Unsecured Creditors

Philadelphia Newspapers L.L.C. can use a private investigator to look into security breaches, including the leak of an internal planning document to the committee representing the firm's unsecured creditors, a federal bankruptcy judge ruled yesterday. Chief Bankruptcy Judge Stephen Raslavich agreed that the company could spend up to $25,000 to use SafirRosetti, a security firm, to investigate the leak and review the overall integrity of the company's protection of internal documents.

John Wanamaker's parent company can wait for Christmas sales results before filing a reorganization plan to get the department-store chain out of Chapter 11, a U.S. Bankruptcy Court judge ruled yesterday. Woodward & Lothrop Inc., which owns 15 Washington-area department stores and the 15-store John Wanamaker, voluntarily filed Chapter 11 on Jan. 17. Judge Stuart Bernstein yesterday gave Woodward & Lothrop until Jan. 9, 1995, to file its plan. He gave the chain until Feb. 8 to solicit acceptances of the plan.

Phoenix Steel Corp. announced yesterday that it had reached a new agreement with its unsecured creditors aimed at averting a second bankruptcy filing. Under the plan, Phoenix's 500 unsecured creditors agreed to forgo about half of the $15 million they are owed. In return, they will receive a share in net operating profits and net proceeds from the planned sale of the company. The plan, which was negotiated by Phoenix and a committee representing the unsecured creditors, must now be approved by at least 80 percent of the company's unsecured creditors.

Angry creditors yesterday asked a judge to appoint a trustee to run Eastern Airlines in place of managers from parent Texas Air Corp. The move could mean the end of Eastern's efforts to revive itself after a bankruptcy filing and a 13-month-old strike by the International Association of Machinists. For the first time since Eastern filed for protection from creditors March 9, 1989, Texas Air chairman Frank Lorenzo's control of the carrier seemed uncertain. Eastern's unsecured creditors, who until recently had supported the company, told U.S. Bankruptcy Judge Burton R. Lifland in New York that the carrier was guilty of "gross incompetence . . . gross mismanagement" or fraud in trying to reorganize.

Advanta Corp. creditors, stockholders, and others offered a list of objections last week to the bankrupt Montgomery County credit card firm's liquidation plan ahead of a hearing scheduled for Thursday in Wilmington. The committee representing Advanta's unsecured creditors said in a court filing that court approval of Advanta's proposed plan would be "futile and impose significant and unnecessary expense and delay" on the liquidation process because "it is highly likely that the vast majority of creditors" will vote against it. That would force a second round of voting, costing the bankruptcy estate money that could otherwise be used to pay off Advanta creditors.

If employees and other unsecured creditors go along with Plan A, they may get 58 cents on every dollar bankrupt St. Mary Hospital owes them. If they opt for Plan B, they may get only 33 cents on the dollar - and set the stage for a long legal battle. And, as in all bankruptcy cases, the unsecured creditors get a shot at what's left only after trustees, lawyers, accountants and so-called secured creditors - people with liens - get 100 percent of what they are owed. If estimates in court papers hold, the trustee, lawyers, accountants and others involved in the bankruptcy will get about $1.54 million.

Phoenix Steel Corp. yesterday broke off negotiations with its 500 unsecured creditors and filed for protection under Chapter 11 of the Bankruptcy Act. It was the second such filing for the company within the last four years. Several of the creditors, with whom the company has been negotiating to avert a bankruptcy filing, said they were surprised by Phoenix's announcement because they believed an agreement was at hand. "We thought we were close to a deal," said I. Michael Coslov, president of Tube City Iron & Metal Co., one of Phoenix's largest creditors.

Nothing fuels speculation more than tight lips by those officially involved in a business deal. In the case of the proposed deal for Woodward & Lothrop Inc., there are whispers that the secured creditors of the bankrupt company are unhappy with the bid Woodies wants to accept and will try to derail it. These creditors are the banks that financed the purchase of the Woodies and John Wanamaker stores a decade ago. Their loans are secured by real...

David Feld, chairman and chief executive of the Today's Man menswear chain, has won court approval of his plan to pay off creditors and emerge from personal bankruptcy. Under the plan, Feld will retain his majority stake in Today's Man, in large part because of new backing he received from Philadelphia's Jefferson Bank. The company, which operates 25 retail stores in Philadelphia, New York and Washington, is still operating under Bankruptcy Court protection. Feld made all his payments to nine secured creditors who were owed more than $32 million, said his attorney, Jeffrey Kurtzman.

Advanta Corp. creditors, stockholders, and others offered a list of objections last week to the bankrupt Montgomery County credit card firm's liquidation plan ahead of a hearing scheduled for Thursday in Wilmington. The committee representing Advanta's unsecured creditors said in a court filing that court approval of Advanta's proposed plan would be "futile and impose significant and unnecessary expense and delay" on the liquidation process because "it is highly likely that the vast majority of creditors" will vote against it. That would force a second round of voting, costing the bankruptcy estate money that could otherwise be used to pay off Advanta creditors.

Advanta Corp.'s bankruptcy has hit some choppy waters that could delay payments to retail investors owed $140.6 million by the defunct Montgomery County credit card company. At a hearing Wednesday in Wilmington, the committee representing Advanta's unsecured creditors said it was not supporting the company's liquidation plan. The plan was filed Nov. 2 and said retail noteholders - the largest block of unsecured creditors - could expect to recover 64.4 percent to 100 percent of their investments.

  Angels look like they're slipping off saddle again Back when they were still owned by Gene Autry, the California Angels (as they were then known, but that's another story) were a snakebitten team. No matter what they did, or how much money the singing cowboy spent, the Halos always fell short of winning the World Series. All that was wiped away in 2002, when the Angels beat the Giants in seven. But now, at the start of a new decade, it appears that what's old is new again.

Philadelphia Newspapers L.L.C. can use a private investigator to look into security breaches, including the leak of an internal planning document to the committee representing the firm's unsecured creditors, a federal bankruptcy judge ruled yesterday. Chief Bankruptcy Judge Stephen Raslavich agreed that the company could spend up to $25,000 to use SafirRosetti, a security firm, to investigate the leak and review the overall integrity of the company's protection of internal documents.

Philadelphia Newspapers L.L.C.'s "Keep It Local!" campaign "undercuts the integrity of the bankruptcy process" by unfairly benefiting current management while "demonizing" potential out-of-town bidders, according to a creditors' motion filed in U.S. Bankruptcy Court yesterday. In its motion, the committee for unsecured creditors asked that the court order the company to stop the campaign. The motion also asked the court to "grant other remedial action . . . to rectify the damage done to date.

In a scathing rebuke, the judge overseeing the bankruptcy of Philadelphia Newspapers L.L.C. yesterday described the investigation of an unauthorized taping of a meeting between the company and its senior lenders as a "fine mess. " The investigation of the taping, done by one of the officers of the largest creditor, was directed by a committee of the unsecured lenders, or second-tier creditors. By failing to take sworn depositions and seek key e-mails, the committee left its interim report on the taping open to questions and criticism, Superior Bankruptcy Court Judge Stephen Raslavich said.

The federal judge overseeing the bankruptcy of Philadelphia Newspapers L.L.C. yesterday ordered creditors' lawyers investigating an unauthorized recording to share everything they have learned with the company by Monday. "I'm not happy with anybody here today," U.S. Bankruptcy Judge Jean K. FitzSimon said at the end of the hearing, referring to the lawyers for the committee representing unsecured creditors and the lawyers for the publisher of The Inquirer, the Philadelphia Daily News, and Philly.

Philadelphia Newspapers L.L.C. ought to be able to hire its own special counsel to investigate an unauthorized recording of a meeting with some of its major lenders, rather than relying on lawyers representing other creditors in the case, a lawyer for the media company told a federal judge yesterday. "What's at stake here are our rights," said Lawrence G. McMichael, a Dilworth Paxson L.L.P. attorney who represents the owner of The Inquirer, the Philadelphia Daily News, and Philly.

T.H. Properties L.P., the Harleysville home builder that abruptly ceased operations last week as lenders and suppliers began closing in, yesterday filed for Chapter 11 protection in U.S. Bankruptcy Court in Philadelphia. The filing means that the builder, which has 12 working developments in Pennsylvania and New Jersey, will seek to reorganize its operation in an effort to resume business. Buyers have hundreds of thousands of dollars in deposits on houses in THP developments, while people who went to settlement in the days and weeks before THP suspended operations still await completion of landscaping and driveways.

U.S. Bankruptcy Judge Jean K. FitzSimon said yesterday that a Pittsburgh law firm representing unsecured creditors of Philadelphia Newspapers L.L.C. should investigate an alleged unauthorized recording of a November meeting between company officials and other lenders. The decision that Eckert Seamans Cherin & Mellott L.L.C. should undertake the investigation went against a request by Philadelphia Newspapers - publisher of The Inquirer, the Philadelphia Daily News and Philly.com - that the law firm Elliott, Greenleaf & Siedzikowski P.C., of Blue Bell, be hired.