Minimum Wage May Break from H.R. 833
Senate Majority Leader Trent Lott (R-Miss.) said he plans to take
the combined minimum wage and tax bill (H.R. 3081) and substitute the
Senate provisions from bankruptcy bill H.R. 833, minus the bankruptcy
bill, in order to send H.R. 833 to conference, the CQ Daily
Monitor reported. The minimum wage and tax provisions, which had
been attached to the bankruptcy bill in February, didn't allow H.R. 833
to advance to conference with the House because the Constitution
requires all tax measures to originate in the lower chamber. Now, GOP
leaders have agreed to negotiate a compromise bankruptcy measure via
informal bargaining sessions, and once a deal is struck, the package
would be injected into the electronic signature legislation (S. 761) now
before a House-Senate committee. The end result would be a bankruptcy
bill freed up to be used as a 'shell' to advance the minimum wage and
tax provisions, according to Lott. However, Lott needs to win unanimous
consent to do so, and Democrats Paul Wellstone (D-Minn.) and Russell D.
Feingold (D-Wis.) have blocked such consent in the past because they
have voiced their dislike for the bankruptcy bill. Wellstone said
yesterday that he is willing to agree to moving the minimum wage
package, but wants to see how the bankruptcy bill is then negotiated,
expressing concerns that the bankruptcy bill be balanced for both
business and consumers.
Delaware Bankruptcy Court Transfers Apple Orthodontics Case to
Houston
Last week, the Delaware bankruptcy court in Wilmington transferred
the venue of Apple Orthodontics Inc.'s chapter 11 bankruptcy to Houston
at the request of one of Apple's creditors, according to a newswire
report. Apple, which filed chapter 11 on Jan. 27, opposed the transfer
venue at a hearing, as did its unsecured creditors' committee, the
official committee of doctors and Apple's two senior secured lenders,
Chase Bank of Texas and Bank Paribas. Hon. Mary F. Walrath, who presided
over the case in Delaware, cited new procedures in Houston bankruptcy
courts among her reasons for the transfer. 'I am aware of the new rules
in the Houston court regarding seeking to solve the problem articulated
by the debtor about prompt scheduling of hearings,' she noted in her
ruling. 'The rules provide that a complex case will be given precedence
and will be expedited on the court's calendar. And, quite frankly,
comparing it to my own calendar, I think they may be able to give the
debtor a little better service than our calendar has been able to.' The
transfer motion was prosecuted by Samuel M. Stricklin of the
Dallas firm of Sheinfeld, Maley & McKay P.C.
Federal Judge Hears Breast-implant Suit Arguments
Yesterday, a Dow Corning Corp. attorney asked a federal judge to set
aside a bankruptcy court's opinion the company says modifies and
jeopardizes a $3.2 billion settlement over silicone breast implants, the
Associated Press reported. George Tarpley asked U.S. District Judge
Denise Page Hood to vacate federal Bankruptcy Judge Arthur J.
Spector's December opinion that women opposed to the settlement may
sue Dow Corning's parent companies, calling the opinion 'an error of
law' that, if allowed to stand, could cripple the settlement that took
years to reach and has been approved by 94 percent of the 112,774 women
who last year voted on it. The companies and lawyers for women who voted
in favor of the settlement say Spector's opinion changed the terms of
the settlement he approved Nov. 30, invalidating the deal that was part
of Dow Corning's $4.5 billion plan to emerge from chapter 11 bankruptcy.
Tarpley told Judge Hood that Dow Corning, a joint venture between Dow
Chemical Co. and Corning Inc., was prepared to begin paying claimants if
Judge Spector's opinion is reversed. 'It serves no purpose whatsoever to
pay out $3 billion over a number of years only to have this litigation
continue in other forms, as it did before bankruptcy,' Tarpley said. 'We
want to shut down litigation. If we're gonna pay money for it, we want
it over with.' Under the settlement, Dow Corning would pay out $3.2
billion to settle claims by more than 170,000 women blaming various
health problems on silicone implants once made by the company. But Judge
Spector's Dec. 21 opinion stated that women who voted against the
settlement still could sue Dow Chemical and Corning if they chose. A Dow
Chemical spokesman said that if Judge Spector's opinion stands, 'then
the plan won't be confirmed.' John White, one of the attorneys
representing the a group of women from Nevada, told Judge Hood 'there's
no reason, no bankruptcy purpose, for any injunction or stay against
suing Dow Chemical over implants.' The hearing is to continue today.
ARM Financial Group Signs Purchase Agreement with 1st Atlantic
Guaranty
Louisville, Ky.-based ARM Financial Group Inc.,
debtor-in-possession, announced yesterday that it has entered into a
stock purchase agreement whereby 1st Atlantic Guaranty Corp. will
acquire ARM Financial Group's wholly owned subsidiary SBM Certificate
Co. for $650,000, $400,000 of which will be placed in escrow for 18
months following the closing of the transaction, according to a newswire
report. The escrowed proceeds from the SBM sale will be used to fund
certain indemnification obligations of the company and is subject the
approval of the U.S. Bankruptcy Court for the District of Delaware. Upon
approval, the transaction is expected to close in the second quarter of
2000.
AmeriServe Loses Burger King Account
Addison, Texas-based AmeriServe Food Distribution Inc., which filed
chapter 11 on Jan. 31, said yesterday it will lose its account with
5,800 Burger King restaurants, costing the bankrupt company $2.2 billion
of its $6.2 billion in annual revenue, the Associated Press reported.
AmeriServe chief executive Ronald Rittenmeyer said the company would lay
off 1,400 to 1,600 of its roughly 6,000 employees (about 25 percent),
and is considering whether it wants to continue as a stand-alone
company, merge with a partner or sell some of its assets, he said.
AmeriServe had received $150 million in temporary financing from its two
largest customers, Burger King and Tricon Global Restaurants Inc., which
operates Pizza Hut, KFC and Taco Bell. Acquisitions that left the
company with a heavy debt load caused the company to miss payments to
suppliers, resulting in spot shortages of food and paper products at
some restaurants, prompting several customers, some Burger King
franchisees included, to switch to other distributors. 'The Burger King
system has already arranged for distribution services for the
approximately 5,800 Burger King restaurants currently served by
AmeriServe,' said Tulin Tuzel, senior vice president of worldwide supply
and chief technology officer. 'We have agreed with AmeriServe to work
through a smooth transition to new distributors over the next several
months.' Deliveries of food products to Burger King will end in July;
however, Rittenmeyer said it would not affect the temporary financing,
which runs into August. The company is in talks with Chase and Deutsche
Bank about permanent financing, but Rittenmeyer acknowledged that the
company probably won't emerge from bankruptcy this year.
Kitty Hawk Shares Plummet
Kitty Hawk Inc., the Dallas-based air freight operator, said
yesterday that their shares lost 80 percent of their value after the
company disclosed financial problems that one analyst said could even
lead the company into bankruptcy, according to Reuters. Traders said the
company's publicly held senior debt also fell sharply and was bid on
yesterday at 30 cents on the dollar, down about 40 since the
announcement. The company said that fuel costs, delays and unexpected
costs for aircraft maintenance, as well as weaker-than-expected demand
for scheduled freight, 'seriously eroded cash resources' and increased
first-quarter losses. In addition, Kitty Hawk said it had failed to
comply with the engine maintenance requirements of its lenders for its
fleet of Lockheed L-1011 and Boeing 747 aircraft, which might require
$35 million to fix. As a result, the company might not be able to pay
the $17 million interest due on May 15 on its senior secured notes on
time, or to fix its non-compliance, without selling or refinancing
'significant' assets. Failure to make that debt payment 'could lead to
voluntary or involuntary bankruptcy in the near future,' said Bear
Stearns analyst Ed Wolfe.
Imperial Home Decor Group Seeks Exclusivity Extension
The Imperial Home Decor Group Inc., Cleveland, Ohio, said yesterday
that it has filed an application with the U.S. Bankruptcy Court for the
District of Delaware for an extension period to give the company the
exclusive right to file and advance a plan of reorganization in its
chapter 11 case, according to a newswire report. A hearing to consider
the application is scheduled for May 18. If approved, the company, which
filed chapter 11 in January, would be granted another 120 days, until
Sept. 4, in which only it may file a plan of reorganization, and another
60 days after that date, Nov. 3, during which only it can solicit
creditors to vote for the plan. The company said its unsecured
creditors' committee has indicated its support for the motion.
American HealthChoice Announces Disclosure Approval
American HealthChoice Inc. announced yesterday that its amended
joint disclosure statement was approved by the U.S. Bankruptcy Court
last Thursday, according to a newswire report. A hearing on the plan
confirmation is scheduled for May 16, and company said it expects the
reorganization to be completed by June 30. An important provision of the
plan is the acquisition of three established clinics with expected gross
annual revenue of $5 million and expected cash flow of approximately
$1.5 million. American HealthChoice Inc. is a provider of health care
services and operates primary care clinics located in Texas and
Louisiana.
UNIDYNE Plans Reorganization
UNIDYNE Corp., Kenosha, Wis., yesterday announced that it has begun
the process of structuring a reorganization of its business in
consultation with financial and legal professionals and is reviewing
various options in cooperation with its key lenders and suppliers,
according to a newswire report. No corporate decision has been made with
regard to bankruptcy reorganization, and the company said it expects to
resume normal business operations as part of its reorganization efforts.
UNIDYNE Corp. and its subsidiaries manufacture, sell, service and
finance a variety of products, including vehicle emissions testing
systems, specialized electric motors, and variable speed drives and
controls, and has facilities in Kenosha and Exton, Pa.
SNH Announces Agreements with Integrated Health Services
Senior Housing Properties Trust, Newton, Mass., announced yesterday
that is has a conditional agreement with Integrated Health Services Inc.
and a related agreement with HEALTHSOUTH Corp., according to a
newswire report. SNH currently leases or first mortgage finances a total
of 39 nursing homes to Integrated. The contractual amount of rent and
interest due from Integrated to SNH for these leases and mortgages is
approximately $26.9 million per year. Integrated had stopped paying rent
and interest on these obligations in January, filing for bankruptcy in
February. The conditional agreement between SNH and Integrated includes
new leases for certain nursing homes. The agreement between SNH and
Integrated is contingent upon approval by the Delaware bankruptcy court.
'SNH is pleased to have reached an agreement with Integrated early in
its bankruptcy process,' said David J. Hegarty, President of SNH. 'SNH
believes the best way to preserve values is to free its properties from
the uncertainties which arise from a prolonged bankruptcy process.'
Senior Housing Properties Trust is a real estate investment that owns
senior housing properties located in 26 states.
Howard Tallman Appointed Region 19 U.S. Trustee
Howard R. Tallman, of Englewood, Colo., has been appointed
U.S. Trustee for Region 19, covering Colorado, Utah and Wyoming, by
Attorney General Janet Reno, according to the Executive Office for U.S.
Trustees. Previously, Tallman was practiced with the Denver firm of
Block Markus & Williams L.L.C., where he specialized in bankruptcy
reorganizations and the representation of financial institutions. He has
also practiced with the Denver firm of Holland & Hart, representing
creditors and debtors in chapter 11 reorganizations, and worked as an
attorney in the Denver office of the U.S. Trustee Program, rising to
Assistant U.S. Trustee in 1982. In addition, Tallman served as a
consultant to Continuing Legal Education of Colorado Inc., a non-profit
legal education arm of the Colorado Bar Association and the Denver Bar
Association. From 1977 to 1980, he was an assistant professor and member
of the legal staff of the New Jersey Institute for Continuing Legal
Education, and educational joint venture involving Rutgers University
Law School, Seton Hall Law School and the New Jersey Bar Association. He
received his B.A. summa cum laude in 1972 from Villanova
University, his M.B.A. in finance from the University of Colorado
Graduate School of Business and his J.D. from the University of Denver
College of Law in 1975. Tallman's term took effect on March 29, filling
the position left by when former Region 19 U.S. Trustee Barbara
Shangraw resigned in June 1999. Since her resignation, William T.
Neary, U.S. Trustee for the Northern and Eastern Districts of Texas,
has served as U.S. Trustee for Region 19.
