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House Government Reform Subcommittee Approves Tax Debtor
Legislation
A House Government Reform subcommittee approved legislation yesterday
that would prohibit tax debtors from receiving federal loans or
contracts until their delinquencies are resolved, according to the CQ
Daily Monitor. The bill (H.R. 4181) would expand the Debt Collection
Improvement Act of 1996, which bars delinquent non-tax debtors from
receiving federal loans or loan guarantees. Delinquent federal tax
debtors, who owe the government an estimated $231 billion, are not under
the law's jurisdiction. The IRS would be required to report the tax
status of all applicants for federal loans, loan guarantees and federal
contracts to the agency granting the loan or issuing the contract.
Administration officials from a variety of government agencies say they
support the effort to reduce debt delinquency, but cited a number of
concerns, most notably the impact on small business.
The subcommittee's ranking Democrat, Jim Turner (Texas), the bill's
sponsor, offered a substitute amendment that would only make two
changes. First, it would restrict the definition of delinquent tax
debtors so that if an individual is in dispute with the IRS, he or she
can still apply and receive a loan or contract. Second, in response to
the IRS's concern that its database could not handle the new
responsibility, the amendment would delay implementation to 30 months
after enactment. Subcommittee Chairman Steve Horn (R-Calif.) who is a
cosponsor, called the bill a 'real progressive piece of legislation'
that was 'long overdue.'
Genesis Health Ventures, Affiliates File Bankruptcy
Kennet Square, Pa.-based Genesis Health Ventures Inc. and 197 of its
affiliates filed for chapter 11 yesterday, the same day the New York
Stock Exchange announced that the eldercare company would be delisted
June 27, according to Reuters. The company has been trying to
restructure its debt since March, and senior creditors have agreed to
extend to June 30 forbearance on Genesis' failure to meet interest and
principal payments on bank and subordinated debt. Genesis, which has
48,000 employees and provides long-term care services primarily in New
England, the Mid-Atlantic and the Midwest, reported 1999 sales of $1.9
billion, net income of $270.6 million and long-term debt of $1.5
billion.
Multicare Files Chapter 11, Receives DIP Commitment for Up to $50
Million
The Multicare Cos. Inc. and certain of its affiliates yesterday filed
for chapter 11 protection in the U.S. Bankruptcy Court for the District
of Delaware, according to a newswire report. The company said the filing
was made to enable the company to restructure capital obligations in the
wake of large, unexpected cuts in federal payment systems that reimburse
the company for skilled nursing care and ancillary services. 'Deep cuts
in Medicare reimbursements, which far exceeded all government forecasts
coupled with chronic underfunding of Medicaid reimbursements, have
severely impacted Multicare's ability to service our current capital
structure,' said chairman and chief executive officer, Michael R.
Walker. Multicare said it obtained a commitment for up to $50 million in
debtor in possession (DIP) financing with a lender group led by Mellon
Bank, pending court permission. The company has been in negotiations
with its senior bank lenders and subordinated debt holders since March
21. The company is partially owned by Genesis Health Ventures Inc.,
which also filed for chapter 11 protection in Delaware yesterday (see
above story).
Flooring America Makes Management Changes
Kennesaw, Ga-based Flooring America Inc. yesterday announced several
senior executive changes as part of its restructuring effort, according
to a newswire report. The company, which filed for chapter 11 on June
15, has named Mike Cherico as president of the Flooring America
franchise system, who will remain as president of GCO Carpet Outlet
franchise system; Jim Frede, a veteran of Mercantile Stores Co. and
Federated Department Stores, as executive vice president for operations;
and Bart Levich as president of merchandising, among other staff
appointments. 'These executives will be the core of a renewed Flooring
America,' said Flooring America Chairman and CEO David Nichols. 'They
are committed to rebuilding this company the right way, and the new
talent and positions will help us maximize the skills of our top
executives.'
Creditrust Files for Chapter 11 Protection
Creditrust Corp., which buys delinquent consumer debt from lenders, said
yesterday it filed for chapter 11 protection after a year of poor stock
performance and credit problems, according to Reuters. In April, the
Baltimore-based company lost a large account representing half of its
business, which it said prompted it to evaluate its staff and
facilities. In March, the company ended talks to secure a $55 million
loan because it could not reach favorable terms with an unnamed lender,
but said yesterday that it received a $5 million line of credit with
Sunrock Capital. Creditrust, which put itself up for sale late last
year, buys delinquent consumer loans at a discount and collects them.
AutoInfo Announces Merger Agreement with Sunteck Transport
AutoInfo Inc. announced yesterday that it has entered into an agreement
to acquire Sunteck Transport Inc., a full-service third-party
transportation logistics provider, and its wholly owned subsidiary,
Ubidfreight.com, in exchange for 10 million shares of AutoInfo Common
Stock, which will constitute approximately 37 percent of the proposed
outstanding common stock of reorganized AutoInfo under its chapter 11
reorganization plan, pending bankruptcy court approval, according to a
newswire report. Sunteck, formed in 1997, is a full-service third-party
transportation logistics provider with services including ground
transportation coast to coast, local pick-up and delivery, warehousing,
air freight and ocean freight. AutoInfo said the proceeds of the
financing are intended to develop Ubidfreight.com, an e-commerce
business-to-business application that will provide an interactive
freight auction matching available freight (shippers) and available
cargo space (truckers and other carriers). 'We are extremely pleased to
announce this transaction,' said AutoInfo President and Chief Financial
Officer William Wunderlich. 'It is the culmination of several months of
planning and finalizing a transaction that, if we are successful at
securing the required financing commitment and other closing conditions,
meets the objectives we established for the restructuring of AutoInfo.
We are optimistic that we will receive the approval of the bankruptcy
court of our disclosure statement, which includes the Sunteck
transaction, so that we can move expeditiously to the confirmation of
our reorganization plan.' A hearing to review the merger agreement and
the company's revised disclosure statement is scheduled to be held
before Bankruptcy Judge Adlai S. Hardin Jr, U.S. Bankruptcy
Court, 300 Quarropas Street, Room 520, White Plains, NY 10601, at 10:30
a.m. on Tuesday. All documents on file in this case can be viewed
HREF='http://ecf.nysb.uscourts.gov/index.html'
TARGET='window2'>here.
Banker Completes Sale of Bonds Backed by Isley Brothers
Royalties
Wall Street financier David Pullman said yesterday he had completed the
sale of bonds backed by future royalties of the Isley Brothers'
legendary R&B catalogue, including such hits as 'Twist and Shout,'
and 'Who's That Lady,' capping a months-long saga that included a
multi-million dollar copyright infringement suit brought by the Isleys
against singer Michael Bolton and federal bankruptcy court proceedings
involving Ronald Isley, the lead singer, according to Reuters. While
Pullman would not say what the amount was, estimates put the deal to be
worth between $10-$55 million. Pullman is the banker behind 1997's
'Bowie bonds,' which raised $55 million on securities backed entirely by
the anticipated flow of royalties from the British rock star David
Bowie's first 25 albums.
Pullman has done similar deals with Motown songwriters
Holland-Dozier-Holland, which raised some $30 million; R&B
songwriter-performers Ashford & Simpson, for an esstimated $10
million; and soul legend James Brown for about $30 million. With these
offerings, the artists' musical assets are pledged to secure the sale of
bonds, which are repaid from future royalties. 'We've developed these
deals to empower artists and creators of intellectual property,' said
Pullman. Recently, a federal appeals court upheld a 1994 verdict against
Bolton, awarding the Isley Brothers $5.4 million, in a suit that alleged
that Bolton plagiarised one of his biggest hits, 'Love is a Wonderful
Thing,' from the Isleys. Lawyers said that Bolton had bid for the Isley
catalogue as a way of acquiring the judgment against himself, but U.S.
Bankruptcy Judge Kathleen March approved Pullman's $4.8 million bid for
the assets of bankrupt Ronald Isley, which beat out Bolton's higher
offer of $5.3 million. The court had been liquidating the assets of
Isley, including his portion of the brothers' catalogue, to pay back
creditors who are owed nearly $5 million.
IBJ Whitehall Provides $15 Million in Financing to Strauss
Discount Auto Buyers
IBJ Whitehall Retail Finance announced yesterday that it has provided a
$15 million, three-year revolving credit facility to a new company
formed to acquire the assets of Strauss Discount Auto, a 70-year-old
retailer of aftermarket automotive replacement parts headquartered in
South River, N.J., according to a newswire report. Strauss Discount
Auto, which currently has 91 stores in New York, New Jersey and
Pennsylvania, has been operating under chapter 11 since June 1998. Glenn
Langberg of Charon Investments LLC, together with Schottenstein
Bernstein Capital Group, were successful in their bid to purchase the
company's assets out of bankruptcy in February; their bid was supported
by the $15 million credit facility provided by IBJ Whitehall Retail
Finance, which provides asset-based financing arrangements and a full
array of commercial banking products exclusively to middle market
retailers nationwide.
Transcoastal Marine Changes Its Chapter 11 to 7
TransCoastal Marine Services Inc., Houston, changed its chapter 11 to
chapter 7 on Wednesday, according to Reuters. The company cited
liquidity problems from legal claims, a delayed recovery in the oilfield
service markets and deferred collection on a receivable in Mexico.
TransCoastal originally filed for chapter 11 reorganization after
Chevron Global Technology Services filed a $28 million claim against its
subsidiary, Dickson GMP International Inc.
Verde Media Files for Chapter 11 Protection
Verde Media Inc., which runs an environmental web site, filed for
chapter 11 protection yesterday in the U.S. Bankruptcy Court for the
District of Delaware in Wilmington, according to Reuters. The San
Francisco-based company, which distributes original content across the
web and television, said in court papers that its assets and liabilities
were each less than $10 million and included $3.9 million in summary
notes and warrants with 15 holders. The 20 largest unsecured creditors
have trade claims that range from $30,000 to $1.8 million. Former Verde
investors have included Ted Turnerthe founder of the Cable News
Networkand Turner family members, Island Records founder Chris
Blackwell, and investment firms Lehman Brothers Holdings Inc.,
Canterbury Partners, and United Investors Group.
Court Approves Sale of Lander Valley Medical Center to Lifepoint
Hospitals
New American Healthcare Corp. and LifePoint Hospitals Inc. announced
yesterday that the U.S. Bankruptcy Court for the Middle District of
Tennessee in Nashville has approved the sale of Lander Valley Medical
Center, a 102-bed facility in Lander, Wyo., to LifePoint Hospitals Inc.,
according to a newswire report. The transaction is expected to close by
July 31; terms were not disclosed. Jim Fleetwood, chairman and chief
executive officer of LifePoint Hospitals, said, 'This transaction is
consistent with our long-term operating strategy and complements our
existing group of non-urban hospitals. We look forward to working
closely with the physicians, employees, medical professionals and
management of Lander Valley Medical Center to provide excellent
healthcare to their community. We are very happy to learn that our bid
for the purchase of this facility was approved.' New American Healthcare
and its hospital subsidiaries voluntarily chapter 11 petitions on April
19. LifePoint Hospitals was established in May 1999 as a spin-off to the
shareholders of HCA - The Healthcare Co., the nation's largest hospital
and health care system. LifePoint owns and operates 21 hospitals in
non-urban areas.
New American also announced the Tennessee bankruptcy court approval
of the sale of Crosby Memorial Hospital by New American Healthcare.
Under the agreement, Picayune Clinic LLC will acquire Crosby Memorial
Hospital, a 95-bed hospital in Picayune, Miss. The transaction is
expected to close by July 31, and terms were not disclosed. 'The sale
the court approved today is part of our previously announced strategy of
putting our hospitals into the hands of new owners that can invest in
making them high-quality assets for the communities, patients and
medical professionals that rely on them,' said Tom Singleton, New
American's president and chief executive officer. 'We are especially
pleased that Crosby Memorial is being purchased by a group that has
clearly demonstrated its commitment and ability to operate in the
interest of the people it serves.'
Japan's 1999 Bankruptcies Set Country's Record
For the fourth straight record year, personal bankruptcies in Japan rose
to an all-time high in fiscal 1999 as the nation's economic slump led to
near-record unemployment, according to the Associated Press. Individual
bankruptcies increased by about 19,000, or 18.3 percent, in the year
ending March 31, rising to 122,741. Japan's economy is showing signs of
recovering from a decade-long slump that sent corporate bankruptcies and
unemployment soaring throughout Asia. 'I think for ordinary people,
economic recovery has not been realized,' said Kiyoto Akiyama, a lawyer
and personal bankruptcy expert.
Loewen Group Gets Plan
Extension, OK to Probe Bankers Trust
Loewen Group International Inc. (LOWGQ) on Tuesday obtained a six-month
extension of its exclusive periods to sponsor a chapter 11 bankruptcy
plan of reorganization. The cemetery and funeral home operator also
received permission from U.S. Bankruptcy Judge Peter J. Walsh to
investigate Bankers
Trust Co. in connection with the bank's role as collateral agent for
around $1.1 billion of Loewen's pre-petition secured debt that actually
might not be secured.
DeVlieg-Bullard Asks Court to OK $31.6M Sale to KPS
DeVlieg-Bullard Inc. (DVLGQ) is seeking court authority to sell
substantially all its assets to KPS Special Situations Fund L.P. for
$31.6 million or to any other party that submits a higher and better
bid. Judge Marilyn Shea-Stonum of the U.S. Bankruptcy Court in
Akron, Ohio, is scheduled to consider approving the best and highest
purchase offer at a hearing Tuesday. An auction will be held
immediately before the hearing to consider any competing bids that are
submitted by Fridayor two business days before the hearing. The
Twinsburg, Ohio-based precision-engineered machine tool manufacturer and
KPS entered into a definitive asset purchase agreement on June 8 under
which KPS would pay about $31.6 million, assume certain liabilities and
be assigned certain contracts and leases.
Courtesy
of
href='http://www.fedfil.com/bankruptcy/developments.htm'>The Daily
Bankruptcy
Review Copyright © June 23,
2000.
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