be refinanced,
and the holders will also receive
warrants. The holders of general unsecured
claims, including the holders of $120
million in senior subordinated notes,
will receive 100 percent of the new
common stock; the old common stock
will be cancelled, although shareholders
will have certain limited rights to
participate in the proceeds of any
future public offering or sale of
the company within the next five years.
All claims of suppliers and other
trade vendors were not affected by
the plan and will be paid in full.
Axiohm Transaction Solutions is a
designer and manufacturer of printers
and ancillary products.
style='color:black'>Sterling Packaging Confirms Reorganization Plans
The
U.S. Bankruptcy Court for the Western
District of Pennsylvania in Pittsburgh
ruled late Friday that Sterling Packaging
had met the required standards and
signed the order confirming its reorganization
plan, which was confirmed without
objection, according to a newswire
report. Exit financing for the company,
which manufactures folding cartons
and tissue papers for consumer products,
food packaging and gift boxes, will
be provided by Foothill Capital Corp.,
a division of Wells Fargo. Sterling
will continue to operate as an independent,
standalone manufacturer with existing
management and operations. "We've
lowered financial leverage, dramatically
improved our productivity and restructured
our entire organization around leading-edge
people, processes and technology,''
said Stanley Ruskin, Sterling Packaging's
chief executive officer. Sterling
and Foothill anticipate a final closing
within three to four weeks.
style='color:black'>Funeral Home Operator Convicted of Bankruptcy Fraud
On
Friday, Timothy M. Morrison, U.S.
Attorney for the Southern District
of Indiana, announced that Marvin
Boatright, Indianapolis, was sentenced
to 12 months in prison by U.S. District
Judge David F. Hamilton following
his guilty plea to bankruptcy fraud,
the Executive Office for U.S. Trustees
reported. In addition, Judge Hamilton
imposed a $20,000 fine and ordered
three years of supervised release
following the conclusion of Boatright's
imprisonment, in which he must file
income tax returns for himself and
for all business entities in which
he has had an interest during the
last six years. Boatright pleaded
guilty to having concealed the assets
of the Boatright Funeral Home from
creditors and the U.S. Trustee during
its chapter 11 case, and admitted
that he diverted roughly $49,000 in
funds from the bankruptcy estate of
the funeral home for his personal
expenses. Joseph F. McGonigal, an
attorney with the U.S. Trustee in
Indianapolis, was appointed as special
assistant U.S. attorney and prosecuted
the case.
