February 192003

Of the total number of bankruptcy filings for the 12-month period
ending Dec. 31, 2002, chapter 7 filings were up 5.2 percent, from
1,054,975 in the same period in 2001 to 1,109,923 in 2002. The next
largest group of filings was chapter 13, at 455,877, up 7.2 percent from
the 425,292 filings in calendar year 2001. Chapter 11 filings fell 1.3
percent to 11,270 in calendar year 2002, from the 11,424 chapter 11
filings in 2001. Chapter 12 filings rose 26.6 percent in 2002, from 383
in 2001 to 485 in 2002. More information will be available on Monday at

href='/stats'>http://www.abiworld.org/stats/newstatsfront.html.

Asbestos Reform Legislation Introduced in the Senate

Senate Budget Chairman Don Nickles (R-Okla.) on Thursday introduced his
asbestos reform legislation, which defendant companies hailed as a
welcome addition to the debate, CongressDaily reported.
Separately, the Senate Judiciary Committee is planning a March 5 hearing
on reform, and asbestos compensation bills are likewise being crafted in
the House, the newswire reported. Nickles' bill would require potential
asbestos litigants to meet certain medical criteria prior to being
allowed to file a claim. Nickles said his bill aims to 'reduce the
effect of asbestos litigation as a significant inhibitor to economic
recovery, yet protect the legal rights of those truly injured from
asbestos exposure, as well as those who may develop asbestos-related
injuries in the future,' reported the newswire.

Dice, Internet Job Service, Files for Chapter 11
Bankruptcy

Dice Inc., an Internet job-search service, filed for bankruptcy after
losing money for 17 straight quarters, Bloomberg News reported. Dice
listed $38.8 million in assets and $82.1 million in debts in chapter 11
papers filed on Friday in U.S. Bankruptcy Court in Manhattan. Robert
Feinstein (Pachulski, Stang, Ziehl, Young, Jones & Weintraub;
New York), Dice's bankruptcy lawyer, confirmed the chapter 11 filing and
said the company will file a reorganization plan later on Friday.

Kmart Reaches Pact With Kimco Realty

Kimco Realty Corp. and Kmart Corp. agreed to jointly market about 317
Kmart locations, including 57 Kmart SuperCenters, Dow Jones reported. In
a release on Friday, the companies said the properties, located in the
United States and Puerto Rico, will be sold with permission of the court
in Kmart's chapter 11 bankruptcy case. As reported, after the proposed
sales, Kmart will have a store base of about 1,500. The company stands
to receive more than $500 million in cash and proceeds from the sales of
property and inventory, which could cost $300 million to conduct,
reported the newswire.

Probex Won't File 10Q on Time Due to Financial Condition

Probex Corp. said it won't file its quarterly report on time due to
'several recent developments' affecting its financial condition, Dow
Jones reported. According to the company's filing on Friday with the
Securities and Exchange Commission, these developments require
substantial attention from senior management and the remaining
employees. Probex said it will be unable to repay its debt of about
$26.4 million before a Feb. 28 deadline and may file for chapter 11
bankruptcy protection if efforts to either restructure the debt or
extend the due date fail, Dow Jones reported.

Court Extends Orbital Imaging Plan Exclusivity to May 19

A bankruptcy court has granted Orbital Imaging Corp. an extension of the
period in which other parties are excluded from filing chapter 11
reorganization plans for the company, Dow Jones reported. According to a
court order obtained recently by Dow Jones Newswires, the company now
has until May 19 to file amendments to its chapter 11 plan and solicit
votes for the plan without the threat of competing plans being filed.
Judge Robert G. Mayer of the U.S. Bankruptcy Court in Alexandria,
Va., signed the order on Tuesday. The ruling marked the third time the
court has extended Orbital Imaging's exclusivity, reported the
newswire.

Retired Pilots Weigh in on US Airways Pension Plans

US Airways Group Inc. has said it wants to use the bankruptcy laws to
end its pension plan for pilots, but a federal agency and group of
retirees said the company hasn't met the legal requirements to end the
plan, Dow Jones reported. In separate motions obtained by Dow Jones
Newswires on Friday, the U.S. Pension Benefit Guaranty Corp. and the
Retired Pilots Association of US Airways weighed in on the troubled
carrier's plan to stop pension payments so it can exit chapter 11 by a
proposed March 30 deadline, reported the newswire.

Lehman Begins Trial over First Alliance Predatory Lending
Claim

Lehman Brothers Holdings Inc., the fourth-largest U.S. securities firm,
began a trial today over claims it engaged in fraud by financing a
mortgage company accused of deceiving borrowers, Bloomberg News
reported. The trial against Lehman may be the first against a securities
firm for purchasing subprime loans that were allegedly predatory. The
borrowers claim they were overcharged by First Alliance Corp., once one
of the largest lenders to people with poor credit, the newswire
reported. They say Lehman provided a credit line and bundled mortgages
for sale even though it knew First Alliance engaged in fraud. A verdict
for the borrowers could force sellers of asset-backed securities to more
carefully investigate their clients, slowing the pace of lending,
Bloomberg reported. Jury selection began today in the trial in Santa
Ana, Calif., which is expected to last as long as seven weeks. Opening
arguments are expected to start Tuesday.

Bankruptcy Judge Converts Wheland Case to Chapter 7

U.S. Bankruptcy Court Judge Thomas Stinnett on Friday morning
converted the huge Wheland Foundry bankruptcy case to a chapter
7—over the objections of most of the litigants, reported
Chattanoogan.com. Judge Stinnett said he agreed with the U.S. Attorney's
office that a pending confirmation plan was tilted too much toward
noteholders owed money by the failed foundry, the online news portal
reported. Still to be settled in the case is whether the banks that
loaned large sums to Wheland get 100 percent of the some $32 million
that is remaining or whether unsecured creditors get 20-25 percent, the
news site reported. Judge Stinnett said a chapter 7 trustee could be in
place by Tuesday.

ABB Unit, Facing Asbestos Claims, Files for Bankruptcy

ABB Ltd., Europe's largest electrical-engineering company, said a U.S.
unit facing more than 100,000 asbestos-related claims filed for
bankruptcy protection after most plaintiffs agreed to a $1.2 billion
settlement plan, Bloomberg News reported. ABB, which has paid $1 billion
in asbestos claims since 1990, is shielding itself from more lawsuits at
the defunct unit, which made asbestos-lined boilers into the 1970s that
workers say exposed them to the cancer-causing agent, reported the
newswire. At least 60 U.S. companies including W.R. Grace & Co. and
Kaiser Aluminum Corp. have gone bankrupt after paying for asbestos
claims.

Divine Says It May Seek Chapter 11 Bankruptcy Protection

Divine Inc., an Internet software maker and consultant, said it may file
for bankruptcy protection to cope with continuing losses and debts
racked up acquiring smaller competitors over the past several years,
Bloomberg News reported. Divine said in a news release it hired
Broadview International LLC to advise on business strategies, which may
include asset sales and a chapter 11 bankruptcy filing. The
Chicago-based company's Rowecom Inc. electronic commerce unit, which it
bought in 2001, sought chapter 11 protection on Feb. 10, Bloomberg
reported.

Rigases Oppose Adelphia's Hiring of Top Two Executives; Company
Asks for Court Approval on Severance Plan

Adelphia Communications Corp. founder John Rigas asked a federal judge
to block plans by the bankrupt cable-television company to hire two top
executives and pay them as much as $41 million over three years,
Bloomberg News reported. Rigas said in court papers that Adelphia's
board ignored shareholders' interests last month when it named William
Schleyer chief executive officer and Ronald Cooper chief operating
officer.

Rigas joined other Adelphia shareholders and some creditors in trying
to persuade U.S. Bankruptcy Judge Robert Gerber to reject or
alter the contracts, reported the newswire. Adelphia, which sought
bankruptcy protection in June, is struggling to overcome more than $20
billion in debt and restore its reputation as it tries to get out of
chapter 11.

Separately, Dow Jones reported that Adelphia is asking the bankruptcy
court for approval to pay up to $10 million for a severance plan to keep
its workforce intact. According to court papers obtained by Dow Jones
Newswires, Adelphia Communications said it needs to start the severance
program to boost the morale of current employees and to assist workers
who have been dismissed. A hearing on the issue is scheduled for March
17 in the U.S. Bankruptcy Court in Manhattan.

Farmland to Sell Fertilizer Businesses to Koch for $270
Million

Farmland Industries Inc., which is seeking to reorganize under
bankruptcy protection, said it agreed to sell its fertilizer businesses
to a unit of Koch Industries Inc. for $270 million in cash and assumed
debt, Bloomberg News reported. Koch Industries' Koch Nitrogen Co. unit
also will assume $79.1 million in debt under the agreement, which is
subject to bankruptcy-court approval, Farmland said in a statement,
reported the newswire. Farmland, which is owned by 600,000 farmers,
filed for chapter 11 bankruptcy protection in May 2002 after a slide in
fertilizer sales left it unable to make payments on $1.5 billion in
debt.

PG&E to Issue Stock to Get Investment Rating for Utility's
Plan

PG&E Corp.'s Pacific Gas & Electric unit told a bankruptcy court
that the parent company plans to issue as much as $700 million in new
equity to achieve investment grade ratings under a modified
reorganization plan for its bankrupt utility, Bloomberg News reported.
Pacific Gas told U.S. Bankruptcy Judge Dennis Montali that issuing the
new equity would strengthen its reorganization plan and help it achieve
investment grade ratings. Montali is presiding over a trial for rival
restructuring plans submitted by the utility and the California Public
Utilities Commission, Bloomberg reported.

Steelworker Union, ISG Agree to Six-year Contract

International Steel Group Inc. received employee approval on Tuesday for
a six-year contract, the Associated Press reported. Steelworkers
President Leo W. Gerard lauded the contract for providing secure jobs at
plants that were idled under LTV's bankruptcy. LTV Corp. filed for
bankruptcy protection in December 2000. In February of last year, a U.S.
Bankruptcy Court judge in Youngstown approved New York-based WL Ross
& Co. LLC's purchase of LTV steel assets for $127 million, plus the
unspecified cost of assuming environmental liabilities, reported the
newswire. The private investment firm, under the direction of turnaround
specialist Wilbur Ross Jr., then created ISG as a new steel company.

Pallet Management Files Petition for Chapter 11 Bankruptcy
Protection

Pallet Management Systems Inc. filed for chapter 11 bankruptcy
protection and arranged for short-term interim financing from LaSalle
Business Credit LLC, Dow Jones reported. In a press release on Tuesday,
the shipping platform company said it will restructure its manufacturing
operations and evaluate its existing plants, distribution, logistics and
information technology functions. Pallet said it plans to emerge from
bankruptcy with an Indiana facility that will supply its primary
customer. The company will also shift its focus towards services and
cost efficiency. The shipping platform company retained Genovese Joblove
& Battista P.A. as counsel for the bankruptcy, which was filed with
the Southern District of Florida, reported the newswire.

Shareholder Objects to Former Polaroid's Exclusivity

A shareholder of the former Polaroid Corp. said it wants a bankruptcy
court to hear more options for reorganizing the company, Dow Jones
reported. Stephen J. Morgan has objected to a request by the former
Polaroid and its unsecured creditors to extend the periods during which
they can exclusively file a reorganization plan and lobby for support
from creditors. In the objection, Morgan said he is working with a group
of shareholders on proposals that would reorganize the company for the
benefit of paying off creditors, reported the newswire.

Key3Media Seeks Approval for Retention Plan for Executives

Key3Media Group Inc. is asking a bankruptcy court for approval of an
employee-retention plan aimed at encouraging six senior executives to
stay with the company during its time in chapter 11 bankruptcy, Dow
Jones reported. Key3Media, which produces and manages the promotion of
trade shows and conferences like Comdex for the information-technology
industry, said the plan needs to be approved immediately. A hearing to
consider the motion is scheduled for March 7, reported the newswire.

Valley Media Seeks More Time to File Exclusive Chapter 11
Plan

Valley Media Inc. is asking the U.S. Bankruptcy Court in Wilmington,
Del., to extend the deadline to file an exclusive reorganization plan
and lobby for creditor support, Dow Jones reported. The company wants
until May 13 to file a reorganization plan and up to July 14 to gain
creditor approval. The current deadlines are Feb. 12 and April 14.
Valley Media, which is liquidating, has operated under chapter 11
bankruptcy protection from its creditors since November 2001.

Reliant Resources Lenders Extend Refinancing Deadline

Reliant Resources Inc.'s $2.9 billion Orion bridge loan was extended to
March 28, giving the energy provider's three agent banks additional time
to review a proposed restructuring plan, Dow Jones reported. In a press
release on Tuesday, the company said it needs 100 percent lender
approval for the restructuring transaction. Reliant executives had
previously held out the prospect of bankruptcy if they're unable to
refinance the debts, reported the newswire. Reliant Energy is struggling
with huge debts and downgraded credit reports.

UAL, Creditors Panel Settle over CEO, Director Depositions

The creditors' committee in UAL Corp.'s bankruptcy case will not depose
Chief Executive Glenn Tilton and Director Richard McCormick regarding
Tilton's proposed pay package, according to the terms of a settlement
reached between the two sides, Dow Jones reported. The committee,
however, will be able to question Director James O'Connor and Employment
Consultant Doug Friske of Towers Perrin to determine whether UAL used
sound business judgment in its assembly of Tilton's pay package, Dow
Jones reported. In December, UAL asked Judge Eugene R. Wedoff to
approve a five-year employment agreement with Tilton that would include
a $950,000 annual base salary, a $3 million signing bonus, stock options
and relocation expenses.

Combustion Engineering Files for Chapter 11 In Delaware

Combustion Engineering Inc. on Monday filed for chapter 11 bankruptcy
protection in the U.S. Bankruptcy Court in Wilmington, Del., to address
millions of dollars in asbestos-related personal injury claims, Dow
Jones reported. The Stamford, Conn.-based utility company listed assets
and liabilities each in excess of $100 million in its chapter 11
petition. Eighteen of Combustion Engineering's top 20 unsecured
creditors are asbestos claimants. These claimants assert a total claim
of $9.53 million, reported the newswire. Combustion Engineering, an
electrical engineering company based in Switzerland, said the company's
asbestos-related claimants voted for a prepackaged bankruptcy procedure
to allow it to proceed.

Globalstar Reaches New Financing Agreement

Globalstar has reached a preliminary agreement with a group of five
lenders that will provide it with interim debtor-in-possession
financing, subject to court approval, Dow Jones reported. In a news
release, Globalstar said the five lenders will make a total of $10
million available, giving it necessary working capital while it works
toward a final restructuring plan that would allow it to emerge from
chapter 11 protection later this year, reported the newswire. Globalstar
said it's moving ahead to establish a bidding process that will select
the most favorable final investment offer for the company. The bidding
process is expected to be completed during the second quarter.

Exide Tech: Restructuring on Target

Exide Technologies reported a $7 million net loss for its third quarter
ended Dec. 31, 2002, narrower than the $200.4 million net loss reported
for the same quarter in the previous year, Dow Jones reported. In a Form
8-K filed late on Friday with the Securities and Exchange Commission,
the company said that the third-quarter results were helped by benefits
from 'plant rationalization' and other restructuring initiatives.
Princeton, N.J-based Exide Technologies filed for chapter 11 bankruptcy
protection on April 14, 2002, listing assets of $2.07 billion and debts
of $2.52 billion.

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