February 14, 2000
Sharpe Files Files Proposed Plan
Sharpe Resources Corp.'s wholly owned subsidiary, Sharpe Energy
Co., announced Friday that on Feb. 9, the company filed its final
proposed reorganization plan in the Southern District of Texas,
according to a newswire report. The plan calls for secured bank debt of
$2.4 million to be paid in full on the closing date. In addition, the
agreed-to secured vendor lien claims will accept a cash payment of $.45
as full payment of their claims. Alternatively, one of the sub-classes
of secured claimants will have the option to be paid in full over six
years at 9 percent interest. The first payment would commence 18 months
after the closing date. The unsecured vendor claims will accept a $.10
cash payment 120 days after closing. Sharpe anticipates that a hearing
to consider its plan will be scheduled shortly.
Ice Cream Shops Are Concerned About Shortage of Cones This
Summer
Because Ace Baking Co. filed for chapter 11 in December and
halted production, many ice cream shops are concerned about a shortage
of cones this summer, according to the Associated Press. Ace, based in
Green Bay, Wis., made 1.3 billion ice cream cones last year--more than
half of those were produced in the United States. Ace Baking CFO Jim
Lepore said that he believes the company's assets will be sold at a
bankruptcy auction later this month and that production would resume,
thus averting a cone shortage. Competitor Joy Cone Co., Hermitage, Pa.,
however, expects a shortage anyway, however. Joy President and CEO Joe
George said, 'You can count on there being a cone shortage this summer.'
A Baskin-Robbins owner in a suburb of Milwaukee said she already has run
out of waffle cones and was making her own. Ace bankruptcy attorney
Peter Blain of Reinhart, Boerner et al., Milwaukee,
said that consumers may pay more for cones because Ace's financial
problems may drive up the cost of cones. He also said that more than 20
companies are interested in a Feb. 29 auction of Ace Baking's assets,
and that he expects there will be 'sufficient cone production to meet
summer demand.' National chains such as Baskin-Robbins, Dairy Queen and
McDonald's all use Ace's Eat-it-All brand cones, made at plants in
Chicago, Atlanta and Dallas. Ace Baking has more than $5 million worth
of cones on inventory in various warehouse. It listed liabilities of
about $40 million when it filed chapter 11.
Judge Dismisses Case Against Financier Ronald Perelman
U.S. District Court Judge Roderick McKelvie (D. Del.) last week
dismissed a lawsuit and a potential $550 million claim against financier
Ronald Perelman brought by LaSalle National Bank, the trustee for
noteholders of Marvel Holdings companies, according to the Associated
Press. At issue was LaSalle's allegation that Perelman, through his
Marvel Holdings and other related entities, acted improperly when he
issued $550 million in dividends to the parent companies of Marvel
Entertainment Group Inc. with money from three bond sales. In a 34-page
ruling last week, Judge McKelvie said that noteholders, led by investor
Carl Icahn, 'were warned that the notes were a high-risk investment.
Accordingly [they] cannot complain because the potential risk that they
were warned of materialized. The court finds that the officers and
directors of Marvel Holding Cos. did not owe fiduciary duties to the
noteholders when they paid the dividends' or that they breached their
duties in actions taken during the subsequent chapter 11 case. Perelman
took Marvel Entertainment into chapter 11 in December 1996, hoping,
along with his secured lenders, to restructure and emerge in three
months, but bondholders, led by Icahn, gained control of Marvel Holding
Co. and began a protracted legal battles that continued until July 1998.
Judge McKelvie then approved a reorganization plan in which Marvel
Entertainment would merge with Toy Biz Inc.
Klaff Realty Acquires Hechinger Property Portfolio
Klaff Realty LP, Chicago, announced the acquisition of a
Hechinger Co. real estate portfolio that includes 11 properties,
according to a newswire report. The company purchased the portfolio in a
joint venture with Philadelphia-based Lubert-Adler Funds for $5.9
million at a bankruptcy auction. Hechinger, headquartered in Largo, Md.,
had been operating under chapter 11 but then decided to liquidate last
year. Retail and office properties acquired are in Virginia Beach and
Norfolk, Va., Allentown and York, Pa., and Greensboro, N.C. The vacant
land sites acquired are located in Memphis, Baltimore, Richmond, Va.;
and Johnstown, Pa.
Costilla Submits Proposed Plan
Costilla Energy Inc., Midland, Texas, announced Friday that it
has filed a proposed reorganization plan with the Bankruptcy Court for
the Western District of Texas, according to a newswire report. Under the
proposed plan, Costilla's existing common and preferred stock will be
cancelled and holders will receive no distributions. Holders of the
company's $180 million of 10.25 percent senior notes due 2006 and other
unsecured creditors will receive new common stock representing 100
percent ownership of the reorganized company. The bank credit facility
will be treated as a secured claim that may be satisfied by either
refinancing provided by other parties or a renewal note with the
existing bank group. Costilla, an independent oil and gas company,
intends to file a disclosure statement related to the plan before Feb.
29.
Canada Overhauls Law for Gay Couples, Including Treatment of
Bankruptcy
The Canadian government announced an overhaul on Friday of 68
federal statutes to erase most of the legal differences between
heterosexual and homosexual couples, Reuters reported. The changes,
affecting everything from citizenship to spousal tax credits on income
tax forms to bankruptcy filings, extends benefits and obligations to
homosexual couples on the same basis as common-law heterosexual couples.
Justice Minister Anne McLellan said the bill is about 'tolerance and
fairness.' Following a Supreme Court decision last year in favor of a
lesbian who was seeking alimony from her partner, the government combed
all its laws to present changes in one omnibus bill rather than fighting
68 individual battles. McLellan emphatically stated that the bill does
not affect marriage and that the definition of 'spouse' clearly refers
to the institution of marriage. A significant portion of the proposed
law actually extends common-law benefits and obligations even further
for heterosexuals. For example, the provision preventing transfer of
money to a spouse shortly before bankruptcy, which now only applies to
married couples, would apply to common law couples as well.
Jury Convicts California Administrative Law Judge for
Bankruptcy Fraud
U.S. Attorney Gregory A. Vega announced last week that Simona
Flores Rosales, an administrative law judge for the California Sate
Unemployment Insurance Appeals Board, was convicted by a jury of five
felony criminal counts, three counts of bankruptcy fraud, one count of
money laundering and one count of filing a false federal income tax
return. The jury found her guilty of concealing assets and making false
statements under oath during her bankruptcy proceedings. She is
scheduled to be sentenced May 1. The case was referred to the U.S.
Attorney's Office by U.S. Trustee Harry A. Sherr.
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Japanese Retailer Seeks Bankruptcy Protection
Japanese supermarket operator Nagasakiya Co. filed for
bankruptcy protection on Sunday with the Tokyo District Court, according
to the Associated Press. Established in January 1948, the company had
been in the process of restructuring. The nationwide retailer, which
employs about 2,600 workers, plans to continue operating its 95
stores.
Thai Court Delays Ruling on TPI Debt Plan
Thailand's Central Bankruptcy Court has delayed ruling on a
petition filed by creditors of Thai Petrochemical Industry PLC (TPI) to
take over management of the firm, the country's largest debt defaulter,
according to Reuters. Five major creditors had filed a petition to the
court to nominate a different executor for the company's $3.4 billion
debt restructuring. If the court agrees, the new executor would replace
TPI's CEO, who was appointed in January after an agreement between TPI
and creditors. Analysts have said that further delay of the debt plan
dispute could hurt TPI's liquidity position and impede the pace of debt
restructuring at TPI's largest creditor bank, Bangkok Bank.
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