Congress to Recess Today
Congress is expected to clear a spending, tax and Medicare package
today that will end the lame-duck session, according to the CQ Daily
Monitor. On Dec. 7, the Senate passed H.R. 2415, the
bankruptcy bill conference report, and sent it to President. The
bill — the most significant change to the Code in the last 20
years — is now closer to enactment than at any time during the
last four years. White House Chief of Staff John Podesta said
Monday that President Clinton intends to veto the bankruptcy reform bill
and he is certain he can persuade Senate Democrats who voted for the
legislation to uphold the President's veto.
The President has until Dec. 19 to decide whether to
sign the bankruptcy reform legislation. If Congress does adjourn
this afternoon, the President's failure to sign it will result in a
pocket veto.
Court Approves DIP Financing for
Wheeling-Pittsburgh Steel Corp.
Federal Bankruptcy Court Judge William T. Bodoh yesterday
approved Wheeling-Pittsburgh Steel's debtor-in-possession (DIP)
financing facility, according to a newswire report. Wheeling
filed chapter 11 on Nov. 16 and received interim approval of the
company's $290 million DIP facility on Nov. 17. The Youngstown,
Ohio-based Wheeling is a wholly-owned subsidiary of the N.Y.-based WHX
Corp. WHX and its other subsidiary companies, Unimast and Handy
& Harman, are unaffected by the steel company’s chapter 11
filing.
Bankrupt Kansas Farmers Co-Op Can Sell 2001 Supplies
Farmers can buy next year's supplies now at the Farmers Cooperative
Association, a judge ruled Tuesday, according to a newswire
report. U.S. Bankruptcy Judge John Flannagan, who is
overseeing the Lawrence, Kan.-based co-op's chapter 11 bankruptcy case,
approved the formation of a special account to hold money for farmers
interested in buying seed, herbicides, fertilizers and other products
for next year's harvest. The account could allow farmers who made
money this year to engineer a tax break. By investing in next year's
supplies by Dec. 31, the spending would reduce their taxable incomes for
2000. Those who lost money this year could wait until after the
first of the year, yet still take advantage of reduced prices before the
growing season begins.
The new account will be separate from the bankruptcy, said Don
Dumler, the co-op's president and chief executive officer. He
expects anywhere from 500 to 700 farmers to take advantage of the
program, resulting in sales between $200,000 to $400,000. The
money will be set aside to buy products and will not be available to
creditors seeking payment through the bankruptcy case.
Colorado Company Closes Two Metal Recycling Businesses in
Virginia
Jacobson Metal Co. of Chesapeake, Va., and Peanut City Iron & Metal
Co. Inc. of Suffolk, Va., have closed down, according to a newswire
report. The two scrap metal recycling outfits were owned by the
same company, Recycling Industries Inc. of Englewood, Colo., which has
been trying to reorganize its finances in a chapter 11 bankruptcy in the
federal bankruptcy court in Denver. The bankruptcy judge dismissed
the case on Dec. 6. The U.S. Trustee handling the case requested
the dismissal.
When Recycling Industries filed for bankruptcy in February 1999,
Jacobson Metal employed 60 people. Peanut City Iron employed 15
people in 1998. Both firms collected metal scrap such as old cars
and appliances, processed it into more manageable chunks and sold the
steel bits to steel mills that reproduced it into new products.
Recycling Industries acquired the two companies in 1997. General
Electric Capital Corp., owed $120 million, was the principal secured
creditor. Bondholders were due another $110 million and unsecured
creditors were owed between $10 million and $15 million.
TSR Wireless to Continue Operating During
Chapter 7 Proceeding
TSR Wireless LLC yesterday announced that the U.S. Bankruptcy Court for
the District of New Jersey has authorized the Newark, N.J.-based company
to continue to operate its nationwide paging and wireless communications
business, according to a newswire report. TSR Wireless commenced a
voluntary chapter 7 proceeding on Dec. 8 in order to efficiently wind
down its company-owned and branded retail stores and to facilitate the
prompt sale of its wireless communications business. TSR Wireless
is a nationwide provider of wireless communications services.
Allegheny Health Creditors to Receive $52
Million
A U.S. Bankruptcy Court judge yesterday approved a $52 million
settlement to creditors of a defunct Pennsylvania health care system
with a lending group headed by Mellon Financial Corp., according to a
Reuters report. Under the terms of settlement, Mellon, along with
Toronto-Dominion Bank, Bank One Corp. and First National Bank of
Chicago, agreed to return $52 million to the trustees representing
creditors of the former Allegheny Health, Education and Research
Foundation (AHERF). AHERF filed for bankruptcy in July 1998,
leaving $1.4 billion in debt. Mellon will pay 28 percent of the
$52 million, with Bank One, which has since merged with First National,
paying 48 percent, and Toronto-Dominion Bank paying 24 percent.
The settlement will not affect Mellon's earnings.
Under a technical recovery provision of the bankruptcy code, lawyers
for the creditors filed suit against the banks, claiming that the banks
received preferential treatment from AHERF because their loans to the
health care system were re-paid within 90 days of the bankruptcy
filing. Other lawsuits in the case are still pending, including
criminal charges against former executives of the hospital system who
allegedly raided charitable endowments to divert money to the
financially troubled hospital system.
Users Will Pay to Use the New Scour
CenterSpan Communications Corp., the new owners of Scour's
file-swapping technology, plans to start charging users when the service
is re-launched sometime before March, according to a newswire
report. “There are not the opportunities that there once
were for the download of free content,” said CenterSpan spokesman
Keith Halasy. “It's been shown that content holders won't
accept a free model.”
The new Scour will have digital rights management elements built into
the technology. That means 4.5 million registered users should throw
away the Scour application that has been dormant since the company was
deactivated in November. The old Scour application won't work on
the new CenterSpan version either, said Halasy. CenterSpan has
already begun testing the new service, code-named C*, pronounced
“C star.” It mixes Scour's peer-to-peer file-swapping
technology with CenterSpan's “Socket” programming, which it
already uses for online gaming. The C* service will be paraded
around in January to potential investors and business partners, Halasy
said. No release date is scheduled so far.
Universal Automotive Industries Inc.
Announces Final Lawsuit Outcome
Universal Automotive Industries Inc. yesterday announced the
final, favorable outcome of a lawsuit that has been pending against it
since 1995, according to a newswire report. The bankruptcy trustee
of First National Parts Exchange Inc. filed the lawsuit against
Universal in 1995. The suit alleged that First National, while
experiencing financial difficulty, made certain transfers (in the form
of the sale of products at below fair-market value) to Universal that
harmed First National's creditors. The trustee sought damages in excess
of $10 million. The company recorded a provision of $650,000 in
1997 to reflect an estimated liability for such contingency.
In 1998, in a victory for Universal, a bankruptcy court held that
only about $499,000 of the transfers must be re-paid, with interest of
which the company paid approximately $198,000. As a result, the company
recorded a benefit of $151,000 in 1998. In July, a district court,
ruling on the trustee's appeal of the bankruptcy court judgment,
returned the case to the bankruptcy court for clarification of certain
findings. On Nov. 7, the bankruptcy court clarified these findings and
re-affirmed its 1998 judgment. The trustee did not appeal the
re-affirmation and his decision not to appeal formally ends the lawsuit.
The company believes that the remaining payment to be made under the
1998 judgment will not significantly differ from amounts previously
reserved.
Universal Automotive Industries, headquartered in Alsip, Ill.,
manufactures and distributes brake drums, rotors, pads, shoes and other
brake parts.
Heilig-Meyers, Committees Agree To Plan Exclusivity
Extension
Heilig-Meyers Co. reached agreement with its official committees of
unsecured creditors and equity security holders on a 120-day extension
of the company's reorganization plan filing and voting exclusive
periods. In an order signed Monday by Chief Judge Douglas O. Tice
Jr., Heilig-Meyers and the committees agreed to extend the company's
exclusive plan filing period to April 13 from Dec. 14 and its vote
solicitation period to June 13 from Feb. 12. The order says that on or
after Jan. 23, each committee will have the right to give the company a
written notice saying it no longer consented to the exclusivity
extension. Heilig-Meyers' exclusivity with respect to the committee that
filed the notice will terminate 20 days after the company receives the
notice. However, the company has the right to ask the court for a
hearing before the 20th day to consider whether there is cause to
continue its exclusivity.
Courtesy of
href='http://www.fedfil.com/bankruptcy/developments.htm'>The Daily
Bankruptcy Review Copyright © December 15,
2000.
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