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Court Confirms National Health &
Safety’s Reorganization Plan
National Health & Safety Corp. yesterday announced that the
U.S. Bankruptcy Court of the Eastern District of Pennsylvania has
confirmed the company's reorganization plan, according to a newswire
report. The plan represents the effort by National Health to
consummate a merger where MedSmart (including POWERx) would become a
wholly owned subsidiary of the Horsham, Penn.-based company.
MedSmart has, at a cost of about $1.4 million, turned POWERx into a
turnkey Internet eCommerce business-to-business and business to consumer
service provider. In addition, KJE I Ltd. (co-proponent of the
reorganization plan) will contribute approximately $600,000 to cover
reorganization expenses and provide working capital to the reorganized
National Health & Safety Corp.
Kitty Hawk Files Plan of Reorganization
Kitty Hawk Inc. yesterday filed an amended joint reorganization plan and
supplemental disclosure statement with the U.S. Bankruptcy Court,
according to a newswire report. The company, which has been operating
under chapter 11 protection since May 1, also received court approval of
an extension of the exclusive period during which the company can file a
plan of reorganization and solicit acceptances.
Judge Sets Hearing on Sale of Biz2Net
Bankruptcy Court Judge Henry J. Boroff on Monday refused a
secured creditor's request to resume an asset sale of Biz2Net Corp., the
struggling e-commerce services provider that is trying to sell itself in
the face of mounting losses, according to a newswire report.
Boroff put the petition on an expedited schedule and set a hearing for
10:30 a.m. today. The company's major secured lender — Coast
Business Credit — wants to auction Biz2Net's assets to help
recover an outstanding $3.6 million loan.
Unsecured creditors have temporarily blocked that sale by filing an
involuntary bankruptcy petition. The five unsecured creditors claim
Biz2Net owes them $607,000. Coast says the company's liquidation
value is no more than $2 million, excluding leased equipment and
equipment subject to liens. The Millbury, Mass.-based company has
about $500,000 worth of equipment, $55,000 in inventory and accounts
receivable of about $1.4 million. Without further advances from
Coast, Biz2Net won’t be able to maintain operations. Since
filing a notice of default with the company on Nov. 9, Coast has given
money to Biz2Net for certain expenses, such as payroll. Coast
fought for an immediate asset sale, saying the delay imposed by the
bankruptcy petition erodes the value of the company's collateral.
The only prospective buyer of Biz2Net's assets has advised Coast that it
will decrease or withdraw its offer if a secured party sale cannot be
conducted expeditiously.
Corporate Credit Quality in Steep Slide
U.S. corporate credit quality is in deep trouble and likely to
remain there, according to a Reuters report. Standard & Poor's
announced yesterday that there have been 104 corporate defaults
affecting $37.7 billion of debt in 2000. The number matches the
record set in 1999 and will likely remain high through next year and
much of 2002. Meanwhile, Moody's Investors Service said in a new
report that credit quality is in one of its most pronounced declines
since the 1991 recession, and the slump will likely continue. On
Wednesday, Fitch warned that the default rate for junk bonds is at a
nine-year peak and will remain “above-average” in 2001.
The reports follow a stream of disappointing corporate earnings
reports in the latest quarter, and warnings that profits and sales going
forward will be weaker than expected. Meanwhile, banks have
substantially tightened their lending standards, making it tougher for
some companies to obtain credit amid signs overall U.S. economic growth
is slowing sharply. “Due to the volume of outstanding debt
by financially weak companies, we expect defaults to remain high for the
next year and the best part of 2002,” Leo Brand, an S&P
director, said. “Considering that there is nearly a month
remaining in 2000, it is almost certain we will exceed the amount of
defaults experienced in 1999,” he said. Defaults in 1999
affected $38.4 billion of debt.
The report also said factors that may put further pressure on credit
quality include: a likely dip in capital spending and product demand;
slower consumer spending; higher energy and raw materials costs;
“weaker” product prices, and, among retailers, falling
same-store sales growth.
Judge Rejects A&P Objections to Sale
A bankruptcy judge yesterday rejected a bid by grocer A&P to
derail the sale of its bankrupt rival Grand Union, saying a wholesale
grocer made a good-faith purchase of the company, according to the
Associated Press. U.S. Bankruptcy Judge Novalyn Winfield
upheld C&S Wholesale Grocers Inc.'s purchase of Grand Union in a
Nov. 16 auction.
A&P asked Winfield to order a new auction for Grand Union,
charging that C&S, of Brattleboro, Vt., illegally persuaded other
supermarket chains to pass on the auction, in which it bought much of
Grand Union's assets for $301.8 million. A&P, based in
Montvale, N.J., charged that Grand Union, based in Wayne, N.J., and its
creditors negotiated the price with C&S, Grand Union's supplier and
largest creditor, before the auction. It argued that C&S reached an
agreement to buy Grand Union stores and resell them to chains that would
then agree to be C&S customers.
Winfield scheduled a hearing for Dec. 8 to handle objections by some of
Grand Union's landlords on the terms of their leases. C&S, the
nation's third-largest grocery wholesaler, bought 185 of Grand Union's
197 stores and its distribution center in Montgomery, N.Y. Grand Union
filed for chapter 11 in October for the third time in five
years.
Petsec Announces U.S. Unit Emerges From
Bankruptcy
Australia-based oil and gas group Petsec Energy Ltd. said it expects its
U.S. subsidiary, Petsec Energy Inc., to emerge from chapter 11
bankruptcy today, according to a Reuters report. The U.S. company
confirmed its reorganization plan in the U.S. Bankruptcy Court and which
will become final today. Petsec in the U.S. ran into problems last
year and defaulted on an interest and principal payment to banks, which
led it to seek bankruptcy protection last year. Under the plan, at
a cost of $3 million, Petsec said it would retain five exploration
leases, with its technical database, computer systems and office
equipment.
Imx Files For Bankruptcy Protection
IMX Pharmaceuticals Inc., maker of cosmetics and over-the-counter drugs,
said on Wednesday that it filed for chapter 11 bankruptcy protection,
according to The Palm Beach Post. IMX lost $1.2 million on
$1.5 million in sales in the first six months of this year. As of June
30, the company had $3.5 million in assets and $1.7 million in
liabilities.
Cary, N.C., Telecom Firm Files for Bankruptcy
Access Point, the Cary, N.C.-based telecommunications provider, has
filed for bankruptcy, according to a newswire report. The filing
came one week after it laid off 71 people. Those employees have
been left without severance pay until a federal court rules on the
matter. Access Point has scheduled a meeting for Dec. 11 to
negotiate ways for it to repay the companies it owes. The company
estimates its total debt at between $7 million and $8 million and its
largest creditors are Sprint, Qwest Communications and Nortel.
The company also owes Wachovia Bank $630,000, but has filed a legal
motion to use its cash collateral on the debt to continue operations
with the 87 remaining full-time employees and pay severance packages
averaging $4,300 to the ones who were laid off. Access Point argues that
it has $4.3 million in uncollected revenue that covers its outstanding
debt to the bank. The bank is fighting Access Point's motion,
saying the accounts receivable aren't a reliable collateral
“particularly in light of the debtors' business.”
Severance payments to the laid-off employees have been postponed until a
judge rules on the matter.
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