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November 14, 2002
House Set to Act on Conference Report Today
The outstanding conference report on bankruptcy reform is expected to be
cleared by the Rules Committee for floor action today, a House GOP aide
said late on Wednesday evening, CongressDaily reported. Although
House Republican leaders had expressed concern that the Senate might not
have time to approve the conference report, 'we're not going to sit
around and wait for them [to go first],' the aide added. Separately, a
House leadership source confirmed late on Wednesday that the bankruptcy
and terrorism insurance measures were slated for floor consideration
today.
Sen. Charles Grassley (R-Iowa) and a bipartisan group of colleagues
sent a letter to Senate leaders late on Wednesday urging passage of
comprehensive bankruptcy reform legislation, the newswire reported. The
letter, copied to House leaders, read, 'We pledge our commitment to you
to take the steps necessary to ensure passage of the conference report
-- before Congress adjourns for the year, and trust you will bring the
package to the floor quickly.' In addition to Grassley, Sens. Thomas
Carper (D-Del.), Orrin Hatch (R-Utah), Jeff Sessions (R-Ala.), Joseph
Biden ( D-Del.), Ben Nelson (D-Neb.) and John Breaux (D-La.) have signed
the letter.
Separately, the United States Conference of Catholic Bishops sent a
color='#000080'>letter to members of Congress yesterday,
expressing concern that the conference language attacks the rights of
peaceful pro-life protesters. The group stated that 'the language will
be used to take away the savings, homes and other property of low- and
middle-income peaceful protesters to pay fines and the attorneys' fees
of their opponents.'
Dow Jones reported that a spokesman for the Christian Coalition has said
that Sen. Robert Smith (R-N.H.) has placed a 'hold' on the bill in the
Senate, which could effectively kill the legislation's chances of
getting enacted this year. Calls to Smith's office were not returned,
reported the newswire.
U.S. Bankruptcy Bill Doesn't Harm Lawful Protests (Dow Jones
Newswire)
In an article by Dow Jones newswire, former Judge and Solicitor General
Kenneth W. Starr, currently an attorney at Kirkland & Ellis, says
the item in the bankruptcy reform legislation designed to ensure
protesters pay court-ordered fines won't affect lawful protests from
antiabortion groups or other activists. To read the complete article,
point your browser to
href='http://online.wsj.com/article/0,4820,BT_CO_20021113_007674-search,00.ht…'>
color='#000080'>http://online.wsj.com/article/0,4820,BT_CO_20021113_007674-search,00.ht…
%3E%28article%2Ddoc%2Dtype%3CCONTAINS%3Ebankruptcy%29%29
(subscription required).
Greenspan Tells Congress Economy Has Hit 'Soft Patch'
Federal Reserve Chairman Alan Greenspan told Congress yesterday that the
economy has proven 'remarkably resilient' over the past year, but warned
that shocks from falling stock prices and worries about a war with Iraq
are dimming growth prospects, CongressDaily reported. Greenspan said the
Fed's interest rate cut was the central bank's response to the growing
dangers, adding that the central bank believed the economy would be able
to pull out of the current weak period. But Greenspan told the Joint
Economic Committee there was no doubt that a number of forces are
currently holding back growth, citing the corporate accounting scandals,
the continued reluctance of businesses to increase their investment
spending and 'heightened geopolitical risks.'
National Energy Group Unit Must Restructure Credit
PG&E Corp.'s National Energy Group (NEG) unit lacks adequate sources
of liquidity to meet its obligations and may have to seek chapter 11
bankruptcy protection if it's unable to restructure its debt, according
to a regulatory filing on Wednesday, Dow Jones reported. During a
conference call on Wednesday, PG&E officials said a bankruptcy
filing by NEG wouldn't have financial recourse to the parent company. In
PG&E's third quarter report filed with the Securities and Exchange
Commission, the company said the National Energy unit has proposed to
its lenders a global restructuring plan that would require it to sell or
transfer merchant assets and reduce energy trading operations. If
completed, the sales and transfers proposed in the restructuring plan
would result in 'substantial' charges to earnings in either the fourth
quarter or in 2003, the newswire reported. PG&E is a utility holding
company. Its Pacific Gas & Electric unit filed for chapter 11
bankruptcy in April 2001.
AMF Bowling Worldwide First Quarter Net Loss: $20.8
Million
AMF Bowling Worldwide Inc. said it lost $20.8 million for the first
quarter that ended Sept. 29, compared to a net loss of $64.1 million in
the year-ago quarter, Dow Jones reported. In its quarterly report filed
on Wednesday with the Securities and Exchange Commission, AMF Bowling
said it lost $2.08 a share. The company emerged from bankruptcy on March
8. AMF Bowling said its revenue for the quarter was $150.6 million,
compared to $156.9 million a year earlier.
Swift Transportation Expects to Benefit from Trucking Industry
Woes
The high costs of insurance and a lack of liquidity will drive more
trucking companies into bankruptcy and keep others from expanding,
benefiting large players such as Swift Transportation Co., Swift Chief
Financial Officer Bill Riley said on Wednesday, Dow Jones reported. To
cope with climbing insurance premiums, many trucking carriers are having
to raise their deductibles and lower the upper end of their umbrella
coverage, Riley said during the Salomon Smith Barney Transportation
Conference broadcast on the Internet. Such carriers risk insolvency in
the event of serious accidents. In addition, the trucking industry is
essentially shut out from equipment financing, bank lending and capital
markets, Riley told investors. 'Liquidity for truckload motor carriers
... is drying up,' according to Riley, the newswire reported. The
trucking industry has seen a record number of failures in recent years.
The sector was hit first by industry recession and higher fuel prices,
then by the rising insurance costs.
Creditor Objects to Panaco Exclusivity Extension Request
A secured creditor of Panaco Inc. has opposed the company's request for
an extension of its exclusive right to file a chapter 11 plan, saying
the oil and natural gas firm has neither made progress toward filing a
plan nor established cause for the extension, Dow Jones reported.
Foothill Capital Corp., the creditor, said Panaco's 'assets are
depleting in nature and its operating expenses are high,' according to
an objection filed with the bankruptcy court on Tuesday, the deadline
for parties to respond to Panaco's extension request. Panaco is seeking
an extension of its exclusive plan-filing period to Jan. 31, 2003. If
Panaco files a plan by that date, other parties would be further
excluded from filing competing plans through March 31, 2003, while the
company collects votes for its plan. The U.S. Bankruptcy Court in
Houston will consider the proposed extension at a hearing today
(Thursday), the same day the company's initial exclusive period to file
a plan is set to expire, the newswire reported.
U.S. Government Extends WorldCom Contract, Suspends
Executives
The Bush administration on Wednesday agreed to extend a key contract
with WorldCom Inc., but said it would not allow two former executives of
the bankrupt telephone giant to conduct business with the federal
government, Reuters reported. Following a review of federal contracts
with WorldCom, the U.S. General Services Administration (GSA) said it
agreed to use MCI WorldCom Communications Inc. for telecommunications
services for at least another year. GSA also announced that former
WorldCom officials Scott Sullivan and David Myers were suspended from
conducting business with the federal government. A GSA official said the
suspensions would stay in effect until the conclusion of legal
proceedings against the former executives, the newswire reported.
Stevens Financial Group Reaches Settlement
Stevens Financial Group (SFG) of Springfield, Va.has reached a
settlement that could revive the securities company, which filed for
bankruptcy last year, a company trustee said, the Associated Press
reported. The company filed for federal bankruptcy protection in March
2001 shortly after the state filed a cease and desist order against the
company. Court-appointed U.S. Bankruptcy Trustee Vern Schweigert said on
Tuesday several SFG-related entities reached an agreement for $4.1
million. Bankruptcy Judge Redfield T. Baum Jr. will review the
settlement during a Dec. 2 hearing in Phoenix, Ariz. Schweigert
currently is negotiating separate settlements worth about $1 million
each with SFG founder Damian Sinclair and Susan Sinclair, Damian's
ex-wife and a former SFG director. If the judge rejects the settlement,
the company may have to liquidate its assets, which would mean about 4
cents on the dollar for investors, the newswire reported.
In Store Media Systems Files Reorganization Petition
In Store Media Systems Inc. announced yesterday that it has filed for
chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the
District of Colorado, PR Newswire reported. The company has petitioned
to continue operations as debtor-in-possession and will file a plan of
reorganization to pay all undisputed creditor claims in full. The
bankruptcy was precipitated by Let's Go Shopping Inc.'s cancellation of
a patent and license agreement, In Store said. In Store Media Systems is
a public company that specializes in retail grocery coupon distribution
and coupon processing technologies, associated data management and data
marketing services.
Integrated Telecom Landlord Fights Chapter 11 Plan
Disclosure
An Integrated Telecom Express Inc. landlord on Tuesday objected to the
disclosure statement to the company's liquidation plan, arguing the
chapter 11 case was filed in bad faith and the plan would fail to fully
pay certain claims that are entitled to full payment, Dow Jones
reported. NMSBPCSLDHB L.P., formerly known as Granum Holdings, the
creditor and the landlord for Integrated Telecom's San Jose
headquarters, is expected to file a claim in the bankruptcy case of more
than $20 million, court papers said. Integrated Telecom said in court
papers it intends to reject the lease on its headquarters. The landlord
could have sought the claim amount if Integrated Telecom rejected the
lease outside of bankruptcy, but under the protection of chapter 11, the
landlord's damage claim will be capped, the newswire reported.
Adaptec to Buy Tricord Systems Assets
Adaptec Inc. agreed to acquire the technology assets of Tricord Systems
Inc. through bankruptcy proceedings for $2 million in cash, Dow Jones
reported. In a press release on Wednesday, Adaptec said it plans to use
Tricord's technology -- designed for managing network-attached storage
systems -- as part of its plan to expand its line of external storage
products to include file- and block-based storage systems. The
acquisition, which Adaptec expects to complete on Friday, doesn't
include any liabilities or customer obligations. Tricord, which filed
for chapter 11 bankruptcy protection in August, agreed to sell
substantially all of its assets earlier this month to unnamed
parties.
Network Plus Reaches New Contract Settlement with Qwest
Network Plus Corp. said on Wednesday that it has negotiated a new
settlement with Qwest Communications Corp. to resolve contract disputes,
Dow Jones reported. The debtor company will seek approval of the deal in
December, said Mitchel Appelbaum, an attorney with Hale & Dorr, the
firm representing Network Plus. Terms of the settlement weren't
disclosed. Jeff J. Friedman, an attorney representing Qwest
Communications, said his client will make one lump sum payment to
satisfy amounts owed to Network Plus under the contracts. The amount is
likely to exceed the $4.7 million payment Qwest was to have made to the
debtor under an August agreement to settle the dispute, the newswire
reported.
Kasper Gets Court OK For New Loan; Amends Chapter 11 Plan
The bankruptcy court handling Kasper A.S.L. Ltd.'s chapter 11 case
authorized the company to accept a proposal letter for refinancing its
debtor-in-possession loan and for exit financing, Dow Jones reported.
Kasper plans to use the new $100 million loan to satisfy its needs once
its proposed chapter 11 reorganization plan goes into effect, according
to court papers. The funds, along with cash on hand, will also be used
to pay creditors under the plan. The amended plan, filed by Kasper last
week, is subject to the approval of its creditors and Judge Allan L.
Gropper of the U.S. Bankruptcy Court in Manhattan. In court papers,
Kasper had said it would use the new loan from Citicorp USA Inc.,
Foothill Capital Corp. and GMAC Commercial Finance LLC to refinance any
amounts due under its $126.8 million DIP loan with a group of lenders
led by J.P. Morgan Chase Bank. Upon exiting chapter 11, Kasper said, it
would use the funds to refinance any amounts due under the new DIP loan.
The New York women's branded apparel company has been under chapter 11
protection since Feb. 5.
Ames Department Stores Poised to Sell $48.5 Million In Assets to
Shaw's
Ames Department Stores Inc. has agreed to sell 16 of its store leases
and two of its owned stores to Shaw's Supermarkets Inc. for $48.5
million, subject to higher offers at an auction on Friday, Dow Jones
reported. Judge Robert Gerber of the U.S. Bankruptcy Court in
Manhattan approved bidding procedures for the sale-including a $1.46
million breakup fee provision-following a Nov. 6 hearing. Competing
bids, which were due on Tuesday, must be at least $50.9 million, include
a 10 percent cash deposit and not be subject to any due diligence or
financing contingency, the newswire reported. The liquidating discount
retailer may also consider bids for one or a package of leases or
stores, but can't accept the bids unless they together equal or exceed
the minimum overbid price of $50.9 million. Judge Gerber will hold a
Nov. 25 sale hearing to consider approval of the offer selected by Ames
as the highest and best offer at the auction. Ames filed for chapter 11
for the second time in a decade in August 2001. In September, Ames
decided to close all 327 of its remaining locations after sales dropped
and merchandise became harder to obtain.
XeTel Can't File Second Quarter Results on Time; Cites Chapter 11
Case
Circuit board maker XeTel Corp. said it can't file its second-quarter
results on time, according to a late notice sent to the Securities and
Exchange Commission, Dow Jones reported. The company said its resources
are focused on the chapter 11 case and diverting its staff away from
those duties would result in substantial legal and accounting fees.
XeTel did report revenue and loss figures, but cautioned that the
figures weren't prepared on a liquidation basis and said readers should
'consider the potential insufficiency of the financial information
presented.' For the quarter ended Sept. 28, the company reported a $9.8
million loss, wider than the $5.6 million loss for the year-ago period;
revenue dropped to $6.7 million from $16 million, the newswire reported.
On Oct. 21, XeTel filed a voluntary chapter 11 petition in the U.S.
Bankruptcy Court in Austin, Texas, listing $37 million in assets and $34
million in debts.
Metromedia Fiber to Sell Internet Exchange Facilities
Metromedia Fiber Network Inc. has agreed to sell some Internet exchange
facilities and related assets to a unit of Switch & Data Facilities
Co. for $41.5 million, Dow Jones reported. In court papers obtained on
Wednesday by Dow Jones Newswires, Metromedia asked the U.S. Bankruptcy
Court in White Plains, N.Y., to approve bid procedures through which
other parties could submit competing offers for the property. Metromedia
Fiber sought chapter 11 protection on May 20, saying it had overbuilt
while growing its businesses. To become cash-flow positive, the
fiber-optic network builder said it would seek to dispose of
unproductive properties, as well as to reject burdensome vendor
contracts and substantially reduce its debt. A hearing on the proposed
bid procedures is scheduled for Nov. 26 before U.S. Bankruptcy Judge
Adlai S. Hardin Jr. Metromedia has asked Judge Hardin to schedule a
sale hearing for Jan. 9.
TLC Health Care Services Wins Access to Collateral
Tender Loving Care Health Care Services Inc. (TLC) has won emergency
approval to use its cash collateral after the company's main lender shut
off the funding faucet, the Daily Deal reported. Judge Stan
Bernstein of the U.S. Bankruptcy Court for the Eastern District of
New York approved the emergency petition in first-day motions on Monday,
so TLC could continue operating. TLC needed the approval after
struggling senior lender National Century Financial Enterprises Inc.
refused to provide additional funding. TLC has not sought
debtor-in-possession financing.
Another Chapter 11 Blamed on NCFE
The problems at National Century Financial Enterprises (NCFE) are
reverberating through the health care industry as PhyAmerica Physician
Group Inc. became the third company to tie its chapter 11 filing to NCFE
in the past week, the Daily Deal reported. Durham, N.C.-based
PhyAmerica said on Tuesday that it filed for bankruptcy in the U.S.
Bankruptcy Court for the District of Maryland in Baltimore on Monday so
it could iron out its debt with struggling National Century. 'PhyAmerica
has generated positive cash flow from operations over the past 14
months... and now has one problem -- to successfully restructure the
NCFE debt,' CEO Steven Scott said in a statement. PhyAmerica and
affiliates ECS Holdings Inc., PhyAmeirca Government Services Inc. and
Integrated Provider Networks PA all filed for chapter 11, the Deal
reported.
Tender Loving Care Health Care Services Inc. filed for bankruptcy in
the U.S. Bankruptcy Court for the Eastern District of New York in
Central Islip on Nov. 8 when National Century allegedly defaulted on
cash advances in return for TLC's receivables. Meridian Corp. also tied
its chapter 11 filing to problems with National Century when it filed in
the U.S. Bankruptcy Court for the District of Tennessee in Memphis.
Ilene J. Lashinsky Appointed United States Trustee for
Arizona
Ilene J. Lashinsky has been appointed United States Trustee for Arizona
(Region 14), Lawrence Friedman, Director of the Executive Office for
United States Trustees announced in a press release yesterday.
Lashinsky's appointment takes effect November 18, 2002. Immediately
before her appointment, Lashinsky was of counsel to the Scottsdale,
Ariz., firm of Hymson & Goldstein P.C., where her practice focused
on the representation of creditors and debtors in complex commercial
bankruptcy matters and commercial litigation. For the previous 17 years,
she was a partner at Davis & Lowe P.C. in Phoenix. Before joining
Davis & Lowe P.C., Lashinsky practiced commercial and bankruptcy law
with Leslie L. Miller P.C. and with Streich, Lang, Weeks, Cardon &
French. She also served as Director of Continuing Legal Education for
the State Bar of Arizona, where she helped design and develop legal
education curricula and materials.
Advisory Committee on Bankruptcy Rules Approves Amendments
At its Oct. 10-11, 2002, meeting, the Advisory Committee on Bankruptcy
Rules approved amendments to Bankruptcy Rules 3004, 3005 and 4008,
according to the U.S. Courts web site. Following past practice, the
Advisory Committee will not forward amendments piecemeal, but will
present a package of amendments at a later time. The Advisory Committee
also referred to the Advisory Committee on Civil Rules a suggestion that
before the clerk issues a summons electronically, the action must be
expressly authorized by the court, according to the web site. The
Advisory Committee also considered how the Bankruptcy Rules and Official
Bankruptcy Forms might be amended to notify parties to executory
contracts and unexpired leases with the debtor that a bankruptcy has
been filed. For additional information, please visit
http://www.uscourts.gov/rules/.
Former Adelphia Officer Is Set to Plead Guilty in Fraud
Case
In a development that could help the government's case against the Rigas
family members who founded Adelphia Communications Corp., the company's
former vice president for finance is scheduled to plead guilty on
Thursday and has agreed to testify against the family members, the
Wall Street Journal reported. James R. Brown's expected plea
could be especially damaging to Timothy J. Rigas, son of Adelphia
founder John J. Rigas, because Brown reported directly to Timothy Rigas
when Rigas was Adelphia's chief financial officer, the people said.
Brown is cooperating in the case against all three Rigas family members
charged in the case.
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