August 182000

Bankruptcy

Judge Passes on Toysmart

U.S. Bankruptcy Judge Carol

Kenner yesterday declined to place advance

conditions on the proposed sale of the customer

list of bankrupt Internet toy retailer

style='color:windowtext;text-decoration:none;text-underline:none'>Toysmart.com

because there was no buyer for the list, according

to a newswire report. Judge Kenner also said

critics would be able to register their objections

when a buyer appears. The proposed sale of the

Waltham, Mass.-based company's customer list,

which contains names and other information on

about 250,000 people, has sparked criticism

both from the Federal Trade Commission (FTC)

and nearly every state attorney general. The

problem is that the Web site had promised people

that the information they provided would "never

be shared with anybody."

But the list is now being considered

an asset the ailing company had hoped to sell

to pay off its debts. The FTC and the attorneys

general have argued that the sale of the list

would violate people's privacy and violate consumer

protection laws. The company, majority-owned

by

href='http://quicken.excite.com/investments/quotes/?symbol=DIS'>

style='color:windowtext;text-decoration:none;text-underline:none'>Walt Disney

Co., reached an agreement with the

FTC that set conditions on any potential sale,

including a requirement that the list only be

sold to a buyer in a related market who agrees

to abide by the terms of the original

href='http://Toysmart.com'>Toysmart.com privacy promise. The company was

hoping Kenner would give the agreement her seal

of approval.

Reliance

in Tentative Deal to Sell Unit to Aon

Reliance Group Holdings Inc., an insurance

company that is considering bankruptcy protection,

said yesterday it reached a tentative deal to

sell its accident and health insurance unit

to a division of Aon Corp., according to Reuters.

New York-based Reliance said the purchase is

subject to a definitive agreement with Aon's

Combined Insurance Company of America, which

focuses on life and health insurance, and regulatory

approvals. On Aug. 14, Reliance said it might

seek bankruptcy protection to restructure its

debt after mounting losses and a repayment schedule

of $700 million in obligations over the next

three years. The

Wall Street Journal reported that Berkshire

Hathaway Inc. is interested in buying some of

Reliance's assets. Last month, Leucadia National

Corp. withdrew from a proposed $293 million

purchase of Reliance, a company used by financier

Saul Steinberg to mount takeover bids during

the 1980s.

Cisco's

Court Rival Files for Bankruptcy

American Metrocomm, a Louisiana phone company

that recently sued Cisco Systems for allegedly

selling faulty equipment, has filed for bankruptcy

protection, according to a newswire report.

American Metrocomm, which offers high-speed

Internet and phone connections to small businesses,

will continue to operate while it financially

reorganizes. The bankruptcy is the latest twist

for AMC, which is mired in a

style='color:windowtext;text-decoration:none;text-underline:none'>court battle

with Cisco. In late April, the networking giant

filed a lawsuit demanding payment for loans

it gave to AMC so it could buy Cisco equipment.

AMC responded in May with a countersuit, arguing

that it was forced to refund about $1.4 million

to its customers because allegedly defective

Cisco equipment failed to provide promised services.

AMC's suit also accuses Cisco employees of alleged

conflicts of interest. AMC is seeking $62 million

in damages and costs associated with the Cisco

equipment. Cisco has vehemently denied the charges

levied by AMC, pointing to its track record

with other customers.