January 72002

January 7, 2002

U.S. Payrolls Decline, Jobless Rate Climbs to 5.8 Percent

The unemployment rate inched higher in December as employers cut jobs in
the retail, air-travel and manufacturing sectors.  The pace of cuts
slowed, however, The Wall Street Journal reported. 
Separately, a closely watched survey of purchasing managers showed that
growth in the service sector gained speed.  Businesses cut 124,000
jobs last month, the Labor Department announced on Friday. 
Economists predicted a decline in payrolls of 175,000.  Payrolls
have been cut for five straight months, with a revised 371,000 jobs shed
in November.  It was previously estimated that 331,000 jobs were
lost that month. Since the start of the U.S. recession in March about
1.4 million jobs have been cut.

The continued slide in payrolls pushed the unemployment rate to 5.8
percent in December, the highest since April 1995.  The
unemployment rate for November was revised to 5.6 percent from the 5.7
percent previously reported, part of a five-year historical
revision.  Economists surveyed by Thomson Global Markets expected a
December jobless rate of 5.8 percent.



Assisted Living Concepts Emerges From Bankruptcy

Assisted Living Concepts Inc.’s first amended joint reorganization
plan for itself and its Carriage House Assisted Living Inc. emerged from
chapter 11 bankruptcy protection on Jan. 1, Dow Jones reported. 
The Portland, Ore.-based company said it expects its shares of common
stock to be quoted on the over-the-counter Bulletin Board beginning
today.  Holders of the company’s old common stock and old
debentures who hold their securities in book-entry form through
Depositary Trust Co. will receive shares of new common stock and/or new
notes, as applicable.

Pioneer Companies Emerges From Chapter 11

Pioneer Companies Inc. on Friday announced that it emerged from chapter
11 bankruptcy proceedings in the United States and parallel proceedings
in Canada on Dec. 31, according to Dow Jones.  The Houston-based
chlorine, caustic soda, and hydrochloric acid maker filed for bankruptcy
protection in July.  Pioneer said it has issued new debt securities
to the disbursing agent for distribution to the company’s secured
creditors, in keeping with its plan of reorganization.  The
company’s old common and preferred shares have been canceled, and
it expects to distribute new common shares to unsecured creditors over
the next several months.  Pioneer also announced that its new board
took office. 

Sulzer Medica U.S. Settlement Postponed By Two Months

The possible settlement between Sulzer Medica and patients affected by
the group’s faulty hip and knee joints will be postponed for two
months, the Swiss medical technology group said on Friday, Dow Jones
reported.  Sulzer Medica said U.S. district court Judge Kathleen
O’Malley has granted patients more time to decide whether or not
to accept Sulzer Medica’s proposals or to participate in a class
action suit against the group.  The period was extended to May 14,
when the final fairness hearing will start, Sulzer said. 
Initially, the fairness hearing was scheduled for March 12.

About 3,000 patients have filed lawsuits in connection with faulty
hip and knee transplants against Sulzer Medica’s U.S. unit Sulzer
Orthopaedics Inc. Sulzer said in December the group’s U.S. unit
could file for chapter 11 bankruptcy protection if the company is unable
to reach a settlement agreement with the plaintiffs. Such a move could
reduce the amount of money patients would receive.

Halliburton Says No Basis For Bankruptcy Rumors

Halliburton on Friday announced that there is no basis to the rumor that
it has filed for bankruptcy or that such a filing is being contemplated,
Dow Jones reported.  Halliburton also called
“unfounded” the rumor that there has been a new large
asbestos jury verdict against the company that it has not
announced.  On Thursday, analysts cited investor concerns about
potential asbestos-related liability and an overall decline in the
oil-services sector for the company’s falling share price. 
Dallas-based Halliburton provides products and services to the petroleum
and energy industries.

Service Merchandise Closing Doors

Service Merchandise Co. Inc., a 42-year-old retail chain that has been
operating under chapter 11 bankruptcy protection since March 1999,
announced on Friday that it is going out of business, according to the
Associated Press.  Company executives said the weak economy and
slow sales after the Sept. 11 terrorist attacks hurt the company’s
2001 results and prevented it from completing its planned business
reorganization and emergence from bankruptcy.  Service Merchandise
reported losses of $180 million in 2000 and as of November had
liabilities totaling $1.34 billion and assets of $1 billion.

The company said it will fire about 500 of its 9,300 employees this
month, with the others receiving staggered termination notices
throughout the year.  The company will begin going-out-of-business
sales on Jan. 19, pending approval by the U.S. Bankruptcy Court for the
Middle District of Tennessee.  Service Merchandise said it intends
to file a liquidation plan by Sept. 30, to provide for the distribution
of the proceeds of its assets to creditors.  The company expects
shareholders will not receive any distribution on their common stock in
2002.  Service Merchandise said employee severance and other
benefit payments would be paid in accordance with orders from the
bankruptcy court.  The company will also sell its real estate,
including its headquarters in suburban Nashville, 70 fee-owned
properties and 150 unexpired leaseholds.



Court Approves Hathaway Bid for Fruit of the Loom

Bankrupt underwear maker Fruit of the Loom Ltd. on Friday announced that
Berkshire Hathaway Inc. has been declared the successful bidder to buy
the company, Reuters reported.  It also said it has filed an
amended reorganization plan and disclosure statement with the U.S.
Bankruptcy Court for the District of Delaware. A hearing to consider the
disclosure statement is scheduled in the court for Feb. 1.

Fruit of the Loom filed for bankruptcy protection in December
1999.  Last November, the company was bought out for $835 million
by Berkshire, the investment vehicle of billionaire investor Warren
Buffett.  The reorganization plan relies on the Berkshire agreement
for its payout to creditors. A committee of Fruit of the Loom creditors
and the court must approve the plan.   The company said the
Delaware court issued an order on Jan. 2 determining Berkshire Hathaway
as the successful bidder for Fruit of the Loom. Fruit of the Loom owes
about $1.2 billion in secured debt and about $500 million in unsecured
debt

Carmike to Emerge From Bankruptcy

Carmike Cinemas Inc.’s reorganization plan was approved on Jan. 3,
allowing the Columbus, Ga.-based theater chain to emerge from bankruptcy
by mid-January.  Carmike filed for chapter 11 bankruptcy protection
in August 2000.  Since the filing, Carmike has closed 113 theaters
comprising 474 screens. It will operate 323 theaters with 2,328 screens
under the reorganization plan. Under its reorganization plan, almost all
allowed creditor claims would be fully paid with interest.  Two of
the exhibitor’s largest secured creditors are GE Capital and
Citigroup Inc.’s Salomon Smith Barney Inc.



USInternetworking to File For Chapter 11

Annapolis, Md.-based technology firm USInternetworking Inc. plans to
file for chapter 11 bankruptcy protection today in order to eliminate a
debt of more than $120 million, The Washington Post
reported.  USInternetworking executives confirmed its chapter 11
plans and announced that the plan has the support of the majority of the
firm’s creditors.  The Nasdaq stock market will halt trading
of USInternetworking stock today because of the bankruptcy filing.

Philippine Music Says Involuntary Bankruptcy Filed Against U.S. Unit


Lawyers acting for Philippine semiconductor group Music Corp. this
morning announced that a company has brought a petition in a Californian
court to put its U.S. unit under involuntary chapter 11 bankruptcy
protection, Dow Jones reported.  In a letter to the Manila stock
exchange, Music’s lawyers said the court has appointed an examiner
to look into a petition brought by Tality Corp. against U.S. unit Music
Semiconductors Inc. on concerns that the parent plans to transfer its
U.S. assets to its Philippine operations.



Music’s lawyers said there are no plans to send back the assets of
Music’s U.S. unit.  The lawyers said the examiner appointed
by the court is scheduled to file its report on Jan. 9. A further
hearing is scheduled for Jan. 23 to determine whether a chapter 11
trustee should be appointed.

ENRON UPDATE

BayCorp Has $684,000 Administrative Claim

BayCorp Holdings Ltd. expects to record a fourth-quarter charge of
about $1.1 million, or 13 cents a share, for Enron Corp.’s
termination of December power contracts with its Great Bay Power Corp.
unit, reported Dow Jones.  BayCorp said Enron owes Great Bay about
$1.1 million for power delivered prior to Enron’s chapter 11
bankruptcy protection filing last month.  Great Bay has an
administrative claim of $684,100 for power delivered between Dec. 2 and
Dec. 21, 2001, and an unliquidated claim for damages resulting from the
terminated agreements.  The terminated contracts provided for
purchases of power by Enron through Dec. 31, 2001.  Great Bay has
no contracts with Enron for periods beyond 2001.  Loss for the
quarter ended Dec. 31, 2000, included a non-cash charge of $3.4 million
for unrealized losses on forward contracts.

Creditors Seek to Move Enron Bankruptcy Case to Houston

A group of Enron Corp. creditors will try to convince a New York
bankruptcy judge today to move the case to a court in Houston, where the
energy company is based, Dow Jones reported.  Large creditors, such
as energy traders Dynegy Inc. and El Paso Corp., and smaller ones, like
the Southern Ute Indian Tribe of Colorado, believe it would be more
convenient and economical to hear the case near the location of many
Enron creditors and assets.  Dynegy and El Paso are based in
Houston.



In a motion filed by Dynegy and other creditors, lawyers also say there
is “an emotional interest to be served” by moving the case
to Houston, where thousands of Enron employees were laid off. 
Analysts say these creditors might also be hoping for a potentially more
favorable hearing in Houston, whose economy has suffered as a result of
Enron’s demise.  Lawyers for Enron, and a handful of
creditors opposed to relocating the proceedings, are expected to argue
that it would be less expensive and more accommodating if the case were
administered in New York, home to the armies of lawyers and bankers
working on both sides.  Enron filed for chapter 11 bankruptcy
protection on Dec. 2 in the U.S. Bankruptcy Court for the Southern
District of New York. One of its smaller subsidiaries, Enron Metals and
Commodity Corp., is based there.