Bankruptcy Cloture Vote Defeated With Senators Absent
Senate Democrats yesterday blocked a vote on final legislation to
overhaul the U.S. bankruptcy system, further dimming the prospects of
efforts to make it harder for individuals to wipe out their debts,
according to Congress Daily. The Senate voted 53-30 to
invoke cloture on the bill, but that was seven votes short of the 60
needed to force consideration of the comprehensive bankruptcy measure.
Sixteen senators were absent. With Congress apparently poised to
defer its unfinished budget battles until after next week's elections
— in what many lawmakers believe will be a very short “lame
duck” session — opponents of the bill were claiming a
“tremendous victory.”
“I think the dynamic changes in a lame duck session and I think
we will only be in a stronger position,” said Sen. Paul Wellstone
(D-Minn.). But supporters insisted they would continue to press
for Senate passage of the bill, which was approved by the House last
month. Senate Majority Leader Trent Lott (R-Miss.) vowed to
resurrect the bill when Congress returns later this month.
“We will persist in our effort to pass this important
legislation,” he said. “We will have another vote before the
year is out.”
After it became clear that Republicans would lose on the motion, Lott
cast the single Republican vote against invoking cloture so he can seek
reconsideration. But Sen. Edward Kennedy (D-Mass.) scoffed at the notion
that a lame duck session would last any longer than it takes to cast
'one vote,' and said he doubts bankruptcy will be back on the
agenda. Sen. Charles Schumer (D-N.Y.) said he believes bill
opponents will retain the 29 Democrats who are opposed to cloture and
will pick up more votes among today's absentees.
Drypers Receives Final Approval of DIP Financing
Drypers Corp. yesterday announced that it has received final approval
from the bankruptcy court for its debtor-in-possession (DIP) financing,
according to a newswire report. The DIP agreement calls for Fleet
Capital Corp. to provide a $25 million credit facility to fund the
Houston-based company's ongoing operating needs under chapter 11.
Additionally, the bankruptcy court gave final approval to the payment
plan between Drypers and the Procter & Gamble Company, which
resolves the outstanding disputes and litigation between the
companies. Drypers Corp. manufactures and markets premium quality
disposable diapers, training pants and pre-moistened wipes.
Reliance Group Ratings Fall as Bankruptcy Looms
Reliance Group Holdings Inc., the holding group controlled by Saul
Steinberg, yesterday saw the Moody's Investors Service slash its debt
and financial strength ratings, citing a “myriad” of risks,
according to a Reuters report. The New York-based Reliance Group is
expected by many to declare bankruptcy in the next few months because it
has sold most of its cash-generating businesses. Its expected
purchase by Leucadia National Corp. was called off in July.
Moody's cuts came after the company last week said its Reliance
Insurance unit will increase loss reserves, or funds set aside to pay
claims, by $332 million in the third quarter. The increase brought
Reliance's total reserves to about $3.5 billion, and worsens Reliance's
financial outlook because the company must repay $237.5 million of bank
debt and $291.7 million of bond debt this month.
NetZero Acquires Key Assets of Freeinternet.com for $5 Million
NetZero Inc., a provider of advertising- and commerce-supported Internet
access, yesterday announced that it has completed its previously
announced acquisition of certain assets of Freei Networks Inc., a
national provider of free Internet access, according to a newswire
report. Freei Networks, which is also known as Freeinternet.com or
Freei, filed chapter 11 on Oct. 6. NetZero will pay Freei Networks
$5 million in cash in exchange for certain key assets of Freei,
including the domain names Freeinternet.com, Freeinet.com and Freei.net;
all proprietary rights; certain tangible assets; and the transition of
Freei users to NetZero's service.
NetZero, based in Westlake Village, Calif., has reserved an account
name and password for existing Freei users. These users will, in
most cases, have the opportunity through a simple process to elect to
transition to the NetZero service, while maintaining their existing
Freei e-mail address.
Listen.com to Buy Bankrupt Scour Inc.'s Assets
Online music company Listen.com said yesterday that it agreed to buy
the assets of Scour Inc., the Internet search engine company, partly
owned by Hollywood power broker Michael Ovitz, which declared bankruptcy
last month, according to a Reuters report. A Listen.com spokesman
said the company has offered to pay $5 million in cash and about 500,000
company shares for the assets, which include Scour's technologies.
The agreement was filed in the U.S. Bankruptcy Court for the Central
District of California in Los Angeles for court approval. The sale
will give Listen.com control of Scour's assets, but will not transfer
responsibility for Scour's legal liabilities.
Scour filed chapter 11 on Oct. 12. The filing automatically
stays all pending litigation against the company. Scour said it
has about $4 million in debt, but could be liable for as much as $250
billion in damages stemming from pending litigation.
Former Penny Stock Mogul Charged
New bankruptcy fraud charges filed yesterday state that financier
Robert E. Brennan tried to keep his creditors from getting a share of
about $4 million in bonds that he stashed in an offshore account,
according to the Associated Press. The 10-count federal indictment
adds to state and federal charges unsealed in August that accused
Brennan of attempting to conceal $500,000 in casino chips from creditors
seeking millions for his penny stock deals. Brennan, who is free
on bail, faces arraignment Monday before U.S. District Judge Garrett
E. Brown Jr. The new charges may stall the former penny stock
tycoon's Dec. 5 trial.
Brennan declared bankruptcy in 1995, when a federal judge in New York
ruled that he cheated First Jersey investors and ordered him to pay what
is now more than $78 million to the Securities and Exchange
Commission. According to yesterday's indictment, Brennan failed to
disclose 759 bonds worth $3.7 million in the bankruptcy petition.
Brennan sold all but one for a sum of $4 million and concealed the
proceeds in a Bear Stearns brokerage account in New York and in an
account at the Bank of Scotland branch on the Isle of Man. The
most serious of the charges, three money laundering counts, each carry
up to 20 years in prison and a $500,000 fine.
Perry Ellis International Purchases Mondo Brands
Perry Ellis International Inc. (PEI) yesterday announced that it signed
an agreement to purchase the Mondo di Marco, Pronto Uomo and Linea Uomo
trademarks from the bankruptcy estate of Mondo Inc. for about $3.5
million, according to a newswire report. Under PEI's previously
announced agreement with Men's Wearhouse, the two companies will work
together to capitalize on the strength of the acquired brands. Upon
final approval of the acquisition, Men's Wearhouse will purchase the
worldwide rights from PEI to distribute the Pronto Uomo and Linea Uomo
brands for about $1.75 million. The Miami-based Perry Ellis
International markets men's, women's and children's products.
Medical Lab Files For Bankruptcy
The Medical Arts Laboratory of Oklahoma City yesterday announced that it
filed chapter 11, according to a newswire report. Although the
laboratory does almost half of all the lab work in the state, the lab is
deep in debt. Company President Bob Savasten, however, said he was
confident that their service wouldn’t suffer due to the bankruptcy
protection. “There won't be any disruption to clients. [It's
going to be] business as usual,” he said.
In 1994, a number of shareholders disagreed on the lab’s proposed
expansion and withdrew their investments, taking with them a lot of
financial support. The company decided to go forth with the expansions
with help from creditors, which resulted in almost $20 million
debt. Savasten said that he filed for bankruptcy because he
doesn’t want to the company to be sold to a national laboratory,
which would cost an estimated 600 Medical lab employees their jobs.
CollegeClub.com Purchase Finalized
Student Advantage Inc. announced yesterday that it has completed the
acquisition of the San Diego-based CollegeClub.com after securing $10
million in equity financing early this week, according to a newswire
report. The financing came in part from minority investor
Excite@Home. The purchase price for CollegeClub.com included $7.5
million in cash and about 1.3 million shares of Student Advantage common
stock and the assumption of certain liabilities. On Aug. 22, Student
Advantage announced that it had signed an agreement to purchase
substantially all CollegeClub.com assets and certain affiliates that had
filed for bankruptcy on Aug. 21. The sale to Student Advantage was
approved on Oct. 19 by a federal bankruptcy judge.
