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Warnaco Group Wins Court Approval of Chapter 11 Plan
Warnaco Group Inc. won a federal bankruptcy judge's approval of its
reorganization plan, clearing the way for the clothing maker to shed
more than $2 billion in debt and come out of chapter 11, Bloomberg News
reported. The maker of Calvin Klein jeans, Speedo swimsuits and Olga
bras sought bankruptcy protection in June 2001, hurt by the
slowing economy and heavy debt from acquisitions and licensing
agreements. New York-based Warnaco will repay creditors owed more than
$2.45 billion with new shares, notes and cash. Warnaco said it will
restructure around three product groups: sportswear, intimate apparel
and swimwear. The company has renegotiated licensing deals, sold assets
and closed retail outlets in the bankruptcy reorganization, reported the
newswire.
Warnaco expects to emerge from bankruptcy on Feb. 4.
ADELPHIA COMMUNICATIONS
Adelphia Class A Holdings Cut by Weitz Group to 9.3
Percent
Wallace R. Weitz & Co., a former member of the shareholders'
committee in Adelphia
Communications Corp.'s bankruptcy proceedings, cut its stake to 9.3
percent from 10.7 percent of the cable television company's Class A
common shares, Bloomberg News reported. The fund group headed by Wallace
Weitz was replaced on the Adelphia equity owners' committee, which
negotiates in bankruptcy on behalf of shareholders, by Northwestern
Mutual Life Insurance Co. in December, according to a newsletter
published by Income Securities Advisors that tracks bond defaults,
reported the newswire.
The shareholders' committee sued Adelphia in bankruptcy court last
week in a bid to win control from founder John Rigas, who along with two
sons is under indictment for defrauding the company of $2.5 billion by
inflating profit and concealing debt. The
shareholders are asking the bankruptcy judge to order an election of the
Adelphia board and bar the Rigas family from voting, Bloomberg
reported.
Properties Returned to Adelphia
The indicted founder of the Adelphia Communications Corporation has
agreed to give up 34 apartments, condominiums and vacation homes bought
with company money, the Associated Press reported. Negotiations are also
under way on at least 60 other properties held by the family of the
founder, John J. Rigas, lawyers for Adelphia and the family said today.
'Some of these properties are clearly the company's and we are conveying
them back to the company,' a lawyer for the Rigas family, Stephen J.
Harmelin, said today.
In filings with the federal bankruptcy court, Adelphia said it had paid
$1.2 million for improvements to a condo in Beaver Creek, Colo. owned by
Tim Rigas, and paid the taxes on a second Beaver Creek unit bought by
John Rigas and his wife, Doris. From 1995 until 2001, the company also
paid the taxes on six lots the Rigas family bought at resorts in Hilton
Head and Daufuskie, S.C., and on land and homes in Dunkirk and Olean,
N.Y., the filing said, reported the newswire.
Supreme Court to Review $27 Million Award Against Conseco
Finance
The U.S. Supreme Court has agreed to review an arbitrator's $27 million
award against Conseco Finance Corp. that would go to more than 3,700
South Carolina residents, Knight Ridder Business News reported.
The plaintiffs in the case won the judgment because the state court
found that the lender failed to alert them that they could pick a real
estate lawyer to prepare and review loan documents and represent them at
mortgage closings, as required by state law. Depending on how it acts,
the high court may now decide whether disputes that wind up in
arbitration instead of in court can become 'class' actions where
multiple parties with similar grievances can join forces, reported the
news service. The high court is scheduled to hear arguments in the
matter in April.
Independent Examiner to Probe Allegations against Polaroid
A US bankruptcy judge yesterday ordered the appointment of an
independent examiner to probe allegations that Polaroid Corp.
orchestrated its own bankruptcy and that management purposely misstated
the value of the company prior to a court auction last summer, the
Boston Globe reported. Judge Peter J. Walsh ordered the US
Trustee, who represents the public in bankruptcy proceedings, to gather
candidates for the examiner's job, according to people present at the
hearing yesterday in Wilmington, Del. The examiner will be selected at a
Feb. 18 hearing and will be expected to produce a report within 60 days,
the judge said, reported the newspaper.
Highlands Insurance Gets Court Approval to Seek Votes on
Plan
Highlands Insurance Group Inc., a property and casualty insurance
provider spun off by Halliburton Co., won bankruptcy court permission to
seek creditors' approval of its repayment plan, Bloomberg News reported.
Under the plan, a trust would be created with money from the company's
liquidated assets. After administrative and priority
claims are paid, other creditors would be paid in a specific order, with
all bank claims being paid before unsecured creditors would receive any
money.
Lawrenceville, N.J.-based Highlands sought bankruptcy protection in
October after defaulting on loans and reporting three straight years of
losses. U.S. Bankruptcy Judge Lloyd King granted permission to seek
votes at a hearing today in Wilmington, Del., and scheduled a hearing on
March 17 for final approval of the plan, reported the newswire.
Richard F. Clippard Appointed U.S. Trustee for Tennessee,
Kentucky
Richard F. Clippard has been appointed U.S. Trustee for Tennessee and
Kentucky, it was announced today by Lawrence Friedman, Director of the
Executive Office for United States Trustees. Clippard's appointment
takes effect Jan. 21, 2003. Clippard served as interim United States
Attorney for the Middle District of Tennessee, in Nashville, from May
2001 through February 2002. During that time he was also the Chief of
the Civil Division for the Nashville Office of the United States
Attorney, a position he had held since 2000, after joining the office as
an Assistant United States Attorney in 1988. From 1993 through 2002,
Clippard served as the ethics officer for the Nashville Office of the
United States Attorney, handling ethics inquiries and providing training
on ethics matters. He is also a frequent legal education instructor on
topics relating to civil litigation and criminal prosecution, including
criminal investigations in bankruptcy fraud.
Kmart Seeks Approval of Photofinishing Deal With Kodak
Troy, Mich.-based Kmart Corp. has asked the judge overseeing its
bankruptcy case here for permission to hire Eastman Kodak Co. to handle
all photofinishing services at the retailer's stores, Dow Jones
reported. According to court papers made available electronically on
Thursday afternoon, Kmart said that offering photofinishing services was
an important part of maintaining customer traffic. Last year, offsite
photofinishing brought in about $120 million in sales and accounted for
$49 million in gross margin. The retailer seeks court approval of an
agreement whereby Kodak would provide photofinishing, digital kiosks,
Internet-based photofinishing and imaging services, reported the
newswire.
Provell Gets Interim Court OK of Class Action Settlement
The U.S. Bankruptcy Court in Manhattan has granted Provell Inc. interim
approval of an agreement that will settle a class-action lawsuit against
the company and eliminate a $20 million claim against the estate, Dow
Jones reported. The suit, filed by four individuals, alleged that Damark
International Inc., now known as Provell, engaged in illegal and
deceptive business practices. A final hearing on the matter is scheduled
for Jan. 29, reported the newswire. Provell filed chapter 11 bankruptcy
last May, listing $40.6 million in assets and $83 million in debt.
Court Blocks Other Plans for L&H As Company Deals with
Ex-Owner
A court blocked other parties from proposing competing chapter 11 plans
for Lernout & Hauspie Speech Products NV through March 31 while the
company tries to resolve issues with the former owner of an old unit,
Dow Jones reported. The issues relate to an appellate court's decision
in November 2002 that could entitle the former owner to collect more
funds than expected under L&H's proposed chapter 11 plan of
liquidation, according to court papers obtained recently by Dow Jones
Newswires. As reported, the plan-which must be approved by the former
speech and language technology company's creditors and the bankruptcy
court handling its two-year-old case-distributes proceeds from the
company's previous asset sales and provides for the liquidation of any
remaining assets, reported the newswire. In the court order signed Jan.
9, U.S. Bankruptcy Judge Judith H. Wizmur granted L&H's request to
retain the exclusive right to file a chapter 11 plan through March 31.
During this time, creditors and other third parties won't be allowed to
propose competing plans.
US AIRWAYS
US Airways Gets Court OK of $120 Million DIP Loan from GE
Capital
A bankruptcy court on Thursday approved a deal between US Airways Group
Inc. and its largest creditor, General Electric Capital Corp., that the
airline says could finance 'a significant portion' of its capital needs
after it emerges from chapter 11 protection, Dow Jones reported.
Judge Stephen S. Mitchell approved the global settlement at a
hearing before the U.S. Bankruptcy Court in Alexandria, Va. In documents
filed with the court on Dec. 27, US Airways said the parties reached the
settlement to resolve all of their issues. 'The debtors cannot emphasize
enough how important the global settlement is to their estates,
creditors and other parties in interest,' according to the airline's
motion, reported the newswire.
US Airways Employees Object to Stock Proposal
US Airways' proposal to render all of its existing common stock
worthless as part of its bankruptcy reorganization drew protests
yesterday from many former and current employees, some of whom said at a
U.S. Bankruptcy Court hearing that it would be painful because they had
funded their 401(k) retirement plans with US Airways stock, the
Washington Post reported. Bankruptcy Judge Stephen S. Mitchell
said the 401(k) problem 'had raised a lot of concerns' but was outside
the purview of the bankruptcy court. 'I've suggested before that there
could be a need for some sort of legislative solution to the problem
that arises whenever employee retirement plans are funded by company
stock,' he said.
Under the company's reorganization plan, unsecured creditors would
get 2 cents on the dollar for their unpaid claims and the company's
stock would be canceled, making it worthless, John W. Butler Jr., an
attorney for the troubled airline, said yesterday. After its
reorganization, the company will issue new stock, he added, reported the
newspaper.
Special Metals Wins Plan-filing Exclusivity Extension
Special Metals Corp. has received an extension of the period during
which it alone can file a chapter 11 reorganization plan, according to a
Form 8-K filed on Thursday with the Securities and Exchange Commission,
Dow Jones reported. On Jan. 9, the U.S. Bankruptcy Court in Lexington,
Ky., approved the company's request to extend its exclusive plan filing
period through March 10. Special Metals also reached an agreement with
its bank group to amend its debtor-in-possession credit agreement to
give the company until Feb. 14 to file a plan, the SEC filing said,
reported the newswire.
Maxcor Financial Gets Preliminary Relief From Bankruptcy Court
Maxcor Financial Group Inc.'s broker-dealer unit obtained preliminary
relief from a U.S. Bankruptcy Court in order to adjust the settlement of
all when-issued trading contracts effected in the common stock of NTL
Inc. prior to that company's emergence from bankruptcy last week, Dow
Jones reported. In a press release on Thursday, Maxcor said the
emergency court order provides that, pending a full hearing on granting
permanent relief, Maxcor and other sellers of NTL common stock in the
when-issued market may settle their transactions on an adjusted basis.
The adjustment essentially allows settlement as if the transactions were
modified by a one-for-four reverse stock split, reported the
newswire.
Globalstar Would Have to File Plan by Jan. 30 Under Deal
New Valley Corp.'s investment agreement with Globalstar LP would include
a timeline for Globalstar for the pact to remain in effect, and
Globalstar would have to file a reorganization plan by Jan. 30, Dow
Jones reported. New Valley has agreed in principle to make a $55 million
investment in Globalstar as part of a reorganization plan for the
satellite telephone system operator in exchange for 80.1 percent of
Globalstar's new common stock that would be issued under the plan,
according to a filing late on Wednesday with the Securities and Exchange
Commission. Globalstar Telecommunications Ltd. is a general partner of
Globalstar LP, which filed for chapter 11 bankruptcy on Feb. 15.
Globalstar Telecommunications isn't under bankruptcy protection,
reported the newswire. The deal would call for the court to approve the
disclosure statement by March 7, and the plan must be confirmed no later
than May 7. That timeline calls for the reorganization plan to take
effect by July 7.
NTL Comments On Court Hearing
A U.S. bankruptcy judge, in a hearing concerning the settlement of
when-issued trading in NTL Inc. shares, has no plans to consider
revoking or altering the company's confirmed reorganization plan or its
capitalization, as was mentioned in a hearing on Wednesday, Dow Jones
reported. NTL planned to issue 200 million shares under its bankruptcy
emergence plan, approved in September, but later changed that amount to
50.5 million shares, the newswire reported. Certain parties who traded
the issue claim they weren't aware that the company would issue fewer
shares than initially planned and, therefore, sold their securities at a
lower price. They are seeking adjustment of the traded shares before
settlement of the transactions, reported Dow Jones.
Whirlpool Corp. to Recognize Charge
Whirlpool Corp. will take a fourth-quarter charge of $43 million, or
about 62 cents a share, related to UAL Corp.'s bankruptcy filing, Dow
Jones reported. Whirlpool said in August that about $68 million, pretax,
of its $96 million aircraft lease assets could be reduced in value if
UAL's United Airlines filed for bankruptcy, reported the newswire. The
charge is to discontinued operations and won't impact Whirlpool's
appliance business. The home appliance maker will also accelerate the
payment of up to $49 million in long-term deferred income taxes related
to the lease assets. The payments will come from cash flow in 2003, but
won't impact earnings, reported Dow Jones.
Magellan Pursuing Waivers to Credit Pact
Magellan Health Services Inc. is still seeking to amend its credit
agreement to waive existing defaults, Dow Jones reported. On Wednesday,
the company said it may restructure its $1 billion in debt through
chapter 11 bankruptcy protection if it fails to receive the waiver. In a
press release on Thursday, the over-the-counter Bulletin Board company
said that it would have obtained an extension of its prior waiver under
the credit agreement, which expired on Jan. 15, if it hadn't triggered
an additional default, caused by an order obtained by the State of
Tennessee with respect to one of its units. This default immediately
accelerated the company's debt obligations and prevented the company
from seeking a modified waiver on a timely basis, reported the
newswire.
Feds to Ban Execs From Certain Trades
Corporate executives will be banned from buying or selling company stock
during periods when employees cannot trade the shares held in their
retirement accounts, federal regulators decided on Wednesday, the
Associated Press reported. 'It's only fair' to put executives and
employees on the same footing, Commissioner Cynthia Glassman said at a
Securities and Exchange Commission meeting before the vote on the new
rule.
Congress ordered the ban as part of a law adopted over the summer
following Enron's collapse into bankruptcy and a wave of corporate
scandals.
XO Communications Emerges From Bankruptcy After Shedding
Debt
XO Communications Inc. emerged from bankruptcy protection after it shed
$4.6 billion in debt and sold control of the company to financier Carl
Icahn, reported Bloomberg News. The company's reorganization plan,
approved in November by a bankruptcy judge, gives Icahn-controlled
entities 80 percent ownership in the Reston, Va.-based company. The
company, which had $5.1 billion in long-term debt, said in a statement
it has $500 million in debt after the chapter 11 reorganization,
according to the newswire.
XO sought bankruptcy protection in June amid waning demand for phone and
Internet services and a glut of supply. Bloomberg reported that XO's
former bondholders and unsecured creditors will get warrants to purchase
25 percent of the reorganized company's shares.
Aetna Industries Wins Court Approval of Plan to Pay
Creditors
Aetna Industries, a bankrupt stamped-metal parts supplier to major U.S.
automobile manufacturers, won court approval for its plan to pay
creditors with money from its liquidated assets, Bloomberg News
reported. Under the plan, unsecured creditors of the closely held
company will recover about 23 percent to 25 percent of their claims,
which total about $95 million, court papers say. Aetna sought chapter 11
bankruptcy protection in February 2002 after defaulting on bond
payments. Questor Management Co.'s AZ Automotive completed a purchase of
most of the company's assets in June for $145 million, reported the
newswire.
WORLDCOM
WorldCom Lawsuit Authorized by University of California
Regents
WorldCom Inc. officers and directors, Citigroup Inc. and Arthur Andersen
LLP will be sued in California state court for securities fraud by the
University of California, the school's regents said yesterday, Bloomberg
News reported. The state university system voted to withdraw from a
federal shareholder suit in New York and sue on its own under state law.
The university said it lost $353 million on 10.2 million shares of the
second-largest long-distance company bought between 1998 and 2000. Last
year, it sold its shares of now-bankrupt WorldCom, which the school will
not sue, reported the newswire.
WorldCom Objects to Bank of America Request; Seeks to Recover
Funds
WorldCom Inc. has opposed a motion by Bank of America N.A. to apply some
of the telecommunications firm's cash collateral to outstanding debts,
saying the request would allow the bank to remove property necessary for
WorldCom's reorganization, Dow Jones reported. The telecommunications
giant is seeking to recover the funds, which are held in a Bank of
America account, according to an objection obtained on Thursday by Dow
Jones Newswires. WorldCom said it intends to file an adversary complaint
with the court overseeing its chapter 11 case to retrieve the money in
the account.
ABB Proposes to Settle Claims Over Asbestos for $1.2 Billion
ABB Ltd. today unveiled a proposal to pay $1.2 billion in stock and cash
to settle asbestos-related claims in the United States as part of a
bankruptcy plan for its U.S. unit, Combustion Engineering, Dow Jones
reported. Under the new plan, the Switzerland-based electrical
engineering company's latest offer is slightly higher than its earlier
$1.1 billion offer made in October. ABB said it will send the plan to
the more than 100,000 asbestos plaintiffs by early next week, reported
the newswire.
In order to settle its asbestos claims, Combustion Engineering's market
value of $812 million will be made available to asbestos plaintiffs, ABB
said. In addition, ABB will enhance the payments to asbestos plaintiffs
by a stock-and-cash offer of up to
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