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January 8, 2002
Global Technovations Bankruptcy Case Moved to Michigan From
Delaware
A Delaware bankruptcy court yesterday transferred Global Technovations
Inc.’s chapter 11 case to the U.S. Bankruptcy Court for the
Eastern District of Michigan, Dow Jones reported. “Due to
the present burden of cases on the court in this district, the chapter
11 cases of Global Technovations et al should be transferred to the
Michigan court,” said Judge Mary F. Walrath of the U.S. Bankruptcy
Court in Wilmington, Del.
The change of venue comes weeks after Global Technovations won
interim approval of a pared down version of its debtor-in-possession
(DIP) financing agreement, which allows the company to use up to
$500,000 until Jan. 15. The company had sought interim approval of
a $1.2 million pact but altered its request after Judge Walrath
expressed concerns that the company was borrowing more than
necessary. A final hearing had been scheduled for Jan. 15, but
will now be subject to the Michigan court’s calendar. Palm
Beach Gardens, Fla.-based Global Technovations and three affiliates
filed for chapter 11 bankruptcy protection on Jan. 3. The company
said it has consolidated assets of roughly $59.2 million and liabilities
of $59.8 million.
Digital Teleport Gets OK for DIP Financing
Digital Teleport Inc. yesterday announced that Judge Barry S. Schermer
of the U. S. Bankruptcy Court for the Eastern District of Missouri has
approved a company request for initial lending under a $5 million
debtor-in-possession (DIP) financing arrangement, according to a company
press release. KLT Telecom Inc., the current majority owner of
Digital Teleport, is providing the $5 million DIP financing. The
court also approved various other requests that provide authority to
continue the company’s day-to-day operations as a regional fiber
communications provider in secondary and tertiary markets. Judge
Schermer approved the company’s request to pay pre-filing and
post-filing employee wages, benefits and business expenses. A
hearing on full funding under the DIP financing is pending.
Digital Teleport filed for chapter 11 bankruptcy protection on Dec.
31.
Polaroid Seeks Court Approval of $4.8 Million Asset Sale
Polaroid Corp. is seeking approval from a bankruptcy court to sell its
Polaroid Digital Solutions Inc. assets to Appareo Software Inc. for
about $4.8 million, Dow Jones reported. The U.S. Bankruptcy Court
in Wilmington, Del., will consider the company’s request at a
hearing on Jan. 15. Interested parties may file objections through
today. Polaroid Digital Solutions Inc., a non-core, wholly owned
unit of Polaroid, provides electronic forms, digital photo imaging and
automation tools for the real estate, insurance and corporate inspection
communities.
Polaroid said it began a sale process for the business even prior to
its Oct. 12, 2001, petition date. According to a Dec. 19, 2001,
press release, the companies expect to close the deal before Jan.
31. Polaroid warned in its motion that if the sale isn’t
accomplished now, the value of the assets would deteriorate.
ENRON UPDATE
Enron LNG Marketing Files For Chapter 11 Protection
Another Enron Corp. unit has filed for chapter 11 bankruptcy protection,
bringing the total number of company affiliates seeking court protection
to 30, Dow Jones reported. Enron LNG Marketing LLC, a Houston
affiliate, in a filing on Friday with the U.S. Bankruptcy Court for the
Southern District of New York, listed assets of $21 million and total
debts of $11.6 million, not including off-balance sheet and contingent
obligations.
Judge to Decide On Enron Bankruptcy Venue This Week
A federal bankruptcy judge will decide by the end of this week whether
to transfer Enron Corp.’s chapter 11 proceeding to Houston, Dow
Jones reported. Judge Arthur J. Gonzalez of the U.S. Bankruptcy
Court for the Southern District of New York said it will take him a few
days to decide whether to move the venue for the largest bankruptcy case
in corporate history — as some Enron creditors have requested due
to the energy trading company’s large concentration of assets and
employees in Texas. Legal experts have said that it is unlikely
that the motions will be approved. Judge Gonzalez repeatedly
expressed his concern at changing venue for a case that is more than a
month old. “Time has passed and things have had to be
done,” said Gonzalez. “...if you had to choose between
the stability of the case and transferring it, then the choice is
stability.”
Enron Corp. is fighting a push by creditors to move the former energy
trading giant’s bankruptcy case from New York to its home town of
Houston, according to the Associated Press. Many of the creditors
are located in the Houston area or other western parts of the
country. Large creditors, such as energy traders Dynegy Inc. and
El Paso Corp., and smaller ones, like the Southern Ute Indian Tribe of
Colorado, believe it would be more convenient and economical to hear the
case near the location of many Enron creditors and assets. Dynegy
and El Paso are based in Houston.
Enron Gets Bids for Stake in Trading Arm
In a small but vital first step toward resurrecting its trading
operations, Enron Corp. received formal bids for a majority stake in its
energy-trading arm from Citigroup Inc., UBS AG and BP PLC, people
familiar with the matter said, The Wall Street Journal
reported. They said there was no bid from J.P. Morgan Chase &
Co., one of Enron’s largest creditors, which had been weighing an
offer for the unit. It was unclear late yesterday how many other
bids, if any, had been received for the wholesale trading business, once
considered Enron’s flagship operation. Goldman Sachs Group Inc.
and American International Group Inc. also had been looking at the
unit.
Under bankruptcy court rules governing the sale, the initial bids
were submitted on a confidential basis, and will be used in an auction
on Thursday, when the company’s advisers are expected to press
bidders to raise their offers. The results will be disclosed on
Friday.
Regal Cinemas, AMC Entertainment Selling Bonds
Regal Cinemas Inc., which filed for bankruptcy protection on Oct. 12,
yesterday joined AMC Entertainment Inc. in the line to sell bonds, the
first from movie theater operators since a wave of bankruptcies crippled
the industry, Reuters reported. Knoxville, Tenn.-based Regal plans
to sell $200 million in notes. Kansas City, Mo.-based AMC last
week said it is selling $150 million in notes. Both are selling
10-year senior subordinated notes. Regal, which recently had more
than 3,800 screens, intends to use bond sale proceeds in a
recapitalization. AMC, with more than 2,800 screens, said it will
use its proceeds to pay off bank debt and for other purposes, such as
acquisitions. Both sales are expected this month.
RHI Shares Plunge as U.S. Unit Seeks Bankruptcy Protection
Troubled Austrian fireproof materials maker RHI yesterday announced that
its U.S. subsidiary, Narco, filed for chapter 11 bankruptcy protection
on Jan. 4 due to a growing number of asbestos-related claims, according
to Reuters. The debt-laden RHI also said that its 2001 group
results would be “considerably compromised” by the removal
of Narco from its consolidated balance sheet and a charge for
provisional valuation adjustments.
RHI has already said that it faced thousands of asbestos-related
claims from former employees at its U.S. subsidiaries—Harbison
Walker and A.P. Green—which it acquired in 1999. However,
RHI Chief Financial Officer Eduard Zehetner said that those two units
had no immediate plans to follow Narco’s example and file for
bankruptcy.
Metals USA Receives Approval for Bankruptcy Financing
Metals USA Inc., a metals processor and distributor, yesterday said it
received bankruptcy court approval for a $350 million
debtor-in-possession (DIP) financing facility, which will be used to
fund its operations, Reuters reported. Houston-based Metals USA,
which filed for chapter 11 bankruptcy protection on Nov. 14, said the
facility is from a group of lenders led by Bank of America. It
matures on June 30, 2003, and provides for two three-month
extensions.
Cox Moves @Home Customers
Cox Communications, the last of the big three cable companies building
their own high-speed Internet networks in the wake of Excite
Home’s bankruptcy, has started moving customers to its new
network, according to CNET News.com. The company announced
yesterday that it had begun moving customers in one area in December,
and it’s now changing over the rest of its 555,000 high-speed
Excite@Home customers. Most of these subscribers should be on the
network by the end of the month. Cox has agreed to support
Excite@Home through the end of February in order to smooth the
transition of its customers between networks. The cable company is
spending $150 million to replicate the bankrupt high-speed Internet
company’s network.
USinternetworking Files for Bankruptcy
Annapolis, Md.-based USinternetworking Inc., which provides computer
application use to companies via the Internet, yesterday disclosed that
it filed for bankruptcy and that Bain Capital Partners LLC has agreed to
invest up to $106 million in the company, reported Reuters. The
bankruptcy filing is part of a pre-negotiated plan to eliminate a
substantial amount of the company’s debt. A majority of the
company’s lessors have endorsed the plan and the company has
received signed support letters from an ad hoc committee holding a
majority of its convertible debt. It expects to emerge from
bankruptcy in the spring. Under an agreement with Bain, an
investment affiliate of Bain will initially invest $81 million in
USinternetworking, with an additional $25 million invested when certain
business goals are achieved.
PG&E Bankruptcy Judge to Weigh Chemical Injury Claims
The judge presiding over Pacific Gas & Electric’s (PG&E)
bankruptcy case is expected to rule within a few days on a courtroom
fight with links to the 1993 environmental case that inspired the
Academy Award-winning movie “Erin Brockovich,” according to
Reuters. In that case, 650 people received $333 million from the
company to settle lawsuits that claimed they drank water contaminated by
chromium six, a possible carcinogen, near a PG&E natural gas
pipeline station in Hinkley, Calif. Now about 1,250 additional
claims seeking $500 million for alleged personal injuries are pending in
15 lawsuits involving chromium at PG&E’s Kettleman and Topock
pipeline stations in California, plus Hinkley. PG&E has
estimated its potential liability at $160 million.
PG&E filed for chapter 11 bankruptcy protection on April 6, 2001,
after taking on billions of dollars in debt as a result of
California’s deregulation scheme. U.S. Bankruptcy Court
Judge Dennis Montali will decide if the chromium claims should be
transferred to a U.S. district court in San Francisco, as sought by
PG&E, or heard in state court in Los Angeles. Montali held a
two-hour hearing on the issue last week.
Interland Won’t Purchase E.spire Web Hosting Units
Interland Inc. has decided not to pursue an acquisition of E.spire
Communications Inc.’s web hosting units, FloridaNet Inc. and
CyberGate Inc., Dow Jones reported. The company said yesterday
that the current bid price, along with the associated liabilities, for
the units is too high to provide an acceptable rate of return for
shareholders. Web-hosting provider Interland said it was in talks
to buy certain web-hosting assets of E.spire’s Cybergate Inc. and
FloridaNet Inc. units.
In December, E.spire said the U.S. Bankruptcy Court for the District of
Delaware approved a lead bid of $21 million for Cybergate from an
unnamed web-hosting provider. The Washington Post also
reported that E.spire Chairman and Chief Executive George F. Schmitt had
submitted a bid of $15.5 million for CyberGate.
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