April 7, 2000
Gibbs Construction Reveals Plans for
Bankruptcy, Cites Collection Problems
Gibbs Construction Inc., Garland,
Texas-based general construction contractor, said yesterday that since
January it has received funding assistance through an operating
agreement with one of its bonding sureties, necessitated by losses and
collection problems from certain construction projects and the recent
bankruptcy filing of Just For Feet Inc., its largest and most profitable
customer, according to a newswire report. The results of the company's
Dec. 31 audit reflected its inability to continue to operate normally in
its current financial condition, and consequently, Gibbs plans to file
for chapter 11. 'During the last half of 1999, the company's largest and
most profitable customer, Just for Feet, declared bankruptcy,' said
company president Danny Gibbs. 'In addition, losses and collection
problems in connection with the completion of hotel and other projects
continued to escalate. We realized the company could either require
additional financial resources or consolidation with another company.'
In December 1999, the company began discussions with a privately held
asset management company in Atlanta 'relative to a consolidation by
'reverse merger' with Gibbs. Considering the current financial condition
of Gibbs, we have concluded that any transaction is not feasible without
the assistance of a chapter 11 bankruptcy.'
Alta Gold Co. Requests Deferment of Chapter
7 Ruling
At its most recent bankruptcy court hearing on March 30 Alta Gold
Co. asked the court to defer ruling on the company's motion to convert
its case to a chapter 7 liquidation case, according to a newswire
report. Alta made its request to allow the company and certain of its
secured creditors additional time to attempt to prepare a definitive
agreement to complete the liquidation of the company's assets, and to
reclaim the company's mining properties, on an orderly basis. The court
agreed to defer ruling on the motion until April 24, at which time it
will also review the definitive agreement. If approved, the company may
then ask the court to continue to defer its ruling on the company's
motion to convert for several more months.
North Face Stock Falls as Company Moves
Toward Bankruptcy
The North Face Inc.'s stock tumbled Thursday on news that the
sportswear and outdoor gear company may be forced to seek bankruptcy
protection, the Associated Press reported. The San Leandro, Calif.
company acknowledged in a statement that its financial condition raises
'substantial doubt about its ability to continue as a going concern.'
North Face shares fell $2.47, or 67 percent, ending at $1.22 on the
NASDAQ Stock Market.
Dimac Holdings, Units File for
Bankruptcy
Atlanta-based DIMAC Holdings Inc., a private marketing company, and
eight of its subsidiaries filed for chapter 11 Thursday in the District
of Delaware, Reuters reported. In court papers, DIMAC said its
assets and debts were each greater than $100 million, and that the
combined companies have more than 1,000 creditors. The subsidiaries
included in the filing were DIMAC Corp., DIMAC Marketing Corp., DIMAC
Direct Inc., Palm Coast Data Inc., DMW Worldwide Inc., MBS Multimode
Inc., AmeriComm Holdings Inc. and AmeriComm Direct Marketing
Inc.
Furniture Retailers Levitz, Seaman Enter
Shared Services Pact
Furniture retailer Levitz Furniture Inc. and Seaman Furniture Co.
Inc. said last Friday they have entered into a management and shared
services pact, and that they expect to create a holding company as part
of a reorganization filed by Levitz in its bankruptcy proceedings,
according to Reuters. In a statement, the companies said that the new
holding company, Levits Home Furnishing Inc., would own all of Levitz
and a majority of Seaman, but the two companies would continue to be
operated separately except for the management and shared services
agreements. Under the management pact, Seaman's management will take on
the management of Levitz stores on the East Coast, and Seaman will also
provide some administrative services for the combined companies' 115
stores, including MIS, accounting and human resources. Levitz will
continue to handle all aspects of operations for its 44 stores on the
West Coast and Minneapolis/St. Paul. If the reorganization plan is
approved, Resurgence Asset Management LLC and its entities are expected
to become the largest shareholder of the new company by contributing
their claims in the Levitz bankruptcy to the new company and exchanging
their majority ownership of Seaman for equity in the new
company.
UK Publishes Plans to Help 'Honest'
Filers
Last Friday, Britain's Trade and Industry Secretary Stephen Byers
published details of plans to allow bankruptcy filers to get back into
business in a bid to encourage responsible risk-taking, according to
Reuters. The paper is seen as a key move toward ending the stigma
attached to bankruptcy. Under existing rules, bankrupts are
automatically disqualified from being a director of a limited company
and suffer other restrictions for up to three years. The
'Bankruptcy—Fresh Start' paper proposes making a distinction
between the majority of 'honest' business people who become bankrupt
through no fault of the directors and those who are culpable. Under the
new rules, the first category of bankrupts will have a discharge from
bankruptcy after six months, and personal property for those who have
invested capital in the business will become exempt. 'We must remove the
stigma surrounding bankruptcy,' Byers said. Too many people are
unwilling to set up their own business because they are worried about
the consequences of failure.' However, under the new plans, those found
guilty of misconduct face a harsher punishment, and could be
disqualified for up to 15 years. Byers's plans came as a result of
proposals first flagged last year.
