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iPCS Creditors Win OK to File Suit Against Sprint PCS
Creditors of iPCS Inc. said on Wednesday they won bankruptcy court
approval to proceed with a lawsuit against wireless telephone company
Sprint PCS, which they contend broke contract agreements and misused its
control over the affiliate, Reuters reported. iPCS, which sells wireless
telephone service under the Sprint PCS brand in the Midwest, filed for
bankruptcy in February. The creditors asserted that Sprint PCS
controlled its finances and operations and essentially rewrote contracts
to gain an unfair advantage, the newswire reported. The creditors this
week won approval from the U.S. Bankruptcy Court for the Northern
District of Georgia to file a lawsuit against Sprint PCS and seek
damages, the company and creditors said. 'We remain convinced that
Sprint dominates and controls iPCS, and that Sprint should be found
liable for the damages,' the creditors' committee said in a statement.
'Sprint's actions have already cost iPCS's creditors hundreds of
millions of dollars.' Sprint PCS said it denied the allegations.
The court order 'in no way comments on the merits of the lawsuit or
makes any finding that any of the plaintiffs' allegations have any
validity,' said Sprint PCS spokesman Dan Wilinsky, reported the
newswire.
Colombian Airline Aces Faces Liquidation
Colombia's troubled airline group, Alianza Summa, will ask shareholders
in Aces, its second-largest carrier, to liquidate the struggling
airline, a senior pilot said Wednesday, Reuters reported. Pedro Morales,
the president of Aces' pilots' association, also said on local radio
that all Aces flights have already been grounded. 'Aces is over for us.
Yesterday we were told these were our last flights. All that is left is
a shareholders' meeting today in Medellin, in which I think the decision
that has been taken, to liquidate, will be announced to the country,'
said Morales. 'The information that I have is that the liquidation is
imminent,' Juan Camilo Restrepo, a senior official at the Colombian
Coffee Growers' Federation, a major Aces shareholder, told local radio,
reported the newswire.
In the first four months of the year, Aces lost $9 million, up from a
$7 million loss in the same period of 2002. The airline has a cash
shortfall of $33 million and its liabilities totaled $76 million as of
April, Reuters reported.
Northwestern Names Interim CEO to Post Permanently
Cash-strapped U.S. power company Northwestern Corp. on Wednesday named
interim Chief Executive Gary Drook to the post permanently, Reuters
reported. The Sioux Falls, S.D.-based company, which warned last week
that its credit problems could force it to file for bankruptcy, said in
a statement that Drook had served as interim CEO since January.
Northwestern also named Michael Hanson, the former president and CEO of
its Northwestern Energy utility unit, as the company's COO. Last week,
Northwestern's chief financial officer, Kipp Orme, resigned. The company
is conducting a search to fill that position, reported the newswire.
ABB's Asbestos-Settlement Plan Given Fast-track Priority by
Court
The Wall Street Journal reported that ABB Ltd. said Thursday that
its $1.2 billion asbestos-claims settlement plan has received fast-track
priority from the U.S. Third Circuit Court of Appeals, a move that could
help speed up the company's efforts to cap its crippling asbestos
liabilities. The Swedish-Swiss company faces more than 100,000
asbestos-related lawsuits stemming from a Connecticut-based
combustion-engineering unit that insulated boilers with the
cancer-causing agent. ABB is counting on the settlement to clear the way
for it to sell its oil, gas and petrochemicals unit and help reduce its
$8.3 billion in debt, the online newspaper reported. Late last month, a
U.S. district court approved ABB's settlement plan, but several hundred
plaintiffs have appealed the verdict to the Third Circuit Court in
Philadelphia. Plaintiffs opposing the deal have until Aug. 31 to lodge a
formal appeal at the Third Circuit Court of Appeals. After that, the
court will launch an appeal hearing. Analysts said they were optimistic
that the hearings would proceed smoothly, the Journal
reported.
Aurora Foods Defers $9.9 Million in Interest Payments
Aurora Foods Inc. on Wednesday said it deferred $9.875 million of
interest payments due Aug. 15 on both series of its 9.875 percent senior
subordinated notes maturing in 2007, Reuters reported. The St.
Louis-based company said the deferral was connected with the
restructuring it announced on July 2. Aurora said at that time that it
planned to file for bankruptcy and sell a majority stake in the company
to buy out firm J.W. Childs Associates LP for $200 million. Aurora
announced the interest payments deferral in a securities filing. Aurora
aimed to build a portfolio of food brands from large manufacturers, but
struggled with legal problems, weak sales growth and too much debt,
reported the newswire.
Japan's Crosswave Seeks Bankruptcy Protection
Nasdaq-listed Japanese broadband communications firm Crosswave
Communications Inc. said on Wednesday it had filed for protection from
creditors in Japan with total group debts of 68.4 billion yen ($577
million), Reuters reported. 'As a result of severe price competition in
the Japanese communications market and a depressed domestic economy,
Crosswave has been unable to achieve profitability and has experienced
increasing funding constraints,' the company said in a statement.
Crosswave fell into negative net worth in June when its liabilities
exceeded assets by $10 million. The company said on Wednesday it had
filed for bankruptcy protection as a way to continue to provide services
and avoid the confusion that would result from the suspension of its
services, reported the newswire.
Magellan Health Services to Move Out of Chapter 11
Magellan Health Services Inc. has received approval for a plan of
reorganization that should bring the company out of bankruptcy, only a
few months after having filed for chapter 11 protection, BestWire
reported. Magellan Health Services said the U.S. Bankruptcy Court for
the Southern District of New York has approved the disclosure statement
the company filed in connection with its reorganization plan as it seeks
creditor approval for this third amended plan.
The managed-care provider said its financial-restructuring plan would
cut its debt from $1 billion to about $500 million. The bankruptcy court
also authorized the company to begin soliciting approval from its
creditors for the amended plan, which Magellan will do on or about Aug.
29, the company said. The voting deadline for creditor acceptance or
rejection of the plan is set for Sept. 30, Magellan said, reported the
newswire.
Romacorp Advances Its Financial Restructuring Program
Romacorp Inc., operator and franchisor of Tony Roma's restaurants,
yesterday announced in a press release that it continues to make
progress in its efforts to strengthen its financial position. It also
announced that it has reached agreement with the holders of more than 80
percent of its outstanding 12 percent Senior Notes due July 1, 2006 with
respect to a plan to restructure the outstanding Senior Notes.
Romacorp previously announced that it had engaged Houlihan Lokey
Howard & Zukin Capital as its financial advisor to evaluate a number
of alternatives as it seeks greater financial flexibility to reinvest in
its business to create a solid platform for growth. The agreement
announced yesterday specifies, among other things, that Romacorp's
Senior Notes will be refinanced with a combination of cash and newly
issued notes of Romacorp pursuant to an out-of-court exchange offer or a
bankruptcy filing. The refinancing would reduce the company's cash
interest expense, according to the press release.
Holder's Stamina Results In Burlington Chapter 11 Probe
Walker Rucker has been pressuring textile maker Burlington Industries
Inc. for some time in hopes of seeing a return on his stock in the
company, but with little success. His persistence yielded some rewards
recently, when the court overseeing Burlington's chapter 11 bankruptcy
case ordered the company to provide documents and allow Rucker
interviews with executives in an effort to uncover hidden value in the
company. It's still unclear, however, whether the information will prove
useful.
Lawyers for Rucker interviewed Burlington executives and obtained
documents on Burlington affiliates not in chapter 11—Nano-Tex LLC,
Nano-Tex Inc. and Burlington Worldwide Ltd.—which Rucker said
Burlington has undervalued in marketing itself for sale.
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href='http://www.djnewsletters.com/dbr2.html'>www.djnewsletters.com/dbr2.html).
Copyright (c) 2003 Dow Jones & Company, Inc. All Rights
Reserved.
EchoStar Purchase Of Loral Space Would Put It In New
Business
By acquiring Loral Space & Communications Ltd., EchoStar
Communications Corp. would be able to add capacity, but also would be
moving beyond its core business of satellite broadcasting. Loral
confirmed in a statement late Tuesday that it received an informal offer
from EchoStar to acquire all its entire satellite fleet as well as its
satellite manufacturing unit. As reported earlier, EchoStar offered more
than $1.45 billion for the assets. If EchoStar decides to go ahead with
a formal bid, it would be the second publicly declared interest in
Loral's assets. In July, Intelsat Ltd. agreed to buy Loral's North
American satellite fleet for $1 billion.
EchoStar, which has about $2 billion in cash, has been looking for
ways to expand since its proposed merger with Hughes Electronics Corp.'s
DirecTV fell apart earlier this year amid regulatory disapproval. Since
then, Australian satellite powerhouse News Corp. has stepped in to buy a
controlling stake in Hughes.
Provided by Daily Bankruptcy Review (
href='http://www.djnewsletters.com/dbr2.html'>www.djnewsletters.com/dbr2.html).
Copyright (c) 2003 Dow Jones & Company, Inc. All Rights
Reserved.
Trenwick Files for Chapter 11 Bankruptcy as Part of
Restructuring
Bermuda-based Trenwick Group Ltd. announced that it has filed for
protection under chapter 11 of the U.S. Bankruptcy Code with the U.S.
Bankruptcy Court for the District of Delaware, according to the
Insurance Journal. The filing also includes its affiliates
LaSalle Re Holdings Limited and Trenwick America Corp. The company
described the filing as 'a step in its previously announced
restructuring and in accordance with its Aug. 6 letter of intent with
creditors.' It also noted that 'Trenwick and LaSalle Re Holdings are in
the process of filing proceedings in the Supreme Court of Bermuda, known
under Bermudian law as 'winding up,' as a further step in the
restructuring and in accordance with the previously announced Letter of
Intent.' The letter set out a plan to restructure some $375 million in
debts owed to the group's principal lenders.
According to a report on the filing from Reuters, Trenwick expects to
dispose of its insurance and reinsurance operations, which would
continue to function under their successors. It also expects to sell its
Lloyd's operations to a company controlled by Lloyd's management.
Mental-Health Insurer Moves Closer to Reorganization Plan
Columbia, Md.-based Magellan Health Services yesterday announced that a
federal bankruptcy-court judge has approved its disclosure statement,
the step in the corporate-bankruptcy process that leads to a creditor
vote on a company's plan of reorganization, according to the
Baltimore Sun. The bankruptcy judge's approval of this disclosure
statement is just one of several steps remaining ahead of Magellan as
the company works to emerge from federal bankruptcy protection. However,
if all goes according to plan, the firm could be in U.S. Bankruptcy
Court in Manhattan as early as Oct. 8, asking a federal judge for final
approval of its plan of reorganization, the online newspaper
reported.
Magellan, which provides mental health and employee-assistance
treatment for about 65 million people, filed for chapter 11 federal
bankruptcy protection in March. The company had amassed about $1 billion
in debt via a 1990s acquisitions spree, later disposing of businesses
that didn't mesh with its central strategy. The plan of reorganization,
if consummated, will halve Magellan's debt to $500 million and infuse it
with $150 million in new equity from an outside investor, according to
both the company and published reports, according to the Sun.
Malden Mills Industries Chairman Gets More Time to Secure
Financing
A key hearing for Malden Mills Industries Inc. has been postponed until
Monday, giving chairman Aaron Feuerstein a few extra days to arrange an
unusual financing package to buy back control of the Lawrence textile
company, reported the Boston Globe. Feuerstein is seeking $50
million in working capital guarantees from the US Export-Import Bank in
Washington, which would be the largest ever made by the public agency.
He met yesterday with its staff trying to pull the deal together, the
online newspaper reported. Even the request is a sign of the political
support that Feuerstein has drawn in his efforts to take back control of
Malden Mills as it emerges from chapter 11 bankruptcy. But the amount
has drawn some skepticism, said an official involved in the review
process, and it isn't obvious what the bank's three-member board will
decide.
Malden Mills sought bankruptcy protection nearly two years ago. Under
the terms of an agreement with creditors, Feuerstein will control just
one of its seven board seats and a small fraction of its equity. But
until Aug. 26 he has the right to buy back control of the family
business for about $92 million. Afterward the price would increase to
around $124 million until August 2004, $151.4 million until August 2005,
and $158.5 million until August 2006.
Kaiser Aluminum Amends Credit Facility
Houston-based Kaiser Aluminum on Wednesday said that the sixth amendment
to its existing credit agreement has become effective, increasing its
available credit by about $45 million, and the term of the credit
agreement for one year, Reuters reported. With the latest amendment, the
company's current credit agreement will run through February 2005.
Kaiser, which produces fabricated aluminum products, said it is aiming
to emerge from chapter 11 bankruptcy protection in 2004. However, it
said it sought an extension of the credit agreement to help provide
financing after its exit from bankruptcy, the newswire reported.
Former Polaroid Auditor Seeking to Block Improper Accounting
Report
After six months of investigating Polaroid Corp. for alleged improper
accounting leading up to its October 2001 bankruptcy, court-appointed
examiner Perry Mandarino has run into a last-minute roadblock:
Polaroid's former auditor, KPMG LLP, is seeking to block release of
parts of Mandarino's report, according to the Boston Globe. The
accounting firm, which audited Polaroid's financial statements in the
late 1990s through the bankruptcy, last week wrote to a lawyer for
Mandarino, saying that documents it provided during his investigation
are confidential, and that it does not want them released in his report,
the newspaper reported. The report has set off a last-minute scramble as
Mandarino seeks permission from U.S. Bankruptcy Judge Peter J. Walsh to
include the documents in his report.
Mandarino's report will rely heavily on documents produced by KPMG,
and will include several of those documents as exhibits to the report,
according to a court filing. If he were to remove the references to
KPMG's documents, the report 'would be substantially watered-down and
would not represent the entirety of the examiner's examination,' wrote
lawyers for Mandarino. The legal maneuvering has heightened anticipation
about what Mandarino's investigation will reveal about Polaroid's
bankruptcy. A hearing has been requested for tomorrow before Walsh to
determine whether to honor KPMG's request for secrecy. Mandarino has
asked the judge to deny KPMG's request, or allow him to file the
Polaroid report under seal, in which case only a few parties
participating in the bankruptcy case would have access to it, the
Globe reported.
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