Bankruptcy Proceedings

Richard M. Yaffe, president of Landmark Homes Inc., said yesterday that the beleaguered company is "winding down" and will cease as an active homebuilder.Yaffe, who recently split with partner Gary Houston, said the company has not filed for bankruptcy court protection and intends to complete 14 homes under construction. He said it will honor claims made by homeowners whose homes are still under warranty.Rumors that the Towson-based company, which has had a number of lawsuits filed against it, was in bankruptcy proceedings and was going out of business had been circulating in the local building industry.

An Elkridge-based clothing manufacturer has been forced into involuntary bankruptcy proceedings by creditors who say Wang Zi Cashmere Products Inc. owes them more than $150,000 from its expansion into the factory outlet store business.The creditors' filing, made last week in U.S. Bankruptcy Court in Baltimore, said the cashmere company did not pay a contractor, a display shelf fabricator and architects who worked on some or all of the company's eight factory outlets, scattered from Massachusetts to California.

After weeks of negotiating and a 1 a.m. conference call to bless the deal, parties in Merry-Go-Round's bankruptcy case agreed yesterday to sharply reduce potential pay for the fashion retailer's new bosses.Also, as expected, Merry-Go-Round announced its intention to file a reorganization plan by Feb. 15 with the U.S. Bankruptcy Court in Baltimore.Creditors and shareholders for the Joppa-based clothing chain agreed last week on a tentative plan, which company managers have agreed to support.

Merry-Go-Round Enterprises Inc. disclosed yesterday the extent of its losses after its first year in bankruptcy proceedings: $186.3 million.The large loss, which came on sales of $782.8 million, was inflated by lawyers' fees, lease-cancellation claims, asset write-offs and other one-time reorganization costs.But even when taxes, interest, depreciation, write-downs and reorganization expenses are excluded, the Joppa-based Merry-Go-Round lost $52.5 million for the year ended Jan. 28.The size of the net loss, $3.45 per share, was expected by Merry-Go-Round's creditors.

NEW YORK -- Lower costs, customer research and stronger fashion statements will help struggling Merry-Go-Round Enterprises Inc. boost sales and generate positive cash flow this fiscal year, company executives said yesterday.In elaborate presentations to financial analysts, creditors and shareholders, Chairman Thomas Shull pronounced the Joppa-based retailer "alive and well."But he said the company came perilously close to shutting down and liquidating last fall.Merry-Go-Round projects that it can boost same-store sales by 10.5 percent during the fiscal year that started Sunday, compared with an estimated plunge of 17.7 percent last fiscal year.

Investors in distressed securities are paying unusually high prices for the trade debt of Merry-Go-Round Enterprises Inc., which filed for Chapter 11 bankruptcy protection Tuesday."

Mac Clayton, who led Fair Lanes Inc. into and then out of bankruptcy proceedings, has resigned and been replaced as president by the bowling chain's vice president for real estate, the company said yesterday.In parting ways with Mr. Clayton, Fair Lanes is returning to its roots, taking on top managers and an organization structure that predate an unsuccessful 1989 leveraged buyout.Fair Lanes' new president is Wayne Strausburg, who has worked in operations, finance and real estate over a 22-year career with the Hunt Valley-based chain.

After weeks of intense negotiation, Merry-Go-Round Enterprises Inc. has agreed to pay a bonus that could reach $8.8 million to its two new bosses if they succeed in restoring the Joppa-based retailer to a certain level of profitability.But the deal is still controversial among Merry-Go-Round's creditors, who want to speed the chain's bankruptcy process so they can receive what they're owed more quickly. Creditors may try to block the package because it contains no incentives for management to file a reorganization plan in 1995, said people close to Merry-Go-Round.

Trying to bolster management while it goes through Chapter 11 bankruptcy reorganization, Merry-Go-Round Enterprises Inc. yesterday named a veteran department store and boutique merchant to run its flagship division.On Aug. 1 Frank Tworecke will become president of the Merry-Go-Round stores unit, a 500-store chain that forms the core and corporate soul of the Joppa-based fashion retailer.Now senior vice president and general merchandise manager for Federated Department Stores Inc.'s Lazarus division, Mr. Tworecke fills the last important vacancy on the team Merry-Go-Round officials have said they need to turn the company around.

In another big, painful step to try to return to profitability, Merry-Go-Round Enterprises Inc. said yesterday that it will close 200 more stores by February.The move means hundreds more store employees will lose their jobs. And it raises a question of whether additional positions will be cut at the retailer's Joppa headquarters, now that there are fewer Merry-Go-Round, Dejaiz and Chess King stores to support.Company executives could not be reached yesterday to comment on the number of jobs being eliminated and locations of the stores.

They were still buying General Motors shares on Thursday, as if the company deserved its space in the Dow Jones Industrial Average. GM stock dipped 3 cents to $1.12 on Thursday after rising more than a dime earlier. If this column were owned by the financial wires, it would assign glib and dubious causes to GM's blip. Europe eyes new GM bailouts! A few creditors agreed to a revised restructuring plan! There are no reasons to buy GM stock, however, except nostalgia and the cool picture of cars and smokestacks on the certificate.

One hundred days into his presidency, do you think President Barack Obama is doing a good job? (1,185 votes; results are not scientific) NEXT poll Would you be less likely to buy a car from a company that was in bankruptcy proceedings? Cast your vote at baltimoresun.com/vote

READERS ASK whether to buy shares of Bethlehem Steel. This column is not in the business of giving stock tips, partly because picking stocks is difficult to do and be right. But offering advice on Bethlehem Steel shares is easy. For that reason, and because larger lessons can be drawn from the sorry Bethlehem tale, we make an exception. This column's official investment recommendation on Bethlehem Steel stock is: No. Don't even think about it. A "strong sell" recommendation is not negative enough for Bethlehem Steel.

Last summer, a bankrupt US Airways Group Inc. wowed airline analysts with a recovery plan that seemed likely to lift the troubled carrier out of a financial hole made deeper by its failed merger with United Airlines and the Sept. 11 terrorist attacks. But recent setbacks suggest elements of the Arlington, Va.-based airline's bankruptcy recovery plan may be in trouble as travelers book fewer trips. United's own bankruptcy, filed just last week, could shrink the benefits of a code-share alliance between the two carriers that was supposed to net US Airways $150 million in additional revenue annually.

The owners of the short-lived Galeano's Restaurant in Little Italy were indicted yesterday on one count of wire fraud and one count of bankruptcy fraud, authorities said. Daniel H. Galeano, 61, and Teresa M. Galeano, 43, formerly of Baltimore and now of Tannersville, Pa., owned and operated their High Street restaurant from Dec. 31, 1997, through the middle of last year. They had previously operated a restaurant of the same name in Fenwick Island, Del. According to the indictment, the Galeanos fraudulently procured a mortgage loan in late 1999 to purchase a house on Stiles Street in Little Italy.

What would you recommend someone to do who actually owns Enron stock, such as myself. My feeling is that I should just hang on to it, since it's worth nothing anyway, and it may just resurrect. It's a long shot, but one never knows. Don't get your hopes up. Shareholders with stock in a company that's entered bankruptcy proceedings rarely recover anything, said Peter A. Chapman, president of Bankruptcy Creditors' Service Inc. of Trenton, N.J., and the editor of newsletters that track specific companies through bankruptcy proceedings.

Richard M. Yaffe, president of Landmark Homes Inc., said yesterday that the beleaguered company is "winding down" and will cease as an active homebuilder.Yaffe, who recently split with partner Gary Houston, said the company has not filed for bankruptcy court protection and intends to complete 14 homes under construction. He said it will honor claims made by homeowners whose homes are still under warranty.Rumors that the Towson-based company, which has had a number of lawsuits filed against it, was in bankruptcy proceedings and was going out of business had been circulating in the local building industry.

Merry-Go-Round Enterprises Inc. disclosed yesterday the extent of its losses after its first year in bankruptcy proceedings: $186.3 million.The large loss, which came on sales of $782.8 million, was inflated by lawyers' fees, lease-cancellation claims, asset write-offs and other one-time reorganization costs.But even when taxes, interest, depreciation, write-downs and reorganization expenses are excluded, the Joppa-based Merry-Go-Round lost $52.5 million for the year ended Jan. 28.The size of the net loss, $3.45 per share, was expected by Merry-Go-Round's creditors.

An Elkridge-based clothing manufacturer has been forced into involuntary bankruptcy proceedings by creditors who say Wang Zi Cashmere Products Inc. owes them more than $150,000 from its expansion into the factory outlet store business.The creditors' filing, made last week in U.S. Bankruptcy Court in Baltimore, said the cashmere company did not pay a contractor, a display shelf fabricator and architects who worked on some or all of the company's eight factory outlets, scattered from Massachusetts to California.

NEW YORK -- Lower costs, customer research and stronger fashion statements will help struggling Merry-Go-Round Enterprises Inc. boost sales and generate positive cash flow this fiscal year, company executives said yesterday.In elaborate presentations to financial analysts, creditors and shareholders, Chairman Thomas Shull pronounced the Joppa-based retailer "alive and well."But he said the company came perilously close to shutting down and liquidating last fall.Merry-Go-Round projects that it can boost same-store sales by 10.5 percent during the fiscal year that started Sunday, compared with an estimated plunge of 17.7 percent last fiscal year.