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WORLDCOM
MCI's Trade Creditors Seeking Trustee in WorldCom
Bankruptcy
MCI Communications Corp. trade creditors say they've been ignored during
parent WorldCom Inc.'s bankruptcy and need a trustee to oversee
recovery, Bloomberg News reported. WorldCom announced last week that it
changed its name to MCI, but the company continues to file its
bankruptcy documents under WorldCom. Under a reorganization plan
announced last week, WorldCom creditors may be favored over MCI
creditors, according to documents filed today by a committee of MCI
trade claimants. 'There is no officer, director or professional who is
charged with protecting the unique interests of the MCI debtors and
their creditors,' and officials 'continue to focus exclusively on the
interests of WorldCom,' court papers said, reported the newswire. If
U.S. Bankruptcy Judge Arthur Gonzalez decides against a trustee,
the committee wants him to appoint an examiner to investigate, among
other things, WorldCom's assertion that MCI should be responsible for
'billions of dollars' in claims, according to Bloomberg. WorldCom said
Monday that an agreement with creditors would let the company exit
bankruptcy protection with $5 billion in debt by October. WorldCom, the
No. 2 U.S. long-distance telephone company after AT&T Corp., sought
protection in U.S. Bankruptcy Court in Manhattan last July, listing $107
billion in assets and $41 billion in debts.
Court Approves Panel to Examine Fees in WorldCom
Case
A bankruptcy court Friday approved the formation of a committee to
review the fees paid to professionals hired in WorldCom Inc.'s chapter
11 proceedings, according to a court order, reported Dow Jones. The
telecommunications company, its unsecured creditors' committee and the
U.S. Trustee asked the bankruptcy court overseeing WorldCom's case to
appoint the fee committee and related procedures, the newswire reported.
Judge Arthur Gonzalez of the U.S. Bankruptcy Court in Manhattan
signed an order granting the request. According to the order, the fee
committee will review both the interim and final fee applications of
court-approved professionals that have been hired in the bankruptcy
case. The fee committee's primary job will be to review and ensure that
the time-entry descriptions in each fee application and the
out-of-pocket expenses of each hired professional comply with the
Bankruptcy Code as well as guidelines of the court and the U.S. Trustee,
the order said, reported Dow Jones. The filing said that WorldCom, the
creditors' committee and the trustee will each appoint at least one
individual to serve as a representative on the fee committee.
Spiegel to Shut Down Outlet, Clearance Stores to Reduce $1.7
Billion in Debt
Downers Grove, Ill.-based Spiegel Inc., the bankrupt owner of the
98-year-old Spiegel catalog, will close all of its outlet and clearance
stores to reduce $1.7 billion in debt, reported Bloomberg News. Spiegel,
which filed for bankruptcy protection last month, will close 12 Spiegel
outlet and four clearance stores and five Newport News outlet stores,
Spiegel spokeswoman Debbie Koopman said, according to the newswire. The
store closings, expected to begin in May, will improve operating income
by $11 million annually, Koopman said. Spiegel lost more than $727
million in the past two years. It obtained $400 million in loans from a
group of banks led by Bank of America Corp. that will allow it to
continue to operate catalogs and Eddie Bauer stores while in
bankruptcy.
Court OKs Globalstar Settlement with Loral Space
Dow Jones Newswire reported that the bankruptcy court overseeing
Globalstar LP's chapter 11 proceedings has approved the company's
settlement with Loral Space & Communications Ltd. The approval will
help San Jose-based Globalstar move closer to court confirmation of a
reorganization plan. Court papers said Loral Space & Communications
will be allowed $875 million in general unsecured claims in Globalstar's
chapter 11 case, reported the newswire.
However, Loral's allowed unsecured claims could be reduced to $437.5
million when the court confirms a reorganization plan for Globalstar,
the newswire reported. The reduction would occur after the parties
release each other from some contracts and pay some cure amounts under
the pacts. Court documents said Loral could be allowed $57 million of
additional vendor financing claims, according to Dow Jones. Chief Judge
Peter J. Walsh of the U.S. Bankruptcy Court in Wilmington, Del.,
signed an order that approved the settlement. Globalstar
Telecommunications Ltd. is a general partner of Globalstar, which filed
for chapter 11 bankruptcy protection in February 2002.
American Air Flight Attendants to Hold Another Vote
Angered by an American Airlines plan to give bonuses to top executives,
the flight attendants' union said late Friday it would scrap results of
a vote that approved concessions the company says it needs to stay out
of bankruptcy, reported the Associated Press. The union said it plans to
schedule a new vote, according to the newswire. The company said Friday
that executives had decided not to accept the bonuses, which were
disclosed after employees voted to accept $10 billion in concessions
over six years. Still, the president of the flight attendants' union
said the results of the voting were tainted because the company didn't
tell workers about the bonuses until most of them had cast their
ballots, reported AP. The union's move threatened to push American
closer to bankruptcy just two days after members of its three main
unions narrowly approved the concessions, which included wage cuts.
After learning of the plan for a new round of voting by the Association
of Professional Flight Attendants, American said it stood by the results
of the earlier vote.
GLOBAL CROSSING
Global Crossing Fees May Reach $163 Million
Advisers in the Global Crossing Ltd. bankruptcy case could end up being
paid about $163 million in fees, according to the special committee
appointed to evaluate the requests for payment from the numerous firms
handling the work, according to The Daily Deal. The fee figure is
about two-thirds the total value of Hutchison Whampoa Ltd.'s and
Singapore Technologies Telemedia Pte's court-approved purchase of a 61.5
percent stake in the reorganized company for $250 million. The estimate
includes court-approved bills for January to April 2002, invoices
submitted for May to September, projections for the following months and
success fees, reported the online newspaper. Since the Hamilton,
Bermuda-based company filed for bankruptcy protection in January, the
committee said in court filings, professionals' fees have totaled
roughly $11.25 million per month. Judge Robert Gerber of the U.S.
Bankruptcy Court for the Southern District of New York is scheduled
today to consider the advisers' second interim applications for fees and
expenses covering work done between May 1 and Sept. 30, 2002, according
to the Deal. Read the full story at
href='http://www.thedeal.com/'>www.thedeal.com (subscription
required).
Global Crossing's February Loss Widens to $142 Million from
January
Bankrupt Global Crossing Ltd. said it had a loss of $142 million in
February, up 53 percent from the preceding month on foreign-currency
losses, according to Bloomberg News. Sales fell to $222 million, the
newswire reported. In January, the company had a $93 million loss on
$236 million in sales, the company said in a statement distributed by PR
Newswire. Global Crossing is trying to win U.S. approval of a plan to
sell control to two Asian companies—Hutchison Whampoa Ltd. and
Singapore Technologies Telemedia Pte—when it exits chapter 11.
Officials want reassurance that foreign ownership won't compromise U.S.
national security, reported Bloomberg. The company filed for bankruptcy
in 2002 after a network-capacity glut left it unable to pay $12.4
billion of debt.
Court Approves Retention Plan for Wherehouse Entertainment
The U.S. Bankruptcy Court in Wilmingon, Del., approved an
employee-retention plan to help keep workers in place until the chapter
11 case of Wherehouse Entertainment concludes, Dow Jones Newswire
reported. The ruling authorizes the company to spend $1.4 million on
bonuses targeted to 11 workers that the company believes are essential
to its restructuring, the newswire reported. Without the plan,
Wherehouse Entertainment said, the company fears competitors and other
prospective employers may recruit its key employees and offer them new
career opportunities, Dow Jones reported. The company listed assets of
$228 million and debts of $222.5 million as of July 31, 2002, in its
chapter 11 bankruptcy petition, filed on Jan. 20. Three more affiliates
filed for bankruptcy protection on Jan. 21.
Ameripol Synpol, Creditors Hammer Out Reorganization Plan
Port Neches, Texas-based Ameripol Synpol Corp. filed a detailed term
sheet in bankruptcy court on Wednesday outlining a plan with its
creditors that would enable the company to avoid having a trustee named
to the case, according to Dow Jones. In an April 9 hearing, the
committee of Ameripol's unsecured creditors agreed to withdraw its
request for a trustee if the company immediately escrowed $5.2 million
in cash and drew up plans to emerge from chapter 11 bankruptcy
protection, the newswire reported. According to terms of the agreement,
filed with the U.S. Bankruptcy Court in Wilmington, Del., unsecured
creditors of Ameripol would recover 15 percent of their aggregate
claims. They would also get a pro-rata share of the $5.2 million
escrowed last week. Each of these payments would have higher priority
than other unsecured claims incurred before Feb. 28, according to Dow
Jones.
Also under the agreement, by April 30 Ameripol would file a
reorganization plan that the creditors would endorse and the company
would agree not to seek any further debtor-in-possession financing, the
newswire reported. Ameripol would ask for extensions of the exclusive
periods in which the company or creditors can file a reorganization plan
until June 20, and in which support can be solicited for the plan until
Aug. 20. A hearing on the settlement is scheduled for April 22, and
creditors said it must be approved by May 6 to remain in place.
Former Budget Group Likely to Get Exclusivity Extension
The company formerly known as Budget Group Inc. is likely to receive a
60-day extension of its exclusive periods to file a reorganization plan
and solicit votes for the plan, according to Dow Jones Newswires. No
creditors of the company, now known as BRAC Group, filed objections
before an April 14 deadline to extending the plan filing exclusivity
until June 2 and the exclusive period to seek votes until Aug. 1,
according to court papers filed Thursday. A hearing on the proposed
extension is scheduled for today. BRAC Group said the U.S. Bankruptcy
Court in Wilmington, Del., should grant the extension because the
company has made progress in its chapter 11 bankruptcy case.
U.S. Trustee Seeks to Convert Telscape International Case to
Chapter 7
The U.S. Trustee acting in Telscape International Inc.'s bankruptcy case
is asking the court to convert the proceedings to a chapter 7
liquidation because the company's chapter 11 trustee didn't comply with
his fiduciary duties, Dow Jones reported. According to court filings
obtained Thursday by Dow Jones Newswires, the U.S. Trustee said the
chapter 11 trustee failed to comply with the U.S. Trustee's operating
and reporting requirements because he hasn't monthly operating reports
since his appointment, according to the newswire. The U.S. Trustee said
in the motion that the chapter 11 trustee's failure to file the reports
hinders the ability to monitor post-petition operations and whether a
viable plan may be proposed, reported Dow Jones. A chapter 11 trustee
was appointed to Telscape International by the U.S. Trustee on June 22,
2001. The U.S. Trustee says converting Telscape International's chapter
11 case to chapter 7 is in the best interest of the company's creditors,
Dow Jones reported. A hearing on the request is scheduled for May 23 in
the U.S. Bankruptcy Court in Wilmington, Del. Objections are due by May
9, reported the newswire.
Peregrine Systems Banks Oppose Opening Plan-filing Process
A bid by the unsecured creditors' committee to open up Peregrine Systems
Inc.'s chapter 11 plan-filing process to parties other than the company
will face opposition at a hearing today, according to court documents
obtained by Dow Jones Newswires. Peregrine Systems' factoring
banks—which include Fleet Business Credit LLC, Wells Fargo HSBC
Trade Bank N.A. and Silicon Valley Bank—have objected to the
committee's request, claiming Peregrine has stabilized in the
marketplace and that ending the company's exclusivity would 'send a
distressing signal' to the market. The U.S. Bankruptcy Court in
Wilmington, Del., which is overseeing Peregrine's case, is scheduled to
consider the matter at a hearing at 1:30 p.m. EDT today.
HealthCare Integrated to Seek Sale Confirmation
Bankrupt HealthCare Integrated Services Inc. (HIS) will seek to confirm
the sale of its assets for at least $19.8 million next week to an
affiliate of PresGar Diagnostic Imaging LLC, reported The Deal.
Ocean Township, N.J.-based HIS hopes to win court approval to sell its
assets under a stalking-horse agreement with PG of New Jersey LLC,
according to the lawyer for debtor's creditors, reported the online
newspaper. A scheduled auction for competitive bidding was canceled
Wednesday, April 16, when no other buyers stepped forward to challenge
PG's cash and debt offer. HIS will appear before Judge Judith
Wizmur in the U.S. Bankruptcy Court for the District of New Jersey
on Monday to get the sale confirmed as part of its liquidation plans,
The Deal reported.
Judge Rules Against Barge Company in Farmland Bankruptcy
Case
A company that leased Farmland Industries' 100 barges has been told by a
bankruptcy judge to take its $18 million claim and move to the end of
the line, according to an article in the Kansas City Star. U.S.
Bankruptcy Judge Jerry Venters said the company, River Barge, and River
Barge's lender, CIT Group/Equipment Financing, had not proved their debt
should be treated as a financial responsibility arising after the
bankruptcy was filed, and so paid out of current operating funds. The
two argued that Farmland continued to use the barges after the
bankruptcy, a contention Farmland denied. 'River Barge's and CIT's
arguments are sheer speculation, totally unsupported by any facts or
evidence,' Venters said in his ruling Thursday, reported the Star.
'There has been no showing that Farmland used the barges or that it
might use them in the future; in fact, Farmland disclaimed any interest
in any possible use of the barges, now or in the future.'
Bankruptcy Trustee Claims Papermaster, Agillion Execs Squandered
Assets
The Austin Business Journal reports that six of Agillion Inc.'s
former top executives have been sued by U.S. Bankruptcy Trustee Marsha
Milligan for the legendary spending sprees that bankrupted one of the
most well-financed and well-known high-tech startups in Austin, Texas.
Milligan on Thursday sued Agillion Co-founders Steve Papermaster, Frank
Moss and four other executives and board members for breach of fiduciary
duty, gross negligence and waste after they 'irrationally squandered
Agillion's assets,' according to the suit, filed in Travis County
District Court, reported the online newspaper. The suit comes nearly two
years after the company filed for chapter 7 bankruptcy liquidation.
Agillion, which offered a web service that helped businesses maintain
vital information about their customers, filed for bankruptcy in July
2001 with about $100 in the bank; just 15 months before, Agillion had
$30 million in the bank, according to the suit, the Journal
reported. 'Their revenue was so inconsequential that management never
recorded a single dollar in revenue in their internal bookkeeping,' the
suit alleges. Despite the poor performance, 'Agillion's management
increased their wasteful spending,' the suit states, reported the
Journal.
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