|
Lawmakers Strive to Conclude Bankruptcy
Overhaul
House and Senate negotiators were hammering out their final differences
yesterday over legislation to overhaul the U.S. bankruptcy system,
according to Reuters. Agreements were reached at the staff level Tuesday
on the majority of outstanding issues, and lawmakers remain optimistic
that they can settle the issues holding up the passage of the bill. 'We
think we can get it done,' Senate Judiciary Committee Chairman Orrin
Hatch told reporters. However, sharp differences remain, namely, how
much of the value of their homes debtors should be allowed to shield
from creditors in bankruptcy. The Senate set a $100,000 cap in its
version of the legislation, passed in February, taking the view that the
unlimited 'homestead exemptions' now allowed in Florida, Texas and three
other states unfairly allow formerly wealthy debtors to keep homes
worth, in some cases, millions of dollars - despite discharging huge
debts. By comparison, the House voted last May for a $250,000 cap and
allowed states wishing to do so to opt out of it.
DEN Announces Plans to File Chapter 11
Digital Entertainment Network, a startup online entertainment company,
told its 150-person staff yesterday that it has run out of funding and
can no longer pay employees, according to Reuters. The Santa Monica,
Calif.-based company, which was backed by high-profile investors
including Chase Capital Partners, Microsoft, Dell, NBC and former Warner
Bros. co-chairman Terry Semel, said it plans to file for chapter 11
protection as soon as possible. DEN had already laid off more than 100
staffers earlier this year. Since it launched in 1998, the site has been
sharply criticized for lavish spending on its two facilities and top
execs, management shuffles and a sexual harassment lawsuit against
co-founder Marc Collins-Rector by a 20-year-old, which many in the
industry said had tainted the company's brand identity, crippling its
fund-raising capabilities. In an attempt to make a comeback, DEN tried
to appeal to its young audience, industry naysayers and investors with a
flashy new site and original content, but financiers decided not to pump
more money into the startup. DEN had raised $60 million to date, and
last month announced it would halt production on its original slate of
shows, which targeted such audiences as Christian teens and
extreme-sports fanatics, and would acquire content from outside
production houses in order to cut rising costs. An IPO filing, which
would have sought out to raise $75 million, was canceled in February.
AmeriServe Sues Ex-CEO
Bankrupt restaurant supplier AmeriServe Food Distribution Inc., Addison,
Texas, has filed a lawsuit against its founder and former chief
executive, claiming he improperly pulled tens of millions of dollars out
of the company before it filed for bankruptcy in January, the Associated
Press reported. The company, which has lost more than one-third of its
restaurant business, including accounts with such restaurant chains as
Burger King and Chick-fil-A, charged in its lawsuit, filed Tuesday in
Wilmington, Del., that John Holten wrongfully diverted funds from the
company into other companies under his control under the guise of
expense reimbursements, management fees and other transactions, and that
the transfers had 'no legitimate business purpose,' leaving the company
short of money to meet its obligations. The company has asked for the
return of the money and unspecified punitive damages; Holten's attorney
denied any wrongdoing and called the lawsuit a typical tactic in
bankruptcy cases. 'In a bankruptcy proceeding, where there is ever a
transfer of money, lawsuits are filed...creditors are trying to maximize
their return,' said Robert S. Burrick, a New York bankruptcy lawyer. 'We
can justify the payments.' Burrick said Holten's companies, principally
closely held Holberg Industries Inc. of Greenwich, Conn., maintained
financing for AmeriServe.
David Margulies, an AmeriServe spokesman, said yesterday that the amount
of money involved is 'substantial,' but that the company wasn't alleging
that the transfers alone forced the bankruptcy filing.
In a related matter, investors who bought AmeriServe bonds have asked
the U.S. Bankruptcy Court in Wilmington for assistance in investigating
a $200 million bond offering in September underwritten by Donaldson,
Lufkin & Jenrette Inc. Burrick said Holten and Holberg Industries put
$30 million into the company in early December, along with $100 million
from DLJ and $15 million from a major customer, Tricon Global
Restaurants Inc. of Louisville, Ky.
Ventas Files Proof of Claim in Vencor Bankruptcy
Real-estate investment trust Ventas Inc., New York, said yesterday it
has filed a proof of claim totaling about $4 billion in Vencor Inc.'s
chapter 11 bankruptcy proceeding, according to a Dow Jones newswire
report. Ventas, Vencor's primary landlord, said the claim includes rent
due to Ventas at contract rental rates until certain master lease
agreements expire. In November, Ventas itself reached an agreement with
more than 95 percent of its lenders on terms to restructure Ventas's
debt. Vencor, one of the nation's largest U.S. nursing-home operators,
filed for bankruptcy last September. Last Thursday, Vencor asked the
U.S. Bankruptcy Court for the District of Delaware to extend its
reorganization plan filing date to July 18. In March, the Justice
Department announced it was seeking more than $1.3 billion from Vencor,
alleging that the company had defrauded government health-care programs
since 1992, according to the Associated Press. In April, it reached an
agreement with Vencor under which Vencor must repay $90 million over
five years.
AIOC Corp., AIOC Resources Seek Approval of Joint Chapter 11
Plan
The chapter 11 trustee for AIOC Corp. and AIOC Resources AG, Edward G.
Moran, is seeking court approval of his amended joint transnational
chapter 11 plan, dated May 3, that provides for 100 percent
distributions on all allowed administrative and priority claims,
according to a newswire report. The U.S. Bankruptcy Court for the
Southern District of New York approved the disclosure statement for the
plan on May 4, and scheduled a hearing to consider confirmation of the
plan for 9:45 a.m. on June 1. Ballots accepting or rejecting the plan
must be received by the balloting agent, and objections to confirmation
of the plan must be filed and served, by 4 p.m. EST on May 26. Parties
in interest may obtain further information by contacting the balloting
agent, Bankruptcy Services LLC, Attn: Mr. Alex Houghton, at (888)
498-7763 or (212) 376-8989 (fax), or Moran at (212) 697-3515 or (212)
986-1530 (fax). Prior to their filing in April 1996, both companies were
engaged in the purchase and sale of ferrous, nonferrous and precious
metals with trading partners throughout the world, and maintained more
than 20 offices worldwide. In August 1996, AIOC Resources became the
subject of an involuntary bankruptcy proceeding in Zug, Switzerland,
which is being administered by the Bankruptcy Office for the Canton of
Zug, Switzerland. The Swiss and U.S. proceedings involving Resources
have been administered and coordinated under a Cross-border Liquidation
Protocol entered into by the chapter 11 trustee and the Swiss Bankruptcy
Office.
GST Files for Bankruptcy, Sells Assets
Reuters reported that California-based GST Telecommunications Inc. filed
for bankruptcy yesterday and has agreed to sell substantially all of its
assets to Time Warner Telecom Inc. for $450 million. GST, an integrated
communications provider (ICP), claims it has secured a commitment from
Heller Financial Inc. for debtor-in-possession financing of up to $50
million. The company said the filing (44 filings for GST and 43
affiliates) was necessary because of high cash-flow problems, a
substantial debt load and an inability to secure financing. 'Given our
recent liquidity challenges, I believe we are taking all the right steps
to preserve the value of GST by continuing to provide quality service to
our customers and retain our employee base,' said Tom Malone, GST's
acting chief executive. The company originally discussed its liquidity
problems on May 9 when GST's debt, already trading at distressed levels,
fell hard on news of the bankruptcy filing. GST said cash had fallen
below $20 million on May 5 from more than $42 million on March 31 and
argues that delays on construction projects had deferred some receipts.
Time Warner Telecom said its proposed acquisition of GST's assets would
extend geographic expansion. GST's bankruptcy filing listed assets of
$489.1 million and liabilities of $179.7 million.
New ICO Emerges from Bankruptcy Protection
According to a newswire report, the former ICO Global Communications has
successfully emerged from chapter 11 following completion of a $1.2
billion investment led by telecommunications pioneer Craig McCaw. 'We
appreciate having the opportunity to learn from the pioneering efforts
of others in reconfiguring New ICO for the market,' said McCaw. New ICO
will be the successor to ICO Global Communications (Holdings) Ltd.,
established in January 1995 to provide global mobile personal
communications services by satellite. ICO's stock was suspended from
trading when the company filed for chapter 11 protection last fall. The
business was renamed New ICO following its emergence from chapter 11
yesterday. New ICO (pronounced 'EYE-co') is based in London with offices
in Washington, Miami and more than nine other international locations.
In related news, ICO-Teledesic Global Ltd., a new holding company
that controls the satellite assets of McCaw's private investment
company, Eagle River Investments LLC, intends to merge with New ICO.
This proposal is subject to approval by the New ICO board and
shareholders and regulatory authorities. Russell Daggatt will now become
acting chief executive officer of New ICO and ICO-Teledesic Global. 'The
New ICO and Teledesic teams are already working together laying the
groundwork for delivering quality global voice and satellite 3G wireless
services', said Daggatt. McCaw and Microsoft founder Bill Gates are
Teledesic's two primary founding investors.
Involuntary Chapter 11 Filed Against Mossimo
Financially troubled sportswear designer Mossimo Inc. said yesterday
that an involuntary petition has been filed against it, according to
Reuters. Mossimo, which said in March it would make substantial job cuts
as part of a restructuring to refocus on design and finance rather than
its traditional wholesale-to-retail business, said the petition was
filed on Tuesday by Pacific Apparel Resources Inc., Caeco Enterprises
Inc. and Wilmar Concepts.
Morris Material Handling Announces $35 Million DIP
Financing
Morris Material Handling Inc., Milwaukee, Wis., a global provider of
equipment and services for material handling, announced yesterday it has
filed chapter 11 cases for itself, its parent, MMH Holdings Inc., and
its domestic subsidiaries, in the U.S. Bankruptcy Court for the District
of Delaware, according to a newswire report. The company has also
announced that is has received a $35 million debtor-in-possession
financing facility from Canadian Imperial Bank of Commerce as an agent
for a syndicate of banks, including members of the company's existing
bank group. 'The [creditors'] committee is fully supportive of the
company and looks forward to working with the company to implement a
capital structure that is appropriate for its operations, which should
allow the company to remain competitive and support growth in its core
businesses,' said Randall Lambert, managing director of Chanin Capital
Partners LLC, the committee's financial advisor. Morris has global
operations on five continents and manufactures a broad range of
through-the-air cranes and hoists for material handling.
Hooters Founders Acquire Bankrupt Manhattan Hooters
Hooters Inc., the originators of the Hooters Restaurant concept,
announced yesterday that they have acquired the Staten Island and
Manhattan, N.Y., Hooters locations out of a chapter 11 bankruptcy
filing, according to a newswire report. 'We are extremely excited,'
stated President Neil Kiefer. 'The previous operator worked hard getting
the units open, but now they need our boost to get to the level of
service, fun and prominence that we enjoy across the country.' The units
are located at 56th and Broadway in Manhattan and on Hyland in Staten
Island.
Oklahoma Woman Convicted of Fraud
Dan Webber, U.S Attorney for the Western District Oklahoma, announced
that Lola Faye Denton of Elk City, Okla., was convicted yesterday on
federal charges of bank fraud, bankruptcy fraud, mail fraud and
conspiracy to commit perjury. Denton's conviction followed a four-day
trial before U.S. District Judge Robin Cauthron. 'Denton attempted to
cheat, through lies and deception, both in the banking system and the
bankruptcy system,' said Webber, 'Ms. Denton's schemes have been exposed
and will be punished appropriately.' Denton faces a maximum sentence of
up to 30 years in prison and a fine of up to $1 million dollars for
obtaining loans from an Oklahoma bank and claming she was owed money
from a fictitious person, all in connection with a wildlife park known
as Bear Creek. Denton and other co-conspirators also testified falsely
under oath to the U.S. Bankruptcy Court in connection with her
bankruptcy. The case was referred to the FBI, following tips from the
Office of the U.S. Bankruptcy Trustee and Washita State Bank.
Federal Jury Convicts Minneapolis Couple of Fraud
On May 10, a federal jury in Minneapolis convicted a husband and wife,
Ronald and Diane Mages of Paynesville, Minn., for operating a
wide-raging scheme that involved bankruptcy fraud, wire fraud, mail
fraud and making false statements to fraudulently obtain U.S. Department
of Agriculture program payments, according to the Executive Office for
U.S. Trustees. The three-week trial found the Mages guilty of 46
criminal felony counts. The pair operated two farming businesses, RODI
Inc. and Greater Minnesota Investments Inc. (GMI), and during the course
of their chapter 11 that they filed in May 1994, they hid their
interests in the two companies, as well as the corporations' assets,
from the U.S. Trustee, the bankruptcy estate and their creditors. This
reduced their debt to their creditors, including the U.S. Department of
Agriculture (USDA), from $1.9 million to $300,000. In addition, they had
hidden their interest in GMI and their conversion and unlawful farming
of a wetland, which enabled them to receive more than $113,000 in USDA
program benefits they were not otherwise eligible to receive. The Mages
each face a maximum penalty of 30 years in prison and/or a $1 million
fine on each count of mail fraud and wire fraud, and up to five years in
prison and/or a $250,000 fine on each count of bankruptcy fraud,
conspiracy and false statements. Extensive assistance was provided by
Region 12 U.S. Trustee Barbara Stuart, as well as Assistant U.S.
Trustees Robert Raschke and Jim Snyder, and attorney Michael Fadlovich.
size='3'>Thanks for visiting Today's Bankruptcy Headlines.
New
articles are posted here each business day.
|
