Singer Executives Put Company Back Together
After advising The Singer Company N.V. for more than 22 years, Phillip
Watson and other company executives made the decision in September 1999
to file chapter 11 with the U.S. bankruptcy court for the Southern
District of New York. Singer entered bankruptcy with a debt of
about $600 million and total assets of $1.2 billion; its U.S. subsidiary
had been nearly $40 million in debt, with $68 million of assets.
Despite its troubles, Watson and his colleagues — and eventually
the majority of creditors — were convinced that Singer was worth
saving. On Sept. 14, just one year after filing for bankruptcy,
Singer emerged from chapter 11. Fears that the nearly 150-year-old
company would be tossed wholesale are only beginning to fade. The
reorganization plan filed in the U.S. court reduced Singer to less than
half its previous size. But so far, Singer's bankruptcy is
succeeding against the odds. Its experience spotlights a growing
effort to harmonize divergent bankruptcy regimes.
Because Singer's U.S. affects so many countries, those handling it have
had to be creative. The federal judge overseeing the case
authorized a new type of liaison — 'foreign representatives'
— to coordinate proceedings overseas with those taking place in
the United States. This exporting of court representatives is 'an
interesting experiment' that is being watched closely by the
cross-border insolvency community, says Jay Westbrook, who teaches
bankruptcy law and international litigation at the University of Texas
law school. And, “if it turns out to be a useful way to
interface with foreign legal systems — and it may well be —
then I think it'll be widely copied,” Westbrook says.
'Reorganized Singer' has an estimated value of $245 million - 265
million. About $100 million worth of new stock, which will be the
sole source of debt repayment, is expected to go on the market in the
spring. Singer's restructured U.S. affiliate would be worth $40
million - 45 million, with the total projected value of the common stock
ranging from $5 million - 10 million. With few liquid assets, however,
the company promises to repay creditors with new equity; the investment
banker hired jointly by Singer and its creditors project that common
stock prices will give a return of 15 to 20 cents on the dollar.
Armstrong May File for Bankruptcy
The stock of Armstrong Holdings Inc. plunged again yesterday after the
company said in its quarterly report Tuesday that it may be forced to
consider filing for bankruptcy, according to the Lancaster New
Era. The slide comes one day after the Lancaster, Penn.-based
company acknowledged publicly that it may seek chapter 11 protection as
a result of a cash crunch.
'If Armstrong does not obtain sufficient additional liquidity in the
next few months, Armstrong will have to consider seeking protection
under the U.S. Bankruptcy Code,' the company said in its filing with the
U.S. Securities and Exchange Commission. But trouble began seven
weeks ago, when Owens Corning filed for chapter 11. Both Owens
Corning and Armstrong are building materials manufacturers that once
sold products containing asbestos, and consequently face thousands of
suits from people who say the products harmed them. Armstrong, the
owner of Armstrong World Industries Inc., has estimated that its future
payments to settle the asbestos suits could reach as high as $1.4
billion. After Owens Corning filed for bankruptcy, banks decided
to reconsider their exposure to Armstrong because of its asbestos
liabilities and pulled the plug on a $400 million, one-year credit line
for Armstrong.
Bankruptcy Court OKs Sale Of Iridium's Assets For $25 Million
A bankruptcy court judge yesterday said he would approve the sale of
former satellite telephone company Iridium LLC's assets for $25 million
to a Delaware entity known as Iridium Satellite LLC, according to a
newswire report. U.S. Bankruptcy Judge Cornelius Blackshear
said he would sign formal court papers authorizing the sale of Iridium's
assets, including 66 low-orbiting satellites, to Iridium Satellite.
At a hearing yesterday in a New York bankruptcy court, Iridium
attorneys said Iridium Satellite had submitted a plan to pay $6.5
million in cash and $18.5 million in senior unsecured convertible debt
securities for the assets. In approving the sale to Iridium
Satellite, Judge Blackshear rejected bids by three other parties who
came to the hearing in an attempt to buy Iridium's assets. The judge
rejected the bids, some of which were significantly higher than Iridium
Satellite's offer, because the parties hadn't brought cash deposits with
them that would secure their bids. Iridium filed for chapter 11 in
August 1999. The company had $3.4 billion in assets and $4.2
billion in debts as of Sept. 30, 1999.
Judge Calls CRIIMI MAE's Reorganization Plan
'Fair and Reasonable'
Calling CRIIMI MAE Inc.'s reorganization plan “fair and
reasonable,” Judge Duncan W. Keir yesterday found that the plan
met all of the confirmation standards required by the bankruptcy code,
according to a newswire report. The Rockville, Md.-based company
intends to submit a proposed confirmation order for the judge's review
and approval today. Judge Keir said he would hold a hearing next
Wednesday if he has any questions about the proposed order submitted to
him. Otherwise, he said he would sign the order confirming CRIIMI MAE's
reorganization plan.
FCC Official Worried Legal Fight Could Hurt
Auction
The protracted legal wrangling over wireless licenses repossessed from
NextWave Telecom Inc. and soon to be re-auctioned could depress the
bidding for the licenses, a top Federal Communications Commission (FCC)
official said yesterday, according to a Reuters report. NextWave,
which is undergoing bankruptcy proceedings, has two appeals pending to
retain 90 licenses it won at auction in 1996 but later lost when the
Hawthorne, N.Y.-based company failed to make timely payments.
Despite the legal challenges now at the U.S. Court of Appeals for the
District of Columbia and at the Supreme Court, the FCC is scheduled to
sell those licenses as part of a bigger auction starting Dec. 12.
However, the FCC said in its public notice for the auction that if
NextWave was ultimately successful in its court challenges to win back
its licenses, the company that had bought the repossessed licenses would
have to relinquish them but would be reimbursed. “That
suggestion could potentially have a very chilling effect on the auction
and on what might potentially happen after the auction,” FCC
Commissioner Harold Furchtgott-Roth said. “I think it's an
issue for the courts to resolve,” he said.
“We’re getting pretty close to a final resolution but I
think pending a final resolution I would not proceed with the
auction.”
Without Needed Funding, Garden.com Shuts Down
Garden.com, an e-business that had once been considered 'successful'
announced a shut down of the company’s operations saying that they
could not get the financing they needed to continue, according to the
company’s web site. The company was not able to raise the
additional funding necessary to finance the company's growth moving
forward and the Board of Directors' decided to end the business.
During the first phase, Garden.com will offer a 'going-out-of-business'
product sale. Orders placed for in-stock items before 5 p.m.
Central Standard Time on Dec. 1 will be processed and shipped. Any
items backordered and not shipped by Dec. 15 will be cancelled and
credit cards refunded. Returns of damaged or incorrect items will
be accepted until Dec. 20.
Wheeling-Pittsburgh Steel Corp. Files for Chapter 11
WHX Corp. yesterday announced that its subsidiary,
Wheeling-Pittsburgh Corp., has filed for chapter 11 protection of its
steel-making operations because of the deteriorating conditions for the
U.S. steel market, according to a Reuters report. The filing in
Federal District Court in Youngstown, Ohio, includes the Wheeling, W.
Va., operations of Wheeling-Pittsburgh Steel Corp. (WPSC). WHX nor
its other operating subsidiaries, including Handy & Harman, Unimast
Inc. and Wheeling Entertainment, are involved in the filing. WPSC
is continuing all normal business operations and will continue
uninterrupted services to its customers. No plant closures are
planned as a result of the filing.
To ensure that the company has the capital necessary to continue to
operate its business as normal during the restructuring process, WPSC
has entered into an agreement with Citibank, N.A. to provide $290
million in debtor-in-possession (DIP) financing. The DIP financing will
enable the company to pay for the post-petition delivery of goods and
services and continue operations and administration necessary to meet
current and future customer needs. WPSC is the ninth-largest
domestic integrated steel producer.
JCC Holding Considers Pre-negotiated Bankruptcy
JCC Holding Co. is considering a pre-negotiated bankruptcy to
reorganize its financial arrangements and capital structure, according
to a newswire release. A JCC Holding spokesperson said yesterday that it
made a presentation to the New Orleans Casino Tax Advisory Committee
regarding a contemplated restructuring.
JCC Holding holds a lease with the New Orleans Committee and a
contract with the state of Louisiana to manage Harrah's New Orleans, a
Canal Street casino. JCC Holding said its financial advisers,
Jefferies & Co., have concluded that the company's New Orleans
casino isn't viable under current conditions, because revenue can't pay
all expenses. Financing for the casino has been arranged through
March 31, 2001, but the company's ability to continue beyond that time
is in doubt. A significant liability for JCC Holding is a
$100-million minimum payment due to the State of Louisiana. Unless that
payment is reduced and other economic concessions are received, the
company won't be able to continue.
Veritas Capital to Acquire Stellex Electronics
The Veritas Capital Fund LP yesterday announced that it had agreed to
acquire Stellex Electronics, according to a newswire report.
Stellex, headquartered in San Jose, Calif., is a manufacturer of
components and subsystems for the defense and telecommunications
industries. The Veritas Capital Fund is a private equity firm
based in New York.
Stellex and its parent company, Stellex Technologies Inc., filed for
chapter 11 on Sept. 12, in Bankruptcy Court in Delaware. The closing of
any sale of the assets of Stellex Electronics will be subject to a
public auction supervised by the Bankruptcy Court and final approval by
the Bankruptcy Court. The auction will occur in January and the
transaction, which is expected to close on or before Jan. 31, is subject
to certain other regulatory approvals.
Scour Stops File Swapping Service
Scour shut down its file-swapping service yesterday, saying the move
will help resolve a copyright infringement lawsuit and facilitate the
sale of its assets in a bankruptcy proceeding, according to a newswire
report. In a notification on its Web site, Scour said its future
remains 'bright,' noting that 7 million people had downloaded the
company's Scour Exchange software by the time of the closure. The
message added that all other Scour services remain in operation, and
that several suitors have expressed interest in acquiring its
file-swapping technology.
Scour Exchange was targeted by motion picture and music industry
associations, claiming it was being used to trade illegal copies of
videos, songs and other digital content. This publicity made it
difficult for the company to search for new funding, leading to a round
of layoffs and ultimately a bankruptcy filing. Bidders for the
company that have emerged so far include San Francisco-based Listen.com
and CenterSpan Communications of Hillsboro, Ore.
Metal Management Agrees to
Restructuring
Metal Management Inc., a full-service metals recycler, said yesterday
that it agreed in principle on a restructuring that will give holders of
its 10 percent senior subordinated notes virtually all of the company's
equity, according to a Reuters report. The agreement calls for
holders of the 10 percent notes, due 2008, to exchange them for 99
percent of the restructured company's common stock. Its 12-3/4 percent
senior secured notes due 2004 would, however, remain outstanding under
their current terms.
As part of the agreement, Metal Management said it did not make a $9
million Nov. 15 interest payment due on the 10 percent notes. It said it
expects the agreement to be implemented through a pre-arranged plan of
reorganization under chapter 11 bankruptcy. As part of the
restructuring, Metal Management said its senior bank lenders have agreed
to lend it an additional $20 million.
Drypers Corp. Won't File Third Quarter Report On Time
Drypers Corp. (DYPR) will not file its third quarter report with the
Securities and Exchange Commission on time, according to a notice filed
with the SEC Wednesday. The Houston-based disposable diaper manufacturer
blamed its inability to file the report on time on its Oct. 10
bankruptcy filing. The late notice added that Drypers' results of
operations for the third quarter show a decrease in net sales of $18.7
million as compared with last year's third quarter.
Courtesy of
href='http://www.fedfil.com/bankruptcy/developments.htm'>The Daily
Bankruptcy Review Copyright © November 17,
2000.
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