July 232003

Submitted by webadmin on Wed, 2003-07-23 00:00

July 23, 2003

WORLDCOM

Former Attorney Generals Give Panel Insight On WorldCom
Scandal

A 'disregard for the most basic principles of corporate governance'
contributed to MCI WorldCom's $11 billion corporate fraud scandal,
former U.S. Attorney General Richard Thornburgh told the Senate
Judiciary Committee on Tuesday, CongressDaily reported. Former
U.S. Attorney General William Barr, Verizon's vice president and general
counsel, said WorldCom's reorganization plans threaten to undermine
competition in the telecommunications sector, in part because federal
enforcement authorities have not done enough to ensure that
'[WorldCom's] ill-gotten gains are surrendered.'

But witnesses testifying on WorldCom's behalf said the former
executives responsible for the fraud are now facing criminal
proceedings, and the company has 'cleaned house' since filing bankruptcy
a year ago. Taking additional enforcement action against the company
would only punish its new management, employees, stockholders, creditors
and customers, said Nicholas Katzenbach, another former U.S. attorney
general who serves on MCI's board of directors. Noting that the
Bankruptcy Code is designed to prevent a company that is 'capable of
holding its own' from being driven out of business, Judiciary ranking
member Patrick Leahy (D-Vt.) said the WorldCom bankruptcy proceedings
should run their 'ordinary course' unless evidence emerges that the law
needs to be updated. 'If, as we move forward, there is some reason to
believe the bankruptcy system is breaking down, we are ready to step in
and take appropriate action,' Leahy said. He added that if the panel
determines that the current federal enforcement actions are 'inadequate
to the challenges presented in this uniquely troubling situation, we
should do whatever is necessary to help those agencies chart the right
course,' reported the newswire.

WorldCom Judge Approves Nextel's $144 Million Buy of
Unit

WorldCom Inc. won a bankruptcy judge's approval to sell its
wireless-telephone unit to Nextel Communications Inc. for $144 million,
Bloomberg News reported. U.S. Bankruptcy Judge Arthur J. Gonzalez in
Manhattan approved the sale after a four-hour hearing. The sale drew at
least 22 court-filed protests, including opposition from WorldCom
competitors Sprint Corp. and SBC Communications Inc. WorldCom

resolved some of the objections, and Gonzalez overruled the others.

WorldCom has been selling assets to pay creditors owed more than $41
billion in its bid to come out of bankruptcy. The Federal Communications
Commission approval of the sale to Nextel is required, WorldCom lawyer
Alfredo Perez told Gonzalez. Perez said the process may take three or
four months, reported the newswire.

WorldCom Auditors Took Shortcuts

A Wall Street Journal article examines the role of auditors in
the WorldCom case. To read the article, point your browser to
href='http://www.wsj.com/'>www.wsj.com (subscription required).

Mirant Wins Temporary Approval to Halt Large Stock, Debt
Trades

A bankruptcy judge signed a temporary order prohibiting some large-block
trading of Mirant Corp. bonds and stock to prevent the Atlanta power
producer from losing as

much as $400 million in tax credits, Bloomberg News reported. U.S.
Bankruptcy Judge D. Michael Lynn in Fort Worth, Texas, signed an order
on Monday prohibiting trades by holders of more than $250 million in
preferred stock and bonds, and stockholders owning or seeking to buy at
least 4.75 percent of Mirant stock. Lynn will consider Mirant's request
today for procedures to carry out such trades, such as providing 10 days
notice.

Mirant declared bankruptcy on July 14 after failing in talks with
bondholders and banks, including Citigroup Inc., to refinance $4.9
billion in debt. A plunge in wholesale power prices and a collapse in
energy trading following Enron Corp.'s December 2001 bankruptcy saddled
Mirant with a $2.4 billion loss last year, reported the newswire.

PG&E Utility Gets Approval to Pay $281 Million in
Bonds

PG&E Corp.'s Pacific Gas & Electric Co. utility has received
bankruptcy court

approval to pay $281 million in bonds that are scheduled to mature Aug.
1, Bloomberg News reported. The payments will be made on 6.25 percent
Series 93C first

and refunding mortgage bonds, the San Francisco-based company said in a
statement distributed by PR Newswire. Pacific Gas & Electric became
insolvent in April 2001 buying power for more than it could charge
during California's energy crisis. PG&E last month reached a
settlement with regulators on bankruptcy reorganization of the
utility.

NRG Files 3rd Appeal of FERC Order Backing Connecticut
Contract

NRG Energy Inc. filed its third appeal to a Federal Energy Regulatory
Commission order requiring the company to continue supplying power to
Connecticut Light & Power Co. until the agency makes a final ruling,
Bloomberg News reported. NRG made the appeal today at the U.S. Court of
Appeals, Second Circuit in New York. The Minneapolis-based company lost
last week at the U.S. Court of Appeals for the D.C. Circuit.

The case is considered important to the power industry in determining
whether federal energy regulation overrides bankruptcy law. A bankruptcy
court on June 2 said NRG can exit the contract, and the company won an
initial stay at the U.S. District Court

for the Southern District of New York on June 12. That same court
reversed its ruling on June 30. The filing yesterday is an appeal of the
District Court's decision, reported the newswire.

SSG Capital Advisors Closes Sales of U.K. Subsidiary, U.S.
Division of Country Home Bakers

SSG Capital Advisors L.P. announced yesterday in a press release the
close of the sale of Readi-Bake Ltd., the United Kingdom-based
subsidiary of Country Home Bakers Inc., to Arkady Craigmillar Ltd., a
subsidiary of CSM NV, a Netherlands-based manufacturer of food bakery
ingredients and products for professional chefs. In June 2003, SSG
Capital Advisors also sold the assets of Country Home's U.S.-based Pie
Division to Shine Food Inc., a manufacturer and distributor of food
products.

SSG was retained in February 2003 to concurrently sell Readi-Bake and
the Pie Division, shortly after Country Home filed for protection under
chapter 11 of the U.S. Bankruptcy Code. SSG's mandate was to quickly
solicit offers in anticipation of two separate Section 363 Auctions. The
Readi-Bake and Pie Division auctions attracted multiple bidders and
generated final purchase prices of 18 percent and 35 percent
respectively, above their platform bids.

Halliburton Wins Asbestos Settlement Delay From Judge

Halliburton Co. won more time to complete a $4 billion settlement of
asbestos injury claims, Bloomberg News reported. U.S. Bankruptcy Judge
Judith Fitzgerald in Pittsburgh gave Halliburton until Sept. 30 to
conclude negotiations. After that, she said, a court order barring trial
of thousands of personal injury cases against its DII Industries unit
will automatically be lifted. 'I think with the stay terminating
automatically, an

extension is warranted,'' Fitzgerald said in court. In a hearing on a
separate asbestos-related bankruptcy case earlier yesterday, lawyers
said Fitzgerald told them she wouldn't let companies seek delays while
awaiting the outcome of asbestos legislation in the U.S. Senate,
reported the newswire.

Enron Workers Sued to Force Return of Post-bankruptcy
Bonuses

Former Enron Corp. executives and employees were sued by a group seeking
the return of $72 million in bonuses paid after the company filed what
was then the largest

bankruptcy ever, Bloomberg News reported. The lawsuit was filed against
292 former employees, officers and executives of the Houston-based
company, according to a

statement from the Employee-Related Issues Committee distributed on PR
Newswire.

The suit was filed in U.S. Bankruptcy Court in Houston.

SK Global's US Unit Files For Chapter 11 Bankruptcy

South Korea's SK Global Co. said Tuesday its U.S. unit SK Global
America Inc. filed for chapter 11 bankruptcy protection at a bankruptcy
court in New York.

SK Global America filed for bankruptcy protection after Kookmin Bank
filed a lawsuit to seize the U.S. unit's customer deposits, said the
South Korean company in a statement. 'It was an inevitable move to
protect the company's assets and to ensure fairness among all
creditors,' said the head of the U.S. unit, Kim Seung-Jae.

Former Polaroid Gets More Time For Reorganization Plan

The bankruptcy court handling the chapter 11 case for the entity
formerly called Polaroid Corp. has given the company an extension of its
sole right to file a liquidation plan and lobby for creditor support. A
July 17 order from the U.S. Bankruptcy Court in Wilmington, Del., gives
the former Polaroid until Oct. 31 to file a liquidation plan and until
Dec. 31 to gain creditor approval. The company said it needed more time
to develop the plan so the results of a probe looking into the company's
finances before it filed for bankruptcy could be incorporated into the
plan.

Bankruptcy law requires that companies operating under chapter 11
bankruptcy protection submit a reorganization or liquidation plan that
outlines how creditors will be paid. Exclusive periods that prevent
other parties from submitting such plans to the court allow the company
to retain control of the restructuring process.

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