March 9, 2000
Greenspan Warns Lenders of Growing Lax
Federal Reserve Chairman Alan Greenspan addressed lenders at a
meeting of the Independent Community Bankers of America yesterday in San
Antonio and warned that lenders may be getting too lax, The Wall
Street Journal reported. Greenspan said that he detects a
'troubling trend' in which 'many banking institutions view current
strong economic conditions as no longer extraordinary and exceptional
but rather ordinary and expected.' That may foster reckless lending that
'could have grave consequences for industry's ability to weather weaker
economic conditions.' He also said that at the same time, intense
competition has pressured some banks to move 'lower on the
credit-quality spectrum' as they seek higher profits. Greenspan said the
current banking conditions are 'excellent' and that the Fed released a
survey yesterday indicating that 'credit quality and lending standards
were stable' in the first two months of the year. And although the most
recent report on bank loans and monitoring of credit conditions showed a
significant percentage of banks had tightened lending standards,
Greenspan said there are some signs of trouble. 'We have seen growing
evidence of credit granted solely on the expectation that current robust
conditions will continue indefinitely, with little thought as to how
borrowers might perform under more stressful conditions.' He went on to
say that '...most bad loans are made in the good times.'
Equalnet Makes $3.25 Million Offer to Acquire ATCALL
Equalnet Communications Corp., Houston, has submitted an offer
to acquire all of the assets of ATCALL Inc., Arlington, Va., in exchange
for the assumption, on a non-recourse basis, of about $3 million of
secured debt and a guaranteed payment of $250,000 in Equalnet common
stock, according to a newswire report. ATCALL, which is operating as a
debtor-in-possession under chapter 11, resells long distance phone
service to residential and small business subscribers and also supplies
pre-paid phone debit cards to major national retailers. A bankruptcy
court hearing is scheduled for March 14 to consider offers to acquire
ATCALL. Equalnet is a nationwide supplier of telecommunications
services.
Court Approves Asset Sale Procedures for CellNet Data
Bankruptcy Judge Peter J. Walsh (D. Del.) this week approved
bidding procedures for the sale of substantially all of CellNet Data
Systems Inc.'s assets to stalking horse bidder Schlumberger RMS, a unit
of Schlumberger Ltd. (SLB), a French energy services firm, according to
a newswire report. Judge Walsh authorized a $5 million break-up fee
payable to Schlumberger if the deal with CellNet falls through, and he
set a $2.5 million bid increment for offers seeking to top
Schlumberger's proposal to acquire CellNet. The deal is valued at more
than $225 million, and the opening bid at auction must be at least $7.5
million greater than that. Judge Walsh set an April 12 bid deadline, and
if higher or better offers are received, an auction will be held on
April 14 in the New York office of Simpson, Thacher & Bartlett,
CellNet's lead bankruptcy counsel. A hearing to approve the sale to
Schlumberger or the highest bidder will be held shortly after the April
17 deadline for objections to the sale. CellNet recently received final
court approval of $30 million in debtor-in-possession financing from
Schlumberger. CellNet filed chapter 11 in February, listing assets of
$343.4 million and liabilities of $503.7 million as of Dec. 31.
Pilgrim's Pride Makes Announcement About Second Quarter
Earnings
Pilgrim's Pride Corp., Pittsburg, Texas, stated that in light
of the chapter 11 filing on Jan. 31 by AmeriServe, losses incurred Jan.
27-28 from an ice storm and the generally weaker chicken markets in the
United States, it will not meet the consensus estimates of $.32 per
share for the second quarter ending on April 1. The company anticipates
that its second quarter earnings will be in the range of $.15 to $.20
per share instead. AmeriServe is a significant distributor of products
to a number of fast food and casual dining restaurant chains, several of
which are customers of Pilgrim's Pride. At the time of AmeriServe's
chapter 11 filing, Pilgrim's Pride had extended about $6 million in
trade credit to AmeriServe, all of which will be reserved in the second
quarter and decrease reportable earnings by about $.09 per share on an
after-tax basis. The company has reached the necessary
post-reorganization agreements with its customers supplied by AmeriServe
to continue distribution of its products and does not believe that the
chapter 11 filing will have an adverse effect on distribution on a
going-forward basis. Pilgrim's Pride estimated that losses realized from
the January ice storm will negatively affect second quarter pre-tax
earnings by about $2 million or $.03 per share on an after-tax
basis.
Eagle Food Centers' Largest Creditors List Online at
BankruptcyData.com
BankruptcyData.com
href='http://www.bankruptcydata.com/'>(http://www.bankruptcydata.com)
announced that the list of creditors holding the 40 largest unsecured
claims against Eagle Food Centers Inc. is now available online,
according to a newswire report. The supermarket chain operator, which
filed for chapter 11 protection on Feb. 29 in Delaware, owes $12.55
million, its largest unsecured claim, to Alliance Capital Management
LLC. Concurrent with the filing, Eagle Food reported that it had secured
$50 million in financing and negotiated the terms of a plan with its
biggest secured lenders and substantially all identifiable institutional
holders of 8 5/8 percent senior unsecured notes due April 15, 2000.
Congress Financial has agreed to provide interim debtor-in-possession
financing, which is subject to the court's approval. Eagle Foods is the
largest supermarket chain to file bankruptcy in 2000, although it is
primarily a regional company focused in the Midwest. Other grocery store
chains to file in recent years include Penn Traffic, Grand Union, Farm
Fresh and Bruno's. Reports on those filings are also online at
BankruptcyData.com.
SystemSoft Announces Effective Date of Plan
SystemSoft Corp., Natick, Mass., announced yesterday that its
chapter 11 case has been resolved, according to a newswire report. The
plan of reorganization, approved by the Bankruptcy Court for the
District of Massachusetts on Feb. 22, states that the assets and
intellectual property rights of SystemSoft were acquired by Rocket
Software, also in Natick. The plan became effective March 2. All issued
and outstanding publicly traded shares of SystemSoft stock were
cancelled effective March 1.
Public Notice for Reappointment of Pennsylvania Bankruptcy
Judge
The current term of office of David A. Scholl, U.S. Bankruptcy
Judge for the Eastern District of Pennsylvania at Philadelphia, is due
to expire on Aug. 26, 2000. The U.S. Court of Appeals for the Third
Circuit is considering the reappointment of Judge Scholl to a new term
of of office and has determined that he appears to merit reappointment
subject to public notice and opportunity for public comment. Upon
reappointment, the incumbent would continue to exercise the jurisdiction
of a bankruptcy judge as specified in title 28, U.S. Code; title 11,
U.S. Code; and 122, 98 Stat. 333-346. In bankruptcy cases and
proceedings referred by the district court, the incumbent would continue
to perform the duties of a bankruptcy judge that might including holding
status conferences, conducting hearings and trials, making final
determinations, entering orders and judgments, and submitting proposed
findings of fact and conclusions of law to the district court.
Members of the bar and the public are invited to submit comments for
consideration by the Court of Appeals regarding the reappointment of
Judge Scholl to a new term of office. Please not that the Court of
Appeals procedures provide that 'the circuit executive shall not
disclose the identity of any person who requests confidentiality, but
shall provide the incumbent bankruptcy judge with a general description
of the source and nature of the comments.'
All comments should be directed to the following address: Office of
the Circuit Executive, Toby D. Slawsky, Circuit Executive, 22409 U.S.
Courthouse, 601 Market St., Philadelphia, PA 19106-1790. Comments must
be received no later than Friday, April 14.
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