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[Commentary] © 2001-04 Philip Hyde, The Timesizing Wire™, Box 622 Cambridge MA 02143 USA (617) 623-8080

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Bankruptcies, August-December/2001

12/27/2001  2 bankruptcies mentioned in (NYT) New York Times & (BG) Boston Globe -

1. Enron Broadband Services files for Chapter 11 protection, Dow Jones via NYT, C4.
   Following in the footsteps of 28 of its affiliates...a telecommunications products trader has filed...in U.S. Bankruptcy Court in Manhattan, list[ing] assets of $64.5m and debt of $63.7m, not counting off-balance-sheet and contingent obligations.... Enron Broadband Services estimated that it had 16 to 49 creditors.

2. Enron Broadband files for Chapter 11 protection, Dow Jones via NYT, C4.
   ...The Enron Freight Markets Corp. sought bankruptcy protection on Friday [listing] $6.3m in assets and $4.7m in debts, not counting off-balance-sheet and contingent obligations....

• ACT seeks Chapter 11, BG, C1.
  ACT Manufacturing Inc., of Hudson MA, yesterday sought reorganization under Chapter 11 in Bankruptcy Court in Worcester MA according to a news release from the Hudson electronics manufacturer.... The company said it has been hurt by negative conditions in the telecommunications and high-end computing sectors.

• South Carolina: A town may dissolve, AP via NYT, A18.
  Money problems may force the town of Iva in Anderson County near the Georgia border to dissolve. "We are bankrupt," Mayor Shirley Powell said. The town of 1,174 people lacks the funds to pay employees or provide services. Efforts to borrow money until property taxes arrive next month have been unsuccessful. Ms. Powell said the town needed at least $150,000.

• NationsRent files for bankruptcy, Bloomberg via NYT, C7.
  ...Rent[er] of heavy construction equipment to contractors, sought bankruptcy protection from creditors after an industry slowdown.... In Chapter 11 papers filed in US Bankruptcy Court in Delaware [yester]day, the company, which is based in Ft. Lauderdale, Fla., listed $1.58B in assets and $1.19B in debts.... As it restructures, the company said, it will continue to pay all 3,300 employees and provide them with benefits....
  [So they're in Good Company.]
  [Followup - "NationsRent files plan to reorganize and cut debt," Bloomberg via 6/20/2002 NYT, C4.]

• Japan: Bankruptcies soar, Reuters via NYT, C3.
  Bankruptcies [corporate and personal?] in Japan [the world's 2nd biggest economy] hit their 5th-highest postwar level in Nov....as banks take a tougher line on borrowers and as investors sell shares in troubled companies....
  Teikoku Databank, a research company, said that the number of corporate bankruptcies in Nov. rose 10% from a year ago, to 1,851 cases, the highest total for a November since World War II.
  Total debt held by those firms also soared, to 1.88 trillion yen ($14.92B), a 53.9% jump from a year earlier. Teikoku said that 1,419 [of the Nov. corporate] bankruptcies, or 77%, were caused by the prolonged weakness of the economy.
  The Nov. cases pushed the [year-to-date] 2001 total to 17,936, [already] the 3rd-highest postwar total.... The postwar [one-year] record [was] 20,841 in 1984....

1. Japan: Builder files for protection, AP via NYT, W1.
   ...The Aoki Corp. has...giv[en] up on its efforts to reorganize amid rising debts and a slumping economy...because of Japan's protracted economic troubles, an Aoki spokesman, Kazuhiro Edagawa, said..\.. The construction concern, which is based in Osaka, had debts of $3.09B as of Sept., said Teikoku Databank, a private credit research firm....

2. Pager files for bankruptcy, by Simon Romero, NYT, C3.
   Arch Wireless, a provider of wireless messaging services...filed for bankruptcy.... The company, based in Worcester MA also said it and its creditors had reached a debt restructuring agreement under which it will issue $300m worth of notes in exchange for about $1.3B of outstanding bonds. Arch, the nation's largest paging company, has been hurt by pager customers swapping their units for cellphones.

3. Planet Entertainment Corp., NYT, C3.
   ...Menands, NY, a wholesale distributor of prerecorded music...filed for Chapter 11...in NY.
   [Not to be confused with Planet Hollywood, which "floated up to the top of the fishbowl" on 10/13/99.]
   The company's stock has fallen to 1 cent but products can still be purchased from its webpage.
   [Unspecified debt.]

• Bankruptcies rise, Bloomberg via BG, F2.
  More than 1 million Americans filed for personal bankruptcy during the first nine months of the year, according to data released by the Administrative Office of US Courts. That's a 16% increase over the year-earlier period and is on pace to surpass the record 1.4m filings in 1998. Business bankruptcies have increased 10% so far this year, according to the courts.

• Enron Corp. files largest U.S. claim for bankruptcy - Seeks $1B in loans - Energy trading company sues ex-partner in merger deal, blaming it for collapse, by Richard Oppel and Andrew Sorkin, NYT, front page.
  ...In filings with the Federal Bankruptcy Court in New York, Enron sought Chapter 11 protection from creditors while it reorganizes.... The company lists assets of $49.8B and debts of $31.2B.... The largest previous bankuptcy filing, measured by assets, was Texaco's 1987 filing, which listed $35.9B in assets....
  [Hey, we're getting right up there with Japanese-scale bankruptcies!]

• [first, a general story -]
Bankruptcy trend is now to liquidate [Ch.7 & 11!] , not just reorganize [Ch.11], by Riva Atlas, NYT, A1.
...Several factors are forcing this:
• financing is harder to obtain...,
• more repeat business failures are in the courts,
• ...more start-ups with fewer assets are in trouble, [and]
• impatient creditors are pushing companies to sell sooner rather than later out of concern that cash is draining away.
...But it can have a high...cost.
• Virtually all employees will be out of a job,
• their retirement benefits [will be] placed in jeopardy,
• ...the local community \may be\ devastated...especially when jobs are scarce [and]
• competing businesses may also suffer as customers flock to buy products from the liquidating company at bargain prices....
  
A record 230 public companies with more than $182 billion in [total] assets have already filed for bankruptcy this year, according to *BankruptcyData.com. That is 25% more companies and double the amount of assets for all of last year, when 176 companies with $95B in assets filed for bankruptcy..\..
The liquidation rate is far higher that a decade ago, the last time there was a surge of bankruptcy filings...in part because many of the companies [today] are telecomms or Internet start-ups, which have few assets other than employees..\..
[But that's just what you get when you make the much-heralded shift from a manufacturing economy to a service economy. You go from hardware to vaporware.]
Said Brad Scheler, head of the bankruptcy practice at the law firm of Fried Frank Harris Shriver & Jacobson...."Most of the companies 10 years ago were using bankruptcy to fix their balance sheets.... This time a lot are really sick"..\.. Many companies that ran into trouble 10 years ago had been acquired in leveraged buyouts and simply needed to reduce their debt.
[Oh yes, the great LBO (leveraged buyout) fad that set us up for our current death spiral. Yet another bunch of virus-brains who didn't give a damn about anybody else acting like get-rich-quick cowboys. Notice how many things in this article indicate a huge cumulative problem?]
\But according to\ Barry Ridings, co-head of the restructuring advisory group at Lazard Freres...many companies that went bankrupt in the early 1990's simply exchanged existing debt for new debt due several years later [when] in hindsight [they] should have insisted their creditors take stock [i.e., 'take it out in trade'] instead..\..
[But how many creditors would be willing to go along with that?]
"Things we fixed 10 years ago haven't stayed fixed," he said..\.. "There have been a bunch of Chapter 22's," [he] said,...referring to companies filing for Chapter 11 a second time.... "[Such] companies...always retain some vestige of backlash," said...Scheler.... "Their relationship with vendors is never quite the same."...Said Mark Tomisch, an [LTV] spokesman..."We had significant amounts of cash during the last bankruptcy [in 1986] but after the import flood of 1998, we've had three down years" \and\ run...out of cash..\.. TWA was a Chapter 33.... \Thus\ many of the companies confronting liquidation [today] have been through bankruptcy before..\..
Data on liquidations, though, is not readily available. While it is easy to find the number of filings under Chapter 7 [where] a trustee appointed by the court oversees a sale of assets, most large companies that liquidate do so [under] Chapter 11, lawyers said, [where] data on...filings does not distinguish between liquidations and reorganizations....
1. Malden Mills Industries seeks Chapter 11 bankruptcy protection, Bloomberg via NYT, C4.
   The company [and] Aaron Feuerstein, the president and CEO..\..made famous when it kept its employees on the payroll while it recovered from a devastating fire...employs 1,200 [and] has been negotiating with creditors to remain open while it attempts to restructure its debt. The company, which is privately owned, makes Polartec fleece....
   [And additional info just from the Boston Globe subhead -]
   Malden Mills seeks Chapter 11 protection - Textile maker to get $20m [from lenders]; Feuerstein to remain in control, by Ross Kerber, BG, E1.
   ...From its peak employment of around 2,500 before the fire, Malden Mills now has about 1,500 jobs worldwide....
   [Followup]
   Malden Mills to file plan to emerge from bankruptcy, AP via 8/06/2002 NYT, C4.

   [More followup]
   Malden Mills is emerging from bankruptcy protection, AP via 8/20/2002 NYT, C4.
   [Even more followup]
   Malden Mills reaches accord on reorganization plan, AP via 1/29/2003 NYT, C6.

2. Haverty Furniture, NYT, C4.
   ...will buy 4 stores from bankrupt HomeLife for $11m....

• People's Pottery, NYT, C4.
  ...Rochester, filed for Chapter 11 bankruptcy protection, listing assets and debts both of $10m to $50m.
  [Huh, what the heck does that mean. Bad editing!]

• Japan: Insurer files for bankruptcy, b Ken Belson, NYT, C3.
  The Taisei Fire & Marine Insurance Co., Japan's 12th-largest casualty carrier, filed for bankruptcy yesterday because of claims stmming from the terrorist attacks in the U.S. The insurer...said its liabilities exceeded assets by $325m....

• Burlington Industries files for bankruptcy protection, AP via NYT, C4.
  ...once the largest textile maker in the world...saying it had no choice as it struggles to cope with weak sales, heavy debt and increased competition from cheaper Asian imports. The company, which has 11,000 employees...operates plants in the U.S., Mexico and India, and has about 3,500 workers in factories near its corporate HQ in Greensboro, NC.
  [followup]
  Berkshire Hathaway to buy textile company [bankrupt Burlington Industries], AP via 2/12/2003 NYT, C6.

• Federal interest varies, but cost-cutting is constant for security firms, by Moss and Eaton, NYT, B1.
  International Total Services Inc...which screens passengers at major airports nationwide, [or] ITS, as it is known..\..had been faltering for years.... ITS...paid so little that it could scarcely hire enough workers, and those it did hire quickly left. At one airport, when its army of 90 screeners had slipped to 60, the company had raised salaries by more than a third to attract workers. But then it started losing $80,000 a month on that one job alone.
  After slashing costs, dumping contracts, and borrowing all the money he could, ITS's president, Mark Thompson, was in the midtown Manhattan offices of his lawyer preparing to file for bankruptcy on the morning of Sept. 11.
  [Unmentioned in NYT or BG till now.]
  ...ITS filed...on Sept. 13, driven to the brink of collapse not by terrorism but by the precarious economics of the airport security industry..\.. Even with the higher pay that Congress is now considering, the industry will need to attract, train and hold onto people who can effectively perform the vital, if monotonous, task of looking for weapons that are almost never there....

• Parent of car rental chains seeks bankruptcy, AP via NYT, C4.
  The ANC Rental Corp., the parent company of the Alamo and National car rental companies, filed for bankruptcy yesterday, a victim of the drop in travel since the terrorist attacks. ...Customers of the two companies will not notice any difference in service, and all reservations will be honored, the company said.... The company intends to reorganize its operations and finances under Chapter 11 bankruptcy protection.

• BJ's, TJX charges, Bloomberg via BG, D9.
  ...Calif.-based House2Home [Inc.], a home decorating chain, filed for Chapter 11 bankruptcy protection yesterday....

• Genzyme purchase, Bloomberg via BG, D9.
  ...acquired plants of Pharming Group NV, which has been in court receivership following the Netherlands-based biotechnology company's bankruptcy in August....
  [But mentioned here for the first time in either the NYT or BG.]

• American Classic Voyages files for bankruptcy, Bloomberg via NYT, C4.
  ...A cruise ship company controlled by the billionaire Sam Zell, sought bankruptcy protection in Federal Bankruptcy Court in Delaware after customers canceled trips following the Sept. 11 attacks. Cruise bookings fell 50% after Sept. 11, and cancellations increased 30%.... American Classic listed assets of $37.4m and debts of $452.8m [net negative $415.4m]. The company is the largest American-flagged cruise line, operating seven vessels with 3,480 passengers berths. American Classic will cease operating its Hawaii vessels today and will shut down four of the five Delta Queen vessels in the next three days.

• Vectour Inc., NYT, C4.
  ...Blue Bell, Pa., a charter transportation company, filed for bankruptcy protection as revenue from several of its units fell by 25-50% after the terrorist attacks.

• Steel maker seeking help in Chapter 11 - Bethlehem Steel says it lost $152m in quarter, by Claudia Deutsch, NYT, C1.
  The Bethlehem Steel Corp., a 97-year-old company whose steel forms the underpinnings of such diverse structures as the Golden Gate Bridge and the newly repaired Navy destroyer Cole, filed for Chapter 11 bankruptcy protection yesterday. The company...has not made money since 1998.... Bethlehem is the 25th steel company to file for bankruptcy since 1998, and more are expected..\..
  [The sky really is falling. No longer there to hold it up, the American steel industry is road kill - except for timesizer Nucor Corp.]
  "The events of Sept. 11 put steel demand into free fall, and the terms of the financing packages we were negotiating kept getting worse," said Robert S. Miller Jr., the turn-around specialist who became Bethlehem's chairman on Sept. 24. "We had hoped to solve things out of court, but it is easier to borrow money when you've filed for bankruptcy than when you are teetering on the edge."...

1. Deep in debt since 1988, Polaroid files for bankruptcy, by Claudia Deutsch, NYT, C1.
   The Polaroid Corp., once one of American industry's technological lights, filed for Chapter 11 bankruptcy protection yesterday. Most experts predict that Polaroid will never emerge, but will use the court's protection to set up a sale of its assets....
   [This is a great American tragedy, on par with Levi's big layoff, which led us to predict the downturn 2½ years ago (see 2/23/1999). Polaroid was, for many years, very good to its employees, too. Now its pensioners can't even count on their pensions.]
   [Sad followup - ]
   Bank One unit agrees to buy assets of Polaroid, AP via 4/19/2002 NYT, C4.
   The maker of instant cameras and film...agreed to sell most of its assets to...One Equity Partners, the private equity unit of Bank One..\..for $265m. Polaroid said the sale...could allow the company to emerge from Chapter 11...."
   [More followup]
   Former Corning CEO is new chairman at Polaroid, AP via 6/27/2002 NYT, C8.
   ...Mr. [John] Loose replaces Gary DiCamillo, who resigned, effective July 1, after a seven-year tenure during which Polaroid's fortunes faded. The company filed last fall for bankruptcy protection after accruing $1 billion in debt.... [And more followup]
   Bank One Corp., 6/29/2002 NYT, B5.
   ...Chicago, said its VC group had won bankruptcy court approval to buy the remaining assets of Polaroid Corp., Cambridge, Mass., the pioneer of instant photography, for $255m....
   [So now venture capitalists have turned into vultures?]
   [Followup]
   Joint bankruptcy plan filed to dissolve former Polaroid, Dow Jones via 1/17/2003 WSJ, B3.
   The entity formerly known as Polaroid Corp. and its committee of unsecured creditors filed a joint bankruptcy reorganization plan that calls for the dissolution of the instant-photography firm and its subsidiaries.
   [This is what's passing for "efficiency" these days? We call it a waste. And where's the reorg component in a dissolution?]
   Stockholders won't be compensated under the proposed plan....
   In July 2002, all of Polaroid's assets, including its trademark name, were sold for $255m in cash and $200m in liabilities to OEP Imaging Corp., a unit of Bank One Corp. At the conclusion of the sale, OEP Imaging changed its name to Polaroid Corp., while the original Polaroid Corp. was renamed Primary PDC Inc.
   [Seems to be a big new fad = fiddling with language. Remember "New Speak" in George Orwell's "1984"? Compare all the wording backbends being practiced by the Bush administration, or for that matter, the euphemisms for downsizing = rightsizing and smartsizing. CEOs spend all this time rationalizing shrinkage and then they turn around and wonder where growth has gone.]

2. Etc...Lechters Inc., Globe wire services via Boston Globe, C1.
   ...a Harrison, NJ-based housewares retailer that filed for bankruptcy protection in May, plans to close its 315 stores and sell its assets after an unsuccessful attempt to find a buyer....
   [Filed May 1, mentioned in 8/21/2001 #1 below, but not counted till now. Why are we counting it late, you ask? Because there was no article focused on it in NYT or BG around May 1, and because sometimes, when there is such an article, we count it early. So it works both ways. Check out Regal Cinemas, counted on 11/16/2000 #3 but not clinched till today. By the way, Casual Male Corp., which mentioned in this same Etc. article today (10/13/2001) was counted back on 5/19/2001.]

1. Chapter 11 sought, Dow Jones via BG, D2.
   Aztec Technology Partners Inc. filed for Chapter 11 bankruptcy protection after its lenders refused to extend a deadline to renegotiate debt payments.... The Braintree [Mass.] ISP, which owes banks about $40m, had been given [a grace period from April 30] through Sept. 28 while restructuring talks were underway.

2. American soybean exporter buys unit in Argentina, Bloomberg via NYT, C4.
   ...[from] Andre & Cie.... Andre, based in Lausanne, Switzerland, has been shedding assets since it filed for protection from creditors in March.
   [But not reported then in NYT or BG.]

• Liquidation set, AP via NYT, D2.
  Its reorganization failed, Reliance Insurance Co. was preparing yesterday [10/04] to face Pennsylvania state liquidators. It owes $10B in claims in all 50 states.
  [Followup]
  Public Notices - Notice of filing by the liquidator of Reliance Insurance Co., 11/18/2002 WSJ, A19.
  Reliance Insurance Co. was placed in liquidation by order of the Commonwealth Court of Pennsylvania dated Oct. 3, 2001....
  [Somebody's dates are off a day.]

• ["the other shoe drops"]
  Sabena of Belgium gets loan and asks for court protection, by Paul Meller, NYT, C1.
  ...from creditors [yester]day, and the Belgian government provided a $115m bridge loan for one month to try to salvage at least part of the airline. Sabena's decision...followed Swissair's announcement of Tuesday that it would not pay its share of a $395m rescue package it promised Sabena in July. "This was the last straw," said Wilfried Remans, a spokesman for Sabena....
  [And all he has now is the "remans" of an airline to speak for. The coup-de-grâce came a month later -]
  Filing for bankruptcy, Sabena shuts down, by Paul Meller, 11/07/2001 NYT, W1.
  ...ending 78 years of service....

1. Much of Swissair seeks bankruptcy - Belgium's airline imperiled by moves;  Many Swissair units are seeking bankruptcy protection - The Crossair regional operation will take over most of the flights, by Elizabeth Olson, NYT, W1, W7.
   [Well, Peter Ustinov used to call Phil Hyde's hometown, Toronto, "New York run by the Swiss." That comes to an end now that the Swiss have screwed up Swissair. If the Swiss can't even run their own national airline on an even keel without letting it slide into ruin (or sliding it into ruin?), they're no fit comparison for Toronto, Ont.]
   GENEVA...- Deep in debt and desperate for cash, the Swissair Group announced drastic action to revamp itself today, including filing for bankruptcy protection for many of its operations and a sale of control of Crossair, its regional subsidiary, to Switzerland's two largest banks. In effect, a much-reduced Swissair will continue as a brand, but not as a company: Crossair will absorb about two-thirds of Swissair's flight operations beginning Oct. 28, and the rest will be shut down.
   Swissair has been in dire financial trouble for months, because of losses from a failed attempt to expand across Europe with stakes in smaller carriers. The sharp decline in passenger traffic, particularly across the Atlantic, after the Sept. 11 terror attacks made matters worse, and on Friday, Mario Corti, the CEO, acknowledged that Swissair was teetering on the edge of insolvency with $10.5B in debts and had almost no cash left. Over a frantic week of negotiations, the airline's banks came up with today's partial rescue plan..\.. The move threatened the survival of Sabena, Belgium's main airline, Swissair Group owns 49.5% of Sabena and was to have poind it $120m in cash this week to help it keep operating; that payment will not be made, the Swissair Group said....
   [Followup - other names associated with this bankruptcy -]
   US Bankruptcy Court, Southern District of NY - In re:...Swissair, Swiss Air Transport Co. Ltd., Sairgroup AG, Sairlines AG, Flightlease AG, Swisscargo AG, debtors in a foreign proceeding...under Sec.304 of the Bankruptcy Code, legal notice, 7/15/2004 WSJ, B7.

2. Federal-Mogul files for bankruptcy, AP via NYT, C4.
   ...The auto parts maker sought bankruptcy protection in the U.S. and Britain yesterday to help it resolve asbestos claims stemming from its acquisition of a British company three years ago. During the restructuring proceedings, the company will continue its business without interruption or job losses and all employees will be paid, said Frank Macher, Federal-Mogul's chairman, in a conference call with reporters. In 1998, Federal-Mogul acquired T&N PLC of Manchester, England, an auto parts maker that once used asbestos extensively in a separate building-supplies business, and two other companies with asbestos liabilities.
   [Hmm, now we have the fatal takeover-bankruptcy connection to add to the lethal takeover-downsizing connection.]
   [Followup]
   Federal-Mogul, 10/11/2002 NYT, C4.
   ...Southfield, Mich., the largest maker of auto bearings and seals, asked a federal bankruptcy judge to extend by 4 mons a deadline for submitting plans to complete its Ch. 11 reorg. The deadline, Nov. 1, has already been extended twice.
   [These clowns can't even do bankruptcy on schedule!]

3. Assisted Living Concepts files for bankruptcy, Bloomberg via NYT, C4.
   ...A leading chain of retirement homes...based in Portland, Ore. \filed\ Chapter 11 papers...yesterday in U.S. Bankruptcy Court in Wilmington, Del....

• At Home files for bankruptcy; Will sell a unit - A marquee brand of the dot-com era buckles from economic pressure, by Matt Richtel, NYT, C1, C2.
  The At Home Corp., a once-mighty Internet portal turned high-speed access provider, [was] a victim of shrinking online advertising revenue and the collapse of the dot-com bubble. The company...which is based in Redwood City, Calif..\..does business as Excite@Home.... In a statement, Patti Hart, Excite@Home's CEO, said the Chapter 11 filing would let the company "protect the value of the broadband business for the benefit of the company's financial stakeholders [and] help reassure our customers that service will continue uninterrupted through the restructuring process."...
  [Never mind your employees. Who cares about them, right? This may be one of their hidden problems. Plus we get a story on 10/11, "At Home halts subscriptions," Bloomberg via 10/11/2001 NYT, C4, which reveals that adding customers loses them money. No wonder they went bankrupt.]

• Exodus files for bankruptcy, by Simon Romero, NYT, C2.
  As expected, Exodus Communications...based in Santa Clara, Calif..\..the nation's largest Wb-services company, sought bankruptcy protection yesterday.... Exodus has suffered from the closure of many Internet companies that once purchased its Web services and data storage services.

1. Dairy Mart Convenience Stores Inc., NYT, C2.
   ...Hudson, Ohio, an operator of 550 retail stores...filed for Chapter 11...and listed assets of $190.7m and debts of $220.7m.
   [Making them 220.7-190.7= $30m in the red.]
   The company said it...had no plans to close any stores or reduce its workforce of 3,800.
   [That's the "old college spirit"!]

2. Phar-Mor, drugstore chain, files for bankruptcy, Bloomberg via NYT, C2.
   ...[The operator of] 138 drugstores in 24 states has filed for Chapter 11...in Youngstown, Ohio [where it] is based..\..because of heavy debt and will close 65 stores to reduce costs.... Phar-Mor...said that the slowing economy and competition from larger chains contributed to its financial problems. Phar-Mor...emerged from a three-year bankruptcy reorganization in September 1995.

3. Sanmina Corp., NYT, C2.
   ...said it had won approval in U.S. Bankruptcy Court to buy the assets of E-M Solutions Inc., Longmont, Colo., a closely held electronics maker....

• Komag Inc., NYT, C2.
  ...San Jose, Calif., a maker of storage disks for computers, said it had filed a Chapter 11 bankruptcy recovery plan that has the support of more than half of its creditors....

• Australia: Miner seeks seeks shelter, by Becky Gaylord, NYT, W1.
  Pasminco, a large zinc and lead producer, filed for the equivalent of Chapter 11 bankruptcy protection, succumbing to low zinc prices, mounting debt and the damage from a failed currency hedging strategy....

• Acquisition made, Bloomberg via BG, F8.
  California-based MCMS Inc., which makes electronics for telecommunications and computer companies, sought Chapter 11 bankruptcy protection and agreed to sell most of its assets to...Manufacturers' Services.... The buyout is subject to a competitive bankruptcy auction....
  [A search of the web turned up the following more focused article -]
  MCMS bankruptcy filing lists assets, debts, Reuters 19:53 09-18-01 via AOLNews.
  Electronics maker MCMS Inc. listed assets of $173.4m and debts of $343.5m in a filing on Tuesday seeking Chapter 11 protection in the U.S. Bankruptcy Court in [Wilmington,] Delaware....
  [Giving us a net debt of 343.5-173.4= $170.1m.]

• Japan: Supermarket bankruptcy, AP via NYT, C2.
  Japan's fourth-largest supermarket chain, the Mycal Corp., filed for protection from creditors [in the] Tokyo District Court..\..after its bank refused to keep bailing it out. Th Dai-ichi Kangyo Bank's decision to cut off Mycal's credit line heartened investors who took it as an indication that banks are getting serious about their bad-loan exposure. But the failure of yet another major retailer was a sign that more economic pain lies ahead.... A private credit agency, Teikoku Databank, estimated Mycal's debt to total nearly $12.6B.

• Australian airline files for bankruptcy, NYT, C8.
  SYDNEY...- Ansett Airways, the only national competitor to Qantas, Australia's biggest airline, filed for...voluntary administration..\..the local equivalent of Chapter 11 bankruptcy protection today as its financially troubled principal owner, Air New Zealand, searched with growing desperation for a buyer or new financing for Ansett. Ansett will continue to fly, at least for now, the company said....
  Qantas, which had been asked by the Australian and New Zealand governments to consider taking Ansett over, said Ansett's problems were too severe and it could not proceed. Then an appeal for emergency subsidies from the Australian government was turned down.
  Air New Zealand stock fell more than 20% [yester]day, on a combination of specific worries about its troubles and investor anathema for airline stocks after the terrorist attacks in New York....

• American Tissue Inc., NYT, C4.
  ...Hauppauge, NY, a paper and tissue maker which defaulted on its loans last month, [will] seek Chapter 11 bankruptcy protection.

• France: Moulinex seeks bankruptcy, by John Tagliabue, NYT, B3.
  The big European household goods maker...best known in the United States for its food processors and Krups coffee makers..\..announced it was filing for bankruptcy [liquidation per 12/15/2001 NYT C3] after failing to reach agreement with its principal shareholder over financing a reorganization to counter big losses.... Patrick Puy, the CEO, said Moulinex was forced to seek the French equivalent of Chapter 11 after E.I.Fi S.p.A., the Italian group that holds 74% of Moulinex shares, refused [to] pay for the reorganization.

• [This little story includes a seldom-mentioned clue to many bankruptcies.]
  Speedo maker asks bankruptcy judge to approve bonuses, Bloomberg via NYT, C6.
  The Warnaco Group, the maker of Calvin Klein jeans and Speedo swimwear...sought Chapter 11 bankruptcy protection in June..\..in US Bankruptcy Court in Manhattan.
  [And not reported or counted then.]
  ..\..[It] filed yesterday [a] proposed bonus plan \of\ up to $28.5m...intended to reduce employee turnover and enhance morale. Warnaco, based in New York, said about 25 crucial employees had resigned since the company sought Chapter 11....
  The plan does not provide a bonus to the chairman and chief executive, Linda J. Wachner, who was one of the highest-paid executives in the United States. She "earned" [our quotes - ed.] more than $158m in salary, bonuses and options from 1993 to 1999 for running Warnaco and the Authentic Fitness Corp., a Warnaco subsidiary. Her pay was cut 59% in 2000 to $3.1m....
  [So her pay must originally have been over $7,500,000 - for running her company into bankruptcy.]
  The company said in yesterday's filing that it would ask the court to approve Ms. Wachner's proposed employment agreement through a separate request....
  [Wonder how many other American companies are being sucked dry and bankrupted by the grotesque overpay of their leach executives, oops, chief executives.]
  [Followup]
  Warnaco to emerge from bankruptcy, AP via 1/17/2003 NYT, C7.
  [and]
  Consumer Products - Warnaco Group Inc. - Bankruptcy court approves revamp plan under Chapter 11, Dow Jones via 1/17/2003 WSJ, B6.
  [and]
  Warnaco Group emerges from bankruptcy, Bloomberg via 2/05/2003 NYT, C4.

• Net currency seller files for bankruptcy, Bloomberg via NYT, C4.
  Flooz.com, a seller of online currency used as electronic gift certificates, filed for Chapter 7 bankruptcy protection, days after saying $300,000 of credit card fraud over the Internet contributed to its shutdown. The company, whose online payment system featured a currency named flooz that could be used for Internet purchases, listed $295,862 in assets and $13.9m in debts in papers filed on Friday in Federal Bankruptcy Court in Manhattan....
  [Let's see. 13.9-.295862= 13.9-.3= $13.6m in net debt.]

• Argentina: Music bankruptcy, Bloomberg via NYT, W1.
  ...Musimundo, Argentina's biggest seller of compact discs and tapes..\..sought protection from creditors after sales dropped 50% and financing dried up..\.. Musimundo, which is controlled by the Exxel Group, a buyout firm...has $206.4m of debt....

• Standard Media Inc. files for bankruptcy, Reuters via NYT, C2.
  SAN FRANCISCO...- The parent company of the once high-flying dot-com magazine The Industry Standard, filed for bankruptcy protection today, one week after it ceased publication and laid off most of its staff.... At the height of the dot-com heyday, The Industry Standard employed more than 400 people and regularly published magazines that exceeded 300 pages. But the drastic reversal in dot-com fortunes hit the magazine's advertising base hard, and negotiations for further financing from principal investors including the trade magazine publisher International Data Group collapsed.

8/24/2001  1 bankruptcy in NY Times (NYT) & Boston Globe (BG) -

• Level 3 buys back trans-Atlantic fiber optic network from Viatel, Bloomberg via NYT, C4.
  ...Viatel, a New York-based seller of phone and data services, sought Chapter 11 protection from creditors in May.
  [But unreported in the Times or the Globe then.]
  As part of the transaction, Level 3 is to release Viatel from $9m in debt registered with the bankruptcy court and keep all cash payments made under an April 2000 contract, including $94m paid by Viatel at the end of last year....

1. Battling competition, Ames files for bankruptcy protection, Bloomberg via NYT, C7.
   Ames Department Stores Inc...based in Rocky Hill, Conn..\..sought Chapter 11 bankruptcy protection yesterday as competition with Wal-Mart Stores Inc. has left the company struggling to pay its debts.... Four company units were included in the filing.... A string of other discount retailers, including Lechters [5/01 based in Harrison NJ, and not counted till 10/13/2001 #2 above] and Bradlees [95 & 00 Braintree MA], have filed for bankruptcy protection over the last year [plus Caldor in '95 & '99 based in Norwalk CN]....
   Ames, which spent almost three years in bankruptcy in the early 1990's, announced last week that it would close 47 stores and eliminate 2,000 jobs [8/17, #2]....

2. Produce exchange seeks protection, NYT, C6.
   World Commerce Online Inc...based in Orlando, Fla..\..which develops and licenses software that allows food and produce companies to conduct business on the Internet, said it had filed for bankruptcy protection....
   [Incomplete reporting - Chapter 11? 7?]

• Newsweek: Media lead sheet/August 27, 2001 issue (on newsstands Monday, August 20), PRNewswire 08/19/2001 15:36 EDT via AOLNews via RadioTony.
  COVER: "Are you maxed out [on your credit lines]?" (p. 34). As the economic expansion of the early 90s slows to a crawl, it is being kept alive in large part by consumer spending that is based on a rising mountain of personal debt. All told, [US] consumers owe $7.3 trillion, according to the Federal Reserve - double the amount they carried in the last recession. And as layoffs increase and stock winnings dwindle, many are piling on even more [consumer debt] and forecasters are predicting that a record 1.4 million people may file for bankruptcy this year, reports National Correspondent Daniel McGinn.
  [Compare the accompanying story -]
  "The growing risks of fringe lending" (p. 40). Just as alarming as the growing [personal] debt is the explosion in loans to low-income consumers who have spotty credit histories. Banks hail these so-called "subprime" loans as the "democratization of debt"...
  [Don't they mean "credit"? Debt may be alliterative but it's a Bad Thing and doesn't need democratization. At any rate, this kind of debt may soon explode in another sense -]
  ...but it comes at a high cost to borrowers [in the form of] 10-24% interest rates and high fees.
  [which make bad-loan write-offs and/or personal bankruptcies more likely.]
  Those rates make for fat profits, which is why the $300B subprime business has nearly quadrupled since 1995 and attracted some of the nation's biggest banks....
  [Isn't this getting a lot like 1929's overleveraged overhang of margin loans? We smugly think we're immune to a repeat of 1929 because our smart forebears passed legislation to make such a thing impossible, but -
  1. we've stupidly repealed a lot of the safeguards they enacted (e.g., the Glass-Steagall Banking Bill that separated banks, brokerages and insurance companies - see 7/02/99, #2 - reminiscent of Baby Bush's attempts to unseparate Church and State?) and
  2. we're constantly thinking up new ways to push the envelope and drive our SUVs closer to the cliff-edge,
     • like this "subprime" loan explosion, whose very name is misleading (makes you think it charges less than the prime rate) and
     • like the new single-stock futures (see 6/30/2000), which have been compared to the high-risk bucket-shop deals of the late 1920s.]

• Vitech seeks relief from Gateway loans, Bloomberg via NYT, B4.
  Vitech America Inc. sought bankruptcy protection [yester]day after a New York court ordered it to pay Gateway Inc. $41m plus interest for defaulting on loans. Gateway sued Vitech, a computer maker, last March [for] defaulting on loans made since 1999, when the two companies agreed to let Vitech sell products in Brazil using Gateway's name.... Vitech, which is based in Miami, is considering an appeal.... The company listed $422.1m in assets and $141.4m in debts....

1. Asbestos litigation felling firms, study shows, Reuters via NYT, E3.
   The number of US firms caught up in asbestos litigation has grown dramatically in the past 10 years and all the major asbestos defendants are likely to be bankrupt within the next two years, according to a study released yesterday...by the Calif.-based independent RAND Institute for Civil Justice.... Billions of dollars of asbestos-related costs already have forced 41 firms to file for Chapter 11....
   
   
2. Egghead files for Chapter 11, Bloomberg via NYT, C4.
   Egghead.com, a computer retailer, filed today for bankruptcy protection after laying off two thirds of its workforce and agreeing to sell its assets to closely held Fry's Electronics, court records said....

3. Financial problems force chain of computer camps to close, NYT, E5.
   ...ACE Computer Camp, an Atlanta-based company that ran 60 camps a year for some 8,000 campers ranging in age from 7 to 16, ceased operations last Friday.... ACE had been suffering from decreased enrollment, with 45% fewer campers in 2001 than in the previous year..\.. Fritz Hager, who was ACE's CEO, said the company ran out of money when a sale of the company fell through this month.... Mr. Hager said the company planned to file for Chapter 7 bankruptcy [i.e., liquidation, not reorg].
   ..\..Many campers ending their session were left unsupervised while counselors, confused by the sudden news, packed up and left.... Many ACE campers who been left in the lurch for the final weeks of camp were sent to a location run by Cybercamps, a rival operation in much healthier financial shape....

1. Midway Airlines files for bankruptcy protection, AP via NYT, C4.
   ...as it sought to preserve cash while it reorganizes to cope with a severe downturn in corporate travel...a "calamitous drop in business traffic," low fares, and high jet fuel prices. The airline [is] based in Morrisville, NC....
   [Followup -]
   Midway Airlines - Judge orders the liquidation of regional carrier's assets, 10/31/2003 WSJ, C7.

2. South Korea picks out 49 concerns to liquidate - Critics say the big troubled companies are allowed to go on, by Don Kirk, NYT, W1.
   ...The plan is the latest effort to revive an economy that has been slumping since early last year. The 49 were selected, the Financial Supervisory Service said, from 455 companies whose viability was studied. The Service said that the decision showed its determination to jettison weak companies. But critics said that of the 49 companies, all were minor except Dong Ah Construction, which was the nation's second-largest construction company when it went bankrupt this year....

• Revamping, broadband provider offers swap, by Simon Romero, NYT, C4.
  The Covad Communications Group offered yesterday to swap bonds with a face value of $1.4B for a combination of cash and equity as the company, an unprofitable provider of high-speed Internet service, prepares to seek bankruptcy protection....
  [In "Covad to file for bankruptcy," Reuters via 8/16/2001 NYT, C6, we read, "Covad said on Aug. 7 that it expected to file for reorganization under Chapter 11...by mid-August."]

• Mosler Inc., NYT, B4.
  ...Hamilton, Ohio, a closely held provider of security systems and services [will] dismiss all of its 1,800 employees, stop conducting business and begin liquidating assets.

• Rhythms NetConnections, NYT, C3.
  ...Englewood, Colo., a provider of high-speed Internet service, sought bankruptcy protection and said it planned to stay in business while trying to reorganize.