LAW—Creditors Circle as Skepticism Grows On Energy Bailout

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Gov. Gray Davis’ proposed $2.9 billion bailout plan for Southern California Edison hasn’t gone over too well so far. But it may not matter.

Frank Zerunyan, a member of Sulmeyer Kupetz Baumann & Rothman in Los Angeles, predicts that even if the Governor’s plan gets passed by state legislators, it wouldn’t be enough to pay back Edison’s various creditors. As a result, those creditors are expected to either file a slew of lawsuits against Edison or band together and file a petition to put the company into involuntary bankruptcy.

“If the package passes, it depends on what it provides for and how it affects larger facilities or bondholders,” said Zerunyan, who would represent Los Angeles County if Edison goes into bankruptcy. “If those folks don’t like it, they will file an involuntary bankruptcy against Edison.”

So far, creditors haven’t been too hot on the Governor’s plan because it’s about $1 billion short of Edison’s total debt.

Even a buyout of Edison may not keep it out of bankruptcy, despite recent interest in the prospect, such as the Aug. 24 offer by Long Beach-based City Light & Power Inc.

“If the buyer wants to pay all (Edison’s) debts in full, bankruptcy is not necessary and everyone is happier,” Zerunyan said. “But I don’t predict a buyer out there will want to pay such a premium for Edison.”


Thrill Ride

A Glendale design-and-production house has been sued by the Screen Actors Guild for failing to pay SAG members sufficient compensation.

The lawsuit, filed Aug. 13 in federal court in Los Angeles, claims that Landmark Entertainment Group did not pay enough compensation to SAG members involved in the four-minute film “James Bond 007: License to Thrill,” which is part of a motion-simulation ride at five Paramount Parks theme parks throughout the country. SAG claims compensation should be based on rates for work on full-length movies.

SAG declined to comment on the lawsuit.

But Landmark founder and chairman Gary Goddard said the claim is without merit and that the suit represents a “sign of the times.”

“This is the kind of thing that causes companies like ours to use non-SAG actors,” he said.


Tech Trials

Two executives of the Century 21 real estate office in Long Beach on Aug. 27 were found not guilty of insider trading, in a ruling by a federal judge in Los Angeles.

Craig Smith and Stephon Carradine were accused of profiting $110,000 from a 1999 sale of securities of Ancor Communications Inc., a technology company now owned by Aliso Viejo-based QLogic Corp. The two were charged along with Brian Pridgeon, Carradine’s cousin and a product-marketing engineer at Intel Corp. Pridgeon pleaded guilty to insider trading.

Irell & Manella LLP of Century City represented Smith and Carradine.

Staff Reporter Amanda Bronstad covers the legal community and can be reached at (323) 549-5225 ext. 225, or at [email protected].

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