Advocates
for Bankruptcy Law Change Spending Millions
Banks,
credit card companies, retailers and automakers
have lined up to push for a change in bankruptcy
laws, saying wealthy debtors are abusing the
current system…and they are spending millions
to make their point, according to the CQ
Daily Monitor. According to a Common Cause
study, the consumer credit industry gave $72.6
million in soft money and political action
committee (PAC) contributions between 1989
and 1999. The industry has made about a third
of its donations—$23.3 million—since lawmakers
launched an overhaul of U.S. bankruptcy laws
in 1997. The Center for Responsive Politics,
which tracks how much groups spend on lobbying
in general, says commercial banks spent almost
$33 million on lobbying costs in 1998. That
includes the amount spent lobbying for banking
deregulation. Finance and credit companies
spent almost $20.7 million. The leading opposition
groups—the Consumer Federation of America,
U.S. Public Interest Research Group, Consumers
Union of the United States, the National Consumer
Law Center and the National Association of
Consumer Bankruptcy Attorneys—spent about
$1.3 million on their lobbying efforts that
year.
In 1999, according to Common
Cause, seven of the 10 House members who received
the largest amount in campaign contributions
from the consumer credit industry were banking
committee members. The same was true of half
of the Senate members who received the most
campaign contributions from the industry.
John J. LaFalce (D-N.Y.) received $94,522,
Bill McCollum (R-Fla.) got $88,499, Richard
H. Baker (R-La.) took in $85,677, Rick A.
Lazio (R-N.Y.) got $85,500 Marge Roukema (R-N.J.)
received $53,750; Jim Maloney (D-Conn.) took
in $53,700, Bruce F. Vento (D-Minn.) received
$53,100 and Speaker Dennis J. Hastert was
given $58,061. In the Senate, Rod Grams (R-Minn.)
got $76,359, Rick Santorum (R-Pa.) received
$58,929, Phil Gramm (R-Texas) took in $51,417,
Jack Reed (D-R.I.) received $44,729 and Paul
S. Sarbanes (D-Md.) was given $44,200.
Heilig-Meyers
Receives Approval of First-day Orders
Heilig-Meyers
Co., the nation's largest retailer of home
furnishings and related items, announced Friday
that received bankruptcy court approval to
pay pre- and post-petition employee wages,
salaries and benefits during its voluntary
restructuring under chapter 11, which commenced
on Wednesday, according to a newswire report.
The court also approved interim debtor-in-possession
(DIP) financing for immediate use by the company
to continue operations, pay employees and
purchase goods and services. In conjunction
with the filing, Heilig-Meyers received a
commitment for $215 million in DIP financing
from a group of lenders led by Fleet Retail
Finance Inc. The final hearing on the DIP
agreement has been set for Sept. 27. President
and Chief Executive Officer Donald S. Shaffer
said he was pleased with the bankruptcy court's
prompt approval of the first-day orders. "We
expect the DIP financing, together with the
successful completion of strategic restructuring
initiatives we announced in conjunction with
the filing, to provide adequate funding to
support post-petition trade and employee obligations."
Delaware
Court OKs Sun's Plan Deadline Extension
A
Delaware bankruptcy court has approved another
extension for Albuquerque, N.M.-based Sun
Healthcare Group as it reorganizes under a
deal that included the resignation of Chairman/CEO
Andrew Turner, according to a newswire report.
It was the third extension granted for Sun's
reorganization plan. Mark Wimer, formerly
Sun’s chief operating officer, replaced Turner
as chief executive while board member James
Tolbert became chairman.
style='mso-bidi-font-weight:normal'> Sun's Aug. 11 deadline for filing a reorganization
plan was extended by the Delaware-based federal
court to Nov. 9 without objection from creditors.
Sun's annual report says the company believes
it is owed $74.5 million in Medicare payments
by the federal government, but says "it
is unlikely that the company will recover
any of these receivables because it is likely
the HHS (federal Health and Human Services
Department) will claim more than such amount."
Sun told the court it faces 325 lawsuits;
two class-action lawsuits alone seek more
than $1 billion. Sun's original filing for
protection from creditors under chapter 11of
federal bankruptcy laws showed assets of $1.8
billion and liabilities of $2.1 billion. The
company lost $1.09 billion last year. The
new schedule gives Sun until Jan. 8, 2001,
to persuade creditors to accept the plan.
Crown
Vantage Announces Amended Letter of Intent
Crown Vantage Inc. and its wholly owned subsidiary
Crown Paper Co. announced Friday that Crown
Paper signed a revised letter of intent with
Crown Acquisition Corp. for the sale to CAC
or its designee of substantially all of the
assets of Crown Paper, amending the terms
of an earlier letter of intent between Crown
Paper and CAC, and that it obtained approval
of the U.S. Bankruptcy Court for the Northern
District of California of the letter of intent
and bidding procedures for competing offers,
according to a newswire report. Under the
terms of the revised letter of intent, the
consideration for the acquisition of the assets
to be purchased is $337 million in cash, a
subordinated note issuance to Crown Paper
of $24 million, the assumption of approximately
$39 million of industrial development bonds,
an option for Crown Paper to purchase at the
closing 10 percent of the equity of the purchaser,
and seven year warrants to purchase five percent
of the equity of the purchaser at price three
times that being paid by such co-investors.
The purchaser has also agreed to assume certain
liabilities of Crown Paper arising after the
filing of the chapter 11 case. The acquisition,
which would occur as a sale of assets under
§363 of the Bankruptcy Code, is subject to
the negotiation and execution of a definitive
asset purchase agreement, due diligence and
financing. The sale is also subject to the
receipt of higher or better offers and to
bankruptcy court approval. Crown Vantage is
a manufacturer of value-added papers for printing,
publishing and specialty packaging.
