Leisure Technology reorganization goes before judge; proposal would give ownership to major bondholder.A creditor-supported reorganization plan A scheme authorized by federal law and promulgated by the president whereby he or she alters the structure of federal agencies to promote government efficiency and economy through a transfer, consolidation, coordination, authorization, or abolition of functions. proposes that retirement-home developer Leisure Technology Inc.'s shareholders give all the firm's assets to its creditors. Leisure Technology's major bondholder and biggest creditor -- SN Phelps & Co., an investment firm that acquires high-yield bonds High-yield bond See: Junk bond high-yield bond See junk bond. issued by distressed corporate borrowers -- supports the plan and would become the majority owner if U.S. Bankruptcy Court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. Judge William J. Lasarow approves the plan at a hearing scheduled for Feb. 5. Both Michael L. Tenzer, Leisure Technology's chairman, chief executive and biggest stockholder, and majority bondholder Stanford N. Phelps -- the Connecticut investor who heads the official creditors' committee creditors' committee A group of lenders who seek to protect their interests in connection with a borrower that experiences financial difficulties. -- had recommended that creditors vote in favor of the reorganization plan Judge Lasarow approved for submission to the creditors in January. Partner Gary Anstey of Phelps' SN Phelps & Co. noted that the multi-faceted investment firm is active as a "distressed high-yield investor" but wouldn't reveal how much of the bond issues the firm controls. But attorney Michael Tuchin of Stutman, Treister & Glatt Glatt may refer to:
Most creditors filing ballots by the Jan. 25 deadline voted in favor of the proposed plan, which would transfer ownership of Leisure Technology's assets from Tenzer and other stockholders to Phelps and other creditors, said Tuchin. "People said it would never happen; it's something of a miracle for a real estate company to emerge from bankruptcy in this economy," Tuchin stated. However, one major creditor -- Hazama USA Corp./Starts International California Inc. -- which controls one of the four creditor voting classes, voted against the plan, Tuchin noted. This creditor has threatened to "assert a large claim" against the company. Leisure Technology disputes the claim and will litigate if necessary, he added. Tenzer's health has recently altered the course of the reorganization plan. He learned in December that he has a "potentially serious medical condition," and the plan was amended to grant Tenzer an option to choose a "one-company plan" or a "two-company plan," according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. bankruptcy court documents. The two-company plan would have split various assets between two new entities. Had Tenzer elected for that plan, Leisure Technology's creditors would have received its most financially sound properties, and Tenzer would have kept the most financially strapped ones. As votes were being tallied last week, the company informed the creditors' committee that Tenzer has elected to go with the one-company plan. Under this plan, Tenzer and other stockholders would relinquish ownership of all Leisure Technology assets to the creditors. Tuchin said the creditors include Phelps, other bondholders, "trade creditors" such as building material suppliers, and banks. Although Tenzer had surgery Jan. 27, and the prognosis is "good," according to Tuchin, a source suggested that Tenzer's election of the one-company plan indicates "he's decided against trying to rebuild his empire" from the firm's most troubled properties. If the plan is confirmed, Leisure Technology's new directors -- including Phelps and two other major creditor representatives, Morton Kirsch kirsch n. A colorless brandy made from the fermented juice of cherries. [French, short for German Kirschwasser; see kirschwasser. and Richard Carpenter Richard Carpenter can refer to:
v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. firm would formally employ Tenzer full-time for three months, and then for one year as part-time consultant "to assist in the transition," said Tuchin. He confirmed that the firm's stockholders would receive nothing. The new company would have a reserve of $500,000 and control of "unencumbered Unencumbered Property that is not subject to any creditor claims or liens. Notes: For example, if a house is owned free and clear (meaning the owner owes no mortgage to anyone), it is unencumbered. assets," i.e., Leisure Technology developments underway in New Jersey the Leisure Village Ocean Hills project under development in Oceanside, Calif., Tuchin said. Since the firm was founded in 1957, Leisure Technology and its subsidiaries have developed more than 18,000 homes, primarily in California, New Jersey, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , Illinois and Florida, according to company reports. Annual revenues exceeded $180 million during its best late-1980s years, records indicate, and the corporation posted net earnings of $8.17 million in 1988. Common shares in the firm traded as high as $6.50 apiece and preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. at $25.75 in 1989, records show. But after Leisure Technology issued high-yield notes -- the two biggest issues at 15.75 and 13.63 percent interest -- the builder's empire came crashing down when property values sank and prospective buyers of the firm's new developments had trouble selling their existing homes, according to bankruptcy filings. The emerging real estate credit crunch Credit Crunch An economic condition whereby investment capital is difficult to obtain. Banks and investors become weary of lending funds to corporations thereby driving up the price of debt products for borrowers. made it difficult to secure additional operating funds. In April 1991, Leisure Technology and seven subsidiaries filed for Chapter 11 bankruptcy protection, listing assets of $218 million and liabilities of $168 million. |
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