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November 22, 2002
Economic Indicators Remain Flat
The Index of Leading Economic Indicators remained flat in October after
four straight months of declines, the New York-based Conference Board
reported today, reported Congress Daily. The Board said the index
stayed at 111.4 after falling a revised 0.4 percent in September, the
newswire reported. Six of the 10 indicators that make up the index rose
in October, including building permits and manufacturers' new orders for
consumer goods and materials, the Board said. 'Only consumption has
consistently fueled the recovery through the first 10 months of this
year,' said Conference Board economist Ken Goldstein, adding that the
leading indicators 'are not pointing toward a more positive
outlook.'
Court Vacates Ruling That Barred Creditor Suits in Chapter 11
(The Wall Street Journal)
A court ruling that barred creditors from suing to recover fraudulently
transferred assets on behalf of companies in bankruptcy has been tossed
out, reported The Wall Street Journal. The tossed-out appellate
ruling—binding on federal district and bankruptcy courts in
Delaware, New Jersey, Pennsylvania and the Virgin Islands—was in
stark contrast to common practice, according to the online newspaper. It
also delayed a major trial in a large asbestos-related chapter 11 case.
A new hearing has been set for Feb. 19.
In an order obtained Thursday by Dow Jones Newswires, Chief Judge
Edward Becker of the U.S. Court of Appeals for the Third Circuit in
Philadelphia vacated what became known as the Cybergenics ruling,
handed down in September from three of that court's judges, the
newspaper reported. According to the order, the majority of the court's
active judges voted to have the case reheard by the full court. The
three judges who issued the Cybergenics ruling said that the
language of the Bankruptcy Code allowed only debtors and
trustees—not creditor groups—to bring fraudulent transfer
lawsuits against third parties in bankruptcy cases. To read the full
article, point your browser to
target='window2'>http://www.wsj.com (subscription required).
Tokheim Corp. Files for Chapter 11 Bankruptcy Protection
Fort Wayne, Ind.-based Tokheim Corp. and five affiliates on Thursday
filed for chapter 11 bankruptcy protection in the U.S. Bankruptcy Court
in Wilmington, Del., reported Dow Jones. Tokheim plans to sign a
debtor-in-possession financing agreement with a group of lenders led by
ABN Amro Bank NV, according to court papers acquired by the newswire.
Proceeds of the loan will be used to finance working capital needs, pay
loan fees and for general corporate purposes during the chapter 11 case,
Dow Jones reported.
The company's prepackaged plan provided for the cancellation of
existing common stock and distribution of warrants to previous
shareholders and the distribution of new common stock to bondholders.
The company makes and services electronic and mechanical petroleum
dispensing systems. It listed assets of $249.5 million and debts of
$457.8 million in court papers.
Adelphia Communications Seeks Court OK of $150,000 Severance
Plan
Coudersport, Pa.-based Adelphia Communications Corp. is seeking court
approval of a $150,000 severance plan for up to 50 employees in its
information and technology department, whose services will be required
only for three more months, reported Dow Jones. The newswire reported
that while the company has decided to discontinue the development of a
billing platform on which its IT employees have been working for the
last several years, Adelphia said on Wednesday that it needs to retain
these employees to dismantle the platform in an orderly manner, a
process expected to take about 90 days. The severance plan proposed by
the cable television company would allow hourly IT employees to receive
one week of severance pay for each year of service with the company and
salaried IT employees to receive two weeks of severance pay for each
year of service, the newswire reported. No severance benefits will be
paid unless those employees release the company from all claims. The
U.S. Bankruptcy Court in Manhattan will consider approval of the
severance plan at a Dec. 6 hearing.
Superior Propane Gets Court OK to Buy Sterling Unit
Superior Propane Income Fund said in a news release that the U.S.
Bankruptcy Court has approved Superior Propane Inc.'s acquisition of the
pulp chemicals business of Sterling Chemicals Inc. and certain of its
subsidiaries, reported Dow Jones. The company agreed earlier this month
to acquire those assets for $375 million, subject to certain conditions,
including bankruptcy court approval, the newswire reported. Closing of
the acquisition is expected to occur on or before the end of the year,
after satisfaction of various conditions pertaining to Sterling's
overall plan of reorganization and receipt of regulatory approvals,
according to Dow Jones.
Bankruptcy Court Asked to Approve Deal to Resume Production of
Apligraf
The maker of human skin substitute Apligraf has asked a U.S. bankruptcy
court to approve a settlement with Novartis Pharma AG that would allow
production to resume, the Associated Press reported. Canton, Mass.-based
Organogenesis filed for bankruptcy protection in September in the midst
of a bitter dispute with marketing partner Novartis, the Swiss
pharmaceutical giant, according to the newswire. Apligraf, assembled
from human cells, is used to treat venous leg ulcers and diabetic foot
ulcers, common side effects for diabetics. Production was halted after
Organogenesis claimed Novartis inflated sales forecasts, forcing it to
make more product, AP reported. Novartis countered that Organogenesis's
production had been spotty. On Wednesday, Organogenesis issued a release
saying it had asked a bankruptcy judge to approve a settlement
establishing new production, supply and licensing agreements. Under the
agreement, Novartis would provide Apligraf with $3 million in
debtor-in-possession financing, while Organogenesis would hold exclusive
trademark, marketing and distribution rights.
Bankruptcy Court Approves Investigation of Payless
Cashways
A U.S. bankruptcy court approved the hiring of two attorneys to
investigate and prosecute claims against the former officers and
directors of Lee's Summit, Mo.-based Payless Cashways Inc., according to
the Associated Press. The court approval was made at the request of the
trustee overseeing the dismantling of the building supply company. The
trustee originally sought to pursue only possible claims covered by a
liability insurance policy for the officials, including former chief
executive Millard Barron, reported the newswire. The policy covered
errors or omissions, but not fraud, that could have contributed to the
company's demise. The scope of the investigation was broadened after
attorneys for the unsecured creditors' committee filed a limited
objection stating that the 'investigation should not be constrained by
concerns about whether any claims will be covered by the policies,
because there is no way to know whether any potential claims are of the
type and nature to be covered under the insurance policies until after
the investigation takes place,' the newswire reported. Among areas
likely to be explored is whether Payless Cashways's officers or
directors breached their fiduciary duty.
ENRON
Judge Approves Enron Plan for Sharing Bankruptcy
Costs
The judge in the Enron Corp. bankruptcy proceeding approved Thursday the
energy company's proposal for how bankruptcy costs will be spread among
the parent company and its multitude of subsidiaries, reported Dow
Jones. The approval capped more than a month of negotiations between
Enron, its officially appointed creditors' committee, various creditor
groups and a court examiner for its largest subsidiary, Enron North
America, according to the newswire. The company has projected that
lawyer and other professional fees will total about $306 million by the
end of next month. Altogether, according to its projection,
administrative costs will be about $774 million during the 13-month
period, Dow Jones reported.
A group of 18 oil and gas company creditors of the Enron North
America unit already have challenged Enron's projection of $774 million
as too high. In light of the complexity of Enron's bankruptcy case,
Judge Arthur Gonzalez in New York in April took the unusual step
of appointing a fee committee to review billing by professional firms.
The committee is expected to start filing reports soon on bills for the
first four months of Enron's bankruptcy.
Enron Employees Allowed to Probe Pre-bankruptcy
Bonuses
U.S. Bankruptcy Judge Arthur Gonzalez, who is overseeing Enron
Corp.'s bankruptcy, approved a request from an employee group to hire
lawyers to investigate bonuses executives received just before the
chapter 11 bankruptcy case was filed. Judge Gonzalez said yesterday the
Enron Employment-Related Issues Committee, which represents Enron
workers in the bankruptcy, could hire two Houston law firms to
investigate the bonuses. The company doled out more than $100 million in
bonuses to nearly 600 workers in November 2001, reported the newswire.
Enron filed for bankruptcy on Dec. 2. About $50 million was spread among
75 traders and another $55 million was given to another 500 workers as
an incentive to stay with Enron.
Teleglobe Communications Wins OK for $70 Million Replacement DIP
Loan
Teleglobe Communications Corp. Thursday won approval of a $70 million
debtor-in-possession financing agreement with an affiliate of the
purchaser of its voice and data business, Dow Jones reported. Teleglobe
will use the loan to fund operating expenses, cover costs associated
with the closing of the asset sale, and maintain its relationships with
vendors and suppliers, said Mark D. Collins, an attorney with
Richards Layton & Finger, the firm representing Teleglobe, reported
the newswire. The $70 million DIP loan from Madeleine Corp. and its
affiliate Madeleine LLC replaces a $30 million loan Teleglobe had used
to fund expenses since June. That loan, which was supplied by Teleglobe
Communications' Canadian parent Teleglobe Inc., a unit of BCE Inc.,
expires Nov. 30. Teleglobe Communications filed for chapter 11
protection on May 28, listing more than $100 million in both assets and
debts.
Patrick Industries Sees $1.6M 4Q Charge on Customer's
Bankruptcy
Patrick Industries Inc. will take a pretax charge of $1.6 million, or
about 21 cents a share, to fourth-quarter earnings to boost its
allowance for doubtful accounts, Dow Jones reported. The charge was the
result of unsecured exposure to Oakwood Homes Corp., which filed for
chapter 11 bankruptcy protection earlier this week, on accounts
receivable, inventory and checks in transit that it doesn't expect to
recover, Patrick Industries said in an 8-K filing with the Securities
and Exchange Commission Thursday, reported the newswire. Patrick
Industries, which makes building products for the recreational vehicles
and manufactured-homes industries, said in the filing it planned to
implement 'more restrictive credit policies and limit any further
exposure specifically related to Oakwood and one other major
customer,² reported Dow Jones.
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