January 12, 2000
Isley Catalog for Sale in Bankruptcy Court
Ronald Isley, a member of the Isley Brothers, is in chapter 7
bankruptcy, largely because of an IRS claim of almost $5 million,
according to a newswire report. His assets are scheduled to be auctioned
off Jan. 18 in bankruptcy court in Los Angeles. Among those assets are a
stake in one of the R&B music catalogs that includes the classic
'Shout.' Attorney Debra Grassgreen of Pachulski, Stang,
Ziehl, Young & Jones P.C., who represents Howard
Ehrenberg (Sulmeyer, Kupetz, Baumann & Rothman) the trustee
who will conduct the sale, said, 'This is one of the classic R&B
catalogs, and we believe it will have value for many years to come.'
Other assets for sale include Isley's interest in songs he performed but
did not write, such as 'This Old Heart of Mine,' an 87-foot yacht, and
his interest in a $6 million judgment against Michael Bolton. Isley won
a copyright infringement suit against Bolton over the song 'Love Is a
Wonderful Thing.' That case is now on appeal in the U.S. 9th Circuit
Court of Appeals. Isley is opposing the sale and hopes the bankruptcy
court will permit him to work out a deal with the Pullman Group, which
invented the Bowie bonds named for rocker David Bowie, under which music
assets are pledged to secure bonds and the debt is repaid from the
royalty stream. EMI put in an aggregate bid of $1.4 million to acquire
Isley's portion of the songwriter's and publisher's rights to the
catalog. Under a 1980 agreement, EMI already owns a 50 percent interest
in the publishing rights.
American Pad & Paper Comments on Involuntary Filing
American Pad & Paper Co., Dallas, announced that it is
disappointed that a group of its bondholders filed an involuntary
chapter 11 petition against the company, according to a newswire report.
The company has 20 days to respond to the petition, and CEO James W.
Swent III said the company is exploring the possibility of having the
petition dismissed or converting to a voluntary chapter 11 to
reorganize. Swent said he is 'confident of arranging alternative
financing to ensure the liquidity required' to stay in business. He also
said American Pad's bank group has expressed its support for the
company. American Pad & Paper, which invested the legal pad in 1888,
plans to continue toward reducing its debt through asset sales. Lazard
Freres, the company's financial advisor, has received several
indications of interest in the Williamhouse Division and other business
assets.
Two Offers for Beloit Accepted
The creditors' committee in the chapter 11 of Harnischfeger
Industries Inc. has accepted the offer from Metso Corp.'s fiber and
paper technology business area, Valmet, to purchase certain assets of
Beloit, Harnischfeger's American paper machine manufacturer, according
to a newswire report. The offer included Beloit's roll cover division,
paper machine aftermarket business assets and the related paper machine
technology. The auction price was $160 million. The court is scheduled
to review the bid next week. GL&V also announced that its bid to
acquire Beloit's two pulping and finishing business unites have been
accepted. The acquisition would position GL&V as one of the three
largest manufacturers in its industry. Harnischfeger filed chapter 11 in
June.
E-Debt.com to Provide Marketplace for Trading of Distressed
Consumer Debt
E-Debt Exchange Inc., Akron, Ohio, announced plans yesterday to
launch http://www.E-Debt.com, an online community for the trading of
distressed credit card and installment debt, according to a newswire
report. The site will go live in early March with debt portfolios
available for trading using a standard web browser. E-Debt.com™ is
a 'B2B infomediary' where portfolios can be viewed, due diligence
performed, purchase arrangements made and relevant documents
transmitted. The site's Just-in-Time-Scrub™ uses the latest
available information to eliminate uncollectible debt resulting from
bankruptcy, death and bad address information. Debt portfolios posted on
the site can be sold at price, at auction or through private online
negotiations. The Federal Reserve reports that there is $1.4 trillion in
consumer debt outstanding, and according to the Debt Sales Directory
published by Faulkner and Gray, annuals sales of distressed consumer
debt increased from $4 billion to $42 billion between 1990 and 1998.
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SkyLynx Communications Announces Litigation Developments
SkyLynx Communications Inc., Denver, a provider of broadband
Internet access and enhanced Internet services, announced favorable
developments in two significant litigation matters, according to the a
newswire report. The company announced that on Jan. 7, the U.S.
Bankruptcy Court for the Middle District of Florida entered a final
judgment granting the company's motion for summary judgment on all
issues, dismissing on the merits of all previously asserted claims in
the matter of In re Cable Corporation of America d/b/a Paradise
Cable. The court also ordered that SkyLynx could recover any costs of
action from the plaintiff, which has filed an appeal from the order.
SkyLynx also announced that it has been able to reach a final settlement
that will result in the dismissal of all claims in the long-standing
dispute between SkyLynx, NST and their respective affiliates.
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Orange County Bankruptcy Settlement Nears End
A final report on suits stemming from Orange County, Calif.'s
1994 chapter 9 bankruptcy was filed in court on Monday, clearing the way
for more than 200 schools, cities and public agencies to recover their
shares of about $860 million in settlements as soon as next month,
The Los Angeles Times reported. Bankruptcy Judge John J. Ryan
scheduled a hearing for Feb. 2 on the report, which details the course
of lawsuits and settlements. Judge Ryan must approve the report before
the money can be distributed. An attorney for the county said they do
not expect any opposition.
PacifiCare Health to Lay Off Hundreds of Employees
PacifiCare Health Systems Inc. is expected to announce today
that it will lay off several hundred workers as part of a cost-reduction
plan, The Wall Street Journal reported. Some employees began
receiving notice yesterday, said the largest operator of Medicare health
maintenance organizations in the country. In September PacifiCare
announced a major corporate reorganization into three divisions, partly
designed to increase growth in the non-Medicare HMOs and related
businesses. Job cuts may affect workers in all of the 11 states where
the company operates.
Bank One to Overhaul Credit Card Business and Take Charge for
Fourth Quarter
BankOne Corp. has announced that it will overhaul its credit
card business through a restructuring that will require a $725 million
charge against fourth-quarter earnings, according to The Wall Street
Journal. The Chicago bank offered a detailed look at what went
wrong at First USA, its credit card subsidiary that was at one time the
primary source of growth at the fourth-largest bank in the United
States. They described the problem as a lack of financial discipline and
focus and said the remedy is tighter expense controls, better customer
service and tougher profitability requirements for the unit's marketing
programs. Although Bank One said its problems are confined to First USA,
the restructuring goes beyond the credit card unit to involve some job
cuts and consolidation across the company.
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