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To: tom pope who wrote (18384)	1/10/1999 7:41:00 PM
From: Ron McKinnon	Read Replies (1) \| Respond to of 53068

Tom >>> I'm not certain about the legalities, but I also think that the Citicorp financing rules out the possibility of Chapter XI, which would be the death knell for equity investors. (In other words, I'm saying Citicorp probably wouldn't be able to turn its financing into Debtor in Possession financing no financing can ever rule out a bankruptcy that is the exclusive right of the company and the court if SME were to take a chapter then Citi's pre XI debt would become pre petition debt, secured by all assets under their security agreement then, either Citi, might also do the post petition DIP financing (unlikely) or a new lender would do it normally Citi would petition the court to liquidate, the court would deny, Citi would get the "indubetal equiveilent" (sp?)of A/R and Inv as security, and SME would have the right to use incoming cash to purchase new inventory from suppliers under a DIP # which gives the supplier a senior position to cash over Citi's debt very normal sequence of events, happens all the time