/raid1/www/Hosts/bankrupt/TCR_Public/080815.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, August 15, 2008, Vol. 12, No. 194
Headlines
AB SCDO: Fitch Junks Ratings on Two Classes of Floating-Rate Notes
ACA FINANCIAL: S&P Holds CCC on Watch After Restructuring Deal
AEGIS MORTGAGE: Wants Plan-Filing Deadline Extended to November 5
AEGIS MORTGAGE: Wants Removal Deadline Extended to November 10
AMERICAN BUSINESS: Case Trustee Continues Litigation for Recovery
AMERICAN COLOR: Filing of Schedules Extended Until September 29
ASIAN BANK: Weiss Ratings Assigns "Very Weak" E- Rating
AURORA OIL: Negotiates Funding, Collaborative Support from Lenders
BEARINGPOINT INC: June 30 Balance Sheet Upside-Down by $423MM
BIOJECT MEDICAL: Posts $916,000 Net Loss in Quarter Ended June 30
BLUEPOINT RE: Files for Chapter 15 Bankruptcy Protection
BOSCOV'S INC: U.S. Trustee Names Seven-Member Creditors Committee
BOSCOV'S INC: Wants to Hire Capstone Advisory as Financial Advisor
CALPINE CORPORATION: Files Form S-3 Registration Statement
CENTERBANK: Weiss Ratings Assigns "Very Weak" E- Rating
CENTRAL MAINTENANCE: Involuntary Chapter 11 Case Summary
CHENIERE ENERGY: S&P Affirms 'CCC+' Credit Rating on Refinancing
COMFORCE CORP: June 29 Balance Sheet Upside-Down by $6.7 Million
CONPOREC INC: Obtains CCAA Protection, Closes Sorel-Tracy Facility
CONVERSION SERVICES: Posts $2,441,419 Net Loss in 2008 2nd Quarter
DELPHI CORP: Inks Pact with Beck Aluminum to Sell Patented K-Alloy
DELPHI CORP: Court Partly Grants Appaloosa's Suit Dismissal Motion
DOWNEY FINANCIAL: Moody's Cuts Sr. Unsecured Ratings to B3 from B1
DURA AUTOMOTIVE: Has $100 Mil. of Inventories to Cull, CEO Says
EDISON FUNDING: S&P Affirms 'BB+/B' Rating; Outlook Negative
ENERGY FUTURE: Fitch's Rtng Unmoved by 20% Interest Sale
ENRON CORP: Distributes $6MM to Claims Holders in 2nd Qtr. 2008
ENRON CORP: Ex-Officer Settles Insider-Trading Charges for $31.5MM
FRONTIER AIRLINES: Can Amend Sale Contract with Verulamium Finance
FRONTIER AIRLINES: Court Approves Sale/Leaseback Deal with GECAS
FRONTIER AIRLINES: Court Moves Plan Filing Period to February 4
FRONTIER AIRLINES: Court OKs $30MM Secured Superpriority DIP Deal
FV-UNION: Voluntary Chapter 11 Case Summary
GATEHOUSE MEDIA: June 30 Balance Sheet Upside-Down by $18.7MM
GS MORTGAGE: Minimal Loan Paydown Cues Fitch to Affirm Ratings
HAVEN HEALTHCARE: Judge Dabrowski Dismisses All Chapter 11 Cases
INPHONIC INC: Court Approves 2nd Amended Disclosure Statement
INSMED INC: Posts $4.7 Million Net Loss in Second Quarter fo 2008
MARVEL ENTERTAINMENT: To Get $80MM Settlement from Revlon Chairman
MAXXAM INC: J. Kent Friedman Resigns as General Counsel
MICROMET INC: Posts $8.6MM Net Loss for the Quarter Ended June 30
MORGAN STANLEY: Fitch Affirms 'B-' Rating on $1.8MM Class N Certs.
MRS FIELDS: To Delay Filing of June 2008 Quarterly Report
NANOGEN INC: Posts $5.1 Million Net Loss in 2008 Second Quarter
NEXCEN BRANDS: Expects to Strike Deal with Lender Next Week
PAPPAS TELECASTING: Court Directs Appointment of Ch. 11 Trustee
PAPPAS TELECASTING: Wants Until February 5, 2009 to File Plan
PAPPAS TELECASTING: Court Directs Appointment of Ch. 11 Trustee
PERFORMANCE TRANS: Ch.7 Trustee May Employ Phillips Lytle
PIERRE FOODS: Gets Final Approval for $35MM DIP Credit Facility
PITTSFIELD WEAVING: Disclosure Statement Hearing Set for Aug. 19
PITTSFIELD WEAVING: Hearing on Case Dismissal Motion Set Aug. 20
PITTSFIELD WEAVING: Files 8th Motion to Use Cash Collateral
PITTSFIELD WEAVING: Wants to Sell Checkpoint Orders; Tap CES Fund
PLASTECH ENGINEERED: JCIM Sheds Off 160 Jobs at Caro, Mich. Plant
PLASTECH ENGINEERED: Wants to Recover $8MM in Payments to Basell
POST PROPERTIES: Moody's Affirms Ba1 Preferred Stock Rating
PROPEX INC: Committee Wants Rule 2004 Exam on Lenders
PROTECTION ONE: June 30 Balance Sheet Upside-Down by $51.8 Million
QUEBECOR WORLD: Names Jeremy Roberts as Chief Financial Officer
QUEBECOR WORLD: Signs $45 Million Printing Deal with Canada Wide
RADIOSHACK CORP: Moody's Affirms Ba1 CF Rating; Outlook Stable
RAMBUS INC: To Shave Off 21% of Workforce in Restructuring Move
REAL ESTATE VII: June 30 Balance Sheet Upside-Down by $18,320,000
SBARRO INC: Posts $5 Million Net Loss in Quarter Ended June 29
SEMGROUP LP: Wants to Hire Blackstone as Investment Banker
SEMGROUP LP: Owes More Than $8 Million to Oil Vendors
SEMGROUP LP: $150MM "Secret" Loan from Hedge Funds Ominous
SLEEP SAVVY: Case Summary & 20 Largest Unsecured Creditors
SPHERICS INC: Assignee to Sell Pharma. Intellectual Property
SPORTSQUEST INC: Posts $324,691 Net Loss in Qtr. Ended April 30
ST CLAIR ROOFING: Files for Ch. 11 Bankruptcy in St. Louis
STEVE & BARRY'S: Court Approves BH S&B as Stalking Horse Bidder
STEVE & BARRY'S: Gets Okay to Use Cash Collateral on Final Basis
STH 6,8: Case Summary & 20 Largest Unsecured Creditors
STORM CAT: In Talks with Lenders to Cure Credit Pact Violation
TERRY ANCIL: Case Summary & Nine Largest Unsecured Creditors
TEEVEE TOONS: Committee Wants Affiliates' Assets Consolidated
UBS AG: Moody's Says No Rating Implications on 2Q 2008 Earnings
VALENCE TECHNOLOGY: June 30 Balance Sheet Upside-Down by $68 Mil.
VERSO PAPER: S&P Affirms 'B' Rating on IPO Completion, Lower Debt
VERTIS HOLDINGS: Wants Richards Layton as Delaware Counsel
VERTIS HOLDINGS: To Hold Conference Call on August 15, 2008
VERTIS HOLDINGS: Has Until Sept. 29 to File Schedules of Assets
VICORP RESTAURANTS: Has Until October 30 to File Chapter 11 Plan
WCI COMMUNITIES: Obtains Approval to Use $50MM Cash Collateral
WHITEHALL JEWELERS: U.S. Trustee Amends Creditors' Panel Members
* S&P Cuts 93 Ratings on 20 US CDOs; $17BB In Issuance Affected
* Auto Suppliers Heading for Bankruptcy, Grant Thornton Says
* Proskauer Rose Adds Jefferies' Joshua W. Thompson as NY Partner
* Madeleine Tan Joins Kaye Scholer-NY as Partner in C&F Department
* BOOK REVIEW: Rupert Murdoch: Creator of a Worldwide Media Empire
*********
AB SCDO: Fitch Junks Ratings on Two Classes of Floating-Rate Notes
------------------------------------------------------------------
Fitch Ratings has downgraded these two classes of notes and
removed them from Rating Watch Negative. These rating actions are
effective immediately:
AB SCDO Series 2007-1
-- US$ 20,000,000 class IVA secured floating rate notes due 2014
to 'CCC' from 'BBB+'.
AB SCDO Series 2007-7
-- US$ 30,000,000 class IVA secured floating rate notes due 2014
to 'CCC' from 'BBB+'.
The actions reflect Fitch's view on the credit risk of the rated
notes following the release of its new Corporate CDO rating
Criteria and the continued deterioration of the portfolio since
the notes were placed on Rating Watch Negative.
Given Fitch's view of concentration and the current credit quality
of the portfolio, the 2.8% credit enhancement level is not
sufficient to justify the previous rating of the notes.
Fitch's rating action commentary on the Rating Watch Negative
status (dated May 14, 2008) indicated a possible downgrade to the
'B' category if there were no significant changes prior to a
resolution of the Watch status. In this case, no changes to the
portfolio have been executed. However, since the notes were placed
on Rating Watch Negative in May 2008, an additional 24.8% of the
portfolio has experienced further downgrades, representing an
average downgrade of 1.8 notches. These downgrades resulted in a
decline of the average credit quality from 'BBB' in May 2008 to
'BBB-'.
In addition, 9.8% of the portfolio is currently on Rating Watch
Negative and 30.7% of the portfolio has a Negative Outlook. Fitch
also notes the industry concentration of 36.5% in the
underperforming sector of banking & finance, including a combined
exposure of 2.4% to XL Capital Assurance (IFS rated 'CCC'; Outlook
Negative by Fitch) and Financial Guaranty Insurance Company (IFS
rated 'CCC'; Outlook Negative by Fitch).
Both AB SCDO 2007-1 and AB SCDO 2007-7 are partially funded
synthetic collateralized debt obligations referencing the same
portfolio of primarily investment grade corporate obligations. At
close, proceeds from the issuance of the notes were used to
collateralize credit default swaps between the issuer and Morgan
Stanley Capital Services Inc., the CDS counterparty (guaranteed by
Morgan Stanley, rated 'F1+/AA-'; Outlook Negative by Fitch). The
portfolio is managed by Alliance Bernstein L.P. The transactions
have a scheduled termination date of June 20, 2014. The ratings
of the notes address the likelihood that investors will receive
full and timely payments of interest and ultimate receipt of
principal by the scheduled maturity date.
Fitch released updated criteria on April 30, 2008 for Corporate
CDOs and, at that time, noted it would be reviewing its ratings
accordingly to establish consistency for existing and new
transactions. As part of this review, Fitch makes standard
adjustments for any names on Rating Watch Negative or with a
Negative Outlook, lowering such ratings for default analysis
purposes by two and one notch, respectively. Fitch has previously
noted that its review will be focused first on ratings most
exposed to risks it has highlighted in its updated criteria.
Consequently, the notes were placed on Rating Watch Negative on
May 14, 2008. As previously indicated, resolution of the Negative
Watch status depends on any plans managers/arrangers may choose to
modify either the structure or the portfolio. In this case, as
noted above, the manager confirmed that no modifications took
place.
ACA FINANCIAL: S&P Holds CCC on Watch After Restructuring Deal
--------------------------------------------------------------
Standard & Poor's Ratings Services said its 'CCC' financial
strength rating on ACA Financial Guaranty Corp. (ACA) remains on
CreditWatch with developing implications, following the company's
announcement on Aug. 8 that it had reached agreement with its
credit default swap and certain other counterparties on a
restructuring transaction.
"The potential for a rating upgrade reflects the possibility that
the capital remaining in the company would in our view provide
greater policyholder protection for the remaining exposures than
indicated by the present ratings," said Standard & Poor's credit
analyst Dick Smith. "However, should we view the oversight and
restrictions placed on the company by the Maryland Insurance
Administration as consistent with a regulatory action, the ratings
could be changed to 'R'," he added. An 'R' rating signifies that
an insurer is under regulatory supervision owing to its financial
condition.
It is S&P's understanding that in the restructuring transaction,
ACA will settle its credit default swap and reinsurance
obligations in exchange for a cash payment and surplus notes
issued by ACA. Going forward, ACA will be in runoff mode,
administering to the orderly runoff of existing policies but not
allowed to take on new exposures. The remaining policies relate to
726 primarily municipal issues with a par value totaling $7.3
billion as of June 30, 2008. Maturities extend to 2045. As part of
the settlement, ACA was required to develop a view of how much
financial resources would be required to pay potential claims from
the remaining exposure and to provide for operating expenses until
the exposure runs off in 2045. This analysis informed the
regulator's determination of how much cash was available to be
immediately paid out and how much capital would remain in the
company.
The counterparties will receive 95% of the $1 billion of surplus
notes while parent company ACA Capital Holdings Inc. will receive
5% of the notes. The aggregate amount of surplus notes issued was
intentionally large so that holders of the surplus notes would
participate in all distributions made by the company without the
possibility that there would be a residual distributable sum that
would revert to ACA Capital Holdings. The surplus notes will bear
no interest and are subordinate to the claims of policyholders and
all other classes of creditors but are superior to claims of ACA's
common and preferred shareholders. Payments on the surplus notes
will occur over time and cannot be made without permission from
the Maryland Insurance Administration, ACA's regulator.
To resolve the CreditWatch placement, Standard & Poor's will meet
with ACA representatives to review the company's financial and
operating status and will perform an updated capital adequacy
analysis to reflect the company's new capital position and
remaining exposures.
The ratings could be raised if the results of the financial and
operating reviews and the capital adequacy analysis are favorable
relative to the current ratings. S&P will also have a discussion
with the Maryland Insurance Administration to learn more about the
order it issued on Aug. 8 that approved the restructuring, to
determine whether that order establishes sufficient regulatory
intervention and authority for S&P to take a view that there has
been a regulatory action.
Ratings List
Ratings On CreditWatch
ACA Financial Guaranty Corp.
Issuer Credit Rating
Local Currency CCC/Watch Dev/--
Financial Strength Rating
Local Currency CCC/Watch Dev/--
Financial Enhancement Rating
Local Currency CCC/Watch Dev/--
AEGIS MORTGAGE: Wants Plan-Filing Deadline Extended to November 5
-----------------------------------------------------------------
Aegis Mortgage Corporation and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to give them until
Nov. 5, 2008, to file a Chapter 11 plan and until Jan. 5, 2009, to
solicit votes for that plan.
The extension, the Debtors said, will give them opportunity
to further negotiate with their creditors and facilitate an
efficient and cost-effective plan process.
The Court will convene a hearing on the proposed extension on
Sept. 16, 2008, at 2:00 p.m. By application of Rule 9006-2 of the
Local Rules of Bankruptcy Practice and Procedures of the U.S.
Bankruptcy Court for the District of Delaware, the Debtors'
exclusive plan filing period is automatically extended through the
conclusion of that hearing.
Parties-in-interest have until Aug. 25, 2008, at 4:00 p.m., to
file their objections.
Headquartered in Houston, Texas, Aegis Mortgage Corporation --
http://www.aegismtg.com/-- offers a variety of mortgage loan
products to brokers through its subsidiaries. The company
together with 10 affiliates filed for chapter 11 protection on
Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119). Curtis A. Hehn,
Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy
P. Cairns, Esq., at Pachulski, Stang, Ziehl, & Jones, L.L.P.,
serve as counsel to the Debtors. The Official Committee of
Unsecured Creditors is represented by Landis Rath & Cobb LLP. In
schedules filed with the Court, Aegis disclosed total assets of
$138,265,342 and total debts of $4,125,470.
The Debtors exclusive period to file a plan expired on Aug. 7,
2008. (Aegis Bankruptcy News, Issue No. 24; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
AEGIS MORTGAGE: Wants Removal Deadline Extended to November 10
--------------------------------------------------------------
Aegis Mortgage Corp. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to give them until
Nov. 10, 2008, to file notices of removal of civil actions pending
as of the bankruptcy filing.
Timothy Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in
Wilmington, Delaware, says the Debtors were not able to fully
review their civil lawsuits since they have focused more on the
wind down of their business and the sale of their assets.
"The extension of time for removing actions will afford the
Debtors the opportunity necessary to make fully-informed
decisions concerning removal of any action," Mr. Cairns says. He
adds that the rights of the Debtors' adversaries will not be
prejudiced because any party to an action that is removed can
have it remanded to the state court.
The Bankruptcy Court will convene a hearing on the proposed
extension on Sept. 16, 2008, at 2:00 p.m. By application of
Rule 9006-2 of the Local Rules of Bankruptcy Practice and
Procedures of the U.S. Bankruptcy Court for the District of
Delaware, the Debtors' removal period is automatically extended
through the conclusion of that hearing.
Parties-in-interest have until Aug. 25, 2008, at 4:00 p.m., to
file their objections.
Headquartered in Houston, Texas, Aegis Mortgage Corporation --
http://www.aegismtg.com/-- offers a variety of mortgage loan
products to brokers through its subsidiaries. The company
together with 10 affiliates filed for chapter 11 protection on
Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119). Curtis A. Hehn,
Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy
P. Cairns, Esq., at Pachulski, Stang, Ziehl, & Jones, L.L.P.,
serve as counsel to the Debtors. The Official Committee of
Unsecured Creditors is represented by Landis Rath & Cobb LLP. In
schedules filed with the Court, Aegis disclosed total assets of
$138,265,342 and total debts of $4,125,470.
The Debtors exclusive period to file a plan expired on Aug. 7,
2008. (Aegis Bankruptcy News, Issue No. 24; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN BUSINESS: Case Trustee Continues Litigation for Recovery
-----------------------------------------------------------------
George L. Miller, chapter 7 trustee in the the case of American
Business Financial Services, Inc., and its debtor-affiliates
provided status update number 18 to describe the procedural status
of various pending litigation against the Debtors.
The status updates are cumulative. Status updates 1 through 18
are available for free at http://www.abfsonline.com/
State Court Action
On Jan. 19, 2006, the Case Trustee commenced an action against
Bradley Weber, a former ABFS's senior vice president for
Servicing/Collection Operations.
On July 13, 2006, Mr. Miller filed a lawsuit, in the Court of
Common Pleas in Philadelphia, Pennsylvania, July Term, 2006,
#1225, against certain directors, officers and financial
institutions. The Case Trustee is seeking damages in excess of
$750,000,000. He anticipates this litigation will be vigorously
defended and will take years to reach a resolution.
In October 2007, the defendants submitted a motion to the Federal
Court again seeking to transfer the State Court action to the
Federal Court. The Federal Court again rejected this second
transfer attempt ruling that a transfer was not proper and
returned the State Court Action to the Philadelphia Court of
Common Pleas for a jury trial.
On Feb. 15, 2008, the Trustee filed a lawsuit against the ABFS's
former general counsel law firm. On March 24, 2008, the
defendants requested the State Court to combine the Weber Lawsuit
and the Law Firm Lawsuit with the State Court Action.
The Case Trustee has begun the discovery process in the State
Court Action. Trial is currently scheduled to begin no earlier
than April 2009. Except for procedural matters, Mr. Miller said
he does not anticipate any quick resolution of the State Court
Action, the Weber Lawsuit or Law Firm Lawsuit.
Bankruptcy Court Actions
A. Disbursement Motion
The Case Trustee in a Disbursement Motion sought permission to
have a non-debtor affiliated company (ABFS 2003-2, Inc.) pay the
debts which it owes to the Debtors in the amount of at least
$4,021,392 and to enable the Bankruptcy Trustee's use of the funds
in part to fund the litigation expenses of pursuing recovery in
the State Court Action, the Greenwich, et al. Adversary and other
costs of administration.
Hearings on the Case Trustee's Disbursement Motion were held
throughout the Summer and concluded in August 2007. Post hearing
briefs were submitted throughout the Fall and final briefing was
concluded on Nov. 15, 2007.
Greenwich and the Indenture Trustees each opposed the Case
Trustee's Disbursement Motion. The Indenture Trustees as part of
the Indenture Trustee Settlement have agreed to withdraw their
opposition to the Disbursement Motion leaving Greenwich as the
sole party opposing the Disbursement Motion. Greenwich in its
opposition to the Disbursement Motion claims to be entitled under
the chapter 11 financing agreements to be paid and indemnified for
all obligations owed to Greenwich (including its fees and costs)
which according to Greenwich would include indemnification for any
amount which Greenwich is adjudicated in the Greenwich, et al.
Adversary to owe the bankruptcy estate.
Mr. Miller said he does not believe Greenwich is owed any
additional monies for indemnity or otherwise. The Case Trustee
has resolved his claims against the Indenture Trustees and the
Bankruptcy Court approved the resolution in December, 2007. The
resolution of the claims against the Indenture Trustees are
described in an Indenture Trustees Settlement.
Greenwich is the only remaining party opposing the Bankruptcy
Trustee˙s Disbursement Motion. All post-trial briefs on the
Disbursement Motion were filed in November 2007. Mr. Miller
awaits a decision from the Bankruptcy Court on the Disbursement
Motion.
B. Greenwich et al. Adversary
Pre-trial discovery and depositions have begun in the Greenwich,
et al. Adversary. A trial date has not been set but Mr. Miller
hopes a trial will occur in late 2008 or early 2009.
In July 2007, Greenwich, Ocwen, Berkshire Group and Michael
Trickey each filed Motions to Dismiss requesting the Bankruptcy
Court to dismiss the Case Trustee's Adversary proceedings for
various reasons.
On Nov. 6, 2007, the Case Trustee and the Indenture Trustees'
entered into a settlement agreement. That settlement was approved
by the Bankruptcy Court on Dec. 19, 2007, wherein the Case Trustee
agreed to dismiss the Greenwich, et al. adversary against the
Indenture Trustees and the Indenture Trustees agreed to withdraw
their opposition to the Case Trustee's Disbursement Motion. In
addition, the Indenture Trustees' Settlement provides the Case
Trustee with access to certain assets, and other benefits.
These points are Mr. Miller's interpretation of the most
significant elements of the Indenture Trustees' Settlement from
the estate's perspective:
1) The Indenture Trustees' have withdrawn their objections to
the Disbursement Motion.
2) The Case Trustee has dismissed with prejudice the lawsuit
against the Indenture Trustees as Defendants in the
Greenwich et al Adversary.
3) The Indenture Trustees' Settlement resolves the dispute as
to the amount and classification of the Indenture Trustees'
claims by providing that the IT˙s Proofs of Claim will be
allowed as:
(i) $40,000,000 Chapter 11 Super Priority Claim;
(ii) $58,149,685 General Unsecured Claim.
4) The first $1,000,000 available for distribution from ABFS
2003-2, Inc. will be paid to the Indenture Trustees on
account of the IT˙s Proofs of Claim.
5) Collections on certain defined assets identified as
Liquidation Proceeds and Litigation Proceeds will be split
with 40% being paid to the Indenture Trustees by the
Case Trustee on account of Indenture Trustees' Proofs of
Claim and 60% being available to the Bankruptcy Trustee
for administrative and litigation expenses.
6) The Case Trustee will be allowed to retain up to $5,000,000
of other identified miscellaneous assets to pay
administrative and litigation expenses. After collection
of the $5,000,000, any additional collections will be split
40/60.
7) The first $3,000,000 of preference collections, net of
expenses to collect, will be available to the Case Trustee.
Any amount collected over $3,000,000 in preference
recoveries will be split 40/60.
Payments by the Case Trustee to the Indenture Trustees on account
of the Indenture Trustees' Proofs of Claim pursuant to the
Indenture Trustees' Settlement will not begin until after the
Disbursement Motion is decided by the Bankruptcy Court. The Case
Trustee will not be making disbursement directly to the
collateralized noteholders but rather will be making disbursements
to the Indenture Trustees who in turn will be responsible for
making distribution to the collateralized noteholders.
A full-text copy of the IndentureTrustees' Settlement is available
for free at http://ResearchArchives.com/t/s?30c0
The Bankruptcy Court denied Berkshire Group and Michael Trickey's
Motions to Dismiss in November 2007 and denied Greenwich's and
Ocwen's Motions to Dismiss on March 20, 2008. Pretrial discovery
and depositions have begun. A trial date has not been set by the
Bankruptcy Court.
Other Matters
In January 2008, Anthony Santilli died. Mr. Santilli is the
former President and Chairman of the Board. Mr. Miller said he
does not expect a major impact on the litigation because of his
death.
Summary
Mr. Miller said he still receive numerous telephone calls
regarding the reported issues.
* the Case Trustee does not currently have any money to
distribute to creditors.
* if the Case Trustee wins all the litigation, he expects to
have money to distribute to creditors.
* the Case Trustee does not know if he will win, so he can
not presently estimate any distribution.
* if the Case Trustee loses the litigation, there will be no
distribution.
* Mr. Miller cannot provide tax advice or documentation for
tax advice.
* although trials of the State Court Action and the Greenwich
et al. Adversary may take place in the Spring of 2009, the
litigation as a result of post-trial appeals may take years
to conclude, perhaps 2010 or 2011).
* there are in excess of 26,500 Proofs of Claims filed which
assert claims in excess of $1,000,000,000.
About American Business Financial Services
Headquartered in Philadelphia, Pennsylvania, American Business
Financial Services, Inc., -- http://www.abfsonline.com/--
together with its subsidiaries, is a financial services
organization operating mainly in the eastern and central portions
of the United States and California. The company originates,
sells and services home mortgage loans through its principal
direct and indirect subsidiaries. The company, along with four of
its subsidiaries, filed for chapter 11 protection on Jan. 21, 2005
(Bankr. D. Del. Case No. 05-10203). The Bankruptcy Court
converted the cases to a chapter 7 liquidation on May 17, 2005.
Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the
Debtors. George L. Miller was appointed chapter 7 trustee in the
case. John T. Carroll, III, Esq., at Cozen O'Connor, represents
the Case Trustee. When the Debtors filed for protection from
their creditors, they listed $1,083,396,000 in total assets and
$1,071,537,000 in total debts.
AMERICAN COLOR: Filing of Schedules Extended Until September 29
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extended
the deadline for Vertis Holdings, Inc. and ACG Holdings, Inc., and
their debtors-affiliates to file Schedules of Assets and
Liabilities, schedules of executory contracts and unexpired
leases, lists of equity holders, schedules of current income and
expenditures, and statements of financial affairs through and
including September 29, 2008.
As reported in the Troubled Company Reporter on July 30, 2008,
Vertis and ACG are required to file their Schedules and Statements
by August 14, 2008. Vertis, however, noted that the preparation
of the Schedules and Statements that relate to more than its
50,000 creditors will require significant expenditure of time and
effort.
Similarly, ACG asserted that given the large number of its
creditors, the complexity of its businesses and its limited
staffing, the 30-day extension period under Local Rule 1007-1(b)
is not sufficient.
In the event ACG seeks to establish a claims bar date, the Debtor
seeks to have its Schedules and Statements filing deadline
extended to a date that is 10 days after the filing of a Bar Date
motion.
Moreover, Vertis and ACG asked Judge Christopher S. Sontchi to
permanently waive the requirement for them to file the Schedules
and Statements upon the effective date of their Prepackaged Plan
of Reorganization.
About Vertis Holdings Inc.
Headquartered in Baltimore, Maryland, Vertis Holdings, Inc. --
http://www.vertisinc.com/-- is a provider of targeted print
advertising and direct marketing solutions to America's retail and
consumer services companies.
The company and its six affiliates filed for Chapter 11 protection
on July 15, 2008 (Bank.D.Del. Case No. 08-11460). Gary T.
Holtzer, Esq. and Stephen A. Youngman, Esq. at Weil, Gotshal &
Manges LLP represent as the Debtors lead counsels and Mark D.
Collins, Esq. and Michael Joseph Merchant, Esq. at Richards Layton
& Finger, P.A. represent as their Delaware local counsels. Lazard
Freres & Co. LLC is the company's financial advisors. When the
Debtors filed for protection from their creditors they listed
estimated assets between $500 million and $1 billion and estimated
debts of more than 1 billion.
About American Color Graphics
American Color Graphics Inc. -- http://www.americancolor.com/--
is one of North America's largest and most experienced full
service premedia and print companies, with eight print locations
across the continent, six regional premedia centers, photography
studios nationwide and a growing roster of customer managed
service sites. The company provides solutions and services such
as asset management, photography, and digital workflow solutions
that improve the effectiveness of advertising and drive revenues
for their customers.
The company filed and its four affiliates filed for Chapter 11
protection on July 15, 2008 (Bank.D.Del. Case No. 08-11467).
Pauline K. Morgan, Esq. and Sean T. Greecher ,Esq., at Young,
Conaway, Stargatt & Taylor represent the Debtors in their
restructuring efforts. Lehman Brothers, Inc. serves as the
company's financial advisors. When the Debtors filed for
protection from their creditors they listed estimated assets of
$100 million to $500 million and estimated debts of $500 million
to $1 billion.
ACG Holdings, Inc. and American Color Graphics also filed
bankruptcy petition under the Companies' Creditors Arrangement Act
before the Ontario Superior Court of Justice (Commercial List) on
July 16, 2008. Jay A. Carfagnini, Esq., David B. Bish, Esq., and
Jason Wadden, Esq. at Goodmans LLP are their solicitors.
PricewaterhouseCoopers Inc. serves as their CCAA Information
Officer.
ASIAN BANK: Weiss Ratings Assigns "Very Weak" E- Rating
-------------------------------------------------------
Weiss Ratings has assigned its E- rating to Philadelphia, Pa.-
based Asian Bank. Weiss says that the institution currently
demonstrates what it considers to be significant weaknesses and
has also failed some of the basic tests Weiss uses to identify
fiscal stability. "Even in a favorable economic environment,"
Weiss says, "it is our opinion that depositors or creditors could
incur significant risks."
Asian Bank has been a member of the Federal Reserve and deposits
have been insured by the Federal Deposit Insurance Corporation
since June 9, 1999.
Asian Bank's Web site at http://www.theasianbank.com/says its
mission is "to provide personalized, quality banking services to
individuals, organizations and small businesses in our regional
market."
FDIC data shows that Asian Bank has one branch. At June 30, 2008,
Asian Bank disclosed $87 million in assets and $80 million in
liabilities in its regulatory filings.
AURORA OIL: Negotiates Funding, Collaborative Support from Lenders
------------------------------------------------------------------
Aurora Oil & Gas Corporation management determined that the
company failed to meet certain financial and non-financial
covenants required by its loan agreements for the quarter ended
June 30, 2008.
Management has requested the Lenders to permanently waive the
company's failure to observe or perform the required covenants for
the second quarter, as well as requesting the Lenders to extend
the forbearance agreements and standstill period for an additional
period of time.
The company is continuing negotiations with various financial
institutions and its existing lenders to restructure its debt
obligations. There can be no assurance that it will be able to
obtain a waiver, extend the forbearance and standstill agreements,
or restructure its current indebtedness within an adequate period
of time.
Though several term sheets have been signed and due diligence has
been underway, the company has not been able to secure new
financing and continues to negotiate with its Lenders to pursue a
collaborative solution.
"It is disappointing that we have not yet been able to
successfully refinance the company's debt," John E. McDevitt,
president and chief operating officer commented. "We are not
alone, however, in these difficult credit markets as we are
familiar with firms much larger than Aurora which have also
experienced challenges in refinancing efforts. In the meantime,
we continue to have open dialogue with our lending partners while
working to methodically address our various operational and
financial concerns. In the meantime, our developed and
undeveloped assets continue to provide cash flow and future
opportunity for the company."
About Aurora Oil & Gas
Based in Traverse City, Michigan, Aurora Oil & Gas Corporation
(Amex: AOG) -- http://www.auroraogc.com/-- is an independent
energy company focused on unconventional natural gas exploration,
acquisition, development and production with its primary
operations in the Antrim Shale of Michigan, the New Albany Shale
of Indiana and Kentucky, and the Woodford Shale of Oklahoma.
BEARINGPOINT INC: June 30 Balance Sheet Upside-Down by $423MM
-------------------------------------------------------------
BearingPoint Inc.'s balance sheet at June 30, 2008, showed total
assets of $1.95 billion, total liabilities of $2.37 billion,
resulting in a stockholders' deficit of roughly $423 million.
The company related that its net income in the second quarter was
$18.5 million compared to a loss of $64.0 million in the second
quarter of 2007. The company's second quarter tax provision
includes an $18.9 million foreign corporate restructuring charge,
related to a reorganization of our European operations.
Cash balance was $350.9 million on June 30, 2008, compared to
$352.9 million on June 30, 2007.
The company also disclosed that it is engaged in discussions in
relation to its exploring strategic alternatives in order to
reduce or restructure the company's outstanding indebtedness. The
company also stated that due diligence continues.
In early 2008, BearingPoint hired Greenhill & Co. LLC to explore
strategic alternatives including a merger or sale of the company
as a whole, a sale of all or substantially all of the assets of
the company or the sale by the company of any of its six principal
business units.
The company hopes that these discussions can be completed in the
near future, and protecting the interests of its clients,
shareholders, creditors and employees will be at the heart of its
analysis and decisions.
At present, the company can give no assurance that a sale of all
or a portion of the company's business can be completed in the
near term at or near current market prices or at all.
About BearingPoint Inc.
Headquartered in McLean, Virginia, BearingPoint, Inc. (NYSE:BE) --
http://www.bearingpoint.com-- is a provider of management and
technology consulting services to Global 2000 companies and
government organizations in more than 60 countries worldwide. The
company's core services include management consulting, technology
solutions, application services and managed services. In North
America, BearingPoint delivers consulting services through its
Public Services, Commercial Services and Financial Services
industry groups (North American Industry Groups), which provides
industry-specific knowledge and service offerings. Outside of
North America, BearingPoint operates in Europe, the Middle East
and Africa (EMEA); the Asia Pacific region, and Latin America
(including Mexico).
BIOJECT MEDICAL: Posts $916,000 Net Loss in Quarter Ended June 30
-----------------------------------------------------------------
Bioject Medical Technologies Inc. reported financial results for
the second quarter ended June 30, 2008.
The company reported a net loss of $916,000 for the quarter ended
June 30, 2008, compared to last year's net loss of 979,000 for the
same period.
Bioject reported revenues of $1.7 million for the quarter ended
June 30, 2008, compared to revenues of $2.8 million in the
comparable 2007 period. Product sales were $1.4 million in the
2008 period compared to $2.0 million in the comparable 2007
period. License and technology fees were $275,000 for the quarter
ended June 30, 2008 compared to $802,000 in the comparable 2007
period.
The company reported an operating loss of $787,000 in the second
quarter of 2008 compared to an operating loss of $296,000 in the
second quarter of 2007. Included in the current quarter operating
loss is $591,000 of non-cash charges comprised of a one-time
write-off of goodwill of $94,000, non-cash compensation expense
related to the fair value of stock-based awards, warrants and
stock funding of $275,000 compared to $235,000 in the comparable
year ago period, and depreciation and amortization of $222,000, in
both the current quarter and the prior year ago period. Also
included in operating expense for the current quarter was
approximately $200,000 of expenses related to the company's new
business strategy and expenditures expected to be non-recurring.
Net loss allocable to common shareholders for the second quarter
of 2008 was $989,000 compared to $1.1 million in the comparable
2007 period. Cash, cash equivalents and marketable securities at
June 30, 2008 totaled $2.2 million compared to $2.1 million at
June 30, 2007.
For the six months ended June 30, 2008, Bioject reported revenues
of $3.5 million compared to revenues of $4.9 million in the
comparable period of 2007. The six month 2008 operating loss was
$1.5 million compared to $2.0 million in the comparable period of
2007. Net loss allocable to common shareholders was $1.8 million,
or $0.11 per share, in the six-month period ended June 30, 2008
compared to $3.3 million, or $0.22 per share, in the comparable
period of 2007.
"In anticipation of sales fluctuations, partially driven by the
expected timing of orders and the signing of any new agreements,
we reduced operating expenses by 20% for the quarter ended June
30, 2008, as compared to the same quarter last year, and 28% in
the six month period ended June 30, 2008, over the same period of
the prior year," Ralph Makar, Bioject's President and CEO, said.
"We also reduced the net loss by 47% in the six month period ended
June 30, 2008 as compared to the same period in 2007. In
addition, during the first half of 2008, the company significantly
improved its debt position, by retiring over $1.0 million in debt,
through conversion of debt to equity and by paying down balances
on both our term loan and revolving credit lines.
"Most exciting, during the second quarter of 2008, we signed a
long-term agreement with Merial Limited for a next-generation
spring device, which included an upfront payment for the
technology license, and solidified our long standing partnership
collaboration in the animal health sector. We are quite pleased
about our ongoing relationship with Merial with the new and
current agreements."
In June 30, 2008, the company's balance sheet showed total assets
of $7.2 million and total liabilities of $5.2 million, resulting
in a $1.9 million stockholders' equity.
About Bioject Medical
Based in Portland, Oregon, Bioject Medical Technologies Inc.
(Nasdaq: BJCT) -- http://www.bioject.com/-- is a developer and
manufacturer of needle-free injection therapy systems (NFITS).
NFITS provide an empowering technology and work by forcing
medication at high speed through a tiny orifice held against the
skin. This creates a fine stream of high-pressure fluid
penetrating the skin and depositing medication in the tissue
beneath. The company is focused on developing mutually beneficial
agreements with leading pharmaceutical, biotechnology, and
veterinary companies.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 18, 2008,
Moss Adams LLP expressed substantial doubt about Bioject Medical
Technologies Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the years ended Dec. 31, 2007, and 2006. The auditor reported
that the company has suffered recurring losses, has had
significant recurring negative cash flows from operations, and has
an accumulated deficit.
BLUEPOINT RE: Files for Chapter 15 Bankruptcy Protection
--------------------------------------------------------
BluePoint Re, Ltd. sought for Chapter 15 bankruptcy protection
before the United States Bankruptcy Court for the Southern
District of New York (Bankr. S.D. N.Y. 08-13169) on August 13,
2008. John C. McKeena, the Debtor's provisional liquidator, filed
the Chapter 15 petition on BluePoint's behalf.
Based in Bermuda, the Debtor provides insurance and reinsurance of
all kinds, and in particular to underwrite third party financial
insurance, mostly with underlying risks of structured finance and
municipal transactions. It is a wholly owned subsidiary of
BluePoint Holdings Ltd. in Bermuda, which in turn is wholly owned
by Wachovia Corp.
The Debtor principally reinsures financial guarantees of public
finance and asset-backed debt obligations insured by monoline
financial guaranty companies. This insurance was provided through
treaties and facultative agreements. The reinsurance generally
provided for guarantees of scheduled principal and interest
payments on an issuer˙s obligation in accordance with the
obligor's original payment schedule.
In addition to providing reinsurance to monoline bond insurers,
the Debtor also sold credit default protection on asset-backed
securities, and other credit risks, via credit default swaps using
standard documentation and confirmations.
On August 7, 2008, the Debtor requested and obtained an order from
the Supreme Court of Bermuda to be wound up pursuant to the
Bermuda Companies Act of 1981. The Court also appointed Mr.
McKeena as the Debtor's provisional liquidator on the same day.
BOSCOV'S INC: U.S. Trustee Names Seven-Member Creditors Committee
-----------------------------------------------------------------
Roberta A. DeAngelis, acting United States Trustee for Region 3,
appointed seven members to the Official Committee of Unsecured
Creditors in the Chapter 11 cases of Boscov's Inc. and its debtor
affiliates.
The Creditors Committee members are:
(1) Kellwood Company
Attn: Edward J. Upbin
600 Kellwood Parkway
Chesterfield, Missouri
Phone: 314-576-8506
Fax: 866-530-4870
(2) Jones Apparel Group, Inc.
Attn: Sharyn Wismann
180 Rittenhouse Circle
Bristol, Pennsylvania
Phone: 215-781-5520
Fax: 215-781-5520
(3) GMAC Commercial Finance LLC
Attn: Arthur Brown
1290 Avenue of the America
New York, New York
Phone: 212-884-7034
Fax: 212-884-7200
(4) VF Jeanswear d/b/a Lee Company
Attn: Mike Durant
335 Church Ct.,
Greensboro, North Carolina
Phone: 336-332-3400
Fax: 336-332-5408
(5) HanesBrands Inc.
Attn: Russell R. D'Souza
1000 E. Hanes Mill Road
Winston-Salem, North Carolina
Phone: 336-519-6212
Fax: 336-519-2061
(6) Philadelphia Newspapers, Inc.
Attn: Scott D. Baker
400 N. Broad St.
Philadelphia, Pennsylvania
Phone: 2152-854-5969
Fax: 215-854-5105
(7) Phillips-Van Heusen
Attn: Warren C. Gerber, Jr.
1001 Frontier Road
Bridgewater, New Jersey
Phone: 908-698-6345
Fax: 908-704-1908
Five of the Committee members were listed as one of the Debtors'
largest unsecured creditors holding these claims for trade debt,
as of the Petition Date:
Jones Apparel Group Inc. $3,110,015
Kellwood Company 2,600,364
GMAC Commercial Credit LLC 1,199,846
Hanes 1,151,218
Philadelphia Newspapers LLC 930,047
About Boscov's Inc.
Headquartered in Reading, Pennsylvania, Boscov's Inc. --
http://www.boscovs.com-- is America's largest family-owned
independent department store, with 49 stores in Pennsylvania, New
York, New Jersey, Maryland, Delaware and Virginia.
Boscov's Inc. and its debtor-affiliates filed for Chapter 11
protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637)
Daniel J. DeFranceschi, Esq. at Richards Layton & Finger and L.
Katherine Good, Esq. at Richards, Layton & Finger, P.A. represent
the Debtors in their restructuring efforts. The Debtors'
financial advisor is Capstone Advisory Group and their investment
banker is Lehman Brothers Inc. The Debtors disclosed estimated
assets of $500 million to $1 billion and estimated debts of
$100 million to $500 million.
(Boscov's Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
BOSCOV'S INC: Wants to Hire Capstone Advisory as Financial Advisor
------------------------------------------------------------------
Boscov's Inc. and its affiliated debtors seek permission from the
U.S. Bankruptcy Court for the District of Delaware to employ
Capstone Advisory Group LLC, and its subsidiaries' agents, as
their financial advisor nunc pro tunc to Aug. 4, 2008.
As financial advisors to the Debtors, Capstone will:
(a) assist the Debtors and the Debtors' counsel in
negotiations with significant creditors or interested
third parties regarding use of cash collateral as well
as debtor-in-possession, exit or other financing;
(b) advise the Debtors concerning, and assist in evaluating,
store lease acceptance or rejection negotiations;
(c) advise the Debtors in evaluating the profitability of
existing store locations;
(d) assist in the preparation of updated projections based on
current performance and latest thinking assumptions;
(e) assist in the preparation of the Debtors' schedules of
assets and liabilities and statement of financial affairs;
(f) assist the Debtors in preparing monthly operating reports;
(g) assist the Debtors in communications with any official
committees appointed in their Chapter 11 cases, as well as
with other constituencies and their professionals,
including financial and operating information required by
the parties or the Bankruptcy Court;
(h) advise and assist management in negotiating and developing
a plan or plans of Reorganization and underlying business
plan;
(i) assist the Debtors with respect to revolving disputes and
otherwise managing the claims process; and
(j) perform other services as may be requested from time to
time.
The Debtors will pay Capstone and its professionals according to
the firm's customary hourly rates. The Debtors anticipate that
these professionals will take the lead in providing financial
advise to the Debtors:
Professional Hourly Rate
------------ -----------
Robert Manzo $725
Christopher J. Kearns $650
Executive Directors $525 to $725
Consulting Staff $265 to $510
Support Staff $75 to $165
Pursuant to an engagement letter, the Debtors agree to indemnify
Capstone from liabilities and claims related to the firm's
engagement, except those arising from the firm's gross negligence
and willful misconduct. The Debtors and Capstone believe that
the indemnification are customary and reasonable for financial
advisory and investment banking engagements, both out-of-court
and in chapter 11 proceedings.
Christopher J. Kearns, an executive director at Capstone, assures
the Court that his firm is a "disinterested person," as that term
is defined in Section 101(14) of the Bankruptcy Code, as modified
by Section 1107(b). He adds that his firm does not represent any
interest adverse to the Debtors, their estates, and their
creditors.
Mr. Kearns disclose that the Debtors paid Capstone more than
$2,500,000 for prepetition fees and expenses. He tells the Court
that Capstone has agreed to waive any unpaid fees and expenses
that are in excess of the Retainer. As a result, Capstone is not
owed any sums for services provided prepetition. Capstone
intends for the unapplied portion of the Retainer to constitute a
general security retainer for postpetition services and expenses
until the conclusion of the Chapter 11 cases.
About Boscov's Inc.
Headquartered in Reading, Pennsylvania, Boscov's Inc. --
http://www.boscovs.com-- is America's largest family-owned
independent department store, with 49 stores in Pennsylvania, New
York, New Jersey, Maryland, Delaware and Virginia.
Boscov's Inc. and its debtor-affiliates filed for Chapter 11
protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637)
Daniel J. DeFranceschi, Esq. at Richards Layton & Finger and L.
Katherine Good, Esq. at Richards, Layton & Finger, P.A. represent
the Debtors in their restructuring efforts. The Debtors'
financial advisor is Capstone Advisory Group and their investment
banker is Lehman Brothers Inc. The Debtors disclosed estimated
assets of $500 million to $1 billion and estimated debts of
$100 million to $500 million.
(Boscov's Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
CALPINE CORPORATION: Files Form S-3 Registration Statement
----------------------------------------------------------
Calpine Corporation filed with the Securities and Exchange
Commission a Form S-3 Registration Statement. The registration
statement was required to be filed after the company's emergence
from bankruptcy pursuant to a registration rights agreement
entered into in connection with the company's plan of
reorganization.
Based in San Jose, California, Calpine Corporation (OTC Pink
Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers
and communities with electricity from clean, efficient, natural
gas-fired and geothermal power plants. Calpine owns, leases and
operates integrated systems of plants in 21 U.S. states and in
three Canadian provinces. Its customized products and services
include wholesale and retail electricity, gas turbine components
and services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services.
The company and its affiliates filed for chapter 11 protection on
Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard
M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq.,
and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the
Debtors in their restructuring efforts. Michael S. Stamer, Esq.,
at Akin Gump Strauss Hauer & Feld LLP, represents the Official
Committee of Unsecured Creditors. As of Aug. 31, 2007, the
Debtors disclosed total assets of $18,467,000,000, total
liabilities not subject to compromise of $11,207,000,000, total
liabilities subject to compromise of $15,354,000,000 and
stockholders' deficit of $8,102,000,000.
On Feb. 3, 2006, two more affiliates, Geysers Power Company, LLC,
and Silverado Geothermal Resources, Inc., filed voluntary chapter
11 petitions (Bankr. S.D.N.Y. Case Nos. 06-10197 and 06-10198).
On Sept. 20, 2007, Santa Rosa Energy Center, LLC, another
affiliate, also filed a voluntary chapter 11 petition (Bankr.
S.D.N.Y. Case No. 07-12967).
On June 20, 2007, the Debtors filed their Chapter 11 Plan and
Disclosure Statement. On Aug. 27, 2007, the Debtors filed their
Amended Plan and Disclosure Statement. Calpine filed a Second
Amended Plan on Sept. 19, 2007 and on Sept. 24, 2007, filed a
Third Amended Plan. On Sept. 25, 2007, the Court approved the
adequacy of the Debtors' Disclosure Statement and entered a
written order on September 26. On Dec. 19, 2007, the Court
confirmed the Debtors' Plan. The Amended Plan was deemed
effective as of January 31, 2008.
CENTERBANK: Weiss Ratings Assigns "Very Weak" E- Rating
-------------------------------------------------------
Weiss Ratings has assigned its E- rating to Milford, Ohio-based
CenterBank. Weiss says that the institution currently
demonstrates what it considers to be significant weaknesses and
has also failed some of the basic tests Weiss uses to identify
fiscal stability. "Even in a favorable economic environment,"
Weiss says, "it is our opinion that depositors or creditors could
incur significant risks."
CenterBank is not a member of the Federal Reserve. Deposits
have been insured by the Federal Deposit Insurance Corporation
since March 15, 2000.
CenterBank's Web site at http://www.centerbank4me.com/says it
offers a full range of financial products and is one of the
leading SBA lenders in the state of Ohio.
FDIC data shows that CenterBank has two branches. At June 30,
2008, CenterBank disclosed $87 million in assets and $80 million
in liabilities in its regulatory filings.
CENTRAL MAINTENANCE: Involuntary Chapter 11 Case Summary
--------------------------------------------------------
Alleged Debtor: Central Maintenance Services, Inc.
100 Oakman Blvd.
Highland Park
MI 48203
Case Number: 08-59675
Involuntary Petition Date: August 13, 2008
Court: Eastern District of Michigan (Detroit)
Judge: Hon. Walter Shapero
Petitioner's Counsel: Kevin Kalczynski
(kkalczynski@bsdd.com)
Barris, Sott, Denn & Driker, PLLC
211 West Fort Street, 15th Floor
Detroit, MI 48226
Telephone (313) 965-9725
Fax (313) 983-3310
Petitioner Nature of Claim Claim Amount
----------- --------------- ------------
Luminant Energy Co. Utility Services $591,495
fka TXU Energy Retail Owed
Co LLP
1601 Bryan Street
Dallas, TX 75201
CHENIERE ENERGY: S&P Affirms 'CCC+' Credit Rating on Refinancing
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'CCC+' corporate
credit rating on liquefied natural gas (LNG) project developer
Cheniere Energy Inc. and its 'B+' senior secured rating on
subsidiary Sabine Pass LNG L.P. The outlook remains negative. The
company had about $2.85 billion of total debt outstanding as of
June 30, 2008.
The affirmation follows the company's announcement that it is
about to complete a $250 million convertible security financing to
replace the $95 million bridge loan and provide additional funds.
Despite continuing pressure resulting from low import volumes of
LNG to the U.S., the financing should enable the company to remain
solvent over the next couple of years. However, this assumes the
proceeds are used to fund working capital needs, including
Cheniere Marketing's terminal use agreements (TUA) payments to
Sabine Pass. These payments are needed to generate sufficient cash
flows to release funds from Sabine Pass that are required to cover
Cheniere Energy Partners L.P.'s distribution requirements, which
in the medium term will be used to service debt at Cheniere.
Separately, bondholders at Sabine Pass continue to be supported by
contracted revenues from the Total S.A. and Chevron Corp. TUA,
while Cheniere's bondholders are supported by the company's
existing cash balance. Cheniere's cash on hand will be used to
meet its interest payments and operating expenses, assuming no
cost overruns to complete Sabine Pass Phase 2 above the project's
additional indebtedness covenant or the use of the cash balance in
a shareholder friendly manner. S&P estimates that cash held by
Cheniere will be sufficient to service debt at the holding company
over at least the next 12 months.
COMFORCE CORP: June 29 Balance Sheet Upside-Down by $6.7 Million
----------------------------------------------------------------
COMFORCE Corporation reported results for its second quarter ended
June 29, 2008. At June 29, 2008, the company's balance sheet
showed total assets of $184.4 million and total liabilities of
$191.2 million, resulting in a $6.7 million stockholders' deficit.
The company reported revenues for the quarter of $152.8 million,
compared to revenues of $149.7 million for the second quarter of
2007, a 2.0% increase. The increase in revenues was principally
due to the continued growth in the company's Human Capital
Management Services segment, consisting of PRO Unlimited(R), where
revenues increased $3.3 million, or 3.5% over the second quarter
of 2007. PRO also reported gross profit for the quarter of
$12.8 million, compared to $12.3 million for the second quarter of
2007. Staff Augmentation revenue decreased by $280,000 due
primarily to a decrease in services provided to Technical Services
customers which was partially offset by an increase in services
provided to Healthcare Support and Information Technology
customers.
Gross profit for the second quarter of 2008 was $24.4 million, or
16.0% of sales, compared to $23.3 million, or 15.5% of sales for
the same period last year.
COMFORCE's operating income for the second quarter of 2008 was
$4.0 million, compared to operating income of $4.0 million for the
second quarter of 2007.
Interest expense was $1.1 million for the second quarter of 2008,
compared to $2.0 million for the second quarter of 2007. This
decrease was due principally to the company's repurchase and
redemption of $11.2 million of 12% Senior Notes during 2007 and
the repurchase of $6.5 million of Senior Notes in April 2008. The
company recorded income before income taxes of $2.9 million for
the second quarter of 2008, compared to income before income taxes
of $1.9 million for the same period last year.
COMFORCE recognized a provision for income taxes of $1.3 million
in the second quarter of 2008, compared to $806,000 in the second
quarter of 2007.
Six Months Results
COMFORCE recorded revenues of $303.0 million for the first six
months of 2008, compared to revenues of $291.3 million for the
first six months of 2007, an increase of 4.0%. The company's
revenues for the first half of 2008 were favorably impacted by the
continued strong performance of PRO Unlimited, where revenues
increased 6.8% or $12.3 million over the first six months of 2007.
PRO recorded gross profit of $25.3 million for the six month
period, compared to gross profit of $23.7 million for the
comparable period last year.
The company's gross profit for the first six months of 2008 was
$48.2 million, or 15.9% of revenues, compared to a gross profit of
$45.4 million, or 15.6% of revenues for the first six months of
2007.
Operating income was $7.5 million for the first half of 2008,
compared to operating income of $7.6 million for the first half of
2007.
Interest expense for the first 6 months of 2008 was $2.6 million,
compared to $4.0 million for the first six months of 2007. This
lower interest expense was primarily due to the repurchase and
redemption of the 12% Senior Notes.
The company reported income before income taxes of $4.7 million
for the first six months of 2008, compared to income before income
taxes of $3.4 million for the first six months of 2007. COMFORCE
recognized a tax provision of $2.1 million for the six month
period, compared to a tax provision of $1.5 million for the same
period last year.
Comments from Management
"We are pleased to have reported an increase in revenue and net
income for both our second quarter and first six months of 2008,
compared to 2007," John Fanning, Chairman and Chief Executive
Officer of COMFORCE, commented. "PRO's revenues increased in the
first half of the year as they continued to increase the services
that they are providing to new clients. As we have said in the
past, we believe there is a trend for companies to rely more on
providers of human capital management services, such as those
provided by PRO and RightSourcing(R).
"There has been a slow down in the labor market over the past
several months and we are not immune to these adverse conditions
even as we have continued to increase our revenues and
profitability this year. We have tried to position our company to
better weather bad economic environments. Over the past few
years, while investing to grow COMFORCE, we have also focused on
containing our costs and reducing our debt. On July 28th, we
announced that we will redeem all of our outstanding 12% Senior
Notes on August 25, 2008. The completion of this redemption
should save us approximately $400,000 in annualized interest
expense based on current interest rates. We believe these actions
better position us to withstand the challenging economic climate
we now face as well as provide us greater flexibility in
considering options for future growth."
About Comforce Corp.
Headquartered in Woodbury, New York, Comforce Corporation (AMEX:
CFS) -- http://www.Comforce.com/-- is a provider of outsourced
staffing management services that enable Fortune 1000 companies
and other large employers to consolidate, automate and manage
staffing, compliance and oversight processes for their contingent
workforces. The company also provides specialty staffing,
consulting and other outsourcing services to Fortune 1000
companies and other large employers for their healthcare support,
technical and engineering, information technology,
telecommunications and other staffing needs.
The company operates in three segments -- Human Capital Management
Services, Staff Augmentation and Financial Outsourcing Services.
The Human Capital Management Services segment provides consulting
services for managing the contingent workforce through its PRO(R)
Unlimited subsidiary. The Staff Augmentation segment provides
healthcare support services, including RightSourcing(R) Vendor
Management Services, Technical, Information Technology and Other
Staffing Services. The Financial Outsourcing Services segment
provides funding and back office support services to independent
consulting and staffing companies.
CONPOREC INC: Obtains CCAA Protection, Closes Sorel-Tracy Facility
------------------------------------------------------------------
Conporec Inc. requested and obtained an initial court ordinance
under the terms of the Companies' Creditors Arrangement Act. Until
this initial 30 days period or until any other delay decided by
the Court, this ordinance affects the Canadian activities of
Conporec but not its subsidiary companies Conporec SAS (France)
and Conporec PTY (Australia).
The board of directors of Conporec, of which all the members
remain in position, estimates that obtaining such an ordinance and
the possible deposit of a Plan of Arrangement to the creditors are
the only solutions to regain a viable financial health. Ernst
&Young has been appointed as controller. In addition to the CCAA
statutory responsibilities, Ernst & Young will also assist the
management of Conporec to develop a Plan of Arrangement that could
be acceptable for the creditors and to define the financial
restructuring plan of the company.
In addition, Conporec received notification from Hera Holdings SA
about their intention not to pursue the contemplated private
placement under the disclosed terms and conditions and for which
the closing date was planned July 31, 2008. Conporec and Hera
Holdings SA study other ways to team up in the development of
projects. Consequently, Conporec definitively withdraws its
intention to conclude a private placement according to the
beforehand disclosed terms.
Consequently of the review of its operations under the terms of
the LACC, Conporec also disclosed the temporary shut down of its
Sorel-Tracy municipal solid waste facility. The resumption of the
activities will be function of a new contractual agreement with
the customers of this installation. However, Conporec continues
its source separated organics composting activities at the La
Prade Environmental Park, and also all of its engineering and
construction activities, in particular for the Tournan-en-Brie
plant (France) and for the Mindarie Regional Council plant
(Australia).
In order to support the financial restructuring of Conporec, an
arm's length subscriber has the intention to subscribe to a
C$1.5 million mortgage. This mortgage is conditional to a due
diligence and a negotiation between the parties, which have to be
completed within the next fifteen days. Conporec will disclose
the name of the aforementioned subscriber at the end of this
period and will also disclose any new information about the
current situation of the company.
About Conporec Inc.
Headquartered in Quebec, Canada, Conporec Inc. (CA:CNX)
(ALTERNEXT: ALCNX) -- http://www.conporec.com/-- specializes in
the treatment and recovery of household waste and organic
materials. Conporec offers municipalities an alternative solution
to landfill use. The sorting composting technology developed by
Conporec allows its clients to recover more than 70% of waste that
would otherwise be sent to landfills. In addition, through its
Biomax solutions, the company also offers its clients organic
waste recovery solutions.
CONVERSION SERVICES: Posts $2,441,419 Net Loss in 2008 2nd Quarter
------------------------------------------------------------------
Conversion Services International Inc. reported a net loss of
$2,441,419 on revenue of $4,635,134 for the second quarter ended
June 30, 2008, compared with a net loss of $3,974,529 on revenue
of $5,412,932 in the same period last year.
The decrease in revenue primarily reflects a decrease in strategic
consulting revenue. Strategic consulting revenue was $1,433,632,
or 30.9% of total revenue, for the three months ended June 30,
2008, compared to $2,364,910, or 43.7% of total revenue, for the
three months ended June 30, 2007.
Interest expense was $191,907 for the three months ended June 30,
2008, compared with $2,596,435 for the three months ended June 30,
2007. The decrease in interest expense in the current period, as
compared to the prior year, was primarily due to the conversion of
short and long-term notes due to TAG Virgin Islands Inc. to equity
and a reduction in charges related to the relative fair value of
warrants issued and charges incurred to account for beneficial
conversion features on notes that were issued in the prior year.
At June 30, 2008, the company's consolidated balance sheet showed
$9,574,782 in total assets, $4,885,775 in total liabilities, and
$3,770,675 in total stockholders' equity.
The company's consolidated balance sheet at June 30, 2008, also
showed strained liquidity with $3,478,359 in total current assets
available to pay $4,522,375 in total current liabilities.
Full-text copies of the company's consolidated financial
statements for the quarter ended June 30, 2008, are available for
free at http://researcharchives.com/t/s?30c7
Going Concern Doubt
The company has incurred net losses for the six months ended
June 30, 2008, and the years ended Dec. 31, 2007, 2006, 2005, and
2004, negative cash flows from operating activities for the six
months ended June 30, 2008, and the years ended Dec. 31, 2007,
2006, 2005, and 2004, and had an accumulated deficit of
$65,373,298 at June 30, 2008.
The company says that these factors raise substantial doubt as to
the its ability to continue as a going concern.
About Conversion Services
Headquartered in East Hanover, N.J., Conversion Services
International Inc. (AMEX: CVN) -- http://www.csiwhq.com/ --
provides professional services focusing on strategic consulting,
data warehousing, business intelligence, business process
reengineering, as well as integration and information technology
management solutions. CSI's current customers include ADP, Coach,
Goldman Sachs, Liberty Mutual, Merck, Morgan Stanley, and Pfizer.
DELPHI CORP: Inks Pact with Beck Aluminum to Sell Patented K-Alloy
------------------------------------------------------------------
Delphi Corp. disclosed a strategic licensing agreement with Beck
Aluminum to produce and market Delphi's patented corrosion-
resistant K-Alloy(TM).
The agreement is designed to improve the competitiveness of the
product through increased availability at attractive prices. The
Delphi agreement with Beck Aluminum helps simplify the process to
gain access to the patented material.
"We are excited to announce this new relationship with Beck
Aluminum," Timothy Forbes, Delphi director of commercialization
and licensing, said.
Our new strategic licensing agreement will allow us to
significantly increase the adoption of this outstanding alloy by
increasing the availability to aluminum die casters", Mr. Forbes
added.
Delphi's K-Alloy is an innovative new aluminum die casting alloy
that resists corrosion. It can eliminate expensive processes such
as anodizing, chromating, powder coating and painting that are
designed to slow corrosion.
In addition to cosmetic improvements, K-Alloy provides increased
functional durability for aluminum cast components in harsh
environments.
Originally developed to withstand extreme salt corrosion and
temperatures, vibration and shock experienced in vehicle engine
electronics, K-Alloy aluminum is now currently used or being
tested on products as diverse as sporting goods, outdoor lighting,
furniture, water systems, mail boxes, radios, communications
enclosures and vehicle roof racks.
K-Alloy has been tested to withstand 3,000 hours of salt spray
testing with no metal loss or surface damage. Other aluminum
alloys would require additional processes and/or coatings to
withstand this harsh environment.
"Beck is ISO certified and has support resources serving an
extensive customer base," Bryan Beck, executive vice president of
Beck Aluminum, said. "K-Alloy's unique qualities allow Beck to
offer customers a product that will provide them with rugged
durability and more process flexibility."
"We're pleased that we're already producing over 100,000 pounds of
K-Alloy per month at our smelter in Lebanon, Pennsylvania," Beck
said. "We have already had inquiries for new programs and
applications that will each require several million pounds of K-
Alloy per year."
Delphi has appointed MDW Technologies LLC as its technical and
licensing representative to broaden its customer base.
About Beck Aluminum
Based in Cleveland, Ohio, Beck Aluminum --
http://beckaluminum.com/-- is a distributor of primary aluminum
alloys in North America. The company currently supplies aluminum
alloys for more than 700 customer locations in the U.S., Canada
and Mexico. In addition, Beck Aluminum International was recently
formed by the company to handle their growing import/export
shipments. Every month Beck Aluminum sells more than 30 million
pounds of aluminum products and recycles approximately 15 million
pounds of scrap.
About Delphi
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional
headquarters in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
March 31, 2007, the Debtors' balance sheet showed
US$11,446,000,000 in total assets and US$23,851,000,000 in total
debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their
proposal to provide US$2,550,000,000 in equity financing to
Delphi.
DELPHI CORP: Court Partly Grants Appaloosa's Suit Dismissal Motion
------------------------------------------------------------------
The Hon. Robert Drain of the U.S. Bankruptcy Court for the
Southern District of New York issued a ruling granting in part and
denying in part, each of the motions of Appaloosa Management L.P,
Harbinger Del-Auto Investment Company Ltd., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Goldman Sachs & Co. and UBS
Securities LLC for the dismissal of the complaints filed against
them by the Debtors, pursuant to Rules 9(b), 12(b)(6) and (12)(f)
of the Federal Rules of Civil Procedure, as incorporated by Rules
7009 and 7012(b) of the Federal Rules of Bankruptcy Procedure.
As disclosed in the Troubled Company Reporter on Aug. 7, 2008,
Delphi has accused Appaloosa and other investors of defrauding
the Court by stating that they had every intention of performing
under the Equity Purchase and Commitment Agreement. Appaloosa,
however, argued that Delphi cannot seek specific performance
because it is currently unable to perform under the conditions-
precedent of the EPCA, including obtaining commitment to its
$6,100,000,000 debt financing and the completion of the rights
offering.
Judge Drain ruled that:
* the motion filed by Appaloosa Management L.P. and A-D
Acquisition Holdings, LLC is granted to the extent
of dismissing Delphi's complaint of fraud against
Appaloosa, pursuant to Federal Rules of Civil Procedure
9(b)as incorporated in Rule 7009 Federal Rules of
Bankruptcy Procedure, to the extent it asserts a claim for
fraud based on Appaloosa's failure to inform Delphi of the
facts alleged in the complaint. Judge Drain denies
Appaloosa's motion in all other respects.
* the motions filed by Harbinger Del-Auto Investment
Company Ltd., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman Sachs & Co. and UBS Securities LLC
are granted to the extent of dismissing the part of
Delphi's complaint against each of them for:
(i) Breach of Contract under the Equity Purchase and
Commitment Agreement to the extent it seeks monetary
damages from Harbinger, Merrill Lynch, Goldman Sachs
and UBS in excess of the cap on aggregate liability
in section 11(b) of the EPCA; and
(ii) Equitable Subordination and Disallowance to the
extent it seeks relief as against Harbinger, Merrill
Lynch, Goldman Sachs and UBS.
* Harbinger's motion to dismiss Delphi's complaint for
Breach of contract under the Commitment Letter Agreements
dated December 10, 2007, is granted to the extent it seeks
relief from Harbinger or Pardus other than monetary damages
up to the amount of the cap on aggregate liability
applicable to Harbinger and Pardus; and
* the motions of Harbinger, Merrill Lynch, Goldman Sachs and
UBS are denied in all other respects.
About Delphi
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional
headquarters in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
March 31, 2007, the Debtors' balance sheet showed $11,446,000,000
in total assets and $23,851,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their proposal
to provide $2,550,000,000 in equity financing to Delphi.
(Delphi Bankruptcy News, Issue No. 141; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
DOWNEY FINANCIAL: Moody's Cuts Sr. Unsecured Ratings to B3 from B1
------------------------------------------------------------------
Moody's Investors Service downgraded the senior unsecured ratings
of Downey Financial Corp. to B3 from B1. Downey Saving and Loan
Association's bank financial strength rating was downgraded to E+
from D, long term deposit rating to B1 from Ba2 and issuer rating
to B2 from Ba2. All Downey ratings are under review for
downgrade.
Moody's downgrade and review for further downgrade reflect the
company's limited financial flexibility. Downey's primary
liquidity resources are approximately $900 million, which includes
$700 million of cash and short term investments (a result of their
draw from the Federal Home Loan Bank (FHLB) after the end of the
second quarter) and a modest remaining $200 million of FHLB
capacity. This represents a decline from Moody's previous
assumptions. Additionally, Downey maintained a $1.0 billion
portfolio of investment securities issued by government sponsored
entities at June 30, 2008.
Downey disclosed that it experienced some net deposit withdrawals
after the end of the second quarter of 2008. The company also
disclosed that the Office of Thrift Supervision has imposed
limitations on certain of its activities. This includes payment
of dividends by Downey Saving and Loan Association to Downey
Financial Corp., payment of dividends by Downey Financial Corp.,
and the issuance or renewal of new debt by Downey Financial Corp.
In addition to the firm's financial flexibility, Moody's review
will also focus on Downey's asset quality trends and operating
results in the third quarter. Additionally, the review will focus
on any conclusion to the company's review of strategic
alternatives.
Downgrades:
-- Issuer: Downey Financial Corp.
-- Issuer Rating, Downgraded to B3 from B1
-- Senior Unsecured Regular Bond/Debenture, Downgraded to B3
from B1
-- Issuer: Downey Savings & Loan Association
-- Bank Financial Strength Rating, Downgraded to E+ from D
-- Issuer Rating, Downgraded to B2 from Ba2
-- OSO Senior Unsecured OSO Rating, Downgraded to B2 from Ba2
-- Senior Unsecured Deposit Rating, Downgraded to B1 from Ba2
DURA AUTOMOTIVE: Has $100 Mil. of Inventories to Cull, CEO Says
---------------------------------------------------------------
DURA Automotive Systems Inc.'s president and chief executive
officer, Tim Leuliette, said the company still has at least
$100,000,000 of cost savings to pluck from operations after
recently emerging from Chapter 11 bankruptcy protection, Crain's
Detroit Business reported. DURA, Mr. Leuliette said, has large
inventories to cull.
Mr. Leuliette added that DURA also needs to return to better
payment terms with its suppliers, the report said. Some terms
required DURA to pay cash in advance or in 10 days for parts
deliveries when normal payment terms are from 30 days to 60 days,
he told the Detroit Business. He added that DURA has room to
improve on 5% EBITDA. The autoparts industry average is twice
that level, he said.
Mr. Leuliette, according to the Detroit Free Press, said he
expects DURA to put its shares on a stock exchange in the next 12
to 18 months. That time frame, in part, is to wait until
investors will be willing to put their money in automotive
stocks. "The market's got to be there," Mr. Leuliette said.
DURA, after its emergence from its 20-month stint in Chapter 11
on June 27, 2008, issued 7,234,060 shares of new common stock,
par value $0.01 per share.
In a speech delivered at the Center for Automotive Research's
Management Briefing Seminar, Mr. Leuliette blamed U.S. auto
makers for helping force auto-parts suppliers into bankruptcy.
Auto makers have "begun to realize they have been passing on too
many commodity cost increases to suppliers," he told The Wall
Street Journal.
All Headline News said the worldwide automotive market declined
18.3% in 2008. General Motors Corp. reported a sales slump for
June 2008, while Toyota Corp. reported a 21% decline. Nissan
Motor Company reported a drop in sales by nearly 18%, while sales
at Ford Motor Company, also dropped to 28%. Chrysler LLC plunged
to 36%. Audodata Corp. attributed the decrease in sales to
soaring fuel prices, which hit record highs from March to June
2008, AHN said.
According to AHN, citing analysts, automakers are shifting their
focus to producing hybrid cars or fuel-efficient models. In the
U.S., AHN said Asian automakers Honda Motor Corp. and Hyundai
Motor Company experienced increased in sales in June, outdoing
American car firms GM, Ford and Chrysler.
Mr. Leuliette criticized the U.S. auto makers for "failing to
prepare for the sharp rise in oil and the decline in demand for
large sport-utility vehicles and trucks, the Journal added.
"We had warning. We knew gasoline prices would rise. We watched
as emerging markets demanded more and more of the oil," The
Detroit Free Press quoted Mr. Leuliette as saying. "As a nation,
we did nothing. As an industry, we pretended that cheap oil
would last forever."
"GM and Ford moved too slowly to import fuel-saving autos from
overseas to combat record gasoline prices," Mr. Leuliette told
Bloomberg News. "Japanese automakers already had the vehicles to
bring to market while their U.S. counterparts had no plan to
import the more fuel-efficient vehicles they were selling
overseas."
As a result of the declined in automobile sales in the first
months of 2008, the auto makers have canceled supply agreements,
re-sourced the auto parts to other suppliers for cheaper prices,
resulting to lower sales of the auto suppliers, and leading them
to bankruptcy.
Recently, Intermet Corp. and 19 of its affiliates filed for
Chapter 11 protection, for the second time, citing low demand for
trucks and sport-utility vehicles due to high fuel costs.
Intermet joins other auto-parts makers including Lexington
Precision Corp., Diamond Glass Inc. Plastech Engineered Products
Inc., Progressive Molded Products Inc. and Blue Water Automotive,
which filed for Chapter 11 bankruptcy this year due to rising
costs and slowdown in demand. Plastech and Blue Water have been
liquidating their assets. Progressive has shut its business
operations after its key customers elected to terminate their
supply contracts.
About DURA
Rochester Hills, Michigan-based DURA Automotive Systems Inc.
(Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent
designer and manufacturer of driver control systems, seating
control systems, glass systems, engineered assemblies, structural
door modules and exterior trim systems for the global automotive
industry. The company is also a supplier of similar products to
the recreation vehicle and specialty vehicle industries. DURA
sells its automotive products to North American, Japanese and
European original equipment manufacturers and other automotive
suppliers.
The company has three locations in Asia -- China, Japan and Korea.
It has locations in Europe and Latin-America, particularly in
Mexico, Germany and the United Kingdom.
The Debtors filed for chapter 11 petition on Oct. 30, 2006,
(Bankr. D. Del. Case No. 06-11202). Marc Kieselstein, P.C., Esq.,
Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., at
Kirkland & Ellis LLP are lead counsels for the Debtors' bankruptcy
proceedings. Daniel J. DeFranseschi, Esq., and Jason M. Madron,
Esq., at Richards Layton & Finger, P.A. Attorneys are the Debtors'
co-counsels. Baker & McKenzie acts as the Debtors' special
counsel. Togut, Segal & Segal LLP is the Debtors' conflicts
counsel. Miller Buckfire & Co., LLC is the Debtors' investment
banker. Glass & Associates Inc., gives financial advice to the
Debtor. Kurtzman Carson Consultants LLC handles the notice,
claims and balloting for the Debtors and Brunswick Group LLC acts
as their Corporate Communications Consultants for the Debtors.
As of Jan. 31, 2008, the Debtor had $1,503,682,000 in total
assets and $1,623,632,000 in total liabilities.
On April 3, 2008, the Court approved the Debtors' revised
Disclosure Statement explaining their revised Chapter 11 plan of
reorganization. On June 27, 2008, the Debtors emerged from
Chapter 11 bankruptcy protection.
(Dura Automotive Bankruptcy News, Issue No. 61; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
EDISON FUNDING: S&P Affirms 'BB+/B' Rating; Outlook Negative
------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on Edison
Funding Co., including its counterparty credit rating of 'BB+/B'.
The outlook remains negative. Edison Funding is a wholly owned,
unregulated subsidiary of Edison Capital, a subsidiary of Edison
Mission Group Inc., which is in turn a wholly owned subsidiary of
Edison International (BBB-/Stable/--).
"The affirmation reflects our belief that although Edison
International's recent nonbinding agreement with the Internal
Revenue Service (IRS) to settle outstanding tax liabilities of
$1.6 billion will significantly weaken financial performance at
Edison Funding, Edison International has the financial capacity
and incentive to support liquidity as needed, despite the absence
of a formal support agreement," said Standard & Poor's credit
analyst Rian M. Pressman, CFA.
On Aug. 8, 2008, Edison International disclosed that it entered
into a nonbinding, preliminary settlement agreement with the IRS
regarding all outstanding tax issues, including those of Edison
Funding, dating from 1994 through 2002. The settlement includes
the settlement of an estimated $1.6 billion in deferred tax
liabilities associated with lease-in/lease-out and sale-in/lease-
out transactions that the IRS has challenged. Although the
proposed settlement is global in nature, the bulk of earnings and
cash-flow exposure will occur at Edison Funding due to its role in
arranging and managing the affected lease transactions.
This settlement, as currently contemplated, stipulates that Edison
Funding unwind its cross-border leveraged leases, and Edison
International (the ultimate taxpayer for the consolidated
organization) pay cash taxes (and interest on taxes owed) that had
been previously deferred. Management has estimated its maximum
earnings exposure to cross-border leveraged leases to be $1.25
billion (after-tax). (Loss of the tax benefits associated with
these leases will generate at least a $650 million [after-tax]
charge to earnings; the charge could be up to the maximum exposure
of $1.25 billion. Edison Funding has already executed term sheets
with its lease counterparties toward this purpose.) If the leases
are terminated, Edison Funding would have substantial cash
resources to apply to these payments, including treasury
securities that serve as collateral deposits supporting equity
rents on the leases, cash balances in excess of $200 million, and
$111 million in deposits previously made to the IRS. However, S&P
believes that Edison Funding will have to rely on Edison
International (through Edison Mission Group) for additional
liquidity. (Treasury securities are sensitive to changes in
interest rates; therefore, the value of the collateral that is
available may change.)
Maintenance of the current rating reflects S&P's belief that
Edison International (through its Edison Mission Group subsidiary)
will support tax-related and other obligations at Edison Funding,
despite the lack of a formal support agreement. Management
estimates that the settlement of all tax issues (including lease
terminations and the resolution of affirmative claims at other
subsidiaries of Edison International) would yield positive cash
benefits over time on a consolidated basis; this cash would be
available to support tax-related payments by Edison Funding. In
addition, liquidity resources at Edison International are
substantial and include a $1.5 billion revolver with no
outstanding borrowings as of June 30, 2008. Excluding tax-related
claims, Edison Funding's remaining obligations are relatively
small--the most prominent being long-term debt of $129 million
(the equivalent of 75 million British pound notes swapped to U.S.
dollars), which is not due until 2015.
The negative outlook reflects the nonbinding nature of Edison
International's agreement with the IRS, as well as the lack of a
formal guarantee between Edison Funding and its direct or indirect
parents. (S&P believes that Edison Funding's ability to fully meet
all of its tax-related and other obligations is contingent upon
the support of its ultimate parent.) The consolidated
organization's credit metrics could suffer if the settlement does
not proceed or is substantially modified; any significant
reduction to parent company earnings and cash flows may trigger a
downward ratings adjustment given the importance of implied
parental support in S&P's rating of Edison Funding.
ENERGY FUTURE: Fitch's Rtng Unmoved by 20% Interest Sale
--------------------------------------------------------
Energy Future Holding's announcement that it has agreed to sell an
approximate 20% ownership interest in Oncor Electric Delivery Co.,
LLC will not affect the ratings or Rating Outlook of Oncor or EFH,
according to Fitch Ratings.
Fitch currently rates these entities with a Stable Outlook:
Oncor
-- IDR 'BBB-'.
EFH (formerly TXU Corp.)
-- IDR 'B'.
The announced transaction price is approximately $1.254 billion
for an approximate 19.75% minority interest. The buyer is an
investment group led by Borealis Infrastructure Management that
includes large Canadian pension plans, the Singapore government
investment company, and others. Closing the transaction is
subject to review by the Committee on Foreign Investment in the
United States; in the unlikely case the transaction fails to
close, there would be no impact on Fitch's ratings.
Fitch's existing ratings of Oncor already reflect ring-fencing
mechanisms put in place in connection with the leveraged buy-out
of TXU Corporation by private investors on Oct. 10, 2007, which
insulate Oncor effectively from the lower credit of its highly
levered parent, EFH. In Fitch's view, effective ring fences
combine meaningful regulatory orders, contractual limits in
financing arrangements, and appropriate management policies, and
Oncor's arrangements already included mechanisms of all three
types.
The Public Utility Commission of Texas required Oncor to limit its
dividends payments to amounts no greater than net income through
2012 in addition to Oncor's previous voluntary commitment to pay
no common dividends if its ratio of long-term debt-to-capital
exceeds its authorized ratio (currently 60%) as calculated for
regulatory purposes, or if Oncor's board of directors determined
the dividend payment would not be in Oncor's best interest. Oncor
also agreed to appoint independent directors and implement other
separation mechanisms, such as maintaining separate books, records
and corporate identity and to limit upstream dividends to
cumulative net income since the 2007 transaction date.
Contractual ring-fencing provisions include a maximum 65% total
debt-to-capital covenant in Oncor's $2 billion, six-year revolving
credit facility.
While the Oncor ring fencing is sufficient in Fitch's view to
retain low investment-grade ratings, it is imperfect; rating
linkage stems from shared tax filings, pension and operational
linkage with the leveraged EFH group which will continue not
withstanding the sale of a minority ownership interest. If the
credit quality of EFH or affiliated energy provider Texas
Competitive Electric Holding were to deteriorate, the operating
and financial rating linkages could result in reduced or less
favorable capital market access for Oncor, leading to potential
adverse changes in Oncor's ratings.
Oncor did not take on debt to finance the LBO, and standalone
credit metrics at Oncor remain consistent with investment-grade
ratings for a utility with low business risk. Fitch upgraded
Oncor's senior notes and debentures to 'BBB' from 'BBB-' on
May 12, 2008 when they were elevated to secured status with a
perfected lien upon Oncor's physical assets.
Assuming that the majority of the cash proceeds from the
transaction will be retained by EFH to finance growth and capital
investments in other EFH businesses or reduce short-term debt, the
credit implications for EFH are neutral.
EFH is a diversified energy holding company with a portfolio of
competitive and regulated energy businesses in Texas. Oncor, an
80%-owned entity within the EFH group, is the largest regulated
transmission and distribution utility in Texas. The company
delivers electricity to approximately three million delivery
points in and around Dallas-Fort Worth.
ENRON CORP: Distributes $6MM to Claims Holders in 2nd Qtr. 2008
---------------------------------------------------------------
Enron Creditors Recovery Corp., formerly Enron Corp., and its
affiliated reorganized debtor entities delivered to the U.S.
Bankruptcy Court for the Southern District of New York their
Fifteenth Post-Confirmation Status Report.
A. Distributions
John S. Delnero, Esq., at Bell, Boyd & Lloyd LLP, in Chicago,
Illinois, informed the Court that between April 2 and June 30,
2008, the Reorganized Debtors made cash distributions of
approximately $6,037,000,000 to holders of Allowed Claims, with a
substantial portion allocated for holders of Allowed
Administrative, Priority, Secured, General Unsecured, Guaranty
and Convenience Claims. The distributions included
approximately:
-- $5,567,000,000 of Cash distributions,
-- $319,000,000 of Portland General Electric Common Stock
equivalents, and
-- $151,000,000 in interest, dividends and gains from the sale
of PGE Common Stock.
The Reorganized Debtors have distributed an aggregate of
$20,673,000,000 in cash and PGE Common Stock equivalents to
holders of Allowed Claims, including $233,000,000 of interest,
capital gains and dividends. About $613,000,000 in cash and
cash equivalents of PGE Common Stock are held in the Disputed
Claims Reserve, including $87,000,000 of accrued interest,
capital gains and dividends.
B. Claims Resolution Process
In the second quarter of 2008, about 19 claims have been
disallowed, 45 have been ordered allowed, and 29 were withdrawn.
Of the 25,000 claims filed against the Debtors, 4,357 have been
allowed, 2,261 have been allowed as filed, and 17 remain
unresolved. The remaining filed claims have been expunged,
withdrawn, subordinated, or otherwise resolved.
The remaining unresolved claims have a reserve base of
approximately $284,300,000,000, comprised of:
-- $77,500,000 for four pending Administrative Claims; and
-- $206,800,000,000 for 13 pending General Unsecured, Guaranty
and Convenience Claims.
The 13 pending General Unsecured, Guaranty and Convenience Class
Claims consist of $200,000,000 relating to three claims in
connection with unresolved aspects of certain structured
financing transactions, and $6,800,000 relating to 10 Schedule S
claims, which are pending presentment of ownership certificates.
C. Citigroup Settlement
The Reorganized Debtors entered into a Global Settlement
Agreement, dated April 4, 2008, with Citigroup and several of its
affiliates, to resolve the MegaClaim Litigation.
The Global Settlement Agreement, among other things, provides
that Citigroup will pay $1,660,000,000, to Enron. The settlement
also provides for the expungement or subordination of
approximately $249,400,000, in claims, as well as indemnity
claims with a $4,000,000,000 reserve.
Mr. Delnero said that claims held by the six Yosemite/CLN Trusts
against Enron North America and a guaranty claim against Enron
have been allowed for $2,413,800,000. Additional claims of
$28,600,000 held by the six Yosemite/CLN Trusts against Enron
have been allowed.
The Global Settlement Agreement also released $1,700,000,000 of
cash held in the DCR. The cash settlement and the impact of the
release of reserves under the Settlement Agreement was included
in the special distribution in June 2008.
D. Section 10.1 Notice
Mr. Delnero said that Section 10.1 of the confirmed Plan of
Reorganization provides that 20% of the recoveries from the
Litigation Trust Claims and the Special Litigation Trust Claims
that would be distributed to holders of Allowed Enron Guaranty
Claims will be reallocated to holders of Allowed General
Unsecured Claims against the primary obligor Debtors
corresponding to the Allowed Enron Guaranty Claims.
The 20% Holdback has been held in reserve in the DCR pending the
Holdback's reallocation and its current reserve is $143,000,000.
On July 2, 2008, Enron filed the Notice of Publication of Claims
Analysis with Respect to Section 10.1 of the Plan and
Reallocation of 20% of Litigation Trust Claim and Special
Litigation Trust Claim Recoveries.
Mr. Delnero related that the 10.1 Notice describes the method
used by Enron to allocate the 20% Holdback currently reserved and
the process used to identify the beneficiaries of the 20%
Holdback.
In addition, the exhibits under the 10.1 Notice lists, among
other things, the Debtors that are beneficiaries of the 20%
Holdback and the amount currently reserved for each, and the
claims that will share in the 20% Holdback and the respective
amounts of the claims.
E. Other Activities
Mr. Delnero stated that Enron continue to oversee various final
wind-up activities, including:
(a) Document Administration and Disposal -- Approximately
104,000 boxes of documents have been approved for disposal
with 132,000 boxes remaining. The Debtors' request to
amend the prior Document Disposal Procedures has been
approved by the Court;
(b) Dissolution of Corporate Entities -- There are 105
remaining entities, including 96 Debtors, seven non-
Debtors, and two Post Final-Distribution Trusts;
(c) Tax Issues -- Tax returns are being prepared and filed for
all remaining entities;
(d) Resolution of Outstanding Litigation -- There are 42
remaining pending in Enron's Chapter 11 cases; and
(e) Miscellaneous -- Enron is currently disposing of remaining
assets, settling insurance claims, resolving Enron's
captive insurance subsidiary, and auditing and winding up
its terminated benefit plans.
Mr. Delnero noted that Enron continues to perform the necessary
accounting, control and reporting work required to maximize
timely distributions to creditors and the accounting and
reporting associated with the amount remaining in the DCR, which
aggregates $613,000,000.
Since December 31, 2006, Enron's workforce has been reduced from
274 to its current level of 33 employees. The duties and
responsibilities of Enron's remaining employees include:
(a) supporting litigation;
(b) handing accounting, tax, cash management and reporting for
the 105 remaining Enron entities;
(c) calculating and controlling creditor distributions;
(d) performing claims management and controlling over the DCR;
(e) completing disposition of remaining assets; and
(f) overseeing windup of employee matters and benefit plans
and overseeing IT and corporate services providers and non-
litigation matters.
About Enron Corp.
Based in Houston, Texas, Enron Corporation filed for chapter 11
protection on Dec. 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033)
following controversy over accounting procedures, which caused
Enron's stock price and credit rating to drop sharply.
Albert Togut, Esq., at Togut Segal & Segal LLP, Brian S. Rosen,
Esq., Martin Soslan, Esq., Melanie Gray, Esq., Michael P. Kessler,
Esq., Sylvia Ann Mayer, Esq., at Weil, Gotshal & Manges LLP,
Frederick W.H. Carter, Esq., Michael Schatzow, Esq., Robert L.
Wilkins, Esq., at Venable, Baetjer and Howard, LLP, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft, LLP, represent
the Debtors. Jeffrey K. Milton, Esq., Luc A. Despins, Esq.,
Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank,
Tweed, Hadley & McCloy LLP represent the Official Committee of
Unsecured Creditors.
The Debtors filed their Chapter Plan and Disclosure Statement on
July 11, 2003. On Jan. 9, 2004, they filed their fifth Amended
Plan and on the same day the Court approved the adequacy of the
Disclosure Statement. On July 15, 2004, the Court confirmed the
Debtors' Modified Fifth Amended Plan and that plan was declared
effective on Nov. 17, 2004. (Enron Bankruptcy News, Issue No.
211; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
ENRON CORP: Ex-Officer Settles Insider-Trading Charges for $31.5MM
------------------------------------------------------------------
Enron Energy Services' former chairman and chief executive
officer, Lou L. Pai, agreed to settle the U.S. Securities and
Exchange Commission's insider-trading charges for $31,500,000.
Without admitting or denying the SEC's allegations, Mr. Pai, a
former SEC economist, agreed to pay $30,000,000 in disgorgement
and prejudgment interest, including a $6,000,000 offset based on
his prior waiver of insurance coverage for the benefit of Enron
investors, plus a $1,500,000 penalty. The Wall Street Journal
said the settlement amounts from Mr. Pai will be added to an SEC
fund for the benefit of harmed Enron investors.
The SEC, in formal complaint filed with the U.S. District Court
for the Southern District of Texas, alleges that between May 18
and June 7, 2001, Mr. Pai sold 338,897 shares of Enron stock and
exercised stock options that resulted in the sale of 572,818
shares to the open market. The sales occurred after Mr. Pai
moved to head another division and before he resigned from Enron
in 2001, the Financial Times said.
According to the SEC, before making the sales, Mr. Pai received
material non-public information from EES successor management
concerning certain financial and operational problems and
substantial contract-related losses at EES. The SEC alleged that
had Enron reported EES' contract-related losses in its Retail
Energy Services segment, that segment would have shown a
quarterly loss of at least $60,000,000, rather than a profit of
$40,000,000as falsely reported in Enron's Form 10-Q for the first
quarter of 2001.
The SEC further alleges that Mr. Pai avoided substantial losses
from these sales when the price of Enron stock collapsed in the
fall of 2001. Enron's stock price averaged approximately $53.78
per share during the time of Mr. Pai's sales, but closed at $0.40
on Dec. 3, 2001 -- the day after Enron filed for Chapter 11
bankruptcy protection. By selling his Enron stock in May and
June 2001 before the collapse of Enron's share price, Mr. Pai
avoided millions of dollars of losses, the SEC said.
Aside from the monetary payments, Mr. Pai also agreed to a five-
year bar from serving as officer or director of a public company.
Linda Chatman Thomsen, Director of the SEC's Division of
Enforcement, said in a press release, "The Commission has never
relented in pursuing fraud committed by Enron's executives, and I
am pleased that [the] settlement will add another $25.5 million
to the Enron Fair Fund for the benefit of injured investors."
Fredric D. Firestone, Associate Director of the SEC's Division of
Enforcement, added, "Today's settlement represents one of the
largest financial settlements with an individual for insider
trading in the history of the SEC's enforcement program. The
Commission will continue to hold senior executives and corporate
insiders accountable for illegally trading on the basis of
material nonpublic information."
"More than seven years after the sale of his stock, Mr. Pai is
pleased to conclude his negotiations with the SEC in a settlement
that involves no admission of wrongdoing," Mr. Pai's counsel,
Roger Zuckerman, Esq., told the Journal.
About Enron Corp.
Based in Houston, Texas, Enron Corporation filed for chapter 11
protection on Dec. 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033)
following controversy over accounting procedures, which caused
Enron's stock price and credit rating to drop sharply.
Albert Togut, Esq., at Togut Segal & Segal LLP, Brian S. Rosen,
Esq., Martin Soslan, Esq., Melanie Gray, Esq., Michael P. Kessler,
Esq., Sylvia Ann Mayer, Esq., at Weil, Gotshal & Manges LLP,
Frederick W.H. Carter, Esq., Michael Schatzow, Esq., Robert L.
Wilkins, Esq., at Venable, Baetjer and Howard, LLP, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft, LLP, represent
the Debtors. Jeffrey K. Milton, Esq., Luc A. Despins, Esq.,
Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank,
Tweed, Hadley & McCloy LLP represent the Official Committee of
Unsecured Creditors.
The Debtors filed their Chapter Plan and Disclosure Statement on
July 11, 2003. On Jan. 9, 2004, they filed their fifth Amended
Plan and on the same day the Court approved the adequacy of the
Disclosure Statement. On July 15, 2004, the Court confirmed the
Debtors' Modified Fifth Amended Plan and that plan was declared
effective on Nov. 17, 2004. (Enron Bankruptcy News, Issue No.
211; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
FRONTIER AIRLINES: Can Amend Sale Contract with Verulamium Finance
------------------------------------------------------------------
Judge Robert D. Drain of the U.S. Bankruptcy Court for the
Southern District of New York authorized Frontier Airlines
Holdings Inc. and its subsidiaries to terminate the letter of
intent for the sale of two Airbus A319-111 aircraft, and two
Airbus A318-111 aircraft dated as of March 13, 2008, and amended
as of April 28, between the Debtors and Verulamium Finance Ltd.,
and its affiliate Bakersvalley Partners Corp., as the buyer.
Parties to the Original Aircraft Agreements will be released from
their obligations with respect to the Original 318 Aircraft.
The Court also authorized the Debtors to amend the Agency
Agreement, dated as of Dec. 17, 2007, with respect to the
remarketing of four A320 Series aircraft between the Debtors and
JetWorks Leasing, LLC, now known as Skyworks Leasing, LLC, as
amended on May 2, 2008.
Frontier entered, in December 2007, into the Agency Agreement,
pursuant to which Skyworks was appointed the exclusive and world-
wide agent to arrange for a sale or lease of, among others, the
Original 318 Aircraft.
In March 2008, Frontier and Bakersvalley executed the Original
Letter of Intent, as amended in April 2008, pursuant to which the
parties agreed that Bakersvalley would purchase the Original
Aircraft for an aggregate purchase price of $106,000,000.
The Court approved the assumption of the Original Letter of
Intent on May 2, 2008.
Since the assumption of the Original Letter of Intent,
Bakersvalley expressed its intent to acquire additional aircraft
from Frontier and its preference for the Airbus A319-111 model of
aircraft, especially given the technical challenges associated
with certifying Airbus A318-111 aircraft under local law,
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, in New York,
related.
As a result, Mr. Huebner said, Frontier and Bakersvalley have
agreed to enter into the Aircraft Agreements, pursuant to which
Bakervalley will purchase the Aircraft for an aggregate purchase
price of $165,000,000.
Additionally, the parties also agree, upon the closing of the
purchases under the Aircraft Agreements, to (i) terminate the
Original Aircraft Agreements, (ii) release all of the obligations
of the parties with respect to the Original 318 Aircraft, and
(iii) apply the funds held in escrow with respect to the Original
318 Aircraft to the purchase price of the Aircraft.
The mortgages to be discharged using the proceeds of the purchase
price secures an indebtedness of approximately $97,700,000, which
will result in net cash proceeds to the estate of approximately
$67,300,000, Mr. Huebner told the Court.
Frontier and Bakersvalley expect to consummate the sale of all of
the Aircraft on or about Aug. 15, 2008, with title to the Aircraft
passing to Bakersvalley.
Except in certain limited circumstances, the Aircraft will be
physically delivered within the period from Aug. 15, 2008, to
Oct. 31, 2008. In the interim, Frontier will store and
maintain each Aircraft and Bakersvalley will compensate Frontier
for costs incurred by the storage and maintenance.
Under the Agency Agreement, Skyworks was to receive fees of
$357,350 on account of the sales of the Original 318 Aircraft.
Under the Agreement's amended terms, however, Skyworks will
receive only $170,000 total on account of the sales of the
Replacement Aircraft, which accounts for less than 0.31% of the
gross proceeds of the sale of the Replacement Aircraft and is
entirely reasonable for the valuable services provided by
Skyworks in connection with these transactions, Mr. Huebner
avers.
Mr. Huebner submitted that Frontier's decision to amend the
Agency Agreement, as a result of changes in the underlying
structure of the Debtors' sale of their Aircraft will generate
substantial cash for the estates.
Furthermore, absent an amendment of the Agency Agreement and
termination of the Original Letter of Intent, the Debtors will
need to conduct an additional marketing and sales process which
would only duplicate their and Skyworks' previous efforts,
resulting in additional expenses and delay, Mr. Huebner adds.
Mr. Huebner said the Aircraft Agreements are expected to (i)
contribute significant cash flows to Frontier's 2008 operating
plan, (ii) allow the Debtors to save significant costs on the
maintenance and storage of unneeded aircraft, (iii) enable the
Debtors to continue implementing their operational strategy, and
(iv) provide more cash flow and less risk than any other
alternative plan to lease or sell aircraft in the market.
Mr. Huebner added that the proceeds from the sale of the Aircraft
will generate sufficient proceeds to discharge any liens or
encumbrances on the Aircraft. Thus, the Sale will transfer the
Aircraft to Bakersvalley free and clear of all liens, claims and
encumbrances and any other interests held by, or relate against,
the Debtors.
The Official Committee of Unsecured Creditors fully supports the
Debtors' request, Mr. Huebner noted.
Each Aircraft subject to the Sale Transactions will be free and
clear of all liens, claims and encumbrances, pursuant to Section
363(f) of the Bankruptcy Code.
As a good-faith purchaser, Bakersvalley is entitled with the
protections under Section 363(m) of the Bankruptcy Code, Judge
Drain ruled.
About Frontier Airlines Inc.
Headquartered in Denver, Colorado, Frontier Airlines Inc. --
http://www.frontierairlines.com/-- provide air transportation
for passengers and freight. They operate jet service carriers
linking their Denver, Colorado hub to 46 cities coast-to-coast,
8 cities in Mexico, and 1 city in Canada, well as provide
service from other non-hub cities, including service from 10
non-hub cities to Mexico. As of May 18, 2007 they operated 59
jets, including 49 Airbus A319s and 10 Airbus A318s.
The Debtor and its debtor-affiliates filed for Chapter 11
protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-
11297 thru 08-11299.) Hugh R. McCullough, Esq., at Davis Polk &
Wardwell, represents the Debtors in their restructuring efforts.
Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre
& Benson LLP is the Debtors' Special Counsel, and Kekst and
Company is the Debtors' Communications Advisors. At Dec. 31,
2007, Frontier Airlines Holdings Inc. and its subsidiaries'
total assets was $1,126,748,000 and total debts was
$933,176,000.
(Frontier Airlines Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FRONTIER AIRLINES: Court Approves Sale/Leaseback Deal with GECAS
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized Frontier Airlines Holdings Inc. and its subsidiaries to
enter into the Sale/Leaseback and Early Lease Termination
Agreements with GE Commercial Aviation Services LLC.
The Debtors' fleet consists of 70 aircraft, 43 of which are
leased, and 27 are owned by the Debtors. Of the Debtors' leased
aircraft, 26 are leased from GE Commercial Aviation Services LLC,
and of their owned aircraft, two are pledged to GECAS. The
Debtors also separately lease three engines from GECAS.
The Debtors have concluded, based on their analysis, that
entering into certain transactions with GECAS will allow them to
monetize the significant equity in certain of their owned
aircraft, while simultaneously achieving the goal of
rationalizing the overall size and composition of their fleet.
After extensive negotiations, the Debtors and GECAS finalized
term sheets that contemplate several transactions between the
parties.
Sale/Leaseback Transactions
A. Transaction Term Sheet 1
The salient provisions under the Transaction 1 Term Sheet
include, without limitation:
(a) GECAS will purchase one A319 aircraft bearing FAA
Registration No. N948FR, and lease the aircraft back to
Frontier for a term of eight years;
(b) if requested by Frontier no later than August 29, 2008,
GECAS will purchase an additional aircraft and lease the
aircraft back to the Lessee for a term of eight years;
(c) following the consummation of SLB 1, three of the
operating leases between GECAS and the Lessee will be
terminated early. If SLB 2 closes, two further operating
leases between the parties will be terminated early; and
(d) the Early Lease Terminations that occur after the closing
of SLB 1 will be in respect of three A319 aircraft bearing
FAA Registration Nos. N944FR, N946FR and N950FR. The
Early Lease Terminations that occur after the closing of
SLB 2 will be in respect of two A319 aircraft bearing FAA
Registration Nos. N945FR and N942FR. GECAS will have the
right to substitute either of two A318 aircraft bearing
FAA Registration Nos. N806FR and N807FR for any of the
A319 aircraft that are subject to Early Lease
Terminations.
B. Transaction Term Sheet 2
The Transaction 2 Term Sheet's salient provisions are, among
other things:
(a) unless Frontier will have prepaid in full, on or prior to
September 5, 2008, all indebtedness secured by the two
A319 aircraft pledged to GECAS, GECAS will purchase and
lease the Aircraft back to Frontier for a term of 7.5
years; and
(b) for each T2 Sale/Leaseback Transaction which closes, two
of the operating leases between GECAS and Frontier will be
subject to Early Lease Terminations.
Under the Transactions 1 and 2 Term Sheets, each Aircraft that is
subject to a Sale/Leaseback Transaction will be delivered free
and clear of liens, and GECAS will retain all rights, remedies
and claims under Section 1110 of the Bankruptcy Code with respect
to the Sale/Leaseback Aircraft. Upon an event of default under
the Leases, the automatic stay imposed under Section 362(a) of
the Bankruptcy Code will be lifted to allow the Lessor to
exercise its rights, claims, and remedies.
In addition, each aircraft that is subject to an Early Lease
Termination will be removed from service not later than 10 days
preceding designated date for redelivery.
Moreover, GECAS will retain the security deposit under each
Lease, in consideration for GECAS' agreement to waive compliance
with the requirement that each ELT Aircraft at redelivery is
fresh from a Redelivery "C" Check and is repainted in a livery
selected by GECAS. GECAS will retain allowed administrative
expense claims for rent, supplemental rent, and maintenance
reserves with respect to each ELT Aircraft covering the period
to, and including the date of, surrender and return of the
Aircraft.
Certain "special termination triggers" under the Transactions
include (i) a Court order dismissing or converting the Debtors'
Chapter 11 cases to Chapter 7, (ii) the Debtors' commencement of
a liquidation in their cases, (iii) Frontier's suspension to
carry on all or a material part of its business, (iv) Frontier's
failure in any material respect to provide GECAS with copies of
all current and historical documents and records in respect of
each Aircraft, or (v) or a material breach by Frontier of the
Term Sheets. Upon the occurrence of a Special Termination
Trigger, GECAS will be permitted to issue to Frontier a written
termination notice, and to exercise its remedies.
Under the Term Sheets, Frontier will provide document access to
GECAS. Specifically, the parties agree that:
* on or before Aug. 1, 2008, GECAS will provide Frontier
with a written notice specifying the order of aircraft and
engine priority for providing the relevant records;
* Frontier will provide the Relevant Records to GECAS, and
will ensure that (i) commencing on Aug. 8, 2008, and
calculated at the end of each calendar week on a rolling
cumulative average basis thereafter, the Relevant Records --
with respect to at least seven leased aircraft per week --
are delivered to GECAS, and (ii) all Relevant Records are
delivered to GECAS by Frontier no later than August 31,
2008;
* on or prior to September 5, 2008, GECAS will provide
Frontier with a notice of deficiencies, if any, in the
Relevant Records provided by Frontier, and the Debtors agree
that it will rectify all discrepancies on or before
Sept. 15, 2008; and
* GECAS will be entitled to conduct an on-site review of
the Relevant Records with respect to any noted
discrepancies, to which Frontier will cooperate and assist.
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, in New York,
related that given the unique, pre-existing relationship between
the Debtors and GECAS, the Debtors were able to structure the
Agreements to accomplish multiple goals and to most effectively
leverage the value of their existing assets.
According to Mr. Huebner, the ELT Aircraft are not necessary for
the Debtors' operations; thus, terminating them will allow the
Debtors to monetize the equity in the Transactions and generate
liquidity for the benefit of the Debtors' estates and creditors,
while the Debtors finalize their potential postpetition
financing.
Furthermore, the ELTs will help achieve the Debtors' fleet
reduction goals over an agreed time frame, while reducing the
magnitude of claims associated with that fleet reduction,
pursuant to their business plan, Mr. Huebner added.
Pursuant to Section 363(f) of the Bankruptcy Code, each Aircraft
that is subject to a Sale/Leaseback Transaction will be delivered
free and clear of liens, including, without limitation the liens
filed by Tarrant County, Texas.
With respect to ELT Aircraft, GECAS (i) will retain all its
rights under Section 1110 of the Bankruptcy Code, and (ii) will
have an allowed administrative expense claim for rent,
supplemental rent, and maintenance reserves.
Additionally, Judge Robert D. Drain permitted GECAS to retain any
and all security deposits previously paid by Frontier with respect
to the ELT Aircraft. Frontier will indemnify GECAS with respect
to any ELT Aircraft obligations the Debtors may have to third
parties.
Upon the occurrence of any Special Termination Trigger, Frontier
is deemed to have rejected all operating leases with GECAS. The
Term Sheets will also be terminated, and the Stay imposed by
Section 362(a) of the Bankruptcy Code will be vacated.
In the event of a default under the SLT Leases, the Stay will be
vacated to allow GECAS to exercise its right and remedies.
The Court held that GECAS, as a good-faith purchaser, is entitled
with the protections under Section 363(m) of the Bankruptcy Code.
About Frontier Airlines Inc.
Headquartered in Denver, Colorado, Frontier Airlines Inc. --
http://www.frontierairlines.com/-- provide air transportation
for passengers and freight. They operate jet service carriers
linking their Denver, Colorado hub to 46 cities coast-to-coast,
8 cities in Mexico, and 1 city in Canada, well as provide
service from other non-hub cities, including service from 10
non-hub cities to Mexico. As of May 18, 2007 they operated 59
jets, including 49 Airbus A319s and 10 Airbus A318s.
The Debtor and its debtor-affiliates filed for Chapter 11
protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-
11297 thru 08-11299.) Hugh R. McCullough, Esq., at Davis Polk &
Wardwell, represents the Debtors in their restructuring efforts.
Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre
& Benson LLP is the Debtors' Special Counsel, and Kekst and
Company is the Debtors' Communications Advisors. At Dec. 31,
2007, Frontier Airlines Holdings Inc. and its subsidiaries'
total assets was $1,126,748,000 and total debts was
$933,176,000.
(Frontier Airlines Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FRONTIER AIRLINES: Court Moves Plan Filing Period to February 4
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
extended the period within which Frontier Airlines Holdings Inc.
and its subsidiaries may file their plan of reorganization,
through and including Feb. 4, 2009.
"[T]he time within which the Debtors may solicit acceptance, and
no competing plans may be filed, pursuant to Section 1121(c)(3)
of the Bankruptcy Code, is extended through and including
April 6, 2009," Judge Robert Drain held.
The Order is without prejudice to the Debtors' right to seek
additional extensions of, and parties-in-interests' right to seek
to shorten or terminate, the Exclusive Periods, pursuant to
Section 1121(d) of the Bankruptcy Code.
Headquartered in Denver, Colorado, Frontier Airlines Inc. --
http://www.frontierairlines.com/-- provide air transportation
for passengers and freight. They operate jet service carriers
linking their Denver, Colorado hub to 46 cities coast-to-coast,
8 cities in Mexico, and 1 city in Canada, well as provide
service from other non-hub cities, including service from 10
non-hub cities to Mexico. As of May 18, 2007 they operated 59
jets, including 49 Airbus A319s and 10 Airbus A318s.
The Debtor and its debtor-affiliates filed for Chapter 11
protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-
11297 thru 08-11299.) Hugh R. McCullough, Esq., at Davis Polk &
Wardwell, represents the Debtors in their restructuring efforts.
Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre
& Benson LLP is the Debtors' Special Counsel, and Kekst and
Company is the Debtors' Communications Advisors. At Dec. 31,
2007, Frontier Airlines Holdings Inc. and its subsidiaries'
total assets was $1,126,748,000 and total debts was
$933,176,000.
(Frontier Airlines Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FRONTIER AIRLINES: Court OKs $30MM Secured Superpriority DIP Deal
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
issued an interim order authorizing Frontier Airlines Inc. and its
debtor-affiliates to enter into the Secured Superpriority Debtor-
In-Possession Credit Agreement with Republic Airways Holdings
Inc., Credit Suisse Securities (USA) LLC, and AQR Capital, LLC as
lenders, and Wells Fargo Bank Northwest, National Association, as
administrative and collateral agent.
The Court allowed the Debtors to borrow up to an aggregate
principal or face amount of $30,000,000, pursuant to the terms of
the DIP Loan Documents.
DIP Obligations
Without further approval of the Court, the Debtors are authorized
to, among other things:
(a) execute, deliver and perform under the DIP Credit
Agreement and other DIP Loan Documents, including, without
limitation, the Collateral Documents, as agreed between
the Debtors and Wells Fargo;
(b) pay the all amounts required to be paid to Wells Fargo
and the DIP Lenders in connection with the DIP Facility,
including, among other things, the Commitment Fee for
$1,500,000; and
(c) pay other fees referred under the DIP Credit Agreement,
including, among others, fees and expenses of the
professionals retained.
The DIP Loan Documents will constitute the Debtors' valid and
binding obligations, which will not be stayed, restrained,
voided or recovered under the Bankruptcy Code, or subjected to
defense, reduction, set-off, recoupment or counterclaim.
Pursuant to Section 364(c)(1) of the Bankruptcy Code, all of the
DIP Obligations will constitute allowed claims against the
Debtors with priority over all administrative expenses,
diminution claims and other claims against the Debtors. However,
the Superpriority Claims of Wells Fargo and the DIP Lenders
arising under the DIP Loan Documents will be pari passu to the
Superpriority Claims of First Data Merchant Services Corporation.
The Court also vacated and modified the automatic stay under
Section 362 of the Bankruptcy Code to permit Wells Fargo and the
DIP Lenders to accelerate all Obligations due upon the occurrence
of an Event of Default. The Loans and other Obligations under
the DIP Facility will bear interest at the Default Rate, and will
not be discharged by the confirmation of the Debtors' plan of
reorganization.
Any reversal or modification of the Order will not affect the
validity of any DIP Obligations, and the validity or
enforceability of any lien or priority authorized or created
respect to any DIP Obligations. Similarly, the DIP Liens and the
Superpriority Claims of Wells Fargo and the DIP Lenders will not
be modified, impaired or discharged by the conversion of the
Debtors' cases to Chapter 7 or their dismissal, and the
confirmation of the Debtors' plan of reorganization.
Liens and Security Interests
The Court granted Wells Fargo with these security interests and
liens for the benefit of the DIP Lenders:
* first lien on unencumbered property, including all of the
Debtors' existing and after-acquired notes and capital
stock, accounts, cash or cash equivalents, supporting
obligations and general intangibles; and
* liens junior to certain other liens, upon the portion of the
DIP Collateral that is subject to valid, perfected and
unavoidable liens in existence immediately prior to the
Closing Date.
The DIP Liens will not be subject or subordinate to (i) any lien
or security interest that is preserved for the Debtors under
Section 551 of the Bankruptcy Code, or (ii) any liens arising
after the Closing Date, including liens or security interests for
any liability of the Debtors, granted in favor of any
governmental unit, commission, board or court.
All DIP Collateral will be free and clear of other liens, claims
and encumbrances, except for those expressly permitted under
the DIP Loan Documents.
Section 1110 Assets and Beneficiaries
Judge Drain clarified that the Interim Order does not constitute
a waiver of the rights of any secured party, lessor or vendor
under Section 1110 of the Bankruptcy Code, and is without
prejudice to the rights of any Section 1110 beneficiary.
Any liens that are granted in any Section 1110 Assets will be
"silent" liens, to which Wells Fargo and the DIP Lenders will not
have the right to exercise any remedies, until the obligations
under the relevant Section 1110 Agreements have been satisfied
and paid in full.
Wells Fargo or the DIP Lenders will not be subject to, among
others, (i) the equitable doctrine of "marshaling, and (ii) an
"equities of the case" claim under Section 552(b) of the
Bankruptcy Code with respect to proceeds, product, offspring or
profits of the DIP Collateral.
The Court also directs the Debtors to pay Qwest Communications
Corporation's valid reclamation claim pursuant to Section 546(c)
of the Bankruptcy Code.
No Prejudice to CBAs
Judge Drain ruled that the Order will not constitute an
agreement, admission or acknowledgment by any union that any
concessions with respect to, or any changes to, any collective
bargaining agreement are necessary or appropriate.
"The Debtors aren't here seeking to implement any modifications
of their collective bargaining agreements, and I'm clearly not
ruling on any request to do so," Judge Drain said during the
Court hearing on Aug. 5, 2008, according to Bloomberg.
All unions reserve their rights with respect to, among others,
any claim that the terms of the DIP Credit Facility do not
constitute a valid basis in support of Section 1113 of the
Bankruptcy Code. The Order does not relieve the Debtors of any
obligation with respect to the requirements of Section 1113,
Judge Drain clarified.
The provisions of the Order will govern in the event of its
inconsistencies with the DIP Loan Documents, Judge Drain ruled.
The Court will convene the Final DIP Financing Hearing on
September 15, 2008, at 10:00 a.m., prevailing Eastern Time.
Objections must be filed no later than August 29, at 5:00 p.m.,
prevailing Eastern Time.
Perseus' Improved Terms
Representing Perseus, L.L.C., Michael L. Bernstein, Esq., at
Arnold & Porter LLP, in Washington, D.C., told Judge Drain during
the August 5 hearing that Frontier "didn't provide the Court
information on improved terms that [Perseus had] offered over the
last few days," according to Bloomberg News.
To recall, the Debtors entered into the Original DIP Credit
Agreement with Perseus, and sought authorization to obtain
postpetition financing of up to $75,000,000, in two installments,
conditioned upon certain concessions which were satisfactory to
Perseus.
Frontier did not want to disclose Perseus' revised terms because
they were confidential and the loan from the new creditor group
was still preferable because it was a "straight loan," not
contingent on a buyout offer, Marshall S. Huebner, Esq., at
Davis Polk & Wardwell, in New York, responded on behalf of the
airline, says the report.
Frontier, however, is willing to review all strategic offers,
including those from Perseus, Mr. Huebner added.
About Frontier Airlines Inc.
Headquartered in Denver, Colorado, Frontier Airlines Inc. --
http://www.frontierairlines.com/-- provide air transportation
for passengers and freight. They operate jet service carriers
linking their Denver, Colorado hub to 46 cities coast-to-coast,
8 cities in Mexico, and 1 city in Canada, well as provide
service from other non-hub cities, including service from 10
non-hub cities to Mexico. As of May 18, 2007 they operated 59
jets, including 49 Airbus A319s and 10 Airbus A318s.
The Debtor and its debtor-affiliates filed for Chapter 11
protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-
11297 thru 08-11299.) Hugh R. McCullough, Esq., at Davis Polk &
Wardwell, represents the Debtors in their restructuring efforts.
Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre
& Benson LLP is the Debtors' Special Counsel, and Kekst and
Company is the Debtors' Communications Advisors. At Dec. 31,
2007, Frontier Airlines Holdings Inc. and its subsidiaries'
total assets was $1,126,748,000 and total debts was
$933,176,000.
(Frontier Airlines Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FV-UNION: Voluntary Chapter 11 Case Summary
-------------------------------------------
Debtor: F.V. - Union Centre Shoppes, L.L.C.
5908 East Red Bird Road
Scottsdale, AZ 85262
Bankruptcy Case No.: 08-10380
Related Information: Michael A. Scott, managing member, filed
the petition on the Debtor's behalf.
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
F.V. - Union Centre Professional Suites, L.L.C.
Chapter 11 Petition Date: August 12, 2008
Court: District of Arizona (Phoenix)
Debtor's Counsel: Daniel E. Garrison, Esq.
Shugart Thomson & Kilroy
3636 North Central Avenue, Suite 1200
Phoenix, AZ 85012
Tel: (602) 650-2085
Fax: (602) 296-0138
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A. F.V. - Union Centre Shoppes' List of Largest Unsecured
Creditors:
Creditor Claim Amount
-------- ------------
EJK Development, Inc. $63,549
Michael A. Scott, Inc. $11,887
Frost Brown Todd $1,840
B. F.V. - Union Centre Professional's List of Largest Unsecured
Creditors:
Creditor Claim Amount
-------- ------------
EJK Development, Inc. $22,720
Frost Brown Todd $1,900
GATEHOUSE MEDIA: June 30 Balance Sheet Upside-Down by $18.7MM
-------------------------------------------------------------
GateHouse Media Inc. reported Friday financial results for its
second quarter ended June 30, 2008.
At June 30, 2008, the company's consolidated balance sheet showed
$1.41 billion in total assets and $1.43 billion in total
liabilities, resulting in a roughly $18.7 million stockholders'
deficit.
The company's consolidated balance sheet at June 30, 2008, also
showed strained liquidity with $116.7 million in total current
assets available to pay $133.3 million in total current
liabilities.
Net loss for the 2008 second quarter was $443.2 million, compared
with net loss of $2.0 million in the 2007 second quarter.
Operating loss for the second quarter was $429.7 million, which
included a goodwill, intangibles and long-lived assets impairment
charge of $443.1 million. Excluding the goodwill, intangible and
long-lived assets impairment charge, which is a non-cash charge,
operating income was $13.4 million compared to $18.5 million in
the second quarter of 2007. As Adjusted EBITDA for the quarter
was $38.0 million, a decrease of 16.0% on a same store basis.
As Adjusted EBITDA is a non-GAAP measure and is defined as
Adjusted EBITDA [net income (loss) before interest, income tax
expense (benefit), depreciation and amortization and other non-
recurring or non-cash items] before other non-cash items such as
non-cash compensation and non-recurring integration and
reorganization costs.
Total revenue for the three months ended June 30, 2008, increased
by $26.1 million or 16.5% to $184.1 million from $158.0 million
for the three months ended June 30, 2007. The increase in total
revenue was comprised of a $18.2 million, or 15.5% increase in
advertising revenue, a $5.6 million, or 17.4% increase in
circulation revenue and a $2.3 million, or 27.4% increase in
commercial printing and other revenue.
Michael E. Reed, GateHouse Media's chief executive officer, said,
"The company delivered industry leading same store results in a
very challenging economic environment. The majority of our
revenue declines continue to come from classified advertising.
Local advertising revenue is holding up quite well and our online
and circulation revenues continue to grow.
"We are experiencing increasing inflationary pressure,
particularly with regard to newsprint pricing, delivery costs and
health care expenses. Unfortunately, these expense increases
offset our targeted cost reductions in the second quarter,
resulting in a 1.3% decline in expenses year over year on a same
store basis, less than we anticipated. We continue to
aggressively look for ways to reduce expenses without impacting
the quality of news and customer service we provide to our readers
and advertisers. We also continue to invest in and expand our
online business which is translating into growth. Both protecting
and enhancing our local franchises, print and online, is very
important to our future."
Levered Free Cash Flow for the quarter was $11.5 million compared
with $17.4 million for the same quarter in 2007.
The company disclosed that a second quarter 2008 non-cash
impairment charge related to goodwill, intangibles and long-lived
assets of $443.1 million was recorded. This charge resulted from
impairment testing, in accordance with Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible
Assets, completed at the end of the second quarter triggered by
the decline of the company's share price.
Commenting on the impairment charge, Reed said, "It is important
to note, that while the company's cash flows are down the first
six months on a same store basis, our assets still produce great
cash flow. This impairment is more a reflection of the company's
stock price and a reconciliation of market capitalization to book
value. We believe our assets will continue to produce strong cash
flows and when the economic cycle improves we are positioned in
our small markets to grow."
The company said it was in compliance with the financial covenants
under its 2007 Credit Facility as of June 30, 2008.
Capital Management Initiatives
The company disclosed that it will temporarily suspend payment of
a quarterly dividend to common shareholders commencing with the
second quarter of 2008. A subsidiary of the company entered into
an agreement to issue $11.5 million of non-voting cumulative
preferred stock to a private equity fund managed by an affiliate
of Fortress Investment Group, GateHouse Media's largest
shareholder. The proceeds will be used to ensure the company is
in compliance with its credit agreement.
Commenting on the capital management initiatives, Reed said,
"Given the challenging environment we are using free cash flow to
reduce leverage and maintain additional liquidity. These
initiatives will also allow us to pay down our revolving credit
facility to zero over the next three months. When the revolving
credit facility is at zero, we have no leverage covenant tests
under our credit facility. Our facility does not mature until
2014, which provides us with significant time to strengthen our
balance sheet."
Full-text copies of the company's consolidated financial
statements for the quarter ended June 30, 2008, are available for
free at http://researcharchives.com/t/s?30bc
About GateHouse Media Inc.
Headquartered in Fairport, New York, GateHouse Media Inc.
(NYSE: GHS) -- http://www.gatehousemedia.com/-- is one of the
largest publishers of locally based print and online media in the
United States as measured by its 97 daily publications. GateHouse
Media currently serves local audiences of more than 10 million per
week across 21 states through hundreds of community publications
and local websites.
As disclosed in the Troubled Company Reporter on July 16, 2008,
Douglas McIntyre of 24/7 Wall Street reported that Gatehouse Media
Inc. could hit debt service problems that could force the company
to sell properties or file for Chapter 11 protection. According
to the report, Gatehouse is one of the companies that are at high
risk for not making it another year due to the big debt loads it
took in buying newspaper properties and seeing operating income
chopped by falling sales.
GS MORTGAGE: Minimal Loan Paydown Cues Fitch to Affirm Ratings
--------------------------------------------------------------
Fitch Ratings affirmed GS Mortgage Securities Corporation II,
series 2007-GG10 as:
-- $72.8 million class A-1 at 'AAA';
-- $725.3 million class A-2 at 'AAA';
-- $246.6 million class A-3 at 'AAA';
-- $72.0 million class A-AB at 'AAA';
-- $3,661.0 million class A-4 at 'AAA';
-- $514.0 million class A-1A at 'AAA';
-- $756.3 million class A-M at 'AAA';
-- $519.9 million class A-J at 'AAA';
-- Interest-only class X at 'AAA';
-- $75.6 million class B at 'AA+';
-- $94.5 million class C at 'AA';
-- $56.7 million class D at 'AA-';
-- $56.7 million class E at 'A+';
-- $75.6 million class F at 'A';
-- $75.6 million class G at 'A-';
-- $104.0 million class H at 'BBB+';
-- $94.5 million class J at 'BBB';
-- $75.6 million class K at 'BBB-';
-- $37.8 million class L at 'BB+';
-- $18.9 million class M at 'BB'.
-- $28.4 million class N at 'BB-';
-- $18.9 million class O at 'B+';
-- $18.9 million class P at 'B';
-- $18.9 million class Q at 'B-'.
Fitch does not rate the $141.8 million class S.
The rating affirmations reflect minimal paydown since issuance. As
of the August 2008 distribution date, the transaction has paid
down by 0.03% to $7.561 billion from $7.563 billion at issuance.
In total, 38 loans are considered Fitch loans of concern (28.7%),
including two specially serviced loans. The largest specially
serviced loan (0.64%) is secured by a portfolio of 11 cross-
collateralized, cross-defaulted limited and full service hotels
totaling 2,187 rooms and located across seven states throughout
the Midwest, East, and Southeast. The loan is current, but it was
transferred to special servicing in April 2008 due to imminent
monetary default. The borrower has been delinquent with its
franchisors and has not provided adequate financial statements or
business plans.
The second largest specially serviced loan (0.57%) is a
multifamily property located in Georgia. The loan was transferred
to special servicing on July 2, 2008 due to monetary default.
The third, ninth and 10th largest loans (10.5%) are considered
Fitch loans of concern due to low YE07 DSCRs. The third largest
loan is an office property (6.2%) located in Los Angeles,
California. As of year-end 2007, the debt service coverage ratio
was 0.74 times compared to a banker underwritten DSCR at issuance
of 1.20x. At issuance, the loan was structured with a
$3.0 million debt service reserve, which has already been
depleted. There are no significant lease expirations in the near
term, however, the loan does not mature until 2017 and the
property benefits from strong and experienced sponsorship in
Maguire Properties, Inc.
The ninth largest loan (2.2%) is an office building also located
in Los Angeles, California. As of YE07, the DSCR was 0.45x
compared to a DSCR of 1.23x at issuance. At issuance, this loan
was structured with a $4.5 million debt service reserve, of which
$1.9 million remains. Finally, the 10th largest loan (2.1%) is a
multifamily property located in Boston, Massachusetts. As of
YE07, the DSCR was 0.96x compared to a DSCR at issuance of 1.15x.
At issuance, a debt service reserve of $2.9 million was funded and
currently, $2.7 million remains. The low DSCRs are primarily the
result of tenants paying below-market rents.
The Shorenstein Portland Portfolio (9.2%) is the largest loan in
the transaction. It is secured by 46 office buildings with a
total of 3.8 million square feet. The buildings are located
throughout the greater Portland area. The loan has exhibited
improved performance since issuance. The loan's DSCR and
occupancy at issuance were 1.34x and 94.1%. As of YE07, the
servicer-reported DSCR has increased to 1.37x and occupancy was
86.6%. The loan matures on April 6, 2017.
Although Fitch is closely monitoring its loans of concerns,
affirmations are warranted at this time due to minimal near-term
maturity risk as none of the loans mature prior to 2011 and 85.6%
of the pool matures in 2017. In addition, at issuance the loans
banker underwritten NCF's were generally based on projected or pro
forma property cashflows and expected to improve due to rental
growth in future years or upon stabilization. In most cases, the
loans were structured with reserves to cover potential debt
service shortfalls during the loan terms.
HAVEN HEALTHCARE: Judge Dabrowski Dismisses All Chapter 11 Cases
----------------------------------------------------------------
The Hon. Albert S. Dabrowski of the United States Bankruptcy Court
for the District of Connecticut dismissed the Chapter 11 cases of
Haven Healthcare Management LLC and its debtor-affiliates.
On July 15, 2008, Diana G. Adams, the U.S. Trustee for Region 2,
asked the Court to dismiss each of the Debtors' cases, saying
there is no reasonable likelihood of rehabilitation. The Trustee
contended that the Debtors will not be able to pay all existing
and future Chapter 11 administrative costs. The Trustee told the
Court that a dismissal is the most practical resolution of these
cases.
The Debtors were unable to sell their assets to two separate
bidders. In May 2008, LifeHouse Retirement Properties withdrew
its $105 million offer to purchase the Debtors' assets. Formation
Capital LLC also withdrew its $84.75 million bid the following
month.
Bloomberg News reports that lender under its $50 million revolving
credit terminated financing for the reorganization.
About Haven Healthcare
Headquartered in Middletown, Connecticut, Haven Healthcare
Management LLC -- http://www.havenhealthcare.com/-- provides
nursing care to the elderly in New England, Connecticut. The
company operates health centers and assisted living facilities.
In addition, the company specializes in short-term rehabilitative
care and long-term care.
The company and 46 of its affiliates filed for chapter 11
protection on Nov. 22, 2007 (Bankr. D. Conn. Lead Case No. 07-
32719). Moses and Singer LLP serves as the Debtors' counsel.
Kurtzman Carson Consultants LLC is the Debtors' claims and
notice agent. The U.S. Trustee for Region 2 appointed nine
creditors to serve on an Official Committee of Unsecured Creditors
in this case. Pepper Hamilton LLP is counsel and Neubert Pepe &
Monteith P.C. as its co-counsel to the Creditors Committee. When
the Debtors sought protection from their creditors, they listed
assets and debts of between $1 million and $100 million. The
Debtors' consolidated list of 50 largest unsecured creditors
showed total claims of more than $20 million.
* * *
As of Feb. 29, 2008, the Debtors' balance sheet showed total
assets of $25,965,631 and total liabilities of $38,597,720
resulting in a $12,632,089 stockholders' deficit.
INPHONIC INC: Court Approves 2nd Amended Disclosure Statement
-------------------------------------------------------------
The Hon. Kevin Gross of the United States Bankruptcy Court for
the District of Delaware approved a second amended disclosure
statement dated Aug. 11, 2008, explaining a second amended Joint
Chapter 11 plan of liquidation filed by Inphonic Inc. and its
debtor-affiliates together with the Official Committee of
Unsecured Creditors, as co-proponent. Judge Gross held that the
proponents' disclosure statement contains adequate information
within the meaning of Section 1125 of the Bankruptcy Code.
Judge Gross also approved procedures the Debtors proposed for
solicitation and tabulation of plan votes. Deadline for voting on
the plan is Sept. 16, 2008.
A hearing is set for Oct. 14, 2008, at 2:00 p.m., to consider
confirmation of the plan. The hearing will take place at 824
Market Street, 6th Floor, Courtroom 3 in Wilmington, Delaware.
Objections, if any, are due Sept. 16, 2008, at 4:00 p.m.
As reported in the Troubled Company Reporter on June 25, 2008,
several parties filed objections to the earlier version of
the disclosure statement explaining a plan the Debtors and the
Committee filed on April 14, 2008, including The Department of
Treasury of the State of Michigan alleging that the earlier plan
failed to provide for the payment of interest on its
administrative and priority tax claims.
The treasury asserted that its interest must be paid at a rate
determined by the "prevailing market rate for a loan of a term
equal to the payout period." Its current interest rate for
bankruptcy tax claims is 9%.
Overview of the Plan
The Plan provides for the orderly liquidation of the Debtors'
estates, and for the merger of all of their estates and
consolidation of assets and liabilities into SN Liquidation on
the effective date.
Because substantially all of the Debtors' operating assets have
been sold as part of the sale, the Plan further provides for the
creation of litigation trust to administer the Debtors' remaining
assets and assess the value of these assets. Pursuant to the
Plan, eight distinct legal entities are being liquidated.
The remaining assets, among other things, include any causes of
action against the recipients of stock redemption payments and
claims, former directors and officers. These causes of action are
central to the success of the Plan and the distribution of any
value to the general unsecured claim holders.
On Dec. 13, 2007, the Court approved the Debtors' request to
sell substantially all of their assets to Adeptio INPC Funding
LLC, acquisition vehicle set up by Versa Capital Management, for
$50,000,000, under an asset purchase agreement dated Nov. 8,
2007. The Debtors then said Adeptio has acquired all the rights
of Versa Capital under a certain senior credit agreement, and
purchased all of its right, title and interest.
The amended plan classifies claims against and liens in the
Debtors in 6 classes. The classification of treatment of claims
and interests are:
Treatment of Claims and Interests
Type Estimated
Class of Claims Treatment Amount
----- --------- --------- ---------
1 other secured unimpaired $0
creditor claims
2 non-tax priority unimpaired $0
claims
3 secured lender impaired n/a
claims
4 general unsecured impaired $350,718,352
claims
5 intercompany impaired n/a
claims
6 equity interest impaired n/a
Under the amended plan, administrative, priority tax and trustee
claims will paid in full on the effective date. The Debtors have
$1,800,000 in administrative claims of which $700,000 remain
unpaid. All unpaid administrative claims will incur L.I.B.O.R.
rate of interest plus 4%. The Debtors' estate is presently does
have sufficient cash to pay administrative claims. If enough fund
are available, unpaid administrative claims will receive a pro
rata distribution on the plan's effective date.
Holders of class 1 other secured creditor claims will receive,
either:
-- cash equal to the amount of the allowed secured claims;
-- the collateral which secures the holder's claim; or
-- other treatment as to which the Debtors and holder agrees
after the plan's effective date.
Holders of class 2 non-tax priority claims will receive in full
satisfaction, settlement, release and discharge of and in exchange
for allowed priority non-text claims:
-- cash equal to the unpaid portion of any allowed priority
non-text claim; or
-- other treatment the litigation trustee and holder agreed
upon in writing.
On the Plan's effective date, each holder of class 3 secured
lender claims will get an allowed deficiency claim of $20,000,000,
which entitles the holder to a pro rata share of the interest in
the litigation trust interest to be distributed to class 4
unsecured creditors.
Each holder of class 4 general unsecured claims will receive it
pro rata share of the litigation trust interests. The earlier
version of the plan revealed approximately $204,964,908 in
unsecured claims filed against the Debtors.
Holders of class 5 intercompany claims and class 6 equity
interests will not receive any distribution from the Debtors under
the amended plan.
About InPhonic Inc.
Headquartered in Washington, DC, InPhonic Inc. (NASDAQ:INPC)--
http://www.inphonic.com/-- provides internet and wireless
services. The company through its wholly owned subsidiary, CAIS
Acquisition II, market broadband and VOIP services. The company
maintained operations centers in Largo, Maryland; Reston,
Virginia; and Great Falls, Virginia.
As reported in Troubled Company Reporter on Feb. 12, 2008, the
Court authorized the Debtors to change their name and the caption
of the bankruptcy case to SN Liquidation, Inc.
The company and its debtor-affiliates filed for Chapter 11
protection on Nov. 8, 2007 (Bankr. D. Del. Case Nos. 07-11666 to
07-11673). Mary E. Augustine, Esq., and Neil B. Glassman, Esq.,
at The Bayard Firm, in Wilmington, Delaware, represent the
Debtors. The Debtors selected BMC Group Inc. as their claims,
noticing and balloting agent. The United States Trustee for
Region 3 appointed five creditors to serve on an Official
Committee of Unsecured Creditors in the Debtors' cases. Kurt F.
Gwynne, Esq., and Robert P. Simons, Esq., at Reed Smith LLP,
represent the Committee.
When the Debtors filed from protection from their creditors,
they listed total assets of $120,916,991 and total debts of
$179,402,834.
INSMED INC: Posts $4.7 Million Net Loss in Second Quarter fo 2008
-----------------------------------------------------------------
Insmed Inc. reported results for the second quarter and six-months
ended June 30, 2008. The net loss for the second quarter of 2008
was $4.7 million, compared with a net loss of $2.5 million in the
second quarter of 2007. This $2.2 million increase was primarily
attributable to a $2.2 million increase in total expenses as the
increase in revenues for the quarter was offset by the increase in
net interest expense.
The $2.2 million total increase in expenses was due primarily to a
$1.8 million increase in research and development expenses, a
$340,000 increase in selling, general and administrative expenses,
and the realization of a $54,000 non-cash loss on investments.
"Over the past several months, Insmed has achieved several
important milestones across the full spectrum of its business,"
Geoff Allan, President and CEO of Insmed, said. "Most
importantly, our FOB initiatives have received strong scientific
validation with the exciting results of the INS-19 clinical trial
that demonstrated bioequivalence to Neupogen(R), opening the door
to a potential meeting with the FDA to discuss the initiation of a
possible Phase 3 trial. Additionally, retaining both Chairman
Thomas to represent our interests inside the Beltway in the
discussion around creating a regulatory pathway for FOB, and RBC
to evaluate our strategic financial options will ensure that the
company make informed decisions for moving our FOB program
forward, and advancing the development of IPLEX(TM) in MMD and
ALS."
Revenues for the second quarter ended June 30, 2008, the companyre
$2.6 million, up from $2.3 million for the corresponding period in
2007. The increase was primarily attributable to a $1.4 million
improvement in cost recovery from the company's EAP to treat
patients with ALS in Italy. This was partially offset by the
absence of license income from its agreement with Napo
Pharmaceuticals Inc., from which the company received a milestone
payment in the second quarter of 2007.
The higher R&D Expenses reflected a rise in clinical trial costs
this last quarter as the company's FOB and IPLEX(TM) programs
gained momentum. The increase in SG&A Expenses was due primarily
to increased investor relations and public relations activity and
the loss on investments arises from the write-down of the
company's investment in Napo. This investment, which was funded
by a milestone payment from Napo, was recorded as part of the
company's agreement with Napo in 2007.
For the six months ended June 30, 2008, revenues totaled
$5.0 million, up from $3.9 million in the first six months of
2007. Consistent with second quarter results, the increase was
primarily attributable to a $3.0 million improvement in cost
recovery from the company's EAP to treat patients with ALS in
Italy. This was partially offset by the absence of license income
from Napo and the revenues lost from the company's withdrawal of
IPLEX(TM) in the short stature market pursuant to the terms of the
companysettlement agreement with Genentech Inc. and Tercica Inc.
entered into in 2007.
The net loss for the six months ended June 30, 2008, was
$9.5 million, compared to $12.8 million for first six months of
2007. Year-over-year, R&D Expenses increased to $10.8 million for
the first half of 2008, from $9.8 million, reflecting an increase
in clinical trial activity for the company's FOB and IPLEX(TM)
programs. SG&A Expenses fell to $3.0 million for the first half
of 2008 from $6.5 million a year earlier due to the elimination of
litigation expenses following the March 2007 settlement and the
removal of commercial expenses associated with the company's
business restructuring plan. The $446,000 loss on investments
represents the write down on the Napo investment during the first
half of 2008.
Interest income for the first half of 2008 was $375,000, and was a
reduction from the $525,000, earned in the same period of 2007 due
to the combination of a lower interest rate environment and a
lower average cash balance. Interest expense increased to
$682,000 in the most recent six month period from $306,000 during
the corresponding period of 2007. The increase was due to an
increase in the debt discount amortization resulting from the
quarterly payment of the company's 2005 convertible notes, which
began in March 2008.
As of June 30, 2008, the company had total cash, cash equivalents
and short-term investments on hand of $9.4 million, compared to
$16.5 million on hand as of Dec. 31, 2007. The $7.1 million
decrease in cash, cash equivalents and short-term investments
primarily reflects the use of $6.0 million for operating
activities and a $1.1 million principal repayment of the company's
2005 convertible notes, which began on March 1, 2008.
At June 30, 2008, the company's balance sheet showed total assets
of $11.9 million and total liabilities of $9.2 million, resulting
in a $2.6 million stockholders' equity.
About Insmed
Insmed Incorporated, (NasdaqCM: INSM) -- http://www.insmed.com --
a biopharmaceutical company, develops and commercializes drugs to
treat metabolic diseases, endocrine disorders, and oncology. Its
lead product candidate IPLEX, a recombinant protein product
candidate, is in Phase II clinical trials for the treatment of
myotonic muscular dystrophy, the common form of adult-onset
muscular dystrophy. The company has license and collaborative
agreements with Fujisawa Pharmaceutical Co., Ltd. to use IGF-I
therapy for the treatment of extreme or severe insulin resistant
diabetes; and a license to Pharmacia AB's portfolio of regulatory
filings pertaining to rhIGF. Insmed was founded in 1999 and is
headquartered in Richmond, Virginia.
Going Concern Doubt
Richmond, Virginia-based Ernst & Young LLP raised substantial
doubt about the ability of Insmed Incorporated to continue as a
going concern after it audited the company's financial statements
for the year ended Dec. 31, 2007. The auditor pointed to the
company's recurring operating losses and negative cash flows from
operations.
The company said that its ability to continue as a going concern
is dependent upon its ability to take advantage of raising capital
through securities offerings, debt financing, and partnerships and
use these sources of capital to fund operations. Management is
focusing on raising capital through any one or more of these
options.
MARVEL ENTERTAINMENT: To Get $80MM Settlement from Revlon Chairman
------------------------------------------------------------------
Revlon, Inc. chairman Ronald O. Perelman will pay $80 million to
resolve a long-running dispute with the trustees of Marvel
Entertainment Group, Inc., various reports say. However,
according to the reports, Mr. Perelman denies any wrongdoing.
The Hon. Judge Sue L. Robinson of the United States District Court
in Wilmington, Delaware, has set Sept. 11, 2008, to consider
approval of the settlement.
In 1997, Marvel sued Mr. Perelman and other former Marvel
directors for aiding a diversion of $55.3 million in notes while
in control of Marvel, the reports note. The lawsuit was filed
after Marvel went bankrupt. Marvel emerged from bankruptcy in
1998 and a litigation trust was formed to pursue claims of
noteholders.
In 2004, Bloomberg relates, U.S. District Judge Kent A. Jordan
dismissed Marvel's suit. A year after, the U.S. Appellate Court
in Philadelphia reversed Judge Jordan's ruling. The case was sent
back to Wilmington for further hearing. An August 18 hearing was
set. However, through a mediation by U.S. Magistrate Judge Mary
Pat Thynge, the settlement was reached, Bloomberg reports.
Pursuant to the settlement, Mr. Perelman's holding company,
MacAndrews & Forbes Holdings Inc., will pay the $80 million, The
Wall Street Journal and Bloomberg News relate.
The litigation trustee said "it would be irresponsible" for the
Marvel noteholders to reject the offer, the reports note.
Edward Friedman, Esq., represents the litigation trustee. Anthony
Clark, Esq., represents Perelman and other defendants in the
Marvel case.
About Revlon Inc.
Headquartered in New York City, Revlon Inc. (NYSE: REV)
-- http://www.revloninc.com/-- is a worldwide cosmetics, hair
color, beauty tools, fragrances, skincare, anti-
perspirants/deodorants and personal care products company. The
company's brands, which are sold worldwide, include Revlon(R),
Almay(R), Mitchum(R), Charlie(R), Gatineau(R) and Ultima II(R).
At June 30, 2008, the company's consolidated balance sheet showed
$883.7 million in total assets and $1.94 billion in total
liabilities, resulting in a $1.06 billion stockholders' deficit.
About Marvel Entertainment
With a library of over 5,000 characters built over more than sixty
years of comic book publishing, Marvel Entertainment, Inc. --
http://www.marvel.com/-- is one of the world's most prominent
character-based entertainment companies. Marvel utilizes its
character franchises in licensing, entertainment (via Marvel
Studios) and publishing (via Marvel Comics), with emphasis on
feature films, home DVD, consumer products, video games, action
figures and role-playing toys, television and promotions.
Marvel's strategy is to leverage its franchises in a growing array
of opportunities around the world.
Marvel filed for chapter 11 bankruptcy on Dec. 27, 1996 (Bankr. D.
Del.), in order to implement a proposed $525 million
recapitalization. Marvel's filing did not include Marvel's Panini
subsidiary, which is headquartered in Italy. In conjunction with
the chapter 11 filing, a bank group led by Chase Manhattan Bank
has agreed to provide Marvel with $100 million of debtor-in-
possession financing.
Marvel's plan of reorganization was consummated on Oct. 18, 1998.
The plan of reorganization for Marvel Entertainment Group was
confirmed on July 31, 1998 by the Court. Pursuant to the plan,
MEG Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the company, merged with and into Marvel, with
Marvel continuing as the surviving corporation and as a wholly-
owned subsidiary of the registrant. As a result of the merger,
the company acquired all of the tangible and intangible assets of
Marvel.
MAXXAM INC: J. Kent Friedman Resigns as General Counsel
-------------------------------------------------------
MAXXAM Inc. and J. Kent Friedman, the co-vice chairman and general
counsel of the company, entered into a Separation, Release and
Confidentiality Agreement and related Addendum on July 31, 2008.
Under the Separation Agreement, Mr. Friedman terminated his
employment with the company effective as of July 31, 2008,
although he will continue to serve on the company's Board of
Directors as co-vice chairman and receive compensation as a non-
employee director.
The Separation Agreement also contemplates that Mr. Friedman will
serve the company as outside general counsel through the law firm
he was joining following termination of his employment.
The Separation Agreement indicates that the company expects
Mr. Friedman will not be required to spend more than 20% of his
time on company legal matters.
The terms of the Separation Agreement confirmed that Mr. Friedman
would receive his benefits under the company's existing plans and
programs, including the company's Pension Plan and Supplemental
Executive Retirement Plan, 16 weeks of severance pay, up to one
year's of continued coverage under the company's group health
insurance (provided that he pays for 50% of the cost), and his
vested amounts under the company's Capital Accumulation Plan and
Supplemental Savings Plan.
The Separation Agreement also provided for the extension of the
time period in which Mr. Friedman can exercise his vested stock
options/stock appreciation rights. Subject to approval by the
company's Section 162(m) Compensation Committee (which was
obtained), the exercise period was extended to December 1, 2009
for 17,500 Options and to December 31, 2009, for 46,887 Options.
All of his unvested options were cancelled as of July 31, 2008.
Mr. Friedman would also earn a specified cash payment under
certain circumstances if prior to December 31, 2009:
(i) the Texas Legislature allows video lottery terminals
to be utilized at Texas horse and dog tracks, and
(ii) if required, such legislation is approved by Texas
voters.
About MAXXAM Inc.
Headquartered in Houston, MAXXAM Inc. (AMEX: MXM) is a publicly-
traded company, with business interests in three industries:
forest products, real estate investment and development and racing
operations.
As reported in the Troubled Company Reporter on May 19, 2008,
MAXXAM Inc.'s consolidated balance sheet at March 31, 2008, showed
$483.5 million in total assets and $779.6 million in total
liabilities, resulting in a $296.1 million total stockholders'
deficit.
Going Concern Doubt
As reported in the Troubled Company Reporter on May 9, 2008,
Deloitte & Touche LLP, in Houston, expressed substantial doubt
about MAXXAM Inc.'s ability to continue as a going concern after
auditing the company's consolidated financial statements for the
year ended Dec. 31, 2007.
The auditing firm pointed to the uncertainty surrounding the
ultimate outcome of the separate voluntary petitions for
reorganization under Chapter 11 of the Bankruptcy Code filed by
certain of the company's wholly owned subsidiaries, and its effect
on the company, as well as the company's operating losses at its
remaining subsidiaries.
MICROMET INC: Posts $8.6MM Net Loss for the Quarter Ended June 30
-----------------------------------------------------------------
Micromet, Inc. announced its financial results for the second
quarter and six months ended June 30, 2008. The company reported
a net loss of $8.6 million for the quarter ended June 30, 2008,
compared to a net loss of $6.4 million for the same quarter last
year.
For the three months ended June 30, 2008, Micromet recognized
total revenues of $8.5 million, compared to $3.1 million for the
same period in 2007. Total operating expenses were $14.4 million
for the three months ended June 30, 2008, compared to $11.1
million for the same period in 2007. For the three months ended
June 30, 2008, Micromet reported a net loss of $8.6 million,
compared to a net loss of $6.5 million for the same period in
2007.
The company reported a net loss of $14.4 million for the six month
ended June 30, 2008, compared to a net loss of $14.0 million for
the same period last year.
For the six months ended June 30, 2008, Micromet recognized total
revenues of $14.4 million, compared to $5.8 million for the same
period in 2007. Total operating expenses were $27.6 million for
the six months ended June 30, 2008, compared to $21.4 million for
the same period in 2007. For the six months ended June 30, 2008,
Micromet reported a net loss of $14.5 million, compared to a net
loss of $14.1 million for the same period in 2007.
Micromet's cash and cash equivalents were $22.4 million as of June
30, 2008. Net cash used in operating activities was $4.7 million
for the six months ended June 30, 2008 compared to $7.9 million
used in operating activities for the same period in 2007.
At June 30, 2008, the company's balance sheet showed total assets
of $48.2 million and total liabilities of $36.2 million, resulting
in a $12.0 million stockholders' equity.
About Micromet Inc.
Micromet Inc. (Nasdaq: MITI) -- http://www.micromet-inc.com/-- is
a biopharmaceutical company developing novel, proprietary
antibodies for the treatment of cancer, inflammation and
autoimmune diseases. Four of its antibodies are currently in
clinical trials, while the remainder of the product pipeline is in
preclinical development.
Going Concern
The company disclosed in its Form 10-Q for the first quarter of
2008, that as of March 31, 2008, the company had an accumulated
deficit of $170.8 million, and its expects to continue to incur
substantial, and possibly increasing, operating losses for the
next several years. The company says that these conditions create
substantial doubt about the company's ability to continue as a
going concern.
MORGAN STANLEY: Fitch Affirms 'B-' Rating on $1.8MM Class N Certs.
------------------------------------------------------------------
Fitch Ratings affirmed Morgan Stanley Dean Witter Capital Trust's
commercial mortgage pass-through certificates, series 2001-IQ as:
-- $113.6 million class A-3 at 'AAA';
-- Interest-only class X-1 at 'AAA';
-- Interest-only class X-2 at 'AAA';
-- $22.3 million class B at 'AAA';
-- $18.7 million class C at 'AAA';
-- $5.3 million class D at 'AAA';
-- $5.3 million class E at 'AAA';
-- $8.9 million class F at 'AAA';
-- $5.3 million class G at 'AA-';
-- $5.3 million class H at 'A+';
-- $10.7 million class J at 'BBB';
-- $3.6 million class K at 'BB+';
-- $1.8 million class L at 'BB';
-- $5.3 million class M at 'B';
-- $1.8 million class N at 'B-'.
The $2.2 million class O is not rated by Fitch. Classes A-1 and
A-2 have been paid in full.
The affirmation reflects the stable performance of the remaining
collateral. Although the transaction has been paid down 70.5%
since issuance, the pool has become increasingly concentrated with
only 30 loans remaining. As of the July 2008 distribution date,
the pool's aggregate principal balance has been reduced to
$210.4 million from $713 million at issuance.
The top five loans constitute 49.3% of the collateral balance. In
addition, 30 loans remain in the pool, down from 91 at issuance.
The pool has experienced quicker than normal paydown due to the
seasoned nature of the loans: at issuance the loans had an average
seasoning of 3.3 years.
There are currently no delinquent or specially serviced loans.
Approximately 44% of the pool matures in 2009, including the
remaining shadow rated loan (22.4%).
Fitch reviewed the remaining shadow rated loan, which maintains an
investment grade credit assessment. The Town Center Plaza loan
(22.4%) is secured by 388,962 square feet of a retail shopping
center located in Leawood, Kansas. As of April 2008, the property
was 95.7% occupied. The Fitch stressed DSCR as of year-end 2007
was 1.84 times compared to 1.37x at issuance.
MRS FIELDS: To Delay Filing of June 2008 Quarterly Report
---------------------------------------------------------
Mrs. Fields Famous Brands, LLC, informed the Securities and
Exchange Commission that it is unable to complete its quarterly
report on Form 10-Q for the quarterly period ended June 28, 2008,
prior to the designated filing date for the Quarterly Report due
to its ongoing negotiations relating to the Company's potential
restructuring; the recent resignation of the Company's Chief
Executive Officer; and the appointment of Interim Co-Chief
Executive Officers.
The delay in completing the review could not be eliminated by the
Company without unreasonable effort or expense. Accordingly, the
Company will be unable to file the Quarterly Report on a timely
basis. The Company believes it will be able to file the Quarterly
Report within the 5-day extension period provided under Rule 12b-
25 of the Securities Exchange Act of 1934, as amended.
George Fugelsang and Christopher Wright, both on July 31, 2008,
and Peter Mullin, on August 1, 2008, resigned from the Board of
Directors of Mrs. Fields. On July 10, 2008, Stephen Russo, a
director and president and chief executive officer of Mrs. Fields,
terminated his employment with the Company.
Michael Ward has been appointed Interim Co-CEO, Executive Vice
President and Chief Legal Officer.
Pending final review, the Company estimates that it suffered a net
loss of approximately $10.7 million for the 13 weeks ended June
28, 2008, compared to a net loss of approximately $1.4 million for
the 13 weeks ended June 30, 2007, and that the Company suffered a
net loss of approximately $4.7 million for the 26 weeks ended June
28, 2008, compared to a net loss of $4.0 million for the 26 weeks
ended June 28, 2007.
The increase in the Company's net loss for the 13 and 26 week
periods ended June 28, 2008, was due primarily to an impairment of
$8.2 million relating to marketable securities, an impairment of
intangible assets for the Company's TCBY brands of $2.1 million,
decreased contribution from our business units of $1.6 million,
and increased general and administrative expenses of $100,000.
Out-of-Court Exchange Offer
As reported by the Troubled Company Reporter, on June 6, 2008,
Mrs. Fields announced a plan of reorganization through an out-of-
court exchange offer a "pre-packaged" Chapter 11 filing and a
plan of reorganization confirmed under the United States
Bankruptcy Code, as amended. Mrs. Fields and certain affiliates
entered into a binding Restructuring Term Sheet dated June 2,
2008, with certain unaffiliated investors holding Mrs. Fields' 9%
and 11˝% Senior Secured Notes due 2011 for an offer by Mrs. Fields
to exchange the Notes for cash, new debt and new equity. On June
3, 2008, certain members of a committee of unaffiliated investors
holding Notes, including those investors who are parties to the
Term Sheet, entered into support agreements. The Support
Agreements provide that the signatories will support the
Restructuring as set forth in the Term Sheet and that Mrs. Fields
and the members of the Committee will negotiate and enter into
definitive documentation regarding the Exchange Offer in order to
permit to commence by June 30, 2008.
The TCR reported that on July 7, 2008, the Exchange Offer was not
commenced on June 30, 2008, as originally anticipated, but rather
was expected to commence "within the next few weeks." Mrs. Fields
that although members of the Committee and their advisors continue
to work together to complete the definitive documentation needed
to proceed with the Exchange Offer, the members of the Committee,
through their counsel, advised the Company that they were
reserving their right to terminate their obligations under the
Term Sheet by reason of the Exchange Offer not having been
commenced on June 30, 2008.
As of July 11, Mrs. Fields and the Committee reached an agreement
to amend the Term Sheet. The Term Sheet Amendment, among other
things, reconfirms the parties' support for the previously
announced Restructuring and establishes July 21, 2008, as the
target date for commencing the Exchange Offer, subject to an
automatic extension until July 31, 2008, if the parties are
working in good faith to implement the Restructuring. The Term
Sheet Amendment also establishes additional milestones that would
need to be met by Mrs. Fields for the Committee to continue to be
obligated to support the Restructuring.
Restructuring Term Sheet
The Amendment to Restructuring Term Sheet, dated July 11, 2008,
provides, among others, that -- if required -- Mrs. Fields must
commence a prepackaged bankruptcy case by September 15, 2008; have
a plan confirmed by the bankruptcy court within 90 days of the
Petition Date; and have a confirmed plan declared effective within
120 days of the Petition Date. The original term sheet provides
that, if required, Mrs. Fields must file for bankruptcy by August
15.
Blackstone Advisory Services L.P., and Skadden, Arps, Slate,
Meagher & Flom, LLP, have been brought on board to advise the
Company. CRG Partners has been retained as the Company's
turnaround consultant.
Mrs. Fields has been required to engage KPMG LLP to conduct a
review of tax issues related to the corporate structure of the
Company as a result of the Restructuring, and Financial Balloting
Group LLC as information and exchange agent in connection with the
Restructuring.
Akin Gump Strauss Hauer & Feld LLP and William P. Kuehn,
principal, and his team at CLEO Consulting Partners have been
retained as advisors to Mrs. Fields' Noteholders Group.
The Counterparties to the July 11 Restructuring Term Sheet, as
amended, are:
-- PLAINFIELD SPECIAL SITUATIONS MASTER FUND LIMITED
-- GSCP (NJ), LP, in its capacity as Collateral Manager
-- GSC PARTNERS CDO FUND II, LIMITED
-- RIVER RUN MANAGEMENT, L.L.C.
-- H PARTNERS MANAGEMENT LLC
-- CARLYLE STRATEGIC PARTNERS, L.P.
A full-text copy of the Term Sheet, as amended, is available at no
charge at:
http://ResearchArchives.com/t/s?30cc
A full-text copy of the original Term Sheet is available at no
charge at:
http://ResearchArchives.com/t/s?30cd
About Mrs. Fields Famous Brands
Headquartered in Salt Lake City, Utah, Mrs. Fields Famous Brands,
LLC -- http://www.mrsfields.com/-- develops and franchises retail
stores which sell core products including cookies, brownies and
frozen yogurt through three specialty branded concepts: Mrs.
Fields, Great American Cookie company. The company has more than
1,200 franchised and licensed concept locations worldwide.
On August 7, 2007, Mrs. Fields sold substantially all of the
assets of its wholly owned subsidiaries Pretzel Time Franchising,
LLC and Pretzelmaker Franchising, LLC to NexCen Brands, Inc.,
divesting the Company of roughly 376 franchised or licensed units
worldwide and approximately $6.4 million in revenue. On
January 29, 2008, Mrs. Fields sold substantially all of the assets
of its wholly owned subsidiary Great American Cookie Company to
NexCen, divesting the Company of roughly 300 franchised units
primarily located in the United States and roughly $26 million in
revenue.
At March 29, 2008, the company's balance sheet showed total assets
of $147.2 million and total liabilities of $247.2 million,
resulting in a total shareholders' deficit of approximately
$100.0 million.
Going Concern Doubt
As reported in the Troubled company Reporter on April 18, 2008,
KPMG LLP raised substantial doubt about the ability of Mrs. Fields
Famous Brands LLC to continue as a going concern after it audited
the company's financial statements for the year ended
Dec. 29, 2007. The auditing firm reported that the company has
suffered recurring net losses and negative cash flows from
operations and has a net member's deficit at Dec. 29, 2007.
NANOGEN INC: Posts $5.1 Million Net Loss in 2008 Second Quarter
---------------------------------------------------------------
Nanogen Inc. reported a net loss of $5.1 million for the second
quarter ended June 30, 2008, compared with a net loss of
$14.6 million in the same period last year.
Total revenues for the second quarter of 2008 grew 21% to
$12.9 million, as compared to $10.3 million reported for the
second quarter of 2007. Product revenues for the second quarter
of 2008 were approximately $8.0 million, up 51% over product
revenues of $5.3 million recorded in the second quarter of 2007.
Costs and expenses, including cost of sales, decreased in the
second quarter of 2008 by almost 20% to $19.3 million from
$24.1 million in the second quarter of 2007. The current quarter
included $1.1 million in charges directly related to the decision
to consolidate point of care manufacturing operations into one
location with no comparable charge in the prior quarter.
For the quarter ended June 30, 2008, Nanogen's Modified EBITDA was
negative $2.8 million for the second quarter of 2008, an
improvement of 59% as compared to negative $6.9 million in the
second quarter of 2007. The second quarter of 2008 loss from
operations improved by 54% to $6.3 million as compared to a loss
of $13.8 million in the second quarter in 2007.
"Our operating performance in the second quarter was greatly
improved, continuing the positive trend we have shown each quarter
since our restructuring," said Howard C. Birndorf, Nanogen's
chairman of the board and chief executive officer. "We are
clearly realizing the anticipated benefits of the significant
business restructuring we initiated last year."
Default on Convertible Debt/May File for Bankruptcy
The company has not made interest payment under its convertible
notes for the quarter ended June 30, 2008, which constitutes a
default under the terms of these convertible notes. Unless such
default is waived, holders of the company's convertible debt have
the right to call the notes immediately, and the company will be
required to pay in cash all principal and accrued interests due
under the notes, plus certain late charges and default premium.
The default will also increase the interest rate of the
convertible notes to 12% per annum. In addition, the company has
granted holders of certain portion of its convertible notes a
first priority security interest in substantially all of its
assets and stock of its subsidiaries to secure its obligations
under the notes. Upon the occurrence of an event of default, the
holders would have the right to foreclose upon and sell, or
otherwise transfer, the collateral subject to their security
interest.
There is no guarantee that holders will waive default under the
convertible notes, and if such default is not waived and the
noteholders call the notes, the company said it will not have the
capital required to repay the notes, which could force it to file
for bankruptcy protection if holders were to call its notes.
Going Concern Doubt
Ernst & Young LLP, in San Diego, expressed substantial doubt about
Nanogen Inc.'s ability to continue as a going concern after
auditing the company's consolidated financial statements for the
year ended Dec. 31, 2007. The auditing firm pointed to the
company's recurring operating losses, working capital deficit and
accumulated deficit of $400.6 million as of Dec. 31, 2007.
Based on the company's operating plan, its existing working
capital is not sufficient to meet the cash requirements to fund
planned operating expenses, capital expenditures, and working
capital requirements through Dec. 31, 2008, without additional
sources of cash or the deferral, reduction or elimination of
significant planned expenditures.
Balance Sheet
At June 30, 2008, the company's consolidated balance sheet showed
$94.9 million in total assets, $79.9 million in total liabilities,
and $15.0 million in total stockholders' equity.
The company's consolidated balance sheet at June 30, 2008, also
showed strained liquidity with $25.1 million in total current
assets available to pay $50.6 million in total current
liabilities.
Full-text copies of the company's consolidated financial
statements for the quarter ended June 30, 2008, are available for
free at http://researcharchives.com/t/s?30c9
About Nanogen Inc.
Headquartered in in San Diego, Nanogen Inc. (Nasdaq: NGEN) --
http://www.nanogen.com/-- develops diagnostic products that
enable physicians to deliver improved patient care. Its products
allow faster and easier diagnosis, treatment and monitoring of
cardiovascular disease and a range of infectious diseases. The
company˙s products include molecular diagnostic kits and reagents,
and kits for rapid point-of-care testing. Nanogen has pioneered
the development of biomarkers, molecular biology technologies and
nanotechnology to bring better results to diagnostics and
healthcare.
NEXCEN BRANDS: Expects to Strike Deal with Lender Next Week
-----------------------------------------------------------
NexCen Brands, Inc., certain of its subsidiaries, and BTMU Capital
Corporation, its lender, entered into a letter agreement that
amends the July 17, 2008 letter agreement among them by extending
the forbearance period to August 15, 2008. The Company and BTMUCC
continue to work on finalizing agreements to effect a
comprehensive restructuring of the Company's borrowing facility,
and the Company expects the agreements to be completed next week.
Reuters' Emily Chasan says the cash pressure could make NexCen
Brands seek bankruptcy protection as early as Friday. Ms. Chasan
says a spokesman for BTMUCC did not return a call for comment; and
NexCen spokesman David Roady declined to comment.
On June 20, 2008, NexCen Brands disclosed that the Company, NexCen
Holding Corporation as Issuer, and other subsidiaries had entered
into a letter agreement with BTMUCC, which originally provided the
Company, until July 17, 2008, with limited forbearance and near-
term access to additional cash.
On July 17, Company and BTMUCC extended the original forbearance
period through August 8.
Since June 20, the Company and BTMUCC have remained in active
discussions.
The July 17 Restated Letter Agreement includes a number of
modifications that where provided for in the Original Agreement,
as well as additional modifications that will enhance the
Company's access to cash to fund operations of the Issuer and its
subsidiaries.
NexCen Brands, NexCen Holding and its subsidiaries were permitted
to withdraw certain additional amounts that remain in the lockbox
for these purposes (in priority order):
-- Certain of the Company's subsidiaries will be paid
approximately $1.1 million for management fees accrued since May
31, 2008 to reimburse the subsidiaries for operating expenses
associated with managing the Company's brands and franchisees;
-- BTMUCC will be paid approximately $2.6 million for accrued
interest on all outstanding notes;
-- BTMUCC's professional advisors will be paid approximately
$418,000 for services rendered in connection with the
restructuring;
-- The Issuer will receive approximately $4.6 million for use
by the Company and certain of its subsidiaries for accrued
accounts payable, accrued expenses and working capital; and
-- Neither the Issuer nor any of its subsidiaries will be
required to make any payments of principal with respect to any
outstanding notes with respect to scheduled payments in July 2008.
Approximately $152,000 currently in an Issuer subsidiary's bank
account will be released to the Issuer for use by the Company and
certain of its subsidiaries for accrued accounts payable, accrued
expenses and working capital. Approximately $552,000 currently in
a lockbox account will be retained in the account and set aside
for the payment of fees to BTMUCC's professional advisors.
Certain of the Company's subsidiaries agreed to collect an
alternate management fee for managing the Company's brands and
franchisees effective on and after May 31, 2008.
In the Restated Letter Agreement, BTMUCC continues to allege that
certain Defaults and Events of Default have occurred. NexCen
Holding and its subsidiaries continue to deny that the defaults
have occurred.
A full-text copy of the Letter Agreement is available at no charge
at:
http://ResearchArchives.com/t/s?30d0
Reuters notes that NexCen spent more than $100 million in the last
two years to acquire the Great American Cookies, PretzelTime and
Pretzelmaker food service brands from Mrs. Fields.
NASDAQ Delisting
NexCen Brands has advised the Securities and Exchange Commission
that it would not file its Quarterly Report on Form 10-Q for the
period ended June 30, 2008, until such time that it had filed an
amendment to its Annual Report on Form 10-K for the year ended
December 31, 2007, and its Quarterly Report on Form 10-Q for the
period ended March 31, 2008.
On August 11, the Company received a Nasdaq Staff Determination
letter, notifying the Company that it has not complied with Nasdaq
Marketplace Rule 4310(c)(14) due to its failure to file its
Quarterly Report on Form 10-Q for the period ended June 30, 2008.
This matter serves as an additional basis for delisting the
Company's common stock from The Nasdaq Stock Market. The Company
previously disclosed that it received a Nasdaq Staff Determination
letter indicating that the Company's common stock is subject to
delisting pursuant to Nasdaq Marketplace Rule 4310(c)(14) due to
its failure to file its Quarterly Report on Form 10-Q for the
period ended March 31, 2008.
Following the receipt of the initial letter, the Company requested
and was granted a hearing before the Nasdaq Listing Qualifications
Panel. At the hearing, held on July 10, 2008, the Company
presented its plan to regain compliance with Nasdaq's filing
requirements. The Company's common stock will remain listed on
The Nasdaq Stock Market pending a listing determination by the
Panel. The Company cannot provide any assurances that the Panel
will grant the Company's request for continued listing.
Kenneth J. Hall, NexCen's Executive Vice President, Chief
Financial Officer and Treasurer, said, "[t]he Company did not
initiate its current brand management and franchising business
until the second half of 2006. Of the nine brands we owned and
operated as of June 30, 2008, we owned only four -- The Athlete's
Foot, Bill Blass, Maggie Moo's and Marble Slab -- for the entire
second quarter of 2007. Our results for June 30, 2007 include
Waverly for two months. We did not own Pretzel Time, Pretzelmaker,
Shoebox New York, or Great American Cookie in the second quarter
of 2007. As a result, our revenues, expenses, assets and
liabilities for the second quarter of 2008 differ substantially
from the second quarter of 2007."
About NexCen Brands
NexCen Brands Inc. (NASDAQ: NEXC) -- http://www.nexcenbrands.com/
-- acquires and manages global brands, generating revenue through
licensing and franchising. We currently own and license the Bill
Blass and Waverly brands, as well as seven franchised brands. Two
franchised brands -- The Athlete's Foot and Shoebox New York --
sell retail footwear and accessories. Five are quick-service
restaurants -- Marble Slab Creamery, MaggieMoo's, Pretzel Time,
Pretzelmaker, and Great American Cookies.
The company licenses and franchises its brands to a network of
leading retailers, manufacturers and franchisees that generate
$1.3 billion in retail sales in more than 50 countries around the
world. The franchisees operate approximately 1,900 franchised
stores. Franchisee support and training is provided at NexCen
University, a state-of-the-art facility located in Atlanta.
* * *
A. Substantial Doubt
As reported by the Troubled company Reporter on May 21, 2008,
based on information that is now known, the company believes that
there is substantial doubt about its ability to continue as a
going concern, and pending completion of an independent review,
that this substantial doubt also may have existed at the time the
company filed its 2007 10-K. The audit committee of the company's
Board of Directors has retained independent counsel to conduct an
independent review of the situation.
The company has concluded that its 2007 financial statements
should no longer be relied upon and no reliance should be placed
upon KPMG's audit report dated March 20, 2008, or its report dated
March 20, 2008 on the effectiveness of internal control over
financial reporting as of Dec. 31, 2007, as contained in the
company's 2007 10-K.
B. Strategic Alternative Review
NexCen also announced that it is actively exploring all strategic
alternatives to enhance its liquidity, including potential capital
market transactions, the possible sale of one or more of its
businesses, and discussions with the company's lender. In
addition, the company will take immediate steps to reduce
operating expenses.
PAPPAS TELECASTING: Court Directs Appointment of Ch. 11 Trustee
---------------------------------------------------------------
The Hon. Peter J. Walsh of the United States Bankruptcy Court for
the District of Delaware directed the United States Trustee for
Region 3 to appoint a Chapter 11 trustee to oversee the cases of
Pappas Telecasting Inc. and its debtor-affiliates.
As reported in the Troubled Company Reporter on May 28, 2008,
Fortress Credit Corp., as administrative agent to the lenders
under a prepetition credit agreement with the Debtors, asked the
Court to appoint a Chapter 11 trustee in the Debtors' bankruptcy
cases.
Fortress alleged that the Debtors' chief executive officer Harry
J. Pappas used the Chapter 11 proceeding in attempt to:
-- preserve his equity interest in the Debtors;
-- convert the lender's cash, and loan it to the Debtors as
junior debtor-in-possession financing; and
-- avoid exposure on a $30 million personal guaranty at the
expense of his fiduciary obligations to the constituencies
of these cases.
As reported in the Troubled Company Reporter on May 19, 2008,
Mr. Pappas and his wife Stella was the subject of a petition for
Chapter 7 liquidation filed by creditors before the Court. The
petitioning Creditors -- including Fortress Credit Opportunites I
LP, Fortress Credit Opportunites II LP, Ableco Finance LLC and
Silver Oak Capital -- asked the Court, among other things, to
limit Mr. Pappas' use of funds.
John H. Knight, Esq., at Richards Layton & Finger, P.A., in
Wilmington, Delaware, said lenders who hold majority interest in
the Debtor, have lost confidence in Mr. Pappas. Mr. Pappas has
thrown up roadblock after roadblock to impair the lenders' ability
to sell their collateral, Mr. Knight notes.
As long as Mr. Pappas remains in control of the Debtors, Fortress
will not authorize the Debtors to use its cash collateral, Mr.
Knight related.
According to Fortress, at Mr. Pappas' direction, the Debtors
borrowed $284 million -- $30 million of which was guaranteed by
Mr. Pappas -- under a prepetition credit agreement dated March 1,
2006, as amended, on a promise that he would sell several stations
to repay $100 million of the loan principal and dispose of more
stations to settle the remaining debt.
The Debtors are currently in default under the credit agreement
agreement, Fortress said. The Debtors' current debt obligations
is $303,574,665 plus additional accrued and unpaid interest.
Fortress said that the appointment of a Chapter 11 trustee is
the best alternative to preserve the value of the estate. The
Chapter 11 trustee is expected to undertake an expeditious sale of
the Debtors' assets for the benefit of creditors.
Michael Luskin, Esq., at Luskin, Stern Eisler LLP in New York,
represents Mr. Pappas and his wife.
About Pappas Telecasting
Fresno, California-based Pappas Telecasting, Inc., aka KMPH, aka
KMPH-TV, and aka KMPH Fox 26 -- http://www.pappastv.com/-- and
its affiliates are broadcasting companies. Founded in 1971, their
stations reach over 15% of all U.S. households and over 32% of
Hispanic households.
Pappas and 21 affiliates filed chapter 11 petition on May 10, 2008
(Bankr. D. Del. Case No. 08-10915 through 08-10936). Laura Davis
Jones, Esq., and James E. O'Neill, Esq., at Pachulski Stang Ziehl
& Jones, LLP represent the Debtors in their restructuring efforts.
The Debtors selected Administar Services Group LLC as claims and
noticing agent. The U.S. Trustee for Region 3 appointed seven
creditors to serve on an Official Committee of Unsecured
Creditors. As of March 1, 2008, the Debtors listed total assets
of $459,643,677 and total debts of $536,912,788.
PAPPAS TELECASTING: Wants Until February 5, 2009 to File Plan
-------------------------------------------------------------
Pappas Telecasting Inc. and its debtor-affiliates ask the United
States Bankruptcy Court for the District of Delaware to extend
their exclusive periods to:
a) file a Chapter 11 plan until Feb. 5, 2009, and
b) solicit acceptances of that plan until April 3, 2009.
A hearing is scheduled for Aug. 27, 2008, at 2:00 p.m., to
consider the motion. Objections, if any, are due Aug. 20, 2008,
at 4:00 p.m.
The Debtors say that the appointed Chapter 11 Trustee will
need sufficient time to get their business and sale process to
move forward. The Debtors say that the development of any plan
now would not serve the best interests of the Debtors and their
creditors. Furthermore, the Court should not allow the Trustee to
formulate any plan, the Debtors assert.
James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP,
says the size and complexity of the Debtors' cases justify the
extension of the exclusive periods. As of March 1, 2008, the
Debtors listed total assets of $459,643,677 and total debts of
$536,912,788.
The Debtors' current exclusive rights to file a plan expires on
Sept. 7, 2008.
About Pappas Telecasting
Fresno, California-based Pappas Telecasting, Inc., aka KMPH, aka
KMPH-TV, and aka KMPH Fox 26 -- http://www.pappastv.com/-- and
its affiliates are broadcasting companies. Founded in 1971, their
stations reach over 15% of all U.S. households and over 32% of
Hispanic households.
Pappas and 21 affiliates filed chapter 11 petition on May 10, 2008
(Bankr. D. Del. Case No. 08-10915 through 08-10936). Laura Davis
Jones, Esq., and James E. O'Neill, Esq., at Pachulski Stang Ziehl
& Jones, LLP represent the Debtors in their restructuring efforts.
The Debtors selected Administar Services Group LLC as claims and
noticing agent. The U.S. Trustee for Region 3 appointed seven
creditors to serve on an Official Committee of Unsecured
Creditors. As of March 1, 2008, the Debtors listed total assets
of $459,643,677 and total debts of $536,912,788.
PAPPAS TELECASTING: Court Directs Appointment of Ch. 11 Trustee
---------------------------------------------------------------
The Hon. Peter J. Walsh of the United States Bankruptcy Court for
the District of Delaware directed the United States Trustee for
Region 3 to appoint a Chapter 11 trustee to oversee the cases of
Pappas Telecasting Inc. and its debtor-affiliates.
As reported in the Troubled Company Reporter on May 28, 2008,
Fortress Credit Corp., as administrative agent to the lenders
under a prepetition credit agreement with the Debtors, asked the
Court to appoint a Chapter 11 trustee in the Debtors' bankruptcy
cases.
Fortress alleged that the Debtors' chief executive officer Harry
J. Pappas used the Chapter 11 proceeding in attempt to:
-- preserve his equity interest in the Debtors;
-- convert the lender's cash, and loan it to the Debtors as
junior debtor-in-possession financing; and
-- avoid exposure on a $30 million personal guaranty at the
expense of his fiduciary obligations to the constituencies
of these cases.
As reported in the Troubled Company Reporter on May 19, 2008,
Mr. Pappas and his wife Stella was the subject of a petition for
Chapter 7 liquidation filed by creditors before the Court. The
petitioning Creditors -- including Fortress Credit Opportunites I
LP, Fortress Credit Opportunites II LP, Ableco Finance LLC and
Silver Oak Capital -- asked the Court, among other things, to
limit Mr. Pappas' use of funds.
John H. Knight, Esq., at Richards Layton & Finger, P.A., in
Wilmington, Delaware, said lenders who hold majority interest in
the Debtor, have lost confidence in Mr. Pappas. Mr. Pappas has
thrown up roadblock after roadblock to impair the lenders' ability
to sell their collateral, Mr. Knight notes.
As long as Mr. Pappas remains in control of the Debtors, Fortress
will not authorize the Debtors to use its cash collateral, Mr.
Knight related.
According to Fortress, at Mr. Pappas' direction, the Debtors
borrowed $284 million -- $30 million of which was guaranteed by
Mr. Pappas -- under a prepetition credit agreement dated March 1,
2006, as amended, on a promise that he would sell several stations
to repay $100 million of the loan principal and dispose of more
stations to settle the remaining debt.
The Debtors are currently in default under the credit agreement
agreement, Fortress said. The Debtors' current debt obligations
is $303,574,665 plus additional accrued and unpaid interest.
Fortress said that the appointment of a Chapter 11 trustee is
the best alternative to preserve the value of the estate. The
Chapter 11 trustee is expected to undertake an expeditious sale of
the Debtors' assets for the benefit of creditors.
Michael Luskin, Esq., at Luskin, Stern Eisler LLP in New York,
represents Mr. Pappas and his wife.
About Pappas Telecasting
Fresno, California-based Pappas Telecasting, Inc., aka KMPH, aka
KMPH-TV, and aka KMPH Fox 26 -- http://www.pappastv.com/-- and
its affiliates are broadcasting companies. Founded in 1971, their
stations reach over 15% of all U.S. households and over 32% of
Hispanic households.
Pappas and 21 affiliates filed chapter 11 petition on May 10, 2008
(Bankr. D. Del. Case No. 08-10915 through 08-10936). Laura Davis
Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP represents the
Debtors in their restructuring efforts. The Debtors selected
Administar Services Group LLC as claims and noticing agent. The
U.S. Trustee for Region 3 appointed seven creditors to serve on
an Official Committee of Unsecured Creditors. The Debtors listed
$100 million to $500 million in assets and debts when they filed
for bankruptcy.
PERFORMANCE TRANS: Ch.7 Trustee May Employ Phillips Lytle
---------------------------------------------------------
Mark S. Wallach, the trustee appointed under Performance
Transportation, Inc., et al.'s, Chapter 7 cases, sought and
obtained the U.S. Bankruptcy Court for the Western District of New
York's authority to employ Phillips Lytle LLP as special counsel
for the trust, nunc pro tunc to the Conversion Date.
The Chapter 7 Trustee has selected Phillips Lytle because of its
ability to act expeditiously under the circumstances of the
Chapter 7 cases and itss background knowledge which will be
helpful in the disposition of assets in the Chapter 7 cases based
upon its experience.
Phillips Lytle will render services necessary to the disposition
of the Debtors' physical assets including:
a. consulting with the Chapter 7 Trustee concerning the
administration of the Chapter 7 cases;
b. promptly organizing a legal process to dispose of the
Debtors' physical assets including tractors, trailers,
other equipment inventory and real property in a manner
maximizing creditor recoveries and minimize liabilities;
c. taking actions necessary or useful to aid the Chapter 7
Trustee in preserving and protecting the physical assets of
the Debtors' estates, to prepare all necessary pleadings,
reports, applications, answers, orders, and other legal
documents;
d. representing the Chapter 7 Trustee's interests in any
hearings before the Court with regard to the scope of
Phillips Lytle's engagement as special counsel;
e. reviwieng all applications, motions, pleadings, orders or
other matters filed in the Debtors' Bankruptcy cases
related to the scope of Phillips Lytle's engagement as
special counsel; and
f. monitoring actions taken, or proposed to be taken, by the
Chapter 7 Trustee in connection with the disposition or
sale of property of the estates, the assumption or
rejection of executory contracts, unexpired leases, or
lease restructurings.
Phillips Lytle will be compensated at its customary hourly rates:
Professional Hourly Rate
------------ -----------
Partners/shareholders $250 to $475
Associates $155 to $355
Paralegals $100 to $165
Law clerks $70 to $135
Phillips Lytle will also seek reimbursement of all disbursements
and all actual and necessary expenses incurred in performing
services to the creditor committee and other committees, subject
to Court approval.
William J. Brown, Esq., a partner at Phillips Lytle, assures the
Court his firm is a "disinterested person" as defined in Section
101(14) of the Bankruptcy Code and as required by Section 327(a)
of the Bankruptcy Code.
About Performance Transportation
Performance Transportation Services Inc. is the second largest
transporter of new automobiles, sport-utility vehicles and light
trucks in North America, and operates under three key
transportation business lines including: E. and L. Transport,
Hadley Auto Transport and Leaseway Motorcar Transport.
The company and 13 of its affiliates previously filed for Chapter
11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06-
00107). The U.S. Bankruptcy Court for the Western District of New
York confirmed the Debtors' plan on Dec. 21, 2006, and that plan
became effective on Jan. 29, 2007. Garry M. Graber, Esq. of
Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day
represented the Debtors in their restructuring efforts. When the
Debtor filed for protection from their creditors it reported more
than $100,000,000 in total assets. It also disclosed owing more
than $100,000,000 to at most 10,000 creditors, including $708,679
to Broadspire and $282,949 to General Motors of Canada Limited.
The company and its debtor-affiliates filed their second Chapter
11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746
thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents
the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve
as the Debtors' local counsel. The Debtors' claims and balloting
agent is Kutzman Carson Consultants LLC. (Performance
Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Services
Inc.; http://bankrupt.com/newsstand/or 215/945-7000).
As reported in the Troubled Company Reporter on July 18, 2008,
the Court converted the Debtors' Chapter 11 cases to cases under
Chapter 7 of the Bankruptcy Code, effective as of July 14, 2008.
Mark S. Wallach was appointed as the Chapter 7 trustee.
PIERRE FOODS: Gets Final Approval for $35MM DIP Credit Facility
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave Pierre
Foods Inc. and its debtor-affiliates final authority to access
$35,000,000 in debtor-in-possession, including a $25,000,000
letter of credit, from OCM POF IV PF Ltd., administrative and
collateral agent and lead arranger in a DIP fund credit agreement.
The Troubled Company Reporter said on July 18, 2008, that the
Court authorized the Debtor to obtain, on an interim basis, up to
$29,000,000 in DIP financing under a revolving credit facility
from a consortium of financial institutions led by OCM POF.
The proceeds of the DIP facility will be used to:
-- pay interest, fees, and expenses under the DIP facility;
-- support the Debtors' working capital needs and for general
corporate purposes;
-- satisfy certain of the adequate protection obligations
required by the DIP orders; and
-- make any other payments permitted to be made by the
Bankruptcy Code.
The Court allowed the Debtors to use the lenders' cash collateral
under a proposed budget. A full-text copy of the proposed budget
is available for free at:
http://ResearchArchives.com/t/s?2f91
On July 15, 2008, several prepetition lenders, which comprised of
Antares Capital Corporation, General Electric Capital Corporation,
Morgan Stanley Investment Management, Van Kampen Asset Management,
and Z Capital Finance LLC, opposed request to obtain DIP financing
and use of cash, saying that there is substantial risk that their
interest will not be adequately protected. The prepetition
lenders requested that their reasonable fees and expenses be
reimbursed by the Debtors.
Under the DIP agreement, advances under the DIP facility will bear
interest at a per annum rate equal to LIBOR Rate plus 550 basis
points.
The DIP liens are subject to a carve-out for payments of (i)
unpaid fees of the clerk of the bankruptcy court and the U.S.
Trustee, and (ii) fees and expenses of professionals retained by
the Debtors or the committee. There is a $2,500,000 carve-out for
payments of professional advisors employed by the Debtors or the
committee.
The Debtors will pay fees including a $10,000 administrative agent
fee and $150,000 work fee.
To secure the Debtors' DIP obligations, OCM POF will be granted,
among other things, a superprioprity administrative claim status.
The DIP agreement contains appropriate and customary events of
default.
Indebtedness
As of May 31, 2008, the Debtors have a $367,000,000 in outstanding
debt in the aggregate. In June 2004, the Debtors borrowed
$266,000,000 in loan to finance the acquisition of Pierre Foods
Inc. by Madison Dearborn Partners, and to pay certain existing
indebtedness. The loans incur interest rate at 9%.
As of the Debtors' bankruptcy filing, about $223,000,000 remained
outstanding under the term loan, and $14,000,000 has been drawn on
the revolving loan.
In addition, the Debtors have approximately $6,400,000 in
outstanding letters of credit issued under to their senior secured
credit facility. Under the prepetition credit facility, the fund
are available for working capital requirements and other general
corporate purposes.
The indebtedness is secured by the prepetition collateral,
including cash collateral.
A full-text copy of the superpriority priming debtor-in-possession
credit agreement is available for free at:
http://ResearchArchives.com/t/s?2f92
About Pierre Foods
Headquartered in Cincinnati, Ohio, Pierre Foods Inc. --
http://www.pierrefoods.com-- manufactures and sells ready-to-cook
and pre-cook products. The company and and 13 of its affiliates
filed for Chapter 11 protection on July 15, 2008 (Bankr. D. Del.
Lead Case No. 08-11469). Paul Noble Heath, Esq., at Richards,
Layton & Finger P.A., represents the Debtors in their
restructuring efforts. The Debtors selected Kurtzman Carson
Consultants LLC as their claims agent. An Official Committee of
Unsecured Creditors has been appointed to serve in this case.
When the Debtors filed for protection against their creditors,
they listed estimated assets between $500 million and $1 billion,
and estimated debts between $100 million and $500 million.
PITTSFIELD WEAVING: Disclosure Statement Hearing Set for Aug. 19
----------------------------------------------------------------
The Hon. Mark W. Vaughn of the U.S. Bankruptcy Court for the
District of New Hampshire ordered the continuation of a hearing on
Pittsfield Weaving Company's third amended disclosure statement to
Aug. 19, 2008, at 1:00 p.m.
The Debtor's third amended disclosure statement explained its
third amended chapter 11 plan filed on July 1, 2008.
Plan Overview
Under the Debtor's third amended plan, about $625,000 in
administrative and priority wage claims will be converted to
equity to give the Debtors a chance to pay postpetition tax and
trade claims. Since neither administrative creditors nor any
other creditor except for CapitalSource Finance LLC would receive
money from a liquidation, the Debtor urges all unsecured creditors
to vote in favor of the third amended plan. The Debtors explained
that the provisions of the third amended plan gives unsecured
creditors far more than any other alternative.
The key element of the plan is the $1,000,000 purchase order
funding agreement to be entered into with New Hampshire Community
Loan Fund, which give the Debtors two important keys. It provides
the working capital needed to unlock the checkpoint relationship
for the benefit of all creditors. It also lets the Debtor unwind
its relationship with CapitalSource over time by (a) letting the
Debtor grow its Smart Tag accounts receivable, and (b) returning
inventory to CapitalSource while maintaining the traditional label
business financed by CapitalSource. To call the purchase order
funding agreement essential would be an understatement.
Although the Debtor appears to be administratively insolvent on a
cash flow basis at the present time for a number of reasons,
including the unexpected loss of West Point Stevens which had been
its largest customer and $300,000 in payments made to
CapitalSource, the Debtor has the management, staff, manufacturing
capacity and customers needed to reorganize. Creditors should be
aware of the fact that the plan distinctly favors CapitalSource in
a number of ways, including, among others, payment of the secured
claim held by CapitalSource in full, with interest, over varying
periods of time based on the collateral securing the claim.
The Committee recognizes that the secured claims held by
CapitalSource give it the ability to liquidate the Debtor, which
would damage Meredith Village Savings Bank and leave unsecured
creditors in all classes without any source of repayment. The
Debtor expects to pay less favored creditors about 25% of their
allowed claims over the term of the plan, but only from
distributable funds and after CapitalSource has been paid 35% of
any allowed general unsecured claim which it holds. Subordinate
creditors may be paid up to 12.5% of their allowed claim from
distributable funds, but only after less favored creditors have
been paid 50% of the dividends due them under the plan. The
Committee choses to join the Debtor as a plan proponent.
Classes and Treatment Summary
A. Class 1 or the IRS secured claim will be paid in full, with
interest at the statutory rate, in 60 consecutive installments of
principal and interest, at the amount of $3,359. The Debtor began
making monthly payments following July 1, 2008.
B. Class 2 or the CapitalSource secured claims includes the
impaired, disputed claims asserted by CapitalSource to the extent
qualifying and allowed as secured claims with any deficiency or
balance being treated as a general unsecured claim. The debtor
estimates the allowed secured claims in this class is between
$3,000,000 and $4,000,000, exclusive of any offsets or recoupments
held by the Debtor.
C. Class 3 or the MVCB secured claims include the undisputed
claims of $296,734 on account of a loan made directly to the
Debtor and $1,536,689 on account of a loan made to Windwalker and
guaranteed by the Debtor, which will be allowed on the effective
date. The Debtor expects that the MVSB-Debtor loan will be paid
in full from the net proceeds of a sale of the Fayette Street
Premises or the conveyance of the premises to MVSB by quitclaim
deed. The unpaid balance will become less favored and will be
paid about 25%. On the effective date, the MVSB-Windwalker loan
claims will be allowed in full as a secured claim or less favored
claim, as appropriate.
D. Class 4 or the equipment specific secured claims include the
claims asserted by Marlin Leasing, Bank of America, U.S. Bancorp
Funding and other creditors in the amount of $86,206. Under the
plan, other minior secured creditors will be allowed secured
claims in an amount equal to the judicial value of their
collateral. These claims will be paid in 84 consecutive equal
monthly installments of principal and interest beginning on the
30th day following the effective date.
E. Class 5 or the superpriority claim are held by New England
National, LLC, and the State of New Hampshire. The claim held by
the state will be allowed in accordance with a stipulation among
the parties dated April 20, 2007. The claim held by NEN will be
paid in full on the effective date, including interest and other
fees. Under the plan, the Debtor will issue to NEN a fractional
portion of the 60% of the membership interest reserved for
converting creditors.
F. Class 6 or the administrative expense claims include: (a) the
U.S. Trustee quarterly fees of $360,397 to be paid in full on the
effective date, (b) the claims held by the Debtor's counsel, Nixon
Peabody as special counsel of $32,000, and the Committee's counsel
in the amount of $66,216, and (c) those held by postpetition trade
creditors entitled to an administrative priority claim.
G. Class 7 or the priority wage claims of about $190,000 will be
converted to new shares. Any allowed claims that do not convert
to equity will be paid in full on the effective date unless the
allowed creditor should accept less favorable treatment.
H. Class 8 or priority tax claims exclude the administrative
expense claim held by the State Tax Authority.
I. Class 9 or the convenience claims include unsecured claims
without priority in amounts less than $500, which total $6,000 and
will be allowed on the effective date. Under the plan, the Debtor
will pay each creditor holding an allowed convenience claim a pro
rate or fractional share of $1,500.
J. Class 10 or general unsecured claims include CapitalSource's
non-priority unsecured claim and other unsecured creditors'
claims. The Debtor estimates the allowed amount of claims in this
class to be $0 if CapitalSource should be found to be a fully
secured creditor. The Debtor estimates the allowed amount of
claims to be $2,200,000 if the Court determines that the
CapitalSource collateral is worth only $2,000,000, and
CapitalSource prevails in the CapitalSource adversary proceeding.
This class will be paid in full, with interest over a period of
156 months beginning on the 3oth day following the effective date.
K. Class 11 or less favored claims include non-priority unsecured
creditors' claims. The Debtor estimates the claim in this class
to be about $2,035,000. Under the plan, the Debtor expects to pay
less favored creditors by executing a promissory note of 25% of
the total amount of claims, without interest, in 60 consecutive
monthly installments. No dividends will be paid to the creditors
agent for redistribution to less favored creditors until the 30th
day after the allowed general unsecured creditors have been paid
at least 35% of the dividends due them.
L. Class 12 or subordinate claims are held by Gilbert Bleckmann
and other non-priority unsecured creditors.
M. Class 13 or equity holders' claims will be canceled without the
payment of any dividend.
About Pittsfield Weaving
Based in Pittsfield, New Hampshire, Pittsfield Weaving Company --
http://www.pwcolabel.com/-- provides brand identification to the
apparel and soft goods industries, and manufactures woven and
printed labels and RFID/EADS solutions.
The company filed its chapter 11 protection on Sept. 20, 2006
(Bankr. D. N.H. Case No. 06-11214). William S. Gannon, Esq., at
William S. Gannon PLLC, represent the Debtor in its restructuring
efforts. Bruce A. Harwood, Esq., at Sheehan Phinney Bass + Green,
PA, serves as counsel to the Official Committee of Unsecured
Creditors. Pittsfield Weaving estimated its assets at between
$10 million and $50 million and debts a between $10 million and
$50 million when it filed for protection from its creditors.
PITTSFIELD WEAVING: Hearing on Case Dismissal Motion Set Aug. 20
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Hampshire
extended to August 20, 2008, the deadline to decide on the U.S.
Trustee's motion to dismiss the chapter 11 case of Pittsfield
Weaving Company or, in the alternative, convert the case to a
chapter 7 liquidation proceeding.
The Court held that related motions pending before it -- the
Debtor's motion for order authorizing the sale of certain
checkpoint purchase orders, which the Court must consider in
deciding the U.S. Trustee's motion -- prevent it from meeting the
time limit set forth in Section 1112(b)(3) of the U.S. Bankruptcy
Code. Section 1112(b)(3) requires the Court to decide a motion
brought under Section 1112(b) not later than 15 days after
commencement of the hearing.
U.S. Trustee's Dismissal Motion
Phoebe Morse, United States Trustee appointed by the Attorney
General for the Districts of New Hampshire, Massachusetts, Maine
and Rhode Island, told the Bankruptcy Court that despite the
Debtor's considerable efforts to reduce costs, its financial
situation is precarious and appears to be declining.
The U.S. Trustee related that the Debtor's schedules reflected
assets: real estate valued at $470,000, and personal property
valued at $102,310,376. The personal property figure consists
largely of the Debtor's intellectual property, issued and pending
patents, valued collectively in excess of $95,000,000. The Debtor
listed secured debts of $4,338,953; priority debts of $182,834;
and general unsecured debts of $1,167,402.
In the Debtor's last operating report, filed for the month ending
Feb. 29, 2008, reflects the Debtor had just $800 on hand. The
Debtor also reported the accrual of $481,690 in post petition
debt. Of this amount $175,508 was more than 90 days old.
According to the Debtor's statement of operations from Sept. 20,
2006, to Feb. 29, 2008, the Debtor had net income before other
income and charges of $1,080,120.
At a hearing on the Debtor's seventh motion to use cash collateral
on April 9, 2008, the Debtor's controller acknowledged that the
Debtor was behind with post petition taxes owed to the IRS in the
amount of $74,823 for the fourth quarter of 2007. The Debtor's
failure to timely pay taxes after the date of the order for relief
constitutes "cause" to dismiss the case or convert the chapter 11
case to chapter 7 under 11 Section 1112(b)(4)(I).
At the continued hearing on April 30, 2008, the Debtor's vice-
president acknowledged the company had failed to make the $25,000
adequate protection payment to CapSource, due in March, 2008, and
that it would be hard pressed to make the payment. The Court has
under advisement whether the Debtor will be permitted to use cash
collateral over the objection of CapSource.
The Debtor's March, 2008 operating report is overdue.
The Debtor currently owes $6500 in unpaid quarterly fees to the
United States Trustee. The failure to pay the quarterly fees
constitutes "cause" to either dismiss this case or convert the
Debtor's chapter 11 case to chapter 7 under Section 1112(b)(4)(K).
The Debtor's failure to make timely, postpetition adequate
protection payments to CapSource and to Meredith Village Savings
Bank, which has a mortgage on parcels of the Debtor's real estate,
has increased the accumulated indebtedness against the Debtor's
assets to the extent of any equity.
NH Revenue Department's Case Dismissal Motion
The Troubled Company Reporter said on Feb. 16, 2007, that the
State of New Hampshire Department of Revenue Administration asked
the Court to dismiss or in the alternative convert the Debtor's
chapter 11 case into a chapter 7 liquidation proceeding.
Representing the state, Kelly A. Ayotte, Esq., told the Court
that the Debtor has not paid $45,169 to William S. Gannon PLLC,
its counsel, in postpetition fees. Ms. Ayotte also revealed to
the
Court that the Debtor does not appear to be making payments for
real property taxes of $16,952 that it owes to the Town of
Pittsfield.
The State of New Hampshire maintained that the Debtor's case must
be dismissed or converted to a liquidation proceeding because
the Debtor failed to pay postpetition taxes, it has continuing
losses in its estate, and there is absence of reasonable
rehabilitation.
About Pittsfield Weaving
Based in Pittsfield, New Hampshire, Pittsfield Weaving Company --
http://www.pwcolabel.com/-- provides brand identification to the
apparel and soft goods industries, and manufactures woven and
printed labels and RFID/EADS solutions.
The company filed its chapter 11 protection on Sept. 20, 2006
(Bankr. D. N.H. Case No. 06-11214). William S. Gannon, Esq., at
William S. Gannon PLLC, represent the Debtor in its restructuring
efforts. Bruce A. Harwood, Esq., at Sheehan Phinney Bass + Green,
PA, serves as counsel to the Official Committee of Unsecured
Creditors. Pittsfield Weaving estimated its assets between $10
million and $50 million and debts between $10 million and $50
million when it filed for protection from its creditors.
PITTSFIELD WEAVING: Files 8th Motion to Use Cash Collateral
-----------------------------------------------------------
Pittsfield Weaving Company asked the U.S. Bankruptcy Court for the
District of New Hampshire for permission to use for the eighth
time its lenders' cash collateral.
The Debtor intends to pay the costs and expenses incurred in the
ordinary course of business during the period between July 1,
2008, and Sept. 30, 2008. CapitalSource Financial LLC, Meredith
Village Savings Bank, New England National, LLC and the State of
New Hampshire hold interest in the cash collateral.
A cash collateral budget shows that on Sept. 27, 2008, the
Debtor's accounts receivable will be $978,536 and its inventory
will be $3,887,851, totaling $4,866,387. The Debtor has paid
CapitalSource more than $300,000 in adequate protection payments
over the term of the case on account of claims that CapitalSource
says are undersecured. The Debtor said that CapitalSource is
several hundreds of thousands of dollars better off at present
than at the beginnning of the case.
About Pittsfield Weaving
Based in Pittsfield, New Hampshire, Pittsfield Weaving Company --
http://www.pwcolabel.com/-- provides brand identification to the
apparel and soft goods industries, and manufactures woven and
printed labels and RFID/EADS solutions.
The company filed its chapter 11 protection on Sept. 20, 2006
(Bankr. D. N.H. Case No. 06-11214). William S. Gannon, Esq., at
William S. Gannon PLLC, represents the Debtor in its restructuring
efforts. Bruce A. Harwood, Esq., at Sheehan Phinney Bass + Green,
PA, serves as counsel to the Official Committee of Unsecured
Creditors. Pittsfield Weaving estimated its assets at between
$10 million and $50 million and debts at between $10 million and
$50 million when it filed for protection from its creditors.
PITTSFIELD WEAVING: Wants to Sell Checkpoint Orders; Tap CES Fund
-----------------------------------------------------------------
Pittsfield Weaving Company related to the U.S. Bankruptcy Court
for the District of New Hampshire that it can no longer finance
its "traditional business" for the benefit of CapitalSource
Financial LLC and its "technology business" for the benefit of the
estate without the sale of certain checkpoint orders, or VfG
financing.
The Debtor recognizes the high degree of risk inherent in asking
for authority to sell certain checkpoint orders and tap revolving
purchase money loan, or CES funding.
CapitalSource, the Debtor noted, offered no witness or evidence
contradicting the Debtor's claim that (a) the checkpoint orders
would be about $125,000 to the accounts receivable derived from
the technology business alone, (b) the VfG purchase order funding
would permit the Debtor to pay all expenses in the filing of the
checkpoint orders, (c) the fulfillment of the checkpoint orders
would not use CapitalSource inventory collateral or (d) the
exploitation of the checkpoint relationship would be in the best
interest of postpetition administrative expense creditors and the
estate.
However, the Debtor related that CapitalSource has not consented
to the entry of the proposed orders. By withholding consent while
the Debtor makes $5,000 adequate protection payments weekly,
CapitalSource has simultaneously reduced the Debtor's working
capital to the detriment of creditors and delayed the CES-VfG
financing with potentially disastrous results, including reduced
work hours for employees and delayed deliveries by the Debtor.
The Debtor said that the Committee supports and none of them have
objected to the granting of the financing motions.
The U.S. Trustee offered no evidence that refuted or tended to
refute that the continuation of the Debtor's business operations
would benefit creditors as a whole. The U.S. Trustee did not
introduce the testimony of its own financial analyst.
The evidence offered by Debtor during the hearings on the
financing motions showed that the traditional business is
unprofitable alone and that it cannot fund the traditional
business and the technology business without the financing from
VfG and CES.
The Debtor expected to have $176,585 in available cash or working
capital derived from shipped sales. It has only $53,762 because
it could not fill all of the still-valid and profitable orders
included in the projection due to a lack of inventory, primarily
print tape. The Debtor continues to book orders in excess of its
combined break-even point of $154,900.
The Debtor reasoned that the opposition of CapitalSource makes
almost no sense from a business standpoint. The financing and
Financing to be provided by CES and VfG make it possible to
fulfill traditional business purchase orders and technology
business orders.
About Pittsfield Weaving
Based in Pittsfield, New Hampshire, Pittsfield Weaving Company --
http://www.pwcolabel.com/-- provides brand identification to the
apparel and soft goods industries, and manufactures woven and
printed labels and RFID/EADS solutions.
The company filed its chapter 11 protection on Sept. 20, 2006
(Bankr. D. N.H. Case No. 06-11214). William S. Gannon, Esq., at
William S. Gannon PLLC, represents the Debtor in its restructuring
efforts. Bruce A. Harwood, Esq., at Sheehan Phinney Bass + Green,
PA, serves as counsel to the Official Committee of Unsecured
Creditors. Pittsfield Weaving estimated its assets at between
$10 million and $50 million and debts at between $10 million and
$50 million when it filed for protection from its creditors.
PLASTECH ENGINEERED: JCIM Sheds Off 160 Jobs at Caro, Mich. Plant
-----------------------------------------------------------------
JCIM, LLC, Johnson Controls, Inc.'s subsidiary that purchased
Plastech Engineered Products Inc.'s interior and underhood
business, will close down a Plastech facility in Caro, Michigan
on September 29, 2008, Tuscolatoday.com said in a report.
Located at 1111 South Colling Road, the plant reportedly employs
some 160 workers who will all be affected with the closure. A
few employees, however, will extend work for two weeks to help
close up the plant, the report said.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is a full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
Joel D. Applebaum, Esq., at Clark Hill PLC, represents the
Official Committee of Unsecured Creditors.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 30; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
* * *
As reported in the Troubled Company Reporter on Aug. 11, 2008,
the Debtors have until Sept. 28, 2008, to file a Chapter 11 plan
of reorganization.
PLASTECH ENGINEERED: Wants to Recover $8MM in Payments to Basell
----------------------------------------------------------------
Plastech Engineered Products Inc. and its debtor-affiliates
commenced an adversary proceeding against Basell USA, Inc., to
recover $8,146,187 in payments made to Basell within 90 days prior
to the Petition Date. The payments constitute avoidable transfers
recoverable under Section 547 of the U.S. Bankruptcy Code, the
Debtors assert.
The Debtors also seek to disallow, pursuant to Section 502(d) of
the Bankruptcy Code, the administrative expense claim Basell
filed in May 2008 on account of preferential liability. Section
502(d) provides that unless a recipient of avoidable transfers
has paid or returned the avoidable transfers under Section 547,
its claims will be disallowed.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
Joel D. Applebaum, Esq., at Clark Hill PLC, represents the
Official Committee of Unsecured Creditors.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000.
The Debtors submitted on Aug. 11, 2008, a Joint Plan of
Liquidation, backed by the Official Committee of Unsecured
Creditors. The Plan, which was submitted by the Debtors and the
Creditors Committee, as co-proponents, provides for the orderly
wind-down and liquidation of the Debtors' remaining assets,
following the consummation of the sales of the Debtors' businesses
and assets, and approval of the sale-related settlements.
(Plastech Bankruptcy News; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
POST PROPERTIES: Moody's Affirms Ba1 Preferred Stock Rating
-----------------------------------------------------------
Moody's Investors Service revised the rating outlook to stable
from developing for Post Properties Inc. and Post Apartment Homes,
LP. In addition, the agency affirmed all ratings of the REIT.
The outlook change follows the announcement that Post Properties
has concluded its strategic review without an imminent
transaction. Moody's believes the removal of uncertainty
associated with a potential sale of Post Properties is a plus for
creditors; however, weak market conditions have stunted the REIT's
growth in size, earnings and cash flow, a trend we expect to
continue given plans to increase asset sales, utilize joint
venture structures, and defer or forego new developments.
Post Properties announced the end to the process of seeking a
potential sale, citing difficult market conditions and receipt of
no definitive acquisition proposals, alleviating any concern
regarding possible increases in leverage and secured debt due to a
leveraged buyout, according to Moody's. The REIT has decided to
pursue alternative strategies to increase shareholder value, which
include an evaluation of the number of markets that the company
operates in and the appropriate size of its development pipeline.
In addition, the company has declared its intention to sell eight
assets in New York City, Atlanta and Virginia, with the proceeds
(estimated at $500 million) used to fund committed investments and
for debt reduction - a positive - and the remainder for activities
more favorable to shareholders, such as stock repurchases or a
special dividend. Moreover, Post Properties is seeking to manage
costs through the identification of personnel synergies or
redundancies, which on the one hand may lead to better earnings
and cash flow metrics, though on the other may contribute to
deterioration in the quality of property management and services.
The stable outlook reflects Moody's expectation that key ratios
will remain stable in the intermediate term, with manageable debt
maturities over the next 18 to 24 months, effective leverage (debt
+ preferred as a % of gross assets) under 50% and fixed charge
coverage of 1.8x or better.
Moody's believes upward ratings movement would depend upon Post
Properties maintaining effective leverage approaching 40% of gross
assets and fixed charge coverage greater than 2.25x. Should the
REIT's financial profile and profitability substantially
deteriorate, most likely due to persistent softness in the
multifamily market, the ratings could come under downward
pressure. Furthermore, any reversal in lowering its exposure to
Atlanta or deterioration in current leverage or coverage levels
would also pressure the rating down.
These ratings were affirmed and the outlook was revised to stable
from developing:
Post Properties Inc.
-- Ba1 preferred stock; (P)Ba1 preferred shelf.
Post Apartment Homes LP
-- Baa3 senior unsecured; (P)Baa3 senior unsecured shelf.
Post Properties (NYSE: PPS) is a REIT headquartered in Atlanta,
Georgia and owns 22,140 apartment homes in 61 communities,
including 1,747 apartment units in five communities held in
unconsolidated entities and 1,736 apartment units in five
communities currently under construction and/or in lease-up. The
Company is also developing and selling 514 for-sale condominium
homes in four communities (including 137 units in one community
held in an unconsolidated entity) and is converting apartment
units in two communities initially consisting of 349 units into
for-sale condominium homes through a taxable REIT subsidiary.
PROPEX INC: Committee Wants Rule 2004 Exam on Lenders
-----------------------------------------------------
The Official Committee of Unsecured Creditors of Propex Inc. and
its debtor-affiliates ask the U.S. Bankruptcy Court for the
Eastern District of Tennessee to compel the Debtors and the DIP
Lenders to produce certain documents and give deposition
testimonies in relation to a Security Agreement between both
parties.
Judge John C. Cook had authorized Propex Inc. and its debtor-
affiliates, on a final basis, to:
(i) obtain postpetition secured loans, advances and other
financial accommodations of up to $60,000,000, from BNP
Paribas, as administrative agent, and a syndicate of
lenders, and
(ii) use the cash collateral of a syndicate of financial
institutions arranged by BNP Paribas, as administrative
agent.
The court also approved certain collateral documents, accompanying
the DIP Credit Agreement, including a security agreement between
the parties.
Pursuant to Rule 2004 of the Federal Rules of Bankruptcy
Procedure, the Official Committee of Unsecured Creditors of Propex
Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for
the Eastern District of Tennessee to compel the Debtors and the
DIP Lenders to produce certain documents and give deposition
testimonies in relation to a Security Agreement between both
parties.
The committee complains that the Final DIP Order and the Security
Agreement grants the DIP Lenders a lien on only two-thirds of the
stock of the Debtors' foreign subsidiaries.
The DIP Credit Agreement, by contrast, contains a covenant that,
on its face, requires the Debtors to seek to enter into foreign
pledge agreements pursuant to which all of their foreign stock
will be pledged to the DIP Lenders by some certain date, Ira
Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New
York, points out.
More than two months after the DIP Order was entered, and without
providing any notice to the Committee or the Court, the DIP
Parties executed an amendment to the Security Agreement -- in
direct violation of the DIP Order -- pursuant to which the
Debtors putatively pledged the unencumbered remaining one-third
of their foreign stock, Mr. Dizengoff informs the Court.
The DIP Parties entered into the Security Agreement amendment
despite the fact that:
* the Final DIP Order expressly provides that the Committee
must be given five business days' written notice of any
amendment to the DIP Documents and an opportunity to object
prior to any such amendment becoming effective;
* the Final DIP Order expressly provides that the DIP Lenders
have liens on only two-thirds of the foreign stock unless
the DIP Documents "specifically" provide otherwise; and
* a pledge in excess of two-thirds of foreign stock will have
a material adverse effect on the Debtors.
The Committee believes that the amendment was expressly designed
to give the Prepetition Secured Lenders tens of millions of
dollars of additional collateral, something they did not have --
the value of the unencumbered remaining one-third of foreign
stock -- and wipe out what is possibly the most substantial
source of recovery for unsecured creditors in these cases.
Accordingly, the Committee, as the statutory fiduciary
representative of the Debtors' unsecured creditors, emphasizes
that it is necessary and appropriate to undertake discovery on
the Debtors, the DIP Lenders and, as necessary, the Prepetition
Secured Lenders, to:
(1) resolve the disputed issues regarding the foreign stock
pledge;
(2) safeguard the rights of the Committee's unsecured creditor
constituency;
(3) determine whether any causes of action exist against the
DIP Parties; and
(4) ensure the proper administration of the Debtors'
bankruptcy proceedings.
Debtors Want to Amend Security Agreement
The Final DIP Order and DIP Credit Agreement authorized the
Debtors to grant a first priority lien on all of their property,
including all of the capital stock of their foreign and domestic
subsidiaries, to BNP Paribas, Henry J. Kaim, Esq., at King &
Spalding, LLP, in Houston, Texas, notes.
In carrying out their duties under the DIP Credit Agreement, the
Debtors were required to deliver to BNP Paribas certain foreign
pledge agreements of 100% of the capital of their foreign
subsidiaries on or before 90 days after the closing date of the
DIP Credit Agreement. "The Debtors ran into time constraints
meeting the 90 day deadline," Mr. Kaim notes.
In lieu of defaulting on the foreign pledge requirement, however,
the Debtors and BNP Paribas reached an agreement, and amended the
Security Agreement on April 22, 2008. The April 22 amendment
gave the Debtors until May 23, 2008, to deliver the Foreign
Pledge Agreements in compliance with the terms of the DIP Credit
Agreement. Mr. Kaim tells the Court that the Debtors have
complied with the needed requirement and thus, the delivery date
extension is no longer necessary.
The Amendment also updated and corrected information reflected on
a schedule 6 to the Security Agreement, according to Mr. Kaim.
Schedule 6 pertains to stock holdings and precise names of the
Debtors' foreign subsidiaries. The Revised Schedule 6 removed
certain share certificate numbers, was further updated in accord
with the dissolution of Propex Canada, the merger of Propex's
Hungarian entities and the merger of Propex's UK entities.
The primary purpose of the Amendment was to simply extend the
time for compliance with the terms of the DIP Credit Agreement
and thus, is wholly consistent with the Final DIP Order and
the DIP Credit Agreement, Mr. Kaim asserts. The Debtors did not
then and do not now believe that Court approval is required for
the Amendment.
However, because the Committee has raised issues relating to the
granting of liens on the foreign stock subsidiaries. The Debtors
maintain the the Committee's contentions have no merit.
Accordingly, out of an abundance of caution, the Debtors ask the
Court to:
(i) approve the Amendment, and
(ii) confirm the liens granted to BNP Paribas on 100% of the
foreign capital stock, in accordance with the explicit
terms of the Final DIP Order and DIP Credit Agreement.
A full-text copy of the Amended Security Agreement is available
for free at:
http://bankrupt.com/misc/PROPEX_AmendedDIPSecurityAgrmt.pdf
While it is true that the Revised Schedule 6 -- which relates to
representations, not lien granting provisions -- of the
Security Agreement, as amended, also reflects 100% ownership of
the stock of the foreign subsidiaries, as consistent with the
Debtors' actual ownership and their statements and schedules
filed in their Chapter 11 cases, the modification in the Revised
Schedule 6 did not modify the words "all" of the Investment
Property" of the Debtors, found in the granting clause in the
body of the Security Agreement; and certainly did not change the
requirement in the DIP Credit Agreement that 100% of the capital
stock of the foreign subsidiaries be pledged, Mr. Kaim explains.
The DIP Lenders had insisted on a lien on all of the capital
stock of the foreign subsidiaries of the Debtors, Mr. Kaim
clarifies. Neither the Debtors nor the Committee were able to
persuade the DIP Lenders to modify this requirement, and it
remained clearly in the DIP Credit Agreement and the Final DIP
Order, unaltered from the versions filed with the Court,
containing an express pledge of "all" of the personal property,
including the stock of the Debtors' stock in the foreign
subsidiaries, Mr. Kaim concludes.
About Propex Inc.
Headquartered in Chattanooga, Tennessee, Propex Inc. --
http://www.propexinc.com/-- produces geosynthetic, concrete,
furnishing, and industrial fabrics and fiber. It is produces
primary and secondary carpet backing. Propex operates in North
America, Europe, and Brazil.
The company and its debtor-affiliates filed for Chapter 11
protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No. 08-
10249). The debtors' has selected Edward L. Ripley, Esq., Henry
J. Kaim, Esq., and Mark W. Wege, Esq. at King & Spalding, in
Houston, Texas, to represent them. As of Sept. 30, 2007, the
debtors' balance sheet showed total assets of $585,700,000 and
total debts of $527,400,000. The Debtors' exclusive period to
file a plan of reorganization expired on Aug. 21, 2008.
(Propex Bankruptcy News, Issue No. 14; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
PROTECTION ONE: June 30 Balance Sheet Upside-Down by $51.8 Million
------------------------------------------------------------------
Protection One, Inc. reported financial results for the second
quarter ended June 30, 2008.
At June 30, 2008, the company's balance sheet showed total assets
of $653.8 million and total liabilities of $705.6 million,
resulting in a $51.8 million stockhoders' deficit.
"In a period of economic uncertainty, I am pleased to report that
our Retail segment lowered attrition while increasing RMR
additions from a combination of new sales and price increases,"
Richard Ginsburg, Protection One's president and chief executive
officer, commented. "In addition, our Wholesale segment generated
exceptional growth in additions from its key dealer customers.
With the assimilation of IASG largely complete, we continue to
work on process changes to improve profitability of our monitoring
and service operations across all segments."
Consolidated second quarter revenue declined less than 1% to
$92.4 million. Consolidated RMR increased to $26.9 million as of
June 30, 2008 from $26.8 million as of June 30, 2007. The
company's net loss for the quarter ended June 30, 2008 increased
to $9.1 million from $8.1 million net loss in 2007 and adjusted
EBITDA declined to $27.2 million from $29.5 million. This
decrease was in part due to the company's significant planned
investments in new marketing initiatives and higher service and
legal expenses, offset by $2.3 million of G&A efficiencies.
Segment Results
A. Retail
The company's Retail segment directly sells, installs, monitors
and maintains electronic security and life safety systems for
residential and commercial customers. As of June 30, 2008, the
company served approximately 590,000 retail customers, generating
approximately $20.6 million RMR.
Total Retail segment revenue in the second quarter of 2008
decreased 1.2% to $72.9 million, driven by a decrease in
monitoring and service revenue due to high attrition over the last
12 months on the acquired IASG base. Attrition on the IASG base
has improved since peaking in the fourth quarter of 2007.
The Retail segment's operating income declined by $0.2 million to
$1.8 million. The impact of lower gross margins and anticipated
increases in selling expenses was mitigated by economies realized
in G&A expenses and the absence of merger-related severance.
Retail RMR decreased by $89,000 or 0.4%, from the year ago period.
The Retail segment added approximately $0.6 million Retail RMR in
the second quarter consistent with the second quarter of 2007.
Outside the Southeast, Protection One increased residential
additions by 5%, reversing a prior trend of decreasing residential
additions in non-BellSouth alliance areas and providing an early
positive indicator of the impacts of the company's new marketing
initiatives and its distinctive e-Secure offering. Annualized
Retail gross attrition in the second quarter of 2008 was 12.9%
compared to 13.6% in 2007.
B. Wholesale
The company's Wholesale business, CMS, contracts with independent
security alarm dealers nationwide to provide alarm system
monitoring services to residential and business customers. As of
June 30, 2008, this unit served approximately 4,600 dealers by
monitoring approximately 970,000 homes and businesses on their
behalf.
In the second quarter, Wholesale delivered $452,000 of RMR
additions, up 25.6%, ending the quarter with nearly $4.0 million
RMR, 7.8% higher than one year ago. As a result of strong RMR
additions, Wholesale monitoring and service revenue in the second
quarter of 2008 increased 5.2% to $11.7 million. Wholesale
reported an operating loss of $0.2 million compared to income of
$0.8 million in the second quarter of 2007 due to higher selling
expenses and increased staffing costs to enhance service levels
and to assist in upgrading its monitoring platform, the initial
milestone of which was completed at the beginning of July.
C. Multifamily
The Company's Multifamily reporting unit provides monitoring and
maintenance of electronic security systems for tenants of
multifamily residences under long-term contracts with building
owners and managers. As of June 30, 2008, Multifamily had $2.4
million of RMR arising from approximately 265,000 units in more
than 1,600 rental properties.
Multifamily total revenue decreased 6.9% in the second quarter of
2008 compared to 2007, and monitoring and related services revenue
declined by 4.8%. RMR decreased 5.1% from $2.5 million versus the
year ago period. Principally as a result of lower revenues and
increased selling costs, Multifamily operating income declined to
$1.2 million in the second quarter of 2008 from $1.6 million one
year earlier.
Multifamily's annualized gross attrition rate in the second
quarter of 2008 increased to 12.9% from 12.2% in 2007. As of June
30, 2008, Multifamily's backlog of sold but uninstalled units and
installed units not yet billed was nearly 7,600 compared to 4,200
one year ago.
D. Net Debt
The company's net debt decreased slightly to $484.1 million at
June 30, 2008 from $485.0 million at Dec. 31, 2007, as free cash
flow was mostly offset by fees and expenses associated with the
first quarter refinancing. At current LIBOR, the company's
annualized cash interest expense is approximately $48 million.
Protection One
Headquartered in Lawrence, Kansas, Protection One Inc. (Nasdaq:
PONE) -- http://www.ProtectionOne.com/-- is a vertically
integrated national provider of sales, installation, monitoring,
and maintenance of electronic security systems to homes and
businesses. Network Multifamily, Protection One's wholly owned
subsidiary, is the largest security provider to the multifamily
housing market. The company also owns the nation's largest
provider of wholesale monitoring services, the combined operations
of CMS and Criticom International.
QUEBECOR WORLD: Names Jeremy Roberts as Chief Financial Officer
---------------------------------------------------------------
Quebecor World Inc. appointed Jeremy Roberts as chief financial
officer of the company. Mr. Roberts was previously senior vice
president, corporate finance and treasurer.
"[Mr. Roberts'] strong financial background combined with his
extensive knowledge of our company and our industry make him an
excellent choice for this position. During the last several
months, [Mr. Roberts] has worked extensively with our various
stakeholders. His experience and ability to build constructive
relationships will help the process to exit creditor protection
as quickly as possible as a strong player in our industry,"
commented Jacques Mallette, President and CEO, Quebecor World
Inc.
Mr. Roberts is assuming the position of CFO from Mr. Mallette who
was appointed president and CEO of Quebecor World on Dec. 17,
2007. Mr. Roberts has worked at Quebecor World since 1997 and has
held a series of increasingly more responsible positions in
corporate finance, treasury and investor relations. Prior to
joining Quebecor World, he was Assistant Treasurer at Bell Canada,
where he spent 10 years in corporate finance and treasury. Mr.
Roberts is a Chartered Financial Analyst and holds an M.B.A. and a
B.A. in Economics from the University of Western Ontario.
Roland Ribotti, currently Quebecor World's Vice President,
Investor Relations and Assistant Treasurer, is appointed Vice
President, Corporate Finance and Treasurer.
About Quebecor World
Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE:
IQW), -- http://www.quebecorworldinc.com/-- provides market
solutions, including marketing and advertising activities, well
as print solutions to retailers, branded goods companies,
catalogers and to publishers of magazines, books and other
printed media. It has 127 printing and related facilities
located in North America, Europe, Latin America and Asia. In
the United States, it has 82 facilities in 30 states, and is
engaged in the printing of books, magazines, directories, retail
inserts, catalogs and direct mail.
The company has operations in Mexico, Brazil, Colombia, Chile,
Peru, Argentina and the British Virgin Islands.
Quebecor World and 53 of its subsidiaries, including those in
Canada, filed a petition under the Companies' Creditors
Arrangement Act before the Superior Court of Quebec, Commercial
Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable
Justice Robert Mongeon oversees the CCAA case. Francois-David
Pare, Esq., at Ogilvy Renault, LLP, represents the Company in
the CCAA case. Ernst & Young Inc. was appointed as Monitor.
On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S.
subsidiary, along with other U.S. affiliates, filed for chapter
11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08-
10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP
represents the Debtors in their restructuring efforts. The
Official Committee of Unsecured Creditors is represented by Akin
Gump Strauss Hauer & Feld LLP.
Based in Corby, Northamptonshire, Quebecor World PLC --
http://www.quebecorworldplc.com/-- is the U.K. subsidiary of
Quebecor World Inc. that specializes in web offset magazines,
catalogues and specialty print products for marketing and
advertising campaigns. The company employs around 290 people.
Quebecor PLC was placed into administration with Ian Best and
David Duggins of Ernst & Young LLP appointed as joint
administrators effective Jan. 28, 2008.
As of Sept. 30, 2007, Quebecor World's unaudited consolidated
balance sheet showed total assets of $5,554,900,000, total
liabilities of $3,964,800,000, preferred shares of $175,900,000,
and total shareholders' equity of $1,414,200,000.
The Debtors have until Sept. 30, 2008, to file a plan of
reorganization in the chapter 11 case. The Debtors' CCAA stay
has been extended to Sept. 30, 2008. (Quebecor World Bankruptcy
News, Issue No. 23; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
QUEBECOR WORLD: Signs $45 Million Printing Deal with Canada Wide
----------------------------------------------------------------
Quebecor World Inc. has reached a new 7-year agreement valued
at approximately $45 million with Canada Wide Media Ltd. to print
Magazines and Periodicals for the Vancouver-based publisher. The
agreement includes renewal work on titles such as BC Business,
Westworld Publications, BC Home, Alberta Home, Gardenwise and
Granville Magazine.
"Quebecor World's dedication to quality and service was a key
contributing factor in partnering with them for another 7 years",
said Peter Legge, Chairman and CEO Canada Wide Media. "Our
business was built on print over 30 years ago and this partnership
renewal with Quebecor World shows our commitment to the importance
of printed media in the Canadian marketplace. We look forward to
working with Quebecor World as we actively pursue our growth
objectives over the next 7 years".
"We are pleased to extend our long term partnership with Canada
Wide Media" said Jacques Mallette, President and CEO of Quebecor
World Inc.
"Our ability to provide an unparalleled service approach allows us
to deliver the value and quality an independent industry
publishing leader such as Canada Wide Media Ltd demands" said
Antonio Galasso, President of Quebecor World Canada.
Quebecor World's Canadian division is one of the leading magazine
print and related service providers in Canada. The company
provides complete premedia, print, distribution and mailing
services across the country for publishers in the consumer, B2B,
Association, City and Regional Magazine markets.
About Canada Wide Media Limited
Canada Wide Media Limited (CWM) is one of the largest
Independent Publishers in Canada producing a diverse range of
media services and products, ranging from high-end printed
publications to the latest in digital media. The company
produces self owned publications as well as produces contract
publications for leading companies that inform, entertain and
inspire people of all ages and cultures around the world. CWM's
corporate headquarters are located in Burnaby, British Columbia.
About Quebecor World
Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE:
IQW), -- http://www.quebecorworldinc.com/-- provides market
solutions, including marketing and advertising activities, well
as print solutions to retailers, branded goods companies,
catalogers and to publishers of magazines, books and other
printed media. It has 127 printing and related facilities
located in North America, Europe, Latin America and Asia. In
the United States, it has 82 facilities in 30 states, and is
engaged in the printing of books, magazines, directories, retail
inserts, catalogs and direct mail.
The company has operations in Mexico, Brazil, Colombia, Chile,
Peru, Argentina and the British Virgin Islands.
Quebecor World and 53 of its subsidiaries, including those in
Canada, filed a petition under the Companies' Creditors
Arrangement Act before the Superior Court of Quebec, Commercial
Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable
Justice Robert Mongeon oversees the CCAA case. Francois-David
Pare, Esq., at Ogilvy Renault, LLP, represents the Company in
the CCAA case. Ernst & Young Inc. was appointed as Monitor.
On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S.
subsidiary, along with other U.S. affiliates, filed for chapter
11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08-
10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP
represents the Debtors in their restructuring efforts. The
Official Committee of Unsecured Creditors is represented by Akin
Gump Strauss Hauer & Feld LLP.
Based in Corby, Northamptonshire, Quebecor World PLC --
http://www.quebecorworldplc.com/-- is the U.K. subsidiary of
Quebecor World Inc. that specializes in web offset magazines,
catalogues and specialty print products for marketing and
advertising campaigns. The company employs around 290 people.
Quebecor PLC was placed into administration with Ian Best and
David Duggins of Ernst & Young LLP appointed as joint
administrators effective Jan. 28, 2008.
As of Sept. 30, 2007, Quebecor World's unaudited consolidated
balance sheet showed total assets of $5,554,900,000, total
liabilities of $3,964,800,000, preferred shares of $175,900,000,
and total shareholders' equity of $1,414,200,000.
The Debtors have until Sept. 30, 2008, to file a plan of
reorganization in the chapter 11 case. The Debtors' CCAA stay
has been extended to Sept. 30, 2008. (Quebecor World Bankruptcy
News, Issue No. 23; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
RADIOSHACK CORP: Moody's Affirms Ba1 CF Rating; Outlook Stable
--------------------------------------------------------------
Moody's Investors Service affirmed RadioShack Corporation's Ba1
Corporate Family Rating and SGL-1 Speculative Grade Liquidity
rating; the outlook is stable.
The affirmation of the Ba1 Corporate Family Rating considers that
despite the weakening in leverage metrics that will occur
following the closing of RadioShack's announced convertible debt
offering of up to $350 million, the company continues to be well-
positioned in the Ba1 rating category, "Improvements in operating
performance over the past 18 months generated sufficient cushion
at this rating level such that this transaction has no immediate
impact on RadioShack's ratings or outlook", stated Moody's Senior
Analyst Charlie O'Shea.
RadioShack's ratings and outlook continue to reflect the company's
nationwide franchise including its 4,439 retail stores, and its
somewhat unique product mix, especially in the peripheral and
accessories segments. At the same time, the rating and outlook
acknowledge the continuing competitive challenges the company
faces from the discounters such as Wal-Mart and Target, home
electronics superstores such as Best Buy and Circuit City,
warehouse clubs such as Sam's Club and Costco, as well as
proprietary cellular phone retailers.
The affirmation of the SGL-1 speculative grade liquidity rating
reflects RadioShack's very good liquidity which is supported by
significant cash balances, healthy free cash flow, and significant
availability under the committed $625 million in unsecured credit
facilities.
Ratings affirmed:
-- Corporate Family Rating of Ba1
-- Probability of Default Rating of Ba1
-- Speculative Grade Liquidity rating of SGL-1
-- Ratings affirmed and LGD point estimate adjusted:
-- Senior unsecured notes at Ba1 (LGD 4, 55%) from Ba1 (LGD 4,
56%)
RadioShack Corporation, headquartered in Fort Worth, Texas, is a
leading retailer of consumer electronics and peripherals, as well
as a large retailer of cellular phones. Its retail network include
4,439 retail stores, 721 kiosks, and 1,444 dealer and other
outlets throughout the United States, and generated LTM June 2008
revenues of $4.27 billion.
RAMBUS INC: To Shave Off 21% of Workforce in Restructuring Move
---------------------------------------------------------------
Rambus Inc. will reduce its workforce by approximately 90
positions -- or 21% of its workforce, according to Bloomberg --
and will take a restructuring charge, on a cash basis, of
approximately $4.0 million in the next two quarters, primarily
related to severance expenses. With this restructuring and
related cost saving measures, Rambus expects cash savings of
approximately $17 million annually, principally due to reduced
compensation related expenses.
"This is a difficult but appropriate adjustment that will position
us to succeed in our strategic objectives," said Harold Hughes,
president and chief executive officer at Rambus. "These steps will
enable us to enhance our investments in breakthrough technology
and strengthen our efforts to protect and be fully compensated for
our patented inventions. We remain dedicated to the product
commitments that we have made to our customers including the
continued support of our leadership XDR memory architecture."
The savings realized through the restructuring are a combination
of reduction in workforce across the Company's global operations
in a number of both engineering and non-engineering positions as
well as a reduction in non-workforce related expenses. After the
restructuring, which is expected to be completed by the end of the
year, Rambus will have a headcount of approximately 340 employees.
About Rambus Inc.
Rambus Inc. (Nasdaq:RMBS) is a technology licensing company
specializing in the invention and design of high-speed memory
architectures. Rambus licenses both its patent portfolio as well
as its interface products. Headquartered in Los Altos, California,
Rambus has regional offices in North Carolina, India, Germany,
Japan and Taiwan. On the Net: http://www.rambus.com/
REAL ESTATE VII: June 30 Balance Sheet Upside-Down by $18,320,000
-----------------------------------------------------------------
Real Estate Associates Limited VII's consolidated balance sheet at
June 30, 2008, showed $1,864,000 in total assets and $20,184,000
in total liabilities, resulting in a $18,320,000 partners'
deficit.
The company reported a net loss of $217,000 on interest income of
$11,000 for the second quarter ended June 30, 2008, compared with
a net loss of $212,000 on interest income of $26,000 in the same
period last year.
The company's revenues consist primarily of interest income earned
on temporary investment of funds not required for investment in
Local Limited Partnerships.
Distributions from the Local Limited Partnerships are accounted
for as a reduction of the investment balance until the investment
balance is reduced to zero. Subsequent distributions received are
recognized as income in the company's consolidated statements of
operations. There were no distributions received from the Local
Limited Partnerships during the three months ended June 30, 2008,
and 2007.
Full-text copies of the company's consolidated financial
statements for the quarter ended June 30, 2008, are available for
free at http://researcharchives.com/t/s?30c4
Going Concern Doubt
Ernst & Young LLP, in Greenville, South Carolina, expressed
substantial doubt about Real Estate Associates Limited VII's
ability to continue as a going concern after auditing the
company's consolidated financial statements for the year ended
Dec. 31, 2007. The auditing firm reported that the company
continues to generate recurring operating losses. In addition,
notes payable and related accrued interest totaling approximately
$19,858,000 are in default due to non-payment.
About Real Estate Associates
Real Estate Associates Limited VII is a limited partnership formed
under the laws of the State of California on May 24, 1983. The
general partners of the partnership are National Partnership
Investments Corp. and National Partnership Investments Associates
II. As of June 30, 2008, the company holds limited partnership
interests in eleven Local Limited Partnerships. In addition, the
company holds a general partner interest in REA IV, which in turn,
holds limited partner interests in eleven additional Local Limited
Partnerships.
In total, the company holds interests, either directly or
indirectly through REA IV, in twenty-two Local Limited
Partnerships which own residential low income rental projects
consisting of 1,579 apartment units.
SBARRO INC: Posts $5 Million Net Loss in Quarter Ended June 29
--------------------------------------------------------------
Sbarro, Inc. disclosed results of operations for the quarter and
the six months ended June 29, 2008.
Second Quarter Financial Results
Net loss for the quarter ended June 29, 2008 was $5.0 million,
as compared to a net loss of $2.4 million for the quarter ended
July 1, 2007.
Revenues were $85.4 million for the quarter ended June 29, 2008,
as compared to revenues of $82.6 million for the quarter ended
July 1, 2007. The increase in revenues was generated by new
company owned and franchise stores opened in 2007 and the first
half of 2008 and revenue growth attributable to the company's
comparable unit sales in its International Franchise restaurants
offset by a slight decrease in comparable unit sales in company
owned and Domestic Franchise restaurants.
EBITDA, as calculated in accordance with the terms of the
company's bank credit agreement, was $5.5 million for the quarter
ended June 29, 2008, as compared to $9.7 million for the quarter
ended July 1, 2007. The decline in EBITDA is primarily a result
of increased cost of products, in particular in the cost of
cheese, flour and flour related commodity costs such as pasta, as
well as increased cost of labor, while comparable unit sales
declined slightly.
Year to Date Financial Results
The company has reported operating results and its financial
position for all periods presented as of and prior to Jan. 30,
2007, as those of the Predecessor Company and for all periods from
and after Jan. 31, 2007, as those of the Successor Company. The
company's operating results for the six months ended July 1, 2007
are presented as the combined results of the Predecessor and
Successor companies. The presentations of "Combined" results is
not consistent with the requirements of GAAP; however, the
company's management believes that it is a meaningful way to
present the results of operations for the six months ended July 1,
2007.
Revenues were $168.6 million for the six months ended June 29,
2008, as compared to combined revenues of $163.1 million for the
six months ended July 1, 2007. The company's revenue increase was
primarily driven from new stores opened in 2007 and the first half
of 2008 in both company owned and franchise restaurants and
revenue growth attributable to the company's comparable unit sales
in its International Franchise restaurants.
Net loss for the six months ended June 29, 2008 was $7.7 million,
as compared to the combined $35.6 million net loss for the six
months ended July 1, 2007. Included in the combined net loss for
the six months ended July 1, 2007 was $31.4 million attributable
to special event bonuses in connection with the Merger.
EBITDA for the six months ended June 29, 2008, as calculated in
accordance with the terms of the company's bank credit agreement,
was $13.4 million as compared to $19.6 million EBITDA for the
combined six months ended July 1, 2007. The decline in EBITDA was
attributable to increased cost of products, in particular in the
cost of cheese, flour and flour related commodity costs such as
pasta, while comparable sales remained relatively flat.
"The reduction in profitability in the first half of the year was
driven primarily by higher commodity costs versus the comparable
period in 2007," Peter Beaudrault, Chairman of the Board,
President and CEO of Sbarro, commented. "Commodity prices started
to increase towards the end of the second quarter of 2007 and
therefore we do not expect to see a corresponding negative impact
on a year over year basis from commodity costs in the second half
of 2008. Furthermore, in recent weeks we have begun to see a
decline in overall commodity costs which, if maintained, would
favorably affect our year over year comparisons. We also expect
to benefit from same store sales comparisons as our same store
sales decreased 1.8% in the fourth quarter of 2007. Year to date
we have reported flat same store sales as compared to a 3%
increase in the first half of 2007."
MidOcean Partners' Acquisition of Sbarro
On Jan. 31, 2007, MidOcean SBR Acquisition Corp., an indirect
subsidiary of MidOcean SBR Holdings, LLC, an affiliate of MidOcean
Partners III, L.P., and certain of its affiliates merged with and
into the company in exchange for consideration of $450 million in
cash, subject to certain adjustments. As a result of the merger,
the company is now an indirect wholly owned subsidiary of
Holdings.
In addition, the former shareholders received a distribution of
the cash on hand in excess of (i) $11 million, plus (ii) all
amounts required to be paid in connection with various special
event bonuses paid in connection with completion of the merger.
In connection with the merger, the company transferred interests
in certain non-core assets to a newly formed company owned by
certain of our former shareholders. There was no additional
consideration given for the transfer of these assets as they were
treated as a dividend. The assets and related costs that we
transferred were:
* the interests in Broadhollow Realty LLC. and Broadhollow
Fitness Center LLC., which owned the corporate headquarters
of the company, the fitness center and the assets of the
Sbarro Cafe located at the corporate headquarters;
* a parcel of undeveloped real property located in East
Northport, New York;
* the interests in Boulder Creek Ventures, LLC and Boulder
Creek Holdings, LLC, which own a 40% interest in a joint
venture that operates 15 steakhouses under "Boulder Creek"
and other names; and
* the interest in Two Mex-SS, LLC, which owns a 50% interest in
a joint venture that operates two tex-mex restaurants under
the "Baja Grill" name.
Balance Sheet
At June 29, 2008, the company's balance sheet showed total assets
of $629.3 million and total liabilities of $501.4 million,
resulting in a $127.8 million stockholders' equity.
About Sbarro Inc.
Based in Melville, New York, Sbarro Inc. -- http://www.sbarro.com/
-- and its franchisees develop and operate family oriented
cafeteria-style Italian restaurants principally under the
"Sbarro", "Mama Sbarro", "Carmela's", "Sbarro The Italian Eatery"
and "Sbarro Fresh Italian Cooking" names. The company has
approximately 1,040 restaurants in 43 countries. Sbarro
restaurants feature a menu of popular Italian food, including
pizza, a selection of pasta dishes and other hot and cold Italian
entrees, salads, sandwiches, drinks and desserts.
* * *
As reported in the Troubled Company Reporter on Aug. 13, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Sbarro Inc. to 'CCC+' from 'B-'. Concurrently, S&P
lowered the ratings on the company's $25 million revolving
facility and $183 million first-lien term loan to 'B-' from 'B+',
and revised the recovery ratings on these facilities to '2' from
'1'. S&P also lowered the rating on the $150 million senior notes
to 'CCC-' from 'CCC+' and affirmed the recovery rating of '6' on
this debt issue. The outlook is negative.
In April 2008, the TCR disclosed that Moody's Investors Service
affirmed all the ratings of Sbarro Inc. including the company's
"B3" Corporate family rating and the "Caa1" rating on the
company's $150 million senior unsecured notes maturing in 2015.
The rating outlook is negative.
SEMGROUP LP: Wants to Hire Blackstone as Investment Banker
----------------------------------------------------------
The SemGroup, L.P., and its debtor-affiliates seeks the authority
of the U.S. Bankruptcy Court for the District of Delaware to
retain Blackstone Advisory Services L.P., as their investment
banker, nunc pro tunc to the bankruptcy filing.
According to the Debtors, Blackstone has diverse experience,
knowledge, recognized expertise, and reputation in the
restructuring field. The Debtors employed Blackstone on July 14,
2008, to assist them in the evaluation of strategic alternatives,
and to serve as their financial adviser.
As investment banker, Blackstone will:
(a) assist in the evaluation of the Debtors' businesses and
prospects;
(b) assist in the development of the Debtors' long-term
business plan and related financial projections;
(c) assist in the development of financial data and
presentations to the Debtors' Board of Directors,
creditors, and other third parties;
(d) analyze the Debtors' financial liquidity and evaluate
alternatives to improve such liquidity;
(e) analyze various restructuring scenarios and the potential
impact of these scenarios on the recoveries of those
stakeholders impacted by the Restructuring;
(f) provide strategic advice with regard to restructuring or
refinancing the Debtors' obligations;
(g) evaluate the Debtors' debt capacity and alternative
capital structures;
(h) participate in negotiations among the Debtors and their
creditors, suppliers, lessors, and other interested
parties;
(i) value securities offered by the Debtors in connection with
a restructuring;
(j) advise the Debtors and negotiate with lenders with respect
to potential waivers or amendments of various credit
facilities;
(k) assist in arranging debtor-in-possession financing for the
Debtors;
(l) provide expert witness testimony concerning any of the
subjects encompassed by the other financial advisory
services;
(m) assist the Debtors in preparing marketing materials in
conjunction with a possible transaction;
(n) assist the Debtors in identifying potential buyers or
parties-in-interest to a transaction and assist in the due
diligence process;
(o) assist and advise the Debtors concerning the terms,
conditions and impact of any proposed transaction; and
(p) provide such other advisory services as are customarily
provided in connection with the analysis and negotiation
of a restructuring or a transaction, as requested and
mutually agreed.
Blackstone will be paid:
* a $350,000 monthly advisory fee, in cash;
* a $1,050,000 retainer, in cash;
* a debt financing fee in the lesser amount of 1% of the face
amount of any new debt financing raised, or $3,000,000 in
cash for any new debt financing;
* an equity financing fee of 5.0% of the total amount of any
new equity financing;
* an additional $20,000,000 restructuring fee, in cash; and
* a transaction fee out of the gross proceeds of the
transaction, calculated as 1.0% of the consideration, and
credited against the restructuring fee.
The Debtors will also reimburse Blackstone of all reasonable out-
of-pocket expenses incurred during the engagement.
Steve Zelin, senior managing director at Blackstone, assured the
Court that his firm does not hold any interest adverse to the
Debtors, their estates, and their creditors. Blackstone is a
"disinterested person" as that term is applied in Section 101(14)
of the Bankruptcy Code.
About SemGroup L.P.
SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream
service company providing the energy industry means to move
products from the wellhead to the wholesale marketplace. SemGroup
provides diversified services for end users and consumers of crude
oil, natural gas, natural gas liquids, refined products and
asphalt. Services include purchasing, selling, processing,
transporting, terminaling and storing energy. SemGroup serves
customers in the United States, Canada, Mexico, Wales, Switzerland
and Vietnam.
SemGroup L.P. and its debtor-affiliates filed for Chapter 11
protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08-
11525). These represent the Debtors' restructuring efforts: John
H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq.
at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P.
Kessler, Esq. and Sherri L. Toub, Esq. at Weil, Gotshal & Manges
LLP; and Martin A. Sosland, Esq. and Sylvia A. Mayer, Esq. at Weil
Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the
Debtors' claims agent. The Debtors' financial advisors are The
Blackstone Group L.P. and A.P. Services LLC. Margot B.
Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer
LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson &
Corroon LLP, represent the Debtors' prepetition lenders.
SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude
Company, sought protection under the Companies' Creditors
Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc.
The CCAA stay expires on Aug. 20, 2008.
SemGroup L.P.'s consolidated, unaudited financial conditions as of
June 30, 2007, showed $5,429,038,000 in total assets and
$5,033,214,000 in total debts. In their petition, they showed
more than $1,000,000,000 in estimated total assets and more than
$1,000,000,000 in total debts.
(SemGoup Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SEMGROUP LP: Owes More Than $8 Million to Oil Vendors
-----------------------------------------------------
SemGroup L.P. are parties to prepetition oil and gas purchase
agreements with each of Mull Drilling Company and D.E.
Exploration, Inc. The purchase agreements incorporates "Conoco's
Latest General Terms and Conditions," which provides parameters
for measurement and testing of the oil and gas. The Debtors
remit payments for the purchased products on the 20th day of the
month following delivery.
Under the purchase agreement, if the Debtors make a late payment
or fail to make a payment, the Conoco terms and conditions
provide that the oil vendors may charge interest on the due
amount at a per annum rate. The Concoco terms are controlled by
the laws of the state of Texas. To assure payment, the Conoco
Terms allow the vendors to require an advance cash payment or a
satisfactory security, through a letter of credit that covers all
deliveries of crude oil. Failure to do so allows the vendors or
the Debtors to terminate the agreement.
Gary F. Seitz, Esq., at Rawle & Henderson, LLP, in Wilmington,
Delaware, representing the vendors, related that payments for the
June delivery of oil and gas by the vendors were due on July 20,
2008, but no payments from the Debtors were received. He asserted
that the Debtors are now in default under the purchase agreement
for failing to provide payment.
Mr. Seitz said the Debtors owe more than $8,000,000 for oil
delivered by the vendors:
Mull Drilling $6,556,780
D. E. Exploration 2,200,048
Pursuant to Section 9.343 of the Texas Business & Commerce Code,
the vendors have perfected purchase money security interests in
the oil and gas production. In the event that the delivered oil
and gas is sold to a second purchaser, the vendors have
continuing purchase money security interests in the resulting
proceeds, Mr Seitz said. He said he believes that the delivered
oil and gas is currently in the Debtors' possession, or has been
sold to a second purchaser.
Mr. Seitz told the U.S. Bankruptcy Court for the District of
Delaware that the vendors seek to initiate federal court actions
against the Debtors for the lack of adequate protection of
interest in the delivered oil and gas.
The vendors, accordingly, separately asked the Court to terminate
the automatic stay to recover the Delivered Oil and Gas, and
grant them adequate protection for those goods.
The vendors filed with the Court separate notices of claim
reclamation in the Debtors' chapter 11 cases.
About SemGroup L.P.
SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream
service company providing the energy industry means to move
products from the wellhead to the wholesale marketplace. SemGroup
provides diversified services for end users and consumers of crude
oil, natural gas, natural gas liquids, refined products and
asphalt. Services include purchasing, selling, processing,
transporting, terminaling and storing energy. SemGroup serves
customers in the United States, Canada, Mexico, Wales, Switzerland
and Vietnam.
SemGroup L.P. and its debtor-affiliates filed for Chapter 11
protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08-
11525). These represent the Debtors' restructuring efforts: John
H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq.
at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P.
Kessler, Esq. and Sherri L. Toub, Esq. at Weil, Gotshal & Manges
LLP; and Martin A. Sosland, Esq. and Sylvia A. Mayer, Esq. at Weil
Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the
Debtors' claims agent. The Debtors' financial advisors are The
Blackstone Group L.P. and A.P. Services LLC. Margot B.
Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer
LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson &
Corroon LLP, represent the Debtors' prepetition lenders.
SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude
Company, sought protection under the Companies' Creditors
Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc.
The CCAA stay expires on Aug. 20, 2008.
SemGroup L.P.'s consolidated, unaudited financial conditions as of
June 30, 2007, showed $5,429,038,000 in total assets and
$5,033,214,000 in total debts. In their petition, they showed
more than $1,000,000,000 in estimated total assets and more than
$1,000,000,000 in total debts.
(SemGoup Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SEMGROUP LP: $150MM "Secret" Loan from Hedge Funds Ominous
----------------------------------------------------------
A $150 million loan provided by hedge funds Alerian Capital
Management LLC, of Dallas and Manchester Securities Corp. of New
York to SemGroup LP prior to the energy company's collapse could
emerge as a source of contention in SemGroup's bankruptcy
proceedings, Serena Ng and Annd Davis of The Wall Street Journal
report.
The hedge funds provided the $150 million to help SemGroup met
margin calls on futures contracts and derivative trades prior to
the company's bankruptcy filing on July 22. Under the agreement,
the hedge funds would get SemGroup's interest in SemGroup Energy
Partners LP (SGLP), a profitable affiliate, once SemGroup defaults
on the debt, which it did.
"Some of SemGroup's other lenders -- owed a total of more than $3
billion -- said they were unaware of the loan or not fully
informed of its terms," according to the report.
About SemGroup L.P.
SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream
service company providing the energy industry means to move
products from the wellhead to the wholesale marketplace. SemGroup
provides diversified services for end users and consumers of crude
oil, natural gas, natural gas liquids, refined products and
asphalt. Services include purchasing, selling, processing,
transporting, terminaling and storing energy. SemGroup serves
customers in the United States, Canada, Mexico, Wales, Switzerland
and Vietnam.
SemGroup L.P. and its debtor-affiliates filed for Chapter 11
protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08-
11525). These represent the Debtors' restructuring efforts: John
H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq.
at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P.
Kessler, Esq. and Sherri L. Toub, Esq. at Weil, Gotshal & Manges
LLP; and Martin A. Sosland, Esq. and Sylvia A. Mayer, Esq. at Weil
Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the
Debtors' claims agent. The Debtors' financial advisors are The
Blackstone Group L.P. and A.P. Services LLC. Margot B.
Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer
LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson &
Corroon LLP, represent the Debtors' prepetition lenders.
SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude
Company, sought protection under the Companies' Creditors
Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc.
The CCAA stay expires on Aug. 20, 2008.
SemGroup L.P.'s consolidated, unaudited financial conditions as of
June 30, 2007, showed $5,429,038,000 in total assets and
$5,033,214,000 in total debts. In their petition, they showed
more than $1,000,000,000 in estimated total assets and more than
$1,000,000,000 in total debts.
(SemGoup Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SLEEP SAVVY: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Sleep Savvy Inc.
4202 East Elwood, Suite 10
Phoenix, AZ 85040
Bankruptcy Case No.: 08-10463
Chapter 11 Petition Date: August 13, 2008
Court: District of Arizona (Phoenix)
Judge: George B. Nielsen Jr.
Debtor's Counsel: Donald W. Powell, Esq.
(d.powell@cplawfirm.com)
Carmichael & Powell, P.C.
7301 North 16th Street, Suite 103
Phoenix, AZ 85020
Tel: (602) 861-0777
Fax: (602) 870-0296
Estimated Assets: $500,000 to $1,000,000
Estimated Debts: $1,000,000 to $10,000,000
A copy of Sleep Savvy Inc.'s list of its 20 largest unsecured
creditors is available for free at:
http://bankrupt.com/misc/azb08-10463.pdf
SPHERICS INC: Assignee to Sell Pharma. Intellectual Property
------------------------------------------------------------
Joseph F. Finn Jr., C.P.A., assignee of the assets of Spherics
Inc., disclosed that all pharmaceutical intellectual property will
be sold at a sealed bid auction on Oct. 10, 2008.
As reported in the Troubled Company Reporter on Aug. 7, 2008,
Spherics Inc.'s assets had been assigned to Mr. Finn, for the
benefit of its creditors. An assignment for the benefit of
creditors is a common law procedure, wherein Mr. Finn will
liquidate the assets, which consist of pharmaceutical IP.
One of the pieces of intellectual property for sale is its lead
product, SRx-502, a once-a-day version of a branded drug that
currently has more than $2 billion in sales despite twice daily
dosing and an unfavorable AE profile. A clear clinical pathway
for SRx-502 has been defined by the FDA for a 505(b)(2) regulatory
submission. A successful bidder may make the NDA submission in 2Q
2009 with the remaining clinical trials expected to cost
$7 million.
Joseph F. Finn, Jr. is the founding partner of the firm Finn,
Warnke & Gayton, Certified Public Accountants of Wellesley Hills,
Massachusetts. He works in the area of management consulting for
distressed enterprises, bankruptcy accounting and related matters,
such as assignee for the benefit of creditors and liquidating
agent for a corporation.
Spherics Inc. has an intellectual property position around its
drug delivery technologies and products. The company has a range
of issued US and international patents through exclusive licenses
from Brown University. These patents cover polyanhydride-based
bioadhesive polymers and PIN. In addition to these issued
patents, Spherics has filed numerous applications covering
compositions of matters of its proprietary polymers (SPHEROMERS),
novel oral delivery systems (including BIOGIT, BIOROD and PIN),
manufacturing methods, methods of use, formulations and product
compositions.
SPORTSQUEST INC: Posts $324,691 Net Loss in Qtr. Ended April 30
---------------------------------------------------------------
Sportsquest Inc. reported a net loss of $324,691 on revenue of
$15,000 for the second quarter ended April 30, 2008, compared with
a net loss of $29,245 on revenue of $7,387 in the same period last
year.
The current period loss reflects an increase of general and
administrative expenses in the quarter and consisted primarily of
salaries, travel, legal and professional fees, and office
expenses.
The company has historically financed its operations through
loans, principally from affiliated parties such as its directors,
and from the proceeds of debt and equity financing. Until such
time that sales revenue can provide greater liquidity, the company
says it will continue to attempt to secure additional financing
through both the public and private market sectors to meet its
continuing commitments of capital expenditures.
At April 30, 2008, the company's balance sheet showed $15,714,352
in total assets, $8,651,278 in total liabilities, and $7,063,074
in total stockholders' equity.
The company's balance sheet at April 30, 2008, also showed
strained liquidity with $64,910 in total current assets available
to pay $4,364,452 in total current liabilities.
Full-text copies of the company's financial statements for the
quarter ended April 30, 2008, are available for free at:
http://researcharchives.com/t/s?30c5
Going Concern Doubt
Gately & Associates, L.L.C., in Winter Park, Florida, expressed
substantial doubt about Sportsquest Inc.'s ability to continue as
a going concern after auditing the company's financial statements
for the year ended Oct. 31, 2007. The auditing pointed to the
company's losses from operations and net capital deficiency.
About Sportsquest Inc.
Based in Oviedo, Florida, Sportsquest Inc. (OTC BB: SPQS) is a
vertically integrated sports and entertainment marketing and
management company. The company's primary activities are to
create, develop, own and manage high end sports events and their
operating entities, as well as executing a growth strategy
involving acquisitions of diverse and effective sports marketing
platforms. The company has been managing the development of the
US Pro Golf Tour since August 2007 and anticipates that it will
continue to manage the US Pro Golf Tour for the foreseeable
future. The company also owns substantial print and radio media
that it intends to deploy for sponsors and advertisers of sporting
events developed by the company.
ST CLAIR ROOFING: Files for Ch. 11 Bankruptcy in St. Louis
----------------------------------------------------------
St. Clair Roofing Co. and its affiliate Gutter Pro Midwest LLC
filed voluntary petitions under Chapter 11 of the Bankruptcy Code
before the United States District Court in St. Louis as they try
to find an investor to assist them in their reorganization,
various sources report.
The company told STLtoday.com that the Debtors had an
underperforming location in Springfield, Montana, and experienced
excessive marketing costs.
Investor Ron Spielman, who owns Sound Solutions and Armaclad
Windows and Doors Inc., will provide an undisclosed amount of cash
to the company, the report says.
According to the report, the company owes at least $3.26 million
to unsecured creditors including Bank Midwest, which is owed $2.5
million in claims; Internal Revenue Services, $404,098; Alside
Supply Center in Earth City, $189,924; and several media
companies, $159,202.
Capes, Sokol, Goodman and Sarachan P.C. represents the company,
says St. Louis Business Journal's Rick Desloge.
Creve Coeur-based St. Clair Roofing Co. dba St. Clair Corp.
installs windows, doors, siding, and gutter protection. The
company has at least 55 employees in Montana and Kansas.
STEVE & BARRY'S: Court Approves BH S&B as Stalking Horse Bidder
---------------------------------------------------------------
The United States Bankruptcy Court for the Southern District of
New York (i) approved the proposed Bidding Procedures of Steve &
Barry's, LLC, and its debtor-affiliates; (ii) authorized them to
enter into stalking horse agreements with BH S&B Holdings, and a
joint venture composed of Gordon Brothers Retail Partners, LLC,
and Hilco Merchant resources, LLC; and (iii) approved their
Assignment Procedures of certain executory contracts and unexpired
leases.
All Objections that have not been withdrawn, waived, settled or
specifically addressed in the Bid Procedures Order, and all
reservations of rights included in the Objections, are overruled
in all respects on the merits.
The Auction will be conducted at the offices of Weil, Gotshal &
Manges LLP, located at 767 Fifth Avenue, in New York, on Aug. 18,
2008, at 10:00 a.m., Eastern Time.
Sale objections were due Aug. 13, 2008, at 5:00 p.m., Eastern
Time.
The Sale Hearing will be held on Aug. 19, 2008, at 10:00 a.m.,
Eastern Time. The Sale Approval Hearing may be adjourned from
time to time without further notice.
Under the terms of the agreement, BH S&B Holdings would acquire
certain of the Debtors' assets for $163,000,000. Subject to
acceptable negotiation of lease terms prior to the final auction
date, BH S&B Holdings' expressed intent to continue to operate
the Debtors' chain of retail stores as a going concern, with
current staff and key facilities, including the company's
New York headquarters, Columbus, Ohio distribution center, and
certain overseas offices.
The assets to be acquired include, but are not limited to:
* certain the Debtors' store leases;
* all the Debtors' merchandise, with the exclusion of any
product located at stores not purchased by BH S&B Holdings;
and
* all the Debtors' intellectual property rights, including
its celebrity and brand licenses.
Further due diligence will determine which of the Debtors'
renegotiated store leases BH S&B Holdings would acquire should
the Asset Purchase Agreement be approved by the Court. The
Company has further entered into an agency sale agreement for
inventory in stores where the Company and BH S&B Holdings cannot
accomplish an appropriate package of renegotiated leases and
other conditions. In this circumstance, Hilco Merchant Resources
LLC becomes the stalking horse bidder with intention of
conducting a final sale of the company's inventory.
The stalking horse proposal will serve as the opening bid during
an auction process that is scheduled to take place in this month
August, and will be subject to higher and better offers.
Bay Harbour Management is an SEC-registered investment advisor
with significant experience in purchasing distressed companies
and effectuating their turnaround. The firm's holdings have
included the retailer Barney's New York, Telcove, and the
rebranding and turnaround of the former Aladdin Casino, now
operating on the Las Vegas strip as the Planet Hollywood Resort
and Casino.
Prior to the Debtors' announcement of Bay Harbour's $163,000,000
offer, more parties filed objections to the Debtors' request to
sell all or substantially all of their assets, as well as the
Debtors' proposed bidding procedures, including:
-- San Bernardino County,
-- City of New York,
-- Colonial Plaza CRP LLC,
-- Woolbright Daytona Promenade LLC, and
-- Chatham County Tax Commissioner
The Chatham County Tax Commissioner also provided notice of its
tax lien claim of $9,408 against certain of the assets proposed
to be sold.
In response, the Debtors asked the Court to overrule all
Objections filed.
Majority of the Objections were from the Debtors' landlords, who
raised a number of overlapping objections to the bidding
procedures, Shai Y. Waisman, Esq., Weil, Gotshal & Manges LLP, in
New York, the Debtors' counsel, noted.
Some Objections raised are procedurally improper, as these are
objections to the sale, and not to the Bidding Procedures, Mr.
Waisman added. He explained that Objections to the Sale are
improper at that time, as no transaction or agreement has yet
been reached.
To the extent the Objecting Landlords wish to compel payment of
other postpetition obligations, they must do so by filing a
motion or notice to compel the Debtors to make payment. The
Debtors will be paying August 2008 rent as and when due, Mr.
Waisman related.
Pursuant to the Bidding Procedures, the Debtors will provide to
the Landlords information sufficient to provide adequate
assurance of future performance, Mr. Waisman said. The Bidding
Procedures preserve the Landlords' rights to request additional
adequate assurance information and, if not satisfied, to object
to the proposed assumption and assignment.
According to Mr. Waisman, the Debtors have agreed to serve a
certain "Assignment Schedule" electronically. Parties wishing to
receive an electronic copy must make a specific request to the
Debtors at:
Matthew.Curro@Weil.com or
Christopher.Stauble@Weil.com
and provide a valid e-mail address. Adequate assurance
information will be served electronically on the Landlords either
contemporaneously with the Assignment Schedule, or as soon as
thereafter possible, he added.
Mr. Waisman asserted that these Procedures provide the Landlords
with ample time to analyze and object to the Debtors' Assignment
Schedule while allowing them to consummate any assignment in a
manner that will provide the greatest value to their estates.
To the extent cure payments are paid by the Debtors, the Debtors
will agree to escrow the undisputed portions of any cure amounts
to which an objection is received. However, the Debtors object
to paying undisputed cure amounts before the resolution of the
entire amount required to cure. In the event those cure amounts
cannot be resolved on terms acceptable to the Debtors, they may
exercise their statutory rights to reject those Leases, according
to Mr. Waisman.
The Debtors will endeavor to work with the Landlords to include
appropriate additions to the Sale Guidelines that do not, in the
Debtors' judgment, adversely affect the Debtors' ability to
maximize the value of their estates and assets in any liquidation
or store closing sale.
With respect to New York City's concern, the Debtors do not
believe that any sale of their assets will include personally
identifiable information in contravention of their privacy
policy. In the event of any sale not in accordance with the
Debtors' privacy policy, they will notify the Court and other
parties-in-interest and seek the appointment of a consumer
privacy ombudsman pursuant to Section 332 of the Bankruptcy Code.
Among other things, the Debtors have agreed to amend the proposed
sale order to provide that the AGI Parties' -- AGI Logistics,
Inc., AGI Logistics USA LLC, and AGI Logistics Foreign Holdings,
LLC -- cargo will not be sold pursuant to the Sale.
These parties' Objections have also been resolved:
-- Expeditors International of Washington, Inc.
-- Flying Pigz LLC, joined by Chickiii Productions, Inc.
-- University Mall Associates, LLC
Headquartered in Port Washington, New York, Steve and Barry LLC
-- http://www.steveandbarrys.com/-- is a national casual
apparel retailer that offers high quality merchandise at
low prices for men, women and children. Founded in 1985, the
company operates 276 anchor and junior anchor shopping center
and mall-based locations throughout the U.S. At STEVE & BARRY'S
(R) stores, shoppers will find brands they can't find anywhere
else, including the BITTEN(TM) collection, the first-ever
apparel line created by actress and global fashion icon Sarah
Jessica Parker, and the STARBURY(TM) collection of athletic and
lifestyle apparel and sneakers created with NBA (R) star Stephon
Marbury.
Steve & Barry's, LLC, and 63 affiliates filed separate voluntary
petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead
Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq., at
Weil, Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts.
Diana G. Adams, United States Trustee for Region 2, has appointed
seven members to the Official Committee of Unsecured Creditors in
the Debtors' Chapter 11 cases.
When the Debtors filed for bankruptcy, it listed $693,492,000 in
total assets and $638,086,000 in total debts.
(Steve & Barry's Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
STEVE & BARRY'S: Gets Okay to Use Cash Collateral on Final Basis
----------------------------------------------------------------
The United States Bankruptcy Court for the Southern District of
New York authorized Steve & Barry's, LLC, and its debtor-
affiliates to use Cash Collateral on a final basis for the period
from the Petition Date through the earliest to occur of:
(i) the day the Prepetition Lenders declare an
event of default -- the Remedies Notice Period;
(ii) 11:59 p.m., on August 22, 2008; or
(iii) the Closing Date of a Going-concern Sale or a Full Chain
Liquidation.
All Objections to the extent not withdrawn or resolved are
overruled.
The Cash Collateral may be used during the Specified Period
solely up to the amounts -- not to exceed 110% of the amounts in
the Budget on a cumulative, aggregate rolling basis measured
weekly as of the close of business on Friday of each week -- at
the times, and for the purposes identified in the Budget approved
by the Prepetition Agents, each in its sole discretion.
However, during the Remedies Notice Period, the Debtors may use
the Cash Collateral in accordance with the terms and provisions
of the Budget solely to meet payroll obligations and to pay
expenses critical to the preservation of the Debtors and their
estates as agreed by the Prepetition Revolver Agent and
Prepetition Term Loan Agent, each in its sole discretion.
The Debtors are also authorized to grant, and have granted, to
the Prepetition Revolver Agent, for the benefit of itself, the
Prepetition Revolver Lenders and the Prepetition Junior
Participants, additional and replacement continuing valid,
binding, enforceable, non-avoidable, and automatically perfected
postpetition security interests in and liens on any and all
presently owned and hereafter acquired personal property, real
property and all other assets of the Debtors, together with any
proceeds.
The Debtors are also authorized to grant, and have granted, to
the Prepetition Term Loan Agent, for the benefit of itself and
the Prepetition Term Loan Lenders, additional and replacement
continuing valid, binding, enforceable, non-avoidable, and
automatically perfected postpetition security interests in and
liens on the Collateral.
As further adequate protection against any Diminution in Value of
their interests, the Prepetition Revolver Agent, Prepetition
Revolver Lenders and Prepetition Junior Participants in the
Prepetition Collateral; and Prepetition Term Loan Agent, and
Prepetition Term Loan Lenders in the Prepetition Collateral were
granted, as and to the extent provided by Sections 503(b) and
507(b) of the Bankruptcy Code, allowed superpriority
administrative expense claims.
To the extent certain landlords held valid, binding, enforceable,
non-avoidable and perfected liens on and security interests in
collateral located in their leased premises and proceeds and
accounts receivables as of the Petition Date, pursuant to
Sections 361 and 363(e) of the Bankruptcy Code, the Landlords are
granted additional and replacement continuing valid, binding,
enforceable, non-avoidable and automatically perfected
postpetition security interests in and liens on the Landlord
Collateral from and after the Petition Date as adequate
protection against any diminution in value of their interests in
the collateral.
The automatic stay has been modified, as necessary, to effectuate
all the terms and provisions of the Final Cash Collateral Order,
the Court held.
A full-text copy of the Final Cash Collateral Order and relevant
exhibits is available for free at:
http://bankrupt.com/misc/S&B_FinalCashCollOrder&Exhibits.pdf
Debtors Address Objections
Prior to the Court's entry of the Final Cash Collateral Order,
counsel for the Debtors, Shai Y. Waisman, Esq., at Weil, Gotshal
& Manges LLP, in New York, noted that the objections to the
Debtors' Cash Collateral Motion generally fall into four
categories -- tax liens; liens with respect to leases; landlords'
request for adequate protection; and adequate protection to be
provided to Prepetition Lenders.
He explained that the Debtors' proposed final order will provide
that Adequate Protection Liens attach solely to proceeds of
leases and not to the leases themselves. The proposed final
order will also provide that any remedies taken by the
Prepetition Lenders will be in accordance with applicable law,
governing leases, consents of applicable landlord, or as
otherwise ordered by the Court.
The Debtors noted that they will agree to grant certain Objecting
Landlords adequate protection liens on their alleged collateral
junior to all liens held by or granted to the Prepetition Lenders
to the extent of any diminution in the Objecting Landlords'
interests in their collateral. This is without prejudice to the
Debtors' rights to challenge those liens on any basis, Mr.
Waisman avers.
The Official Committee of Unsecured Creditors has insisted that a
carve-out of $825,000 should be established for its professionals,
with a corresponding carve-out of $1,475,000 for the Debtors'
professionals and a separate carve-out for expenses of committee
members.
Mr. Waisman argued that there is no basis for bifurcating the
carve-out for the professionals of the Creditors Committee and
the Debtors. The proposed division is arbitrary and does not
reasonably reflect the services provided by professionals for the
Creditors Committee and the Debtors, he said.
The Debtors informed the Court that they will deliver the
information that is being provided to the Prepetition Lenders to
the Creditors Committee. The Debtors also agreed to provide the
Creditors Committee automatic standing to pursue any "Challenge,"
Mr. Waisman said.
The Debtors further noted that the Objections filed by these
parties have been resolved:
-- Tax Appraisal District of Bell County, Texas, County of
Brazos, and Central Appraisal District of Taylor County
-- Arlington ISD, City of Grapevine, City of Haltom City,
Grapevine-Colleyville ISD, Brazoria County, Alief ISD,
Harris-FB MUD #4, and the City of Katy
-- Fort Bend County, Harris County, Katy ISD, Harlingen,
Harlingen CISD, Irving ISD, Jefferson County, Meverick
County, and Tarrant County
-- Brazos Outlets Center, LLC, West Manchester Mall LLC,
Steamtown Mall Partners, L.P., Carousel Center Company,
L.P., Pyramid Mall of Glens Falls NewCo, L.L.C., EklecCo
NewCo, LLC, Riverside Enterprises, L.L.C., Salmon Run
Shopping Center, L.L.C., Pyramid Mall of Ithaca, L.L.C.,
Pyramid Walden Company, L.P., Lanesborough Enterprises
NewCo, LLC, Pyramid Mall of Hadley NewCo, L.L.C., and
Independence Center, LLC
-- PCCP IRG Columbus, LLC
Headquartered in Port Washington, New York, Steve and Barry LLC
-- http://www.steveandbarrys.com/-- is a national casual
apparel retailer that offers high quality merchandise at
low prices for men, women and children. Founded in 1985, the
company operates 276 anchor and junior anchor shopping center
and mall-based locations throughout the U.S. At STEVE & BARRY'S
(R) stores, shoppers will find brands they can't find anywhere
else, including the BITTEN(TM) collection, the first-ever
apparel line created by actress and global fashion icon Sarah
Jessica Parker, and the STARBURY(TM) collection of athletic and
lifestyle apparel and sneakers created with NBA (R) star Stephon
Marbury.
Steve & Barry's, LLC, and 63 affiliates filed separate voluntary
petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead
Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq., at
Weil, Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts.
Diana G. Adams, United States Trustee for Region 2, has appointed
seven members to the Official Committee of Unsecured Creditors in
the Debtors' Chapter 11 cases.
When the Debtors filed for bankruptcy, it listed $693,492,000 in
total assets and $638,086,000 in total debts.
(Steve & Barry's Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
STH 6,8: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------
Debtor: STH 6,8,10,11,13 Inc.
16009 North 81st Street
Suite 100
Scottsdale, AZ 85260
Bankruptcy Case No.: 08-10479
Chapter 11 Petition Date: August 13, 2008
Court: District of Arizona (Phoenix)
Judge: Hon. Redfield T. Baum Sr.
Debtor's Counsel: Shelton L. Freeman, Esq.
Deconcini McDonald Yetwin & Lacy PC
7310 North 16th Street #330
Phoenix, AZ 85020
Tel: (602) 282-0500
Fax: (602) 282-0520
Email: tfreeman@dmylphx.com
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
WRI Communities Fund 1, LLC Bank Loan $10,507,399
1301 Fifth Avenue, Suite 3100
Seattle, WA 98101
Achen Contractors, LLC Trade debt $27,443
550 South 79th Street
Arizona Wholesale Supply Trade debt $29,281
Company
P.O. Box 2929
Phoenix, AZ 85062-2979
Artistic Stairs Trade debt $3,201
4116 East Superior, Suite 7
Phoenix, AZ 85040
BBP Concrete Co. Trade debt $24,513
7777 North 70th Avenue
Glendale, AZ 85303-1334
Crum Plumbing, Inc. Trade debt $14,600
1410 Qest Houston Avenue
Gilbert, AZ 85233
Fordyce Floors Trade debt $40,109
4409 East Baseline Road
Suite 130
Phoenix, AZ 85042
Jade Grading Trade debt $4,816
10646 East Pecos Road
Mesa, AZ 85212
Kelly Masonry Trade debt $4,934
2302 West Corrine Drive
Phoenix, AZ 85029
L& S Enterprises Trade debt $3,706
3385 North Nevada Street
Chandler, AZ 85225
New Electric, Inc. Trade debt $5,351
7310 West Roosevelt Street
Suite 14
Phoenix, AZ 85043
Norcraft Companies L.P. Trade debt $4,158
3020 Denmark Avenue
Suite 100
Eagan, MN 55121
Palo Verde Plastering Trade debt $9,099
23440 North 35th Street
Glendale, AZ 85310
Paramount Windows Corp. Trade debt $4,427
550 West Southern Avenue
Tempe, AZ 85282
Poco Verde Landscape Trade debt $10,840
520 West Warner Road
Tempe, AZ 85284
R/S Service & Supply Trade debt $4,675
10227 North El Mirage Road
El Mirage, AZ 85335
Roadrunner Drywall Corp. Trade debt $10,803
7918 East McClain Drive
Scottsdale, AZ 85260
San Tan Arizona Roofing Trade debt $23,725
Systems, LLC
741 North Monterey Street
Gilbert, AZ 85233
San Tan Heights HOA Trade debt $49,706
P.O. Box 105260
c/o CCMC-Western Region
Atlanta, GA 30348-5260
Sonoran Air Trade debt $6,753
21415 North 15th Lane
Suite 100
Phoenix, AZ 85027
STORM CAT: In Talks with Lenders to Cure Credit Pact Violation
--------------------------------------------------------------
Storm Cat Energy Corporation said that was not in compliance with
the financial and minimum average daily production covenants in
the amended credit agreement. The company is discussing a
possible wavier or amendment to the amended credit agreement with
its lenders. However, absent a waiver or an amendment to the
financial covenants or repayment or refinancing of the credit
facility, it is likely that the company will not be in compliance
with the covenants for the next twelve months.
Credit Facility
On Dec. 27, 2007, Storm Cat Energy (USA) Corporation, a subsidiary
of Storm Cat, entered into that certain Credit Agreement with
Wells Fargo Foothill LLC, as agent, and the additional lenders,
which provides for certain credit facilities. Additionally, Storm
Cat agreed to guarantee the obligations of Storm Cat (USA) under
the credit facility.
On April 17, 2008, Storm Cat, Storm Cat (USA), and their
subsidiaries entered into a First Amendment to Credit Agreement.
The credit facility consists of a term loan facility and a
revolving facility. The amended credit agreement provides for a
semi-annual evaluation of such amount, determined based on Storm
Cat's oil and natural gas reserves.
As of June 30, 2008, the credit facility consists of a term loan
facility in an aggregate principal amount of $40.0 million and a
revolving facility in an aggregate principal amount of
$25.0 million. Storm Cat's borrowing base under the credit
facility was $65.0 million as of June 30, 2008. As of June 30,
2008, the company has a total of $64.6 million outstanding
pursuant to the amended credit agreement, which consisted of
$40.0 million on the term loan facility and $24.6 million on the
revolving facility.
Storm Cat and the subsidiary guarantors have also executed and
delivered certain other related agreements and documents pursuant
to the credit facility, including a guaranty agreement, security
and pledge agreement and mortgages. The obligations of Storm Cat,
Storm Cat (USA), and their subsidiaries under the credit facility
are secured by a first priority security interest in favor of
Wells Fargo for the benefit of the lenders, in Storm Cat and its
subsidiaries' material tangible and intangible assets, and proved
reserves, among other things.
Each loan under the credit facility bears interest at a base rate
or Eurodollar rate, as requested by Storm Cat, plus an applicable
percentage based on Storm Cat's usage of the facility. The
applicable margin above the base rate and the Eurodollar rate for
the term loan is 6.75% and 8.00%, respectively. The applicable
margin above the base rate and the Eurodollar rate for the
revolving credit facility ranges from 0.75% to 1.25% and 2.00% and
2.50%, in each case depending on its usage under the borrowing
base. Interest on funds drawn will be paid monthly, except that
interest on loans based on the Eurodollar rate will be payable at
the end of each Eurodollar interest period of one, two, three or
six months, and in any event at least every three months. As a
result of the defaults, the lenders may increase the interest rate
accruing on the outstanding loans by 2.0% above the rate otherwise
applicable as default interest.
The credit facility matures on Sept. 27, 2011, or Dec. 27, 2012,
in the event the convertible notes are entirely converted into
equity, with no remaining cash payment obligations, or are
refinanced with a maturity date not earlier than June 27, 2013.
The company stated that its lenders could accelerate its
indebtedness under the credit facility and exercise any available
rights and remedies. The company's lenders could prevent them
from paying interest to the holders of its convertible notes. The
failure to make its scheduled interest payments or the
acceleration of the indebtedness under the amended credit
agreement would result in a default of its convertible notes.
Accordingly, the $64.6 million outstanding under the credit
facility at June 30, 2008, is classified as a current liability in
the consolidated balance sheet at June 30, 2008.
Selected Financial Results for 2008 Second Quarter
For the quarter ended June 30, 2008, the company reported a net
loss of $4.7 million compared to a net loss of $4.6 million for
the second quarter of 2007.
The company has a working capital deficit of $87.7 million at
June 30, 2008. This compares to a deficit in working capital of
$2.0 million at Dec. 31, 2007, and $12.7 million at March 31,
2008. Reclassification of $64.6 million outstanding under its
credit facility its working capital deficit.
The company is considering various alternatives to remedy the
noncompliance with the covenants in the amended credit agreement,
the working capital deficit, and to provide funding for operations
and future capital spending, including the possible sale of
assets, amendment of the amended credit agreement, or raising
additional equity capital.
About Storm Cat Energy Corporation
Based in Alberta, Canada, Storm Cat Energy Corporation --
http://www.stormcatenergy.com/-- is engaged in the exploitation,
development and production of crude oil and natural gas with focus
on unconventional natural gas resources from coal seams, fractured
shales and tight sand formations. The company's estimated proved
reserves as of Dec. 31, 2007, were 44.5 billion cubic feet of
natural gas of natural gas. All of the drilling activities are
conducted on a contract basis with independent drilling
contractors. The company's principal product is natural gas. The
principal markets are natural gas marketing companies, utilities
and industrial or commercial end-users.
TERRY ANCIL: Case Summary & Nine Largest Unsecured Creditors
------------------------------------------------------------
Debtors: Terry Richard Ancil
Wanda Marie Ancil
420 West Cross Street
Anderson, IN 46016
Bankruptcy Case No.: 08-09778
Chapter 11 Petition Date: August 13, 2008
Court: Southern District of Indiana (Indianapolis)
Judge: Frank J. Otte
Debtors' Counsel: Edward B. Hopper, II, Esq.
Edward B. Hopper, II Attorney at Law
(ehopper@ebhopper-legal.com)
202 Marott Center
342 Massachusetts Avenue
Indianapolis, IN 46204
Tel: (317) 822-9085
Fax: (317) 822-9086
Total Assets: $2,209,634
Total Debts: $2,116,597
Debtors' list of its nine largest unsecured creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Star Bank Real Estate $625,000
735 Main Street Secured:
P.O. Box 151600 $350,000
Anderson, IN 46015-1600
Chase Credit Card $42,975
Cardmember Service
P.O. Box 94014
FIA Card Services Credit Card $17,247
P.O. Box 15726
Wilmington, DE 19886
American Express Credit Card $13,600
Citi Cards Credit Card $10,620
Lowes Credit Card $4,355
G.E. Money Bank Credit Card $3,999
Discover Credit Card $168
Stewart & Irwin P.C. Legal Fees Unknown
TEEVEE TOONS: Committee Wants Affiliates' Assets Consolidated
--------------------------------------------------------------
The Official Committee of Unsecured Creditors in the chapter 11
case of TEEVEE Toons, Inc., asks the United States Bankruptcy
Court for the Southern District of New York, in Manhattan, to
consolidate TEEVEE Toons' two non-bankrupt affiliates -- TVT Music
Inc. and Wax Trax Records Inc. -- Bloomberg News reports.
The Committee argues that the Debtor and the affiliates operate as
one unit with funds flowed between them and their employees are
paid through the Debtor's payroll account, according to Bloomberg.
The Committee says that the Debtor and its affiliates together
guaranteed loans secured by their assets, Bloomberg relates. In
1990, the Debtor funded its operation through TVT Catalog
Enterprises, wherein it transfered certain assets, of which were
pledge as security for a $23.5 million loan from Prudential
Securities Creditor Corp., the report says.
When the Debtor defaulted on Prudential Securities loan in 2005,
the report says that the Debtor obtained a $15 million loan from
D.B. Zwirn Special Opportunities Fund LP and LFG National Capital
LLC. The Debtor used its affiliates' assets as collateral, the
report adds.
About TEEVEE Toons
Headquartered in New York City, TEEVEE Toons Inc. dba T.V.T.
Records -- http://www.tvtrecords.com/-- is an American record
label. The Debtor filed for Chapter 11 petition on Feb. 19, 2008
(Bankr. S.D.N.Y. Case No.: 08-10562). The Official Committee of
Unsecured Creditors has selected Sonnenschein Nath & Rosenthal LLP
as its counsel. Alec P. Ostrow, Esq. and Constantine Pourakis,
Esq, at Stevens & Lee, P.C. represent the Debtor in its
restructuring efforts. The U.S. Trustee for Region 2 appointed
five creditors to serve on an Official Committee of Unsecured
Creditors. When the Debtor filed for protection from its
creditors, it listed estimated assets and debts of between
$10 million and $50 million.
UBS AG: Moody's Says No Rating Implications on 2Q 2008 Earnings
---------------------------------------------------------------
Moody's Investors Service reports that there are no rating
implications in response to UBS AG's second quarter 2008 earnings.
The deposits and senior debt of UBS AG are rated Aa2, and the
bank's financial strength rating is B-. The bank's ratings were
lowered on July 4, 2008, and the Q2 2008 results are consistent
with our expectations at the time of that rating action. The
rating outlook remains stable.
UBS announced a net loss of CHF358m in Q2 2008 (compared to a net
loss of CHF11.5bn in Q108 and net profit of CHF5.5bn in Q207).
Earnings included writedowns and losses of USD5.1bn on risk
positions, as well as a USD900m provision for a settlement related
to auction rate securities. The losses were substantially offset
by tax credits of CHF3.8bn.
The majority of the losses on risk positions are related to US
real-estate exposures: US subprime (USD0.9bn), Alt-A (USD0.7bn),
US reference linked note programme (USD0.5bn), and an additional
Credit Value Adjustment for monoline protection (USD2.9bn). The
loss also includes write-downs of US student loan asset-backed
securities (USD0.5bn) and leveraged finance (USD0.2bn).
With regards to the bank's troubled US real estate and related
structured credit position, Moody's believes that the current
marks taken by the bank are prudent and in line with the rating
agency's own estimate of current losses. Although risk exposures
have been substantially reduced further in Q2 2008, the
possibility still remains that a further deterioration in market
conditions will lead to new write-downs over the course of the
year. "But importantly, the bank has replenished capital to a
high level, and therefore we expect that potential further write-
downs can be absorbed by the bank without the need for additional
recapitalization," said Elisabeth Rudman, a Senior Credit Officer
at Moody's. Moody's considers the current Aa2 rating could absorb
further losses of up to around USD7 bn before triggering downward
rating pressure. UBS could suffer substantially higher losses and
still maintain a Tier 1 capital ratio above 8%, however Moody's
considers high capital ratios to be core to UBS' franchise. The
bank's Tier 1 ratio at the end of Q208 was 11.6% (on a Basel 2
basis).
UBS continues to face challenges returning to a position of
stability following the losses in the fixed income division. In
particular, Moody's considers a robust risk management framework
will be a vital factor for the bank's overall creditworthiness.
The bank has already initiated changes to senior management, risk
management, and corporate governance and has announced a
repositioning of the bank at the same time as these results. This
includes a reversal of the bank's integrated 'one firm' business
model, by separating the business divisions into three autonomous
units with the aim of increasing flexibility. "However, we
reiterate our position at the time of our rating action in July,
that it is not yet clear whether these changes will be effective
considering the complexity of the task," Mr. Rudman said.
UBS is undertaking a strategic review of its investment banking
operations and the future of the bank's FICC (fixed income,
currencies and commodities) division is less clear. The bank
remains a leading player in many areas, including advisory, equity
capital markets and equity sales and trading, but the operating
environment will remain tough for investment banking activities
for some time (the division reported a pre-tax loss of CHF5.2bn,
compared to a pre-tax loss of CHF18.2bn in the previous quarter,
and a pre-tax profit of CHF1.7bn in Q2 2007).
UBS's high profile difficulties have led to net new money outflows
of CHF43.8bn during Q2 2008, including net new money outflows of
CHF19.3bn in the Global Wealth Management & Business Banking
division. This division reported pre-tax profit of CHF1.1bn, which
included the impact of the auction rate securities provision, and
was down 48% on the previous quarter. "Despite the challenges
influencing the performance of this division, Moody's believes
that it will remain a core and profitable franchise within UBS",
said Rudman. UBS's Asset Management business continues to face
performance issues in some of its funds and net new money outflows
were CHF24.5bn (however pre-tax profits were CHF352m, up 7% on the
previous quarter). We expect the bank to continue to experience
weaker net new money inflows in the short-medium term due to the
bank's reputation issues as well as the potentially damaging tax
investigations in the US.
UBS AG is headquartered in Zurich; as of 30 June 2008 it had total
assets of CHF2,078 billion and total equity of CHF 52.3 billion.
VALENCE TECHNOLOGY: June 30 Balance Sheet Upside-Down by $68 Mil.
-----------------------------------------------------------------
Valence Technology, Inc. reported financial results for its fiscal
2009 first quarter ended June 30, 2008.
At June 30, 2008, the company's balance sheet showed total assets
of $36.7 million and total liabilities of $105.1 million,
resulting in a $68.3 million stockholders' deficit.
The company reported a net loss of $5.5 million for the quarter
ended June 30, 2008, compared to a net loss of $4.3 million for
the same period last year.
For the first quarter of fiscal 2009, the company reported total
revenue of $11.0 million compared to $4.1 million for the same
period last year. The increased revenue was mainly due to
increased volumes of Segway product sales as well as new shipments
of large-format energy storage solutions to The Tanfield Group
PLC's Smith Electric Vehicle division.
"I am very pleased that during the first quarter we produced and
shipped more energy storage packs than any other period in our
company˙s history," Robert L. Kanode, president and chief
executive officer of Valence Technology, said. "The steps we have
taken over the last few quarters to begin establishing the
appropriate infrastructure for the continued future growth of our
company are gaining traction. We are very encouraged with the
growing level of interest in our energy storage solutions and vast
portfolio of intellectual property as clearly the marketplace is
beginning to better understand the advantages of our safe lithium
ion phosphate technology."
Gross margin declined to a negative $26,000 compared to a positive
$525,000 last year. The recent quarter included inventory
adjustments which increased cost of sales and reduced gross
margin. This included a $1.5 million adjustment related to the
previously announced plans to discontinue the N-Charge product
line and focus on higher margin large-format energy solutions.
Overall operating expenses rose to $4.6 million from $3.5 million
in last year's quarter. Reasons for the higher expense levels
include increased marketing, research, and product development
costs.
About Valence Technology Inc.
Valence Technology Inc. (NASDAQ:VLNC) -- http://www.valence.com/
-- develops and markets the industry's commercially available,
safe, large-format family of lithium phosphate rechargeable
batteries. Valence holds a worldwide portfolio of issued and
pending patents relating to its lithium phosphate rechargeable
batteries. The company has facilities in Austin, Texas; Las
Vegas, Nevada; Mallusk, Northern Ireland and Suzhou, China.
VERSO PAPER: S&P Affirms 'B' Rating on IPO Completion, Lower Debt
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on
Memphis, Tenn.-based paper manufacturer Verso Paper Holdings LLC,
including its 'B' corporate credit rating. The outlook is
positive. At the same time, S&P removed the ratings from
CreditWatch with positive implications where they were originally
placed on April 29, 2008, following the company's announcement of
a planned initial public offering (IPO) to raise about $337
million in proceeds to be used to reduce debt.
The ratings affirmation and CreditWatch resolution reflect the
completion of the IPO, although proceeds of about $150 million
were less than initially expected. The proceeds were used to
reduce outstanding debt, which resulted in improved credit
measures. The positive outlook reflects Verso's improved financial
risk profile because of the reduction of debt and benefits from
sales price increases and cost-reduction initiatives.
VERTIS HOLDINGS: Secures $650MM Exit Financing from GECC, BofA
--------------------------------------------------------------
Prior to their bankruptcy filing, Vertis Holdings, Inc., and its
debtor-affiliates received a series of commitments from lenders to
provide them with financing in connection with their emergence
from Chapter 11. Among those lenders are General Electric
Capital Corporation and Bank of America, N.A.
Exit Facility for Vertis
The Debtors' proposed exit facility comprises a revolving credit
facility and a term loan facility, aggregating $650,000,000:
Exit Facility Loan Amount
------------- ---------------------------------
Revolving Credit Up to $250,000,000, comprised of:
Facility with General
Electric Capital * A senior secured last-in
Corporation, among first-out revolving credit
other lenders tranche of $225,000,000
* A senior secured first-in
last-out fully funded tranche
of $25,000,000
The Bank of America, N.A., has
agreed to commit $35,000,000 as
part of the LIFO tranche.
Avenue Investments LP agreed to
acquire, fund and hold by way
of a participation, the entire
$25,000,000 FILO Tranche of the
Revolving Credit Facility should
GE Capital elect to have Avenue
fund and hold it.
Exit Term Loan Up to $400,000,000, allocated as:
* a first out Term Loan B tranche,
aggregate $250,000,000, to be
provided by Morgan Stanley
Senior Funding, among other
lenders; and
* a last out Term Loan C Tranche,
aggregating $150,000,000, to be
provided by Avenue Investments.
The Debtors intend to use proceeds of the Exit Financing:
(i) to repay in full in cash all amounts owing under the DIP
Credit Facility;
(ii) to pay related fees and expenses incurred;
(iii) to fulfill obligations under the Vertis Debtors'
Prepackaged Plan of Reorganization; and
(iv) for working capital and general corporate purposes.
Pre-Closing Obligations
With respect to the proposed exit financing, the Revolver and
Term Exit Lenders entered into separate commitment letters and
fee letters with the Debtors dated July 8, 2008.
Under the Revolver Commitment Letters, the Debtors agreed to pay
upon demand to the Revolver Exit Lenders all reasonable fees and
expenses those lenders will incur or incurred by in connection
with the transactions contemplated by the Letters.
Additionally, the Debtors agree to indemnify the Revolver
Exit Lenders from and against liabilities incurred with respect
to the Revolver Commitment Letters, the Revolver Fee Letter and
the Exit Financing.
The Debtors have also agreed to pay Morgan Stanley and Avenue
Investment the fees and expenses, and fulfill the obligations set
forth, under the Exit Term Commitment Letters. Among other
things, the Vertis Debtors agree to pay Morgan Stanley $250,000 to
be applied against certain transaction expenses prior to the
closing of the Exit Term Facility. At Morgan Stanley's request,
prior to the closing of the Exit Financing, the Debtors have
agreed to increase from time to time the Documentation Deposit to
maintain an unused balance of at least $50,000.
The Exit Agents and Lenders seek that the Fee Letters be treated
as confidential information, according to the Debtors' proposed
local counsel, Mark D. Collins, Esq., at Richards, Layton &
Finger, P.A., in Wilmington Delaware. Parties to the Avenue
Commitment Letter also seek that the specific terms pertaining to
the payable fees to Avenue Investments be redacted from the actual
copy of the Commitment Letter.
Accordingly, the Debtors ask the Court for permission to:
(a) perform pre-closing obligations and undertakings under
their Exit Facility Documentation, and pay related
reimbursable fees and expenses and provide
indemnification; and
(b) treat certain information as confidential pursuant to
Section 107(b) of the Bankruptcy Code and Rule 9018 of the
Federal Rules of Bankruptcy Procedure.
The Debtors inform the Court that they intend to provide a copy of
the Fee Letters and the unredacted copies of the Commitment
Letters to the Court, any statutory committee appointed in the
Vertis Debtors' Reorganization Cases and the U.S. Trustee, but
will not file the Fee Letter with the Court.
Likewise, the Vertis Debtors seek that parties receiving a copy
of the Fee Letters and the unredacted copies of the Commitment
Letters not disclose any of their contents to third parties.
Mr. Collins asserts that the Commitment Letters were negotiated
in good faith and the terms of the Letters are the most favorable
among the exit financing proposals. He adds that the amounts
requested as fees and expenses are reasonable.
Moreover, the Debtors estimate the maximum exposure for fees and
expenses under the Commitment Letters is relatively modest in
comparison to the size of the Exit Facility.
A copy of the Exit Term Loan Commitment Letter is available for
free at:
http://bankrupt.com/misc/Avenue_ExitTermCommitmentLetter.pdf
A copy of the Exit Revolver Facility Commitment Letter is
available for free at:
http://bankrupt.com/misc/GECC_RevolvingExitCommitmentLetter.pdf
About Vertis Holdings Inc.
Headquartered in Baltimore, Maryland, Vertis Holdings, Inc. --
http://www.vertisinc.com/-- is a provider of targeted print
advertising and direct marketing solutions to America's retail and
consumer services companies.
The company and its six affiliates filed for Chapter 11 protection
on July 15, 2008 (Bank.D.Del. Case No. 08-11460). Gary T.
Holtzer, Esq. and Stephen A. Youngman, Esq. at Weil, Gotshal &
Manges LLP represent as the Debtors lead counsels and Mark D.
Collins, Esq. and Michael Joseph Merchant, Esq. at Richards Layton
& Finger, P.A. represent as their Delaware local counsels. When
the Debtors filed for protection from their creditors they listed
estimated assets between $500 million and $1 billion, and
estimated debts of more than $1 billion.
VERTIS HOLDINGS: Taps Alvarez & Marsal as Restructuring Advisors
----------------------------------------------------------------
Vertis Holdings, Inc., and its debtor-affiliates seek the U.S.
Bankruptcy Court for the District of Delaware the authority to
employ Alvarez & Marsal North America LLC, as their restructuring
advisors.
A&M has supported and assisted the Debtors, prior to the
bankruptcy filing, in the management of their liquidity resources,
contingency planning efforts and obtainment of their debtor-in-
possession financing facility, pursuant to an engagement letter
dated March 11, 2008, Vertis Secretary John V. Howard, Jr., tells
the Court.
As restructuring advisors, A&M is expected to provide assistance
to the Debtors with respect to the management of prepackaged
restructuring process, including the development of ongoing
supplemental business and financial analyses and supporting
negotiations among the Debtors, their advisors and creditors with
respect to their Chapter 11 cases, Mr. Howard adds.
Specifically, A&M will:
(a) assist the Vertis Debtors in the preparation of financial-
related disclosures, as will be required by the Court,
including schedules of assets and liabilities, statements
of financial affairs and monthly operating reports;
(b) assist the Vertis Debtors with information and analyses
required pursuant to their DIP financing;
(c) assist with the identification and implementation of
short-term cash management procedures;
(d) assist with the identification of executory contracts and
leases and performance of cost and benefit evaluations
with respect to their assumption and rejection;
(e) assist the Vertis Debtors' management team and counsel
focus on the coordination of resources with respect to
their ongoing reorganization efforts;
(f) assist in the preparation of financial distribution to
creditors and other parties-in-interest, including, but
not limited to, cash flow projections and budgets; cash
receipts and disbursement analysis; analysis of various
asset and liability accounts; and analysis of proposed
transactions for which the Court's approval is sought;
(g) attend meetings and assist in discussions with potential
investors, banks and other secured lenders, any official
committees appointed, the U.S. Trustee, and other
professionals and parties-in-interest;
(i) analyze creditor claims by type, entity and individual
claim, including assistance with the development of
databases, as necessary, to track the claims; and
(j) render other general business consulting or other
assistance as the Vertis Debtors' management or counsel
may deem appropriate, provided that they do not duplicate
the services provided by other professionals in the Vertis
Debtors' Chapter 11 cases.
A&M will be paid based on these hourly rates:
Managing Directors $600 - $750
Directors/Senior Directors $400 - $600
Associates/Senior Associates $200 - $400
Administration/Analysts $85 - $200
A&M will also seek reimbursement for reasonable and necessary
out-of-pocket expenses it incurred or will incur for the Debtors'
benefit.
In connection with the preparation for the Debtors' Chapter 11
petition, A&M received various retainers. The unapplied residual
retainer, totaling approximately $175,000, will (i) constitute a
general retainer for postpetition services, (ii) not be segregated
by A&M in a separate account, and (iii) be held until the end of
the Vertis Debtors' cases and applied to A&M's Court-approved
fees.
The Debtors do not owe any amounts to A&M with respect to
prepetition fees and expenses, Mr. Howard notes.
According to Mr. Howard, A&M has advised the Debtors that
it will take every effort to avoid duplication of its services
with Lazard Freres & Co, LLC, the Debtors' proposed financial
advisors.
With respect to the possible disputes that may arise in the
course of A&M's engagement with the Debtors, the parties
agree that:
-- any claim with respect to the Debtors' A&M Employment
Application or A&M's services will be brought before the
Bankruptcy Court or the U.S. District Court for the District
of Delaware if reference is withdrawn; and
-- they will submit first to non-binding arbitration in
accordance with certain dispute resolution procedures.
Jeffrey J. Stegenga, a managing director at A&M, assures the
Court that his firm has no connection with the Vertis Debtors,
their creditors and other parties-in-interest; and does does not
hold any interest adverse to the Vertis Debtors' estates. A&M is
a "disinterested person" as that term is defined under Section
101(14) of the Bankruptcy Code, he maintains.
About Vertis Holdings Inc.
Headquartered in Baltimore, Maryland, Vertis Holdings, Inc. --
http://www.vertisinc.com/-- is a provider of targeted print
advertising and direct marketing solutions to America's retail and
consumer services companies.
The company and its six affiliates filed for Chapter 11 protection
on July 15, 2008 (Bank.D.Del. Case No. 08-11460). Gary T.
Holtzer, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal &
Manges LLP, represent as the Debtors as lead counsel; and Mark D.
Collins, Esq., and Michael Joseph Merchant, Esq., at Richards
Layton & Finger, P.A., represent as their Delaware local counsels.
When the Debtors filed for protection from their creditors they
listed estimated assets between $500 million and $1 billion, and
estimated debts of more than $1 billion.
VERTIS HOLDINGS: Wants Richards Layton as Delaware Counsel
----------------------------------------------------------
Vertis Holdings, Inc., and its debtor-affiliates seek the U.S.
Bankruptcy Court for the District of Delaware the authority to
employ Richards, Layton & Finger, P.A., as their co-counsel, nunc
pro tunc to July 15, 2008.
As the Debtors' co-counsel, Richards Layton will:
(a) advise the Vertis Debtors of their rights, powers and
duties as debtors and debtors-in-possession;
(b) take all necessary action to protect and preserve the
Vertis Debtors' estates, including the prosecution and
defense of the actions commenced, the negotiation of
disputes and the preparation of objections to claims
filed;
(c) prepare all necessary motions, applications, answers,
orders, reports and papers in connection with the
administration of the Vertis Debtors' estates;
(d) attend meetings and negotiations with representatives of
creditors, equity holders or prospective investors or
acquirers and other parties-in-interest;
(e) appear before the Court, any appellate courts and the
Office of the United States Trustee for the District of
Delaware to protect the interest of Vertis Debtors; and
(f) perform all other necessary legal services in connection
with the bankruptcy cases of the Vertis' Debtors.
Vertis Holdings Secretary John V. Howard, Jr., relates that due to
the extensiveness of the nature of the services that is to be
provided by Richards Layton, an evergreen retainer is necessary.
Prior to bankruptcy filing, Richards Layton received a $125,000
retainer in connection with the Debtors' reorganization.
The principal Richards Layton professionals designated to
represent the Vertis Debtors are:
Professional Hourly Rate
------------ -----------
Mark D. Collins $610
Michael J. Merchant $475
Lee E. Kaufman $275
Cory D. Kandestin $245
Cathy Greer $185
Richard Layton will also seek reimbursement of actual necessary
expenses incurred, including telephone, telecopier, regular and
express mail, special or hand delivery, document processing,
photocopying, and travel expenses.
Mark D. Collins, Esq., a director at Richards, Layton & Finger,
P.A., assures the Court that his firm is a "disinterested person"
as that term is defined in Section 101(14) of the Bankruptcy
Code, as modified by Section 1107(b).
About Vertis Holdings Inc.
Headquartered in Baltimore, Maryland, Vertis Holdings, Inc. --
http://www.vertisinc.com/-- is a provider of targeted print
advertising and direct marketing solutions to America's retail and
consumer services companies.
The company and its six affiliates filed for Chapter 11 protection
on July 15, 2008 (Bank.D.Del. Case No. 08-11460). Gary T.
Holtzer, Esq. and Stephen A. Youngman, Esq. at Weil, Gotshal &
Manges LLP represent as the Debtors lead counsels and Mark D.
Collins, Esq. and Michael Joseph Merchant, Esq. at Richards Layton
& Finger, P.A. represent as their Delaware local counsels. When
the Debtors filed for protection from their creditors they listed
estimated assets between $500 million and $1 billion and estimated
debts of more than $1 billion.
VERTIS HOLDINGS: To Hold Conference Call on August 15, 2008
-----------------------------------------------------------
Vertis Communications announced that it will be holding a
conference call on August 15, 2008 at 11:00 a.m., Eastern Time, to
discuss earnings for the three and six months ended June 30, 2008.
Mike DuBose, Vertis' chairman and chief executive officer, will
host the conference call at (800) 462-3053, or 1 (706) 902-2200
for international callers. The passcode confirmation is
59281780. A recording of the call will be available for review
for one week at 800.642.1687 or 1.706.645.9291 for international
callers.
About Vertis Holdings Inc.
Headquartered in Baltimore, Maryland, Vertis Holdings, Inc. --
http://www.vertisinc.com/-- is a provider of targeted print
advertising and direct marketing solutions to America's retail and
consumer services companies.
The company and its six affiliates filed for Chapter 11 protection
on July 15, 2008 (Bank.D.Del. Case No. 08-11460). Gary T.
Holtzer, Esq. and Stephen A. Youngman, Esq. at Weil, Gotshal &
Manges LLP are the Debtors lead counsels and Mark D. Collins, Esq.
and Michael Joseph Merchant, Esq. at Richards Layton & Finger,
P.A. are their Delaware local counsels. Lazard Freres & Co. LLC
is the company's financial advisors. When the Debtors filed for
protection from their creditors, they listed estimated assets of
between $500 million and $1 billion and estimated debts of more
than 1 billion.
VERTIS HOLDINGS: Has Until Sept. 29 to File Schedules of Assets
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extended
the time by which Vertis Holdings, Inc. and ACG Holdings, Inc.,
and their debtors-affiliates must file Schedules of Assets and
Liabilities, schedules of executory contracts and unexpired
leases, lists of equity holders, schedules of current income and
expenditures, and statements of financial affairs through and
including September 29, 2008.
As reported in the Troubled Company Reporter on July 30, 2008,
Vertis and ACG are required to file their Schedules and Statements
by August 14, 2008. Vertis, however, noted that the preparation
of the Schedules and Statements that relate to more than its
50,000 creditors will require significant expenditure of time and
effort.
Similarly, ACG asserted that given the large number of its
creditors, the complexity of its businesses and its limited
staffing, the 30-day extension period under Local Rule 1007-1(b)
is not sufficient.
In the event ACG seeks to establish a claims bar date, the Debtor
seeks to have its Schedules and Statements filing deadline
extended to a date that is 10 days after the filing of a Bar Date
motion.
Moreover, Vertis and ACG asked Judge Christopher S. Sontchi to
permanently waive the requirement for them to file the Schedules
and Statements upon the effective date of their Prepackaged Plan
of Reorganization.
About American Color Graphics
American Color Graphics Inc. -- http://www.americancolor.com/--
is one of North America's largest and most experienced full
service premedia and print companies, with eight print locations
across the continent, six regional premedia centers, photography
studios nationwide and a growing roster of customer managed
service sites. The company provides solutions and services such
as asset management, photography, and digital workflow solutions
that improve the effectiveness of advertising and drive revenues
for their customers.
The company filed and its four affiliates filed for Chapter 11
protection on July 15, 2008 (Bank.D.Del. Case No. 08-11467).
Pauline K. Morgan, Esq. and Sean T. Greecher ,Esq., at Young,
Conaway, Stargatt & Taylor represent the Debtors in their
restructuring efforts. Lehman Brothers, Inc. serves as the
company's financial advisors. When the Debtors filed for
protection from their creditors they listed estimated assets
$100 million to $500 million and estimated debts of $500 million
to $1 billion.
ACG Holdings, Inc. and American Color Graphics also filed
bankruptcy petition under the Companies' Creditors Arrangement Act
before the Ontario Superior Court of Justice (Commercial List) on
July 16, 2008. Jay A. Carfagnini, Esq., David B. Bish, Esq., and
Jason Wadden, Esq. at Goodmans LLP are their solicitors.
PricewaterhouseCoopers Inc. serves as their CCAA Information
Officer.
About Vertis Holdings Inc.
Headquartered in Baltimore, Maryland, Vertis Holdings, Inc. --
http://www.vertisinc.com/-- is a provider of targeted print
advertising and direct marketing solutions to America's retail and
consumer services companies.
The company and its six affiliates filed for Chapter 11 protection
on July 15, 2008 (Bank.D.Del. Case No. 08-11460). Gary T.
Holtzer, Esq. and Stephen A. Youngman, Esq. at Weil, Gotshal &
Manges LLP are the Debtors lead counsels and Mark D. Collins, Esq.
and Michael Joseph Merchant, Esq. at Richards Layton & Finger,
P.A. are their Delaware local counsels. Lazard Freres & Co. LLC
is the company's financial advisors. When the Debtors filed for
protection from their creditors, they listed estimated assets of
between $500 million and $1 billion and estimated debts of more
than 1 billion.
VICORP RESTAURANTS: Has Until October 30 to File Chapter 11 Plan
----------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
extended the exclusive periods of Vicorp Restaurants Corp. and its
debtor-affiliates to:
a) file a Chapter 11 plan until Oct. 30, 2008, and
b) solicit acceptances of that plan until Dec. 29, 2008.
As reported in the Troubled Company Reporter on July 31, 2008, the
Debtors said they need sufficient time to formulate and draft a
Chapter 11 plan and disclosure statement describing the plan, then
present their conclusions to various creditors. The Debtors
expected to complete and file the plan and disclosure statement
within the extended filing period.
About VICORP Restaurants
Based in Denver, Colorado, VICORP Restaurants Inc. --
http://www.vicorpinc.com/-- operates two restaurant concepts
under proven and well-recognized brands, Village Inn and Bakers
Square. Founded in 1958, VICORP has 343 restaurants in 25 states,
consisting of 250 company-operated restaurants and 93 franchised
restaurants. Known for its strong breakfast heritage, Village Inn
has been serving its signature breakfast items like one-of-a-kind
skillet dishes and made-from-scratch pancakes for 50 years. In
addition, Village Inn offers traditional American fare for lunch
and dinner.
The company and its affiliates filed for Chapter 11 protection on
April 3, 2008 (Bankr. D. Del. Lead Case No. 08-10623). Donna L.
Culver, Esq., at Morris Nichols Arsht & Tunnell, and Kimberly
Ellen Connolly Lawson, Esq., Kurt F. Gwynne, Esq., and Richard A.
Robinson, Esq., at Reed Smith LLP, represents the Debtors in their
restructuring efforts. The Debtors selected The Garden City
Group, Inc. as their claims agent. The U.S. Trustee for Region 3,
appointed seven members to the Official Committee of Unsecured
Creditors in the Debtors' cases. Abhilash M. Raval, Esq., Dennis
Dunne, Esq., and Samuel Khalil, Esq., at Milbank Tweed Hadley &
McCloy LLP, represent the Committee in these case.
When the Debtors filed for protection from their creditors, they
listed estimated assets and debts of $100 million to $500 million.
WCI COMMUNITIES: Obtains Approval to Use $50MM Cash Collateral
--------------------------------------------------------------
WCI Communities, Inc., disclosed that the Honorable Kevin J.
Carey, of the U.S. Bankruptcy Court in Wilmington, Delaware, has
approved a package of relief designed to facilitate and ensure the
continued and uninterrupted operation of WCI's business, as
requested.
Importantly, the Court assured current and prospective homebuyers
that WCI's Chapter 11 proceedings would not impact their rights or
create any unexpected risks by, among other things:
-- authorizing WCI to deliver clear title to homes and tower
residences at closing;
-- authorizing and directing all closing agents and title
companies to make all required closing payments and
distributions;
-- authorizing the issuance of required title insurance
policies;
-- determining that deposits and other funds received and
held in trust were not subject to the bankruptcy and
are
to be applied only according to the parties' agreements
and applicable law; and
-- providing for the satisfaction of any liens and
implementing procedures to resolve disputes that should
minimize the need for further court intervention.
"The company has worked very hard to formulate the special relief
it would need so that its transition into Chapter 11 would have no
impact on past, present or future customers," Thomas Lauria of
White & Case, WCI's counsel in the Chapter 11 case, said.
The Court's orders also permit WCI to continue supporting the
operations of Prudential Florida Realty, and its WCI Mortgage
venture, neither of which has sought Chapter 11 relief.
In addition, WCI may continue to provide all recreational
amenities and club-related services at existing projects,
performing ongoing warranty obligations and honoring all customer
incentive programs.
The Court also authorized the payment of all employee wages and
benefits, including the payment of all compensation and
commissions earned by brokers.
"Our workforce is our most valuable and irreplaceable asset,"
David L. Fry, interim president and CEO, said. "For this process
to succeed as it should, we need to make sure that our team
receives all required payments and ongoing benefits", Mr. Fry
added.
As a final matter, the Court approved the company's agreement with
its senior lenders to obtain immediate access to approximately
$50 million of cash on hand.
"This will provide sufficient liquidity to run the business until
the company can finalize a deal for a new debtor-in-possession
credit facility, which we expect to ask the Court to approve on
August 27," Mr. Lauria told the Court at the hearing.
About WCI Communities
Headquartered in Bonita Springs, Florida, WCI Communities, Inc. --
http://www.wcicommunities.com/-- is a fully integrated
homebuilding and real estate services company. It has operations
in Florida, New York, New Jersey, Connecticut, Massachusetts,
Virginia and Maryland. The company directly employs roughly 1,800
people, as well as roughly 1,800 sales representatives as
independent contract employees.
The company and 126 of its affiliates filed for Chapter 11
protection on Aug. 4, 2008 (Bankr. D. Del. Lead Case No.08-11643
through 08-11770). Eric Michael Sutty, Esq., and Jeffrey M.
Schlerf, Esq., at Bayard, P.A, are the Debtors local bankruptcy
counsels. Lazard Freres & Co. represents the Debtors as financial
advisors. The Debtors selected Epiq Bankruptcy Solutions LLC as
their claims & notice agent.
When the Debtors filed for protection against their creditors,
they listed total assets of $2,178,179,000 and total debts of
$1,915,034,000.
WHITEHALL JEWELERS: U.S. Trustee Amends Creditors' Panel Members
----------------------------------------------------------------
Roberta A. DeAngelis, the U.S. Trustee for Region 3, amended the
composition of the Official Committee of Unsecured Creditors of
Whitehall Jewelers Holdings, Inc. and Whitehall Jewelers, Inc.
The new Creditor's Committee members are:
1. SDC Designs LLC
Attn: Abhay Javeri
529 Fifth Avenue
New York, New York 10017
Tel: (212) 764-7979
Fax: (212) 599-4237
2. Leo Schachter Diamonds, LLC
Attn: Jay I. W einblatt, or
Eric Austein
579 Fifth Avenue
New York, New York 10017
Tel: (212) 981-1887, and
(212) 981-1836
Fax: (212) 688-3174
3. Continental Manufacturing, Ltd.
c/o Continental Jewelry USA, Inc.
Attn: Lawrence Lee
115 W. 30 th Street, Ste. 300
New York, New York 10001
Tel: (212) 695-3303
Fax: (212) 695-0997
4. Jewelex New York, Ltd.
Attn: Nandini Doshi, or
Atul Kothari
529 Fifth Avenue, 18 th Floor
New York, New York 10017
Tel: (212) 840-3500
Fax: (212) 840-6077
5. Simon Property Group, Inc.
Attn: Ronald M. Tucker
225 W. Washington Street
Indianapolis, IN 46204
Tel: (317) 263-2346
Fax: (317) 263-7901
6. General Growth Properties, Inc.
Attn: Julie Minnick Bowden
110 N. Wacker Drive
Chicago, IL 60606
Tel: (312) 960-2707
Fax: (312) 442-6374
Official creditors' committees have the right to employ legal
and accounting professionals and financial advisors, at the
Debtors' expense. They may investigate the Debtors' business and
financial affairs. Importantly, official committees serve as
fiduciaries to the general population of creditors they represent.
Those committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
About Whitehall Jewelers
Headquartered in Chicago, Illinois, Whitehall Jewelers Holdings,
Inc. -- http://www.whitehalljewellers.com/-- owns and operates
375 stores jewelry stores in 39 states. The company operates
stores in regional and regional shopping malls under the names
Whitehall and Lundstrom. The Debtors' retail stores operate under
the names Whitehall (271 locations), Lundstrom (24 locations),
Friedman's (56 locations, and Crescent (22 locations). As of June
23, 2008, the Debtors have about 2,852 workers.
The company and its affiliates, Whitehall Jewelers Inc., filed for
Chapter 11 protection on June 23, 2008 (Bankr. D. Del. Lead Case
No. 08-11261). James E. O'Neill, Esq., Kathleen P. Makowski,
Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl &
Jones, LLP, represent the Debtors in their restructuring efforts.
Epiq Bankruptcy Solutions LLC as their claims, noticing and
balloting agent.
When the Debtors' filed for protection against their creditors,
they listed total assets of total assets of $207,100,000 and total
debts of $185,400,000.
* S&P Cuts 93 Ratings on 20 US CDOs; $17BB In Issuance Affected
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 93
tranches from 20 U.S. cash flow and hybrid collateralized debt
obligation (CDO) transactions. S&P removed 45 of the lowered
ratings from CreditWatch with negative implications. At the same
time, S&P placed two ratings on CreditWatch negative, and affirmed
two other ratings and removed them from CreditWatch negative. The
ratings on 48 of the downgraded tranches remain on CreditWatch
with negative implications, indicating a significant likelihood of
further downgrades. The CreditWatch placements primarily affect
transactions for which a significant portion of the collateral
assets currently have ratings on CreditWatch negative or have
significant exposure to assets rated in the 'CCC' category.
The 93 downgraded U.S. cash flow and hybrid tranches have a total
issuance amount of $17.628 billion. Seven of the 20 affected
transactions are high-grade structured finance (SF) CDOs of asset-
backed securities (ABS), which are CDOs collateralized at
origination primarily by 'AAA' through 'A' rated tranches of
residential mortgage-backed securities (RMBS) and other SF
securities. Twelve of the 20 transactions are mezzanine SF CDOs of
ABS, which are collateralized in large part by mezzanine tranches
of RMBS and other SF securities. The other transaction is a CDO of
CDOs that was collateralized at origination primarily by notes
from other CDOs, as well as by tranches from RMBS and other SF
transactions. Today's CDO downgrades reflect a number of factors,
including credit deterioration and recent negative rating actions
on U.S. subprime RMBS securities.
To date, including the CDO tranches listed below and including
actions on both publicly and confidentially rated tranches, S&P
has lowered its ratings on 3,475 tranches from 825 U.S. cash flow,
hybrid, and synthetic CDO transactions as a result of stress in
the U.S. residential mortgage market and credit deterioration of
U.S. RMBS. In addition, 1,337 ratings from 418 transactions are
currently on CreditWatch negative for the same reasons. In all,
S&P has downgraded $383.270 billion of CDO issuance.
Additionally, S&P's ratings on $33.552 billion in securities have
not been lowered but are currently on CreditWatch negative,
indicating a high likelihood of future downgrades.
Standard & Poor's will continue to monitor the CDO transactions it
rates and take rating actions, including CreditWatch placements,
when appropriate.
RATING ACTIONS
Rating
Transaction Class To From
----------- ----- -- ----
AVANTI Funding A-1 CCC-/Watch Neg BBB-/Watch Neg
2006-1 Ltd.
AVANTI Funding A-2 CC BB/Watch Neg
2006-1 Ltd.
AVANTI Funding A-3 CC B+/Watch Neg
2006-1 Ltd.
AVANTI Funding B (def) CC CCC+/Watch Neg
2006-1 Ltd.
Barrington II A1-M BB/Watch Neg AAA/Watch Neg
CDO Ltd.
Barrington II A1-Q BB/Watch Neg AAA/Watch Neg
CDO Ltd.
Barrington II A1J-M CC BB-/Watch Neg
CDO Ltd.
Barrington II A1J-Q CC BB-/Watch Neg
CDO Ltd.
Barrington II A2 CC CCC-/Watch Neg
CDO Ltd.
Bluegrass ABS A-2 BB+/Watch Neg A+
CDO III Ltd.
Bluegrass ABS B CC BBB-/Watch Neg
CDO III Ltd.
Bluegrass ABS C CC BB/Watch Neg
CDO III Ltd.
Bluegrass ABS D-1 CC CCC+/Watch Neg
CDO III Ltd.
Bluegrass ABS D-2 CC CCC+/Watch Neg
CDO III Ltd.
Cairn Mezz ABS II CCC/Watch Neg BB+/Watch Neg
CDO 1 PLC
Cairn Mezz ABS III CC BB/Watch Neg
CDO 1 PLC
Cairn Mezz ABS IV CC BB-/Watch Neg
CDO 1 PLC
Cairn Mezz ABS V CC B-/Watch Neg
CDO 1 PLC
Cairn Mezz ABS VI CC CCC/Watch Neg
CDO 1 PLC
Cairn Mezz ABS VII CC CCC+/Watch Neg
CDO 1 PLC
Camber 5 Ltd. A-1 BBB-/Watch Neg AAA/Watch Neg
Camber 5 Ltd. A-2 BB-/Watch Neg A+/Watch Neg
Camber 5 Ltd. A-3 CC BBB/Watch Neg
Camber 5 Ltd. B CC BB+/Watch Neg
Camber 5 Ltd. C CC B+/Watch Neg
Capmark VI Ltd. CreditFaci A/Watch Neg AAA/Watch Neg
Capmark VI Ltd. A-1 BBB/Watch Neg AAA/Watch Neg
Capmark VI Ltd. A-2 B/Watch Neg AA/Watch Neg
Capmark VI Ltd. B CCC/Watch Neg A-/Watch Neg
Capmark VI Ltd. C CC BBB/Watch Neg
Capmark VI Ltd. Income Nts CC BB+/Watch Neg
Coldwater CDO Ltd. A-1 CCC-/Watch Neg BB/Watch Neg
Coldwater CDO Ltd. A-2 CC B/Watch Neg
Coldwater CDO Ltd. A-3 CC CCC+/Watch Neg
Coldwater CDO Ltd. B-2 CC CCC-/Watch Neg
Diversey Harbor A-1M A-/Watch Neg AA+/Watch Neg
ABS CDO Ltd.
Diversey Harbor A-1Q A-/Watch Neg AA+/Watch Neg
ABS CDO Ltd.
Diversey Harbor A-2 BB-/Watch Neg A/Watch Neg
ABS CDO Ltd.
Duke Funding XII Ltd. A-S1VFA BB+/Watch Neg BBB+/Watch Neg
Duke Funding XII Ltd. A-S1VFB BB+/Watch Neg BBB+/Watch Neg
Duke Funding XII Ltd. A1 B/Watch Neg BB+/Watch Neg
Duke Funding XII Ltd. A2 CCC-/Watch Neg BB/Watch Neg
Duke Funding XII Ltd. A3 CC B-/Watch Neg
Duke Funding XII Ltd. B1 CC CCC+/Watch Neg
Duke Funding XII Ltd. B2 CC CCC-/Watch Neg
Fort Duquesne CDO A-1B AA/Watch Neg AAA/Watch Neg
2006-1 Ltd.
Fort Duquesne CDO A-2 BB-/Watch Neg BBB/Watch Neg
2006-1 Ltd.
Fort Duquesne CDO B CCC+/Watch Neg B+/Watch Neg
2006-1 Ltd.
Fort Duquesne CDO C CC CCC+/Watch Neg
2006-1 Ltd.
Fort Duquesne CDO D CC CCC-/Watch Neg
2006-1 Ltd.
Gemstone CDO VI Ltd. A-1 CCC+/Watch Neg BBB/Watch Neg
Gemstone CDO VI Ltd. A-2 CCC-/Watch Neg BB-/Watch Neg
Gemstone CDO VI Ltd. B CC CCC/Watch Neg
Ischus CDO II Ltd. A-1A AA-/Watch Neg AAA/Watch Neg
Ischus CDO II Ltd. A-1B AA-/Watch Neg AAA/Watch Neg
Ischus CDO II Ltd. A-2 BBB+/Watch Neg AAA/Watch Neg
Ischus CDO II Ltd. B B/Watch Neg A/Watch Neg
Ischus CDO II Ltd. C CCC-/Watch Neg BBB/Watch Neg
Ischus CDO II Ltd. D CC B/Watch Neg
Kleros Preferred
Funding VIII Ltd. A-1A BB-/Watch Neg AA-/Watch Neg
Kleros Preferred
Funding VIII Ltd. A-1B CCC-/Watch Neg BB+/Watch Neg
Kleros Preferred
Funding VIII Ltd. A-2 CC B-/Watch Neg
Kleros Preferred
Funding VIII Ltd. A-3 CC CCC-/Watch Neg
Kleros Preferred
Funding VIII Ltd. X CC CCC+/Watch Neg
Lenox CDO Ltd. A-1S A-/Watch Neg AAA/Watch Neg
Lenox CDO Ltd. A-1J B/Watch Neg A-/Watch Neg
Lenox CDO Ltd. A-2 CCC-/Watch Neg BBB+/Watch Neg
Lenox CDO Ltd. B-1 CC BBB-/Watch Neg
Lenox CDO Ltd. B-2 CC BBB-/Watch Neg
Lenox CDO Ltd. C CC BB+/Watch Neg
Lenox CDO Ltd. D CC BB/Watch Neg
Millerton II High
Grade ABS CDO Ltd. A-1 A-/Watch Neg AA/Watch Neg
Millerton II High
Grade ABS CDO Ltd. A-2 BB-/Watch Neg A-/Watch Neg
Millerton II High
Grade ABS CDO Ltd. B CCC-/Watch Neg BBB-/Watch Neg
Millerton II High
Grade ABS CDO Ltd. C CC BB/Watch Neg
Millerton II High
Grade ABS CDO Ltd. D CC CCC+/Watch Neg
Neptune CDO III Ltd. S AA/Watch Neg AAA/Watch Neg
Neptune CDO III Ltd. A-1 BBB-/Watch Neg AAA/Watch Neg
Neptune CDO III Ltd. A-2 B/Watch Neg A+/Watch Neg
Neptune CDO III Ltd. A-3 CCC-/Watch Neg BBB+/Watch Neg
Neptune CDO III Ltd. B CC BBB-/Watch Neg
Neptune CDO III Ltd. C CC B+/Watch Neg
Silver Elms
CDO II Ltd. A-1Q CCC-/Watch Neg B-/Watch Neg
Silver Marlin
CDO I Ltd. A-2 CC CCC+/Watch Neg
Straits Global ABS A-2 AA/Watch Neg AAA/Watch Neg
CDO I Ltd.
Straits Global ABS B-1 BB-/Watch Neg BBB-/Watch Neg
CDO I Ltd.
Straits Global ABS B-2 BB-/Watch Neg BBB-/Watch Neg
CDO I Ltd.
Straits Global ABS C-1 CC B/Watch Neg
CDO I Ltd.
Straits Global ABS C-2 CC B/Watch Neg
CDO I Ltd.
Straits Global ABS A Combo B+/Watch Neg BB+/Watch Neg
CDO I Ltd.
Straits Global ABS B Combo B+/Watch Neg BB+/Watch Neg
CDO I Ltd.
Structured Finance
Advisors
ABS CDO III Ltd. B B+/Watch Neg BBB-/Watch Neg
Structured Finance
Advisors
ABS CDO III Ltd. C CC CCC-/Watch Neg
RATINGS PLACED ON CREDITWATCH NEGATIVE
Rating
Transaction Class To From
----------- ----- -- ----
Bluegrass ABS CDO III Ltd. A-1 AAA/Watch Neg AAA
Silver Marlin CDO I Ltd. A-1 AAA/Watch Neg AAA
RATINGS AFFIRMED AND REMOVED FROM CREDITWATCH NEGATIVE
Rating
Transaction Class To From
----------- ----- -- ----
Barrington II CDO Ltd. A1-S AAA AAA/Watch Neg
Fort Duquesne CDO 2006-1 Ltd. A-1A AAA AAA/Watch Neg
OTHER RATINGS REVIEWED
Transaction Class Rating
----------- ----- ------
AVANTI Funding 2006-1 Ltd. C (def) CC
Barrington II CDO Ltd. A-3 CC
Barrington II CDO Ltd. B CC
Barrington II CDO Ltd. C CC
Barrington II CDO Ltd. D CC
Barrington II CDO Ltd. X AAA
Cairn Mezz ABS CDO 1 PLC Q Combo Nt AAA
Coldwater CDO Ltd. C CC
Diversey Harbor ABS CDO Ltd. A-3 CC
Diversey Harbor ABS CDO Ltd. A-4 CC
Diversey Harbor ABS CDO Ltd. B CC
Diversey Harbor ABS CDO Ltd. C CC
Duke Funding XII Ltd. B3 CC
Fort Duquesne CDO 2006-1 Ltd. X AAA/Watch Neg
Gemstone CDO VI Ltd. C CC
Gemstone CDO VI Ltd. D CC
Gemstone CDO VI Ltd. E CC
Kleros Preferred Funding
VIII Ltd. B CC
Kleros Preferred Funding
VIII Ltd. C CC
Kleros Preferred Funding
VIII Ltd. D CC
Lenox CDO Ltd. E-1 CC
Lenox CDO Ltd. E-2 CC
Silver Elms CDO II Ltd. A-1M B-/Watch Neg
Silver Elms CDO II Ltd. A-2 CC
Silver Elms CDO II Ltd. A-3 CC
Silver Elms CDO II Ltd. B CC
Silver Elms CDO II Ltd. C CC
Silver Elms CDO II Ltd. D CC
Silver Marlin CDO I Ltd. A-3 CC
Silver Marlin CDO I Ltd. A-4 CC
Silver Marlin CDO I Ltd. B CC
Silver Marlin CDO I Ltd. C CC
Silver Marlin CDO I Ltd. D CC
Silver Marlin CDO I Ltd. E CC
Silver Marlin CDO I Ltd. F CC
Straits Global ABS CDO I Ltd. A-1 AAA
Structured Finance Advisors
ABS CDO III Ltd. A AAA
Structured Finance Advisors
ABS CDO III Ltd. Pfd Shares CC
* Auto Suppliers Heading for Bankruptcy, Grant Thornton Says
------------------------------------------------------------
According to Grant Thornton LLP, the second quarter of 2008 failed
to produce the sales rebound many had hoped for, dropping more
than 500,000 units from the prior year, for a decline of 12%. The
dramatic slowdown in sales has put the industry on edge, with
automakers experiencing pressure from not only consumers, but
suppliers as well. Decreasing supply, higher raw material costs
and increasing energy prices are forcing OEMs to reevaluate their
pricing structure. With rising costs and declining sales, will
automakers be able to pass along these price increases to
consumers and bounce back?
Grant Thornton's Automotive Industry Review provides key insights
into the financial and economic outlook for the industry. In the
second quarter, critics continue to speculate about the
profitability and restructuring plans of the Detroit 3, even
suggesting that bankruptcy may loom in the near future if market
conditions remain tenuous. Others predict a modest rebound in the
second half of the year. One thing analysts agree on though:
consumers are drastically changing their buying habits, compelling
automakers to shift gears and rebalance their product portfolios.
A full-text copy of Grant Thornton's Automotive Review is
available for free at http://ResearchArchives.com/t/s?30a1
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
* Proskauer Rose Adds Jefferies' Joshua W. Thompson as NY Partner
-----------------------------------------------------------------
Joshua W. Thompson, a corporate lawyer and former General Counsel
and Secretary of Jefferies Finance, has joined Proskauer Rose LLP
as a partner in New York.
Mr. Thompson focuses on leveraged finance with a particular
emphasis on acquisition finance and debt transactions for
investment banks. As General Counsel at Jefferies Finance, he was
instrumental in negotiating and managing all financings for the
company and oversaw the creation of its legal department and
compliance systems.
"[Mr. Thompson's] background and experience in dealing with
sophisticated transactions further enhances the strength of our
rapidly expanding Corporate Department and we are delighted to
welcome him to the firm," Allen I. Fagin, chairman of Proskauer,
said.
Prior to joining Jefferies, Mr. Thompson was at White & Case,
where he represented major investment banks and leading private
equity sponsors, hedge funds and corporations, with an emphasis on
complex acquisition financings, asset-based financings, structured
financings, recapitalizations, workouts, debt restructurings and
liability management transactions. He earned his undergraduate
and law degrees from the University of New South Wales.
Mr. Thompson is the latest partner to join Proskauer's New York
office, which welcomed Jeffrey Neuburger, Robert Freeman and
Kristen Mathews to its Technology, Media and Communications
Practice Group.
Proskauer's Corporate Department consists of more than 200 lawyers
worldwide who offer legal assistance to clients involving complex
financial transactions and regulatory matters. Key practice areas
of the department include mergers & acquisitions, capital markets,
private equity, finance, and bankruptcy.
About Proskauer Rose
Proskauer Rose LLP, -- http://www.proskauer.com/-- founded in
1875, is an international law firm providing a wide variety of
legal services to clients worldwide from offices in Boca Raton,
Boston, Chicago, London, Los Angeles, New Orleans, New York,
Newark, Paris, Sao Paulo, and Washington, D.C. The firm has wide
experience in all areas of practice important to businesses and
individuals including corporate finance, mergers and acquisitions,
general commercial litigation, corporate governance matters,
conducting internal corporate investigations, white collar
criminal defense, private equity and fund formation, patent and
intellectual property litigation and prosecution, labor and
employment law, real estate transactions, bankruptcy and
reorganizations, trusts and estates, and taxation. Its clients
span industries including chemicals, entertainment, financial
services, health care, information technology, insurance,
internet, lodging and gaming, manufacturing, media and
communications, pharmaceuticals, real estate investment, sports,
and transportation.
* Madeleine Tan Joins Kaye Scholer-NY as Partner in C&F Department
------------------------------------------------------------------
Madeleine M. L. Tan has joined Kaye Scholer LLP's Corporate &
Finance Department as a Partner in its New York office, effective
Aug. 1, 2008.
Ms. Tan has extensive experience advising equity investors,
lenders, project developers, alternative investment funds, special
situation funds, issuers and underwriters in the areas of equity
and debt offerings as well as asset-backed, tax-advantaged and
structured finance transactions, including securitization,
derivatives and leveraged leasing. Ms. Tan's experience allows
her to combine her structured finance background to create
structured products involving commodities such as carbon credits
and securitizations of project finance revenues. She advises
clients on issues surrounding the subprime market collapse in an
effort to identify and execute on arbitrage and repackaging
strategies. She also practices in the area of whole company
securitization.
In addition, Ms. Tan advises corporations, financial institutions,
specialized funds and the trading community on the financing of
alternative energy projects, and derivatives and structured
products. Her focus has been on securitizations of alternative
asset classes, including legal fee receivables, illiquid assets
and royalties. Apart from structured finance, Ms. Tan has
leveraged her leasing and project finance experience to focus on
debt and equity financings of alternative energy and renewable
energy projects, including wind farm and solar power plants, and
projects falling under the Clean Development Mechanism of the
Kyoto Protocol. Ms. Tan has significant experience with carbon
emissions rules and regulations and has advised on both European
and U.S. carbon finance and legislation, including the European
Union Emission Trading System and the Regional Greenhouse Gas
Initiative.
"[Ms. Tan's] addition will significantly enhance our ability to
serve our clients' needs, particularly in light of her expertise
with a vast array of structured vehicles," Henry Morriello, Co-
Chair of the firm's Structured Finance Group, said. "Madeleine's
joining the firm, as well as the recent additions of William
'Butch' Cullen and Janet Barbiere, further solidifies Kaye
Scholer's position as one of the leading Structured Finance
practices in the United States."
"[Ms. Tan's] addition is integral to the expansion of the firm's
Green Technology Group where she will contribute to the firm's
services to companies in the carbon emissions and energy
efficiency markets in the U.S. and Europe and to those developing
carbon offset policies," William Tanenbaum, a Partner in the
firm's Green Technology Practice and Chair of the firm's
Technology, Intellectual Property & Outsourcing Practice, said.
"This complements the firm's work in Green IT and Green
Outsourcing."
"Kaye Scholer's highly regarded Structured Finance practice and
its Green Technology practice are a perfect fit for me," Ms. Tan
commented. "I am excited to be joining the firm and I look
forward to providing clients with the full range of services
offered at Kaye Scholer."
Ms. Tan received both her law and undergraduate degrees from the
University of New South Wales, Australia, with honors. She joins
Kaye Scholer from Brown Rudnick LLP, where she was a Partner in
the Structured Finance Group and the Climate & Energy Group.
About Kaye Scholer LLP
Kaye Scholer's Structured Finance Group brings together a team of
financing lawyers with extensive experience not only in asset
securitization transactions, but also in the related fields of
tax, public offerings, regulatory matters, real estate and certain
specialized industries. The Group represents many leading
commercial banks (both U.S. and international), well as investment
banks, finance companies and corporations, in all aspects of
securitization, including structuring and documenting
transactions, forming multi-seller conduits and special purpose
vehicles, obtaining ratings, representing providers of liquidity
and credit enhancement, and representing issuers, trustees,
underwriters and investors. The Group's work includes
transactions in the United States, as well as cross-border and
international transactions.
Comprised of lawyers from the firm's eight offices located on
three continents, Kaye Scholer's multi-disciplinary Green
Technology Group brings together legal, governmental and business
acumen that provides guidance on the pressing issues facing
businesses that are planning Green Technology strategies,
including issues relating to Green Sourcing, Wind and Alternative
Energies, Climate Change Regulation and Carbon Finance, Green
Corporate Technology Policies, Green Construction, and Patent
Litigation and False Advertising as they relate to Green
initiatives.
Headquartered in New York City, Kaye Scholer LLP --
http://www.kayescholer.com/-- is a full-service international law
firm. The firm has offices in Chicago, Frankfurt, London, Los
Angeles, New York, Shanghai, Washington, DC, and West Palm Beach.
Founded in New York City in 1917, Kaye Scholer now includes more
than 500 lawyers and represents public and private companies,
governmental entities, financial institutions, and other
organizations in matters around the world.
* BOOK REVIEW: Rupert Murdoch: Creator of a Worldwide Media Empire
------------------------------------------------------------------
Author: Jerome Tuccille
Publisher: Beard Books
Hardcover: 324 pages
List Price: US$34.95
Own your personal copy at
http://amazon.com/exec/obidos/ASIN/1587982242/internetbankrupt
This book is a multi-faceted biography of the most innovative
figure of the information age, Rupert Murdoch, who had established
the most far-reaching communications empire in existence when this
book was first published in 1989.
Through interviews with numerous sources both inside and outside
the Murdoch organization, including a rare interview with Murdoch
himself, Jerome Tuccille reveals little-known facts about the man
behind the public figure.
What emerges from Rupert Murdoch is a complete and balanced
picture of the man and his achievements - at once a fascinating
three-dimensional portrait of the individual and a detailed
account of his amazing financial triumphs.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. Raphael M. Palomino, Shimero R. Jainga, Ronald C. Sy, Joel
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Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, Joseph
Medel C. Martirez, Ma. Cristina I. Canson, Christopher G.
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Copyright 2008. All rights reserved. ISSN: 1520-9474.
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*** End of Transmission ***