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Greenspan Reports Rate Boosts May End
Federal Reserve Chairman Alan Greenspan yesterday said he wasn't ready
to declare a formal end to the central bank's year-long campaign of
raising interest rates, according to The Wall Street Journal. 'It
is much too soon to conclude' that 'concerns' about inflationary
pressures 'are behind us,' he said in his semiannual report to Congress.
'We cannot yet be sure that the slower expansion' evident in recent
economic data 'will persist,' he added. Greenspan suggested that if
trends showing economic moderation continue, the Fed is unlikely to
raise rates at its Aug. 22 meeting.
In his report, he addressed bankruptcy issues. 'The number of
bankruptcies have been rather few,' he said. 'But in the cases that they
have risen, they've been very large losses to the FDIC. I must say that
the overall state of the banking system is in reasonably good
shape...but remember that loan losses are exceptionally low, that
bankruptcies of banks are exceptionally low. And if we run into a
recession, I have no doubt that some form of rise in bankruptcies and
liquidations will occur, that some increase in the underlying quality of
measured risks at the time will rise.'
FTC Favors Pact to Permit Sale of Toysmart List, While States Sue
to Stop It
The Federal Trade Commission's (FTC) staff lawyers are recommending that
commissioners approve a settlement negotiated with Toysmart that would
let the Web site sell its customer list with conditions on its use by
the purchaser, according to The Wall Street Journal. Meanwhile,
Massachusetts and 38 other states asked a federal court to keep a
bankrupt online toy retailer from selling personal information about its
customers. The Waltham, Mass.-based Toysmart.com declared bankruptcy in
June and asked a federal bankruptcy court for permission to put all its
assets, including its customer recordssuch as names, addresses and
credit card numbersup for sale despite a privacy policy that
assured customers the information would remain private. The states filed
an objection in U.S. District Court in Boston yesterday, saying the
company's Web site pledged to protect customers' personal information
and shopping preferences. 'Toysmart's decision to sell its customer list
breaks a promise to its consumers, who thought their personal
information would be safe,' Massachusetts Attorney General Tom Reilly
said.
The FTC sued Toysmart, which is now defunct, on July 10, alleging
that the company broke a promise to customers to keep their information
private. Last week, Sens. Patrick Leahy (D-Vt.) and Robert Torricelli
(D-N.J.) introduced legislation that would bar the sale of personal
information kept by a defunct company if the sale would have violated
privacy policies in effect when the company was in business. The text of
the legislation can be found
TARGET='window2'>here.
Juno Captures Freewwweb Customers
Free Internet service provider Freewwweb has filed for bankruptcy and is
referring more than 700,000 subscribers to ISP Juno Online Services,
according to a newswire report. The New York-based company is the latest
ISP to stumble after venturing into the marketplace to offer free,
advertising-supported Internet access to consumers. Under the agreement,
Freewwweb, which filed for bankruptcy last month, will receive
compensation in the form of Juno common stock, as well as smaller
amounts in cash, for each former Freewwweb subscriber who becomes a Juno
subscriber. Subscribers will continue to receive free Internet access
and email sent to their Freewwweb email addresses. They will also have
the option of upgrading to one of Juno's billable premium services
including its high-speed service, Juno ExpressSM. Juno said it received
court approval Wednesday for a subscriber referral agreement with
Freewwweb, a subsidiary of Smart World Technologies.
Geneva Steel Files Reorganization Plan
Geneva Steel, a Vineyard, Utah-based company, announced yesterday that
it has filed a proposed reorganization plan and disclosure statement
with the U.S. Bankruptcy Court for the District of Utah, according to a
newswire report. The plan is proposed jointly by the company and the
official committee of bondholders in the company's chapter 11 case. The
integrated steel mill, along with Citicorp USA, filed an application on
Jan. 31 for a U.S. government loan guarantee under the Emergency Steel
Loan Guarantee Program. The plan would significantly reduce the
company's debt burden and provide additional liquidity in the form of a
$25 million capital infusion through the issuance of convertible
preferred stock, a $110 million term loan that is guaranteed 85 percent
by the federal government, and a $125 million revolving line of credit.
Geneva Steel's pre-bankruptcy unsecured creditors will receive, in lieu
of cash payments, substantially all of the common stock of the company
and the right to purchase the convertible preferred stock. The
pre-bankruptcy holders of the company's common and preferred stock will
not receive a distribution under the plan. The firms of Cadwalader,
Wickersham & Taft and LeBoeuf, Lamb, Greene & MacRae LLP, as
bankruptcy counsel, and The Blackstone Group, L.P., as financial
advisor, represent Geneva Steel.
Diagnostic Health Services Files Reorganization Plan
Diagnostic Health Services Inc., along with its various subsidiaries who
are in chapter 11 proceedings in the Northern District of Texas,
yesterday announced it filed a joint plan of reorganization and
disclosure statement on Tuesday, according to a newswire report. The
plan calls for the consolidation of the company's various subsidiaries
and an exchange of its indebtedness for equity. The plan does not
provide any distribution for current equity holders, and, upon
consummation of the plan, the stock held by its current equity holders
will be cancelled. A hearing to confirm its reorganization plan is
anticipated approximately 40 days after the bankruptcy court approves
the disclosure statement. The Dallas-based Diagnostic Health Services is
a provider of medical outsourcing services to hospitals and other health
care facilities.
Martin Color-Fi Emerges from Chapter 11
Martin Color-Fi Inc. yesterday announced the completion of its
acquisition by Dimeling, Schreiber & Park, a private investment
partnership that makes equity investments in a broad range of
middle-market companies, according to a newswire report. Under terms of
the agreement, the Edgefield, S.C.-based producer of polyester and other
synthetic fibers will retain its name in all current locations and
maintain approximately 550 employees. DS&P specializes in
investments, primarily in the form of leveraged acquisitions,
recapitalizations and chapter 11 reorganizations. The firm has completed
acquisitions totaling in excess of $1 billion since its 1982 inception.
MCF filed for chapter 11 on Nov. 16, 1998.
American BioMed Files Chapter 7
American BioMed Inc. yesterday filed a voluntary chapter 7 petition in
the Northern District Court of Texas in Dallas. After unsuccessfully
pursuing alternate sources of funds and thereby unable to complete its
plan of recapitalization, the company's said its board of directors
authorized retention of bankruptcy counsel and then determined that all
of the Dallas-based company's assets needed to be liquidated. Chairman
and Chief Executive Officer Justine B. Corday commented, 'As
shareholders and creditors of the company ourselves, we wish other
courses had been available, and we genuinely regret the necessity of
these steps.'
Safety-Kleen Bondholders Sue Controlling Shareholder Laidlaw,
Others
Two bondholders of bankrupt Safety-Kleen Corp. Tuesday sued controlling
shareholder Laidlaw Inc. and others in a move that could trigger a clash
between bondholders and bank lenders and delay Safety-Kleen's exit from
bankruptcy, according to Reuters. The Wilmington, Del.-based hazardous
waste management company filed chapter 11 on June 9 after it failed to
make principal and interest payments on a secured $1.9 billion credit
facility and to pay interest due on a promissory note and the 2008
bonds. The plaintiffs seek unspecified compensatory damages on 11 counts
of alleged violations of the Securities and Exchange Act. They have a
combined investment of about $50 million, and claim the support of other
investors including Franklin Advisers Inc., Pacholder Associates Inc.
and Oak Tree Capital Management. 'While (Safety-Kleen) has not as yet
disclosed how its financial statements are materially false...actions
taken by the company make clear that defendants acted improperly in
inflating Safety-Kleen's financial results during the class period,'
court papers stated.
Key Plastics Seeks Longer Exclusive Period To File Plan
Key Plastics LLC (X.KPI) is seeking to increase the exclusive periods
during which only the company would be permitted to file a chapter 11
plan by approximately 80 days, according to a court filing obtained
Wednesday by the Daily Bankruptcy Review. The requested
extensions would extend the Novi, Mich.-based automotive plastics
designer and manufacturer's initial exclusive plan filing period through
Oct. 6, from July 21. If the company files a plan by Oct. 6, third
parties would be prohibited from filing a plan through Dec. 6 to allow
Key Plastics time to solicit votes to its plan.
Courtesy
of
href='http://www.fedfil.com/bankruptcy/developments.htm'>The Daily
Bankruptcy
Review Copyright © July 21,
2000.
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