January 28, 2000
Subprime Auto Loans Improve in 1999
According to Moody's Investors Service, the subprime and near-prime auto
lending industry had a relatively quiet year in 1999, marked by rising
securitization levels and improving credit quality, according to a
newswire report. The industry has made headline news for three years in
a row, but Moody's anticipates that 'the calm after the storm' will
continue into this year and beyond with few changes in the industry
landscape. Public issuance of subprime and near-prime automobile
asset-backed securities (ABS) rose during 1999 to a record $12.8
billion. The increased 1999 volume was a rebound from 1998, when
issuance fell to $10.4 billion. However, in 1999, 'liquidity or lack,
thereof, continued to plague the industry, according to Kumar Kanthan,
who authored the report. He also said that despite the constraints posed
by the lack of liquidity, however, 'the number of issuer bankruptcies
and exits from the industry were down dramatically from prior years, and
none were of major significance to ABS investors.'
Apple Orthodontix Files Chapter 11 Amid Lawsuits
Apple Orthodontix Inc., Houston, announced that it has filed chapter
11 in the District of Delaware, in part because of actions by certain
orthodontic practices affiliated with the company that unjustifiably
withheld monies due the company, according to a newswire report. The
company said the monies due were related to the collection of its
accounts receivable and that it plans to file complaints and motions for
temporary restraining orders as part of its efforts to recover the
funds, continue collection of accounts receivable and compel compliance
by affiliated practices with their respective obligations under their
Services Agreements. Apple has obtained post-petition financing
commitments from its pre-petition secured lenders. The company, a single
specialty practice management company focused on orthodontics, announced
that prior to its petition date, four orthodontic practices filed suits
against the company seeking damages and termination of their Service
Agreements.
Unable to Sell Company, Just For Feet Announces Wind Down
Birmingham, Ala.-based Just For Feet Inc., which filed chapter 11 in
Delaware last November, announced that its previous efforts to negotiate
a sale of the company have been unsuccessful, according to a newswire
report. The company is seeking court approval to sell all, or various
parts of, its assets in a court-approved auction, which is expected to
take place within two to three weeks. A hearing on scheduling the
auction and bidding procedures has been scheduled for Feb. 1. Just For
Feet continues negotiations with its debtor-in-possession lender to
continue to operate prior to the auction. Currently the company has
insufficient funds to operate normally, so if an agreement cannot be
reached with the lender, the company is likely to expand its
going-out-of-business sales activities to all stores. After the auction,
Just For Feet will consider the best bid or combination of bids, and a
second hearing on approval of the sale is expected to be held in about
three weeks. The company will wind down and cease operations once the
sales have been completed.
Claridge Files Plan, Financier Icahn to Control Casino
The Claridge Hotel and Casino Corp, Atlantic City, N.J., filed a
joint reorganization plan yesterday that calls for financier Carl Icahn
to gain control of the struggling casino, according to the Associated
Press. The Claridge Hotel and Casino Corp. and the Claridge at Park
Place Inc. filed voluntary chapter 11 petitions in August to facilitate
a financial restructuring, and in October, Atlantic City Boardwalk
Associates L.P. (the partnership) filed chapter 11 as well. Under the
plan, the partnership would transfer the assets, including the land,
building and furnishings of the Claridge Casino Hotel, to a reorganized
Claridge. Holders of the company's $85 million first mortgage notes
would receive 100 percent of the equity of the reorganized company, and
small noteholders would have the option to receive, in lieu of equity, a
new 10-year secured note, carrying an 8 percent coupon rate, in an
amount up to the greater of (i) $100,000 principal amount of the
noteholder's holdings, or (ii) 15 percent of the principal amount of the
noteholder's holdings. Unsecured creditors would receive payment in full
over seven equal annual installments beginning on the effective date of
the plan. The court will scheduled a hearing on the adequacy of the
disclosure statement so that solicitation on approval of the plan can
begin.
Bruno's Exits Chapter 11 Debt-Free
Bruno's Inc., Birmingham, Ala., announced yesterday that it
successfully emerged from chapter 11 and that it has no debt now,
according to a newswire report. Substantially all of the assets of the
multi-state supermarket chain have been transferred to a newly created
corporation known as Bruno's Supermarkets Inc. The new company is owned
by the financial institutions that held Bruno's Inc. senior debt, but no
single financial institution will own a controlling share. All general
unsecured creditors will receive a cash disbursement equal to 30 percent
of the allowed value of their claims. Bruno's operates 152 supermarkets
under the Bruno's Food World, Food Fair and Food Max banners in Alabama,
Georgia, Florida and Mississippi.
EQK Realty Investors I Appoints New Advisor
EQK Realty Investors I, a Massachusetts real estate investment trust
(REIT), announced that the company has appointed Newleaf Corp., Atlanta,
as its adviser; the appointment was approved by the bankruptcy court
presiding over the company's chapter 11 filed in December. Newleaf
replaces Gregory Greenfield & Associates, which had previously
replaced Lend Lease Portfolio Management Inc. on an interim basis as
advisor. Among the first priorities will be an aggressive marketing
effort to sell the company's single remaining asset, a 900,000-square
foot regional mall in Harrisburg, Pa., that is anchored by Lord &
Taylor, J.C. Penney and Hecht's department stores.
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