February 15, 2000
Hospitals Plan E-mail Campaign About Medicare Cutbacks
Hospitals and their lobbyists are planning an e-mail blitz in
March to members of Congress to convince them that they are still being
deeply affected by the Medicare budget cuts ordered three years ago,
CQ Daily Monitor reported today. The American Hospital
Association (AHA), which is coordinating the campaign in conjunction
with the Catholic Health Association, the American Association of
Medical Colleges and the Federation of American Health Systems, hopes to
send one million e-mails between March 6 and March 12. Although Medicare
providers won about $16 billion in 'givebacks' over five years in the
fiscal 2000 omnibus spending measure, they complain that the cuts are
still too deep. Hospitals and other Medicare providers, such as skilled
nursing facilities and managed care companies, are seeking more money
this year. A House GOP aide said about such campaigns, 'It doesn't help.
It never helps.' AHA Vice President of Political Affairs Al Jackson said
he is aware that Congressional staff do not like this type of campaign,
but it does help them 'measure the level of intensity' on issues, and
that it can provide a database of individuals and groups interested in a
topic. Ways and Means Health Subcommittee Chair Bill Thomas (R-Calif.)
said, 'Like I've said time and time again, if there's an inequity, show
us the inequity.' Jackson plans to do so through the e-mail campaign,
which follows up on a postcard campaign of two million postcards to
Congress and President Clinton last year.
Health Management Consultants File Chapter 11
Health Management Consultants Inc., Miami, and 13 of its
affiliates have filed for chapter 11 protection in the District of
Delaware, according to a newswire report. In papers filed yesterday,
President David Nesslein said the company had up to $1 million each in
assets and liabilities, but the list of 20 largest unsecured creditors
includes about $4 million in claims. The largest claim of $3.7 million
is for a government contract held by Medicare Federal HIB of Columbia,
S.C. Included in the filing are Mederi affiliates from 10 Florida
counties, plus United Home Health Services Inc. and United Home Health
Services of Cook Country and St. Louis.
Charter Hospital Closings Signal Possible Bankruptcy
This month's fast-paced closing and consolidation of Charter
Behavioral Health Systems (CBHS) facilities reflects an aggressive
effort by the nation's largest psychiatric hospital chain to remain
financially viable, according to Mental Health Weekly.
Thirty-three hospitals have been closed or consolidated, and 4,800 jobs
have been eliminated. Rumors of bankruptcy continue, given the company's
financial position, and at least five lawsuits have been filed on behalf
of laid-off workers seeking lost wages. CBHS is also awaiting the
outcome of an ongoing federal probe into Medicaid and Medicare billing
practices at its facilities. A spokesperson for the company said that
the bankruptcy rumors are the result of the company's being open about
the steps it planned to take to restructure itself. Although most of the
33 facilities have been closed, about 600 patients remain in some of the
hospitals. Information on the closings is available at
href='http://www.manisses.com'>http://www.manisses.com.
Omega Announces Negotiations with Bank Group for Extension of
Credit Line Omega Healthcare Investors Inc. announced yesterday
that it is negotiating with its senior bank group, led by Fleet Bank,
for a possible extension of its existing credit line, due to expire in
September, according to a newswire report. The Ann Arbor, Mich.-based
company said that it has initiated efforts with Fleet to extend the
credit to 'alleviate concerns about this and other liquidity issues for
the company.' CEO Essel W. Bailey Jr. also commented on the recent
chapter 11 filing by Integrated Health Services. He said,'We are
actively working to manage the financial difficulties our customers are
suffering, and have ongoing negotiations with Integrated.' Integrated
owns 11 properties subject to mortgages involving an Omega investment of
$55 million. Bailey also said that with respect to properties managed by
an Integrated subsidiary for Lyric Healthcare LLC, partially owned by
Integrated ,that Lyric continues to perform in accordance with all its
agreements. Neither Lyric nor any Integrated subsidiary managing or
having an interest in Lyric has filed for bankruptcy protection. Omega
is a real estate investment trust investing in and providing financing
to the long-term care industry. As of Dec. 31, its portfolio includes
216 health care and assisted living facilities with more than 23,000
beds in 28 states and operated by 24 independent health care operating
companies.
Fitch IBCA Reports on Healthy Credit Card Portfolios
Fitch IBCA's monthly 'Credit Movers and Shakers' report (
href='http://www.fitchibca.com/'>http://www.fitchibca.com)
indicates that the firm anticipates slow receivable growth, ongoing
consolidation and higher interest rates to resonate as key themes
throughout the industry in 2000. 'Strong economic conditions continue to
bolster consumers' financial positions, translating into healthy credit
card portfolio performances,' said Michael Dean, senior director of
Fitch IBCA's Asset Backed Group. According to the report, the recent
passage of S. 625 is also on the industry's radar as it may bring an end
to three years of reform efforts that may prove advantageous for longer
term lenders. Fitch IBCA finds the reversal in rising delinquency trends
most encouraging, even through charge-offs continue an upward trend. The
delinquency index reversed course from the prior month. Taken with
declining bankruptcy filings, the latest results could portend improved
charge-off performance in the coming months as delinquencies pull back
from recent highs.
Greek Shipping Firm Files Chapter 11
Global Ocean Carriers Ltd., Athens, and 14 affiliates filed for
chapter 11 protection in the District of Delaware yesterday, according
to a newswire report. Global listed assets of $92 million and
liabilities of $178 million. Its Marine Services Corp. affiliate listed
Norwest Bank Minnesota as the indenture trustee for an unsecured and
unspecified claim of $126 million. Global specializes in owning and
operating feeder container vessels and dry bulk carriers. Last month the
company said it had a reorganization plan under which current shares
would be extinguished and an issue of new shares would be acquired by
Marmaron Co., an affiliate of the Tsakos shipping family that is said to
have a controlling interest in Global. Global also said that holders of
more than 67 percent of its 10.25 percent notes due 2007 had agreed to
accept 50 cents cash for every dollar of principal amount of notes.
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Fruit of the Loom Seeks Approval to Discontinue Some
Operations
Fruit of the Loom Ltd. announced that as part of its
reorganization, it is seeking bankruptcy court approval to proceed with
an orderly wind-down of its Pro Player Sports & Licensing Division,
which includes its wholly owned subsidiaries, Salem Sportswear Inc. and
Pro Player Inc. In a motion filed with the court, the company said it is
not foreclosing the possibility of selling Pro Player as a going concern
if acceptable offers are received before the Feb. 23 hearing scheduled
on the motion. Acting CEO Dennis Bookshester said, 'It is our fiduciary
obligation to maximize the value of the company for its creditors.
Unfortunately, it is clear that the financial resources required to
maintain this division could be better deployed in our core business of
retail and activewear.' Fruit of the Loom and certain U.S. subsidiaries
filed chapter 11 in late December in the District of Delaware.
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DecisionOne Seeks Bankruptcy Shelter in Delaware
DecisionOne Holdings Corp., a computer support service company,
and its operating subsidiary, DecisionOne Corp., filed for chapter 11
protection in the District of Delaware yesterday. In court papers, the
Frazer, Pa., company said the filing included a pre-packaged and
consolidated reorganization plan. DecisionOne Holdings listed assets of
$4.1 million and liabilities of $633.2 million, and its operating unit
listed assets of $324 million and liabilities of $915.9 million. Last
month DecisonOne Holdings announced it had reached an agreement with
bank lenders and bondholders on a restructuring and that filing would
soon follow. Holdings said it has a commitment for up to $35 million in
debtor-in-possession financing from Ableco Finance LC, a Cerberus
Capital Management Affiliate.
Jitney Jungle Stores Announces Closing of 10 Stores
Jitney Jungle Stores of America Inc. announced the closing of
10 stores last Saturday as part of the company's reorganization plan,
according to a newswire report. The retailer filed for chapter 11
protection in October and said that it may close as many as 50 stores.
President and CEO Ron Johnson said, 'Our plans are to emerge from
bankruptcy by the end of the year without debt and with a financial
structure in place that should enable this company to move forward for
the next 80 years.' Jitney operates 178 grocery stores, 55 gas stations
and 10 liquor stores located throughout Mississippi, Alabama, Louisiana,
Tennessee, Florida and Arkansas.
J. Baker to Acquire Shoe Corp. Assets
J. Baker Inc. announced yesterday that it will acquire assets
of Shoe Corp. of America Inc., including the rights to some 205 footwear
departments in stores nationwide, according to a newswire report. J.
Baker, a leading specialty retailer of apparel and footwear, said that
the transaction will account for about $60 million in annualized revenue
and that its closing is expected next month. Shoe Corp. of America filed
for chapter 11 protection in the Southern District of Ohio last June.
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Clinton Administration Continues Review of Loan for Russian
Oil Sector
The Clinton administration is 'intensively' reviewing a $500
million loan package for Russia's oil industry, according to Reuters.
Late last year U.S. Secretary of State Madeleine Albright blocked the
U.S. Export-Import Bank from approving the loan for Russia's Tyumen Oil
on the grounds that it would not be in the United States' best interest
to approve the loan at the time. Yesterday, Undersecretary of Sate for
Economic Affairs Alan Larson said, 'That process of review has been
going on very intensely since the end of December,' but he did not say
when the review would be finished. The White House has said it is
concerned about how Tyumen was able to acquire another oil company at
the expense of foreign forms. Specifically, BP Amoco had lobbied for the
loan to be turned down after losing a fight with Tyumen through a
bankruptcy proceeding to gain control of a Russian oil company that is a
subsidiary of bankrupt Sidanko, in which Amoco has a 10 percent
interest. The day after the loan was blocked, Amoco signed an agreement
with Tyumen to settle some of the issues that caused the Clinton
administration's concern over the loans.
Grand Union Struggles Since Emerging from Bankruptcy
Grand Union Co., Wayne, N.J., announced yesterday that it was
ousting J. Wayne Harris as CEO, chairman of the board and a director
effective immediately, and that Jack Partridge resigned as vice
chairman, chief administrative officer and a director, according to
Reuters. The company has named Gary Philbin, its president, as the new
CEO. The company has not turned a yearly profit in the last decade and
has seen its stock price fall from about $14 in September to $4.50
yesterday. Last week the company reported a larger-than-expected loss
for the third quarter. Two years ago, nearly half of Grand Union's
directors resigned in protest over a 1998 restructuring under
bankruptcy. 'There is a lot of shareholder dissatisfaction with the
behavior of the stock price. I do think management coming out of chapter
11 has done a very good job initially of boosting cash flows...but this
year it seems like they hit the wall with any further levels of
improvement,' said analyst Jeffrey Wiegan of Robotti & Co.
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Bankruptcy Petition Prepared Fined $48,000 for Violation in
96 Bankruptcy Cases
Bankruptcy petition prepare Barry Ernest, Sacramento, Calif.,
was fined $48,000 last week by the Bankruptcy Court for the Eastern
District of California for violating 11 U.S.C. 100 in 96 bankruptcy
cases, Assistant U.S. Trustee Antonia Darling announced yesterday.
Darling said, 'Mr. Ernest deceived his clients and perpetrated a fraud
on the court and creditors by having debtors file bankruptcy cases that
were never intended to be completed. The bankruptcy cases were used as a
mere stalling technique. This sort of fraudulent bankruptcy mill is
exactly the kind of abuse ß110 was designed to catch.' Operating as
Park Oak Paralegal and Greater Sacramento Services, Ernest was found in
In re Robinson to have engaged in a willful scheme to defraud
the bankruptcy court and creditors. Bankruptcy Judge Christopher
M. Klein said Ernest's scheme involved the 'cynical sale of the
bankruptcy automatic stay' to frustrate landlords who were owed back
rents and were attempting to evict tenants. Ernest solicited customers
by running ads in free local papers under the category 'rentals.' The
ads said that people facing eviction could stall the eviction for 30
days or more, with his help. The court found that in all 96 cases,
Ernest charged his clients at least $175 for counseling and told them to
file for bankruptcy, which chapter to file under, prepared a skeletal
filing and told them how to file the petition and then take it to the
sheriff's office to stop the eviction.
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