/raid1/www/Hosts/bankrupt/TCR_Public/080919.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, September 19, 2008, Vol. 12, No. 224
Headlines
ALEXANDER WOODS: Case Summary & 12 Largest Unsecured Creditors
AMACORE GROUP: Appoints Jay Shafer as President and CEO
AMACORE GROUP: Clark Marcus, et al., Relinquish Post
AMERICAN INTERNATIONAL: Appoints New CEO, Won't Liquidate
AMERICAN INTERNATIONAL: S&P Revises Watch Status to Developing
AMERICAN INTERNATIONAL: Fitch Revises Rating Watch to Evolving
AMES TRUE: S&P Holds All Ratings; Changes Outlook to Developing
AQUATIC CELLULOSE: Delays Filing of Annual Report With SEC
ARCADIA RESOURCES: Paul J. Solit Discloses 6% Equity Stake
ASARCO LLC: To Settle Ready Mix Claim for $12,000,000
ASARCO LLC: Withdraws Adversary Proceeding Against Wells Fargo
AUSTRAL PACIFIC: Cheal A7 Unit Commences Production
AVETA INC: S&P Lifts Counterparty Credit Rating to 'B' from 'CCC+'
AW PARKER: Case Summary & Two Largest Unsecured Creditors
AXCAN INTERMEDIATE: S&P Assigns 'B+' Corporate Credit Rating
AXESSTEL INC: Paul J. Solit Discloses 6.9% Equity Stake
BANK OF AMERICA: S&P Puts 'B+' Rating on $28.741MM Class J Notes
BAYOU GROUP: 32 Investors Agree to Return All Profits
BEACH LANE: Sale of Hamptons Estate Approved; Bids Due Nov. 4
BEAR STEARNS: S&P Lowers Ratings on Seven Classes of Certificates
BHM TECHNOLOGIES: Court Approves Jaffe as Committee Counsel
BHM TECHNOLOGIES: Dundee Wants $346,967 in Goods Returned
BOFA AUTO TRUST: Fitch Rates $28.741MM Class J Notes 'BB'
BROAD PROPERTY: Voluntary Chapter 11 Case Summary
CAPTAIN'S COVE: Files for Chapter 11 Protection
CARUSO HOMES: Court Okays Tydings & Rosenberg as Committee Counsel
CARUSO HOMES: Wants to Hire John Maestri as Real Estate Consultant
CASH TECH: Delays Filing of Annual Report with SEC
CASH TECH: Recurring Losses Cue Auditor's Substantial Doubt
CENT INCOME: Fitch $100MM Income Notes from Removes Negative Watch
CELTS 2007-1: Fitch Cuts $307MM Class Notes Rating to BB from A
CFM US: Panel Wants Teachers Pension Plan Claim Recharacterized
CHRYSLER LLC: Urges Congress to Fund $25BB Loan Program
CIT GROUP: Secures $500 Million Loan From Wells Fargo
CITY CAPITAL: June 30 Balance Sheet Upside-Down by $1.2 Million
CONTINENTAL AFA: Appoints Focus Management as CRO
CPM HOLDINGS: Moody's Holds 'B1' Rating on $224MM Credit Facility
CREDIT SUISSE: Fitch Holds 'BB-' Rating on $11.1MM Class K Certs.
CYBERDEFENDER CORP: Sells $980,500 Unregistered Securities
DANKA BUSINESS: Paul J. Solit Discloses 4.2% Equity Stake
DELPHI CORP: Chapter 11 Examiner Will Cause Delay, Committee Says
DELPHI CORP: Equity Panel Taps Farrell Fritz as Conflicts Counsel
DELPHI CORP: Joseph Firm to Step Down as Equity Panel Counsel
DIABLO GRANDE: Court Okays $148,630 Emergency Loan for Resort
DTN INC: $445MM Telvent's Planned Deal Cues S&P's Developing Watch
EAST 44TH: Court Confirms Chapter 11 Plan of Liquidation
EDUCATION RESOURCES: Court Schedules October 17 as Claims Bar Date
EDUCATION RESOURCES: Court OKs Waive Delinquency & Default Musts
EINSTEIN NOAH: Inks Settlements over San Diego Class Action
ELECTROHOME LTD: Court Approves Plan of Arrangement
ENCAP GOLF: Terminates Meadowlands Deal With Trump Organization
EQUINIX INC: S&P Lifts Corp. Credit Rating to 'B+' from 'B'
FIRST UNION: Fitch Affirms 'B-' Rating on $8.7MM Class M Certs.
FORD MOTOR: Urges Congress to Fund $25BB Loan Program
FORSTER DRILLING: Denis Schoenhofer Quits as Director
FRED LEIGHTON: Affiliate Sues Owner's Sister and Sister-In-Law
FRONTIER AIRLINES: Wants to Reject Teamsters Bargaining Pact
FRONTIER AIRLINES: Can Perform Under Bombardier Contract
FRONTIER AIRLINES: U.S. Trustee Balks at Professionals' Fees
FRONTIER AIRLINES: Wants to Set November 17 as Claims Bar Date
FRONTIER AIRLINES: Court Approve Deloitte Tax as Tax Advisors
FUND CREDIT: S&P Slashes Mutual Funds Ratings to 'Dm' from 'AAAm'
GARY LYNN HAND: Case Summary & Five Largest Unsecured Creditors
GENERAL MOTORS: Urges Congress to Fund $25BB Loan Program
GENERAL MOTORS: May Issue Securities to Raise Funds
GSV INC: Earns $268,224 in 2008 Second Quarter Ended June 30
HAWAIIAN TELCOM: Moody's Junks CF Rtng After Hiring Lazard Freres
HEALTH CARE REIT: S&P Holds 'BB' Preferred Stock Rating
HEALTHSPORT INC: Posts $2,992,368 Net Loss in 2008 Second Quarter
HEXION SPECIALTY: Consents to Huntsman's Entry to Backstop Payment
HIGHGATE LTC: Benjamin Landa Wants New Administrator Installed
HORACE MANN: Moody's Holds '(P)Ba2' Preferred Stock Rating
IPOFA WEST: Federal Trustees to Sell West Oaks Mall
IMMUNICON CORP: Court Sets Oct. 10 Administrative Claims Bar Date
IMMUNICON CORP: Court Okays Liquidating Plan Disclosure Statement
INDEVUS PHARMACEUTICALS: Closes Private Placement of $105MM Notes
INFOGROUP INC: Moody's Confirms Corporate Family Rating at 'Ba3'
INTERMET CORP: Panel Taps Morris Nichols as Delaware Counsel
INTERMET CORP: Wants Time to File Schedules Extended to Nov. 10
INTERSTATE BAKERIES: Wants Plan Funding Commitments Deals Approved
INTERSTATE BAKERIES: Has $143MM Net Loss in Year Ended May 2008
INVESCO NAVIGATOR: Fitch Removes 'CCC' Rated Notes from Neg. Watch
JEFFERSON COUNTY: Bond Insurers Seek Receiver for Sewer System
JEFFERSON COUNTY: S&P Cuts Revenue Bonds Ratings to C from CCC
JPMORGAN AUTO: Moody's Assigns '(P)Ba2' Rating on 2009-A Certs.
KINGSWAY FINANCIAL: Names Glenn Penny as Claims Vice President
LANDRY'S RESTAURANTS: S&P to Holds 'B' Rating on Tillman Offer
LAVEREN JENKINS: Case Summary & Two Largest Unsecured Creditors
LCM VII: Fitch Downgrades Seven Notes Ratings; Removes Neg. Watch
LEHMAN BROTHERS: Gets Interim OK to Borrow $200MM from Barclays
LEHMAN BROTHERS: Court Agrees to Rush-Sale, Hearing Today
LEHMAN BROTHERS: $138BB in Advances by JPMorgan Is Secured
LEHMAN BROTHERS: To Sell Investment Mgmt Unit to Bain, Hellman
LEHMAN BROTHERS: SIPC Does Not Expect Liquidation
LEHMAN BROTHERS: Linklaters to Advice PwC in U.K. Administration
LEHMAN BROTHERS: Japan Banks, Insurers Have US$2.3BB Exposure
LEHMAN BROTHERS: U.S. Trustee Appoints Panel, RR Donnelly Quits
LEHMAN BROTHERS: Asian Unit Quits as Citic Privatization Advisor
LEHMAN BROTHERS: 3 Directors Dispose of Company Shares
LEHMAN BROTHERS: S&P Cuts Ratings on 11 Securities Transactions
LEHMAN BROTHERS: S&P Cuts Five Ratings and Puts Under Dev. Watch
LOAN FUNDING: Fitch Trims $25MM Class A Notes Rating to B from BBB
LUMINENT MORTGAGE: Court Approves Motion to Borrow Up to $400,000
MASONITE INT'L: Buys Time to Amend Credit Facility
MATRIX DEVELOPMENT: Strikes Deal With Lenders to Resume Operations
MAXJET AIRWAYS: Files Liquidating Chapter 11 Plan
MCCLATCHY CO: To Lay Off 10% of Work Force, Cut Dividend by 50%
MCCLATCHY CO: Moody's Cuts CF and POD Ratings on Revenue Decline
MERCURY COS: Seeks Court Okay to Employ Cloyses as Consultant
MERCURY COS: Seeks to Employ Brownstein Hyatt as Bankr. Counsel
MERCURY COS: Trustee Objects to Hiring of Cloyses as Consultant
MERCURY COS: Files Schedules of Assets & Liabilities
MISTRAL PHARMA: Quebec Court OKs Reorganization Under BIA
MORGAN STANLEY: In Merger Talks with Wachovia
MOTOR COACH: Moody's Cuts POD Rtng to 'D' After Bankruptcy Filing
MOVIE GALLERY: Changes Board of Directors and Management Team
MOVIE GALLERY: Delays Filing of Report for Quarter Ended July 6
MOVIE GALLERY: Sopris Wants $205MM Debt Converted Into Equity
NBE LLC: Case Summary & Five Largest Unsecured Creditors
NETBANK INC: Will Auction Domain Names & Trademarks in October
NEW YORK RACING: Emerges From Chapter 11 Bankruptcy
NORTHLAKE FOODS: Files for Chapter 11 Bankruptcy in Florida
ONYX: Consents to Involuntary Chapter 11 Bankruptcy
OPTIGENEX INC: Files Amended 2007 Annual Report With SEC
OXIS INTERNATIONAL: Marvin Hausman Resigns as Director
PAETEC HOLDING: Gilder Gagnon Discloses 3.7% Equity Stake
PEOPLE AGAINST DRUGS: Case Summary & Largest Unsecured Creditors
PEREGRINE PHARMA: Reports $5MM Net Loss for July 2008
PLASTECH ENGINEERED: Disclosure Statement Hearing Moved to Oct. 8
POKAGON GAMING: S&P Lifts Issuer Credit Rating to 'B+' from 'B'
POPE & TALBOT: BC Court Grants CCAA Protection to Canadian Units
POPE & TALBOT: Court Recognizes Filing as Foreign Main Proceeding
POPE & TALBOT: Receiver to Sell Washington Assets for $95,820
PORTOLA PACKAGING: Gets Initial OK to Use GECC's $75 Mil. Facility
PPM RIVIERA: Fitch Lifts Ratings on Two Notes Classes to 'CCC'
PRESCIENT APPLIED: Inks Merger Deal with Park City Group
PROBE MANUFACTURING: Balance Sheet Upside-Down by $273,030
RANCHO MANANA: Panel Has Not Been Appointed, Says U.S. Trustee
REALOGY CORP: Thinning Covenant Cushion Cues S&P's Rating Cut
REHRIG INT'L: Organizational Meeting to Form Panel Today
REUNION INDUSTRIES: Inks Ch. 11 Settlement with Steel Partners
RHODE ISLAND HEALTH: S&P Alters Outlook on 1998 Bonds to Stable
RIVENDELL LOAN: Fitch Junks Rating on $18.75MM Class B Notes
RYAN'S STEAKHOUSE: Closes Doors After 20 Years in Operation
SASCO 2008-C2: S&P Slashes Real Estate CDO Rating to 'CC' from 'A'
SEA CONTAINERS: Files Amended Plan and Disclosure Statement
SEA CONTAINERS: SCL Panel, et al., Balk at Disclosure Statement
SERVES 2006-1: Fitch Keeps 'CCC' Ratings on Four Notes Classes
SPECTRUM RESTAURANT: Sells Guaymas to Specialty for $2.2 Mln.
STATION CASINOS: Likely Covenant Breach Cues S&P's Rating Cuts
STEVE & BARRY'S: Seeks Open-Ended Extension of Removal Period
STRATFORD NURSING: Case Summary & 20 Largest Unsecured Creditors
SUNCAL COS: Creditors Force Lehman Partnership into Bankruptcy
SUNGARD DATA: Fitch Rates Proposed $500MM Sr. Unsec. Notes 'B/RR5'
SUN-TIMES MEDIA: Davidson Kempner Discloses 5.9% Equity Stake
SWIFT & COMPANY: Moody's Rates Proposed $500MM Term Loan 'Ba3'
TECH DATA: Fitch Affirms 'BB+' ID and Debt Ratings; Outlook Stable
TEEVEE TOONS: Wants Until Nov. 30 to Propose Liquidation Plan
TELKONET INC: Enters Into $1,000,000 Line of Credit With Thermo
TEXAS HEMATOLOGY: Discloses Up to 199 Creditors
TITAN ENERGY: Posts $289,701 Net Loss in Quarter Ended June 30
TITAN ENERGY: Extends to the Caribbean with Purchase of RB Grove
TRIANT HOLDINGS: TSX to Delist Common Shares on October 16
TRONOX INC: S&P Lowers Corporate Credit Rating to CCC- from CCC+
TRONOX INC: FMR LLC Discloses Minimal Equity Stake
TROPICANA ENT: Court Permits Aztar Indian Casino Auction
TROPICANA ENTERTAINMENT: Court OKs Evansville Sale Procedures
TROPICANA ENTERTAINMENT: UAW Cries Unfair Labor Practice
TROPICANA ENTERTAINMENT: Commission Says Crisis Could Affect Sale
TUCKAHOE DEVELOPMENT: Voluntary Chapter 11 Case Summary
TURKEY LAKE: Voluntary Chapter 11 Case Summary
UNIGENE LABORATORIES: SEC Grants Confidential Treatment
UNI-MARTS: Wants Until Dec. 23 to File Chapter 11 Plan
US AIRWAYS: Spends $520,000 in Lobbying Fees for 2nd Quarter
US AIRWAYS: To Slash 10% of Phoenix Flights Starting October
UTSTARCOM INC: SVP Mark Green Selling Up to 352,316 Shares
UVUMOBILE INC: Reports $1.2 Million Net Loss for June 2008
VALLEY STEEL: Voluntary Chapter 11 Case Summary
VERASUN ENERGY: Reduced Liquidity Cues Moody's to Cut CFR to B3
VERSO TECHNOLOGIES: Gets Green Light to Use Cash Collateral
VERTIS HOLDINGS: Should Pay Fees, U.S. Trustee Says
VIEW SYSTEMS: Settles Sigma Lawsuit & Satisfies Judgment
VILLAGE FOODS: Closes After Chapter 7 Bankruptcy
VINEYARD CHRISTIAN: Case Summary & 20 Largest Unsec. Creditors
WACHOVIA CORP: In Merger Talks With Morgan Stanley
WASHINGTON MUTUAL: Shareholder Waives Compensation Agreement
WASHINGTON MUTUAL: S&P Chips Ratings on Two Note Classes to 'BB+'
WASHINGTON MUTUAL: Says S&P's Rating Downgrade Not Material
WESTOVER DEVELOPMENT: Voluntary Chapter 11 Case Summary
WEXFORD DEVELOPMENT: Voluntary Chapter 11 Case Summary
WHEELER AUTO: Case Summary & 20 Largest Unsecured Creditors
WHITEHALL JEWELERS: Asks Court to OK Management Incentive Plan
WHITEHALL JEWELERS: Asks Court to Set Dec. 1 as Claims Bar Date
WHITE RIVER: Can Access Standard Bank's Cash Collateral
WHITE RIVER: Court Establishes September 22 as Claims Bar Date
WISCO ENTERPRISES: Athletica Facility Sold for $875,000
WOODSIDE GROUP: Court Converts Involuntary Chapter 11 Case
* S&P Puts 10 Emerging Market ABS Transactions Under Dev. Watch
* Moody's Publishes Underlying Ratings on Various Note Issuers
* Federal Reserve Injecting $180 Billion Into Financial Markets
* Financial Health of Florida's Banks Slipping
* Shelly DeRousse Joins Stahl Cowen as Restructuring Partner
* BOOK REVIEW: Strategies for Investing in Intellectual Property
*********
ALEXANDER WOODS: Case Summary & 12 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Alexander Woods, LLC
1390 Lake Josephine Dr.
Sebring, FL 33875
Bankruptcy Case No.: 08-14250
Chapter 11 Petition Date: September 17, 2008
Court: Middle District of Florida (Tampa)
Debtor's Counsel: Buddy D. Ford, Esq.
Buddy@tampaesq.com
Buddy D. Ford, P.A.
115 N. MacDill Avenue
Tampa, FL 33609-1521
Tel: (813) 877-4669
Fax: (813) 877-5543
Total Assets: $6,098,918
Total Debts: $4,500,126
A list of the Debtor's largest unsecured creditors is available
for free at http://bankrupt.com/misc/flmb08-14250.pdf
AMACORE GROUP: Appoints Jay Shafer as President and CEO
-------------------------------------------------------
The Amacore Group Inc. appointed its president Jay Shafer as both
president and chief executive officer, effective August 29, 2008.
Mr. Shafer continues as a member of the Company's Board of
Directors.
Mr. Shafer, 49, has served as the Company's President since
January 2007 and a member of its Board since March 2007. Prior to
joining the Company, Mr. Shafer was employed by Protective
Marketing Enterprises, Inc., a discount medical plan organization,
as its Chief Executive Officer from 2002 to 2006 and its Vice
President-Business Development from 1997 to 2002. Before that,
Mr. Shafer was Vice President-Financial Services Division of John
Harland Company.
Other Appointments
Effective August 29, 2008, G. Scott Smith, 56, the Company's Chief
Operating Officer since June 2008, was appointed the Company's
interim Chief Financial Officer. Since December 2007, Mr. Smith
served as Chief Operating Officer of LifeGuard. Mr. Smith served
as Chief Marketing Officer of ECOM PPO Advisors Inc., a technology
company that assists companies in maximizing their preferred
provider discounts and savings, from 2006 through 2007. From 2004
to 2006, Mr. Smith served in several senior executive positions at
Insurance Capital Management, Inc., a holding company focusing on
insurance marketing and discount benefit programs, including
President and Chief Executive Officer. Prior to 2004, Mr. Smith
served as President and Chief Executive Officer of National Health
Insurance Company, a life health and annuity insurance company
which specialized in health insurance for self employed
individuals and qualified annuities in the 403(b) teachers market.
Mr. Smith's Employment Agreement with the Company, entered into as
of June 16, 2008 has a three-year term and provides for an annual
salary of $250,000, increased annually by an amount no less than
an amount equal to the increase in the Consumer Price Index for
the Dallas, Texas area. In addition, Mr. Smith is entitled to
receive a special bonus in an amount 0.05% of the Company's
pre-tax profits from the preceding year, up to the first
$1,000,000 of such profits; plus an additional amount equal to
0.75% of the Company's pre-tax profits over $1,000,000 and up to
$2,000,000, 1% of the Company's pre-tax profits over $2,000,000
and up to $4,000,000 and 1.25% of the Company's pre-tax profits
over $4,000,000. In the event Mr. Smith's employment is
terminated within 12 months following a change of control, the
Company is required to pay or issue to Mr. Smith in a lump sum (i)
accured and unpaid salary, if any, (ii) accrued but unpaid
expenses, if any, (iii) accrued but unpaid bonuses, if any, (iv)
unissued warrants, if any, and (v) the total compensation which
would have been paid to Mr. Smith through the longer of the
remaining term and three years.
In connection with his employment, Mr. Smith also received a
warrant to purchase 1,000,000 shares of the Company's common stock
at $0.38 per share to vest in four equal annual installments
starting on July 1, 2009. Mr. Smith is also entitled to receive
other benefits generally received by other senior executives of
the Company and reimbursement of expenses. Mr. Smith also entered
into a standard Employee Confidentiality Agreement.
Effective August 29, the Board of Directors appointed Guy Norberg,
48, as a Director of the Company. Mr. Norberg has been the
Company's Senior Vice President, Sales and Marketing since June,
2008. Prior to joining the Company, Mr. Norberg was Vice
President, Sales and Marketing of Protective Marketing
Enterprises, Inc. and prior to that he was a founder and the
President of US Health Options/Innovative Health Benefits.
Pursuant to his Employment Agreement with the Company, Mr. Norberg
receives an annual salary of $378,720 and other benefits
customarily provided by the Company to its Officers.
Also effective Aug. 29, 2008, Shad Stastney and Chris Phillips
were appointed to the Board of Directors of the Company by the
Company's Board.
Mr. Stastney is the Chief Operating Officer and Head of Research
for Vicis Capital, LLC, a company he jointly founded in 2004.
Mr. Stastney also jointly founded Victus Capital Management LLC in
2001. From 1998 through 2001, Mr. Stastney worked with the
corporate equity derivatives origination group of Credit Suisse
First Boston, eventually becoming a Director and Head of the
Hedging and Monetization Group, a joint venture between
derivatives and equity capital markets. In 1997, he joined Credit
Suisse First Boston's then-combined convertible/equity derivative
origination desk. From 1994 to 1997, he was an associate at the
law firm of Cravath, Swaine and Moore in New York, in their tax
and corporate groups, focusing on derivatives. He graduated from
the University of North Dakota in 1990 with a B.A. in Political
Theory and History, and from the Yale Law School in 1994 with a
J.D. degree focusing on corporate and tax law.
Mr. Phillips has been a managing director for Vicis Capital, LLC
since February 2008. From 2004 through January 2008, Mr. Phillips
served as President and CEO of Apogee Financial Investments, Inc.,
a merchant bank that owns 100% of Midtown Partners & Co., LLC, a
FINRA licensed broker-dealer. From 2000 through January 2008, he
also served as managing member of TotalCFO, LLC, which provides
consulting and CFO services to a number of public and private
companies and high net worth individuals. From November 2007
through January 2008 Mr. Phillips served as the CEO and Chief
Accounting Officer of OmniReliant Holdings, Inc. (OTCBB: ORHI).
Presently, he is a member of the Board of Directors OmniReliant
Holdings, Inc., Precision Aerospace Components, Inc. (OTCBB: PAOS)
and a few private companies. Mr. Phillips received a B.S. in
Accounting and Finance and a Masters of Accountancy, with a
concentration in Tax, both from the University of Florida. Mr.
Phillips is a Florida CPA.
Vicis Capital, LLC is the investment advisor to Vicis and has
voting and dispositive power over the securities issued by the
Company to Vicis. The number of securities the Company has
issued to Vicis is set forth in previous filings with the
Securities and Exchange Commission by the Company and Vicis.
Messrs. Stastney and Phillips will receive the same compensation
as other non-employee directors of the Company.
About The Amacore Group
Based in Tampa, Florida, The Amacore Group Inc. (OTC BB: ACGI) --
http://www.amacoregroup.com/-- provides health-related membership
benefit programs, insurance programs, and other innovative and
high-quality solutions to individuals, families and employer
groups nationwide.
Through its wholly-owned subsidiary, LifeGuard Benefit Solutions
Inc., Amacore now has the ability to provide administrative and
back-office services to other healthcare companies in addition to
expanding its own call center capability through its wholly-owned
subsidiary, JRM Benefits Consultants LLC and US Heath Benefits
Group Inc., a call center-based marketing company. Zurvita Inc.,
Amacore's newly formed, wholly-owned subsidiary specializing in
direct to consumer multi-level marketing, provides yet another
channel for Amacore's ever-increasing range of healthcare and
healthcare-related products
Balance Sheet
At March 31, 2008, the company's consolidated balance sheet showed
$23,421,580 in total assets, $11,779,375 in total liabilities, and
$11,642,205 in total stockholders' equity.
The company's consolidated financial statements at March 31, 2008,
also showed strained liquidity with $8,009,688 in total current
assets available to pay $11,779,375 in total current liabilities.
Full-text copies of the company's consolidated financial
statements for the quarter ended March 31, 2008, are available for
free at http://researcharchives.com/t/s?2cdd
Going Concern Doubt
The company believes that existing conditions raise substantial
doubt about the company's ability to continue as a going concern.
The company has sustained operating losses in recent years. In
addition, the company reported a net loss of $2,592,655 for the
quarter ended March 31, 2008, and had negative working capital of
$3,769,687 as of March 31, 2008.
AMACORE GROUP: Clark Marcus, et al., Relinquish Post
----------------------------------------------------
The Amacore Group Inc. disclosed in a Securities and Exchange
Commission filing that Clark A. Marcus resigned as Chief Executive
Officer of the Company. He will be replaced by Jay Shafer. A
report on Mr. Shafer's appoint appears in today's Troubled Company
Reporter.
Mr. Marcus will continue as the Company's Chairman and as a member
of its Board of Directors. In connection with his resignation as
Chief Executive Officer, Mr. Marcus entered into both a Separation
Agreement and a Consulting Agreement with the Company.
Pursuant to Mr. Marcus's Separation Agreement, the Company will
continue to provide Mr. Marcus with certain benefits for up to 18
months. Mr. Marcus's Separation Agreement contains customary
representations, mutual releases, covenants and indemnification
provisions by both parties.
Pursuant to the Consulting Agreement, Mr. Marcus will provide the
Company with certain consultation and be paid a one-time payment
of $112,000, an annual fee of $600,000 and receive reimbursement
of expenses. The Company will continue to provide Mr. Marcus with
office facilities at its Tampa office. Mr. Marcus's Consulting
Agreement contains customary non-compete and confidentiality
obligations and contains customary mutual indemnification
provisions. Mr. Marcus's Consulting Agreement has a term of one
year and is renewable at the mutual consent of the parties for
additional one-year terms.
Other Resignations
Effective Aug. 25, 2008, Giuseppe Crisafi resigned as Chief
Financial Officer and as a Director. Mr. Crisafi did not resign
due to any disagreements with the Company. In connection with his
resignation as Chief Financial Officer, Mr. Crisafi entered into
both a Separation Agreement and a Consulting Agreement with the
Company. Pursuant to Mr. Crisafi's Separation Agreement, the
Company will continue to provide certain benefits to Mr. Crisafi
for up to 6 months, and the agreement also contains customary
representations, mutual releases, covenants and indemnification
provisions by both parties. Pursuant to Mr. Crisafi's Consulting
Agreement, Mr. Crisafi will provide the Company with certain
consultation services and be paid at an annual rate of
$390,748.54, will receive reimbursement of expenses, and a grant
of 500,000 shares of the Company's Class A Common Stock. Mr.
Crisafi's Consulting Agreement contains customary non-compete and
confidentiality obligations and contains customary mutual
indemnification provisions. Mr. Crisafi's Consulting Agreement
has a term of six months.
Also effective Aug. 25, 2008, Dr. Jerry Katzman, M.D. resigned as
the Company's Chief Medical Officer and as a Director. Dr.
Katzman did not resign due to any disagreements with the Company.
In connection with his resignation as Chief Medical Officer, Dr.
Katzman entered into both a Separation Agreement and a Consulting
Agreement with the Company. Pursuant to Dr. Katzman's Separation
Agreement, the Company agrees to continue to provide certain
benefits to Dr. Katzman for up to 18 months and the agreement
contains customary representations, mutual releases, covenants and
indemnification provisions by both parties. Pursuant to Dr.
Katzman's Consulting Agreement, he is to be paid approximately
$46,000 in the form of forgiveness of a debt in favor of the
Company and an additional fee payable at an annual rate of
$200,000 and reimbursement of expenses. Dr. Katzman's Consulting
Agreement contains customary non-compete and confidentiality
obligations and contains customary mutual indemnification
provisions. Mr. Katzman's Consulting Agreement has a term of one
year and is renewable at the mutual consent of the parties for
additional one-year terms.
Also effective Aug. 25, 2008, Dr. Arnold Finestone, Dr. William
Koch, Sharon Kay Ray and Arthur Yeap resigned as members of the
Company's Board of Directors. None of these outgoing Directors
resigned due to any disagreements with the Company. Dr. Arnold
Finestone, Dr. William Koch, Sharon Kay Ray and Arthur Yeap will
each receive a grant of 50,000 shares of the Company's Class A
Common Stock.
About The Amacore Group
Based in Tampa, Florida, The Amacore Group Inc. (OTC BB: ACGI) --
http://www.amacoregroup.com/-- provides health-related membership
benefit programs, insurance programs, and other innovative and
high-quality solutions to individuals, families and employer
groups nationwide.
Through its wholly-owned subsidiary, LifeGuard Benefit Solutions
Inc., Amacore now has the ability to provide administrative and
back-office services to other healthcare companies in addition to
expanding its own call center capability through its wholly-owned
subsidiary, JRM Benefits Consultants LLC and US Heath Benefits
Group Inc., a call center-based marketing company. Zurvita Inc.,
Amacore's newly formed, wholly-owned subsidiary specializing in
direct to consumer multi-level marketing, provides yet another
channel for Amacore's ever-increasing range of healthcare and
healthcare-related products
Balance Sheet
At March 31, 2008, the company's consolidated balance sheet showed
$23,421,580 in total assets, $11,779,375 in total liabilities, and
$11,642,205 in total stockholders' equity.
The company's consolidated financial statements at March 31, 2008,
also showed strained liquidity with $8,009,688 in total current
assets available to pay $11,779,375 in total current liabilities.
Full-text copies of the company's consolidated financial
statements for the quarter ended March 31, 2008, are available for
free at http://researcharchives.com/t/s?2cdd
Going Concern Doubt
The company believes that existing conditions raise substantial
doubt about the company's ability to continue as a going concern.
The company has sustained operating losses in recent years. In
addition, the company reported a net loss of $2,592,655 for the
quarter ended March 31, 2008, and had negative working capital of
$3,769,687 as of March 31, 2008.
AMERICAN INTERNATIONAL: Appoints New CEO, Won't Liquidate
---------------------------------------------------------
Liam Pleven at The Wall Street Journal reports that Edward Liddy
replaced Robert Willumstad as American International's new CEO.
Before joining AIG, Mr. Liddy had worked with private equity firm
of Clayton, Dubilier & Rice Inc. since January 2007. From 1999
until 2006, he was Allstate Corp.'s chairperson and CEO. Mr.
Liddy is also on the boards of Goldman Sachs Group Inc. and Boeing
Co.
According to WSJ, Mr. Liddy said that he hopes to keep as many of
AIG's largest insurance operations as possible, after selling
assets to pay back loan from the government. WSJ relates that Mr.
Liddy said in an interview on Thursday, "There will be a company
at the end of this. It'll be smaller, it'll be a lot nimbler. My
game plan is not to liquidate."
As reported in the Troubled Company Reporter on Sept. 17, 2008,
the Federal Reserve Board on Tuesday, with the full support of the
Treasury Department, authorized the Federal Reserve Bank of New
York to lend up to $85 billion to AIG under section 13(3) of the
Federal Reserve Act, in exchange for an 80% stake in AIG. AIG
said in a regulatory filing on Thursday that its deal with the
government is subject to shareholder approval.
Mr. Liddy says he wants to pay the loan early, Bloomberg News
says.
AIG's asset sales, says WSJ, will be used to pay back the
company's debts to the federal government. WSJ relates that New
York State insurance regulators have set up a committee to review
any deals. States have oversight over transactions involving
insurers they regulate, but the committee will aim to streamline
the process, WSJ reports. The committee, according to WSJ, will
ensure that buyers are able to protect policyholders. The
regulators will rule on whether AIG gets a fair price for units it
sells, so that the sales will withstand any future challenges by
creditors, the report says, citing Eric Dinallo, the state's
insurance superintendent and committee chairperson.
Mr. Dinallo said he has already received calls from "interested
buyers" who are "top-tier companies," WSJ states. According to
the report, Mr. Liddy said he talked with Mr. Dinallo on Thursday.
"I view this as a partnership," the report quoted Mr. Liddy as
saying.
WSJ reports that Steven Udvar-Hazy, AIG aircraft leasing unit
International Lease Finance Corp.'s chief and a major AIG
shareholder, is expected to lead an effort to try to buy ILFC.
Mr. Liddy said he hasn't determined which AIG businesses he
considers "core" to the company, adding that he had "at most a
four-week time frame" to decide, WSJ states.
Based in New York City, American International Group Inc. is an
international insurance and financial services organization, with
operations in more than 130 countries and jurisdictions. The
company is engaged through subsidiaries in General Insurance, Life
Insurance & Retirement Services, Financial Services and Asset
Management.
AMERICAN INTERNATIONAL: S&P Revises Watch Status to Developing
--------------------------------------------------------------
Standard & Poor's Ratings Services revised the CreditWatch status
of most of its ratings on the AIG group of companies--including
its 'A-' long-term counterparty credit ratings on American
International Group Inc. and International Lease Finance Corp. and
the 'A+' counterparty credit and financial strength ratings on
most of AIG's insurance operating subsidiaries--to CreditWatch
developing from CreditWatch negative.
Standard & Poor's also said that it raised its short-term
counterparty ratings on AIG, its guaranteed subsidiaries, and ILFC
to 'A-1' from 'A-2'.
In addition, Standard & Poor's lowered the ratings on various
subsidiaries' preferred shares to 'B' from 'BBB'; the ratings on
the preferred shares remain on CreditWatch negative because of the
increased risk of deferral of dividend payments due to the right
of the U.S. government to veto dividend payments.
The 'BBB/A-3' counterparty credit rating on American General
Finance Corp. is unchanged. The outlook is negative.
The Federal Reserve Bank of New York extended an $85 billion
borrowing facility for AIG. The facility has a 24-month term and
is intended to assist the company in meeting its financial
obligations during that term. The facility is secured by a pledge
of all of the assets of AIG and its nonregulated subsidiaries as
well as AIG's stock ownership interest in its regulated
subsidiaries. The U.S. government will also receive a 79.9%
equity interest in AIG, giving it effective control of the
company.
"The Fed's actions will provide AIG with substantial relief from
its near-term liquidity constraints," noted Standard & Poor's
credit analyst Rodney A. Clark. "We believe that the size of the
facility greatly exceeds any near-term needs for liquidity." The
amount drawn from the facility will affect decisions on which
businesses might be sold, and the result could either favorably or
unfavorably affect AIG's competitive position and operating
performance.
Most of the ratings are on CreditWatch developing to reflect the
significant uncertainty in the near term as to any impact of
recent events on AIG and its ability to attract and retain
business as well as uncertainty as to which businesses might be
sold to repay AIG's borrowings from the Fed. "It is likely that
the ratings on AIG and its various subsidiaries will move in
different directions as these facts become more clear and
strategic alignment within the insurance operations is more
defined," Mr. Clark added. "The ratings on the preferred shares
remain on CreditWatch negative because of the right of the U.S.
government under the terms of the agreement to veto dividends on
any preferred shares. Any action on that right is uncertain but
could occur with little warning at the government's discretion."
AMERICAN INTERNATIONAL: Fitch Revises Rating Watch to Evolving
--------------------------------------------------------------
Fitch Ratings has revised its Rating Watch on American
International Group, Inc. to Evolving from Negative. Fitch's
action follows AIG's announcement that its board has approved a
transaction under which the Federal Reserve Bank of New York will
provide AIG with a two- year $85 billion secured revolving credit
facility.
Fitch views this transaction as a favorable development that
alleviates significant near-term liquidity concerns. The agency
plans to issue a more detailed analysis in support of this action.
Fitch has revised the Rating Watch Status on these ratings to
Evolving from Negative:
American International Group, Inc.
-Long-term IDR 'A';
-- Senior debt 'A';
-- Junior subordinated debentures 'A-';
-- Short-term IDR to 'F1';
AIG Funding, Inc.
-- Commercial paper 'F1' .
AIG International, Inc.
-- Long-term IDR 'A';
-- Senior debt 'A';.
AIG Life Holdings (US), Inc. (formerly American General Corp.)
-- Long-term IDR 'A' ';
-- Senior debt 'A''.
American General Capital II
-- Preferred securities 'A-'.
American General Institutional Capital A and B
-- Capital securities 'A-'
HSB Capital Trust I
-- Preferred securities 'A' ';
21st Century Insurance Group
-- Long-term IDR 'A';
-- Senior debt 'A'
United Guaranty Corporation
-- Long Term Rating 'A' ';
Ezer Mortgage Insurance Company
-- Insurer Financial Strength Rating 'A';.
ASIF Program
ASIF II Program
ASIF III Program
ASIF Global Financial Program
-- Program ratings 'AA-'.
AIG Capital Corporation
-- Long-term IDR 'A';
-- Short-term IDR 'F1'.
International Lease Finance Corp.
-- Long-term IDR 'A;
-- Senior unsecured debt 'A';
-- Preferred stock 'A-';
-- Short-term IDR 'F1':
-- Commercial paper 'F1'.
American General Finance, Inc.
-- Long-term IDR 'A';
-- Short-term IDR 'F1';
-- Commercial paper 'F1'.
American General Finance, Corp.
-- Long-term IDR 'A';
-- Senior debt 'A';
-- Short-term IDR 'F1';
-- Commercial paper 'F1'.
AGFC Capital Trust I
-- Preferred stock 'A-'.
AIG Finance (Hong Kong) Ltd.
-- Long-term local currency IDR 'A';
-- Senior unsecured 'A';
-- Short-term local currency IDR 'F1'.
CommoLoCo Inc.
-- Short term IDR 'F1';
-- Commercial paper 'F1'
The Rating Watch status on the following 'AA-' Insurer Financial
Strength ratings have been revised to Evolving from Negative:
Life Companies
-- AGC Life Insurance Company;
-- AIG Annuity Insurance Company;
-- AIG Life Insurance Company;
-- AIG SunAmerica Life Assurance Company;
-- American General Life and Accident Insurance Company;
-- American General Life Insurance Company;
-- American International Assurance Company (Bermuda) Limited;
-- American International Life Assurance Company of New York;
-- American Life Insurance Company;
-- First SunAmerica Life Insurance Company;
-- SunAmerica Life Insurance Company;
-- The United States Life Insurance Company in the City of New
York;
-- The Variable Annuity Life Insurance Company.
National Union Inter-company Pool Members:
-- AIG Casualty Company (formerly Birmingham Fire Ins. Co.
of PA);
-- American Home Assurance Company;
-- American International South Insurance Company;
-- Commerce and Industry Insurance Company;
-- Granite State Insurance Company;
-- Illinois National Insurance Co. ;
-- National Union Fire Insurance Company of Pittsburgh, PA;
-- New Hampshire Insurance Company;
-- The Insurance Company of the State of Pennsylvania.
Lexington Inter-company Pool Members:
-- AIG Excess Liability Insurance Company, Ltd.
(formerly Starr Excess Liability Ins. Co., Ltd.);
-- Landmark Insurance Company;
-- Lexington Insurance Company.
AIG Personal Lines Inter-company Pool Members:
-- 21st Century Casualty Company;
-- 21st Century Insurance Company;
-- 21st Century Insurance Company of the Southwest;
-- AIG Advantage Insurance Company
(formerly Minnesota Ins. Co.);
-- AIG Auto Insurance Company of New Jersey;
-- AIG Centennial Insurance Company;
-- AIG Hawaii Insurance Company;
-- AIG Indemnity Insurance Company;
-- AIG National Insurance Company, Inc.;
-- AIG Preferred Insurance Company;
-- AIG Premier Insurance Company;
-- American International Insurance Company;
-- American International Insurance Company of California;
-- American International Insurance Company of New Jersey;
-- American International Pacific Insurance Company;
-- American Pacific Insurance Company;
-- New Hampshire Indemnity Company, Inc..
Non-Pool Companies
-- AIU Insurance Company;
-- American International Specialty Lines Insurance Company;
-- Hartford Steam Boiler Inspection & Insurance Company;
-- United Guaranty Residential Insurance Company.
Foreign Domiciled General Ins. Companies
-- AIG MEMSA Insurance Company Ltd. (UAE);
-- AIG (UK) Ltd. (formerly The Landmark Insurance Co. Ltd. (UK);
-- American International Underwriters Overseas, Ltd. (Bermuda).
AMES TRUE: S&P Holds All Ratings; Changes Outlook to Developing
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Camp
Hill, Pennsylvania-based Ames True Temper Inc. to developing from
stable. At the same time, Standard & Poor's affirmed all of its
ratings on the company, including its 'CCC+' corporate credit
rating. Ames had about $361 million of reported debt as of
June 28, 2008.
The outlook revision reflects the company's continued improved
liquidity position, resulting from inventory reductions and
positive free cash flow generation on a trailing 12-month basis.
Ames has adequate availability (close to $59 million on a
borrowing base of about $122 million as of June 28, 2008) under
its borrowing-based revolving credit facility. Moreover, S&P
believes the company will continue to have adequate availability
over the near term, as Ames' financial covenant does not become
effective unless availability drops to $15 million.
The ratings on Ames reflect competitive industry dynamics, and the
company's narrow product portfolio, seasonal business
characteristics, limited geographic diversification, product and
customer concentration, and a highly leveraged capital structure.
The outlook on Ames is developing. S&P could raise the rating if
the company can restore meaningful top line growth and expand its
EBITDA base, while reducing leverage and sustaining adequate
liquidity. S&P estimates that if the company can generate low
single-digit sales growth in fiscal 2009 while sustaining current
EBITDA margins of about 11%, adjusted EBITDA would be greater than
$55 million, and leverage would decline closer to 7x. If S&P sees
trends heading in this direction over the next couple of quarters,
it could also consider an outlook revision to positive over the
near term.
However, S&P is concerned about the effect of a slowing economy on
fiscal 2009 operating performance and credit measures, as well as
the potential for the company's minimum EBITDA covenant to be
triggered.
"We could lower the rating if macroeconomic conditions deteriorate
meaningfully over the next 12 months, resulting in significant
sales and EBITDA declines," noted Standard & Poor's credit analyst
Christopher Johnson. "If sales continue to decline at the current
rate (4%) and EBITDA margins drop by 200 basis points to close to
9%, we estimate leverage would increase to over 9x and EBITDA
would trend closer to the $40 million area, resulting in reduced
financial flexibility in this scenario," he continued.
AQUATIC CELLULOSE: Delays Filing of Annual Report With SEC
----------------------------------------------------------
Aquatic Cellulose International Corp. informed the Securities and
Exchange Commission that it would delay the filing of its Form
10-K for the fiscal year ended May 31, 2008.
Aquatic Cellulose experienced delays in completing its financial
statements for the fiscal year ended May 31, 2008, as its auditor
has not had sufficient time to review its financial statements for
the fiscal year ended May 31, 2008.
About Aquatic Cellulose
Headquartered in British Columbia, Canada, Aquatic Cellulose
International Corp. (OTC: AQCI) is an independent oil and gas
investment, development and production company, engaged in the
acquisition and development of crude oil and natural gas reserves
and production initially in the state of Texas of the United
States.
The company owns a 20% working interest and a 16% net revenue
interest in the Sargent South Field, Hamill & Hamill lease, a
3,645-acre natural gas producing property located in Matagorda
County, Texas. The company's interest applies to all depths from
surface to 7000 feet, with the exception of three currently non-
producing wells, number 19, 14 and 1-R, of which the company has
no interest in. All of the company's South Sargent interests,
both onshore and offshore, are subject to the company's Joint
Operating Agreement with New Century Energy Corp.
The company also is a 50% working interest participant in oil and
gas leases comprised by the twenty five acre Isaac Holliday tract
in the William Cooper Survey in Waller County, Texas (Brookshire
Dome Field Area).
Aquatic Cellulose International Corp.'s consolidated balance sheet
at Feb. 29, 2008, showed $1,095,311 in total assets and $5,671,840
in total liabilities, resulting in a $4,576,529 total
stockholders' deficit.
At Feb. 29, 2008, the company's consolidated balance sheet also
showed strained liquidity with $255,388 in total current assets
available to pay $5,671,840 in total current liabilities.
The company reported net income of $5,597,919 for the third
quarter ended Feb. 29, 2008, compared with net income of
$1,387,799 in the same period ended Feb. 28, 2007.
Going Concern Disclaimer
As reported in the Troubled Company Reporter on March 13, 2008,
Peterson Sullivan PLLC expressed substantial doubt about Aquatic
Cellulose International Corp.'s ability to continue as a going
concern after auditing the company's financial statements for the
years ended May 31, 2007, and 2006. The auditing firm pointed to
the company's negative cash flow from operations during the year
ended May 31, 2007, and accumulated deficit at May 31, 2007.
The company continues to experience recurring losses. In
addition, the company is receiving minimal cash flow from its oil
and natural gas investments.
ARCADIA RESOURCES: Paul J. Solit Discloses 6% Equity Stake
----------------------------------------------------------
Paul J. Solit disclosed in a Securities and Exchange Commission
filing that he may be deemed to beneficially own 8,118,670 shares
of Arcadia Resources, Inc.'s common stock, representing 5.97% of
the shares issued and outstanding.
Mr. Solit beneficially owns the shares through:
Company Shares Percentage
------- ------ ----------
Potomac Capital
Management LLC 3,419,520 2.5%
Potomac Capital
Management Inc. 4,596,485 3.4%
Potomac Capital
Management II LLC 102,665 0.08%
About Arcadia Resources
Headquartered in Indianapolis, Arcadia Resources Inc. (AMEX: KAD)
-- http://www.arcadiaresourcesinc.com/-- is a healthcare company
that provides healthcare, medical equipment, prescription drugs,
and medical, professional and diversified staffing.
At March 31, 2008, the company's consolidated balance sheet showed
$99.4 million in total assets, $49.6 million in total liabilities,
and $49.8 million in total stockholders' equity.
* * *
In BDO Seidman, LLP's audit report for the company's fiscal 2007
year-end financial statements, the auditing firm expressed
substantial doubt about the company's ability to continue as a
going concern, pointing to the company's recurring losses.
Arcadia has reported net losses in the past four fiscal periods,
including a net loss of $23.4 million for the year March 31, 2008.
In the company's audit report for the fiscal 2008 year-end
financial statements, however, BDO Seidman, LLP, issued an
unqualified audit opinion, removing the going concern issue
included in last year's audit.
The foregoing notwithstanding, and in view of the fact that the
company continues to incur losses, the Troubled Company Reporter
will continue to cover Arcadia Resources Inc. until such time that
the company has shown verifiable proof that they have reversed
this trend.
ASARCO LLC: To Settle Ready Mix Claim for $12,000,000
-----------------------------------------------------
Pursuant to Section 363(b)(1) of the Bankruptcy Code and Rule
9019 of the Federal Rules of Bankruptcy Procedure, ASARCO LLC
asks the U.S. Bankruptcy Court for the Southern District of Texas
Court to approve a compromise and settlement it entered into with
Ready Mix USA, LLC's rejection damages claim arising from ASARCO's
rejection of a prepetition contract.
ASARCO had an agreement with its former affiliate, American
Limestone Company, where ALC was to purchase all stone byproduct
produced by the Tennessee Mines Division for a period of 20 years
with the option to extend the agreement for another 10 years.
ASARCO, however, was forced to shutdown the mines due to the
plummeting price of zinc. Under the force majeure clause in the
Agreement, ASARCO had no obligation to provide any by-product to
ALC while the mines were closed.
In 2006, ASARCO sold the Tennessee mines to Glencore, Ltd., which
did not assume the Agreement upon purchase of the mines.
Glencore reopened the mines in June 2007.
Following the reopening of the mines, Ready Mix filed Claim Nos.
18220, 18224 and 18225 against ASARCO, asserting more than
$89,000,000 in damages resulting from the rejection. The amount
represented Ready Mix's projected lost profits on the by-product
over the remaining 22-year life of the Agreement.
The claim had been the subject of active litigation and discovery
between the parties, Van H. Beckwith, Esq., at Baker Botts,
L.L.P., in Dallas, Texas, relates. The matter was set for trial
on August 20, 2008; however, the parties agreed to mediate the
dispute before the trial.
During a mediation held on August 12, ASARCO and Ready Mix were
able to reach a settlement, which provides that all of Ready
Mix's claims against ASARCO resulting from the rejection of the
Agreement will be settled for an allowed claim of $12,000,000.
According to Mr. Beckwith, counsel to the Official Committee of
Unsecured Creditors for ASARCO, the Official Committee of
Unsecured Creditors for the Asbestos Subsidiary Debtors, and the
Future Claims Representative attended the mediation and support
the settlement with Ready Mix. Counsel to Asarco Incorporated
also attended the mediation and did not raise any questions,
concerns or objections to the settlement.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
The Company filed for Chapter 11 protection on Aug. 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When the Debtor filed for protection from its creditors, it listed
$600 million in total assets and $1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for $2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
$2.7 billion in cash as well as a $440 million guarantee to assure
payment of all allowed creditor claims, including payment of
liabilities relating to asbestos and environmental claims. AMC's
plan is premised on the estimation of the approximate allowed
amount of the claims against ASARCO.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News Issue No. 82; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
ASARCO LLC: Withdraws Adversary Proceeding Against Wells Fargo
--------------------------------------------------------------
ASARCO LLC dismissed, without prejudice, an adversary proceeding
it commenced against Wells Fargo Bank, National Association, and
East Katella Partnership, also known as Pointe South Mountain
Corporate Center, LLC. Accordingly, the Honorable Richard S.
Schmidt of the U.S. Bankruptcy Court for the Southern District of
Texas ordered the dismissal of the complaint.
ASARCO LLC filed the lawsuit in May 2008. Pursuant to Sections
549(a), 550(a) and 551 of the Bankruptcy Code and Rule 7001(1) of
the Federal Rules of Bankruptcy Procedure, the Debtor sought to
avoid and recover certain postpetition transfers, if any, from
Wells Fargo and East Katella. ASARCO, as lessee, and Transwestern
Phoenix I L.L.C., as landlord, entered into a lease, dated April
26, 2005, in connection with an office space designated as Suite
220 at the Pointe South Mountain Center and located at 8222 S.
48th Street, in Phoenix, Arizona.
In March 2006, Transwestern sold the building to East Katella.
In May 2006, East Katella, without Court authorization, appears
to have taken steps to pledge the building and ASARCO's rights
under the Lease to Wells Fargo, as reflected in a subordination
agreement, Nathaniel Peter Holzer, Esq., at Jordan Hyden Womble
Culbreth & Holzer, P.C., in Corpus Christi, Texas, at that time
said.
In April 2008, ASARCO sought and obtained the Court's permission
to reject the lease effective April 30, 2008.
Mr. Holzer said that to the extent the Subordination Agreement
resulted in a transfer to, or for the benefit of, Wells Fargo and
East Katella of an interest in ASARCO's property, and the
transfer occurred after the Petition Date, that transfer was
outside the ordinary course and required Court approval, which
approval was not obtained. Pursuant to Section 549(a), the
Postpetition Transfer is avoidable and pursuant to Section 551,
the Postpetition Transfer should be preserved for the benefit of
the particular estate. As the Postpetition Transfer is
avoidable, Mr. Holzer asserted that ASARCO is entitled to recover
the Postpetition Transfer from Wells Fargo and East Katella.
Accordingly, ASARCO asked the Court to:
(a) avoid the Postpetition Transfer;
(b) grant judgment in its favor in an amount equal to the
recoverable portion of the Postpetition Transfer; and
(c) award it attorneys' fees and costs of the lawsuit to the
fullest extent allowed by law.
In a notice of dismissal, ASARCO said the defendants have not
been served with process and have not filed an answer or a motion
for summary judgment.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
The Company filed for Chapter 11 protection on Aug. 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When the Debtor filed for protection from its creditors, it listed
$600 million in total assets and $1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No.
06-20774 to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for $2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
$2.7 billion in cash as well as a $440 million guarantee to assure
payment of all allowed creditor claims, including payment of
liabilities relating to asbestos and environmental claims. AMC's
plan is premised on the estimation of the approximate allowed
amount of the claims against ASARCO.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News Issue No. 82; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
AUSTRAL PACIFIC: Cheal A7 Unit Commences Production
---------------------------------------------------
Austral Pacific Energy Ltd. announced that the Cheal A7 well
commenced production on August 30, 2008.
Austral CEO and President Thompson Jewell said, "I am pleased to
see the well on stream this quickly and performing as expected.
The incremental production and revenue is a welcome sight."
A7 has now been successfully tied into the Cheal Production
Facility using a temporary connection. The well will be flowed
through these temporary facilities for three months while the
permanent installation is being planned.
As part of the planned production and testing procedures the well
is being produced at 200 barrels of oil per day (bopd) with no
water during the testing phase. There was no observed surface
pressure decline measured during the first test period.
The initial testing indicates that the well is capable of a
maximum flow rate in the range of 250-280 bopd. The optimum flow
rate will be established over the coming weeks. The field's
current production rate is approximately 520 bopd.
Cheal A3X has been shut-in for a week in August while the A7 well
was brought into production as a result of a reoccurrence of the
casing leak encountered earlier this year. A number of options are
being reviewed for immediate remedial repair to return the A3X
well to its 90 bopd rate while planning is underway to support a
permanent repair towards the end of this year if required.
A number of short and medium term production enhancement projects
are being investigated and implemented to further improve and
maximize the value of the current Cheal field production. Two
additional locations that could add both reserves and production
have been prepared and further prospects on trend are being
prioritized based on the results of the A6 and A7 drilling
program.
Cheal is a producing oil and gas field south of Stratford in
onshore Taranaki, New Zealand. It is 69.5% owned by Austral, which
is also field operator.
Austral Pacific Energy Ltd. is a limited liability company
incorporated in British Columbia under the Business Corporations
Act (British Columbia). The Company is domiciled in New Zealand.
The Company is primarily engaged in the acquisition, exploration,
appraisal and development and production from oil and gas
properties in New Zealand (and until the end of May 2008, Papua
New Guinea).
In July 2008, KPMG LLP raised substantial doubt about Austral
Pacific Energy Ltd.'s ability to continue as a going concern after
it audited the company's financial statements for the year ended
Dec. 31, 2007.
The auditor reported that the company has suffered recurring
losses from operations, has a working capital deficit and a net
capital deficiency and has also been unable to generate net cash
from operating activities. In addition, the company is in breach
of several covenants relating to its bank loan facility.
AVETA INC: S&P Lifts Counterparty Credit Rating to 'B' from 'CCC+'
------------------------------------------------------------------
Standard & Poor's Ratings Services raised its counterparty credit
ratings on Aveta Inc., MMM Holdings Inc., and NAMM Holdings Inc.
to 'B' from 'CCC+'.
Standard & Poor's also said that it raised its rating on the
senior secured credit facility issued through MMM and NAMM to 'B'
from 'CCC+'.
The outlook on all these companies is stable. Aveta conducts its
business through MMM and NAMM, which operate as two downstream
wholly owned holding companies.
The recovery ratings assigned to the credit facility issued
through MMM and NAMM is unchanged at '4', indicating average
recovery of principal in the event of default.
Debt outstanding through Aug. 31, 2008, consisted of a $404.4
million term loan due August 2011 and an untapped $10 million
revolver also due August 2011.
"The upgrade reflects Aveta's improving earnings and cash-flow
profile," explained Standard & Poor's credit analyst Joseph
Marinucci. "The core operational fixes related to medical
management and contracting initiatives that the new management
team has implemented mainly drove the improvement." Aveta is
better positioned to sustain and potentially build on its already
established competitive position in Puerto Rico. In addition, the
company paid down $70 million of debt so far in 2008 and favorably
amended its credit facility agreement in July 2008 to allow for
greater financial flexibility in the near to intermediate term.
"The stable outlook reflects our expectation for sustained
business and financial profile development commensurate with
progress achieved for the 12-month period ended June 30, 2008. It
also reflects our expectation for relatively strong debt-service
capacity and improved liquidity and capitalization over the next
12 months. By year-end 2008, S&P expects revenue to be
$1.9 billion-$2.1 billion and for core Medicare HMO membership in
Puerto Rico to be very modestly higher at 170,000 members-175,000
members," S&P says.
AW PARKER: Case Summary & Two Largest Unsecured Creditors
---------------------------------------------------------
Debtor: AW Parker Development, LLC
106 N. Sewalls Point Road
Stuart, FL 34996
Bankruptcy Case No.: 08-23505
About the Debtor: AW Parker was incorporated on Dec. 6, 2006, in
the State of Florida by Ekim Management.
Chapter 11 Petition Date: September 17, 2008
Court: Southern District of Florida (West Palm Beach)
Judge: Erik P. Kimball
Debtor's Counsel: Steven H. Friedman, Esq.
shfaty@aol.com
P.O. Box 1203
West Palm Beach, FL 33402
Tel: (561) 313-1351
Estimated Assets: Less than $50,000
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at http://bankrupt.com/misc/flsb08-23505.pdf
AXCAN INTERMEDIATE: S&P Assigns 'B+' Corporate Credit Rating
------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' long-term
corporate credit rating to Delaware-based Axcan Intermediate
Holdings Inc. and withdrew the 'B+' corporate credit rating on
Montreal-based Axcan Pharma Inc. The outlook on Axcan is stable.
These rating actions stem from a better understanding of the
company's corporate structure after giving effect to the Feb. 25
acquisition of Axcan Pharma Inc. by Axcan. The credit profile of
the consolidated entity is unchanged, as are the issue-level
ratings on Axcan's secured and unsecured financing facilities.
"The rating reflects the company's limited size and scale, high
initial debt leverage, and susceptibility to generic competition,"
said Standard & Poor's credit analyst Maude Tremblay. "The
company's niche position in gastroenterology, relatively diverse
product portfolio, and high margins partially offset these
concerns," Ms. Tremblay added.
"The stable outlook reflects our expectation that debt leverage
will remain high in the medium term. And while Axcan has
established a profitable niche in the gastrointestinal drug
market, the company's limited size and exposure to generic
competition are vulnerabilities. Meaningful deterioration in the
company's cash flows due to entry of a generic competitor would
quickly lead us to revise the outlook to negative. However, if
the company uses internally generated funds to consistently reduce
debt leverage below 4x and further broadens and diversifies its
portfolio, we would consider a positive rating action or outlook
revision," S&P says.
AXESSTEL INC: Paul J. Solit Discloses 6.9% Equity Stake
-------------------------------------------------------
Paul J. Solit disclosed in a Securities and Exchange Commission
filing that he may be deemed to beneficially own 1,608,426 shares
of Axesstel Inc.'s common stock, representing 6.9% of the shares
issued and outstanding.
Mr. Solit also disclosed that Potomac Capital Managment LLC, in
which he is a managing member, may be deemed to beneficially own
693,426 shares of Axesstel Inc.'s common stock, representing 3.0%
of the share issued and outstanding.
Mr. Solit also disclosed that Potomac Capital Management Inc., in
which he is president and sole owner, may be deemed to
beneficially own 915,000 shares of Axesstel's common stock,
representing 4.0% of the shares issued and outstanding.
About Axesstel
Headquartered in San Diego, Calif., Axesstel Inc. (AMEX: AFT) --
http://www.axesstel.com/-- designs and develops fixed wireless
voice and broadband data products. Axesstels product portfolio
includes broadband modems, 3G gateways, voice/data terminals,
fixed wireless desktop phones and public call office phones for
high-speed data and voice calling services. The company delivers
innovative fixed wireless solutions to leading telecommunications
operators and distributors worldwide. Axesstel's research and
development center is located in Seoul, South Korea.
Going Concern Doubt
The company experienced losses from operations from 2004 to 2007.
Because of the company's continuing net losses and negative
working capital position, Gumbiner Savett Inc., the company's
independent auditors, in their report on the company's
consolidated financial statements for the year ended Dec. 31,
2007, expressed substantial doubt about the company's ability to
continue as a going concern.
BANK OF AMERICA: S&P Puts 'B+' Rating on $28.741MM Class J Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its ratings to Bank of
America Auto Trust 2008-1's $5.64 billion asset-backed notes
series 2008-1.
The ratings reflect:
-- The strong obligor and collateral characteristics of the
pool of notes being securitized;
-- The credit enhancement in the form of subordination,
overcollateralization, and excess spread;
-- The timely interest and principal payments made under
stressed cash flow modeling scenarios appropriate to the
assigned rating categories; and
-- The legal structure.
Ratings Assigned
Bank of America Auto Trust 2008-1
Class Rating Type Interest Amount Legal final
rate (%) (mil. $) maturity date
----- ------ ---- -------- -------- -------------
A-1 A-1+ Senior 2.95383 1,824.739 September 2009
A-2-A AAA Senior 4.25000 1,603.250 June 2011
A-2-B AAA Senior One-month LIBOR
plus 1.3000 120.000 June 2011
A-3-A AAA Senior 4.97000 1,096.820 September 2012
A-3-B AAA Senior One-month LIBOR
plus 1.7500 98.600 September 2012
A-4 AAA Senior 5.73000 383.764 January 2013
A-5 AAA Senior 6.27000 100.000 September 2015
B AA+ Sub 6.50000 130.994 September 2015
C AA Sub 6.50000 19.714 September 2015
D A+ Sub 6.50000 77.028 September 2015
E A Sub 6.50000 19.951 September 2015
F BBB+ Sub 6.50000 90.995 September 2015
G BBB Sub 0.00000 8.645 September 2015
H BBB- Sub 0.00000 17.340 September 2015
I BB Sub 0.00000 20.136 September 2015
J B+ Sub 0.00000 28.741 September
2015
SUB -- Subordinate.
BAYOU GROUP: 32 Investors Agree to Return All Profits
-----------------------------------------------------
Bill Rochelle of Bloomberg News reports that Jeff J. Marwil, Esq.,
at Jenner & Block LLP, the receiver for Bayou Group, LLC, and its
debtor-affiliates, ask the U.S. Bankruptcy Court for the Southern
District of New York to approve the settlements with 32 investors
that he sued who were able to recover all their investment plus
profits before the Debtors collapsed into bankruptcy.
According to the report, the investors gave the Debtors
$12.2 million and eventually were paid all their principal plus
profit of $2.5 million. Mr. Marwil sued them along with 15 others
in February to recover both principal and profit, says the report.
Mr. Marwil wants to recover all of the $2.5 million in profits and
give up claims for the remainder, according to the report.
The 47 lawsuits were in addition to 131 Mr. Marwil filed to
recover payments received by other investors less than two years
before bankruptcy and before the financial fraud was disclosed,
the report says. The Court ruled that the lawsuits could go
forward under fraudulent transfer law even though the investors
didn't know a fraud was occurring, the report says.
When evidence came to light indicating the Debtors were being
operated as a Ponzi scheme, the Court appointed Mr. Marwil as
their receiver in April 2006, the report notes. Mr. Marwil put
the Debtors under Chapter 11 protection in May 2006 and later
filed the lawsuits against investors who were able to take out
their investments before the fraud surfaced, the report continues.
The fraud resulted in three guilty pleas, the report says. Daniel
Marino, the Debtors' head of finance, was sentenced to a 20-year
prison term despite his cooperation with prosecutors, the report
specifies. James Marquez, a co-founder of the Debtors, was
sentenced to four years and three months in prison and told to pay
$6.2 million in restitution, the report goes on. Another founder,
Samuel Israel III, was sentenced to 20 years following his guilty
plea in September 2005, the report adds.
Mr. Israel faked suicide immediately before he was to begin
serving his sentence, the report states. He was scheduled to
plead guilty on Sept. 16, 2008, to bail-jumping charges, the
report reveals. Although he was in court, the plea was
postponed on account of Mr. Israel's poor health, the report says.
The suits being settled all involved payments received more than
two years before the bankruptcy filing, the report says.
Mr. Marwil's papers say he recovered more than $30 million in a
prior settlement with 89 investors, according to the report.
The Court has set a hearing on the settlements on Oct. 22, the
report says.
In separate developments, the U.S. Trustee for Region 2, the
report says, objected to the latest fee requests by the lawyers
for Mr. Marwil and the Debtors' Official Committee of Unsecured
Creditors. The Trustee said in her Sept. 15 court paper that
total professional fees of $18.8 million through July represent
64% of Mr. Marwil's collections of $31 million, according to the
report.
The Trustee calls the expense-to-recovery ratio "astounding" and
"unacceptable", according to the report. She asked the Court to
cut off automatic monthly payment of fees and pay only a portion
on the next fee request, says the report.
A hearing on the Trustee's request was scheduled yesterday, the
report adds.
About Bayou Group
Based in Chicago, Illinois, Bayou Group LLC operates and manages
hedge funds. The company and its affiliates filed for chapter 11
protection on May 30, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-
22306) in order to pursue recoveries for the benefit of defrauded
investors.
Elise Scherr Frejka, Esq., at Dechert LLP, represents the Debtors
in their restructuring efforts. Joseph A. Gershman, Esq., and
Robert M. Novick, Esq., at Kasowitz, Benson, Torres & Friedman,
LLP, represent the Official Committee of Unsecured Creditors.
Kasowitz, Benson, Torres & Friedman LLP is counsel to the
Unofficial Committee of the Bayou Onshore Funds. Sonnenschein
Nath & Rosenthal LLP represents certain investors. When the
Debtors filed for protection from their creditors, they reported
estimated assets and debts of more than $100 million.
Bayou also filed lawsuits against former investors who allegedly
received fictitious profits and an inequitably large return of
their principal investments. Jeff J. Marwil, Esq., at Jenner &
Block, was appointed on April 28, 2006, as the federal equity
receiver.
As reported in the Troubled Company Reporter on April 16, 2008,
Bayou Group and its debtor-affiliates delivered 47 adversary
complaints to the Honorable Adlai S. Hardin Jr. of the U.S.
Bankruptcy Court for the Southern District of New York, seeking to
recover certain fraudulent transfers made by investors against the
Debtors. The Bayou entities include Bayou Management LLC, Bayou
Advisors LLC, Bayou Equities LLC, Bayou Fund LLC, Bayou Superfund,
Bayou No Leverage Fund LLC, Bayou Affiliates Fund LLC, and Bayou
Accredited Fund LLC.
The Debtors related that these adversary proceedings arose from
a massive fraudulent investment scheme committed by the Bayou
entities, which controlled private pooled investment hedge funds.
BEACH LANE: Sale of Hamptons Estate Approved; Bids Due Nov. 4
-------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the Southern District of
New York, Keen Consultants -- The Real Estate Division of KPMG
Corporate Finance LLC -- is selling Spectacular Hamptons Estate
located at 74 Beach Lane, Westhampton Beach, New York.
The house is 9,000+ sq. ft and sits on 2+ beautifully manicured
acres. There are 8 bedrooms and 7.5 baths along with a guest
house, Gunite pool and pagoda.
Offers are due November 4, 2008. KPMG's Matthew Bordwin says
offers are being accepted immediately and upon the receipt of an
acceptable offer, the Debtor will sell the property, subject to
Bankruptcy Court procedures.
For more information:
Matthew Bordwin
E-mail: mbordwin@kpmg.com
Managing Director & Group Head - Real Estate Services
KPMG Corporate Finance LLC
Keen Consultants - The Real Estate Division of KPMG Corporate
Finance LLC
1305 Walt Whitman Road, Suite 200
Melville, NY 11747
Tel: (631) 351-7800 (Main)
(631) 421-8282 (Direct)
Fax: (631) 794-2448
On the Net:
http://www.keenconsultants.com
http://www.KPMGCorporateFinance.com
Headquartered in New York City, Beach Lane Estate Corp. owns and
manages real estate. The Debtor filed for Chapter 11 protection
on April 10, 2008, (Bank. S.D. N.Y. Case No.: 08-11296). Mark A.
Frankel, Esq., at Backenroth Frankel & Krinsky LLP, represents the
Debtor in its restructuring efforts. The Debtor related that no
receiver, trustee or examiner has been appointed nor have any
official committees been appointed in this case. When the Debtor
filed for protection from its creditors, it has estimated assets
and debts of $1 million to $100 million.
BEAR STEARNS: S&P Lowers Ratings on Seven Classes of Certificates
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on seven
classes of commercial mortgage pass-through certificates from Bear
Stearns Commercial Mortgage Commercial Mortgage Securities Trust
2006-PWR13. Concurrently, S&P affirmed its ratings on the
remaining 16 classes from this transaction.
The lowered ratings reflect credit concerns with 10 of the 25
loans in the pool that reported debt service coverage of less than
1.0x. The affirmed ratings reflect credit enhancement levels that
provide adequate support through various stress scenarios.
Twenty-five loans in the pool, totaling $217.7 million (7.6%),
have reported DSCs of less than 1.0x. These loans are secured
primarily by a variety of hotel, retail, multifamily, office, and
industrial properties. The loans have experienced an average
decline in DSC of 41.5% since issuance. Standard & Poor's has
credit concerns with 10 of these 25 loans (3.0%). Most of the
properties securing these loans have experienced a combination of
declining occupancy and higher operating expenses. The remaining
loans generally had debt service reserves or are in various stages
of lease up, and S&P expects their DSCs to improve in the future.
The Le Pavillion Hotel is one of the loans that Standard & Poor's
has credit concerns with and is the ninth-largest loan in the
pool. The loan has a total exposure of $41.9 million (1.5%) and
is secured by a 226-room, full-service hotel in downtown New
Orleans. According to a July 2008 Smith Travel Research Report,
the hotel's revenue per available room (RevPAR) has declined by
20% since issuance. However, the hotel is performing well
compared with its competitive set, as it has a favorable RevPAR
penetration factor of 122.8%, which is about the same as at
issuance.
Standard & Poor's adjusted net cash flow for this loan has
declined by 55.8% since issuance, primarily due to higher
operating expenses and a decrease in room revenue. There are also
no debt service reserves in place and DSC was 0.58x as of June 30,
2008.
As of the Sept. 11, 2008, remittance report, the collateral pool
consisted of 303 loans with an aggregate trust balance of
$2.866 billion, compared with the same number of loans totaling
$2.907 billion at issuance. The master servicers, Wells Fargo
Bank N.A. and Prudential Asset Resources Inc., reported financial
information for 99% of the pool. Ninety-six percent of the
servicer-provided information was full-year 2007 data. Based on
this data, Standard & Poor's calculated a weighted average DSC of
1.43x for the pool, down from 1.44x at issuance. There are no
delinquent loans in the pool and the trust has not experienced any
losses to date.
Wells Fargo and Prudential reported a watchlist of 17 loans with
an aggregate outstanding balance of $102.3 million (3.6%). The
largest loan on the watchlist is the Courtyard Apartments
Valdosta, which is secured by a 434-unit multifamily property in
Valdosta, Georgia. The loan is on the watchlist because the
property lost its master lease with Moody's Military Base and the
borrower withdrew funds from a debt service reserve in October
2007. As of Dec. 31, 2007, the property reported a DSC of 0.67x.
The top 10 loans have an aggregate outstanding balance of $704.5
million (24.5%) and a weighted average DSC of 1.37x, the same as
at issuance. Standard & Poor's reviewed property inspections
provided by the master servicers for all of the assets underlying
the top 10 exposures and all of the properties were characterized
as "good."
Eight loans had credit characteristics consistent with investment-
grade obligations at issuance. The credit characteristics of the
300 North Meridian, North Brunswick Manor, New Braunfels
Marketplace, Nohl Plaza, Crockett Square, Westlake I&II, 1380
Howard Street, and Brandywine & Fountain Terrace Apartment loans
are still consistent with those of investment-grade obligations.
Standard & Poor's stressed the loans on the watchlist and the
other loans with credit issues as part of its analysis. The
resultant credit enhancement levels support the lowered and
affirmed ratings.
Ratings Lowered
Bear Stearns Commercial Mortgage Securities Trust 2006-PWR13
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
H BB+ BBB- 3.17%
J BB- BB+ 2.54%
K B+ BB 2.41%
L B BB- 2.03%
M B- B+ 1.77%
N CCC+ B 1.52%
O CCC B- 1.27%
Ratings Affirmed
Bear Stearns Commercial Mortgage Securities Trust 2006-PWR13
Class Rating Credit enhancement
----- ------ ------------------
A-1 AAA 30.42%
A-2 AAA 30.42%
A-3 AAA 30.42%
A-AB AAA 30.42%
A-4 AAA 30.42%
A-1A AAA 30.42%
A-M AAA 20.28%
A-J AAA 12.17%
B AA 9.89%
C AA- 8.87%
D A 7.48%
E A- 6.46%
F BBB+ 5.32%
G BBB 4.18%
X-1 AAA N/A
X-2 AAA N/A
N/A -- Not applicable.
BHM TECHNOLOGIES: Court Approves Jaffe as Committee Counsel
-----------------------------------------------------------
The United States Bankruptcy Court for the Western District of
Michigan approved the request of the Official Committee of
Unsecured Creditors of BHM Technologies Holdings, Inc., and its
debtor-subsidiaries to retain Jaffe Raitt Heuer & Weiss, P.C., as
counsel.
As reported by the Troubled Company Reporter on July 16, 2008,
Martin Seward, chairman of the Creditors Committee, says the
panel has selected Jaffe as counsel because of the firm's
extensive general experience and knowledge, and its recognized
expertise in the field of debtor's and creditors' rights,
business reorganizations under Chapter 11 of the Bankruptcy
Code, and unsecured creditors committees' rights and duties.
Jaffe will assist the Committee in fulfilling the functions
described in Section 1103(c) of the Bankruptcy Code and other
functions as may be required or permitted of the Committee
pursuant to the Bankruptcy Code.
Judith Greenstone Miller, Esq., a member of the firm, says his
firm does not hold or represent an interest adverse to the
Debtors' estate in the matters upon which Jaffe is to be
employed.
Jaffe will charge the Debtors' estates at its standard hourly
rates and will seek reimbursement of necessary out-of-pocket
expenses. The firm's standard rates are:
Professional Position Hourly Rate
------------ -------- -----------
Jay L. Welford Partner US$385
Thomas E. Coughlin Partner 335
Judith Greenstone Miller Partner 360
Louis P. Rochkind Partner 455
Richard Kruger Partner 285
Alicia Schehr Partner 250
Paige Barr Associate 200
Paul Hage Associate 185
Maureen E. Chapman Paralegal 160
Jaffe will apply to the Court for allowance of compensation and
reimbursement of expenses in accordance with applicable
provisions of the Bankruptcy Code, Federal Rules of Bankruptcy
Procedure, local rules and orders of the Court.
Headquartered in Ionia, Michigan, BHM Technologies Holdings
Inc. -- http://www.browncorp.com/-- manufactures and sells
automobile parts including air bags and electrical systems. It
has manufacturing facilites in Mexico and operates under Brown
Corp.
BHM Technologies Holdings, Inc. and 14 affiliates filed separate
voluntary petitions under Chapter 11 on May 19, 2008 (Bankr.
W.D. Mich. Lead Case No. 08-04413). Hannah Mufson McCollum,
Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and
Leon R. Barson, Esq. of Pepper Hamilton LLP, represent the
Debtors in their restructuring efforts. The Debtors total
scheduled asset is US$0 and its total scheduled liabilities is
US$336,506,519.
The Debtors have until Dec. 15, 2008, to exclusively file their
bankruptcy plan. (BHM Technologies Bankruptcy News; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
BHM TECHNOLOGIES: Dundee Wants $346,967 in Goods Returned
---------------------------------------------------------
Dundee Products Co. gives notice of the delivery of written
demand, pursuant to Sections 503 and 546 of the Bankruptcy Code,
and applicable non-bankruptcy law, on debtor-affiliates -- The
Brown Co. of Moberly, LLC, The Brown Co. of Ionia, LLC, and The
Brown Co. of Waverly, LLC -- of BHM Technologies Holdings, Inc.,
to reclaim certain assets that are subject to reclamation.
Michael S. Messenger, Esq., at Robison, Curphey & O'Connell, in
Toledo, Ohio, says that Dundee believes that the Goods were sold
in the ordinary course of business and delivered on credit terms
to, and received by, the Debtors during the days prior to the
Petition Date.
Mr. Messenger adds that Dundee further believes that Debtors were
insolvent at the time Debtors received delivery of the goods. The
value of the goods at issue in this demand is $346,967.
Headquartered in Ionia, Michigan, BHM Technologies Holdings
Inc. -- http://www.browncorp.com/-- manufactures and sells
automobile parts including air bags and electrical systems. It
has manufacturing facilites in Mexico and operates under Brown
Corp.
BHM Technologies Holdings, Inc. and 14 affiliates filed separate
voluntary petitions under Chapter 11 on May 19, 2008 (Bankr.
W.D. Mich. Lead Case No. 08-04413). Hannah Mufson McCollum,
Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and
Leon R. Barson, Esq. of Pepper Hamilton LLP, represent the
Debtors in their restructuring efforts. The Debtors total
scheduled asset is US$0 and its total scheduled liabilities is
US$336,506,519.
The Debtors have until Dec. 15, 2008, to exclusively file their
bankruptcy plan. (BHM Technologies Bankruptcy News; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
BOFA AUTO TRUST: Fitch Rates $28.741MM Class J Notes 'BB'
---------------------------------------------------------
Fitch rated Bank of America Auto Trust 2008-1 asset-backed notes
as:
-- $1,824,739,000 2.95383% class A-1 'F1+';
-- $1,603,250,000 4.25% class A-2a 'AAA';
-- $120,000,000 one-month LIBOR + 130 Class A-2b 'AAA';
-- $1,096,820,000 4.97% class A-3a 'AAA';
-- $98,600,000 one-month LIBOR + 175 class A-3b 'AAA';
-- $383,764,000 5.73% class A-4 'AAA';
-- $100,000,000 6.27% class A-5 'AAA';
-- $130,994,000 6.50% class B 'AA';
-- $19,714,000 6.50% class C 'AA-';
-- $77,028,000 6.50% class D 'A';
-- $19,951,000 6.50% class E 'A-';
-- $90,995,000 6.50% class F 'BBB';
-- $8,645,000 0.00% class G 'BBB';
-- $17,340,000 0.00% class H 'BBB-';
-- $20,136,000 0.00% class I 'BB+';
-- $28,741,000 0.00% class J 'BB'.
BROAD PROPERTY: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Broad Property 2004 LLC
1047 South Clinton
Trenton, NJ 08609
Bankruptcy Case No.: 08-27756
Chapter 11 Petition Date: September 17, 2008
Court: District of New Jersey (Trenton)
Debtor's Counsel: Shmuel Klein, Esq.
shmuelklein@optonline.net
Law Office of Shmuel Klein
113 Cedarhill Avenue
Mahwah, NJ 07430
Tel: (201) 529-3411
Estimated Assets: undisclosed
Estimated Debts: $100,000 to $500,000
The Debtor did not file a list of 20 largest unsecured creditors.
CAPTAIN'S COVE: Files for Chapter 11 Protection
-----------------------------------------------
Jenny Hopkinson at The Daily Times reports that Harold Glick and
Robert Warfield filed for Chapter 11 bankruptcy protection for
their company, Captain's Cove Group LLC, in the U.S. Bankruptcy
Court for the District of Maryland, after defaulting on about
$18 million in loans.
According to The Daily Times, court documents indicate that PNC
Bank sued Messrs. Glick and Warfield in the Worcester County
Circuit Court, demanding the unpaid part of a $22 million in loans
the developers borrowed over the past four years.
The Daily Times relates that Messrs. Glick and Warfield took out a
$9 million loan from Peninsula Mercantile Bank, now PNC Bank, on
Feb. 1, 2004. In that same month, Messrs. Glick and Warfield
bought the holdings of the previous developer of Captain's Cove,
Calvin Burns and the First Charter Land Corp., including about
1,500 residential lots and out parcels, for $7.5 million, The
Daily Times says.
Captain's Cove borrowed another $9 million from PNC Bank in July
2005, and two more loans from PNC Bank for $2 million each in May
2007, according to The Daily Times. The report says Captain's
Cove failed to repay the $18 million balance of the loans it owed
PNC Bank by July 2. The report adds that attorneys for PNC Bank
then sent letters warning these five entities that signed as
guarantors of the loans:
-- Captain's Cove Group;
-- G&W Realty, another company owned by Messrs. Glick and
Warfield;
-- Harold Glick;
-- Robert Warfield; and
-- Mr. Warfield's wife, Margaret.
PNC Bank, according to The Daily Times, filed a lawsuit against
the developer in Worcester County Circuit Court on Aug. 11,
demanding the payment of the debt plus interest, attorney's fees,
and levied additional interest as high as $645 a day, on each of
the five loans in default. When Captain's Cove failed to pay the
debt on Aug. 26, PNC Bank obtained Writs of Garnishment and seized
four bank and investment accounts belonging to Mr. Glick, two
owned by Robert Warfield, and another two owned by Margaret
Warfield, The Daily Times states.
About Captain's Cove
Berlin, Maryland-based Captain's Cove Group, LLC, is a residential
development south of the Worcester County border. Captain's Cove
is a 2,000-acre subdivision stretching along 11 miles of
waterfront on the Chincoteague Bay in Greenbackville, and is
within commuting distance to Pocomoke City, Salisbury and Wallops
Island. Developers of Captain's Cove envisioned homes on each of
the 4,800 three-quarter-acre lots when the project was planned in
the early 1970s. About 860 houses have been built for the
project. Under current county zonig codes, the project would
never be approved under current county zoning codes, as it falls
on low-lying ground and wetlands, according to Ron Wolff, Accomack
County Supervisors chairperson and representative for the
Greenbackville-Captain's Cove area.
Captain's Cove's owners, Harold Glick and Robert Warfield, filed
for Chapter 11 protection on behalf of the company on Aug. 26,
2008 (Bankr. D. Md. Lead Case No. 08-20901). J. Daniel Vorsteg,
Esq., at Whiteford Taylor & Preston represents the Debtor in its
restructuring efforts. The Debtor disclosed assets of between
$10,000,000 and $50,000,000, and debts of between $10,000,000 and
$50,000,000 when it filed for bankruptcy.
CARUSO HOMES: Court Okays Tydings & Rosenberg as Committee Counsel
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Maryland authorized
the Official Committee of Unsecured Creditors appointed in the
bankruptcy cases of Caruso Homes Inc. and its debtor-affiliates to
employ Tydings & Rosenberg LLP as their counsel.
T&R is expected to:
a. advise the Committee with respect to its rights, duties, and
powers;
b. assist and advise the Committee's investigation of the
acts, conduct, assets, liabilities, and financial condition
of the Debtors and other relevant matters;
c. draft pleadings and applications;
d. analyze any Chapter 11 plans filed in the case and
participating in the formulation of said plans;
e. represent the Committee in hearings and proceedings;
f. represent the Committee in collateral litigation before this
Court and other Courts; and
g. perform other legal services as may be required or in the
best interests of the Committee in accordance with the
powers and duties of the Committee.
The Committee proposed that T&R be paid its customary hourly rates
for services rendered to other clients in bankruptcy and non-
bankruptcy matters and to reimburse T&R for actual, necessary and
reasonable expenses incurred.
To the best of T&R's knowledge, T&R has no connections with and
holds no interest adverse to the Debtors, creditors, any parties
in interest. To the best of the Committee's knowledge, T&R is a
"disinterested person" as defined under the U.S. Bankruptcy Code.
Headquartered in Crofton, Maryland, Caruso Homes Inc. --
http://www.carusohomes.com/-- is a custom home builder. The
company and 24 of its debtor-affiliates filed for Chapter 11
protection on June 23, 2008 (D. Md. Lead Case No. 08-18254). Joel
I. Sher, Esq., at Shapiro Sher Guinot & Sandler P.A, represents
the Debtors as counsel. The Debtors' schedules showed assets of
$16,105,716 and liabilities of $115,809,357.
CARUSO HOMES: Wants to Hire John Maestri as Real Estate Consultant
------------------------------------------------------------------
Caruso Homes Inc. and its debtor-affiliates seek authority from
the U.S. Bankruptcy Court for the District of Maryland to employ
John Maestri Consulting Services as their real estate consultant.
The consulting firm will:
a. market associated properties and/or debt;
b. consult with the Debtors and their Court-approved
professionals in the development and implementation of a
marketing program for the sale of the Properties, which the
Debtors and Maestri expect to include internet, newspaper
and journal advertisements, direct telemarketing and
communication with brokers, investors, developers and such
other parties as may have an interest in the Properties;
c. provide assistance to the Debtors and their Court-approved
professionals in communicating with the Lenders with respect
to the efforts to market and sell the Properties;
d. solicit offers from prospective purchasers and investors and
providing recommendations to the Debtors with respect to any
offers to acquire the associated properties and/or debt;
e. structure any proposed transactions, and review and
negotiate any related documents; and
f. if required, appearing before the Bankruptcy Court to
testify or consult with respect to the contemplated
transactions.
The Debtors will pay the consultant a security retainer of $10,000
and a weekly fee of $5,000 based on 25 hours of work per week. To
the extent the consultant is required to provide more than 25
hours during any given work week (which the Consultant will
endeavor to do as necessary), the consultant will be paid
additional amounts at the reduced rate of $150 per hour. In
addition, the consultant will be reimbursed for all reasonable out
of pocket expenses, including mileage, meals, tolls and other
related business expenses.
In addition, when a Project Entity sells or otherwise transfers
title to a Property (or a Lender assigns its debt associated with
a Property) for which the consultant is the procuring cause,
whether individually or part of a package, the consultant will
receive a Success Fee equal to 1% of the gross proceeds received
at the closing upon such transaction.
Between 2005 and early-2007, John Maestri, the consultant's
principal, was employed by the Debtors as a vice president of land
acquisitions responsible for acquiring real property in Delaware,
Maryland and Virginia. However, the consultant holds no interest
adverse to the Debtors. To the best of the Debtors' knowledge,
the consultant is a "disinterested person" as defined under the
U.S. Bankruptcy Code.
Headquartered in Crofton, Maryland, Caruso Homes Inc. --
http://www.carusohomes.com/-- is a custom home builder. The
company and 24 of its debtor-affiliates filed for Chapter 11
protection on June 23, 2008 (D. Md. Lead Case No. 08-18254). Joel
I. Sher, Esq., at Shapiro Sher Guinot & Sandler P.A, represents
the Debtors as counsel. The Debtors' schedules showed assets of
$16,105,716 and liabilities of $115,809,357.
CASH TECH: Delays Filing of Annual Report with SEC
--------------------------------------------------
Cash Technologies Inc. disclosed in a Securities and Exchange
Commission filing that it needs more time to file its Form 10KSB
for the fiscal year ended May 31, 2008.
Bruce Korman, Cash Technologies' Chief Executive Officer, said the
company has yet to complete the analysis of the effects of the
Champion Parts, Inc. bankruptcy and subsequent acquisition of
certain Champion assets by subsidiaries of the Company, including
relevant management discussion and analysis.
About Cash Technologies
Headquartered in Los Angeles, Cash Technologies Inc. (AMEX: TQ)
-- http://www.cashtechnologies.com/-- develops and markets
innovative data processing solutions in the healthcare and
financial services industries.
CASH TECH: Recurring Losses Cue Auditor's Substantial Doubt
-----------------------------------------------------------
VASQUEZ & Company LLP stated in its report dated Sept. 13, 2008,
that Cash Technologies, Inc., has suffered significant recurring
losses that raise substantial doubt about its ability to continue
as a going concern after it audited the company's financial
statements for the year ended May 31, 2008.
The company posted a net loss of $800,052 on net revenues of
$336,615 for the year ended May 31, 2008, as compared with a net
loss of $3,065,247 on net revenues of $313,946 in the prior year.
Going Concern
The company has significant losses from operations and had used
significant amounts of cash for operations during the last five
years. As of May 31, 2008, the company does not have sufficient
working capital and net equity operating losses have continued
throughout 2007. The company has generated limited revenues since
its inception, and, while management expects the company to
generate significant revenues within the next fiscal year, there
is no assurance that the company will be successful.
In view of the financial deficiencies, there is substantial doubt
about the company's ability to continue as a going concern. The
recoverability of recorded assets and satisfaction of the
liabilities is dependent on the company's continued operations,
which is in turn dependent upon the company's ability to meet its
financing requirements on a continuing basis as well as to succeed
in its future operations.
Due to the unfavorable results of operations and cash flows, the
management is in the process of negotiating payment terms with
vendors representing a significant portion of the company's
accounts payable and are managing the payments of the remaining
accounts payable on a case-by-case basis. Management is also
taking certain steps to obtain additional equity financing to
improve the company's operating results and financial position.
The company plans to increase revenues and reduce costs in order
to generate sufficient positive cash flow beginning in second
quarter of fiscal year 2007. While management believes that the
company's financing and revenue generation plans will be
successful, no assurances can be given that the company will be
successful and that the company will continue as a going concern.
Liquidity And Capital Resources
The company's capital requirements have been and will continue to
be significant, and the company's cash requirements have exceeded
cash flow from operations. At May 31, 2008, the company had
working capital of $5,241,369 compared with a deficit of
$6,662,506 at May 31, 2007. At May 31, 2008, the company had a
cash balance of $410,305 compared with $1,107,649 at May 31, 2007.
The company is in immediate need of substantial working capital to
continue the company's business and operations. To date, the
company has been funding its operations through the issuance of
equity in private placement transactions with existing
stockholders or persons with whom the company has relationships,
including affiliates of stockholders. There can be no assurance
that the company will be able to continue to raise required
working capital in this or any other manner.
Since inception, the company has satisfied its working capital
requirements through limited revenues generated from operations,
the issuance of equity and debt securities, borrowing under a line
of credit and loans from the company's security holders.
According to the company's management, its auditor indicated
substantial doubt primarily due to substantial debt service
requirements and working capital needs.
Net cash sources used in operating activities was $1,284,026 for
the fiscal year ended May 31, 2008, compared with $2,775,679 for
the fiscal year ended May 31, 2007. Net cash used in investing
activities for the fiscal year ended May 31, 2008, was $500,000
as compared with $0 for the fiscal year ended May 31, 2007.
Net cash provided by financing activities for the fiscal year
ended May 31, 2008, was $86,682 as compared with $3,801,971 for
the fiscal year ended May 31, 2007.
Balance Sheet
At May 31, 2008, the company's balance sheet showed $17,714,762 in
total assets, $10,075,748 in total liabilities, and $7,761,655 in
total stockholders' equity.
The company's consolidated balance sheet at May 31, 2008, also
showed liquidity with $13,383,444 in total current assets
available to pay $8,142,075 in total current liabilities.
A full-text copy of the company's 2008 annual report is available
for free at http://ResearchArchives.com/t/s?3232
About Cash Technologies
Headquartered in Los Angeles, Cash Technologies, Inc. (AMEX: TQ)
-- http://www.cashtechnologies.com/-- develops and markets data
processing solutions in the healthcare and financial services
industries. The company, through its subsidiary, Claim-Remedi
Services, Inc., provides software and services in the healthcare
sector.
CENT INCOME: Fitch $100MM Income Notes from Removes Negative Watch
------------------------------------------------------------------
Fitch Ratings has removed the income notes issued CENT Income
Opportunity Fund I, LLC from Rating Watch Negative. This rating
action is effective immediately:
-- $100,000,000 income notes remain at 'CCC'.
The rating actions reflect the application of methodology outlined
under Fitch's updated Market Value Structures criteria, published
April 18, 2008. In addition, the ratings consider the sustained
market value decline in the secondary leveraged loan market that
has increased the vulnerability of these classes to a
deteriorating credit environment. Fitch continues to be concerned
about pricing volatility in leveraged loan secondary markets.
While the distance-to-trigger metric relative to the advance rate
ranges published in Fitch's updated MVS criteria indicates a 'B'
rating, the income notes currently have significant negative net
asset value coverage. Additionally, from a cash flow perspective,
their probability of default is viewed to be consistent with a
'CCC' rating. This is further evidenced by the level of negative
par coverage. The DTT is now below 7% according to Fitch's most
recent calculation, with the portfolio categorized into 67%
Category 2 assets, 22% Category 3 assets, and 11% Category 4
assets.
CENT Income Opportunity Fund I is a synthetic total rate of return
collateralized loan obligation with a market value termination
trigger. The transaction closed on Aug. 3, 2006 and is managed by
RiverSource Investments LLC, Inc.
The rating assigned to the income notes addresses the ultimate
receipt of the principal investment by the date that is 10 years
from the date of issuance of the income notes.
-- 'Fitch Update: Application of Revised Market Value Structure
Criteria to TRR CLOs' (May 15, 2008)
-- 'Fitch Downgrades 24 Classes from 9 TRR CLOs on Secondary
Loan Price Declines (Feb. 20, 2008)
-- 'Fitch Downgrades 28 Classes from 10 TRR CLOs (Feb. 12, 2008)
CELTS 2007-1: Fitch Cuts $307MM Class Notes Rating to BB from A
---------------------------------------------------------------
Fitch Ratings has downgraded and removed from Rating Watch
Negative two classes of notes issued by CELTS 2007-1. These
rating actions are effective immediately:
-- $307,000,000 class A revolving notes to 'BB' from 'A';
-- $57,000,000 class B notes to 'CCC' from 'BB'.
The rating actions reflect the application of methodology outlined
under Fitch's updated Market Value Structures criteria, published
April 18, 2008. In addition, the ratings consider the sustained
market value decline in the secondary leveraged loan market that
has increased the vulnerability of these classes to a
deteriorating credit environment. Fitch continues to be concerned
about pricing volatility in leveraged loan secondary markets.
The downgrade of class A notes to 'B' reflects its distance-to-
trigger metric relative to the advance rate ranges published in
Fitch's updated MVS criteria. The DTT is now under 5% according
to Fitch's most recent calculation, with the portfolio categorized
into 81% Category 2 assets, 17% Category 3 assets, and 2% Category
4 assets. The rating of the class A notes also benefits from an
additional cushion above the transaction's liquidation trigger
coupled with the quality of the assets and additional
subordination provided by the class B notes.
The downgrade of class B notes to 'CCC' reflects their DTT levels
and their significant negative net asset value coverage levels.
These notes are still receiving interest and have the potential to
receive principal payments but have a low ability to withstand any
further pricing or credit stresses to the portfolio.
CELTS 2007-1 is a total rate of return collateralized loan
obligation with a market value termination trigger. The
transaction closed on Aug. 17, 2007 and is managed by INVESCO
Senior Secured Management, Inc.
The rating of the class A notes addresses the likelihood that
investors will receive full and timely payments of interest, as
per the transaction's governing documents, as well as the stated
balance of principal by the legal final maturity date. The rating
of the class B notes addresses the likelihood that investors will
receive full and timely payments of interest, defined as Class B
Note Rate, as per the transaction's governing documents, as well
as the stated balance of principal by the legal final maturity
date.
CFM US: Panel Wants Teachers Pension Plan Claim Recharacterized
---------------------------------------------------------------
Bill Rochelle of Bloomberg News reports that the Official
Committee of Unsecured Creditors of CFM U.S. Corp. and its debtor-
affiliate, CFM Majestic U.S. Holdings, Inc., has sued the Ontario
Teachers Pension Plan Board. The Ontario Teachers Pension Plan
Board led a group of investors that took the Debtor private in
April 2005.
The Committee wants the more than $300 million owing to the
Teachers Pension Plan recharacterized as equity or subordinated to
the creditors' claims, the report says.
The Committee contends that the Debtor was insolvent when it was
acquired in 2005, according to the report. The Committee alleges
that the Teachers Pension Plan misled creditors about the Debtor's
financial condition, the report relates.
The Debtor was authorized in July to sell most of the assets for
$42.5 million after selling other assets in May to two buyers for
$4.6 million, the report notes. The Debtor was permitted in
August to sell real estate in Huntington, Indiana, for $2 million,
the report adds.
About CFM
Headquartered in Huntington, Indiana, CFM U.S. Corp. --
http://www.majesticproducts.com/-- manufactures two product
categories: Hearth and Heating Products and Barbecue and Outdoor
Products. The company and its affiliate, CFM Majestic U.S.
Holdings, Inc., filed for Chapter 11 protection on April 9,
2008 (Bankr. D. Del. Lead Case No. 08-10668). William Pierce
Bowden, Esq., at Ashby & Geddes, represents the Debtors. The
Debtors selected Administar Services Group LLC as their claims
agent. The U.S. Trustee for Region 3 appointed seven creditors to
serve on an Official Committee of Unsecured Creditors. Patrick J.
Reilley, Esq., at Cole Schotz Meisel Forman & Leonard, P.A.,
represents the Committee in these cases. As reported in the
Troubled Company Reporter on June 18, 2008, the Debtors' summary
of schedules showed total assets of $91,316,300 and total debts of
$32,7367,890.
The Debtors' Canadian affiliates filed protection under Companies'
Creditors Arrangement Act with the Ontario Court of Justice on
April 9, 2008.
CHRYSLER LLC: Urges Congress to Fund $25BB Loan Program
-------------------------------------------------------
Top executives at General Motors Corp., Chrysler LLC and Ford
Motor Co. met with House Speaker Nancy Pelosi and other
congressional leaders on Wednesday to pursue the funding of a
$25 billion loan program intended to help the automakers
modernize their plants to meet fuel efficiency requirements in the
future, reports say.
GM Chairman and CEO Rick Wagoner, Ford CEO Alan Mulally and
Chrysler Chairman and CEO Robert Nardelli, also sent a letter
stating their request for the loan program. In it, they warned
that sluggish U.S. economy could affect thousands of workers.
Dow Jones reports that House Speaker Pelosi told reporters on the
same day that she plans to unveil a $25 billion loan package to
U.S. automakers next week that could possibly add new efficiency
standards. It would likely be contained in a government funding
bill.
Congress has authorized $25 billion in loans in last year's energy
bill, but the plan has yet to be funded. The program authorizes
Congress to provide $25 billion in low-cost loans in order for
automakers and their suppliers to meet new fuel-efficiency
requirements of at least 35 miles per gallon by 2020, a 40%
increase.
According to a report by the Associated press, the loans would
have an interest rate of around 5 percent, providing about
$100 million a year in savings for every $1 billion the companies
receive in loans. The interest rate would have been in double-
digit on the open market because of the companies' poor bond
ratings, the report said.
About Ford Motor Co.
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) --
http://www.ford.com/-- manufactures or distributes automobiles in
200 markets across six continents. With about 260,000 employees
and about 100 plants worldwide, the company's core and affiliated
automotive brands include Ford, Jaguar, Land Rover, Lincoln,
Mercury, Volvo, Aston Martin, and Mazda. The company provides
financial services through Ford Motor Credit Company.
The company has operations in Japan in the Asia Pacific region. In
Europe, the company maintains a presence in Sweden, and the United
Kingdom. The company also distributes its brands in various
Latin-American regions, including Argentina and Brazil.
* * *
As reported in the Troubled Company Reporter on Aug. 5, 2008,
Fitch Ratings has downgraded the issuer default rating of Ford
Motor Company and Ford Motor Credit Company LLC to 'B-' from 'B'.
The Rating Outlook remains Negative. The downgrade reflects: the
further deterioration in Ford's U.S. sales as a result of economic
conditions, an adverse product mix and the most recent jump in gas
prices; portfolio deterioration at Ford Credit and heightened
concern regarding economic access to capital to support financing
requirements; and escalating commodity costs that will remain a
significant offset to cost reduction efforts.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM
employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
At June 30, 2008, the company's balance sheet showed total assets
of $136.0 billion, total liabilities of $191.6 billion, and total
stockholders' deficit of $56.9 billion. For the quarter ended
June 30, 2008, the company reported a net loss of $15.4 billion
over net sales and revenue of $38.1 billion, compared to a net
income of $891.0 million over net sales and revenue of
$46.6 billion for the same period last year.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K.,
Argentina, Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
On July 31, 2008, TCR said that Fitch Ratings downgraded the
Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The
Rating Outlook is Negative. The downgrade reflects Chrysler's
restricted access to economic retail financing for its vehicles,
which is expected to result in a further step-down in retail
volumes. Lack of competitive financing is also expected to result
in more costly subvention payments and other forms of sales
incentives. Fitch is also concerned with the state of the
securitization market and the ability of the automakers to access
this market on an economic basis over the near term, given the
steep drop in residual values, higher default rates, higher loss
severity being experienced and jittery capital market.
CIT GROUP: Secures $500 Million Loan From Wells Fargo
-----------------------------------------------------
CIT Group Inc. signed a commitment letter with Wells Fargo Bank,
N.A., for a new five-year, $500 million secured facility that can
be used by CIT to fund middle market term and revolving loans.
The facility is subject to customary closing conditions including
final documentation and due diligence. Borrowings under the
facility are subject to eligibility criteria, including approval
of all loans used as collateral by Wells Fargo. CIT anticipates
that it will begin to borrow under this new facility during the
fourth quarter of 2008.
CIT's Chairperson and CEO Jeffrey M. Peek said, "We continue to
execute on our strategic funding plan and explore additional
options to further strengthen our liquidity position. These
efforts will allow us to continue to meet the financing needs of
our middle market customers and further enhance the value of the
CIT franchise."
CIT Bank also continues to directly originate new commercial
loans. Since July 1, 2008, CIT Bank deposit issuances have
exceeded $500 million, which, combined with excess cash maintained
in the bank earlier in the year, have supported more than $1.4
billion of commercial loan fundings. CIT also indicated that
fundings through its secured aircraft facility are approaching
$400 million, with an additional $400 million anticipated before
year end.
These developments further evidence the progress CIT has made to
strengthen its balance sheet and improve and diversify its
liquidity and funding, as it positions itself for long-term
success and profitability. As previously announced, during the
third quarter CIT has also:
-- received approximately $1.5 billion from the $3 billion
Goldman Sachs funding facility, with the remainder
expected to be funded by year-end;
-- renewed a $2 billion equipment conduit facility;
-- sold $500 million in assets, including aircraft, and
commercial loans;
-- closed on the sale of $500 million of unfunded loan
commitments;
-- repaid $1.5 billion of unsecured debt; and
-- prepaid $2.1 billion in bank borrowings.
About CIT Group
Headquartered in New York City, CIT Group Inc. (NYSE: CIT) --
http://www.cit.com/-- is a commercial finance company that
provides financial products and advisory services to more than one
million customers in over 50 countries across 30 industries. A
leader in middle market financing, CIT has more than $80 billion
in managed assets and provides financial solutions for more than
half of the Fortune 1000. A member of the S&P 500 and Fortune
500, it maintains leading positions in asset-based, cash flow and
Small Business Administration lending, equipment leasing, vendor
financing and factoring.
The CIT brand platform, Capital Redefined, articulates its value
proposition of providing its customers with the relationship,
intellectual and financial capital to yield infinite
possibilities.
As reported in the Troubled Company Reporter on March 25, 2008,
CIT Group drew upon its $7.3 billion in unsecured U.S. bank
credit facilities to repay debt maturing in 2008, including
commercial paper, and to provide financing to its core commercial
franchises.
The company failed to draw from its normal operational funding
after ratings firms downgraded the bank's debt.
As reported in the Troubled Company Reporter on June 2, 2008,
Moody's Investors Service downgraded the senior unsecured rating
of CIT Group, Inc. to Baa1 from A3 and affirmed its Prime-2 short-
term rating. CIT's long-term ratings remain on review for
possible downgrade.
CITY CAPITAL: June 30 Balance Sheet Upside-Down by $1.2 Million
---------------------------------------------------------------
City Capital Corp.'s consolidated balance sheet at June 30, 2008,
showed $2,406,041 in total assets and $3,668,041 in total
liabilities, resulting in a $1,261,973 total stockholders'
deficit.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $2,078,845 in total current assets
available to pay $3,589,084 in total current liabilities.
The company reported a net loss of $7644,140, on revenues of
$116,679, for the first quarter ended June 30, 2008, compared with
a net loss of $3,044,868, on zero revenues, in the same period
last year.
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?323c
Going Concern Doubt
As reported in the Troubled Company Reporter on May 19, 2008,
Spector & Wong, LLP, in Pasadena, Calif., expressed substantial
doubt about City Capital Corporation'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 said that the company's ability to continue in
the normal course of business is dependent upon the success of
future operations. The auditing firm added that the company has
recurring losses, substantial working capital deficiency,
stockholders' deficit and negative cash flows from operations.
The auditing firm also pointed to the company's default in certain
notes payable, recent withdrawal as a business development company
and commencement of new operations.
About City Capital
Based in Franklin, Tenn., City Capital Corporation (OTC BB: CTCC)
-- http://www.citycapitalcorp.net/-- acquires and renovates
distressed properties in multiple industry segments, reselling
them at a profit.
CONTINENTAL AFA: Appoints Focus Management as CRO
-------------------------------------------------
Focus Management Group has been appointed as Advisor and Chief
Restructuring Officer to Continental AFA Dispensing Company and
its subsidiaries under an Order entered by the United States
Bankruptcy Court for the Eastern District of Missouri, effective
August 8, 2008.
Focus has been appointed by the Court (i) to provide assistance
with CAFA's Chapter 11 filing including the review and preparation
of budgets, filing documents and DIP financing, (ii) to assume
control over CAFA's cash and manage all elements of its working
capital, (iii) to manage and facilitate the orderly wind-down and
liquidation of CAFA's assets and (iv) to serve on CAFA's Board of
Directors.
The Focus team is led by Joseph Figlewicz, a Managing Director of
Focus Management Group. Figlewicz is a restructuring advisor with
extensive experience in chapter 11 reorganizations, distressed
business sales, financial restructurings and operational
turnarounds. He can be reached at 800-528-8985 or
j.figlewicz@focusmg.com
About Focus Management Group
Focus Management Group provides nationwide professional services
in turnaround management, insolvency proceedings, business
restructuring and operational improvement with a senior-level team
of eighty professionals. Headquartered in Tampa, FL, with offices
in Atlanta, Chicago, Cleveland, Greenwich, Los Angeles and
Nashville, the firm provides a full portfolio of services to
distressed companies and their stakeholders, including secured
lenders and equity sponsors.
About Continental AFA Dispensing
Continental AFA, fka Indesco International, Inc. --
http://www.continentalafa.com/ -- headquartered in St. Peters,
MO, designs, manufactures and supplies high quality plastic
trigger sprayers and other liquid dispensing technologies and
systems for major consumer product companies and industrial
markets. CAFA has been positioned as one of two United States
manufacturers of trigger sprayers for major consumer products
companies. These offerings are integrated into (i) household
consumer products for cleaning, laundry and lawn and garden
applications and (ii) industrial and commercial products for
automotive, janitorial and sanitation uses. CAFA also manufactures
lotion, treatment, fine mist and condiment pumps. CAFA's
dispensing products are sold primarily to (i) multinational,
national and regional manufacturers of brand name and private
label consumer products and (ii) independent distributors of
containers and packing products. North America is the principal
market for CAFA's products. These products are found in a wide
variety of consumer product outlets, including Wal-Mart, Target,
Lowe's, Home Depot, grocers and other consumer product outlets.
CAFA possesses leading industry technology, including over 370
active and pending trademarks and patents worldwide.
Continental AFA and its wholly owned subsidiaries, Continental
Sprayers International, Inc. and AFA Products, Inc., filed a
voluntary chapter 11 petition in the Eastern District of Missouri
United States Bankruptcy Court on August 7, 2008 (Case No.
08-45921). Judge Kathy A. Surratt-States oversees the case.
Lawrence E. Parres, Esq., at Lewis, Rice & Fingersh, L.C.,
represents the Debtors. When they filed for bankruptcy, the
Debtors disclosed estimated assets of $100,000,000 to
$500,000,000; and estimated debts of $10,000,000 to $50,000,000.
CPM HOLDINGS: Moody's Holds 'B1' Rating on $224MM Credit Facility
-----------------------------------------------------------------
Moody's Investors Service affirmed the B1 rating on CPM Holdings,
Inc's $224 million senior secured credit facility ($30 million
revolver and $194 million term loan) and the B1 corporate family
rating. The rating outlook remains stable.
The B1 corporate family rating reflects CPM's leverage profile,
its small size, exposure to commodity volatility, and its
ownership by investment funds managed by Gilbert Global Equity
Partners. The ratings are supported by the company's strong
competitive position, solid EBITA margins, conservative capital
structure, and robust free cash flow. The company's overall
performance is in line with expectations since Moody's initial
rating in July 2007 upon the acquisition of Crown Holdings.
Integration risk has diminished as CPM continues to integrate
Crown Holdings.
The stable outlook reflects Moody's expectations that CPM will
continue to integrate the Crown acquisition, Debt/EBITDA will
remain below 3.0x and that CPM will continue to generate free cash
flow some of which will be applied towards debt reduction over the
intermediate term. CPM is benefiting from high commodity prices
and strong end markets, and these strong fundamentals should
enable the company to generate solid free cash flow.
Ratings affected include:
-- Corporate Family Rating B1;
-- $30 million senior secured revolver due 2012 at B1
(LGD 3, 35%);
-- $194 million senior secured term loan due 2014 at B1
(LGD 3, 35%);
-- Probability of default rating changed to B2 from B1 as per
Moody's Loss Given Default Methodology
CPM Holdings, Inc, operating through its wholly-owned
subsidiaries, Crown Acquisition Corp. and CPM Acquisition Corp.,
is a world leader in supplying process machinery and technology
utilized primarily in the agricultural and food
producing/processing industries for oilseed processing, animal
feed production, human foods, bio-fuels, and industrial extrusion.
Current products include a complete line of oilseed processing
equipment, mills, grinders, thermal processing equipment, process
control systems, and ingredient scaling systems. Brand names
include CPM, Crown Iron Works, Roskamp Champion, Wolverine
Proctor, Greenbank Technology, Century Extrusion and Beta Raven.
CREDIT SUISSE: Fitch Holds 'BB-' Rating on $11.1MM Class K Certs.
-----------------------------------------------------------------
Fitch Ratings has upgraded classes of commercial mortgage pass-
through certificates from Credit Suisse First Boston Mortgage
Securities Corp., series 2000-C1:
-- $30.6 million class G certificates to 'AA' from 'A+';
-- $12.5 million class H certificates to 'A+' from 'A-'.
Additionally, Fitch has affirmed these classes:
-- $574.2 million class A-2 at 'AAA';
-- Interest-only class A-X at 'AAA';
-- $50.1 million class B at 'AAA';
-- $44.5 million class C at 'AAA';
-- $15.3 million class D at 'AAA';
-- $29.1 million class E at 'AAA';
-- $13.9 million class F at 'AAA';
-- $9.8 million class J at 'BBB';
-- $11.1 million class K at 'BB-';
-- $9.7 million class L at 'B'.
Class A-1 has paid in full. The $8.4 million class M remains at
'C'/DR4. Fitch does not rate the $968,315 class N certificates.
The upgrades are the result of increased credit enhancement from
loan payoffs and scheduled amortization. Additionally, the
percentage of Fitch identified loans of concern with respect to
the non-defeased collateral decreased to 9.7% from 18.8% earlier
in the year. A total of fifty-five loans (54%) have defeased
since issuance including a shadow rated loan, 1211 Avenue of
Americas (5%). As of the August 2008 distribution date, the
pool's aggregate certificate balance has decreased 27% to
$810.1 million from $1.1 billion at issuance.
Fitch has identified 15 loans of concern (4.4% of the pool), or
9.7% of the non-defeased collateral. They include one specially
serviced loan, as well as loans with low debt service coverage
ratios, occupancies, or other performance issues.
The loan in special servicing (0.54%) is secured by a hotel in
Victoria, Texas. The franchise agreement was terminated in early
2008 and the borrower has had difficulty keeping debt service
payments current. Operations at the property have deteriorated
and losses are expected.
The largest non-defeased loan remaining in the pool is secured by
a hotel property in Indianapolis, Indiana. As of March 31, 2008,
operations at the property were stable, with occupancy reported to
be 74%. The net operating income DSCR is 1.69 times.
Approximately 16.7% of the pool matures through 2010: 11.5% in
2009, and 5.1% in 2010. In addition, 25% of non-defeased loans
that remain in the pool have anticipated repayment date maturities
in 2009 and 2010.
CYBERDEFENDER CORP: Sells $980,500 Unregistered Securities
----------------------------------------------------------
CyberDefender Corp. disclosed in a Securities and Exchange
Commission filing that during the period from June 24, 2008,
through Aug. 22, 2008, pursuant to the terms of a certain
Securities Purchase Agreement, it sold and issued in a private
placement an aggregate of $980,500 of its units for a price of
$25,000 per Unit, with each Unit consisting of (i) 25,000 shares
of the Company's common stock and (ii) a five-year warrant to
purchase up to an additional 18,750 shares of Common Stock at an
exercise price of $1.25 per share.
The Securities Purchase Agreement and the Warrants provide for
weighted average anti-dilution protection such that in the event
the Company sells and issues shares of its Common Stock, or
securities convertible into or exercisable for shares of its
Common Stock, at a price per share, or conversion or exercise
price per share, that is less than $1.00, the Company will be
required to issue to each of the investors in the Offering
additional shares of its Common Stock and the exercise price of
the Warrants will be adjusted downward, except in connection with
certain exempt issuances.
Out of the total gross proceeds of the Offering, the Company paid
its placement agent $88,245 in commissions, and $24,512.50 as a
non-accountable expense allowance, and issued to its placement
agent a warrant to purchase 88,245 shares of Common Stock, equal
to 9% of the number of shares of Common Stock issued in the
Offering, at an exercise price of $1.00 per share. There were no
underwriting discounts or other commissions paid in conjunction
with the Offering.
The Offering was exempt from registration under Section 4(2) of
the Securities Act of 1933, as amended, and Rule 506 of Regulation
D promulgated thereunder, inasmuch as the securities were issued
to accredited investors only without any form of general
solicitation or general advertising.
In connection with the Offering, the Company received notices of
exercise of most favored nation rights from the holders of
$648,000 in aggregate principal amount of the Company's 7.41%
Senior Secured Notes, whereby the Holders elected to exchange
their Notes, and all accrued interest thereon in the amount of
$48,222, and all liquidated damages thereon in the amount of
$19,602 for Units on a dollar for dollar basis. Accordingly, the
Company canceled the $715,824 of indebtedness represented by the
Notes and issued to the Holders 28.63296 Units, comprised of an
aggregate of 715,824 shares of Common Stock and Warrants to
purchase 536,864 shares of Common Stock.
About CyberDefender Corp.
Headquartered in Los Angeles, CyberDefender Corp. (OTC BB: CYDE) -
-- http://www.cyberdefender.com/-- is an Internet security
software company. The company's Internet security technology
offers the earliest possible detection and most aggressive defense
against Internet security attacks. CyberDefender uses a secure
client-to-client distributed network, enabling protection that the
company believes is unparalleled in speed and flexibilit
Going Concern Doubt
KMJ Corbin & Company LLP, in Irvine, California, expressed
substantial doubt about Cyberdefender Corp.'s ability to continue
as a going concern after auditing the company's financial
statemetns for the year ended Dec. 31, 2007. The auditing firm
reported that the Company has recurring losses from operations
and has not generated significant revenues to cover costs to date.
DANKA BUSINESS: Paul J. Solit Discloses 4.2% Equity Stake
---------------------------------------------------------
Paul J. Solit disclosed in a Securities and Exchange Commission
filing that he may be deemed to beneficially own 10,784,916 shares
of Danka Business Systems PLC's common stock, representing 4.2% of
the shares issued and outstanding.
Mr. Solit also disclosed that Potomac Capital Managment LLC, of
which he is a managing member, may be deemed to beneficially own
4,728,496, shares of Danka Business Systems PLC's common stock,
representing 1.8% of the share issued and outstanding.
Mr. Solit also disclosed that Potomac Capital Management Inc. may
be deemed to beneficially own 6,006,420 shares of Danka Business
Systems PLC's common stock, representing 2.3% of the shares issued
and outstanding.
About Danka Business Systems
Headquartered in St. Petersburg, Florida, Danka Business Systems
PLC (LON: DNK) -- http://www.danka.com/-- offers document
solutions including office imaging equipment: digital and color
copiers, digital and color multifunction peripherals printers,
facsimile machines, and software in the United States.
It also provides a range of contract services, including
professional and consulting services, maintenance, supplies,
leasing arrangements, technical support and training, collectively
referred to as Danka Document Services.
The company's revenue is generated from two primary sources: new
retail equipment, supplies and related sales, and service
contracts. Danka sells Canon products, as well as Kodak, Toshiba
and Hewlett-Packard.
On Aug. 31, 2006, the company sold its subsidiary, Danka
Australasia PTY Limited to Onesource Group Limited. In January
2007, the company disposed of its European businesses to Ricoh
Europe B.V.
Going Concern Doubt
As reported in the Troubled Company Reporter on July 24, 2008,
Ernst & Young LLP in Tampa, Fla., raised substantial doubt about
Danka Business Systems PLC's ability to continue as a going
concern after auditing the company's financial statements for the
year ended March 31, 2008. The auditing firm stated that the
company has incurred recurring operating losses, has a working
capital deficit and has not complied with certain covenants of
loan agreements with a bank. In addition, on June 27, 2008, the
company sold its remaining operations to Konica Minolta Business
Solutions U.S.A., Inc.
The company posted a net loss of $35.7 million on total revenues
of $418.2 million for the year ended March 31, 2008, as compared
with a net loss of $29.2 million on total revenues of
$450.2 million in the prior year.
At March 31, 2008, the company's balance sheet showed
$222.1 million in total assets, $229.2 million in total
liabilities, and $368.9 in senior convertible participating
shares, resulting in a $375.9 million stockholders' deficit.
The company's consolidated balance sheet at March 31, 2008, also
showed strained liquidity with $89.3 million in total current
assets available to pay $218.1 million in total current
liabilities.
DELPHI CORP: Chapter 11 Examiner Will Cause Delay, Committee Says
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors in Delphi Corp.'s
bankruptcy case asserts that the United States Bankruptcy Court
for the Southern District of New York is not required to appoint
an examiner in the Chapter 11 cases under Section 1104(c) of the
Bankruptcy Code because a plan of reorganization has already been
confirmed by the Court.
CR Intrinsic Investors, LLC and Highland Capital Management,
L.P.'s request is not supported by the terms of the statute or by
any case law, asserts Robert J. Rosenberg, Esq., at Latham &
Watkins LLP, in New York.
The Committee asserts that while the Court has the discretion to
appoint an examiner at this time notwithstanding Section 1104(c),
it should not exercise that discretion here.
Mr. Rosenberg contends that the downside to appointing an
examiner at this stage vastly outweighs the upside. He argues
that an examiner would simply distract all parties from dealing
with the important matters at hand in the Chapter 11 cases.
The Committee asserts that the current focus of the cases is the
Debtors' request to enter into amendments to the Global
Settlement Agreement and a Master Restructuring Agreement with
General Motors Corporation. Mr. Rosenberg points out that
because the Debtors seek in that motion to grant GM an
administrative expense claim measured in the billions of dollars
and a general release, the determination of what recoveries
general unsecured creditors might receive will hinge on the
outcome of that motion, regardless of whether or not an examiner
is appointed. "An examiner is therefore likely only to cause
delay and increase expenses without providing any benefit to the
Debtors or their creditors."
About Delphi Corp.
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
June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000
in total assets and US$23,742,000,000 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 Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
DELPHI CORP: Equity Panel Taps Farrell Fritz as Conflicts Counsel
-----------------------------------------------------------------
The Official Committee of Equity Holders in Delphi Corp.'s
bankruptcy case seeks authority from the United States Bankruptcy
Court for the Southern District of New York, pursuant to Sections
328 and 1103 of the Bankruptcy Code, and Rule 2014 of the Federal
Rules of Bankruptcy Procedure, to retain Farrell Fritz, P.C., as
conflicts counsel.
Representing the Equity Committee, Bonnie Steingart, Esq., at
Fried, Frank, Harris, Shriver & Jacobson LLP, in New York,
narrates in Court that the Equity Committee's intent to retain
Farrell Fritz stems from A-D Acquisition Holdings, LLC's,
question whether Fried Frank was conflicted from further
representation of the Equity Committee on matters in which the
Committee was potentially adverse to the Plan Investors due to
its representation of Appaloosa on matters unrelated to the
Chapter 11 cases.
This led to the retention of the Gregory P. Joseph Law Offices as
conflicts counsel for the Equity Committee, which it sought and
obtained on November 9, 2007, pursuant to Sections 328 and 1103
of the Bankruptcy Code, Mr. Steingart recalls. On May 16, 2008,
the Debtors filed an adversary proceeding against the Plan
Investors. Since then, the Joseph firm has been actively
involved in the adversary proceeding on the Equity Committee's
behalf.
For reasons unrelated to any substantive aspects of its
representation of the Committee, and no current conflicts have
arisen in connection with the Joseph Firm's representation, it
notified the Equity Committee of its firm desire to withdraw as
conflicts counsel.
After discussing the terms and conditions of the withdrawal, the
Equity Committee consented to the Joseph Firm's withdrawal
provided that the Equity Committee was able to obtain this
Court's authorization to retain a substitute conflicts counsel
and that the Joseph Firm would cover the costs associated with
the transition to substitute conflicts counsel and not seek
reimbursement of any amount from the Debtors.
To ensure that the Equity Committee continues to have conflicts
counsel to represent them in the mediation and litigation with
the Plan Investors, the Equity Committee intends to retain
Farrell Fritz to replace the Joseph Firm as conflicts counsel.
Farrell Fritz is expected to render legal services in matters
that may not be handled by Fried Frank due to conflicts of
interest. As conflicts counsel to the Equity Committee, Farrell
Fritz's responsibilities will include representing the Equity
Committee in matters where Fried Frank has a conflict of interest
or is otherwise unable to represent the Equity Committee. Those
matters will include any legal services in connection with the
pending litigation against the Plan Investors.
The Equity Committee seeks to retain Farrell Fritz as its
conflicts counsel because Farrell Fritz has extensive experience
in the fields of business and financial litigation, bankruptcy
and creditors' rights. Furthermore, Farrell Fritz's practice,
which also includes banking and finance, corporate, securities
and mergers and acquisitions, will permit it to fully represent
the interest of the Equity Committee in an efficient and
effective manner. The Equity Committee believes that Farrell
Fritz is well-qualified and uniquely able to represent the Equity
Committee effectively in these Chapter 11 Cases, Mr. Steingart
relates.
Farrell Fritz has not received a retainer. The firm will be
compensated on an hourly basis and will be reimbursed for actual,
necessary out-of-pocket expenses incurred in performing services.
Farrell Fritz's rates are:
Professional Hourly rate
------------ -----------
Louis A. Scarcella $575
Ted A. Berkowitz 575
Law clerks/paralegals 75 to 225
Associates 250 to 360
Partners 425 to 595
Counsel 335 to 650
Louis A. Scarcella, a member of Farrell Fritz, assures the Court
that her firm does not hold or represent any interest adverse to
and has no connection with the Equity Committee, the Debtors,
their creditors or any party-in-interest in matters upon which
Farrell Fritz is to be retained. The Equity Committee also
believes that Farrell Fritz is a "disinterested person" as that
phrase is defined in Section 101(14) of the Bankruptcy Code.
About Delphi Corp.
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
June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000
in total assets and US$23,742,000,000 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 Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
DELPHI CORP: Joseph Firm to Step Down as Equity Panel Counsel
-------------------------------------------------------------
The Gregory P. Joseph Law Offices LLC seeks permission from the
United States Bankruptcy Court fort the Southern District of New
York to withdraw as conflict counsel for the Official Committee of
Equity Security Holders in Delphi Corp.'s bankruptcy cases,
including as counsel in the adversary proceedings between Delphi
and Appaloosa Management L.P., et al.
Peter R. Jerdee, Esq., a member of the Joseph Firm, relates that
the firm has requested to end its representation for reasons
unrelated to any substantive aspects of its representation of the
Committee, and no current conflicts have arisen in connection
with the Joseph Firm's representation.
After due consideration, the Equity Committee acquiesced to the
Joseph Firm's request, provided that the Committee first obtain
and put in place replacement counsel and that the Joseph Firm
cover the costs associated with the transition to replacement
counsel.
Mr. Jardee asserts (i) "good cause" is established by the
Committee's consent to the firm's withdrawal and because its
interests will be fully protected by successor counsel, (ii) the
Committee will not be prejudiced by the Joseph Firm's withdrawal
as conflict counsel; and (iii) the Joseph Firm has made
appropriate arrangements with the Committee and its successor
counsel to ensure that the Debtors' estates do not incur any
incremental cost as a result of the withdrawal.
About Delphi Corp.
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
June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000
in total assets and US$23,742,000,000 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 Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
DIABLO GRANDE: Court Okays $148,630 Emergency Loan for Resort
-------------------------------------------------------------
Tim Moran at The Modesto Bee reports that the Hon. Robert S.
Bardwil of the U.S. Bankruptcy Court for the Eastern District of
California approved a $148,630 emergency loan to keep the Diablo
Grande, LP resort operating for the next two weeks.
The Modesto relates that the loan will be borrowed from J. Morton
Davis, one of the Diablo Grande partners. According to the
report, Diablo Grande would use the loan for:
-- water district payments,
-- workers compensation,
-- health insurance, and
-- payroll costs
The Court has set a Sept. 23 hearing on more financing for Diablo
Grande, The Modesto states.
Patterson, California-based Diablo Grande LP owns 33,000-acre real
property and runs a resort hotel with golf courses and convention
center. Diablo Grande LP's general partner is Diablo Grande Inc.
with Donald Panoz as president. It filed for chapter 11 protection
on March 10, 2008 (Bankr. E.D. Calif. Case No. 08-90365). Judge
Robert S. Bardwil presides over the case. Ori Katz, Esq., and
Michael H. Ahrens, Esq., at Sheppard Mullin Richter & Hampton LLP,
represent the Debtor in its restructuring efforts. When the
Debtor filed for bankruptcy, it listed assets of between
$50 million and $100 million and debts of between $50 million and
$100 million.
DTN INC: $445MM Telvent's Planned Deal Cues S&P's Developing Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings for DTN
Inc., including the 'B+' corporate credit rating, on CreditWatch
with developing implications.
The CreditWatch listing follows the announcement that Telvent Git
SA plans to purchase DTN for $445 million, which is to be funded
through approximately $80 million of senior indebtedness,
$103 million of equity, and $28 million of IPO proceeds and cash.
DTN's nonrecourse debt will remain outstanding at the close of the
transaction.
"In resolving the CreditWatch listing, we will consider the
strategic relationship between DTN and Telvent, and whether new
ownership might impose any changes to the business or financial
strategies of DTN," said Standard & Poor's credit analyst Liz
Fairbanks.
EAST 44TH: Court Confirms Chapter 11 Plan of Liquidation
--------------------------------------------------------
The Hon. Robert D. Drain of the U.S. Bankruptcy Court for the
Southern District of New York confirmed, on Sept. 15, 2008, an
Amended Chapter 11 Plan of Liquidation for East 44th Realty LLC,
submitted by Chapter 11 trustee David R. Kittay.
The distribution will be funded by the liquidation of all property
of the Debtor's estate. Distribution will be made from the
available cash and any other recoveries by the Trustee, Plan
Administrator or the Debtor.
Following the confirmation of the plan, the Plan Administrator
will establish the Reserve Fund, the UST Reserve and the G Squared
Reserve and maintain the Repair Reserve. The Plan Administrator
will determine a reasonable reserve in his discretion for payment
of all Undetermined Claims, Administration Expenses and all other
post-confirmation expenses and will at all times attempt to retain
in or add to the Reserve Fund sufficient money for such expenses.
After the plan confirmation, the Plan Administrator will also
establish the Tax Reserve Fund.
Treatment of Claims
Under the plan, all Allowed Administration Expense Claims, Allowed
Administration Tax Claims, and Allowed Priority Claims (Class 1
Claims) wil be paid in full.
Holders of Class 2 and 3 Claims will receive in payment of their
Allowed Claims payment in the full, with postpetition interest at
the legal rate on the Effective Date.
Holders of Class 4 Interests will retain their respective Allowed
Equity Interests in the Debtor.
A full-text copy of the Debtor's Chapter 11 Plan is available for
free at http://ResearchArchives.com/t/s?3257
About East 44th Realty LLC
Headquartered in New York City, East 44th Realty, LLC, is a tenant
of a building located at 228-238 East 44th Street in Manhattan.
The building is comprised of 164 residential units and three
commercial spaces. The Debtor is the sub-lessor of the premises,
collects rents from its subtenants and manages the premises. The
Debtor is the tenant under a net-lease dated as of Dec. 9, 1960.
The Debtor filed for Chapter 11 protection on Aug. 5, 2005 (Bankr.
S.D.N.Y. Case No. 05-16167). Warren R. Graham, Esq., at Davidoff
Malito & Hutcher LLP represents the Debtor in its restructuring
efforts. David Kittay, Esq., the Chapter 11 Trustee appointed by
the Court to oversee the Debtor's affairs represented by Michelle
G. Gershfeld, Esq., at Kittay & Gershfeld, P.C. When the
Debtor filed for protection from its creditors, it listed
$25,737,873 in assets and $13,128,560 in liabilities.
EDUCATION RESOURCES: Court Schedules October 17 as Claims Bar Date
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Massachusetts
established Oct. 17, 2008, as the deadline by which all
prepetition creditors must file proofs of claim in The Education
Resources Institute Inc.'s Chapter 11 case.
Any entity holding a rejection damages claim must file a proof of
claim on account of the rejection damages claim so that the it is
received by EPIQ Bankruptcy Solutions LLC, the Debtor's claims
agent, no later 30 days after the entry of the order authorizing
the rejection of the executory contract or unexpired lease.
Any entity that is required to file a proof of claim with respect
to a particular claim against the Debtor, but that fails to do so
in a timely manner, will be forever barred, estopped and enjoined
from:
(a) asserting any Claim against the Debtor that entity has
(i) is in an amount that exceeds the amount that is stated
in the schedules of assets and liabilities as undisputed,
non-contingent and liquidated or (ii) is of a different
nature or in a different classification; and
(b) voting upon, or receiving distributions under, any plan in
the Chapter 11 case in respect of the Claim.
Any Entity that relies on the Debtor's Schedules of Assets and
Liabilities will bear responsibility for determining that its
Claim is accurately listed in the Schedules.
Any Proof of Claim Form to be validly and properly filed must
include a signed original of the completed Proof of Claim Form,
together with accompanying documentation, and must be delivered
to EPIQ so as to be received on or before the Bar Date, or other
deadline, if applicable. Proofs of claim may be submitted in
person or by courier service, hand delivery or mail. Facsimile
submissions will not be accepted. Proofs of claim will be deemed
filed when actually received by EPIQ.
About The Education Resources Institute Inc.
Headquartered in Boston, Massachussetts, The Education Resources
Institute Inc. -- http://www.teri.org/-- aka Boston Systems
Resources Inc., Brockton Education Opportunity Center, TERI, TERI
College Access, TERI College Access Centers and TERI Marketing
Services Inc., is a nonprofit organization that promotes
educational opportunities for all through its college access and
loan guarantee activities. Founded in 1985, TERI is a guarantor
of private or non-government student loans with more than $17
billion in outstanding guarantees.
The Debtor filed for Chapter 11 petition on April 7, 2008 (Bankr.
D. Mass. Case No.: 08-12540.) Daniel Glosband, Esq., Gina L.
Martin, Esq., at Goodwin Procter LLP represent the Debtor in its
restructuring efforts. The Debtor's Conflicts Counsel is Craig
and Macauley PC. Grant Thornton LLP, acts as financial advisors,
and Citigroup Global Markets Inc. acts as investment banker. Its
Claims Agent is Epiq Bankruptcy Solutions LLC. When the Debtor
filed for protection from its creditors, it listed estimated
assets of more that $1 billion and estimated debts of $500,000 to
$1 billion.
(TERI Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
EDUCATION RESOURCES: Court OKs Waive Delinquency & Default Musts
----------------------------------------------------------------
The Education Resources Institute Inc., is party to Guaranty
Agreements with various Lenders and complementary agreements with
various servicers governing loans made to student borrowers in
accordance with servicing guidelines. Under the Program
Documents and the Guidelines, when a Program Loan becomes 60 days
past due, the Servicer must transfer files on the Program Loan to
TERI. TERI then undertakes so-called pre-claim or pre-default
assistance aimed to induce payment and reduce or eliminate
delinquency.
Prior to the Petition Date, TERI would then honor its guaranty
obligation, pay the lender the outstanding amount of the
defaulted Program Loan and seek to collect on the defaulted
Program Loan. Since the Petition Date, the Lenders have taken
differing approaches to the Pre-Default Process and the Default
Process. For the most part, Lenders have made claims against
TERI under the Program Documents but not fully complied with the
Default Process.
While TERI has performed its collection efforts when Lenders have
complied with the Pre-Default Process, TERI has advised Lenders
that it will cease to do so unless the Lender and TERI agree to
terms on which TERI would continue. Some Lenders have agreed or
are negotiating on those terms; other Lenders have advised that
they no longer wish to engage TERI but nonetheless wish to
preserve their rights to assert claims against TERI for any
failure of its performance.
Both TERI and the Lenders have expressed concern that some
delinquent and defaulted Program Loans are essentially not being
collected while Lenders and Servicers remain uncertain about
their rights and the implications of failure to comply with the
Guidelines. The Debtor, with the encouragement and assent of the
Official Committee of Unsecured Creditors, now seeks a mechanism
by which Lenders can collect delinquent and defaulted Program
Loans without compliance by them and their Servicers with the
Pre-Default Process or the Default Process, while not
compromising their rights to assert claims against TERI or its
rights to object to those claims on any grounds other than
compliance with the Pre-Default Process or Default Process.
Accordingly, pursuant to Sections 105 and 362 of the Bankruptcy
Code, the Debtor sought and obtained authority from the U.S.
Bankruptcy Court for the District of Massachusetts, pending (i)
assumption or rejection of the applicable Program Documents; (ii)
confirmation of a Plan of Reorganization; or (iii) further order
of the Court, to:
(a) waive the conditions set forth in the Program Documents
that require the Lenders and the Servicers to observe the
Guidelines, the Pre-Default Process and the Default
Process of the Program Documents; and
(b) allow Lenders to take steps they deem appropriate to
collect delinquent or defaulted Program Loans.
The Debtor also sought and obtained the Court's permission not to
object to allowance of a Lender's claim that arises under the
Program Documents on the grounds that from and after the Petition
Date the Lender's collection activities failed to comply with the
Pre-Default Process and the Default Process of the Program
Documents and Guidelines.
The Debtor and the Lenders reserve all other claims, defenses and
counterclaims that each may have against the other, including
without limitation any assertions or objections concerning the
amount of those claims.
The Court also ruled that:
(a) the automatic stay is modified to the extent necessary to
permit Lenders to take steps as they deem appropriate to
collect delinquent or defaulted Program Loans;
(b) until a Lender's claim has been finally resolved, (i)
the Servicers will submit informational Claims Packages to
the Debtor, and (ii) the Lenders will continue to furnish
to the Debtor servicing, delinquency and default data on
Program Loans, consistent with past practice, to enable
the Debtor to evaluate Lender's claims;
(c) if a Lender asserts a claim against the Debtor for
repayment of a defaulted Program Loan, and if the Debtor
notifies a Servicer that the claim for a defaulted Program
Loan will be paid pursuant to the terms of the relevant
Guaranty Agreement, then the Lender will assign and the
Servicer will deliver to the Debtor all documentation
required to satisfy the Default Process; and
(d) if a Lender notifies a Servicer that the Debtor will
perform pre-default services, the Servicer will transmit
the applicable electronic pre-default files for the
Lender's delinquent Program Loans to the Debtor. If the
Servicer receives no notification it will have no
obligation to send the file or perform any other due
diligence during the period normally reserved for
pre-default activities, unless mutually agreed to by the
Lender and the Servicer.
The Debtor's counsel, Gina Lynn Martin, Esq., at Goodwin Procter
LLP, in Boston, Massachusetts, told the Court that the Debtor's
request eliminates concerns expressed by Lenders and Servicers
regarding the consequences of the Debtor's Chapter 11 including
the suspension of its purchase of Program Loans.
"These consequences result in circumstances where it is difficult
for the Debtor, the Servicers or the Lenders to consistently,
literally and fully follow the Guidelines in respect of
delinquent or defaulted Program Loans," Ms. Martin contends.
Neither the Debtor nor the creditors benefit if collections of
delinquent or defaulted Program Loans are disrupted or delayed,
she told the Court.
About The Education Resources Institute Inc.
Headquartered in Boston, Massachussetts, The Education Resources
Institute Inc. -- http://www.teri.org/-- aka Boston Systems
Resources Inc., Brockton Education Opportunity Center, TERI, TERI
College Access, TERI College Access Centers and TERI Marketing
Services Inc., is a nonprofit organization that promotes
educational opportunities for all through its college access and
loan guarantee activities. Founded in 1985, TERI is a guarantor
of private or non-government student loans with more than $17
billion in outstanding guarantees.
The Debtor filed for Chapter 11 petition on April 7, 2008 (Bankr.
D. Mass. Case No.: 08-12540.) Daniel Glosband, Esq., Gina L.
Martin, Esq., at Goodwin Procter LLP represent the Debtor in its
restructuring efforts. The Debtor's Conflicts Counsel is Craig
and Macauley PC. Grant Thornton LLP, acts as financial advisors,
and Citigroup Global Markets Inc. acts as investment banker. Its
Claims Agent is Epiq Bankruptcy Solutions LLC. When the Debtor
filed for protection from its creditors, it listed estimated
assets of more that $1 billion and estimated debts of $500,000 to
$1 billion.
(TERI Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
EINSTEIN NOAH: Inks Settlements over San Diego Class Action
-----------------------------------------------------------
Einstein Noah Restaurant Group Inc. disclosed in a Securities and
Exchange Commission filing that on Aug. 27, 2008, it reached an
agreement in principle for the settlements of putative class
action against the company in the Superior Court of California for
the State of California, County of San Diego.
These settlements provide for payment of up to an aggregate of
$2.5 million by the Company. Each settlement is subject to
completion of a settlement agreement to be signed by the parties,
preliminary and final court approvals and the participation of a
sufficient percentage of each of the putative classes. There can
be no assurance that these conditions will be satisfied.
On Sept. 18, 2007, Eric Mathistad, a former store manager, filed a
putative class action against Einstein Noah Restaurant Group, Inc.
in the Superior Court of California for the State of California,
County of San Diego. The plaintiff alleges that the Company
failed to pay overtime wages to "salaried restaurant employees" of
the Company's California stores who were misclassified as exempt
employees, and that these employees were deprived of mandated meal
periods and rest breaks. On Nov. 14, 2007, Bernadette Mejia,
another former store manager, filed a similar case and these cases
were subsequently consolidated.
On Feb. 8, 2008, Gloria Weber and Hakan Mikado, non-exempt
employees, filed a putative class action against the Company in
the Superior Court of California for the State of California,
County of San Diego. The plaintiff alleges that the company
failed to pay minimum wages, failed to pay overtime and failed to
provide rest periods and meal breaks, among other charges.
The Company will be recording a liability in the third quarter of
2008 pursuant to Statement of Financial Accounting Standards
No. 5, Accounting for Contingencies, in the amount of $1.9 million
to satisfy these settlements. This one-time charge represents the
Company's current estimate of the aggregate amount that is
probable to be paid pursuant to these settlements, but there can
be no assurance that amounts actually paid will not be greater, up
to $2.5 million, or less than the amount recorded by the Company.
Based in Lakewood, Colo., Einstein Noah Restaurant Group Inc.
(Nasdaq: BAGL) -- http://www.einsteinnoah.com/-- operates a
a retail chain of quick casual restaurants in the United States,
specializing in foods for breakfast and lunch. The company
operates locations primarily under the Einstein Bros.(R) Bagels
and Noah's New York Bagels(R) brands and primarily franchises
locations under the Manhattan Bage(R) brand. The company's retail
system consists of more than 600 restaurants, including more than
100 license locations, in 35 states plus the District of Columbia.
At April 1, 2008, the company's consolidated balance sheet showed
$154.1 million in total assets and $183.2 million in total
liabilities, resulting in a $29.1 million total stockholders'
deficit.
ELECTROHOME LTD: Court Approves Plan of Arrangement
---------------------------------------------------
The Ontario Superior Court of Justice approved Electrohome
Limited's Plan of Arrangement at a hearing on Tuesday in Toronto.
The Plan was previously approved by the company's shareholders on
Sept. 11, 2008.
As part of the Plan, the company intends to complete the
sale of its interest in Mechdyne Corporation on Sept. 23, 2008,
and thereafter will proceed with the expeditious satisfaction of
its outstanding obligations in order to maximize the amount of
residual proceeds that can be distributed to its shareholders
prior to the dissolution of the company.
Headquartered in Kitchener, Ontario, Electrohome Limited --
http://www.electrohome.com/-- was founded in 1907. It holds 26%
interest in Mechdyne.
ENCAP GOLF: Terminates Meadowlands Deal With Trump Organization
---------------------------------------------------------------
Newsday.com reports that the U.S. Bankruptcy Court for the
District of New Jersey gave EnCap Golf Holdings, LLC, permission
on Thursday to terminate the Meadowlands Development Venture, a
deal with the Trump Organization to transform polluted wetlands in
New Jersey into a housing and golf complex.
According to Newsday.com, Trump assumed control of the project in
November 2007, after the state's inspector general spotted
problems in the project.
The attorneys for EnCap Golf told The Record of Bergen County that
the company doesn't have the money to go through with the Trump
deal. Newsday.com relates that the lawyers said the company
hasn't ruled out negotiating with Trump.
EnCap Golf has until Sept. 30 to file its Chapter 11
reorganization plan, Newsday.com reports.
About EnCap Golf
Headquartered in East Rutherford, New Jersey, EnCap Golf
Holdings, LLC, a subsidiary of Cherokee Investment Partners of
North Carolina, develops closed landfills and other brownfield
properties into golf courses.
The company and its affiliate, NJM Capital LLC, filed for Chapter
11 protection on May 8, 2008 (Bankr. D. N.J. Lead Case No.
08-18581). Michael D. Sirota, Esq., at Cole, Schotz, Meisel,
Forman & Leonard, P.A., in Hackensack, New Jersey, represents the
Debtors. The U.S. Trustee for Region 3 appointed five creditors
to serve on an Official Committee of Unsecured Creditors.
Greenberg Traurig LLP represents the Committee in this case. The
Debtors' schedules disclose total assets of $70,056,038 and total
liabilities of $458,587,968.
EQUINIX INC: S&P Lifts Corp. Credit Rating to 'B+' from 'B'
-----------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on Foster
City, California-based data center and interconnection service
provider Equinix Inc. S&P raised the corporate credit rating to
'B+' from 'B', and convertible subordinated debt rating to 'B-'
from 'CCC+'. As of June 30, 2008, the company had about
$1.2 billion of total debt outstanding. The outlook is stable.
"We upgraded the company to reflect its de-leveraging since its
acquisition of IXEurope in September 2007," said Standard & Poor's
credit analyst Catherine Cosentino. During this time, leverage
declined from a pro forma initial level of about 7x to 5.4x based
on annualized results for the second quarter of 2008.
FIRST UNION: Fitch Affirms 'B-' Rating on $8.7MM Class M Certs.
---------------------------------------------------------------
Fitch Ratings has upgraded First Union National Bank Commercial
Mortgage Trust's commercial mortgage pass-through certificates,
series 2000-C1, as:
-- $29.1 million class G to 'A+' from 'A';
-- $7.8 million class H to 'A' from 'BBB+';
-- $3.9 million class J to 'A-' from 'BBB+'.
Fitch has also affirmed these classes:
-- $459.6 million class A-2 at 'AAA';
-- Interest-only class, IO at 'AAA';
-- $38.8 million class B at 'AAA';
-- $34.9 million class C at 'AAA';
-- $11.6 million class D at 'AAA';
-- $25.2 million class E at 'AAA';
-- $11.6 million class F at 'AAA';
-- $7.8 million class K at'BBB-';
-- $5.8 million class L at'BB';
-- $8.7 million class M at 'B-'.
Fitch does not rate the $8.8 million class N. Class A-1 has paid
in full.
The rating upgrades are due to increased credit enhancement levels
as a result of the defeasance of seven loans (6.1%), and one loan
payoff since Fitch last rating action. As of the August 2008
distribution date, the transaction's aggregate principal balance
has decreased 15.8% to $653.8 million from $776.3 million at
issuance. The transaction remains diverse geographically with no
state concentration greater than 8%. Fifty-nine loans (51.1%) are
defeased.
Currently there is one specially serviced asset (1.2%) in the
transaction, which is a 125,993 SF office building located in
Troy, Michigan. Although the property was foreclosed in March
2008, the borrower has a six-month right of redemption pursuant to
Michigan Law. The trust will gain title of the asset this month.
Based on the latest appraisal value, losses are expected upon the
liquidation of this asset.
In addition to the specially serviced asset, Fitch has identified
10 loans of concern (5.7%) due to declining performance. The
largest Fitch loan of concern (2.2%) is secured by a 256-unit
multifamily property located in Spring, Texas. Servicer reported
year-end 2007 debt service coverage ratio was 0.99x with occupancy
at 96%, compared to a DSCR of 1.20x with an occupancy rate of 93%
at issuance. The property is offering concessions to attract new
tenants.
The second largest Fitch loan of concern (1.2%) is secured by a
206,011 square feet retail property in Decatur, Illinois. The
original anchor tenant Albertson's, which leases 48.8% of the
property until June 2016, vacated and sub-leased the space to
Kay's Merchandise Mart in January 1998. The sub-lesser
subsequently vacated the space in June 2007. Servicer reported YE
2007 DSCR decreased to 0.93x, compared to a DSCR of 1.22x at
issuance. The property is currently 98% leased and Albertson's is
till paying the rent.
There are four non-defeased loans (3.2%) secured by properties in
Texas. Fitch is monitoring these properties for potential damages
from Hurricane Ike.
FORD MOTOR: Urges Congress to Fund $25BB Loan Program
---------------------------------------------------------
Top executives at General Motors Corp., Chrysler LLC and Ford
Motor Co. met with House Speaker Nancy Pelosi and other
congressional leaders on Wednesday to pursue the funding of a
$25 billion loan program intended to help the automakers
modernize their plants to meet fuel efficiency requirements in the
future, reports say.
GM Chairman and CEO Rick Wagoner, Ford CEO Alan Mulally and
Chrysler Chairman and CEO Robert Nardelli, also sent a letter
stating their request for the loan program. In it, they warned
that sluggish U.S. economy could affect thousands of workers.
Dow Jones reports that House Speaker Pelosi told reporters on the
same day that she plans to unveil a $25 billion loan package to
U.S. automakers next week that could possibly add new efficiency
standards. It would likely be contained in a government funding
bill.
Congress has authorized $25 billion in loans in last year's energy
bill, but the plan has yet to be funded. The program authorizes
Congress to provide $25 billion in low-cost loans in order for
automakers and their suppliers to meet new fuel-efficiency
requirements of at least 35 miles per gallon by 2020, a 40%
increase.
According to a report by the Associated press, the loans would
have an interest rate of around 5 percent, providing about
$100 million a year in savings for every $1 billion the companies
receive in loans. The interest rate would have been in double-
digit on the open market because of the companies' poor bond
ratings, the report said.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K.,
Argentina, Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
On July 31, 2008, TCR said that Fitch Ratings downgraded the
Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The
Rating Outlook is Negative. The downgrade reflects Chrysler's
restricted access to economic retail financing for its vehicles,
which is expected to result in a further step-down in retail
volumes. Lack of competitive financing is also expected to result
in more costly subvention payments and other forms of sales
incentives. Fitch is also concerned with the state of the
securitization market and the ability of the automakers to access
this market on an economic basis over the near term, given the
steep drop in residual values, higher default rates, higher loss
severity being experienced and jittery capital market.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM
employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
At June 30, 2008, the company's balance sheet showed total assets
of $136.0 billion, total liabilities of $191.6 billion, and total
stockholders' deficit of $56.9 billion. For the quarter ended
June 30, 2008, the company reported a net loss of $15.4 billion
over net sales and revenue of $38.1 billion, compared to a net
income of $891.0 million over net sales and revenue of
$46.6 billion for the same period last year.
About Ford Motor Co.
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) --
http://www.ford.com/-- manufactures or distributes automobiles in
200 markets across six continents. With about 260,000 employees
and about 100 plants worldwide, the company's core and affiliated
automotive brands include Ford, Jaguar, Land Rover, Lincoln,
Mercury, Volvo, Aston Martin, and Mazda. The company provides
financial services through Ford Motor Credit Company.
The company has operations in Japan in the Asia Pacific region. In
Europe, the company maintains a presence in Sweden, and the United
Kingdom. The company also distributes its brands in various
Latin-American regions, including Argentina and Brazil.
* * *
As reported in the Troubled Company Reporter on Aug. 5, 2008,
Fitch Ratings has downgraded the issuer default rating of Ford
Motor Company and Ford Motor Credit Company LLC to 'B-' from 'B'.
The Rating Outlook remains Negative. The downgrade reflects: the
further deterioration in Ford's U.S. sales as a result of economic
conditions, an adverse product mix and the most recent jump in gas
prices; portfolio deterioration at Ford Credit and heightened
concern regarding economic access to capital to support financing
requirements; and escalating commodity costs that will remain a
significant offset to cost reduction efforts.
FORSTER DRILLING: Denis Schoenhofer Quits as Director
-----------------------------------------------------
Forster Drilling Corporation disclosed in a Securities and
Exchange Commission filing that on C. Denis Schoenhofer, has
resigned as a company director.
Headquartered in Houston, Forster Drilling Corporation (OTC BB:
FODL.OB) -- http://www.forsterdrilling.com/-- is engaged in
in the refurbishing land drilling rigs and deploying them for use
by oil and natural gas producers. Currently, the company provides
contract land drilling services in New Mexico to two different oil
and gas company customers.
Forster Drilling Corp.'s consolidated balance sheet at Feb. 29,
2008, showed $15,050,904 in total assets and $16,088,602 in total
liabilities, resulting in a $1,037,698 total stockholders'
deficit.
Going Concern Doubt
LBB & Associates Ltd., LLP, in Houston, expressed substantial
doubt about Forster Drilling Corp.'s ability to continue as a
going concern after auditing the company's consolidated financial
statements for the year ended Nov. 30, 2007. The auditing firm
pointed to the company's absence of significant revenues,
recurring losses from operations, and its need for additional
financing in order to fund its projected loss in 2008.
FRED LEIGHTON: Affiliate Sues Owner's Sister and Sister-In-Law
--------------------------------------------------------------
William Rochelle of Bloomberg News reports that a debtor affiliate
of Fred Leighton Holding, Inc., Calypso Mines, LLC, has filed a
lawsuit to recover $24 million from the sister and sister-in-law
of owner Ralph Esmerian. The report says that transfers were
fraudulent because the Debtor-affiliate was insolvent at the time
and didn't receive enough value in return, according to the
complaint.
About Fred Leighton
Fred Leighton Holding, Inc. -- http://www.fredleighton.com/-- is
a New York-based jewelry retailer owned by Ralph O. Emerian. Fred
Leighton has decked countless red-carpet-dwellers in diamonds,
including Sarah Jessica Parker, Nicole Kidman, and Catherine Zeta-
Jones. It specializes in vintage jewelry from the 18th and 20th
centuries, including antique cushion-cut diamonds and antique and
estate brooches. It also produces Fred Leighton signature
collection that combines past aura and the present materials and
craftmanship.
The Debtors filed voluntary petitions for relief under Chapter 11
of the Bankruptcy Code on April 15, 2008 (Bankr. S.D.N.Y., Case
No. 08-11363). Joshua Joseph Angel, Esq., and Frederick E.
Schmidt, Esq., at Herrick, Feinstein LLP, in New York, represent
the Debtors. An Official Committee of Unsecured Creditors has
been appointed in these cases. The Committee's counsels are
Michael Z. Brownstein, Esq., and Rocco A. Cavaliere, Esq., at
Blank Rome LLP. No trustee or examiner has been appointed in the
cases. The Debtors listed total assets of $128,551,467 and total
liabilities of $134,814,367 in their schedules.
FRONTIER AIRLINES: Wants to Reject Teamsters Bargaining Pact
------------------------------------------------------------
Frontier Airlines, Inc. and its debtor-affiliates seeks authority
from the U.S. Bankruptcy Court for the Southern District of New
York to reject their collective bargaining agreements with the
Teamsters Airline Division of the International Brotherhood of
Teamsters. The CBA covers wages, benefits, job security and other
employment conditions for 425 members, specifically:
* aircraft appearance agents and maintenance cleaners:
http://ResearchArchives.com/t/s?325d
* aircraft technicians, ground service equipment technicians
and tool room attendants:
http://ResearchArchives.com/t/s?325f
* material specialists:
http://ResearchArchives.com/t/s?325e
The Debtors also seek the Court's authority to implement the
terms of their bargaining proposal to the Teamsters, in
accordance with Section 1113 of the Bankruptcy Code.
A full-text copy of the Proposed Section 1113 Modifications is
available for free at:
http://ResearchArchives.com/t/s?3260
Liquidity Crisis
Benjamin S. Kaminetzky, Esq., at Davis Polk & Wardwell, in New
York, relates that Frontier is currently in the midst of a
liquidity crisis brought about by a combination of three factors
-- record high fuel costs, competition in its home market of
Denver, Colorado, and excess capacity throughout the airline
industry.
To place the Company on more sound financial footing, Frontier
implemented a series of difficult cost-cutting measures and made
efforts to generate additional liquidity and revenues.
In May 2008, Frontier reached agreements with its pilots and
dispatchers unions on temporary wage and benefit concessions --
for 14.5% and 10% wage reductions. Under an interim agreement
dated May 24, 2008, Frontier's Teamsters-represented employees
also accepted temporary wage and benefit concessions, equal to
8.8% of wages and related premiums for mechanics and material
specialists and 6.3% of wages and premiums for appearance agents.
Including other temporary benefit concessions to which the IBT-
represented employees agreed, the Interim Agreement allowed
Frontier to reduce its labor costs associated with IBT-
represented employees by 10%.
A full-text copy of the Interim Agreement on wage concessions
between Frontier and the Teamsters is available for free at:
http://ResearchArchives.com/t/s?3261
Despite these steps, Frontier remains in crisis, Mr. Kaminetzky
explains.
As a result, Frontier needs to make additional cuts that will
affect virtually all areas of the Company, including its union
and nonunion labor force, Mr. Kaminetzky tells Judge Drain.
"At a time when Frontier faces existential threats to its
continued operations, it simply cannot continue to pay its IBT-
represented employees at the same rates and under the same work
rules as it could in rosier periods," he notes.
According to Mr. Kaminetzky, the centerpiece of Frontier's
Section 1113 Proposal consists of work rule changes that will
allow Frontier to outsource its heavy maintenance work. This
step, which will lead to the elimination of approximately 130 IBT
jobs, has become necessary because Frontier is significantly
reducing the number of aircraft in its fleet from 62 to 51
in its ongoing efforts to generate critically needed liquidity,
trim excess capacity and right-size the Company, he adds.
With fewer aircraft, and in light of the periodic nature of heavy
maintenance work, Frontier will have a greatly diminished need
for heavy maintenance going forward. As a result, the employees
who currently perform that work -- like Mechanics and Material
Specialists -- will remain idle, sometimes for long stretches at
a time. With the Company's operations already running at a loss,
Frontier cannot afford to retain these employees when it cannot
fully utilize them, especially when outsourcing heavy maintenance
work has become far more cost-effective, Mr. Kaminetzky
maintains.
Moreover, outsourcing heavy maintenance has become a competitive
necessity for the Company, Mr. Kaminetzky says. He notes that
Frontier's main competitors in its home market, as well as most
other low-cost airlines and many legacy carriers, already
outsource substantial portions of their heavy maintenance
operations some up to 100%.
According to Rocky Mountain News, Frontier is attempting to
outsource maintenance work, including 130 jobs, in El Salvador.
The remaining modifications contained in Frontier's Section 1113
Proposal include wage and benefit cuts, the majority of which
would simply make permanent the temporary concessions to which
the IBT already agreed in May and June 2008 -- and which would
otherwise expire on September 27, 2008, he says.
Mr. Kaminetzky notes that Frontier's business plan projects that
for the Company to survive, it must cut approximately $35,000,000
from its mainline labor costs on an annualized basis, and a 17%
decrease from last year's levels. Absent the implementation of
the CBAs under the Section 1113 modifications, realizing the
savings will be impossible, he says.
Terms and Valuation of Frontier's Sec. 1113 Proposal
In a declaration filed with the Court, Kevin Stocker, a senior
director at Frontier, reiterates that Frontier's Section 1113
Proposal seeks to achieve necessary cost savings through two
types of modifications: (i) wage and benefit reductions, and (ii)
outsourcing of certain heavy maintenance work.
In essence, the Section 1113 Proposal proposes that all of the
proposed Modifications, and all other existing terms, take effect
from September 27, 2008, through September 30, 2011.
Christopher Collins, executive vice president and chief
operations officer at Frontier, projects that when aggregated
over a five-year period, the Section 1113 Proposal will save the
Company approximately $5,615,310 per year, which salient terms
and value include:
(1) extending the existing 6.3% wage and premium reductions
for the Appearance Agents until September 2011, which will
result to annual cost savings of $166,132;
(2) work rule changes to permit Frontier to outsource "C"
Checks and other heavy maintenance, which will allow
Frontier to save $4,069,308 annually;
(3) wage and premium reductions of 11% for Mechanics and
Materials Specialists until September 2011, to effect
annual cost savings of $1,159,746 for Frontier; and
(4) authorization to withdraw from the Western Conference of
Teamsters pension fund, which will result to annual cost
savings of $386,256.
With respect to wage rule changes, Mr. Collins maintains that
permitting the Debtors to outsource heavy maintenance work will
"right-size the Company."
It is no longer economically feasible for Frontier to continue
employing approximately 130 Mechanics and Material Specialists at
their full-time wage and benefit rates, Ronald L. McClellan, vice
president of Maintenance and Engineering at Frontier, said in a
declaration filed with the Court.
Teamster Refuses to Negotiate
According to Mr. Kaminetzky, the Debtors delivered their Section
1113 Proposal to the Teamsters on July 29, 2008. Frontier has
repeatedly reiterated its willingness to discuss the Section 1113
Proposal and bargain in good faith. However, the Teamsters made
no effort to take Frontier up on its offer, Mr. Kaminetzky tells
the Court.
By refusing to even engage with Frontier on the substance of the
Section 1113 Proposal, the Teamsters will have de facto rejected
the proposal without any good cause if no agreement results from
the ongoing bargaining sessions, he adds.
Frontier also proposed to extend the expiration date of the
Interim Agreement by seven weeks from September 27, 2008, to
November 14 so that negotiations could take place at a more
measured pace.
Absent an extension, Frontier would be forced to file its Section
1113 Motion in short order to protect itself from any prolonged
increase in costs resulting from the snapback of Teamsters' wages
and benefits on September 27, 2008.
However, IBT flatly refused Frontier's request to extend the
Interim Agreement concessions.
Absent the rejection of the CBAs, Frontier's creditors claims
will be impaired. If Frontier cannot implement a viable business
plan which generates real profits, as contemplated under the
Section 1113 Proposal, Frontier will be forced to liquidate and
unsecured creditors will recover less, or possibly will recover
nothing at all than if Frontier reorganizes, Mr. Kaminetzky tells
Judge Drain.
However, the Section 1113 Proposal "would not change Frontier's
commitment to negotiate with the Union for as long as necessary
to reach a mutual agreement," Mr. Kaminetzky emphasized, on
behalf of the Debtors.
The Court will convene a hearing on October 3, 2008, at 10:00
a.m., to consider the Debtors' request.
Teamsters: Frontier Failed To Demonstrate Need
In a press release dated September 11, 2008, the Teamsters said
it will oppose Frontier's attempt to subcontract maintenance
work.
"The Teamsters adamantly and steadfastly opposes any
subcontracting of maintenance work with the resulting job
losses," said Teamsters Local 961 President Matthew Fazakas.
"The company has not demonstrated a need to send the work to a
foreign country," he adds.
"The company has not demonstrated a need for an extension of the
interim concession agreement," Mr. Fazakas said.
"The Teamsters members employed at Frontier are standing strong
and united against the company's attempts to subcontract our
good-paying Colorado jobs to a foreign country and to get uneven
and unfair concessions."
Teamsters Local 961, Teamsters Local 41, Teamsters Local 104 and
the International Brotherhood of Teamsters comprise the Union's
negotiating committees have met with Frontier five times since
September 4, 2008, according to the statement.
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.
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.) Benjamin S. Kaminetzky, Esq., and Hugh R.
McCullough, Esq., at Davis Polk & Wardwell, represent 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.
(Frontier Airlines Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FRONTIER AIRLINES: Can Perform Under Bombardier Contract
--------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized Frontier Airlines and its affiliate debtors to perform
under an agreement with Bombardier.
Pursuant to Letter Agreement No. 02, Frontier Airlines Holdings,
Inc.'s subsidiary Lynx Aviation, Inc., holds certain options to
purchase Bombardier Q400 Series aircraft from Bombardier
Inc., represented by Bombardier Aerospace Regional Aircraft, now
known as Bombardier Aerospace Commercial Aircraft. The Options
have various exercise dates, and the Aircraft related to the
options have various delivery dates.
In July 2008, the Debtors exercised one option for the first
purchase of an Aircraft with a scheduled delivery date in June
2009. The Debtors have already paid Bombardier a pre-delivery
payment related to the First Option Aircraft and intend to pay
additional pre-delivery payments on August 30, and December 1,
2008. The balance of the purchase price is due when the First
Option Aircraft is delivered.
Damian S. Schaible, Esq., at Davis Polk & Wardwell, in New York,
tells the Court that Sections 363(b)(1) and 363(c)(1) of the
Bankruptcy Code authorize the Debtors to perform, in the ordinary
course of their business, their obligations under the Option
Aircraft Agreements.
Mr. Schaible says that the purchase price of the Aircraft under
the Option Aircraft Agreements is favorable to the Debtors. In
addition, the periodic aircraft purchases, especially the fuel
efficient Bombardier Q400 Series Aircraft, is necessary for the
Debtors' operations and consistent with the Debtors anticipated
operational needs.
Against this backdrop, the Debtors seek the Court's permission
to:
* perform under the Option Aircraft Agreements with Bombardier
and exercise all options to purchase any Aircraft; and
* make any and all payments to Bombardier in connection the
purchase of the Aircraft without further Court order.
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.
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.) Benjamin S. Kaminetzky, Esq., and Hugh R.
McCullough, Esq., at Davis Polk & Wardwell, represent 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.
(Frontier Airlines Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FRONTIER AIRLINES: U.S. Trustee Balks at Professionals' Fees
------------------------------------------------------------
Upon review of the fee applications filed by professionals
retained in the bankruptcy cases of Frontier Airlines and its
affiliate debtors, Diana G. Adams, United States Trustee for
Region 2, determined that there is a need to reduce the fees
awarded to these nine applicants by a percent reduction pending
the final resolution of Frontier's Chapter 11 cases:
(1) Davis Polk & Wardwell
(2) Seabury Transportation Holdings, LLC
(3) FTI Consulting
(4) KPMG LLP
(5) Togut, Segal & Segal LLP
(6) Faegre & Benson LLP
(7) Wilmer Cutler Pickering Hale and Dorr LLP
(8) Houlihan Lokey Howard & Zukin Capital, Inc.
(9) the Official Committee of Unsecured Creditors
The Applicants seek the Court's interim allowance of their fees
totaling $8,046,146, and reimbursement of their expenses for
$224,076 in the aggregate.
The results of the Chapter 11 cases will serve as an important
factor in determining the success of the efforts of the
Applicants, Ms. Adams says. Because the results are still
unknown, percentage reduction is proper at this time, she
maintains.
To the extent applicable, the U.S. Trustee requests additional
information from the applicants regarding their billing
practices.
Specifically, the U.S. Trustee requires these Applicants, who
have requested reimbursement of photocopying expenses, to provide
additional information regarding their actual cost for
photocopying, totaling $1,771:
Photocopying
Applicant Charges
--------- ------------
Seabury $1,136
Wilmer Cutler 344
FTI Consulting 154
Faegre & Benson 70
Togut, Segal & Segal 67
Davis Polk & Wardwell has advised the U.S. Trustee that it has
agreed with the Official Committee of Unsecured Creditors to
various reductions to the firm's request for compensation
totaling approximately $50,000. The firm has also agreed that
its photocopying costs totaling $11,953, will be reduced by
$3,594, Ms. Adams notes.
According to Ms. Adams, Davis Polk & Wardwell has also provided
additional details on, or further explained, their expenses
relating to "Cafeteria Meals" and "Miscellaneous" expenses for
$3,000, which was incurred during the organizational meeting for
the purpose of appointing a Creditors Committee on April 28,
2008.
Meanwhile, Houlihan Lokey Howard & Zukin Capital, Inc.'s fee
application lacks adequate detail on the nature of the services
it rendered to the Debtors, Ms. Adams tells Judge Drain.
Creditors Committee Closely Monitors
Fee Applications
The Creditors Committee notifies the Court that it continues to
monitor closely the fees and expenses incurred by the
professionals, with respect to the services rendered by the firms
to Frontier.
While the Committee does not object to approval, on an interim
basis, of Frontier's professionals' first Fee Applications, the
Committee reserves all rights in connection with the final fee
applications of those professionals, Andrew N. Goldman, Esq., at
Wilmer Cutler Pickering Hale and Dorr LLP, in New York, says.
"The Committee will consider all final fee requests in light of
the results achieved, and distributions ultimately made available
to creditors, at the conclusion of this reorganization," Mr.
Goldman says.
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.
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.) Benjamin S. Kaminetzky, Esq., and Hugh R.
McCullough, Esq., at Davis Polk & Wardwell, represent 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.
(Frontier Airlines Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FRONTIER AIRLINES: Wants to Set November 17 as Claims Bar Date
--------------------------------------------------------------
Rule 3003(c)(3) of the Federal Rules of Bankruptcy Procedure
provides that any creditor (i) who asserts a prepetition claim
against the Debtors, (ii) whose claim is not listed on the
Debtors' schedules of assets and liabilities, or schedules of
executory contracts and unexpired leases, or (iii) whose claim is
listed on the Schedules as disputed, contingent, or unliquidated,
must file a proof of claim.
Fixing the proposed Bar Date will enable Frontier Airlines
Holdings Inc. and its subsidiaries to receive, process, and begin
their analysis of creditors' claims in a timely and efficient
manner, and give all creditors ample opportunity to prepare and
file proofs of claim, Marshall S. Huebner, Esq., at Davis Polk &
Wardwell, in New York, tells the U.S. Bankruptcy Court for the
Southern District of New York.
In accordance with General Order M-350 of the United States
Bankruptcy Court for the Southern District of New York dated
March 27, 2008, the Debtors ask the Court to establish Nov. 17,
2008, at 5:00 p.m., prevailing Eastern Time, as the last date and
time by which prepetition claims must be filed.
Due to the size and complexity of the Debtors' cases, the
Debtors, also ask the Court to approve its Proof of Claim Form,
which is based on Official Form No. 10, a copy of which is
available at no charge at:
http://bankrupt.com/misc/Frontier_ProofOfClaimForm.pdf
Pursuant to Rule 2002(a)(7) of the Federal Rules of Bankruptcy
Procedure, the Debtors propose to mail a Notice of the Bar Date
Order and the Bar Date Order to parties-in-interest, a copy of
which is available for free at:
http://bankrupt.com/misc/Frontier_BarDateNotice.pdf
Procedures for Filing Proofs of Claim
The Debtors propose that claimants will be required to file their
proofs of claim:
-- in the English language;
-- in lawful currency with respect to asserted claim amount;
-- indicating the correct Debtor;
-- with supporting documentation; and
-- signed by the claimant or an authorized agent.
Claimants must file an original, written proof of the claim that
substantially conforms to the Proof of Claim Form, either by:
* delivering the original proof of claim by hand or overnight
courier to:
Frontier Airlines Claims Processing Center,
c/o Epiq Bankruptcy Solutions, LLC
757 Third Avenue, 3rd Floor
New York, NY 10017,
or by mailing the original proof of claim to:
Frontier Airlines Claims Processing Center,
c/o Epiq Bankruptcy Solutions, LLC
FDR Station, P.O. Box 5012
New York, NY 10150-5012
Furthermore, the Debtors propose that persons or entities will
not be required to file a claim if:
-- they have already properly filed a claim in a form
substantially similar to the Proof of Claim Form;
-- their claim is listed on the Schedules; provided that (i)
the claim is not scheduled as "disputed," "contingent" or
"unliquidated," (ii) the claimants agree with the amount,
nature and priority of the claim as set forth in the
Schedules and (iii) the claimants agree that the claim is
an obligation of the specific Debtor against which
the claim is listed on the Schedules;
-- the claim has been allowed by a Court order before the
proposed Bar Date;
-- the claim has been paid in full by the Debtors;
-- the claimant is any current employee of the Debtors, and
any labor union authorized by law to represent any current
employee, with respect to wages, salaries and vacation pay
arising in the ordinary course of business;
-- the claimant holds a claim for which specific deadlines
have been fixed by a Court order prior to the Bar Date;
-- the claimant holds a claim allowable under Sections 503(b)
and 507(a) of the Bankruptcy Code as an expense of
administration;
-- the claim is limited exclusively to the repayment of
principal, interest and other fees and expenses under
certain agreements governing any syndicated credit facility
or debt security pursuant to an indenture; and
-- the claimant is any person or entity that holds an interest
in the Debtors that is based exclusively upon the
ownership of common or preferred stock or warrants.
The proposed Bar Date Order provides that any person or entity
that holds a claim that arises from the rejection of an executory
contract or unexpired lease must file a proof of claim based on
the rejection by the later of (i) the Bar Date and (ii) 30 days
after the Debtors' notice of a Court order authorizing the lease
or contract rejection to which the claim relates.
The Debtors note that at this time, they are not seeking to set a
deadline for the filing of proofs of equity interest.
Any holder of a claim against one or more of the Debtors who is
required, but fails, to timely file a proof of claim in
appropriate form in accordance with the terms of the Bar Date
Order will be forever barred, estopped and enjoined from
asserting the claim against the Debtors.
The Debtors also intend to provide notice by publication to
certain creditors, including (i) those creditors to whom no other
notice was sent and who are unknown or not reasonably
ascertainable by the Debtors; (ii) known creditors with addresses
unknown by the Debtors and (iii) potential creditors with claims
unknown by the Debtors, through a Publication Notice, which will
be published once in each of The Wall Street Journal and The
Denver Post, at least 35 days prior to the Bar Date.
Against this backdrop, the Debtors ask Judge Robert D. Drain to:
(i) establish Nov. 17, 2008, as the Claims Bar Date;
(ii) approve the Proof of Claim Form;
(iii) approve the Bar Date and Publication Notices; and
(iv) approve the proposed notice and publication procedures.
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.
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.) Benjamin S. Kaminetzky, Esq., and Hugh R.
McCullough, Esq., at Davis Polk & Wardwell, represent 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.
(Frontier Airlines Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FRONTIER AIRLINES: Court Approve Deloitte Tax as Tax Advisors
-------------------------------------------------------------
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 employ Deloitte Tax LLP
as tax advisors in their Chapter 11 cases.
Prior to the Court's entry of the Order, Damian S. Schaible,
Esq., at Davis Polk & Wardwell, in New York, filed a certificate
of no objection to the Debtors' employment application.
As reported in the Troubled Company Reporter on Sept. 3, 2008,
Deloitte Tax will render:
(a) tax refund services, which includes assisting the Debtors
in (i) evaluating tax refunds that may be available
related to Colorado sales taxes, and federal and state
excise taxes; and (ii) preparing of refund claims and
responding to inquiries of the taxing authorities; and
(b) bankruptcy tax services, under which the firm will advise
the Debtors:
-- regarding the restructuring or bankruptcy emergence
process, including the tax workplan;
-- on cancellation of indebtedness income for tax purposes
under Section 108 of the Internal Revenue Code;
-- on post-bankruptcy tax attributes -- tax basis
in assets and net operating loss carryovers --
available under the applicable tax regulations and the
absorption of those attributes based on the Debtors'
operating projections, including a technical analysis
of the effects of Treasury Regulation Section 1.1502-28
and the interplay with IRC Sections 108/1017, and
assisting the Debtors with the preparation of tax basis
balance sheets;
-- on the potential effect of the Alternative Minimum Tax
in various post-emergence scenarios;
-- on the effects of tax rules under Section 382(l)(5) and
(l)(6) of the Internal Revenue Code, pertaining to the
post-bankruptcy net operating loss carryovers and
limitations on their utilization and the Debtors'
ability to qualify for Section 382(l)(5) of the
Internal Revenue Code;
-- on Net Built-in Gain or Loss position at the time of
any "ownership change," as defined in Section 382 of
the Bankruptcy Code, including limitations on use of
any tax losses generated from post-bankruptcy asset or
stock sales;
-- in their work with creditors' counsel, the Debtors'
counsel and financial advisors on the cash tax effects
of restructuring and bankruptcy and the post-
restructuring tax profile, including a plan of
reorganization tax projection;
-- regarding the proper tax treatment of postpetition
interest for state and federal income tax purposes;
-- on the proper state and federal income tax treatment of
pre- and postpetition reorganization costs including
the categorization and analysis of those costs and
their related technical positions;
-- in their review and analysis of the tax treatment of
items adjusted for GAAP purposes as a result of "fresh
start" accounting, as required for the emergence date
of the U.S. GAAP balance sheet, in an effort to
identify the appropriate tax treatment of adjustments
to equity and other tax basis adjustments to assets and
liabilities recorded;
-- regarding other state or federal income tax questions
that may arise in the course of the engagement;
-- in their effort to identify tax issues and planning
opportunities related to debt restructuring and
bankruptcy from a state and local perspective,
including, but not limited to, the state adoption of
Section 108 of the Internal Revenue Service on debt
forgiveness and attribute reduction under Section
108(b)(5), state tax effects on Section 346 of the
Bankruptcy Code and state positions with respect to
state tax attribute utilization limitations post-
bankruptcy;
-- in their efforts to preliminarily identify tax issues
and state and local planning opportunities related to
post-restructuring including, but not limited to,
evaluating structural strategies to assist the Debtors
in attempting to minimize state income taxes through
the utilization of net operating losses, creation of
special purpose entities or reorganization of the
business along functional lines, property taxes, sales
and use taxes and other state and local taxes as
appropriate; and
-- in their efforts to estimate the tax basis in the stock
of each of the Debtors' subsidiaries or other entity
interests.
Deloitte Tax will also assist the Debtors in their evaluation and
modeling of the effects of liquidating, merging or converting
entities as part of the restructuring, including the effects on
federal and state tax attributes, state incentives, apportionment
and other tax planning.
In addition, Deloitte Tax will document, as appropriate, tax
analysis, opinions, recommendations, observations and
correspondence for any proposed restructuring alternative tax
issue or other tax matters.
Deloitte Tax will be paid based on these hourly rates:
Partner, Principal, or Director $650
Senior Manager $550
Manager $450
Senior Associate $350
Staff or Paraprofessionals $100-300
David Hoffman, Esq., a partner at Deloitte Tax, assured that
Court that his firm is a "disinterested person," as that term is
defined under Section 101(14) 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.
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.) Benjamin S. Kaminetzky, Esq., and Hugh R.
McCullough, Esq., at Davis Polk & Wardwell, represent 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.
(Frontier Airlines Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FUND CREDIT: S&P Slashes Mutual Funds Ratings to 'Dm' from 'AAAm'
-----------------------------------------------------------------
Standard & Poor's Ratings Services currently assigns Fund Credit
Quality Ratings to more than 270 fixed-income mutual funds and
more than 525 money market-type funds in the U.S. and Europe. As
of today, Standard & Poor's only rating actions on funds prompted
by their exposure to defaulted commercial paper of Lehman Brothers
Holdings Inc. were taken, when S&P lowered the Principal Stability
Fund Ratings on several Reserve Funds--Primary Fund, Reserve
International Liquidity Fund Ltd., and the Colorado Diversified
Trust--to 'Dm' from 'AAAm'. At the same time, S&P placed the
PSFRs on nine other Reserve Funds on CreditWatch with negative
implications. No other PSFRs are affected by exposure to LBHI.
Also on Sept. 16, S&P lowered its ratings on LBHI's senior and
subordinated debt issues, and the ratings on certain issues the
company guarantees, to 'D'. Despite this, S&P has not taken any
rating action on the nine U.S. credit quality-rated funds with
exposure to securities issued by LBHI. Standard & Poor's Fund
Credit Quality Rating captures a fund's overall exposure to
default risk; because of the swiftness of the downgrade of LBHI,
the remaining defaulted securities held in the funds no longer
pose additional default risk to the portfolios.
BGFA, a wholly owned subsidiary of Barclays Global Investors, is
the investment adviser for eight exchange-traded funds with
exposure to LBHI. Each fund seeks investment results that
correspond generally to the price and yield performance, before
fees and expenses, of its underlying index. S&P expects the index
to drop securities issued by LBHI when it rebalances at month-end.
Currently, several funds have exposure to defaulted LBHI
securities: iShares iBoxx $ Investment Grade Corporate Bond Fund,
iShares Lehman 1-3 Year Credit Bond Fund, iShares Lehman Aggregate
Bond Fund, iShares Lehman Credit Bond Fund, iShares Lehman
Government/Credit Bond Fund, iShares Lehman Intermediate
Government/Credit Bond Fund, iShares Lehman Intermediate Credit
Bond Fund, and iShares $ Corporate Bond Fund.
The City of Long Beach Investment Portfolio currently holds a
$20 million piece of 'D' rated LBHI commercial paper, representing
approximately 1.15% of the investment pool's $1.76 billion
portfolio. The pool's primary objectives are to safeguard
investment principal, maintain sufficient liquidity to meet
daily and projected cash flow requirements, and maximize its
return on investments consistent with safety and liquidity.
Standard & Poor's PSFRs, also called Money Market Fund Ratings,
are generally assigned to SEC-registered (2a-7) money market
funds, government investment pools, separate accounts, and other
managed pools of fixed-income assets whose objective and
investment policies are intended to provide a stable ($1.00-per-
share) net asset value. PSFRs may also be assigned to non-U.S.-
domiciled funds with an accumulating share value. PSFRs are rated
from 'AAAm' to 'Dm' (failure to maintain principal stability,
resulting in a realized or unrealized loss of principal). The 'm'
distinguishes the PSFR from S&P's traditional debt ratings,
usually not subscripted, which indicate S&P's opinion of a
borrower's ability to repay principal and interest on a timely
basis.
"As part of its fund rating process, we review holdings and
summary information of principal stability-rated funds on a weekly
basis," S&P says.
S&P base its Fund Credit Quality and Volatility ratings on it
analysis of a fund's eligible portfolio investments and strategy,
historical return volatility, and management. The seven-category
credit quality rating scale is from 'AAAf' to 'CCCf' (least
protection). These ratings may be modified by the addition of a
plus or minus sign to show relative standing within the major
rating categories.
"Volatility ratings indicate lowest volatility ('S1', with certain
funds designated with a plus sign {+} to indicate the fund's
extremely low sensitivity to changing market conditions) to
highest volatility ('S6'). As part of S&P's fund rating process,
we review holdings and summary information of Fund Credit- and
Volatility-rated funds monthly," S&P says.
GARY LYNN HAND: Case Summary & Five Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Gary Lynn Hand
Darla Jean Hand
P.O. Box 434
Bonner, MT 59823
Bankruptcy Case No.: 08-61264
Chapter 11 Petition Date: September 16, 2008
Court: U.S. Bankruptcy Court for the District of Montana (Butte)
Judge: Ralph B. Kirscher
Debtor's Counsel: Jon R. Binney, Esq.
jon@binneylaw.com
P.O. Box 2253
Missuola, MT 59806
Tel: (406) 541-8020
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A copy of the Debtor's petition that includes a list of its Five
Largest Unsecured Creditors is available at:
http://bankrupt.com/misc/mtb08-61264.pdf
GENERAL MOTORS: Urges Congress to Fund $25BB Loan Program
---------------------------------------------------------
Top executives at General Motors Corp., Chrysler LLC and Ford
Motor Co. met with House Speaker Nancy Pelosi and other
congressional leaders on Wednesday to pursue the funding of a
$25 billion loan program intended to help the automakers
modernize their plants to meet fuel efficiency requirements in the
future, reports say.
GM Chairman and CEO Rick Wagoner, Ford CEO Alan Mulally and
Chrysler Chairman and CEO Robert Nardelli, also sent a letter
stating their request for the loan program. In it, they warned
that sluggish U.S. economy could affect thousands of workers.
Dow Jones reports that House Speaker Pelosi told reporters on the
same day that she plans to unveil a $25 billion loan package to
U.S. automakers next week that could possibly add new efficiency
standards. It would likely be contained in a government funding
bill.
Congress has authorized $25 billion in loans in last year's energy
bill, but the plan has yet to be funded. The program authorizes
Congress to provide $25 billion in low-cost loans in order for
automakers and their suppliers to meet new fuel-efficiency
requirements of at least 35 miles per gallon by 2020, a 40%
increase.
According to a report by the Associated press, the loans would
have an interest rate of around 5 percent, providing about
$100 million a year in savings for every $1 billion the companies
receive in loans. The interest rate would have been in double-
digit on the open market because of the companies' poor bond
ratings, the report said.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K.,
Argentina, Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
On July 31, 2008, TCR said that Fitch Ratings downgraded the
Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The
Rating Outlook is Negative. The downgrade reflects Chrysler's
restricted access to economic retail financing for its vehicles,
which is expected to result in a further step-down in retail
volumes. Lack of competitive financing is also expected to result
in more costly subvention payments and other forms of sales
incentives. Fitch is also concerned with the state of the
securitization market and the ability of the automakers to access
this market on an economic basis over the near term, given the
steep drop in residual values, higher default rates, higher loss
severity being experienced and jittery capital market.
About Ford Motor Co.
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) --
http://www.ford.com/-- manufactures or distributes automobiles in
200 markets across six continents. With about 260,000 employees
and about 100 plants worldwide, the company's core and affiliated
automotive brands include Ford, Jaguar, Land Rover, Lincoln,
Mercury, Volvo, Aston Martin, and Mazda. The company provides
financial services through Ford Motor Credit Company.
The company has operations in Japan in the Asia Pacific region. In
Europe, the company maintains a presence in Sweden, and the United
Kingdom. The company also distributes its brands in various
Latin-American regions, including Argentina and Brazil.
* * *
As reported in the Troubled Company Reporter on Aug. 5, 2008,
Fitch Ratings has downgraded the issuer default rating of Ford
Motor Company and Ford Motor Credit Company LLC to 'B-' from 'B'.
The Rating Outlook remains Negative. The downgrade reflects: the
further deterioration in Ford's U.S. sales as a result of economic
conditions, an adverse product mix and the most recent jump in gas
prices; portfolio deterioration at Ford Credit and heightened
concern regarding economic access to capital to support financing
requirements; and escalating commodity costs that will remain a
significant offset to cost reduction efforts.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM
employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
At June 30, 2008, the company's balance sheet showed total assets
of $136.0 billion, total liabilities of $191.6 billion, and total
stockholders' deficit of $56.9 billion. For the quarter ended
June 30, 2008, the company reported a net loss of $15.4 billion
over net sales and revenue of $38.1 billion, compared to a net
income of $891.0 million over net sales and revenue of
$46.6 billion for the same period last year.
GENERAL MOTORS: May Issue Securities to Raise Funds
---------------------------------------------------
General Motors Corp. disclosed in a Securities and Exchange
Commission filing that it plans to register and issue these
classes of securities:
1) Debt Securities;
2) Common Stock (par value $12/3 per share);
3) Preferred Stock (without par value);
4) Preference Stock (par value $0.10 per share); and
5) Warrants
GM said in its prospectus that an indeterminate aggregate initial
offering price and number or amount of the securities of each
identified class is being registered as may from time to time be
sold at indeterminate prices. Separate consideration may or may
not be received for securities that are issuable upon conversion
of, or in exchange for, or upon exercise of, convertible or
exchangeable securities.
Registration fees of $809,000 for up to $10 billion net aggregate
principal amount of securities were paid previously by the GM in
connection with the Registration Statement on Form S-3 (File No.
333-108532) originally filed on September 5, 2003. Pursuant to
Rule 457(p) under the Securities Act of 1933, the fees of $629,402
with respect to $7,780,000,000 aggregate initial offering price of
securities that were previously registered and not sold are being
carried forward, and such unsold securities are deregistered, GM
said. In accordance with Rules 456(b) and 457(r), the company is
deferring payment of all of the registration fee except that
portion previously paid and which is being carried forward.
GM said net cash proceeds from the issuance of the securities will
be added to its general funds and will be available for general
corporate purposes, including capital expenditures, working
capital and the repayment of existing indebtedness.
A copy of GM's prospectus is available free of charge at:
http://researcharchives.com/t/s?3236
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM
employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
At June 30, 2008, the company's balance sheet showed total assets
of $136.0 billion, total liabilities of $191.6 billion, and total
stockholders' deficit of $56.9 billion. For the quarter ended
June 30, 2008, the company reported a net loss of $15.4 billion
over net sales and revenue of $38.1 billion, compared to a net
income of $891.0 million over net sales and revenue of $46.6
billion for the same period last year.
GSV INC: Earns $268,224 in 2008 Second Quarter Ended June 30
------------------------------------------------------------
GSV Inc. reported net income of $268,224 for the second quarter
ended June 30, 2008, compared with net income of $61,333 in the
corresponding period last year.
Revenues for the quarter increased by $253,180 or 123.5%, to
$458,149 in 2008 from $204,969 in 2007. This increase was due to
increased production and increased oil and gas prices.
The company believes that its existing capital resources will
enable it to maintain operations at existing levels for at least
the next 12 months, assuming that the company can extend the
maturities of the notes it issued to Brooks Station Holdings Inc.
and D. Emerald Investments Ltd. beyond the next 12 months.
At June 30, 2008, the company's consolidated balance sheet showed
$3,293,303 in total assets, $879,045 in total liabilities, and
$2,414,257 in total stockholders' equity.
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?3230
Going Concern Doubt
The company said that in recent periods cash flows provided by the
its oil and gas investments have been sufficient to enable it to
fund operating, investing and financing needs. However, the
company will be required to obtain additional financing to fund
drilling and development and to pay certain indebtedness as it
becomes due. The company believes these conditions raise
substantial doubt about its ability to continue as a going
concern.
About GSV Inc.
Headquartered in Westport, Conn., GSV Inc. (OTC BB: GSVI)
-- http://www.gsv.com/-- holds working interests in two oil and
gas wells in the state of Louisiana. An independent reserve
study, effective January 2008, estimated that the remaining
reserve in the wells, including PDP and PDNP, net of expenses and
discounted at 10%, was $985,829. In June 2008 the well that had
been producing oil and gas started to produce some water, and
production of oil and gas from the well has fallen as a result.
Through Cybershop the company also owns interests in certain oil
and gas properties in Texas and an interest in Century Royalty
LLC, a Texas limited liability company that manages the oil and
gas properties in Texas and holds a portion of the company's
interests in the oil and gas wells in Louisiana.
HAWAIIAN TELCOM: Moody's Junks CF Rtng After Hiring Lazard Freres
-----------------------------------------------------------------
Moody's Investors Service has downgraded the Corporate Family
Rating of Hawaiian Telcom Communications Inc., to Caa2 from B3,
and the company's probability of default rating to Caa3 from Caa1.
Moody's also downgraded the ratings for the Company's senior
unsecured and senior subordinated notes to Caa3 and C,
respectively. The ratings remain under review for further
downgrade.
The rating actions were prompted by the announcement by HI-TEL on
September 16, 2008 that the Company has engaged the services of
Lazard Frères & Co. LLC as its financial advisor to assist in the
evaluation of various balance sheet restructuring options and that
the Company plans to organize its bondholders to participate in
the revised strategic plan.
Moody's has taken these rating actions:
* Corporate Family Rating -- Downgraded to Caa2, from B3
* Probability-of-Default Rating -- Downgraded to Caa3, from Caa1
* $90 mm Senior Secured Revolving Credit Facility due 2012 --
Affirmed at Ba3 (LGD2 -- 11%)
* $860 mm Senior Secured Tranche C Term Loan due 2014 ($484.7
million outstanding at 6/30/2008) -- Affirmed at Ba3
(LGD2 -- 11%)
* $150 mm Floating Rate Senior Notes due 2013 -- Downgraded to
Caa3 (LGD3 -- 36%), from Caa2 (LGD4 -56%)
* $200 mm 9.75% Senior Notes due 2013 -- Downgraded to Caa3
(LGD3 -- 36%), from Caa2 (LGD4 -56%)
* $150 mm 12.5% Senior Subordinated Notes due 2015 -- Downgraded
to C (LGD5 -- 83%), from Caa3 (LGD5 -81%)
* Outlook -- Changed to Ratings Under Review for Downgrade, from
Negative
* SGL Rating -- Affirmed at SGL-3
The downgrade of HI-TEL's corporate family rating reflects a
heightened probability of default and a potential restructuring of
the balance sheet over the next twelve months. Moody's believes
that the probability of a distressed debt exchange for the senior
bondholders is extremely high over the near term, given HI-TEL's
weak operating cash flow and elevated debt levels.
Moody's placed HI-TEL's ratings under review for further downgrade
due to the uncertainty as to whether the Company and its financial
advisor will successfully negotiate a debt-for-equity exchange
with the bondholders, which could lead to potentially greater
impairment of debt across all creditor classes. The review will
focus on: i) HI-TEL's restructuring plan, ii) the Company's
turnaround plan post-restructuring, and iii) the role that the
Company's sponsor, Carlyle Group will play in the process.
Moody's has maintained the Ba3 ratings for the Company's senior
secured credit facilities as it believes that bank creditors will
likely be excluded from the debt restructuring and the junior
capital comprising the senior unsecured and senior subordinated
notes will likely absorb the losses in restructuring. Should
these assumptions change, the rating agency will revise the
ratings for various creditor classes accordingly.
Moody's also affirmed HI-TEL's SGL-3 short-term liquidity rating,
indicating its weak liquidity over the next twelve months.
Hawaiian Telcom Communications, Inc. is an incumbent
telecommunications service provider servicing approximately
533,000 access lines. The Company previously operated as a
division of Verizon Communications, Inc. and was acquired by The
Carlyle Group on May 2, 2005, in a $1.6 billion leveraged buy-out.
The company's headquarters are in Honolulu, Hawaii.
HEALTH CARE REIT: S&P Holds 'BB' Preferred Stock Rating
-------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BBB-' corporate
credit and senior unsecured debt ratings on Health Care REIT Inc.
At the same time, S&P affirmed its 'BB' rating on the company's
preferred stock. The outlook remains positive.
"The rating affirmations follow HCN's recent announcement that it
plans to acquire a 90% interest in a joint venture that owns 29
senior housing properties managed by Sunrise Senior Living Inc.
(unrated)," said Standard & Poor's credit analyst George Skoufis.
"The acquisition enhances the quality of HCN's portfolio. The
portfolio should generate good long-term rent growth and allow HCN
to receive its share of the joint venture's earnings. However,
the acquisition does bring greater risk of earnings volatility and
higher direct future capital expenditure requirements."
Current ratings reflect the company's growing health care
portfolio with above-average diversification and good lease-level
rent coverage. HCN has appropriately financed its growth,
resulting in a moderately leveraged balance sheet and comfortable
coverage of its fixed obligations. Mitigating credit weaknesses
include near-term pressure on occupancy and rental growth within
segments hurt by the weaker economy and housing market, a sizeable
and growing development pipeline, and higher secured debt levels.
Toledo, Ohio-based HCN currently owns or finances a portfolio of
635 health care real estate assets in 38 states. Assuming the
$643.5 million Sunrise portfolio acquisition closes as planned in
the fourth quarter, HCN's undepreciated real estate will have more
than tripled since the end of 2002 to more than $6 billion. The
Sunrise acquisition price per unit ($343,420) is rich, and the
going in yield is low (6.4%) compared with its average investment
yield, but not out of line with recent acquisitions of similar
high-quality assets.
HEALTHSPORT INC: Posts $2,992,368 Net Loss in 2008 Second Quarter
-----------------------------------------------------------------
HealthSport Inc. reported a net loss of $2,992,368 on total
revenues of $153,402 for the second quarter ended June 30, 2008,
compared with a net loss of $2,901,504 on total revenues of
$82,711 in the corresponding period of 2007.
The increase in net loss primarily reflects the increase in
general and administrative expenses as a result of the inclusion
of a full year of operations of InnoZen Inc. as opposed to two
months in 2007, and the inclusion of Pacific Manufacturing Group
LLC (PMG) which was not a part of the company in 2007. Results
for the second quarter of 2008 also included an asset impairment
loss of $648,600 associated with the client list acquired in the
Innozen acquisition, and inventory obsolescence loss of $274,840.
These cost additions were partially offset by lower research and
development costs and marketing and selling expense.
Research and development (R&D) costs were $67,533 in 2008, as
compared with R&D costs of $890,058 in 2007. The 2007 amount
included expensing of R&D purchased from InnoZen in the amount of
$847,336.
Balance Sheet
At June 30, 2008, the company's consolidated balance sheet showed
$31,864,084 in total assets, $3,151,501 in total liabilities,
$907,574 in minority interest, and $27,805,009 in total
stockholders' equity.
The company's consolidated balance sheet at June 30, 2008, also
showed strained liquidity with $1,566,719 in total current assets
available to pay $3,088,706 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?3251
Going Concern Doubt
The company will continue to require substantial working capital
until sales develop to the level required to support operations.
The current level of overhead is approximately $392,000 per month,
which includes the PMG manufacturing operation of approximately
$101,000 per month. Current sales will not be adequate to support
this level of operating costs.
These conditions raise substantial doubt about the company's
ability to continue as a going concern.
About Healthsport Inc.
Headquartered in Tulsa, Okla., HealthSport Inc. (OTC BB: HSPO.OB)
-- http://www.healthsportinc.com/-- HealthSport is a publicly
traded holding company focused on the development, manufacturing,
distribution and marketing of nutritional supplements in a one-of-
a-kind edible film strip delivery system.
HEXION SPECIALTY: Consents to Huntsman's Entry to Backstop Payment
------------------------------------------------------------------
Huntsman Corporation's shareholders have sent several proposals to
persuade Hexion Specialty Chemicals, Inc., to continue with the
merger between Hexion and Huntsman.
As reported by the Troubled Company Reporter on July 11, 2008, the
Delaware Court of Chancery granted Huntsman Corporation's
request to expedite the Court's review of Hexion Specialty
Chemicals Inc.'s efforts to abandon Hexion's pending merger with
Huntsman. The trial began Sept. 8, 2008.
$500 Million CVR Proposal
On August 28, 2008, Huntsman Corporation received notice of an
independent shareholder initiative to invest at least $500 million
in Hexion Specialty Chemicals, Inc., in the form of a subscription
for Contingent Value Rights.
A full-text copy of the Additional Financing Commitment Letter
US$500 Million Contingent Value Rights is available for free at:
http://researcharchives.com/t/s?323e
Huntsman shareholders sent a letter to Hexion Specialty Chemicals,
Inc.'s Executive Vice President and Chief Financial Officer
William H. Carter and Apollo Global Management, LLC's President
Joshua J. Harris to explain the proposal.
The letter was sent by:
-- CITADEL LIMITED PARTNERSHIP
-- CITADEL INVESTMENT GROUP, L.L.C.
-- D. E. SHAW VALENCE PORTFOLIOS, L.L.C.
-- D. E. SHAW & CO., L.P.
-- D. E. SHAW OCULUS PORTFOLIOS, L.L.C.
-- MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS L.P.
-- MATLINPATTERSON GLOBAL ADVISERS LLC
-- MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS (BERMUDA) L.P.
-- PENTWATER GROWTH FUND LTD.
A full-text copy of that letter is available for free at:
http://researcharchives.com/t/s?323f
Huntsman responded with this press statement:
"While we appreciate the efforts of these shareholders, due to
the dramatic increase in Huntsman’s net debt and decrease in
its earnings since last July, their proposal does not come
close to making the combined company solvent. Huntsman’s
shareholders lack this information because Huntsman has,
despite our repeated requests for more than two months,
refused to permit its shareholders to review our Delaware
complaint and the Duff & Phelps solvency analysis. If this
information were made public, Huntsman shareholders would
understand that this proposal is inadequate. Furthermore, the
proposal is for incremental, not alternative debt financing,
as specified under the merger agreement.
We are not seeking to renegotiate this transaction. We are
seeking to terminate it, and obtain judicial confirmation that
Hexion has no obligation to pursue the acquisition or to pay
Huntsman a termination fee."
On September 2, 2008, Huntsman Corporation filed its pretrial
brief in the Court of Chancery of the State of Delaware in its
lawsuit with Hexion Specialty Chemicals, Inc. and Apollo
Management, L.L.C. and certain of its affiliates. On September 5,
2008, a public version of the pretrial brief was made available by
the Court of Chancery. A full-text copy of the public version of
the brief is available for free at:
http://researcharchives.com/t/s?3239
$416 Million Backstop Proposal
On September 8, 2008, Huntsman received a letter from certain
stockholders and a letter from Jon M. Huntsman on behalf of
certain Huntsman family stockholders offering to make cash
payments to Huntsman on the closing of the Merger between Huntsman
and Hexion Specialty Chemicals, Inc. These backstop commitments
guarantee that at least an additional $416,460,102 of cash will be
added to the balance sheet of Huntsman.
A full-text copy of D.E. Shaw's follow-up letter is available for
free at http://researcharchives.com/t/s?3240
A full-text copy of Mr. Huntsman's letter is available for free at
http://researcharchives.com/t/s?3241
That same day, hours before the start of the trial, Huntsman sent
a letter to Hexion requesting Hexion’s consent to Huntsman's
accepting the offers in the Commitment Letters. A full-text copy
of the Consent Letter is available for free at
http://researcharchives.com/t/s?3242
However, in a press statement, Hexion said that the proposal by
Jon Huntsman and certain other Huntsman shareholders "does not
come close to closing the funding gap or making the combined
company solvent."
"Neither the $500 million of financing reflected in the prior CVR
proposal, nor the $416 million reflected in [the Sept. 8]
proposal, is remotely sufficient to result in the combined company
being solvent. Of course, the Hexion board will study this
proposal. We would encourage Huntsman shareholders to read our
pretrial brief in the Delaware action which will provide them with
the necessary facts to conclude on their own that this proposal
would not make the combined company solvent."
A full-text copy of Hexion's pretrial brief is available for free
at http://researcharchives.com/t/s?3243
On Sept. 11, Hexion responded to Huntsman's request for consent
to a "backstop payment" to Huntsman by certain of its
shareholders. According to Hexion's CFO, William H. Carter, his
company consents to Huntsman’s entering into the Huntsman
shareholder commitments subject to four conditions:
1. There will be no payment, distribution, consideration of
any kind or anything of value provided directly or
indirectly to, or for the benefit of, the Huntsman
shareholders making the backstop payment or their
affiliates, whether in the form of a fee, reimbursement or
otherwise.
2. Upon having made the backstop payment, the Huntsman
shareholders will have no ongoing rights or claims with
respect to Hexion, Huntsman, or the Surviving Corporation.
In addition, the Huntsman shareholders will be fully
responsible for all administrative, tax or other costs or
liabilities arising from the backstop payments. Hexion
wants this expressly confirmed in writing by each Huntsman
shareholder providing a backstop payment.
3. Huntsman, its officers and directors, and the shareholders
agreeing to the backstop payment have not taken and will
not take any actions relating to the backstop payment that
increase, or create, liabilities for the combined company.
Hexion is concerned in particular with the potential
inaccuracy and incompleteness of public statements.
4. The letters provided to Hexion do not have enough details
to allow Hexion to understand the full terms of the
backstop payment. Hexion's consent is conditioned on
receipt and review of further information and receipt of
definitive documentation and customary opinions regarding
the backstop payment.
Mr. Carter disclosed that Hexion has not discussed Huntsman's
proposal with Credit Suisse or Deutsche Bank AG New York Branch,
and therefore Hexion cannot advise Huntsman as to their view of
the proper use or consequences of the backstop payment.
With Hexion's conditional consent, Huntsman accepted two backstop
proposals:
-- among Huntsman and certain stockholders who are members of
the Huntsman family and certain of their controlled
entities; and
-- among Huntsman and certain other stockholders, including
D.E. Shaw.
Pursuant to the Backstop Proposals, the Huntsman Stockholders have
agreed, to the extent Hexion refuses to otherwise sell CVRs or
enter into an equity or similar investment with the Stockholders,
to make cash payments to Huntsman totaling $416,460,102 in
connection with the consummation of the merger between Huntsman
and Hexion. The Stockholders will receive no equity, debt or other
securities or payments in return for their payments. The
Stockholders’ obligations to make the cash payments are subject
to, among other things, the Merger being consummated on the terms
provided in the current merger agreement on or prior to November
2, 2008.
Solvency Certificate
Huntsman, on Sept. 12, sent another letter to Hexion about the
commitment letter provided to Hexion on July 11, 2007, from Credit
Suisse and Deutsche Bank in connection with Hexion’s entering into
of the Merger Agreement. The Commitment Letter provides for the
delivery to Credit Suisse and Deutsche Bank of either (i) a
solvency certificate from Hexion’s CFO, (ii) a solvency
certificate from Huntsman’s CFO, or (iii) a solvency opinion from
a reputable valuation firm.
Samuel D. Scruggs, Huntsman's executive vice president and general
counsel, said his company intends to deliver a solvency opinion
from a reputable valuation firm in connection with the Closing of
the Merger. Mr. Scruggs notes that on July 14, 2008, Huntsman's
counsel retained American Appraisal to consult with them about the
solvency issues raised by Hexion’s Delaware complaint. According
to Mr. Scruggs, on Sept. 5, Huntsman asked American Appraisal
whether it could provide a solvency opinion for use in satisfying
the terms of the Commitment Letter.
Mr. Scruggs relates that American Appraisal informed Huntsman
that, based on its review of relevant data to date, if Huntsman
engages them under a standard engagement agreement for solvency
opinion services, and assuming no material change between now and
the effective date of its opinion, American Appraisal would issue
a written opinion stating that a combined Huntsman-Hexion entity
is solvent, as that term is defined in American Appraisal’s
standard solvency opinion letter, subject to all definitions,
terms and conditions as are appropriate for an engagement of this
nature. Huntsman expects to engage American Appraisal to deliver
that opinion at the appropriate time.
Hexion said, in a Sept. 12 press statement, that: "From the public
filing made by Huntsman, it is clear Huntsman does not have a
solvency certificate. We note the peculiar timing of the
announcement in view of Huntsman's request for an expedited trial
and the fact that the firm they reference was retained two months
ago."
About Huntsman Corporation
Headquartered in Salt Lake City, Utah, Huntsman Corporation
(NYSE:HUN) -- http://www.huntsman.com/-- is a manufacturer of
differentiated chemical products and inorganic chemical products.
The company operates in four segments: Polyurethanes, Materials
and Effects, Performance Products and Pigments. Its products are
used in a range of applications, including those in the adhesives,
aerospace, automotive, construction products, durable and non-
durable consumer products, electronics, medical, packaging, paints
and coatings, power generation, refining, synthetic fiber, textile
chemicals and dye industries.
About Hexion Specialty
Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. --
http://www.hexionchem.com/-- is a producer of thermosetting
resins, or thermosets. Thermosets are a critical ingredient in
virtually all paints, coatings, glues and other adhesives produced
for consumer or industrial uses. Hexion Specialty Chemicals is
controlled by an affiliate of Apollo Management L.P.
Hexion Specialty Chemicals Inc.'s balance sheet at March 31, 2008,
showed the company had total assets of $4.2 billion and total
liabilities of $5.5 billion, resulting in a shareholders' deficit
of $1.3 billion.
HIGHGATE LTC: Benjamin Landa Wants New Administrator Installed
--------------------------------------------------------------
James Schlett of the Daily (Schenectady, N.Y.) Gazette reports
that Brooklyn investor Benjamin Landa is moving to install Esther
Farkovitz as the new interim administrator of four New York state
upstate facilities in Niskayuna, Schaghticoke, East Greenbush and
Cortland that he bought from Highgate LTC Management, LLC, and its
Highgate Manor Group, LLC, debtor-affiliate. Mr. Landa, the
report continues, wants the facilities overhauled and prepared for
a permanent operator.
The U.S. Bankruptcy Court for the Northern District of New York
approved on Aug. 28 the $23.3 million sale of Highgate facilities
to Mr. Landa. Mr. Landa, a co-owner of the Woodmere-based Sentosa
Care, in mid-August outbid a New Jersey nursing home
administrator, who also wanted to acquire the facilities,
according to the report.
Mr. Landa, the report says, plans to lease the facilities. But,
according to the report, first he wants to replace the temporary
administrator or receiver from Long Hill Alliance Co. in Shelton,
Connecticut, who was installed in November 2006, following General
Electric Capital Corp.'s foreclosure on the Debtors.
About Highgate LTC
Headquartered in Niskayuna, New York, Highgate LTC Management LLC
operates nursing homes. The company and its affiliate, Highgate
Manor Group, LLC, filed for Chapter 11 protection on April 16,
2007 (Bankr. N.D.N.Y. Lead Case No.07-11068). J. Ted Donovan,
Esq., at Finkel Goldstein Rosenbloom & Nash, LLP, represents the
Debtors in their restructuring efforts.
The U.S. Trustee for Region 2 appointed creditors to serve on an
Official Committee of Unsecured Creditors in the bankruptcy case.
Robert C. Yan, Esq., at Farrel Fritz P.C., represents the
Committee.
The Court appointed Mark I. Fishman, Esq., at Neubert, Pepe &
Monteith, P.C., as Chapter 11 Trustee following allegations that
the Debtors violated several health laws and falsified records.
When the Debtors filed for protection from their creditors, they
listed assets of less than $50,000 and debts of between $1 million
and $100 million.
HORACE MANN: Moody's Holds '(P)Ba2' Preferred Stock Rating
----------------------------------------------------------
Moody's Investors Service has affirmed the Baa3 senior debt rating
of Horace Mann Educators Corporation and the A3 insurance
financial strength ratings of its property-casualty and life
insurance subsidiaries. All ratings have a stable outlook.
According to the rating agency, the most important factor
supporting the ratings of Horace Mann is its strong position
within the education community. The company provides products
mainly to teachers using a distribution force largely made up of
former teachers. It insures about 10% of school district
employees in the United States, with many of its products endorsed
by the National Education Association and its state or local
affiliates.
The A3 insurance financial strength ratings for the property-
casualty subsidiaries is supported by profitable results in recent
years -- underscored by absence of adverse prior years' reserve
development, which, along with a favorable pricing environment,
has enabled the company to rebound since 2003. These strengths
are tempered by the group's significant exposure to catastrophe
losses, risks associated with executing a new distribution
strategy, and competition from larger companies with greater
financial and technical resources.
Moody's believes that recent hurricanes, Gustav and Ike, will
impart material but manageable losses to Horace Mann. With Ike in
particular, the rating agency believes that a material portion of
industry losses will derive from commercial insurance, which is
not a core business of Horace Mann. However, damage assessment
from the hurricanes is still in early stages; should losses
materialize above the high end of Moody's estimates, the rating
agency would likely revisit the property-casualty financial
strength ratings.
The A3 insurance financial strength rating of Horace Mann Life
Insurance Company is based on the company's established niche
position in the 403(b) pension market selling life insurance and
pension annuities to teachers in the K-12 educators market. These
strengths are mitigated by the company's relatively weak
profitability, driven by severe spread compression throughout
virtually all of its in-force fixed annuity liabilities, and by
its relatively modest market presence and scale.
Moody's believes that HMLIC's investment portfolio contains mostly
safe investments, but the rating agency expects material but
manageable realized losses from recent distressed credits (Lehman
and Fannie/Freddie preferred stock). Moody's adds that the HMLIC
portfolio has meaningful exposure to the financial sector and it
will continue to monitor the portfolio in light of current
conditions in the capital markets.
The Baa3 senior debt rating at the parent company is rated three
notches below the A3 insurance financial strength ratings of the
operating subsidiaries. This is consistent with Moody's standard
notching practices for U.S. insurance holding company structures.
Even though Horace Mann benefits from two earnings streams -- one
from P&C and another from Life/Annuity business -- Moody's notes
that the common distribution force used for both businesses, and
their common customer segment, causes the fortunes of each
operation to be tied intimately to the other. Therefore, Moody's
believes that the case for diversification and narrower notching
is not as compelling as that for other companies with multi-line
operations.
The last rating action on Horace Mann occurred on April 18, 2006
when Moody's assigned a Baa3 rating to $125 million of senior
notes (due 2016) issued by the parent company.
These ratings have been affirmed with a stable outlook:
* Horace Mann Educators Corporation -- senior unsecured debt at
Baa3, prospective senior unsecured debt at (P)Baa3,
prospective subordinate debt at (P)Ba1 and prospective
preferred stock at (P)Ba2;
* Horace Mann Insurance Company -- insurance financial strength
at A3;
* Teachers Insurance Company -- insurance financial strength at
A3;
* Horace Mann Property & Casualty Insurance Co -- insurance
financial strength at A3;
* Horace Mann Life Insurance Company -- insurance financial
strength at A3;
Horace Mann Educators Corporation, headquartered in Springfield,
Illinois, is the largest multi-line insurance company focusing on
the nation's educators and their families. Its property-casualty
subsidiaries offer auto and homeowners insurance predominantly,
though not exclusively, to teachers while the life insurance
subsidiaries have an established niche position in the 403(b)
pension market, selling life insurance and pension annuities to
teachers. For the first six months of 2008, the company reported
consolidated net income of $18.8 million, revenues of
$435.5 million and shareholders' equity of $591.1 million at
June 30, 2008.
IPOFA WEST: Federal Trustees to Sell West Oaks Mall
---------------------------------------------------
Federal trustees have put on the block two large shopping malls
caught up in an allegedly fraudulent investment scheme of investor
Edward H. Okun, Kris Hudson of The Wall Street Journal reported
Wednesday.
According to the WSJ, the larger of the two malls, West Oaks Mall
in Houston, has $81.3 million in unpaid debt in the form of
commercial mortgage-backed securities. Joseph Luzinski, the
federally appointed bankruptcy trustee for West Oaks Mall, said he
hopes to sell the mall before the end of 2008. West Oaks Mall,
which was built in 1984 and renovated in 2004, is about 80%
occupied.
Ms. Hudson said that a federal grand jury indicted Mr. Okun on
fraud charges last March after his 1031 Tax Group LLP collapsed
into bankruptcy and didn't return $132 million of investors'
money.
Another Okun mall mired in bankruptcy is Central Mall in Salina,
Kan. The 21-year-old mall spans 330,000 square feet. The trustee
overseeing that mall declined to say how much debt it carries,
adding that his office is "doing [its] best" to sell the property.
About IPofA West
Based in Richmond, Virginia, IPofA West Oaks Mall, L.P., and its
two affiliates, IPofA West Oaks LeaseCo, and IPofA WOM Master
LeaseCo, L.P., own a regional shopping mall commonly known as West
Oaks Mall and located at 1000 West Oaks Mall, Houston in Harris
County, Texas. The Property contains total gross leaseable area
of 1,078,829 square feet, situated on approximately 100 acres and
is currently occupied by approximately 100 retail tenants.
The Debtors filed for Chapter 11 protection on Oct. 2, 2007
(Bankr. E.D. Va. Lead Case No. 07-336490. Richard D. Scott, Esq.,
at LeClair Ryan represents the Debtors. When the Debtors filed
for bankruptcy, they disclosed assets and debts of between
$1 million and $100 million.
Edward H. Okun, the Debtors' appointed managing representative, is
also the owner of The 1031 Tax Group LLC and its affiliates.
Headquartered in Richmond, Virginia, The 1031 Tax Group LLC --
http://www.ixg1031.com/-- is a privately held consolidated group
of qualified intermediaries created to serve real property
exchanges under Section 1031 of the Internal Revenue Code. The
company and 15 of its affiliates filed for Chapter 11 protection
on May 14, 2007 (Bankr. S.D.N.Y. Case No. 07-11447 through
07-11462). Paul Traub, Esq., Norman N. Kinel, Esq., and Steven E.
Fox, Esq., at Dreier LLP, represent the Debtors in their
restructuring efforts. Thomas J. Weber, Esq., Melanie L.
Cyganowski, Esq., and Allen G. Kadish, Esq., at Greenberg Traurig,
LLP, represent the Official Committee of Unsecured Creditors. As
of Sept. 30, 2007, the Debtors had total assets of $164,231,012
and total liabilities of $168,126,294, resulting in a total
stockholders' deficit of $3,895,282.
As disclosed in the Troubled Company Reporter on Sept. 11, 2008,
William Rochelle of Bloomberg News and Bankruptcy Law360 reported
that Gerard A. McHale, the Chapter 11 trustee for The 1031 Tax
Group LLC, lodged an adversary case against several defendants
including former chief executive officer Edward H. Okun, who is
currently incarcerated and awaiting trial after being accused of
misappropriating more than $130 million to fund a lavish
lifestyle.
According to the reports, the complaint centers on a home that Mr.
Okun allegedly bought using company funds.
IMMUNICON CORP: Court Sets Oct. 10 Administrative Claims Bar Date
-----------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
set Oct. 10, 2008, as the deadline by which any person or entity
that holds or may hold an administrative expense claim in the
Chapter 11 cases of Immunicon Corp., Corporation, and its debtor-
affiliates, must file with the Court and serve a statement: (i)
setting forth the amount of their Administrative Claims, and (ii)
providing a basis for the Administrative Claims and the
documentary evidence supporting the Administrative Claims.
To file an Administrative Claim Statement with the Bankruptcy
Court, claimants should use U.S. Mail, overnight courier, or
deliver the statement in person to:
United States Bankruptcy Court
District of Delaware
Attn: Clerk's Office
824 N. Market Street, 3rd Floor
Wilmington, DE 19801
The Administrative Claims Bar Date does not apply to:
1. Fees payable to the Office of the United States Trustee
pursuant to 28 U.S.C. Sec. 1930;
2. Administrative Claims of professionals retained in these
chapter 11 cases for payment of fees and reimbursement of
expenses;
3. Administrative Claims that have already been approved by
order of the Court, even if only approved on an interim
basis;
4. Administrative Claims that have been paid in full at any time
prior to the Administrative Claims Bar Date;
5. Administrative Claims of governmental units that are subject
to Bankruptcy Code Sec. 503(b)(1)(D);
6. Administrative Claims by employees for post-petition
wages, commissions, or benefits accruing after the Petition
Date; and
7. Administrative Claims arising under Bankruptcy Code Sec.
503(b)(9), which were subject to a bar date of Aug. 14,
2008, previously established by the Court, which has now
expired.
About Immunicon Corporation
Headquartered in Huntington Valley, Pennsylvania, Immunicon
Corporation, now known as IMMC, and its debtor-affiliates --
http://www.immunicon.com/
-- offers products and services for cell analysis and molecular
research. The Debtors filed for Chapter 11 protection on June 11,
2008 (Bankr. D. Del. Lead Case No. 08-11178). Magdalena Schardt,
Esq., Michael G. Menkowitz, Esq., at Fox Rothschild O'Brien &
Frankel, LLP, Michael Seidl, Esq., at Pachulski, Stang, Ziehl,
Young & Jones, and Sheldon K. Rennie, Esq., at Fox Rothschild LLP,
represent the Debtors as counsel. Schulte Rote & Zabel LLP is the
Official Committee of Unsecured Creditors' proposed bankruptcy
counsel.
When Immunicon Corp. filed for protection from its creditors, it
listed estimated assets of $9,231,264 and estimated debts of
$24,309,838.
IMMUNICON CORP: Court Okays Liquidating Plan Disclosure Statement
-----------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
approved on Sept. 11, 2008, Immunicon Corp. and its debtor-
affiliates' Third Amended Plan and Disclosure Statement, which was
delivered to the Court on Sept. 8, 2008. The Debtors filed the
First Amended Plan of liquidation and accompanying Disclosure
Statement on Aug. 8, 2008. On Sept. 8, 2008, the Debtors
submitted a Second Amended Plan and Disclosure Statement.
As reported in the Troubled Company Reporter on Aug. 5, 2008,
Immunicon Corp. completed the sale of substantially all of their
assets to Veridex LLC. The Asset Purchase Agreement provides for,
among other things, Veridex to pay a cash purchase price of
$31 million at closing, and to release and discharge at closing
$2,087,500 in allowed trial instrument loans, for a total purchase
price of $33,087,500.
The Third Amended Plan of Liquidation groups claims and interests
in or against the Debtors into five classes:
Type of Impaired/ Voting
Class Claim Unimpaired Status
----- ------- --------- ---------
Unclassified Administrative Unimpaired Deemed to Accept-
Claims and Vote Not
Priority Tax Solicited
Claims
Class 1 Priority Claims Unimpaired Deemed to Accept-
(Other than Vote Not
Priority Tax Solicited
Claims)
Class 2 General Impaired Entitled to Vote
Unsecured Claims
Class 3 Director & Impaired Entitled to Vote
Officer Liability
Claims
Class 4 Existing Common Impaired Entitled to Vote
Stock
Class 5 Existing Options Impaired Deemed to Reject-
and Existing Vote Not
Warrants Solicited
Class 1 claimants is unimpaired under the Plan and will receive
the full amount of their claims.
Class 2 is impaired under the Plan. The Disbursing Agent will pay
Class 2 claimants whose claims have not been satisfied or
extinguished as of the Effective Date, their Pro Rata share of the
Class 2 Available Cash plus Postpetition Interest, from Class 2
Available Cash. Although the Debtors believe Class 2 is
unimpaired and will seek at the Confirmation Hearing to prove that
Class 2 is unimpaired, the Debtors will solicit the vote of the
members of Class 2 out of an abundance of caution.
Director and Officer Liability Claims in Class 3 are contingent
upon any Director or Officer of the Debtors being held liable for
acts or omissions while serving in their official capacities for
the Debtors and such liability exceeding the amount under the
Directors and Officers Liability Policies. Any distribution from
the D&O Reserve in the maximum available from Class 3 Available
Cash up to $500,000 to Allowed Class 3 claimants shall be in full
satisfaction of such Allowed Class 3 Claims.
All Existing Common Stock under Class 4 shall be cancelled. The
Disbursing Agent shall pay to the holders of Existing Common Stock
the Pro Rata share of the Class 4 Available Cash.
Existing Options and Existing Warrants under Class 5 is impaired
under the Plan and deemed to reject the Plan. Holders shall
neither receive nor retain any value on account of such Existing
Option or Existing Warrant or its cancellation.
Continuation of the Debtors' Estates
On and afterthe Effective Date, and upon substantive
consolidation, the Estates shall continue as the Liquidating
Estate. The Liquidating Estate shall hold title to all of the
assets of the Estates, as well as any property acquired after the
Effective Date that otherwise would become property of the Estates
under Sec. 541 of the Bankruptcy Code, free and clear of all
claims, liens, encumbrances, and other interests, except as
otherwise provided in the Plan or the Asset Purchase Agreement,
dated as of June 11,2008, between the Debtors and Veridex, as
approved by the Sale Order.
Appointment of the Liquidating Trustee
The Liquidating Trustee (to be selected by the Creditors'
Committee in consultation with Johnson & Johnson Development
Corp.) shall be appointed, effective on the Effective Date,
pursuant to the terms of the Plan. The Liquidating Trustee shall
be responsible in effectuating the terms of the Plan and the
Liquidating Estate Agreement.
On the Effective Date, the Debtors shall be deemed liquidated and
dissolved as a legal entity pursuant to applicable federal and
state law, without further action by any entity.
Hearing on Examiner Motion
A hearing on the motion for the Appointment of an Examiner filed
by Riverside Contracting, LLC on Sept. 2, 2008, is currently
scheduled for Oct. 14, 2008, and the objection deadline is set for
Oct. 7, 2008.
Balloting Deadline
The Court has set Oct. 22, 2008, as the deadline by which ballots
accepting or rejecting the Plan must be received. Any objections
to the Plan Confirmation must be received in writing not later
than Oct. 22, 2008.
The Court has set the Confirmation Hearing on Oct. 31, 2008, at
4:00 p.m. Eastern Time, or such later time as the Court may set.
Any objection not timely filed and served shall be deemed waived
and deemed to constitute a consent to the Court's enty of an order
confirming the Plan.
A full-text copy of the Third Amended Plan of Liquidation is
available for free at:
http://bankrupt.com/misc/ImmuniconThirdAmendedPlan.pdf
A full-text copy of the Third Amended Disclosure Statement is
available for free at:
http://bankrupt.com/misc/ImmuniconThirdAmendedDS.pdf
About Immunicon Corporation
Headquartered in Huntington Valley, Pennsylvania, Immunicon
Corporation and its debtor-affiliates -- http://www.immunicon.com/
-- offers products and services for cell analysis and molecular
research. The Debtors filed for Chapter 11 protection on June 11,
2008 (Bankr. D. Del. Lead Case No. 08-11178). Magdalena Schardt,
Esq., Michael G. Menkowitz, Esq., at Fox Rothschild O'Brien &
Frankel, LLP, Michael Seidl, Esq., at Pachulski, Stang, Ziehl,
Young & Jones, and Sheldon K. Rennie, Esq., at Fox Rothschild LLP,
represent the Debtors as counsel. Schulte Rote & Zabel LLP is the
Official Committee of Unsecured Creditors' proposed bankrupcy
counsel.
When Immunicon Corp. filed for protection against its creditors,
it listed estimated assets of $9,231,264 and estimated debts of
$24,309,838.
INDEVUS PHARMACEUTICALS: Closes Private Placement of $105MM Notes
-----------------------------------------------------------------
Indevus Pharmaceuticals, Inc. disclosed in a Securities and
Exchange Commission filing that it has closed a private placement
to institutional investors of $105.0 million of non-recourse
notes. The Notes are secured by royalties to be paid from sales
in the United States of SANCTURA(R) and SANCTURA XR(TM) (trospium
chloride). SANCTURA and SANCTURA XR are marketed in the U.S. by
Allergan, Inc. for the treatment of overactive bladder (OAB).
"This transaction reflects the successful execution of our plan to
improve our balance sheet with non-dilutive financing," said
Michael W. Rogers, chief financial officer of Indevus. "With the
proceeds from this transaction, we expect to have sufficient cash
to retire our outstanding convertible notes, due in July of 2009,
and to fund the Company's operations into calendar 2010. In
addition, once the Notes are repaid, all royalties will revert to
Indevus, thereby providing Indevus with a significant
participation in the future royalty stream of the product.
Importantly, this transaction does not cover royalties on SANCTURA
XR that we expect to receive on sales in Europe and other
territories around the world."
The Notes will bear interest at 16% per annum payable quarterly
beginning Nov. 5, 2008. All excess royalties, after paying
interest, administrative fees, and applicable tax distributions,
will be applied to the principal of the Notes until the Notes have
been paid in full. From the proceeds of the transaction, Indevus
will establish a $10.0 million interest reserve account to cover
any potential shortfall in interest payments. After two years,
any remaining funds in the interest reserve account will be
applied to the principal balance. All other payments of principal
and interest on the Notes will be made from royalty revenues from
sales in the U.S. of SANCTURA and SANCTURA XR, as well as a
potential commercialization milestone due to the Company in
December 2013. The Notes may be redeemed at Indevus' option,
subject to the payment of a redemption premium for a certain
period of time. The Notes are not convertible into Indevus
equity, nor have they been guaranteed by Indevus. After fees,
expenses, and the interest reserve, net proceeds to Indevus will
be approximately $91.0 million.
About Indevus Pharmaceuticals
Based in Lexington, Massachusetts, Indevus Pharmaceuticals Inc.
(Nasdaq: IDEV) -- http://www.indevus.com/-- is a specialty
pharmaceutical company engaged in the acquisition, development and
commercialization of products to treat conditions in urology and
endocrinology.
At June 30, 2008, the company's balance sheet showed total assets
of $173.7 million and total liabilities of $291.8 million,
resulting in a $118.0 million stockholders' deficit.
INFOGROUP INC: Moody's Confirms Corporate Family Rating at 'Ba3'
----------------------------------------------------------------
Moody's Investors Service confirmed infoGROUP Inc.'s Ba3 corporate
family rating and the Ba2 rating on its senior secured credit
facilities. The ratings outlook is negative. The outlook
reflects margin pressure due to higher operating costs and the
recent acquisition of lower margin businesses, the prospects for
slowing growth given the weak macro-environment, increasing debt
levels over the last few quarters, and the potential for limited
cushion under one of its financial covenants.
The outlook also considers Moody's concern over the CEO transition
plan, and uncertainty over the timing and ultimate outcome of the
SEC's informal investigation into the company. However, the
rating anticipates that any potential SEC enforcement actions
would not directly target the overall firm.
Despite concerns over covenant cushion, Moody's recognizes the
company has some flexibility at its disposal to maintain
compliance. As such, Moody's anticipates that the company will
maintain adequate liquidity over the next twelve months. The
rating is supported by the company's moderate leverage,
expectations for positive free cash flow, and planned corporate
governance changes.
This action concludes a review that was initiated on March 11,
2008.
These ratings were confirmed:
-- Corporate family rating at Ba3;
-- Probability of default rating at B1;
-- $175.0 million senior secured revolving credit facility, due
2011, rated Ba2. Point estimate revised to (LGD2, 21%) from
(LGD2, 23%);
-- $172.3 million senior secured term loan due 2012, at Ba2.
Point estimate revised to (LGD2, 21%) from (LGD2, 23%).
infoGROUP's Ba3 corporate family rating reflects the company's
recurring revenue stream with a significant portion of sales being
generated by contractual, subscription or license and data
processing service agreements, the high quality of its data, its
diverse customer base, sizeable contract backlog, historically
stable industry growth trends, and significant barriers to entry.
Notwithstanding these positives, the rating is constrained by
ongoing acquisition risk, its relatively small scale, and concerns
over corporate governance, although recognizing the company's
efforts to improve this.
In terms of derivative litigation, the Special Litigation
Committee has implemented a number of remedial measures aimed at
improving corporate governance in conjunction with the settlement
agreement, which is still subject to final court approval. Many
of these measures are also designed to address the material
weakness in internal control over financial reporting that has
been identified by management.
Moody's had originally placed the ratings under review for
downgrade due to concerns that technical defaults could arise from
the company's inability to timely file its financial statements.
However, the company has now filed all required financial
statements. The company was in compliance with the terms of the
credit agreement as of June 30, 2008.
Headquartered in Omaha, Nebraska, infoGROUP Inc. is a leading
provider of business and consumer information, data processing and
database marketing services. The company reported sales of
approximately $749 million through the twelve months ended
June 30, 2008.
INTERMET CORP: Panel Taps Morris Nichols as Delaware Counsel
------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
jointly administered bankruptcy cases of Intermet Corp., and its
debtor-affiliates asks the U.S. Bankruptcy Court for the District
of Delaware for authority to retain Morris, Nichols, Arsht &
Tunnell LLP as its Delaware co-counsel.
As Delaware co-counsel, Morris Nichols will mainly advise the
Committee with respect to its rights, duties and powers in the
Debtors' cases and perform legal services that the Committee may
require in the exercise of said powers and duties.
The Committee told the Court that it sought to retain Morris
Nichols in order to operate more efficiently, given the firm's
specialized knowledge of bankruptcy law and procedures in
Delaware. The Committee also seeks to retain Wiston & Strawn LLP
as Delaware co-counsel. The Committee, Winston & Strawn, and
Morris Nichols will make every effort to avoid duplicative efforts
and to represent the Debtors' unsecured creditors in an efficient
and cost-effective manner.
As compensation for their services, Morris Nichols' professionals
currently bill:
Hourly Rate
-----------
Partners $440-$725
Associates $250-$415
Paraprofessionals $180-$195
Case Clerks $120
Robert J. Dehney, Esq., a partner in Morris Nichols, assures the
Court that the firm has any connection with the Debtors, their
significant secured and unsecured creditors or any other parties
in interest in the Debtors' cases and that the firm is a
"disinterested person" as that term is defined in Sec. 101(14) of
the Bankruptcy Code.
About Intermet Corp.
Based in Fort Worth, Texas, Intermet Corp. designs and
manufactures machine precision iron and aluminum castings for the
automotive and industrial markets. The company and its debtor-
affiliates filed for chapter 11 protection on Aug. 12, 2008
(D. Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878).
Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Michael E.
Comerford, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New
York, serve as the Debtors' counsel. James E. O'Neill, Esq.,
Laura Davis Jones, Esq. and Timothy P. Cairns, Esq., at Pachulski
Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the
Debtors' co-counsel. Kurtzman Carson Consultants LLC serves as
the Debtors' claims, notice and balloting agent. An Official
Committee of Unsecured Creditors has been formed in this case.
When the Debtors filed for protection from their creditors, they
listed assets of between $50 million and $100 million and debts of
between $100 million and $500 million.
INTERMET CORP: Wants Time to File Schedules Extended to Nov. 10
---------------------------------------------------------------
Intermet Corp., and its debtor-affiliates ask the U.S. Bankruptcy
Court for the District of Delaware to extend the deadline by which
they must file their Schedules and Statement of Financial Affairs,
pursuant to Sec. 521 of the Bankruptcy Code, Bankruptcy Rule
1007(c) and local Rule 1007-1(b), for an additional 60 days, or
until Nov. 10, 2008.
The Debtors said that due to the large number of pressing matters
present in the early stages of their cases, including substantial
resources that have been devoted to negotiating new supply
agreements with certain customers, they were unable to complete
the Schedules and Statements in the 30 days provided under Local
Rule 1007-1(b).
About Intermet Corp.
Based in Fort Worth, Texas, Intermet Corp. designs and
manufactures machine precision iron and aluminum castings for the
automotive and industrial markets. The company and its debtor-
affiliates filed for chapter 11 protection on Aug. 12, 2008
(D. Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878).
Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Michael E.
Comerford, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New
York, serve as the Debtors' counsel. James E. O'Neill, Esq.,
Laura Davis Jones, Esq. and Timothy P. Cairns, Esq., at Pachulski
Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the
Debtors' co-counsel. Kurtzman Carson Consultants LLC serves as
the Debtors' claims, notice and balloting agent. An Official
Committee of Unsecured Creditors has been formed in this case.
When the Debtors filed for protection from their creditors, they
listed assets of between $50 million and $100 million and debts of
between $100 million and $500 million.
INTERSTATE BAKERIES: Wants Plan Funding Commitments Deals Approved
------------------------------------------------------------------
Interstate Bakeries Corporation seek authority from the United
States Bankruptcy Court for the Western District of Missouri to
enter into these commitment letters for an investment to be made
in Reorganized IBC in connection with the confirmation and
consummation of a Chapter 11 plan of reorganization:
Commitment Letter Commitment Party Commitment
----------------- ---------------- ----------
equity commitment IBC Investors I, LLC, $130,000,000
an affiliate of
Ripplewood Holdings L.L.C.
revolving loan or General Electric Capital 125,000,000
ABL Facility Corporation and GE Capital
Commitment Letter Markets, Inc.
a term loan Silver Point Finance, LLC, 339,000,000
commitment letter and Monarch Master
Funding Ltd.
Interstate Bakeries Corporation received on Sept. 12, 2008, plan
funding commitments from lenders holding approximately 53% of
IBC's prepetition secured debt, that form a basis for IBC to
emerge from Chapter 11 as a stand-alone company.
J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP,
in Chicago, Illinois, relates that the Debtors undertook various
initiatives to improve operations and move goods to market more
efficiently through improvements in asset optimization, material
and labor productivity, asset productivity and route
optimization. The initiatives served, in part, as the foundation
for a five-year business plan crafted by the Debtors' management
team.
In formulating the Business Plan, the Debtors concluded that
emergence from Chapter 11 as a stand-alone entity would maximize
value for them, their estates, their creditors, and other
parties-in-interest. However, successful implementation of the
Business Plan required (i) additional concessions from the
Debtors' unionized workforce and (ii) a funding commitment to
provide junior debt or equity financing to support a rational
capital structure, Mr. Ivester notes.
According to Mr. Ivester, the Debtors undertook months of intense
negotiations with numerous interested parties to solicit an
equity investment or purchase proposal for the Debtors' Plan,
subsequent to which the Debtors reached an equity commitment
letter with the Commitment Parties, along with a related ABL
facility commitment letter and a term loan facility commitment
letter.
The Commitment Letters "set the foundation for achieving a
rational capital structure to support the Debtors' Business Plan
and, ultimately, the Debtors' emergence from bankruptcy as a
competitive, viable business once again," Mr. Ivester says.
Mr. Ivester assures the Court that the Debtors have provided
drafts of the contemplated commitment papers on a rolling basis
and on a timely manner to the Official Committee of Unsecured
Creditors, and the Official Committee of Equity Holders. On
September 14, 2008, the Debtors delivered final executed copies
of the Commitment Papers to the Committees, he notes.
Commitment Letters' Terms
A. Equity Commitment Letter
Pursuant to the Equity Commitment Letter, IBC Investors agree
to provide, as of the effective date of IBC's Plan, a total of
$130,000,000 of new capital to the Reorganized IBC.
Specifically, the Investors will (i) invest $44,200,000 in
cash in the Reorganized IBC in exchange for 17% New
Convertible Debt to be issued on the Effective Date; and (ii)
purchase $85,800,000 in New Fourth Lien Convertible Secured
Notes, subject to these conditions:
(1) the negotiation and execution by IBC Investors and IBC of
an investment agreement reflecting the terms and
conditions under the Equity Commitment Letter, not later
than September 26, 2008, and the Court's approval of the
Investment Agreement, not later than October 20;
(2) the Court's approval of the Equity Commitment Letter and
related financing documents, not later than September 30,
2008;
(3) IBC's filing of the Plan and disclosure statement in
accordance with the Equity Commitment Letter, not later
than September 30, 2008;
(4) the Court's approval of the disclosure statement not later
than November 21, 2008;
(5) the Court's confirmation of the Plan, not later than
January 15, 2008;
(6) the availability of the financing contemplated by Exit
Facility Commitment Letters;
(7) IBC's obtaining of an agreement to, and ratification of,
changes to its collective bargaining agreements with major
unions;
(8) the absence of a materially adverse change in IBC's
business, operations, property, condition or prospects;
(9) IBC's compliance with certain minimum liquidity
requirements and maximum claim limitations with respect to
certain types of claims; and
(10) the closing of the financing no later than February 9,
2009.
Upon execution of the Investment Agreement, Ripplewood
Partners II, L.P., an affiliate of IBC Investors, will execute
an equity contribution agreement, under which Ripplewood
Partners will make a capital contribution of no more than
$130,000,000 to IBC Investors in cash to the extent of the
payment obligations due from IBC Investors under the
Investment Agreement, including any obligation to pay damages
for a breach.
A full-text copy of the Investment Agreement is available for
free at http://bankrupt.com/misc/IBC_InvestmentAgreement.pdf.
The Debtors will pay certain fees to IBC Investors, pursuant
to the terms of the Equity Commitment Fee Letter, including:
* a commitment fee for IBC Investors' commitment to purchase
New Common Stock, for $2,210,000; and
* a commitment fee for IBC Investors' commitment to purchase
New Convertible Debt, for $4,290,000.
Fifty percent of the Commitment Fees are payable upon the
Court's approval of the Investment Agreement, and the
remaining 50% is payable upon the earlier of (i) the effective
date of a Plan, and (ii) certain alternative transaction
events. The Debtors will also reimburse IBC Investors' out-
of-pocket costs and expenses incurred in connection with the
transaction, not to exceed $6,000,000.
A full-text copy of the Equity Commitment Letter, and its
related Equity Commitment Fee are available for free at:
http://bankrupt.com/misc/IBC_EquityCommitmentLetter.pdf
http://bankrupt.com/misc/IBC_EquityCommitmentFeeLetter.pdf
B. ABL Facility Commitment Letter
In connection with the consummation of the Plan, GECC commits,
on customary terms and conditions, to provide a $125,000,000
working capital senior secured revolving credit facility,
subject to customary conditions for IBC to meet, including:
(1) confirmation and effective date of a Plan;
(2) funding of commitments under the Equity Commitment Letter
and the Term Loan Facility Commitment Letter;
(3) IBC's obtaining of an agreement to, and ratification of,
certain changes to its collective bargaining agreements
with major unions;
(4) minimum availability under the revolving loan contemplated
by the ABL Facility Commitment Letter; and
(5) the absence of a materially adverse change in IBC's
business, operations, property, condition or prospects.
The Debtors agree to reimburse GECC all reasonable out-of-
pocket costs and expenses incurred in connection with the
transaction.
The commitment contemplated by the ABL Facility Commitment
Letter expires on February 9, 2009.
A full-text copy of the ABL Facility Commitment Letter,
is available for free at:
http://bankrupt.com/misc/IBC_ABLFacilityCommitmentLetter.pdf
C. Term Loan Facility Commitment Letter
In connection with the consummation of the Plan, the Term Loan
Facility Commitment Parties commit to provide a $339,000,000
first lien term loan credit facility, provided that:
(1) the IBC Investors and IBC negotiate and execute the
Investment Agreement not later than September 26, 2008;
and the Court's approval of the Investment Agreement, not
later than October 20;
(2) the Court approves the Term Loan Facility Commitment
Letter not later than September 30, 2008;
(3) the Debtors file a Plan and Disclosure Statement not later
than September 30, 2008;
(4) the Court approves the disclosure statement not later than
November 21, 2008;
(5) the Court confirms the Plan not later than January 15,
2009;
(6) the financing contemplated by the Equity Commitment Letter
and the ABL Commitment Letter are available;
(7) there is no materially adverse change in IBC's business,
operations, property, condition or prospects; and
(8) the financing under the Equity Commitment and ABL
Commitment Letters close no later than February 9, 2009.
Pursuant to a Term Loan Fee Letter, the Debtors will pay the
Commitment Parties:
* a backstop fee of $16,800,000 in cash upon the earlier of
(i) the effective date of the Plan, and (ii) the
consummation by any of the Debtors on or prior to
February 6, 2010, of certain favorable transactions; and
* an incremental facility fee of $150,000.
A full-text copy of the Term Loan Facility Commitment Letter,
and its related Term Loan Fee are available for free at:
http://bankrupt.com/misc/IBC_TermLoanCommitmentLetter.pdf
http://bankrupt.com/misc/IBC_TermLoanCommitmentLetter.pdf
The Plan Term Sheet
As the investments to be made in the Reorganized IBC under the
Commitments are hinged upon the confirmation and consummation of
a reorganization plan, the Debtors have laid out their plan's
proposed terms in a Plan Term Sheet, a full-text copy of which is
available for free at:
http://bankrupt.com/misc/IBC_PlanTermSheet.pdf
The Plan Term Sheet provides that, pursuant to a confirmed plan
of reorganization, the senior secured creditors will exchange
claims arising under the Senior Credit Facility in consideration
of the issuance of new debt securities.
The Senior Secured Creditors hold aggregate claims against, and
obligations owed by, the Debtors to the JPMorgan Chase Bank, and
the Senior Secured Creditors pursuant to the Amended and Restated
Credit Agreement dated as of April 25, 2002, among IBC, Brands,
certain lenders and financial institutions, and JPMorgan Chase
Bank, N.A. as administrative agent.
More specifically, the Senior Secured Creditors will convert
their funded Prepetition Debt, pursuant to the Plan, into (i)
$147,000,000 of new third lien notes; and(ii) $85,800,000 of New
Convertible Debt convertible into New Common Stock representing
33% of the New Common Stock.
The pertinent terms in the Plan Term Sheet include, among others:
-- the Reorganized IBC's issuance of New Common Stock,
pursuant to the Equity Commitment Letter; and warrants
under the Term Loan Facility;
-- the Plan's provision for approval of a management incentive
plan for senior management and selected employees and
directors of the Reorganized IBC, which will provide
incentive compensation in the form of stock options and
restricted stock in the Reorganized IBC;
-- entry of holders of New Common Stock to a governance
agreement, the principal terms of which will provide that
the Board of Directors of the Reorganized IBC will
consist of eight directors to be elected by Investors;
-- distribution of New Third Lien Notes and New Convertible
Debt to Prepetition Debt holders;
-- discharge and extinguishment of all general unsecured
prepetition claims against the Debtors;
-- full payment of Administrative and Priority Claims; and
-- the Plan's provision for mutual releases and exculpation by
the Debtors for the benefit of the Plan Supporters, the
lenders, the senior secured creditors, and their
affiliates.
Pursuant to a Plan Support Agreement, Silver Point Capital, L.P.,
McDonnell Loan Opportunity Ltd. and Monarch Alternative Capital
L.P., commit on the terms under the Plan Term Sheet, to support a
reorganization plan for IBC.
A full-text copy of the Plan Support Agreement is available for
free at http://bankrupt.com/misc/IBC_PlanSupportAgreement.pdf
The Plan Supporters collectively hold approximately 53.8% of the
principal amount of funded obligations outstanding under the
Amended and Restated Credit Agreement dated as of April 25, 2002,
among IBC Brands, certain lenders and financial institutions, and
JPMorgan Chase Bank, N.A. as administrative agent.
The Debtors also ask the Court to grant superpriority
administrative status to these Commitment fees and expenses,
pursuant to Sections 105(a), 363(b), 364(c)(1), 503(b) and 507(a)
of the Bankruptcy Code, whether or not the Investment and the
Transactions under the Equity Commitment Letter or the Term Loan
Facility Commitment Letter are consummated:
-- the Investors' Commitment Fees, the Investors Transaction
Expenses and Backstop Fee under the Equity Commitment
Letter; and
-- the Term Loan Facility Commitment Fees and Transaction
Expenses.
IBC's disclosure on Form 8-K with respect to the Commitment
Letters, is available for free at:
http://sec.gov/Archives/edgar/data/829499/000095013708011661/c35
541e8vk.htm
The Court will convene a hearing to consider the Debtors' request
on October 2, 2008. Any objection to the request must be filed
by September 26.
Teamsters Fully Support Steps to Save IBC
"Our plan with Ripplewood is the most viable route that
Interstate Bakeries can take to emerge from the cloud of
bankruptcy and become a strong stand-alone company once again,"
said Jim Hoffa, Teamsters General President, in a statement.
In these uncertain economic times, Mr. Hoffa said, the fact that
a company employing more than 9,000 Teamster members now has the
opportunity to emerge from bankruptcy, is great news.
According to the Teamsters' press release, IBC must draft and
present a plan of reorganization that needs to be approved by the
court, affected by creditors, and ultimately confirmed by the
court. Under this scenario, IBC could emerge from its four-year
bankruptcy in early 2009.
Mr. Hoffa said details will be disseminated to Teamster local
unions and members over the next several weeks. Teamster members
will need to ratify the terms of the contract with the new IBC
for the process to move forward.
"We believe this plan will preserve the greatest number of jobs
for our members," said Richard Volpe, Director of the Teamsters
Bakery and Laundry Conference. "We are appreciative of
Ripplewood's involvement and persistence to get us to this
position."
About IBC
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh-baked
bread and sweet goods, under various national brand names,
including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and
Drake's(R). Currently, IBC employs more than 25,000 people and
operates 45 bakeries, as well as approximately 800 distribution
centers and approximately 800 bakery outlets throughout the
country.
The company and eight of its subsidiaries and affiliates filed for
chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6% senior subordinated convertible notes due Aug. 15, 2014) in
total debts.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 5, 2007. Their exclusive period to file a chapter 11 plan
expired on November 8, 2007. On Jan. 25, 2008, the Debtors filed
their First Amended Plan and Disclosure Statement. On Jan. 30,
2008, the Debtors received court approval of the first amended
Disclosure Statement. IBC did not received any qualifying
alternative proposals for funding its plan of reorganization in
accordance with the court-approved alternative proposal
procedures. As a result, no auction was held on Jan. 22, 2008, as
would have been required under those procedures. The deadline for
submission of alternative proposals was Jan. 15, 2008. A new plan
filing deadline was set for June 30, 2008; no plan was filed as of
that date.
(Interstate Bakeries Bankruptcy News; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
INTERSTATE BAKERIES: Has $143MM Net Loss in Year Ended May 2008
---------------------------------------------------------------
INTERSTATE BAKERIES CORPORATION
Consolidated Balance Sheet
As of May 31, 2008
ASSETS
Current
Assets:
Cash $25,071,000
Restricted Cash 21,052,000
Accounts receivable 136,627,000
Inventories 61,837,000
Assets held for sale 17,562,000
Other current assets 43,995,000
--------------
Total current assets 306,144,000
Property and equipment, net 464,455,000
Intangible assets 158,285,000
Other assets 29,473,000
--------------
Total Assets $958,357,000
==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities not subject to compromise
Current Liabilities
Prepetition Debt $2,759,000
Postpetition Debt 63,358,000
Accounts payable 108,288,000
Accrued expenses 205,411,000
--------------
Total current liabilities 379,816,000
Other liabilities 219,288,000
Deferred income taxes 69,475,000
--------------
Total liabilities not subject to compromise 668,579,000
Liabilities subject to compromise 751,492,000
Stockholders' deficit
Preferred stock, $0.01 par value,
1,000,000 shares authorized, none issued 0
Common stock, $0.01 par value,
120,000,000 shares authorized,
81,579,000 shares issued, 45,202,000
and 45,249,000 shares outstanding 816,000
Additional paid-in capital 584,485,000
Accumulated deficit (403,038,000)
Treasury stock, 36,377,000 and
36,330 shares at cost, respectively (678,740,000)
Accumulated other comprehensive income 34,763,000
--------------
Total stockholders' deficit (461,714,000)
--------------
Total liabilities and stockholders' deficit $958,357,000
==============
INTERSTATE BAKERIES CORPORATION
Consolidated Statement of Operations
Fifty-Two Weeks Ended May 31, 2008
NET SALES $2,798,337,000
Cost of products sold, exclusive of items below 1,440,609,000
Selling, delivery and administrative expenses 1,334,432,000
Restructuring charges (credits) 5,674,000
Depreciation and amortization 67,226,000
Loss on sale or abandonment of assets 4,495,000
Property and equipment impairment 10,473,000
--------------
2,862,909,000
Operating Loss (64,572,000)
Other (income) expense
Interest expense, excluding unrecorded
contractual interest expense 46,374,000
Reorganization charges, net 42,719,000
Other (income) expense (17,000)
--------------
89,076,000
Loss before income taxes (153,648,000)
Provision (benefit) for income taxes (9,964,000)
--------------
NET LOSS ($143,684,000)
==============
INTERSTATE BAKERIES CORPORATION
Consolidated Statement of Cash Flows
Fifty-Two Weeks Ended May 31, 2008
Operating Activities:
Net loss ($143,684,000)
Depreciation and amortization 67,226,000
Provision (benefit) for deferred income taxes (3,031,000)
Reorganization charges, net 42,719,000
Cash reorganization items (36,549,000)
Non-cash bankruptcy-related charges 2,847,000
Non-cash interest expense -- deferred debt fees 3,466,000
Non-cash restricted stock compensation (benefit) (37,000)
Non-cash cumulative effect of accounting change 0
(Gain) loss on sale, write-down or
abandonment of assets 9,836,000
Changes in operating assets and liabilities:
Accounts receivable 15,844,000
Inventories 3,845,000
Other current assets 1,335,000
Accounts payable and accrued expenses (33,661,000)
Long-term portion of self-insurance reserves 2,951,000
Other (9,241,000)
--------------
Net cash used in operating activities ($76,134,000)
Investing Activities:
Purchases of property and equipment (21,447,000)
Proceeds from sale of assets 11,324,000
Restricted cash deposit (5,550,000)
Restricted cash release 0
Acquisition and development of software assets (895,000)
Other 35,000
--------------
Net cash provided by (used in)
investing activities (16,533,000)
Financing Activities:
Reduction of long-term debt (882,000)
Increase in prepetition debt 2,490,000
Reduction of postpetition debt (4,277,000)
Increase in postpetition debt 67,635,000
Stock option exercise proceeds 0
Acquisition of treasury stock 0
Debt fees (14,440,000)
--------------
Net cash provided by (used in)
financing activities 50,526,000
Net decrease in cash (42,141,000)
Cash at beginning of period 67,212,000
--------------
CASH AT END OF PERIOD $25,071,000
==============
A full-text copy of Interstate Bakeries Corporation's annual
report on Form 10-K for the fiscal year ended May 31, 2008, is
available for free at:
http://ResearchArchives.com/t/s?3262
About IBC
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh-baked
bread and sweet goods, under various national brand names,
including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and
Drake's(R). Currently, IBC employs more than 25,000 people and
operates 45 bakeries, as well as approximately 800 distribution
centers and approximately 800 bakery outlets throughout the
country.
The company and eight of its subsidiaries and affiliates filed for
chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6% senior subordinated convertible notes due Aug. 15, 2014) in
total debts.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 5, 2007. Their exclusive period to file a chapter 11 plan
expired on November 8, 2007. On Jan. 25, 2008, the Debtors filed
their First Amended Plan and Disclosure Statement. On Jan. 30,
2008, the Debtors received court approval of the first amended
Disclosure Statement. IBC did not received any qualifying
alternative proposals for funding its plan of reorganization in
accordance with the court-approved alternative proposal
procedures. As a result, no auction was held on Jan. 22, 2008, as
would have been required under those procedures. The deadline for
submission of alternative proposals was Jan. 15, 2008. A new plan
filing deadline was set for June 30, 2008; no plan was filed as of
that date.
(Interstate Bakeries Bankruptcy News; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
INVESCO NAVIGATOR: Fitch Removes 'CCC' Rated Notes from Neg. Watch
------------------------------------------------------------------
Fitch Ratings has removed from Rating Watch Negative the income
notes issued by INVESCO Navigator Fund (Offshore), Ltd. and the
units of INVESCO Navigator Fund (Onshore), LLC. This rating
action is effective immediately:
-- $125,000,000 securities remain at 'CCC'.
The rating actions reflect the application of methodology outlined
under Fitch's updated Market Value Structures criteria, published
April 18, 2008. In addition, the ratings consider the sustained
market value decline in the secondary leveraged loan market that
has increased the vulnerability of these classes to a
deteriorating credit environment. Fitch continues to be concerned
about pricing volatility in leveraged loan secondary markets.
While the distance-to-trigger metric relative to the advance rate
ranges published in Fitch's updated MVS criteria indicates a 'B'
rating, the securities currently have negative net asset value
coverage and negative par coverage based on Fitch's calculations.
Additionally, from a cash flow perspective, their probability of
default is viewed to be consistent with a 'CCC' rating. The DTT
is now below 7% according to Fitch's most recent calculation, with
the portfolio categorized into 76% Category 2 assets, 20% Category
3 assets, and 4% Category 4 assets.
INVESCO Navigator Fund is a total rate of return collateralized
loan obligation with a market value termination trigger. The
transaction closed on Nov. 17, 2005 and is managed by INVESCO
Senior Secured Management, Inc.
The rating of the securities addresses the likelihood of the
return of the original investment by the 10th anniversary of the
issuance.
-- 'Fitch Update: Application of Revised Market Value Structure
Criteria to TRR CLOs' (May 15, 2008)
-- 'Fitch Downgrades 24 Classes from 9 TRR CLOs on Secondary
Loan Price Declines (Feb. 20, 2008)
-- 'Fitch Downgrades 28 Classes from 10 TRR CLOs (Feb. 12, 2008)
JEFFERSON COUNTY: Bond Insurers Seek Receiver for Sewer System
--------------------------------------------------------------
Syncora Guarantee Inc., a wholly owned subsidiary of Syncora
Holdings Ltd., Financial Guaranty Insurance Company, and The Bank
of New York Mellon, as Trustee for $3.2 billion of Jefferson
County Sewer Revenue Warrants, acting at the direction of the Bond
Insurers, filed a suit against Jefferson County Alabama and the
County's Commissioners. The Bond Insurers insure approximately
$2.8 billion in Jefferson County Sewer Revenue Warrants.
The suit, which was filed in the United States District Court for
the Northern District of Alabama, includes a request to the Court
to appoint an independent and qualified receiver to: manage the
Jefferson County Sewer System; consider and implement any
appropriate rate modifications and other sources of revenue;
ensure compliance with applicable laws; assist in achieving an
appropriate financial resolution; and pursue any bona fide claims.
"After many months of efforts by the Bond Insurers, other
creditors and interested parties to work with Jefferson County to
resolve this financial crisis, we are disappointed to have to take
this action," commented Edward Hubbard, President of Syncora
Guarantee Inc. "However, the County Commission's failure to meet
its obligations has left us with no other alternative. We are
hopeful that the appointment of an independent party will provide
a solution that fairly accommodates the needs of the County, its
citizens and its creditors."
"Despite the current state of affairs, we believe the County still
has an opportunity available to move forward and achieve a
mutually satisfactory outcome for all parties. If the County is
willing to take this path, we look forward to working together in
a constructive manner," said Hubbard.
As reported by the Troubled Company Reporter on Sept. 2, an
agreement with creditors that provided the county time to work
toward a solution expired August 29, 2008. Creditors of Jefferson
County agreed not to take any legal action against the county for
30 days in relation to its $3.2 billion sewer debt. As reported
by the TCR on Sep 16., 2008, Jefferson County commissioners
rejected a proposal from banks and bond insurers to expand sales
and business taxes to help repay $3.2 billion of sewer debt.
Syncora Guarantee Inc. is a wholly owned subsidiary of Syncora
Holdings Ltd. Financial Guaranty Insurance Company is a wholly
owned subsidiary of FGIC Corporation.
About Jefferson County
Jefferson County has its seat in Birmingham. It has a population
of 660,000. It ended its 2006 fiscal year with a $42.6 million
general fund balance, according to Standard & Poor's. The
Birmingham firm of Bradley Arant Rose & White, represents
Jefferson County. Porter, White & Co. in Birmingham is the
county's financial adviser. A bankruptcy by Jefferson County
stands to be the largest municipal bankruptcy in U.S. history. It
could beat the record of $1.7 billion, set by Orange County,
California in 1994. Jefferson County has $4.6 billion in overall
debt, including $3.2 billion in sewer bonds.
* * *
As reported by the Troubled Company Reporter on June 10, 2008,
Standard & Poor's Ratings Services' ratings on Jefferson County,
Ala.'s series 1997A, series 2001A, series 2003 B-1-A through 2003
B-1-E, and series 2003 C-1 through 2003 C-10 sewer system revenue
bonds ('CCC' underlying rating [SPUR]) remain on CreditWatch with
developing implications.
As reported by the TCR on July 22, 2008, Moody's Investors
Service's continues to review the Caa3 rating on Jefferson
County's (AL) $3.2 billion in outstanding sewer revenue
warrants for possible downgrade.
JEFFERSON COUNTY: S&P Cuts Revenue Bonds Ratings to C from CCC
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating three
notches on Jefferson County, Alabama's series 1997A, 2001A, and
2003 B-1-A through series 2003 B-1-E, as well as its series 2003
C-1 through 2003 C-10 sewer system revenue bonds to 'C' from
'CCC'. At the same time, S&P revised the CreditWatch implications
on the bonds to negative from developing.
"The downgrade reflects the sewer system's use of its debt service
reserve for debt service payments beginning in September 2008 and
increased uncertainty of its continued timely payment on the
obligations," said Standard & Poor's credit analyst Sussan Corson.
The majority of the sewer system debt reserves are held as surety
bonds, although the system holds a cash-funded debt service
reserve for the 1997A bonds. The trustee calculates the available
cash reserves will cover all but $100,000 of debt service payments
due on the auction-rate bonds through the month of September.
Upon depletion of the cash-funded debt service reserves, the
trustee would request draws on the surety policies to cover
additional debt service on the sewer revenue bonds.
On April 1, Standard & Poor's lowered its underlying rating on
Jefferson County's variable rate demand series 2003 B-2 through
2003 B-7 sewer revenue refunding warrants to 'D' from 'CCC' due to
the sewer system's failure to make a principal payment on the bank
warrants when due on April 1, in accordance with the terms of the
standby warrant purchase agreement.
Increased interest rates in conjunction with accelerated principal
repayments under the standby warrant purchase agreements,
termination events of the swap agreements, and the system's very
high debt burden have placed significant financial pressure on the
county's sewer system. The system has not raised sewer rates to
offset increased costs and operating cash has declined
significantly in the past six months. Interest on the auction-
rate sewer revenue obligations are due on a near-daily basis
throughout the month while interest on the variable rate demand
warrants are due at the first of each month. Regularly scheduled
principal payments are due February 1 of each year.
In the event the system fails to make a principal or interest
payment on the bonds when due, S&P would lower the SPURs on the
bonds to 'D'.
JPMORGAN AUTO: Moody's Assigns '(P)Ba2' Rating on 2009-A Certs.
---------------------------------------------------------------
Moody's Investors Service has assigned provisional ratings to the
securities to be issued by JPMorgan Auto Receivables Trust 2008-A.
The complete rating actions are:
Issuer: JPMorgan Auto Receivables Trust 2008-A
-- A-1 Notes, rated (P)Prime-1
-- A-2 Notes, rated (P)Aaa
-- A-3 Notes, rated (P)Aaa
-- A-4 Notes, rated (P)Aaa
-- B Notes, rated (P)Aa1
-- C Notes, rated (P)A1
-- D Notes, rated (P)Baa2
-- Certificates, rated (P)Ba2
Moody's said the ratings are based on the quality of the
underlying auto loans and their expected performance; credit
enhancement provided by subordination, overcollateralization and
available excess spread; the strength of the transaction structure
which includes the subordination of servicing fee and a sequential
pay trigger that, if breached, would cause the cash flow waterfall
to become sequential pay; and the experience of JPMorgan Chase
Bank, N.A. as master servicer.
The Assumption Volatility Score for this transaction is Low and in
accord with the relatively low level of credit uncertainty in the
prototypical prime auto transaction.
Moody's Assumption Volatility Scores measure a transaction's
exposure to factors that contribute to uncertainty in estimating
credit risk and could give rise to ratings volatility. V Scores
rank transactions on a five point scale by the potential for
significant rating changes owing to uncertainty around the
assumptions and the related modeling that underlie the ratings.
The V Score applies to the entirety of a transaction and is
derived from an analysis of the sector's historical performance
and data adequacy, the issuer's historical performance and data
adequacy, the transaction's complexity and market value
sensitivity, and the level of transaction governance.
Moody's Loss Sensitivities measure the number of notches that the
rating on a structured finance security would likely move downward
if the loss expectations assumed for the transaction's underlying
collateral pool were presumed to be substantially higher than
those actually used to rate the transaction. Loss Sensitivities
assume that the deal has not aged. They are not intended to
measure how the rating of a security might migrate over time, but
rather how the initial rating would change if the loss
distribution for the underlying asset pool changed significantly
in a negative direction from what was used to rate the
transaction.
Were Moody's to assume a substantially higher expected loss for
this transaction -- equivalent to a one-in-twenty negative
scenario or 95th percentile loss on the present distribution - the
ratings indicated by our rating model would shift down as:
-- A-2 Notes, 2 notches
-- A-3 Notes, 2 notches
-- A-4 Notes, 2 notches
-- B Notes, 10 notches
-- C Notes, 11 notches
-- D Notes, more than 7 notches (rating would be lower than B3)
-- Certificates, more than 4 notches (rating would be lower
than B3)
The indicated rating shifts are based upon, among other things, an
original expected loss of 3.00% and a 95th percentile loss of
6.25%.
KINGSWAY FINANCIAL: Names Glenn Penny as Claims Vice President
--------------------------------------------------------------
Kingsway Financial Services Inc. disclosed in a Securities and
Exchange Commission filing that it has appointed Glenn Penny as
Vice President, Claims of Kingsway Financial Services Inc. In
this newly created role, Glenn will be responsible for the
oversight of the claims functions, including building claims
capabilities and common practices throughout the Kingsway
Group.
Mr. Penny is an insurance executive with 24 years of claims
experience. He was previously a senior claims executive with the
Canadian operations of the largest non-standard automobile
insurance company in North America and was most recently Vice
President, Claims of a major Canadian personal and other specialty
lines insurer.
Throughout his career, Mr. Penny has demonstrated an ability to
build high performance claims teams, including start up operations
and the implementation of service standards and performance
metrics for claims departments. One of Mr. Penny's
responsibilities will be to introduce new and innovative claims
services and cost containment initiatives to the group,
particularly in the area of vendor and litigation management. He
is experienced in developing and implementing claims systems and
software tools. Together these elements will ensure that Kingsway
leverages information and experience across the organization to
improve its overall claims execution and performance.
"We are excited to have someone of Glenn's capabilities and
experience join the Kingsway Group", said Shaun Jackson, President
and CEO. "This newly created role is part of our strategic plan
to increase oversight and provide best practices to all of our
insurance companies throughout the group. The dollar spend on
claims settlement is the most significant cost for the Kingsway
and Glenn's experience and knowledge in this area will assist us
in ensuring the best and most cost efficient utilization of our
resources."
"Kingsway's goal is to maintain strong regional claims operations
that are tailored to the local markets but also to provide
centralized procurement, sourcing and training initiatives that
will ensure Kingsway's future operational direction is aligned
with its strategic plans to continue to reduce costs and improve
the profitability of the Company on behalf of our shareholders."
About Kingsway Financial
Headquartered in Ontario, Canada, Kingsway Financial Services Inc.
(TSX:KFS, NYSE:KFS) - http://www.kingsway-financial.com/-- is
a holding company that operates through its wholly owned
subsidiaries in the property and casualty insurance business. The
company's principal lines of business are trucking and non-
standard automobile insurance. KFSI also writes motorcycle
insurance in Canada and writes taxi cab insurance in Chicago,
Illinois and Las Vegas, Nevada.
* * *
As reported in the Troubled company Reporter on Dec. 21, 2007,
Standard & Poor's Ratings Services lowered its senior unsecured
and long-term counterparty credit ratings on Kingsway Financial
Services Inc. to 'BB+' from 'BBB-'. S&P also lowered the debt
ratings on Kingsway's subsidiaries to 'BB+' from 'BBB-'. The
outlook is negative.
LANDRY'S RESTAURANTS: S&P to Holds 'B' Rating on Tillman Offer
--------------------------------------------------------------
Standard & Poor's Ratings Services announced that while the
ratings on Houston-based Landry's Restaurants Inc. will remain on
CreditWatch with negative implications, where they were placed on
Jan. 28, 2008, S&P would affirm the 'B' corporate credit rating on
Landry's in the event that Tilman Fertitta's offer to purchase
Landry's outstanding common stock at $21 a share is consummated.
S&P would also affirm the ratings, including the 'B' corporate
credit rating, on the company's unrestricted subsidiary, Las
Vegas-based-Golden Nugget Inc. The outlook on both entities would
be stable.
"These potential rating actions assume," said Standard & Poor's
credit analyst Charles Pinson-Rose, "that Landry's current
outstanding credit agreement and unsecured notes will be
refinanced as part of the transaction." Another assumption is
that the company would obtain financing through a $300 million
senior secured credit facility, consisting of a $250 million term
loan and a $50 million revolving credit facility, and $315 million
of senior secured second-lien notes. "We assumed that there would
not be borrowings on the revolver at closing," added Mr. Pinson-
Rose.
"The current capital structure at Golden Nugget will not likely be
affected by the transaction. The rating on the company's term
loan would be 'BB-', two notches above the corporate credit rating
on Landry's, with a recovery rating of '1', which indicates our
expectation of very high (90%-100%) recovery in the event of
default. The rating on the second-lien notes would be 'B', the
same as the corporate credit rating, with a '4' recovery rating,
which indicates our expectation of average (30%-50%) recovery in
the event of default," S&P says.
LAVEREN JENKINS: Case Summary & Two Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Laveren L. Jenkins
14405 Woodmore Oaks Court
Bowie, MD 20721
Bankruptcy Case No.: 08-21864
Chapter 11 Petition Date: September 15, 2008
Court: District of Maryland (Greenbelt)
Judge: Thomas J. Catliota
Debtor's Counsel: Bennie R. Brooks, Esq.
Attorney at Law
bbrookslaw@aol.com
8201 Corporate Drive, Suite 260
Landover, MD 20785
Tel: (301) 731-4160
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
Debtor's list of its Two Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
America's Servicing Company 1st Deed of Trust $320,000
P.O. Box 10328 Value: $215,000
Des Moines IA 50306-0328 Net Unsecured: $105,000
GMAC Mortgage 1st Deed of Trust $273,000
P.O. Box 9001719 Value: $215,000
Louisville, KY 40290-1719 Net Unsecured: $58,000
LCM VII: Fitch Downgrades Seven Notes Ratings; Removes Neg. Watch
-----------------------------------------------------------------
Fitch Ratings has downgraded and removed from Rating Watch
Negative seven classes of notes issued by LCM VII, Ltd. These
rating actions are effective immediately:
-- $126,000,000 class A-1 revolving notes to 'BB' from 'AA';
-- $250,000,000 class A-2 term notes to 'BB' from 'AA';
-- $20,000,000 class B notes to 'B' from 'A';
-- $42,763,000 class C notes to 'B' from 'BBB';
-- $29,040,000 class D notes to 'CCC' from 'BB';
-- $937,000 class E-1 notes to 'CC' from 'B';
-- $937,000 class E-2 notes to 'CC' from 'B'.
The rating actions reflect the application of methodology outlined
under Fitch's updated Market Value Structures criteria, published
April 18, 2008. In addition, the ratings consider the sustained
market value decline in the secondary leveraged loan market that
has increased the vulnerability of these classes to a
deteriorating credit environment. Fitch continues to be concerned
about pricing volatility in leveraged loan secondary markets.
The downgrade of class A-1 and A-2 notes to 'BB' reflects its
distance-to-trigger metric relative to the advance rate ranges
published in Fitch's updated MVS criteria. The DTT, which assumes
maximum leverage, is now under 7% according to Fitch's most recent
calculation, with the portfolio categorized into 76% Category 2
assets, 19% Category 3 assets, and 5% Category 4 assets. The Fitch
DTT may therefore differ from the trustee's calculation which is
currently 7.5%. The rating of the class A notes also benefits
from an additional cushion above the transaction's liquidation
trigger coupled with the additional subordination provided by the
other classes.
The downgrade of class B and class C notes to 'B' reflects their
DTT levels. While the class B notes have additional coverage
levels as compared to the class C notes, and are above the
transaction's liquidation trigger, this additional protection is
nominal and both classes are therefore viewed to have a very
similar likelihood of default.
The downgrade of class D notes to 'CCC' reflects their significant
negative net asset value coverage level and negative par coverage
level. This class is still receiving interest and has the
potential to receive principal payments.
The downgrade of class E notes to 'CC' reflects their significant
negative net asset value coverage level and significant negative
par coverage levels. These classes are not receiving interest
payments and may not receive any additional payments over the life
of the transaction.
LCM VII is a cash flow collateralized loan obligation with a
market value termination trigger. The transaction closed on
Aug. 2, 2007 and is managed by Lyon Capital Management LLC.
The ratings on the class A-1, A-2, B, C and D notes address the
timely receipt of scheduled interest payments and the ultimate
receipt of principal as per the transaction's governing documents.
The ratings on the class E-1 and E-2 notes address only the
ultimate repayment of principal as per the transaction's governing
documents.
LEHMAN BROTHERS: Gets Interim OK to Borrow $200MM from Barclays
---------------------------------------------------------------
Judge James M. Peck of the U.S. Bankruptcy Court for the Southern
District of New York granted Lehman Brothers Holdings Inc. interim
authority to immediately borrow up to $200,000,000 from Barclays
Bank Plc and use those borrowed funds as outlined in a budget to
which Lehman and Barclays have agreed. Judge Peck held that the
the terms and conditions of the parties' DIP Credit Agreement are
fair and reasonable under the circumstances, and that Lehman
Brothers' business would be irreparably harmed if the DIP Credit
Agreement were not approved.
Judge Peck will convene a Final DIP Financing Hearing on Oct. 2,
2008, in Manhattan. Objections, if any, must be filed and served
no later than 4:00 p.m. on Sept. 25, 2008.
Lehman Brothers' ability to maintain business relationships with
its customers, pay its employees, and satisfy other critical
operating expenses is essential to its ability to survive,
Richard P. Krasnow, Esq., at Weil, Gotshal & Manges LLP, told
Judge Peck at a hearing Sept. 17 in Manhattan, and there is
little or no cash available to the Debtor. In light of the
events of the last week, Mr. Krasnow said, Lehman no longer has
liquidity to fund its operations. Without immediate access to a
source of fresh working capital, Mr. Krasnow warned, Lehman's
operations may literally shut down and result in irreparable harm
to its business and substantial deterioration of the value of its
enterprise to the detriment of its estate, its thousands of
employees, its creditors, and its stockholders.
Lehman Brothers is seeking to borrow up to $450,000,000 under a
Senior Secured Superpriority Debtor-in-Possession Credit Facility
arranged by Barclays. The Debtor will repay all amounts borrowed
from Barclays from the proceeds of the sale of Lehman Brothers
Inc. to Barclays Capital Inc. (or any higher bidder) for $1.7
billion. The terms of the DIP loan are:
Borrower: Lehman Brothers Holdings Inc.
DIP Lenders: Barclays Bank plc and any other lenders who become
a party to the DIP Credit Agreement.
Loan Amount: $450,000,000, in the form of:
-- a $250,000,000 Term Loan to be made available
immediately following the entry of an Interim
DIP Financing Order and
-- a $200,000,000 Revolving Loan to be made
available to the Debtor upon entry of a
Final DIP Financing Order.
Mandatory
Prepayments: Proceeds from the Sale of Lehman Brothers Inc. and
certain other assets must be used to pay off the
DIP Credit Facility.
All cash in excess of $5,000,000 at the close of
any business day must be used to pay down any
borrowings under the Revolving Loan Facility.
Maturity
Date: The earliest of:
(A) March __, 2009;
(B) the date on which the LBI/Barclays Sale
Agreement terminates; and
(C) consummation of a sale of Neuberger Berman
Holdings LLC;
Interest: At Barclays option:
(1) for the first 60 days:
-- LIBOR plus 6.0% per annum;
-- the Prime Rate plus 5.0% per annum; or
-- the Federal Funds Rate plus 5.5%; and
(2) thereafter:
-- LIBOR plus 7.5% per annum;
-- the Prime Rate plus 6.5%; or
-- the Federal Funds Rate plus 7.0%.
all subject to a 3.5% LIBOR floor, a 4.5% Prime
Rate floor, and a 4.0% Federal Funds Rate floor.
In the event of a default, the Interest Rate
increases by 2.0%.
Fees: Lehman Brothers will pay Barclays an Unused Line
Fee equal to 1% per year on every dollar is doesn't
borrow under the DIP Financing Facility.
Lehman Brothers will pay Barclays additional fees
described in a non-public Fee Letter dated
September 17, 2008.
Collateral: All loans will be secured by a first priority lien
in all of Lehman Brothers' equity interests in
Neuberger Berman.
Carve-Out: Barclays liens and superpriority administrative
expense claims are subject to a $6,000,000 Carve-
Out for payment of fees and expenses owed to the
professionals representing Lehman Brothers and its
Creditors' Committee, the Court Clerk and the U.S.
Trustee in the event of a default.
Use of
Proceeds: The proceeds of the DIP Credit Facility will be
used by the Debtor to fund professionals fees,
personnel expenses and other operating expenses in
accordance with a [non-public] budget to be agreed
upon with the DIP Lenders.
Conditions
& Covenants: Lehman Brothers is required to appoint:
Brian Marsal
ALVARAZ & MARSAL, LLC
600 Lexington Avenue, 6th Floor
New York, NY 10022
Telephone (212) 759-4433
Fax (212) 759-5532
as its Chief Restructuring Officer on terms
reasonably acceptable to Barclays, and Mr. Marsal
must report directly to Lehman's Board of
Directors.
Lehman Brothers is required to hire an investment
banker or other financial advisor satisfactory to
Barclays.
Barclays has the right to appoint and retain its
own financial advisor at Lehman Brothers' expense.
Ian T. Lowitt, Lehman's chief financial officer, controller,
and executive vice president, told Judge Peck that he believes
the terms of the Barclays Loan Facility are significantly more
favorable than any terms that would be offered by other lenders.
Mr. Lowitt says this arises largely from the fact that Barclays
is the proposed purchaser of Lehman Brothers Inc. Mr. Lowitt is
convinced that the DIP Credit Facility reflects the exercise of
the Debtor's sound business judgment. Mr. Lowitt assured Judge
Peck that the Debtor negotiated with the DIP Lenders at arms-
length, in good faith and pursuant to its sound business
judgment.
Subject only to the Carve-Out, all amounts Lehman borrows from
Barclays will:
-- constitute, under section 364(c)(1) of the Bankruptcy
Code, allowed superpriority administrative expense claims
against the Debtor having priority over all administrative
expenses of the kind specified in, or ordered pursuant to,
any provision of the Bankruptcy Code, including, without
limitation, those specified in, or ordered pursuant to,
sections 105, 326, 328, 330, 503(b), 506(c), 507(a),
507(b), 546(c), 726 and 1114 of the Bankruptcy Code, or
otherwise, whether incurred in the Chapter 11 Case or any
conversion thereof to a case under chapter 7 of the
Bankruptcy Code or any other related proceeding; and
-- be secured, pursuant to section 364(c)(2) of the
Bankruptcy Code, by valid, binding, enforceable, first
priority and perfected Postpetition Liens in (a) all
of Lehman's equity interests in Neuberger Berman Holdings
LLC.
Judge Peck instructs the Debtor to deliver a copy of the Fee
Letter to the Court, the Creditors' Committee and the U.S.
Trustee, and directs those parties to keep that document secret.
Barclays is represented by:
Lisa Schweitzer, Esq.
Lindsee Granfield, Esq.
CLEARY GOTTLIEB STEEN & HAMILTON LLP
One Liberty Plaza
New York, NY 10006
A full-text copy of the 100-page Credit Agreement is available at
http://bankrupt.com/misc/LehmanBarclaysDIP.pdfat no charge.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16
(Case No. 08-13600).
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
(Lehman Brothers Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: Court Agrees to Rush-Sale, Hearing Today
---------------------------------------------------------
Judge James M. Peck approved Lehman Brothers' proposed procedures
in connection with the $1.7 billion sale of certain of its assets
to Barclays Bank plc.
A hearing to consider approval of the proposed sale is scheduled
for Sept. 19, at 4:00 p.m. in Courtroom 601. Judge Peck has said
he will entertain all objections lodged before the conclusion of
the sale hearing, and oral objections will be considered at the
hearing. The sale hearing will not be adjourned or canceled
without prior consent of Barclays, the Securities and Exchange
Commission, the Commodity Futures Trading Commission, and the
Federal Reserve Bank of New York.
"The sale . . . is critical to the stabilization of value,"
Jacqueline Marcus, Esq., at Weil, Gotshal & Manges LLP, told
Judge Peck. The value of the business declines every day it is
"subject to the vagaries and vicissitudes of the marketplace and
the impact of bankruptcy."
"Time is of the essence," Ms. Marcus stresses, "because Lehman
Brothers' business is dependent upon its ability to assure its
clients and customers of its financial and operational integrity,
and Lehman can't do that today."
Attorneys for creditors expressed concern over how quickly Lehman
Brothers is pushing to close the sale and that it may be leaving
assets behind in the broker-dealer unit that Barclays is buying,
according to a report by Bloomberg.
Proposed counsel for the Official Committee of Unsecured
Creditors, Luc Despins, Esq., at Milbank Tweed Hadley & McCloy
LLP, said Lehman Brothers is leaving about $1,300,000,000 in cash
and equivalents with the unit. Mr. Despins, however, said that a
provision in the bidding rules preventing the company from
seeking bids to compete with Barclays has been eliminated.
Daniel Goldin, Esq., at Akin Gump Strauss Hauer & Feld LLP, who
represents some bondholders, said creditors needed to know who
else Lehman Brothers has talked to about a sale ahead of its
bankruptcy filing. He asked for more time beyond a sale hearing
to allow the creditors' financial advisers to talk with Lehman
Brothers' financial adviser Lazard.
Harvey Miller Esq., at Weil, Gotshal & Manges LLP, representing
Lehman Brothers, said the company does not have enough money to
operate and that its deal with Barclays needs to close
immediately or there won't be anything to sell.
Salient Terms of Deal
Under the terms of a 47-page Asset Purchase Agreement dated
September 16, 2008 -- a full-text copy of which is available at
http://bankrupt.com/BarclaysAPA.pdfat no charge -- Lehman
Brothers Holdings Inc., non-debtor Lehman Brothers Inc., and LB
745 LLC agree to sell to Barclays Capital Inc.:
these Included Assets:
(a) $1,300,000,000 of Retained Cash held by Lehman Brothers
Inc. and its Subsidiaries;
(b) all customer, security, utility, and similar deposits;
(c) Transferred Real Property Leases;
(d) approximately $70,000,000,000 (at book value) of
government securities, commercial paper, corporate debt,
corporate equity, exchange traded derivatives and
collateralized short-term agreements;
(e) 50% of each position in the residential real estate
mortgage securities;
(f) furniture and equipment;
(g) Purchased Intellectual Property, including the LEHMAN
and LEHMAN BROTHERS names and marks, all patents,
trademarks, copyrights and software rights;
(h) Purchased Contracts;
(i) all relevant Business Documents and relevant personnel
files;
(j) all Permits to the extent assignable;
(k) all supplies;
(l) rights under relevant non-disclosure, confidentiality,
non-compete, non-solicitation and similar agreements;
(m) [intentionally omitted]
(n) rights to "Lehman" indices and analytics that support
the indices;
(o) general trading tools supporting the Business;
(p) interests in Townsend Analytics;
(q) interests in Eagle Energy Management LLC;
(r) all past and present goodwill and other intangibles
associated with or symbolized by the Business;
(s) Mercantile Exchange license agreements with respect to
335 South LaSalle Street and 400 South LaSalle Street in
Chicago; and
(t) any insurance proceeds from the occurrence of a post-
closing event;
but not these Excluded Assets:
(1) interests in affiliates other than Townsend Analytics
and Eagle Energy Management LLC;
(2) all cash other than the Retained Cash;
(3) intercompany receivables;
(4) Excluded Contracts;
(5) intellectual property rights that don't constitute
Purchased Intellectual Property;
(6) confidential personnel and medical records and books and
records that Lehman Brothers Inc. is required to retain
by law, corporate minute books, stock ledgers and stock
certificates of Subsidiaries;
(7) refunds, rebates and tax refunds;
(8) non-SIPC insurance policies;
(9) pre-closing dates claims and causes of action;
(10) commercial real estate investments, private equity
investments and hedge fund investments;
(11) 50% of each position in residential real estate mortgage
securities;
(12) Lehman Brothers Derivative Products Inc.'s derivatives
contracts;
(13) artwork (through Barclays will have the right to possess
the artwork for one year and will have the option to
purchase it at its appraised value);
(14) assets related to the Investment Management Business and
related derivatives contracts;
(15) Specific Excluded Assets that will be used to satisfy
Specific Excluded Liabilities;
(16) real property leases other than the Transferred Real
Property Leases; and
(17) assets of Lehman Commercial Paper Inc.
pursuant to 11 U.S.C. Sec. 363 for the sum of:
(A) $250,000,000 in cash;
(B) the appraised value of Lehman's headquarters at
745 Seventh Avenue less a reasonable market commission;
(C) the appraised value of the Cranford, New Jersey, Data
Center less a reasonable market commission;
(D) the appraised value of the Piscataway, New Jersey, Data
Center less a reasonable market commission;
which is estimated to total about $1,700,000,000.
Contract Assumption & Assignment
Lehman Brothers intends to assume and assign to Barclays leases
for premises located at:
-- 125 High Street in Boston;
-- 190 South LaSalle Street in Chicago; and
-- 10250 Constellation Boulevard in Los Angeles.
pursuant to 11 U.S.C. Sec. 365.
Barclays will have the right, but not the obligation, to take
assignment of other contracts it designates. The parties
estimate that the cure costs associated with these assumption and
assignment transactions are about $1,500,000,000. Barclays will
pay any cure amounts applicable to any contracts it assumes.
Lehman Brothers suggests that Barclays financial condition and
reputation provide parties to contracts with ample "adequate
assurance of future performance" as required by 11 U.S.C. Sec.
365(f)(2).
Employees
Barclays has agreed to absorb approximately 10,000 Lehman
Brothers employees for a period of 90 days and pay any employee
laid off thereafter 20% of the amount they earned in the prior
year. Lehman Brothers estimates Barclays will free it from close
to $2,500,000,000 of employee-related obligations.
Barclays has the right to walk away from the Asset Purchase
Agreement if eight workers designated as Critical Employees don't
join Barclays. Barclays also has the right to walk away if more
than 60 of a pool of 200 Key Employees don't join Barclays.
Regulatory Review
Barclays can walk away from the Asset Purchase Agreement if
Lehman Brothers Inc. files a Chapter 7 petition, or if the U.S.
Department of Justice, U.S. Commodity Futures Trading Commission
or Securities and Exchange Commission balk.
SIPA Proceeding
The Asset Purchase Agreement contemplates that Lehman Brothers
Inc. will consent to the commencement of a case under the
Securities Investor Protection Act of 1970, 15 U.S.C. Secs.
78aaa, et seq. In that proceeding, the Debtors will request that
the SIPA Trustee consent to the sale and request the SIPA Court's
approval of the sale. Lehman Brothers says the Securities
Investor Protection Corporation and the Federal Reserve Bank have
been apprised of this plan.
15 U.S.C. Section 78eee(a)(3)(A) provides that the SIPC may file
an application for a protective decree with the U.S. district
court if the SIPC determines that any member has failed or is in
danger of failing to meet obligations to customers and meets one
of the four conditions specified in 15 U.S.C. Section 78eee(b)(1).
This application is filed as a civil case in which the SIPC or the
SEC or both are named as plaintiff, and the member securities firm
is named as the debtor-defendant. In the event that the SIPC
refuses to act under the SIPA, the SEC may apply to the U.S.
District Court for the District of Columbia to require the SIPC to
discharge its obligations under the SIPA. 15 U.S.C. Section
78ggg(b). By contrast, customers of failing broker-dealers do not
have an implied right of action under the SIPA to compel the SIPC
to exercise its statutory authority for their benefit. Barbour,421
U.S. at 425. Upon the filing of an application, the district court
has exclusive jurisdiction of the debtor-defendant and its
property.
$100,000,000 Break-Up Fee
The Debtors obtained the Court's authority to pay Barclays a
$100,000,000 Break-Up Fee and reimburse up to $25,000,000 of
Barclays' expenses in the event that Barclays' bid is topped by a
competing offer. The Debtors told Judge Peck at a hearing in
Manhattan Sept. 17 that the proposed Break-Up Fee is reasonable
under the circumstances, satisfies the business judgment rule, and
is consistent with the Second Circuit's teaching in In re
Integrated Resources, 147 B.R. 650 (S.D.N.Y. 1992), appeal
dismissed, 3 F.3d 49 (2d Cir. 1993).
"The approval of break-up fees and other forms of bidding
protections in connection with the sale of significant assets
pursuant to section 363 of the Bankruptcy Code have become an
established practice in chapter 11 cases," Jacqueline Marcus,
Esq., at Weil, Gotshal & Manges LLP, told Judge Peck.
In connection with this transaction, Lehman Brothers is receiving
additional legal counsel from
John Finley, Esq.
Andrew Keller, Esq.
SIMPSON THACHER & BARTLETT LLP
425 Lexington Avenue
New York, NY 10017
and Barclays is being advised by:
Victor I. Lewkow, Esq.
David Leinwant, Esq.
Duane McLaughlin, Esq.
CLEARY GOTTLIEB STEEN & HAMILTON LLP
One Liberty Plaza
New York, NY 10006
- and -
Mitchell S. Eitel, Esq.
Jay Clayton, Esq.
SULLIVAN & CROMWELL LLP
125 Broad Street
New York, NY 10004
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16
(Case No. 08-13600).
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
(Lehman Brothers Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: $138BB in Advances by JPMorgan Is Secured
----------------------------------------------------------
Lehman Brothers Holdings, Inc., sought and obtained confirmation
from the U.S. Bankruptcy Court for the Southern District of New
York regarding the status and treatment of transfers amounting to
$138 billion made by JPMorgan Chase Bank, N.A., to Lehman
Brothers, Inc.
Lehman Brothers Inc., a non-Debtor subsidiary of Lehman Brothers
Holdings, is a registered broker-dealer with the Securities and
Exchange Commission. JPMorgan Chase Bank is party to five
clearing agreements with Debtor and certain of its affiliates:
(A) the Clearance Agreement executed by Chase as of June 15,
2000 and executed by the Debtor, LBI, Lehman Commercial
Paper Inc., Lehman Brothers International (Europe), Lehman
Brothers OTC Derivatives Inc., and Lehman Brothers Japan
Inc. as of June 7, 2000;
(B) the Clearance Agreement, dated as of September 10, 2008,
with Lehman Brothers Bank, FSB;
(C) the Clearance Agreement, dated as of September 10, 2008,
with Lehman Brothers Bankhaus Aktiengesellschaft;
(D) the Clearance Agreement, dated as of September 10, 2008,
with Lehman Brothers Commercial Bank; and
(E) the Global Custody and Clearance Agreement, dated March 14,
2001, with LBI, and together with the June 2000 Clearance
Agreement.
Harvey R. Miller, Esq., at Weil, Gotshal & Manges LLP, in New
York, says pursuant to the June 2008 Clearance Agreement, the
September 2008 Clearance Agreements and the Global Clearance
Agreement, Chase may, in its sole discretion, make advances to or
for the benefit of the respective Lehman Clearance Parties, which
advances are payable by the Lehman Clearance Parties upon demand
by Chase.
Mr. Miller says further that the obligations of the Lehman
Clearance Parties under the Clearance Agreements are guaranteed
by Lehman pursuant to:
(1) the Guaranty, dated as of August 26, 2008, by the Debtor in
favor of Chase and its successors and assigns; and
(2) the Guaranty, dated as of September 9, 2008, made by the
Debtor in favor of Chase and its affiliates, subsidiaries,
successors, and assigns.
According to Mr. Miller, the Debtor's obligations under the
Guarantee Agreements are secured by collateral, including all its
proceeds, whether arising before or after the Commencement Date,
pledged to Chase pursuant to:
(a) the Security Agreement, dated as of August 26, 2008, by the
Debtor in favor of Chase and any of its successors and
assigns party to the Clearance Agreements; and
(b) the Security Agreement, dated as of September 9, 2008, by
the Debtor in favor of Chase and any of its affiliates,
subsidiaries, successors, and assigns.
The Agreements contain these additional key provisions:
-- the Clearance Agreement was amended Aug. 26, 2008 pursuant
to which Lehman Brothers Holdings, Inc., Lehman Brothers
International (Europe), Lehman Brothers OTC Derivatives
Inc. and Lehman Brothers Japan Inc., joined Lehman Brothers
Inc. and Lehman Commercial Paper Inc. as customers under
the Agreement. The amendment also said that except for the
obligations of Lehman Brothers Holdings under the Guaranty
and Security Agreement dated Aug. 26, 2008, the obligations
and liabilities of each of the Lehman entities will be
several and not joint.
-- on Sept. 10, 2008, Lehman Brothers Bank, FSB, Lehman
Brothers Bankhaus Aktiengesellschaft, and Lehman Brothers
Commercial Bank signed separate clearance agreements with
Chase.
-- Pursuant to the Clearance Agreement, Chase will make
advances or loans to LBI and other Lehman Entities, which
loans will be backed by security interest in, among other
things, liens upon and right of set-off as to balance of
every existing or future deposit that it maintains with
Chase.
-- Ian Lowitt, as CFO of Lehman Brothers Holdings, signed a
Guaranty dated Aug. 26, 2008, pursuant to which the comapny
agreed to guarantee the loans and advances made by Chase to
LBI, et al.
-- Chase agreed to act as non-exclusive agent for securities
transactions for the Lehman entities. Chase also agreed to
provide tri-party custodian services, pursuant to which it
will accept from LBI any securities, which include physical
securities and securities held by the Federal Reserve Bank
of New York, DTC, PTC, First Chicago Clearing Center, or
other depository or clearing corporation.
Full-text copies of the Agreements can be accessed for free at
http://bankrupt.com/misc/LehmanChaseAgreements.pdf
$138 Billion in Advances By
Chase on Sept. 15 and 16
At the opening of the U.S. securities markets on Sept. 15, 2008,
after the filing of Lehman's Chapter 11 petition, Chase advanced
$87 billion to or for the benefit of the Lehman Clearance Parties
at the request of the Debtor and the Federal Reserve Bank of New
York, Mr. Miller relates. That Commencement Date Advance was
necessary to clear, and facilitate the settlement of, securities
transactions with customers or clients of the Lehman Clearance
Parties to avoid a disruption of the financial markets, he says.
The Commencement Date Advance was repaid by the Federal Reserve
Bank.
Mr. Miller relates further that on Sept. 16, Chase advanced "a
comparable amount" to or for the benefit of the Lehman Clearance
Parties at the request of the Debtor and the Federal Reserve Bank
of New York. He says the Second Day Advance was necessary to
clear, and facilitate the settlement of, securities transactions
with customers or clients of the Lehman Clearance Parties to
avoid a disruption of the financial markets. Chase may elect to
make additional advances under the Clearance Agreements in its
sole discretion.
Pursuant to the Guarantee Agreements and Security Agreements, all
Postpetition Advances are guaranteed by the Debtor, which
guarantees are secured by the Holding Company Collateral,
Mr. Miller adds.
Bankruptcy Court Confirms Advances
Pursuant to Section 105(a) of the Bankruptcy Code, the Debtor
sought and obtained confirmation from Judge James M. Peck that
any of Chase's claims arising under or pursuant to the Clearance
Agreements, Guarantee Agreements, or Securities Agreements --
which agreements are securities contracts within the meaning of
Section 741(7)(A) of the Bankruptcy Code -- arising from any
Postpetition Advances, will be allowed as claims under the
Guarantee Agreements and will be secured by the Holding Company
Collateral to the same extent as if they had been made prior to
the Petition Date.
Mr. Miller asserted that to assure that Chase will continue to
perform under the Clearance Agreements, out of an abundance of
caution, it is necessary for the Court to confirm that the claims
of Chase that may arise from Postpetition Advances or other
transactions arising under or pursuant to the Clearance
Agreements, Guarantee Agreements, or Security Agreements post the
Petition Date will be allowed as claims under the Guarantee
Agreements secured by the Holding Company Collateral.
To the extent the Court views the Postpetition Advances as the
postpetition incurrence of debt, the Debtor asked the Court to
confirm that the Postpetition Advances are authorized under
Section 364 of the Bankruptcy Code as to the Guarantee Agreements
and the Holding Company Collateral.
The Debtor clarified that it is not asking the Court to validate
Chase's guarantees or the liens securing the guarantees, or to
grant administrative expense status for the Clearing Claims.
Rather, out of an abundance of caution, it was asking the Court
to confirm that Chase's Clearing Claims will be allowed as claims
under the Guarantee Agreements that are secured by the Holding
Company Collateral to the same extent as if they had been made
prior to the Commencement Date.
The Debtor has been advised by Chase that, if the Court will not
grant the request, Chase will be unable to continue to make
Postpetition Advances at the Debtor's request, Mr. Miller
relates. It is essential to the Debtor's customers that Chase
continue to clear securities transactions for the Lehman
Clearance Parties in accordance with its prepetition practices.
Any cloud on the guarantees vis-a-vis the Holding Company
Collateral will inhibit Chase from clearing advances to or for
the benefit of the Lehman Clearance Parties to the detriment of
public investors.
According to Mr. Miller, approval of the Debtor's proposal is
fully consistent with the terms of the Bankruptcy Code, will
facilitate a smooth and orderly transition of the Debtor's
operations into Chapter 11, and minimize not only the disruption
of the Debtor's business affairs, but also the disruption of the
financial markets as a whole.
After a hearing on September 16, the Court ruled that any of
Chase's claims against Lehman arising under or pursuant to the
Clearance Agreements, the Guarantee Agreements, or the Securities
Agreements arising from any Postpetition Advances will be allowed
as claims under the Guarantee Agreements and will be secured by
the Holding Company Collateral to the same extent as if they had
been made prior to the date on which the Debtor commenced its
Chapter 11 case in the Court.
Chase: Advances for Clearing of
Securities Transactions with LBI clients
JPMorgan Chase Bank, N.A., delivered a statement to Judge Peck
supporting the Debtor's motion for confirmation of the status of
the Clearing Advances.
Harold S. Novikoff, Esq., at Wachtell, Lipton, Rosen & Katz, in
New York, confirmed that Chase advanced $87 billion to or for the
benefit of LBI on September 15, 2008, in order to clear, and
facilitate the settlement of, certain securities transactions
with customers or clients of LBI. The advance was repaid on
Sept. 15, 2008. Mr. Novikoff adds that on Sept. 16, 2008, Chase
advanced $51 billion.
Mr. Novikoff stressed that the Debtor is not asking for a
validation of Chase's guarantee from the Debtor or of the liens
that secure that guarantee, nor does it seek a determination that
Chase is entitled to administrative expense status. Rather, the
Court is being asked to confirm that Clearing Claims arising from
Postpetition Advances or other transactions after the filing of
the Debtor's bankruptcy petition will be allowed as claims under
the Guarantee Agreements, and will be secured by the Holding
Company Collateral, to the same extent as if they had been made
prior to the filing of the Debtor's bankruptcy petition.
Mr. Novikoff warned that if the Court does not grant the Debtor's
proposal, Chase would stop making Postpetition Advances as it has
been doing at the Debtor's request.
* * *
According to Bloomberg News, Chase said that the second advance
of $51 billion has been repaid and the process will zero out the
advances at the end of each day.
The advances are guaranteed through collateral of Lehman
Brothers' holding company under an existing agreement. Chase
holds about $17 billion in collateral to secure the advances,
according to Bloomberg.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16
(Case No. 08-13600).
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
(Lehman Brothers Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: To Sell Investment Mgmt Unit to Bain, Hellman
--------------------------------------------------------------
According to Bloomberg News, Lehman Brothers Holdings is in
discussions regarding a sale of its investment-management unit to
private-equity firms Bain Capital LLC and Hellman & Friedman LLC,
Bloomberg News reports, citing people familiar with the
negotiations.
Lehman's Investment-Management unit recorded net revenues
(revenues less interest) of $634 million in the quarter ended
Aug. 31, 2008, compared to $802 million during the same period in
2007. Investment Management provides strategic investment advice
and services to institutional and high-net-worth clients on a
global basis.
During 2007, Lehman acquired H.A. Schupf, a high net worth
boutique asset manager with approximately $2.3 billion in
assets under management; LightPoint Capital Management LLC, a
leveraged loan investment manager based in Chicago, Illinois,
with approximately $3.2 billion in assets under management;
Dartmouth Capital, a U.K.-based investment advisory firm with
approximately $340 million in assets under advisory; and MNG
Securities, an equity securities brokerage firm in Turkey.
Lehman also purchased interests in both Spinnaker Asset
Management Limited and Spinnaker Financial Services, part of
Spinnaker Capital, an emerging markets investment management
firm, and a 20% interest in the D.E. Shaw group, a global
investment management firm.
The Asset Management section under Investment-Management includes
proprietary asset management products across traditional and
alternative asset classes, through a variety of distribution
channels, to individuals and institutions:
(i) Neuberger Berman, which Lehman acquired in 2003;
(ii) Lehman Brothers Asset Management brands; and
(iii) Private Equity, under which a number of private equity
portfolios are managed.
A second section, Private Investment Management, provides
traditional brokerage services and comprehensive investment,
wealth advisory, trust and capital markets execution services to
both high-net- worth individuals and small and medium size
institutional clients, leveraging all the resources of Lehman
Brothers.
Established in 1984, Bain Capital is an private investment firm,
managing over $78 billion in assets. Its affiliated advisors in
private equity, public equity, leveraged debt assets, venture
capital and global macro assets.
Hellman & Friedman LLC, founded in 1984, is a private equity
investment firm well respected for its distinctive investment
philosophy and approach. During its 22-year investing history,
it has raised and managed over $16 billion of committed capital
and has invested in over 50 companies.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16
(Case No. 08-13600).
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
(Lehman Brothers Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: SIPC Does Not Expect Liquidation
-------------------------------------------------
The Securities Investor Protection Corporation, which maintains a
special reserve fund authorized by Congress to help investors at
failed brokerage firms, issued the following statement this
morning in relation to reports about the bankruptcy filing of
Lehman Brothers Holdings, Inc.
SIPC President Stephen Harbeck said: "SIPC has not initiated a
liquidation proceeding against the broker-dealer Lehman Brothers
Inc. and we do not currently anticipate doing so. As of this
morning, it appears that all customer cash, stocks and other
securities are accounted for."
"It is important to understand that the holdings of broker-dealer
Lehman Brothers Inc., would not be directly impacted by a
bankruptcy filing at the separate entity Lehman Brothers Holdings,
Inc.
"Should the situation at Lehman Brothers Inc. change in some
material way not now anticipated by SIPC and regulators, we will,
of course, intervene as necessary to protect the cash and
securities of customers. However, I want to underscore that such
an action is considered unlikely at this time.
"SIPC is working closely with the U.S. Securities and Exchange
Commission (SEC) to monitor the situation at Lehman Brothers Inc.
"The Securities Investor Protection Corporation remains vigilant
and committed to our core mission: When a brokerage firm is closed
due to bankruptcy or other financial difficulties and customer
assets are missing, SIPC steps in as quickly as possible and,
within certain limits, works to return customers' cash, stock and
other securities. Without SIPC, investors at financially troubled
brokerage firms might lose their securities or money forever or
wait for years while their assets are tied up in court."
About SIPC
The Securities Investor Protection Corporation is the U.S.
investor's first line of defense in the event a brokerage firm
fails, owing customer cash and securities that are missing from
customer accounts. SIPC either acts as trustee or works with an
independent court-appointed trustee in a brokerage insolvency case
to recover funds. The statute that created SIPC provides that
customers of a failed brokerage firm receive all non-
negotiable securities - such as stocks or bonds -- that are
already registered in their names or in the process of being
registered. At the same time, funds from the SIPC reserve are
available to satisfy the remaining claims of each customer up to a
maximum of $500,000. This figure includes a maximum of
$100,000 on claims for cash. From the time Congress created it in
1970 through December 2006, SIPC has advanced $505 million in
order to make possible the recovery of $15.7 billion in assets for
an estimated 626,000 investors.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16
(Case No. 08-13600).
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
(Lehman Brothers Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: Linklaters to Advice PwC in U.K. Administration
----------------------------------------------------------------
The U.K. Administrators tapped the services of Linklaters LLP to
advise them in the U.K. administration proceeding for Lehman
Brothers International Europe according to a report by
TheLawyer.com.
PricewaterhouseCoopers partners Mike Jervis, Tony Lomas, Steven
Pearson and Dan Schwarzmann sought Linklaters' services after
Lehman Brothers International was placed into administration and
they were appointed as joint administrators to wind down the
business.
Tony Bugg, Linklaters' head of restructuring and insolvency,
leads the engagement, and will be assisted by Richard Holden,
restructuring partner, and Matthew Middleditch and David Ereira,
corporate partners, according to the report.
Lehman Brothers International is the principal U.K. trading
company in the Lehman group. Three other group companies:
-- Lehman Brothers Holdings Plc,
-- Lehman Brothers Limited and
-- LB UK RE Holdings Limited
have also been placed into administration.
In a Sept. 15 press release, Lehman Brothers Holdings Inc. said
the U.K.-based firms were put into administration in light of the
absence of ongoing financial support from the company.
The London Stock Exchange recently declared Lehman Brothers
International a defaulter, meaning it would lose its membership
and ability to trade in the stock exchange.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16
(Case No. 08-13600).
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
(Lehman Brothers Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: Japan Banks, Insurers Have US$2.3BB Exposure
-------------------------------------------------------------
Japan's banks and insurers disclosed a combined JPY245 billion
(US$2.3 billion) of potential losses tied to the collapse of
Lehman Brothers Holdings Inc., Bloomberg news reports.
According to Bloomberg, Banks from Tokyo-based Mitsubishi UFJ,
Japan's largest, to Bank of the Ryukyus Ltd., a lender based in
Okinawa, disclosed assets that might become worthless following
Lehman's filing for bankruptcy protection. The total for 37
banks was JPY198 billion, compared with a combined JPY47 billion
at seven Japanese insurers, according to data compiled by
Bloomberg based on announcements.
Mitsubishi UFJ said in a statement that, on a net basis, the
total amount of credits, etc., extended by group companies of
Mitsubishi UFJ Financial Group, Inc., to Lehman Brothers Holdings
and related companies is US$235 million:
1. The Bank of Tokyo-Mitsubishi UFJ, Ltd.
(total US$260 million)
Credits, including loans, etc.: US$218 million
Of which, to the headquarters: US$35 million
to Japanese subsidiary: JPY20 billion
Corporate bonds: US$42 million
Of these amounts US$40 million is hedged by credit
default swaps.
2. Mitsubishi UFJ Trust & Banking Corporation (total
US$15 million)
Mizuho Financial Group Inc., Japan's second-largest bank by
revenue, may record losses as much as JPY20 billion due to
exposure to Lehman, spokeswoman Masako Shiono said in an
interview, according to Bloomberg.
The absolute priority rule under the Bankruptcy Code provides
that creditors have priority over a company's equity holders.
Shareholders will only receive value after creditors have been
paid. Unsecured creditors won't obtain any recovery until
secured creditors receive recovery to the extent of the value of
their collateral.
Additionally, the Singapore Stock Exchange has suspended Lehman
Brothers Pte Ltd from taking on new securities and derivatives
positions. SGX is facilitating the orderly transfer of customers'
derivatives positions from LBPL to other brokers. At present,
LBPL is meeting their financial obligations to SGX's securities
and derivatives clearing houses. SGX will continue to monitor the
situation and maintain the orderly function of the markets.
Korea's financial regulator, the Financial Services Commission,
also has banned Lehman Brothers Holdings Inc.'s Korean units from
selling and repaying debts until Dec. 15., the day after parent
firm filed for bankruptcy in the U.S., Yonhap News reports.
According to the report, Lehman's Seoul units will also be
prohibited from receiving deposits, trading stocks and
transferring money overseas. The commission, the report relates,
said the ban was aimed at "protecting investors at home and
preventing potential chaos in local financial markets."
The Korean Times notes that Seoul's benchmark stock index plunged
6.54% on the news of Lehman's bankruptcy and insurance giant AIG
Inc.'s struggle for survival after being battered by mortgage
losses. Moreover, Asia Pulse relates, that the Korean won
currency also plunged by KRW50.9 to close at 1,160.0 versus the
U.S. dollar, marking the biggest one-day loss since August 1998,
as local banks scrambled to buy the U.S. currency.
"The situation in the U.S. financial markets appears to be bad
because Lehman filed for bankruptcy only three days after it
announced a plan to sell its assets," Asia Pulse cited Shim
Jae-yeop, a senior analyst at Meritz Securities Co. in Seoul,
as saying.
Government officials, Yonhap points out, tried to calm the market
by assuring the public that Lehman's demise would probably erase
uncertainties in global financial markets in the long term.
The Pulse says that the Korea's finance ministry and the Bank of
Korea said they would act "if necessary." Vice Finance Minister
Kim Dong-soo said the government will provide liquidity to
stabilize the nation's financial markets. "The government and
the Bank of Korea will take steps against excessive fluctuations
in foreign exchange markets," he said.
As of the end of July, the Lehman units in Seoul had a total of
KRW1.6 trillion (US$1.44 billion) in assets from investors.
South Korean financial companies held about US$720 million in
securities linked to Lehman.
In Taiwan, the Financial Supervisory Commission, Taiwan's
watchdog, said it would help investor's of Lehman Brothers
Holdings Inc.'s Taiwan unit to file for damages against its parent
firm if the need arises, Business News reports. The Commission,
the report relates, also ordered the Lehman's Taiwan office to
suspend operations until the parent company's financial crisis is
over. The local benchmark TAIEX stock index, The China Post
relates, precipitated in a steep and combined loss of 554 points
in the first two days of trading this week, compared with the
sharp fall of 504 points in the Dow Jones industrial average index
on Monday.
Taiwan Stock Exchange executives conducted an audit check at the
office of Lehman Brothers in accordance with the enforcement
regulations concerning TSE business operations, but have found no
abnormalities except it voluntarily ceased in securities trading
on September 16, according to The Post.
The Post says that a large number of financial institutions in
Taiwan have made investments in the bonds and other securities
issued, guaranteed by, or related to the Lehman. Among the local
financial institutions, Hua Nan Commercial Bank revealed that it
still holds about NT$440 million worth of such bonds, The Post
says. Hua Nan executives said they have taken necessary actions
to secure the NT$1.7 billion loan extended to the local branch of
Lehman Brothers, the same report adds. Taiwan's institutional
and retail investors have about NT$80 billion (US$2.5 billion US
dollars) of exposure in Lehman investments.
The Taiwan branch of Lehman Brothers has also made investment in
the transactions of non-performing loans and delinquent assets on
the Taiwan market.
Business News points out that some Taiwan investors have asked
the Commission to freeze the assets of Lehman's Taiwan office to
cover their potential losses, but the Commission said that if
there are losses, the parent company is responsible, not its unit
in Taiwan. If there is a need, it would help Taiwan investors
seek damages from the parent company, the commission added.
In India, the Reserve Bank of India (RBI) has advised Indian unit,
Lehman Brothers Capital Pvt Ltd, that it would need prior approval
of RBI before contracting any direct/indirect liability from any
institution in India or outside India or making any foreign
currency remittance, India Infoline News Service reports.
According to Infoline News, the RBI is keeping a close watch on
the developments in the wake of Lehman's bankruptcy filing and is
in constant touch with banks and other market participants to
manage any fallout of these developments on the Indian markets in
an orderly manner.
Meanwhile, The Economic Times says Lehman's bankruptcy wiped off
more than Rs 2,000 crore (US$431 million) from the market
valuation of those Indian companies in which the U.S. firm has
made equity investments. In addition, recent news reports cited
by The Financial Express says Lehman had asked a section of its
BPO staff in India to quit. In India, Lehman employs a total of
2,500 including those in the BPO unit.
The Times relates that Lehman has recorded a loss of more than Rs
50 crore on its investments in India, which is nearly 10 per cent
of its current holding worth an estimated over Rs 500 crore.
Late last month, Lehman offloaded around Rs 400 crore of its
equity holding in nearly 10 companies, most of which were
purchased by Deutsche Bank. Prior to the sell-off, Lehman's
Indian equity portfolio is estimated to have been worth more than
Rs 1,000 crore, which has now nearly halved to about Rs 500
crore, the Times says.
Lehman also had equity holding in about two dozen firms at the
end of June quarter including Spice Communications, Spice Mobile,
Anant Raj Industries, Edelweiss Cap, IVRCL Infra and Tulip
Telecom, the Times adds.
Separately, the Times reports that Lehman's bankruptcy will
impact India's largest private bank ICICI Bank partly. ICICI
Bank, the same report says, will have to take a hit of US$28
million on account of the additional provisioning that ICICI
Bank's UK subsidiary will have to make.
ICICI Bank's UK subsidiary had investments of EUR57 million
(around US$80 million) in senior bonds of Lehman Brothers, the
Times notes. Broking house Edelweiss foresees the UK subsidiary
would have to book mark-to-market losses of US$200 million.
its subsidiaries.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16
(Case No. 08-13600).
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
(Lehman Brothers Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: U.S. Trustee Appoints Panel, RR Donnelly Quits
---------------------------------------------------------------
Pursuant to Section 1102 of the Bankruptcy Code, Diana G. Adams,
the United States Trustee for Region 2, appointed these seven
creditors to serve on the Official Committee of Unsecured
Creditors in Lehman Brothers' Chapter 11 cases:
1. Wilmington Trust Company, as
Indenture Trustee
520 Madison Avenue, 33rd Floor
New York, New York 10022
Attn: James J. McGiniey, Managing Debtor
Phone Number (212) 415-0522
Fax Number (212) 415-0513
2. The Bank of NY Mellon
101 Barclay - 8 W.
New York, New York 10286
Attn: Gerard Facendola, Vice President Corporate Trust
Phone Number (212) 815-5373
3. Shinsei Bank, Limited
1-8, Uchisaiwaicho 2- Chome
Chiyoda - Ku, Tokyo 100-8501
Japan
Attn: Edward P. Gilbert
Phone Number 81-3-5510-6614
Fax Number 81-3-4560-2846
4. Mizuho Corporate Bank, Ltd. as Agent
1251 Avenue of the Americas
New York, New York 10020-1104
Attn: Noel P. Purcell, Senior Vice President
Phone Number (212) 282-3486
Fax Number (212) 282-4490
5. The Royal Bank of Scotland, PLC
101 Park Avenue, 6th Floor
New York, New York 10178
Attn: Alan Ferguson/Michael Fabiano
Phone Number (212) 401-3552 or (212) 401-3663
6. Metlife
10 Park Avenue
P.O. Box 1902
Morristown, New Jersey 07962-1902
Attn: David Yu, Director
Phone Number (973) 355-4581
Fax Number (973) 355-4230
7. RR Donnelley & Sons
3075 Highland Parkway
Downers Grove, Il. 60515
Attn: Daniel Pevonka, Senior Manger Legal Accounts
Phone Number (630) 322-6931
Fax Number (630) 322-6052
R.R. Donnelley & Sons Company said in a statement released Sept.
17 that it has resigned from the Creditors Committee. The U.S.
Trustee has not yet appointed a replacement. R.R. Donnelley said
that its exposure to Lehman is less than $1 million.
The Trial Attorney at the United States Trustee's office in
charge of Lehman Brothers' chapter 11 cases is:
Andrew D. Velez-Rivera, Esq.
Office of the United States Trustee
33 Whitehall Street, 21st Floor
New York, New York 10004
Tel. No. (212) 510-0500
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.
Lehman's creditors convened for the Organizational Meeting at
6:00 p.m. Tuesday evening and waited until almost midnight as the
Office of the U.S. Trustee interviewed candidates for the
committee and assessed potential conflicts of interest.
According to Bloomberg News, creditors interviewed by the U.S.
Trustee that weren't named as committee members included Swedish
bank Svenska Handelsbanken AB; London-based investment manager
Western Asset Management Co.; Bank of China Ltd.; Bank of Tokyo
Ltd.; Charlotte, North Carolina-based Bank of America Corp.; and
BlackRock Inc.
Milbank On Board
The Committee has selected Milbank Tweed Hadley & McCloy LLP, as
its legal counsel.
Kramer Levin Naftalis & Frankel, Akin Gump Strauss Hauer & Feld
and Paul Weiss Rifkind Wharton & Garrison were also interviewed
by the Committee as potential counsel, Kramer Levin partner David
Feldman said in an interview with Bloomberg.
Milbank Tweed's attorneys primarily responsible for the firm's
representation of the Committee are:
Dennis F. Dunne, Esq.
Luc A. Despins, Esq.
Wilbur F. Foster, Jr., Esq.
MILBANK, TWEED, HADLEY & McCLOY LLP
1 Chase Manhattan Plaza
New York, New York 10005
Telephone: (212) 530-5000
Facsimile: (212) 530-5219
E-mail: ddunne@milbank.com
ldespins@milbank.com
wfoster@milbank.com
- and -
Paul Aronzon, Esq.
Gregory A. Bray, Esq.
MILBANK, TWEED, HADLEY & McCLOY LLP
601 South Figueroa Street, 30th Floor
Los Angeles, CA 90017
Telephone: (213) 892-4000
Facsimile: (213) 629-5063
E-mail: paronzon@milbank.com
gbray@milbank.com
Mr. Despins is a senior partner in the Financial Restructuring
Group, and is resident in the Firm's New York office. Mr.
Despins' prior engagements include advising the unsecured
creditors committees in Refco, Inc.'s and Enron Corp.'s chapter
11 proceedings, and representing the agent for the secured
lenders in Adelphia Communications' chapter 11 cases.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16
(Case No. 08-13600).
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
(Lehman Brothers Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: Asian Unit Quits as Citic Privatization Advisor
----------------------------------------------------------------
Lehman Brothers Asia Limited has withdrawn as financial adviser
to Gloryshare Investments Limited in connection with the proposed
privatization of CITIC International Financial Holdings Limited.
Lehman Brothers Asia has asked Gloryshare, a unit of CITIC group,
to seek a replacement advisor after the Stock Exchange of Hong
Kong, Ltd., issued restriction notices on four Hong Kong-based
Lehman Brothers entities, after Lehman Brothers Holdings, Inc.,
filed for Chapter 11 protection in the U.S.
Morgan Stanley Asia Ltd has replaced Lehman effective Sept. 17 as
financial advisor.
Lehman Brothers was formally retained by Gloryshare in June 10,
2008, but has been making a number of proposals to CITIC group in
connection with the transaction since 2007. The terms of the
privatisation proposal envisaged that Banco Bilbao Vizcaya
Argentaria S.A., presently a substantial shareholder of CIFH,
would increase its shareholding interest in CIFH from about 15%
to 30%, the balance of the shares in CIFH being held by the
offeror or members of its group.
The proposal has not been accepted by CIFH shareholders. In late
August 2008, CITIC group beefed up its offer by boosting proposed
cash payments by US$493.2 million, offering HKD2.16 per share
plus one China CITIC Bank Corp Ltd H share for each CIFH share.
CITIC group originally offered one CNCB CITIC Bank Corp H share
plus HKD1.46 cash for each CIFH share.
Jones Day is the adviser to CIFH, and Linklaters is the adviser
to Banco Bilbao.
Separately, Lehman Brothers Holdings Inc. suspended the provision
of secondary market quotes or liquidity for unlisted structured
products.
In a Sept. 17 statement, Lehman Brothers said it suspended the
provision for unlisted structured products issued by Pacific
International Finance Limited, Atlantic International Finance
Limited, and Pyxis Finance Limited pending further announcements.
Lehman Brothers is the swap guarantor for the minibonds issued by
Pacific International and the notes issued by the two other
companies. It is also the guarantor of the collateral for the
notes and for some series of minibonds.
The swap counterparties for the minibonds and the notes are all
wholly-owned subsidiaries of Lehman Brothers.
Lehman Brothers Asia Limited is the arranger of the Lehman
Brothers Unlisted Structured Products.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16
(Case No. 08-13600).
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
(Lehman Brothers Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: 3 Directors Dispose of Company Shares
------------------------------------------------------
Three directors of Lehman Brothers Holdings Inc., filed with the
U.S. Securities and Exchange Commission statements of changes in
beneficial ownership of Lehman common stock after they disposed
of their shares on the day Lehman filed for bankruptcy
protection.
Richard Fuld Jr., chief executive officer and director, disclosed
that he beneficially owns 21,040,914 shares of the company's
common stock after disposing of 2,878,302 shares on Sept. 15,
2008. He further said that some of these shares are held in
various benefit plans.
Thomas Cruikshank disclosed that he beneficially owns 5,000
shares of the company's common stock after disposing of 28,000
shares on Sept. 15, 2008.
Meanwhile, Henry Kaufman reported a zero beneficial securities
ownership after he disposed of 5,000 shares of the company's
common stock on the same date.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16
(Case No. 08-13600).
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
(Lehman Brothers Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: S&P Cuts Ratings on 11 Securities Transactions
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 10
Lehman Bros. Holdings Inc.-related and one Lehman Bros. Inc.-
related repackaged securities transactions. At the same time, S&P
removed its rating on one of the downgraded transactions from
CreditWatch with developing implications, where it was placed on
Sept. 12, 2008, and placed its ratings on another transaction on
CreditWatch with developing implications.
S&P lowered its ratings on these transactions following Standard &
Poor's downgrade of LBHI to D/--/D on Sept. 16, 2008, and Standard
& Poor's downgrade of Lehman Bros. Inc. to BB-/Watch Dev/B on
Sept. 15, 2008.
Nine of the repack downgrades reflect heightened risk to the
transactions given LBHI's recent bankruptcy filing. The filing
has increased the likelihood of cash flow shortfalls because the
repayment terms of those transactions were, in whole or in part,
supported by the fact that LBHI was acting as a guarantor of an
unrated affiliate's swap payment obligations.
The rating on OMX Timber Finance Investments II LLC, a pass-
through transaction, is based solely on LBHI's guarantee of the
repayment of an installment note that was issued by Boise Land &
Timber II LLC, which Standard & Poor's does not rate.
The rating on RACERS Series 2002-38-S, a pass-through transaction,
is based, in part, on Lehman Bros. Inc.'s obligation to make whole
market value losses upon the occurrence of a "non-investment-grade
downgrade event," as per the transaction documents, related to the
underlying issuer of the assets.
The Lehman Bros. Inc. and LBHI-related research updates, "Lehman
Bros. Holdings Downgraded To 'Selective Default'; Other Lehman
Entities To 'BB-' Or 'R'" and "Lehman Brothers Holdings Inc.
Rating Lowered To 'D'," were published on Sept. 15, and Sept. 16,
respectively, on RatingsDirect.
Ratings Lowered
Restructured Asset Certificates With Enhanced Returns (RACERS)
Series 2002-10-TR Trust
$14 million certificates
Rating
------
Class To From
----- -- ----
Certs CCC A-
Restructured Asset Certificates With Enhanced Returns (RACERS)
Series 2003-7-A Trust
$17 million certificates
Rating
------
Class To From
----- -- ----
Certs CCC A+
RACERS Series 2004-6-MM Trust
$2,925 million certificates
Rating
------
Class To From
----- -- ----
C A-1
Restructured Asset Securities with Enhanced Returns (RACERS)
Series 2004-25-TR
$63 million
Rating
------
Class To From
----- -- ----
A-1 CCC BB
A-2 CCC BB
A-3 CCC BB
A-4 CCC BB
A-6 CCC BB
A-7 CCC BB
Restructured Asset Certificates w/Enhanced Returns (RACERS) Series
2005-6-A Trust
$5 million credit-linked certificates
Rating
------
Class To From
Certs CCC AA+
Restructured Asset Certificates with Enhanced Returns ("RACERS")
Series 2006-15-A Trust
$500 million certificates
Rating
------
Class To From
----- -- ----
Certs CCC AAA
Restructured Asset Securities w/Enhanced Returns, Series 2007-7 MM
Trust
$5000 million notes
Rating
------
Class To From
----- -- ----
C A-1/Watch Dev
Variable Funding Trust 2007-1
$500 million variable rate senior secured revolving notes
Rating
------
Class To From
----- -- ----
Notes CCC A
Variable Funding Trust 2008-1
$500 million variable rate senior secured revolving notes
Rating
------
Class To From
----- -- ----
Notes CCC A
OMX Timber Finance Investments II LLC
$735 million Notes
Rating
------
Class To From
----- -- ----
A-2 CCC A
Restructured Asset Certificates With Enhanced Returns (RACERS)
Series 2002-38-S
$50 million certificates
Rating
------
Class To From
----- -- ----
A-1 BB-/Watch Dev A-
A-2 BB-/Watch Dev A-
LEHMAN BROTHERS: S&P Cuts Five Ratings and Puts Under Dev. Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its short-term ratings
on nine Lehman Brothers Inc. liquidity facility-backed issues and
placed them on CreditWatch with developing implications. This
action follows Standard & Poor's Sept. 15, 2008, downgrade of
Lehman Brothers Inc. to 'BB-/B' from 'A+/A-1' and placement of the
rating on CreditWatch with developing implications. As Lehman
Brothers provides liquidity for the issues, the downgrade and
CreditWatch action only affect the short-term ratings on the
issues.
Issue Description
* Ribco Trust (California) floating rate trust receipts series
2004 L27 relating to State of California economic recovery
bonds series 2004A
* Ribco Trust series 00L-12 floating rate trust receipts
relating to Chicago college single-family mortgage revenue
bonds series 2000A
* Ribco Trust series 00L-9 floating rate trust receipts relating
to Colorado Housing Finance Authority single- family bonds
2000 B-2
* Ribco Trust (Florida Hsg Fin Corp.) series 2004 L9 floating
rate trust receipts relating to Florida Housing Finance Corp.
homeowner mortgage revenue bonds 2004 series 2
* Ribco Trust (Jefferson Parish Home Mtg Auth) series 2003 L-51J
floating rate trust receipts relating to Parish of Jefferson
Home Mortgage Authority single-family mortage revenue bonds
series 2003C
* Ribco Trust (Metropolitan Transp Auth) Floating Rate Trust
Receipts series 2008-F111W relating to Metropolitan Transp
Authority
* Ribco Trust (Missouri Hsg Dev Comm) series 2004 L15 floating
rate trust receipts relating to Missouri Housing Development
Community single-family mortgage revenue bonds series 2004
series A-1
* Ribco Trust (Nebraska Invest Fin Auth) series 2001L-31
floating rate trust receipts single-family housing revenue
bonds series 2000A
* Ribco Trust series 2004L2 floating rate trust receipts
relating to Texas Department of Housing and Community Affairs
home mortgage revenue bonds
LOAN FUNDING: Fitch Trims $25MM Class A Notes Rating to B from BBB
------------------------------------------------------------------
Fitch Ratings has downgraded and removed from Rating Watch
Negative two classes of notes issued by Loan Funding Corp 2003-1.
These rating actions are effective immediately:
-- $25,000,000 class A notes to 'B' from 'BBB';
-- $12,000,000 class B notes to 'CCC' from 'BB'.
The rating actions reflect the application of methodology outlined
under Fitch's updated Market Value Structures criteria. In
addition, the ratings consider the sustained market value decline
in the secondary leveraged loan market that has increased the
vulnerability of these classes to a deteriorating credit
environment. Fitch continues to be concerned about pricing
volatility in leveraged loan secondary markets.
The downgrade of class A notes to 'B' reflects its distance-to-
trigger metric relative to the advance rate ranges published in
Fitch's updated MVS criteria. The DTT is now below 6% according
to Fitch's most recent calculation, with the portfolio categorized
into 61% Category 2 assets, 32% Category 3 assets, and 7% Category
4 assets.
The downgrade of class B notes to 'CCC' reflects its subordinated
position to class A notes coupled with a negative net asset value
coverage level. Although there is negative NAV coverage, the
class B rating does indicate there remains potential for this
class to receive principal and interest payments.
Loan Funding Corp 2003-1 is a synthetic total rate of return
collateralized loan obligation with a market value termination
trigger. The transaction closed on July 10, 2003 and is managed
by Guggenheim Investment Management LLC.
The rating on the class A notes addresses timely payment of
interest and repayment of principal on the stated maturity date.
The rating on the class B notes addresses ultimate payment of
interest and principal on the stated maturity date.
LUMINENT MORTGAGE: Court Approves Motion to Borrow Up to $400,000
-----------------------------------------------------------------
Dawn McCarty of Bloomberg News reports that the U.S. Bankruptcy
Court for the District of Maryland gave interim approval to
Luminent Mortgage Capital, Inc., and its debtor-affiliates to
borrow as much as $400,000 to fund operations while in bankruptcy.
The Court allowed the Debtors to obtain the loan from Arco Capital
Corp., the report states citing court papers. The Court set a
hearing on Sept. 29 for the final approval of the Debtors'
$3.2 million in financing, according to the report.
The Debtors said it executed an agreement with secured lender
Arco, WaMu Capital Corp. and noteholders pre-bankruptcy on Sept.
5, the report says. Under the agreement, the plan must provide
for the cancellation of all outstanding common and preferred
shares, as well as all subordinated debt instruments, the report
specifies. Certain unsecured creditors would get 41 percent of
the common stock of the reorganized companies and $2,750,000, the
report continues.
Arco also is committed to provide the Debtors with as much as
$3,200,000 to complete the Chapter 11 process, the reports cites
court papers.
About Luminent Mortgage
Luminent Mortgage Capital, Inc. (OTCBB: LUMCE) is a real estate
investment trust, or REIT, which, together with its subsidiaries,
has historically invested in two core mortgage investment
strategies. Under its Residential Mortgage Credit strategy, the
Company invests in mortgage loans purchased from selected high-
quality providers within certain established criteria as well as
subordinated mortgage-backed securities and other asset-backed
securities that have credit ratings below AAA. Under its Spread
strategy, the Company invests primarily in U.S. agency and other
highly-rated single-family, adjustable-rate and hybrid adjustable-
rate mortgage-backed securities.
Bloomberg News reports that Luminent listed debts of $484,100,000
million and assets of $13,400,000 as of July 31, 2008. Nine
affiliates also filed for bankruptcy. Bloomberg adds that 30
largest unsecured creditors are owed a total of $221,800,000.
Wells Fargo & Co., indenture trustee for Luminent's 8-1/8% bonds
due in 2027, is listed as the largest unsecured creditor. The
principal amount owed under the bonds is $90,000,000, Bloomberg
says.
Luminent and its debtor-subsidiaries continue to operate their
business as debtors-in-possession under the jurisdiction of the
Bankruptcy Court and in accordance with the applicable provisions
of the Bankruptcy Code and orders of the Bankruptcy Court.
MASONITE INT'L: Buys Time to Amend Credit Facility
--------------------------------------------------
Masonite International Inc. entered into a forbearance agreement
with its bank lenders that provides the company more time and
flexibility to negotiate a potential amendment to the terms of its
credit facility.
As a result of its financial performance for the quarter ended
June 30, 2008, Masonite was not in compliance as of the date with
certain financial covenants contained in its credit facility,
which constituted an event of default under the credit facility.
The financial covenants relate to EBITDA metrics and reflect the
challenging conditions in the U.S. housing industry.
Masonite is engaged in ongoing negotiations with lenders that are
party to the credit facility regarding a potential amendment to
the terms of the credit facility. There is no assurance that the
negotiations with lenders will result in an amendment acceptable
to Masonite and to its lenders.
Under terms of the forbearance agreement, which is effective upon
Masonite's payment of certain fees, neither the administrative
agent nor the lenders will:
i) take action to accelerate the maturity of or terminate the
company's revolving credit facility or to otherwise enforce
payment of the company's obligations under the credit
agreement, or
ii) exercise any other rights and remedies available to them
under the credit agreement or applicable law. The
forbearance agreement applies to the non-compliance of the
covenants as of June 30 and, provisionally, any non-
compliance as of Sept. 30, 2008. The forbearance agreement
expires on Nov. 13, 2008, unless further extended by mutual
agreement of the company, the administrative agent and the
lenders.
As of June 30, 2008, the company had $241 million in cash on hand.
"The goal of the current discussions we are having with our
lenders is to help ensure that we have an appropriate capital
structure to support our long-term strategic plan and business
objectives, both today and in the future," Fred Lynch, president
and chief executive officer of Masonite, said. "With our
excellent market position, strong brand, industry-leading
products, and the most capable team in the industry, we believe we
are well-positioned to take advantage when the market rebounds.
In the meantime, we remain focused on delivering the highest value
door products to our customers around the world."
About Masonite International Corporation
Based in Ontario, Canada, Masonite International Corporation --
http://www.masonite.com/-- (TSE:MHM) is a vertically integrated
producer, manufacturing key components of doors, including
composite molded and veneer door facings, glass door lites and cut
stock. The company provides these products to its customers in
more than 70 countries around the world. The company is a wholly
owned subsidiary of Masonite International Inc. It offers a range
of interior and exterior doors. Masonite Canada operates Masonite
International's Canadian subsidiaries, well as certain other non-
United States subsidiaries.
* * *
As reported in the Troubled Company Reporter on Sept. 1, 2008,
Standard & Poor's Ratings Services lowered its long-term corporate
credit ratings on Masonite International Inc. (Masonite) and its
subsidiaries, Masonite International Corp. and Masonite US Corp.,
to 'CCC+' from 'B-'. S&P also lowered the senior secured debt
rating on Masonite to 'B' from 'B+'. The ratings remain on
CreditWatch with negative implications, where they were placed
April 18, 2008.
MATRIX DEVELOPMENT: Strikes Deal With Lenders to Resume Operations
------------------------------------------------------------------
Ryan Frank at The Oregonian reports that Legend Homes has reached
agreements with its lenders to continue operating.
The Oregonian relates that the Hon. Elizabeth Perris of the U.S.
Bankruptcy Court for the District of Oregon mediated settlements
between the attorneys for Legend Homes and lawyers for lenders
KeyBank, Bank of America, JP Morgan Chase Bank, and Columbia River
Bank. Legends Home reached settlements on five projects with
those lenders, The Oregonian states. According to the report, the
agreements last until March 31, 2009, when Legend Homes will file
a longer-term plan to emerge from Chapter 11 bankruptcy.
The Oregonian relates that Legend Homes' bankruptcy had frozen its
cash in court-monitored accounts, and banks refused to lend any
more, given the risks of still declining real estate values.
According to The Oregonian, some lenders demanded that Legend
Homes liquidate to raise as much cash as possible to pay off bank
debts.
According to The Oregonian, Jim Chapman, president and general
manager of Legend Homes, said that the Debtor 's bank debts total
$180 million. Legend Homes also owes subcontractors and suppliers
about $1.5 million, the report says.
The Oregonian states that despite continued slow sales, Legend
Homes executives say they need to continue building operations to
meet demand and generate revenue to keep the company open. More
money could be returned to the lenders by building than if the
banks auctioned off the land, the report says, citing executives.
Legend Homes had sold 30 homes, generating about $7.5 million in
revenues, since it filed for bankruptcy, according to The
Oregonian. The banks, says The Oregonian, wanted to have the
sales proceeds, but Legend Homes asked Judge Perris to let it use
the money for new home construction.
The banks, according to The Oregonian, will collect debt payments
with each future home sale and free up some revenue for Legend
Homes's overhead and future home building expenses.
Legend Homes will resume operations at four subdivisions in
Tigard, Hillsboro, and Corvallis, The Oregonian states. The
company hopes to start new homes on its five additional
subdivisions still under construction. Legend Homes's lawyers are
negotiating with lenders M&T Bank, First Independent Bank,
Wachovia, and Columbia River for the project, The Oregonian
relates.
The Oregonian reports that Key Bank has started to foreclosure on
a property Matrix Development, Legend Homes's parent, acquired in
Riverside, California, as part of a massive Winchester Ranch
development. Matrix Development is working to reduce its land
holdings and Mr. Chapman expects to lose more land through
foreclosures.
About Legend Homes
Headquartered on Portland, Oregon, Matrix Development Corp. aka
Legend Homes -- http://www.legendhomes.com-- designs and builds
homes and condominiums. The company filed for Chapter 11
protection on June 10, 2008 (Bankr. D. Ore. Case No.08-32798).
David A. Foraker, Esq. at Greene & Markley P.C. is the Debtor's
counsel. When the Debtor filed for protection against its
creditors, it listed assets of between $100 million and
$500 million and debts of between $100 million and
$500 million.
MAXJET AIRWAYS: Files Liquidating Chapter 11 Plan
-------------------------------------------------
Bill Rochelle of Bloomberg News reports that MAXjet Airways, Inc.
filed its liquidating Chapter 11 plan and explanatory disclosure
statement with the U.S. Bankruptcy Court for the District of
Delaware, even though court-approved sales of assets didn't pan
out.
The Debtor, according the report, was authorized in March to sell
many of the assets for $1 million. The principal asset was the
operating certificate issued by government regulators, the report
recalls.
The buyer, an affiliate of NCA Sports Group Inc., didn't complete
the sale, says the report. The Debtor believes it has grounds for
a lawsuit, the report adds.
Later the bankruptcy court approved selling two engines, the
report says. The buyer refused to complete the sale, claiming an
engine was not in advertised condition, according to the report.
Although there is now only $546,000 cash on hand, the Debtor
believes it could recover through lawsuits up to $5.5 million and
eventually have $1.3 million for distribution to unsecured
creditors after paying expenses and priority claims, the report
claims.
The company calculates that potential liabilities total
$26.5 million, the report indicates.
About MAXjet Airways
Headquartered in Dulles, Virginia, MAXjet Airways Inc. --
http://www.maxjet.com/-- is an all-business class, long-haul
airline company. It has introduced scheduled services with
flights from London Stansted Airport to New York. As of
December, 2006, it leased five B767 aircraft. Its customers are
both business and leisure travelers. At the airport, its
product features check-in facilities located in primary
terminals, security and a business class departure lounge and
arrivals facility. Its flights features deep-recline seats (170
degree) spaced at a 60 inch pitch, portable entertainment
systems, stowage space and business class catering.
The Debtor filed for chapter 11 protection on Dec. 24, 2007
(Bankr. D. Del. Case No. 07-11912). The Debtor selected
Pachulski Stang Ziehl & Jones LLP and Pillsbury Winthrop Shaw
Pittman LLP as its bankruptcy counsels. The Debtor selected
Epiq Bankruptcy Services LLC as claims, noticing and claims
agent. Arent Fox LLP represents the Official Committee of
Unsecured Creditors. The Debtor's summary of schedules showed
assets of $14,836,147 and debts of $26,697,104.
MCCLATCHY CO: To Lay Off 10% of Work Force, Cut Dividend by 50%
---------------------------------------------------------------
Kathy Shwiff at Dow Jones Newswires reports that The McClatchy Co.
said it will lay off about 1,150 employees -- 10% of its work
force.
According to Dow Jones, McClatchy previously fired about 1,400
workers to save $70 million yearly and had cut about 13% of its
workforce between the end of 2006 and April 2007.
Dow Jones states that half of the latest staff reductions will be
through voluntary programs and attrition. The report says that
affected workers will receive severance payments and continued
benefits. The job cuts and other measures would save McClatchy
some $100 million in 2009, excluding $20 million in severance
costs, the report adds.
Dow Jones relates that McClatchy will also cut its dividend by
50%. McClatchy will pay a third-quarter dividend of nine cents,
down from 18 cents in the second quarter, according to Dow Jones.
The cut in dividend will result in savings of $7.4 million, the
report states.
McClatchy disclosed a 16% decline in revenues in August, as ad
revenue decreased 18% in the month compared with a year earlier.
Dow Jones states that the decline in print ads was partially
offset by a 7.4% gain in online ad revenue. For the first eight
months of 2008, total revenue dropped 15%, ad revenues decreased
17%, and online ad revenue increased 11%, compared to the same
period last year.
About The McClatchy Company
Headquartered in Sacramento, California, The McClatchy Company
(NYSE: MNI) -- http://www.mcclatchy.com/-- is the third largest
newspaper company in the United States, with 30 daily newspapers,
approximately 50 non-dailies, and direct marketing and direct mail
operations. McClatchy also operates leading local websites in
each of its markets. McClatchy-owned newspapers include The Miami
Herald, The Sacramento Bee, the Fort Worth Star-Telegram, The
Kansas City Star, the Charlotte Observer, and The (Raleigh) News &
Observer.
McClatchy also owns a portfolio of premium digital assets,
including 14.4% of CareerBuilder, an online job site, and 25.6% of
Classified Ventures, a newspaper industry partnership that offers
the auto website, cars.com, and the rental site, apartments.com.
At March 30, 2008, the company's consolidated balance sheet showed
$4.0 billion in total assets, $3.6 billion in total liabilities,
and $409.3 million in total stockholders' equity.
* * *
As reported in the Troubled Company Reporter on July 16, 2008,
Douglas McIntyre of 24/7 Wall Street reported that The McClatchy
Company could hit debt service problems that could force the
company to sell properties or file for Chapter 11 protection.
According to the report, McClatchy is one of the companies that
are at high risk of 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.
As reported in the Troubled Company Reporter on April 25, 2008,
Standard & Poor's Ratings Services lowered its ratings for The
McClatchy Co. by one notch and subsequently placed them on
CreditWatch with negative implications. The corporate credit
rating was lowered to 'BB-' from 'BB'.
As reported in the Troubled Company Reporter on April 3, 2008,
Moody's Investors Service downgraded The McClatchy Company's
Corporate Family rating and Probability of Default Rating to Ba3
from Ba2, and the rating on the senior unsecured notes to B1 from
Ba3, concluding the review for downgrade initiated on Feb. 29,
2008.
As reported in the Troubled Company Reporter on July 28, 2008,
Fitch Ratings downgreaded its 'BB' issuer default ratings on The
McClatchy Company to 'B+'. Fitch also affirmed its 'BB+/RR1'
ratings on the company's senior unsecured credit facility and
senior unsecured term loan. Fitch said the rating outlook remains
negative.
MCCLATCHY CO: Moody's Cuts CF and POD Ratings on Revenue Decline
----------------------------------------------------------------
Moody's Investors Service downgraded The McClatchy Company's
Corporate Family and Probability of Default ratings to B2 from
Ba3, the ratings on the senior unsecured notes to Caa1 from B1,
and the rating on the guaranteed bank facility to Ba2 from Ba1.
The rating outlook is negative. LGD assessments and point
estimates were adjusted to reflect the current capital structure.
Moody's last rating action on McClatchy was a downgrade of the CFR
and PDR to Ba3 from Ba2 on April 1st, 2008.
The downgrade reflects Moody's expectation that ongoing
significant declines in advertising revenue will continue to
pressure EBITDA - leading to an increase in leverage and
heightened risk of a credit facility covenant violation. Moody's
anticipates McClatchy's free cash flow generation and the modest
bank leverage will allow the company to obtain an amendment if
necessary, but an increase in the interest rate spread and tighter
non-financial covenants are likely to result, which would reduce
financial flexibility.
On September 16, McClatchy announced a number of actions to lower
costs and preserve cash including a 10% workforce reduction and
50% cut in the dividend. The actions will help to moderate the
pressure on free cash flow, but are indicative of the difficult
newspaper operating environment. In Moody's view, McClatchy will
continue to manage the cost structure aggressively with staffing
adjustments completed prudently to sustain the competitiveness of
its news and information content, although attracting and
retaining employees could become more challenging over time.
Downgrades:
Issuer: McClatchy Company (The)
-- Corporate Family Rating, Downgraded to B2 from Ba3
-- Probability of Default Rating, Downgraded to B2 from Ba3
-- Senior Unsecured Bank Credit Facility, Downgraded to Ba2,
LGD2-22% from Ba1, LGD2-25% (Ratings remain on review for
possible downgrade)
-- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa1,
LGD5-80% from B1, LGD5-80%
The negative rating outlook reflects the uncertainty over the
extent and duration of the current cyclical slowdown and ultimate
recovery in McClatchy's local markets and the resulting effect on
the company's ability to maintain meaningful free cash flow and a
comfortable covenant and liquidity cushion. The rating on the
bank facility remains on review for possible downgrade while
Moody's monitors the company's discussions with its banks and the
effect a possible amendment could have on the facility's priority
of claim.
The significant revenue pressure, the prospect of a financial
maintenance covenant violation and the level of uncertainty that a
tight credit environment creates for closing on signed asset sale
agreements overhangs McClatchy's liquidity and drives the SGL-4
rating. However, Moody's believes the company has sufficient cash
and projected free cash flow to meet its cash obligations over the
next 12 months including the $50 million remaining notes that
mature in April 2009.
The McClatchy Company, headquartered in Sacramento, California, is
the third-largest newspaper company in the U.S., with 30 daily
newspapers and approximately 50 non-dailies. McClatchy also owns
McClatchy Interactive, Real Cities and equity investments in
Career Builder, Classified Ventures, and other newspaper and
online properties. Annual revenue approximates $2.1 billion.
MERCURY COS: Seeks Court Okay to Employ Cloyses as Consultant
-------------------------------------------------------------
Mercury Companies, Inc., seeks the U.S. Bankruptcy Court for the
District of Colorado's approval to employ Cloyses Partners, LLC,
as its consultant and business advisor.
The firm will, among other things, advice the Debtor on the
liquidation and management of assets, and assist the Debtor in
drafting its statement of financial affairs, schedules, and
financial reports.
The firm will charge the Debtor these hourly rates:
Principals $395
Contractors $175 - $195
Patrick Giefer $195
The Debtor assures the Court that the firm is a disinterested
person and does not hold or represent an interest adverse to the
estate.
Daniel J. Garfield, Esq., at Brownstein Hyatt Farber Schreck, LLP,
the counsel for the Debtor, also asks the Court to appove the use
of the $111,211 retainer for Cloyses.
Denver, Colorado-based Mercury Companies Inc. is a holding company
for several real estate services firms involved in title services,
escrow services, real estate services, mortgage services, and
settlement services. It is the corporate parent of the former
Alliance Title and Financial Title companies, which had operations
in Northern California.
The company filed for Chapter 11 protection on Aug. 28, 2008,
(Bankr. D. Colo. Case No. 08-23125). Daniel J. Garfield, Esq.,
and Michael J. Pankow, Esq., at Brownstein Hyatt Farber Schreck,
LLP, represent the Debtors.
MERCURY COS: Seeks to Employ Brownstein Hyatt as Bankr. Counsel
---------------------------------------------------------------
Mercury Companies, Inc., seeks the U.S. Bankruptcy Court for the
District of Colorado's permission to employ Brownstein Hyatt
Farber Schreck, LLP, as its bankruptcy counsel.
Brownstein Hyatt will, among other things, assist the Debtor in
the preparation of schedules and statement of financial affairs
and other documents necessary to file the Chapter 11 case and
represent the Debtor in adversary proceedings and contested
matters related to the Debtor's bankruptcy case.
Daniel J. Garfield, Esq., a shareholder in the firm assures the
Court that the firm does not hold or represent an interest adverse
to the estate.
Brownstein Hyatt will charge the Debtor these hourly rates:
Michael J. Pankow $400
Daniel J. Garfield $325
Dean Stalnaker $175
Mr. Garfield, on behalf of the Debtor, also asks the Court to
approve the use of the $156,652.25 retainer for the counsel.
Court documents indicate that as of Aug. 28, 2008, the firm is
holding $156,652.25 as a retainer in connection with this case
from the Debtor as security for services rendered and expenses
incurred. The firm received a retainer in several installments of
$370,000.00 pre-petition, of which $213,347.75 was used for pre-
petition services.
Denver, Colorado-based Mercury Companies Inc. is a holding company
for several real estate services firms involved in title services,
escrow services, real estate services, mortgage services, and
settlement services. It is the corporate parent of the former
Alliance Title and Financial Title companies, which had operations
in Northern California.
The company filed for Chapter 11 protection on Aug. 28, 2008,
(Bankr. D. Colo. Case No. 08-23125). Daniel J. Garfield, Esq.,
and Michael J. Pankow, Esq., at Brownstein Hyatt Farber Schreck,
LLP, represent the Debtors.
MERCURY COS: Trustee Objects to Hiring of Cloyses as Consultant
---------------------------------------------------------------
Charles F. McVay, the United States Trustee for the District of
Colorado (Region 19), objects to the hiring of Cloyses Partners,
LLC, as consultant and business advisor for Mercury Companies,
Inc.
Mercury Companies is seeking the U.S. Bankruptcy Court for the
District of Colorado's permission to employ Cloyses Partners, LLC,
as its consultant and business advisor.
The firm will, among other things, advice the Debtor on the
liquidation and management of assets, and assist the Debtor in
drafting its statement of financial affairs, schedules, and
financial reports. The firm might also employ accountants on a
contract basis to assist it with these services.
The firm will charge the Debtor these hourly rates:
Principals $395
Contractors $175 - $195
Patrick Giefer $195
Mr. McVay tells the Court that some of the provided services like
the drafting of the Debtor's statement of financial affairs and
schedules are within the scope of services performed by the
Debtor's general counsel.
Mr. McVay contends that the application Mercury filed in the Court
for Cloyses' employment doesn't explain why the firm should be
employed to provide the Debtor with advice concerning the
liquidation and management of its assets. Mr. McVay says that
undeveloped land and a corporate jet don't require much in the way
of "management" and both assets are of the type which are
ordinarily liquidated through brokers. According to Mr. McVay,
liquidating cases don't generally require much in the way of
"analyses, projections, and budgets." The financial reports for
liquidating companies are generally quite simple to prepare given
the limited amount of activity in such cases.
Expert witnesses are generally not "professional persons," Mr.
McVay says. According to the trustee, the employment of Cloyses
to providing testimony, including expert testimony in court does
not justify its employment. A professional person may not hire
another person who would be also be considered a "professional
person" under Chapter 11 of the U.S Bankruptcy Code, Section
327(a), without that person also being required to comply with
Section 327(a).
Accountants are presumptively "professional persons" and cannot be
employed by Cloyses "on a contract basis" without the Court
approving the employment of those accountants, Mr. McVay contends.
The compensation and reimbursement of those accountants would also
be governed by Sections 328 and 331, he says.
An organizational meeting of creditors was set on Sept. 11, 2008.
No committee has been appointed as of press time.
Mr. McVay asserts that the consideration of Mercury's application
should be deferred until it is determined whether there will be a
creditors committee appointed in this case and, if a committee is
appointed, that committee has had adequate time to review the
Application.
Thomas M. Haskins, Esq., has filed a joinder to the U.S. Trustee's
objection, on behalf of Mary L. Howe.
Denver, Colorado-based Mercury Companies Inc. is a holding company
for several real estate services firms involved in title services,
escrow services, real estate services, mortgage services, and
settlement services. It is the corporate parent of the former
Alliance Title and Financial Title companies, which had operations
in Northern California.
The company filed for Chapter 11 protection on Aug. 28, 2008,
(Bankr. D. Colo. Case No. 08-23125). Daniel J. Garfield, Esq.,
and Michael J. Pankow, Esq., at Brownstein Hyatt Farber Schreck,
LLP, represent the Debtors.
MERCURY COS: Files Schedules of Assets & Liabilities
----------------------------------------------------
Mercury Companies Inc. filed with the U.S. Bankruptcy Court for
the District of Colorado, its schedules of assets and liabilities,
disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $380,387
B. Personal Property $21,439,748.45
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $2,091,175.96
E. Creditors Holding
Unsecured Priority
Claims $49,810.07
F. Creditors Holding
Unsecured Non-priority
Claims $61,412,243.28
----------- -----------
TOTAL $21,820,135.45 $63,553,229.31
Denver, Colorado-based Mercury Companies Inc. is a holding company
for several real estate services firms involved in title services,
escrow services, real estate services, mortgage services, and
settlement services. It is the corporate parent of the former
Alliance Title and Financial Title companies, which had operations
in Northern California.
The company filed for Chapter 11 protection on Aug. 28, 2008,
(Bankr. D. Colo. Case No. 08-23125). Daniel J. Garfield, Esq.,
and Michael J. Pankow, Esq., at Brownstein Hyatt Farber Schreck,
LLP, represent the Debtors.
MISTRAL PHARMA: Quebec Court OKs Reorganization Under BIA
---------------------------------------------------------
The Quebec Superior Court approved the proposal filed by Mistral
Pharma Inc., under the Bankruptcy and Insolvency Act (Canada).
The company said that the proposal shall effect a compromise of
its debts existing at June 13, 2008, and effect a reorganization
under Section 191 of the Canada Business Corporations Act.
The company related that the judgment rendered by the Court
approves the Proposal of the Corporation and declares valid and
sufficient the notice of hearing of the motion given to the
holders of securities of the Corporation.
In addition, the Court authorizes the reorganization of the
Corporation in accordance with the terms of the proposal and in
accordance with section 191 of the Canada Business Corporations
Act and the investment of fresh funds by a third-party in the
Corporation in exchange for the cancellation of all of the
Corporation's issued and outstanding shares, options and warrants,
and the issuance of new shares in favor of the purchaser.
The reorganization shall become effective on the date shown on the
certificate to be issued by the Director under section 262 of the
Canada Business Corporations Act.
About Mistral Pharma
Headquartered in Quebec, Canada, Mistral Pharma Inc. (TSX
VENTURE:MIP) -- http://www.mistralpharma.com/-- is a
pharmaceutical company engaged in scientific research and
development to develop and commercialize drugs, which incorporate
oral controlled-delivery technologies. The company is active in
the reformulation and the commercialization of already-marketed
drugs. Mistral uses its controlled release technologies in order
to improve the efficacy, safety or dosing schedule of drugs.
MORGAN STANLEY: In Merger Talks with Wachovia
---------------------------------------------
Aaron Lucchetti, Randall Smith, and Jenny Strasburg at The Wall
Street Journal report that Morgan Stanley is in preliminary merger
talks with Wachovia Corp. and other banks in hopes of insulating
itself from the growing financial pressures.
Morgan Stanley aims to regain investor confidence, citing people
familiar with the matter. Jessica Hall and Joseph A. Giannone at
Reuters report that Morgan Stanley's stock dropped sharply on
Wednesday, suffering its worst one-day decline ever and falling to
a 10-year low during the session. Reuters adds that Morgan
Stanley's credit default swaps traded as if it were in imminent
danger of default.
The New York Times relates that relates that Morgan Stanley
approached Wachovia about a potential deal, earlier this year, but
was rebuffed.
Telegraph.co.uk relates that Morgan Stanley wants a commercial
bank with a significant deposit base to increase its access to
capital in light of the continued credit crunch. According to
WSJ, commercial banks like Wachovia, perceived to be more stable,
could create strong incentive for the investment banks to link up
with them. A source said that Wachovia is also seeking ways to
limit short sales of its stock, Bloomberg reports. Wachovia Chief
Executive Officer Robert Steel is cutting the firm's expenses by
$1.5 billion and reducing risk to cope with increasing losses from
the company's $122 billion of option adjustable-rate mortgages.
According to Reuters, Wachovia "has been hobbled by mortgage
losses, stemming from its ill-timed takeover of Golden West at the
peak of the housing boom in 2006," and the company has reportedly
been seeking a merger partner, hiring Goldman Sachs to study its
options.
WSJ relates that Morgan Stanley's chief executive, John Mack, said
earlier in a Fortune magazine interview that he was "not thinking
about selling the firm," but when its stock price continued to
decline, Mr. Mack received a call from Mr. Steel about a potential
merger.
"I don't think Morgan Stanley can buy Wachovia because of
regulatory hurdles. And I don't know that Wachovia has the
capital to buy Morgan Stanley," Reuters quoted Danielle Schembri,
a bond analyst covering broker-dealers at BNP Paribas in New York,
as saying.
Morgan Stanley is also exploring preliminary mergers with other
banks all over the world, WSJ relates, citing people familiar with
the matter. These sources, according to WSJ, said that Morgan
Stanley may remain independent, but if a merger deal would be
reached it could "come with the likes of HSBC Holdings PLC of the
U.K., Banco Santander SA of Spain, Japan's Nomura Holdings Inc., a
Chinese financial institution or a domestic partner such as Bank
of New York Mellon Corp."
WSJ reports that Mr. Mack also called U.S. Treasury Secretary
Henry Paulson, Securities and Exchange Commission Chairperson
Christopher Cox, and Goldman Sachs CEO Lloyd Blankfein, to discuss
how to stop the drop in share prices. Morgan Stanley and Goldman
Sachs focused on how to stop short-sellers betting on a decline in
Goldman and Morgan shares, the report says, citing sources.
Former Morgan Stanley market strategist Byron Wien suggested that
greater transparency and controls be placed on the market for
credit-default swaps, which measure the cost of insuring a
company's debt, WSJ relates. Mr. Wien said that the increasing
cost of those swaps has influenced stock-price drops, according to
the report.
WSJ relates that Morgan Chief Financial Officer Colm Kelleher said
Tuesday that the company doesn't need to issue debt or new stock
until 2009.
CNBC reports that Morgan Stanley was also having deal discussions
with CITIC, the China-controlled conglomerate that owns brokerage
firm CITIC Securities.
About Wachovia Corporation
Based in Charlotte, North Carolina, Wachovia Corporation (NYSE:WB)
-- http://www.wachovia.com/-- is one of the nation's diversified
financial services companies, with assets of
$812.4 billion at June 30, 2008.
Wachovia provides a broad range of retail banking and brokerage,
asset and wealth management, and corporate and investment banking
products and services to customers through 3,300 retail financial
centers in 21 states from Connecticut to Florida and west to Texas
and California, and nationwide retail brokerage, mortgage lending
and auto finance businesses. Clients are served in selected
corporate and institutional sectors and through more than 40
international offices. Its retail brokerage operations under the
Wachovia Securities brand name manage more than $1.1 trillion in
client assets through 18,600 registered representatives in 1,500
offices nationwide. Online banking is available at wachovia.com;
online brokerage products and services at wachoviasec.com; and
investment products and services at evergreeninvestments.com.
As reported in the Troubled Company Reporter on July 22, 2008,
reports say that a team of regulators from more than five states
investigated the St. Louis headquarters of Wachovia Corp.'s
securities division in relation to its auction-rate bonds sales,
reports say. The regulators were from Missouri, Illinois,
Massachusetts, Pennsylvania, New Jersey and other states.
Missouri Secretary of State Robin Carnahan said in a statement the
investigation was prompted because Wachovia hasn't "fully
complied" with a Missouri probe on the matter. Investors have
filed complaints after they were unable to access money frozen
when firms in the auction-rate bonds market abandoned their
operations in February.
The team delivered more than a dozen subpoenas to the unit's
executives and agents on July 17 as part of its probe into sales
practices, internal evaluations of the auction-rate securities
market and marketing strategies.
Bloomberg News reports that up to $218 billion of auction-rate
bonds sold by student-loan providers, municipalities and closed-
end mutual funds remained frozen.
About Morgan Stanley
New York-based Morgan Stanley -- http://www.morganstanley.com--
is a global financial services firm that, through its subsidiaries
and affiliates, provides its products and services to a group of
clients and customers, including corporations, governments,
financial institutions and individuals. Morgan Stanley’s business
segments include Institutional Securities, Global Wealth
Management Group and Asset Management. The company conducts its
business from New York City, its regional offices and branches
throughout the United States and its principal offices in London,
Tokyo, Hong Kong and other world financial centers.
As reported in the Troubled Company Reporter on May 9, 2008, Fitch
cut Morgan Stanley's certificate rating to C/DR4 from CC/DR2.
MOTOR COACH: Moody's Cuts POD Rtng to 'D' After Bankruptcy Filing
-----------------------------------------------------------------
Moody's Investors Service lowered the probability of default
rating of Motor Coach Industries International, Inc. to D from Ca
and affirmed the existing corporate family rating of Ca following
Motor Coach's September 15, 2008 filing for protection under
Chapter 11 of the U.S. Bankruptcy Code. The rating on Motor
Coach's $59 million Guaranteed Senior Subordinate Notes due May
2009 is C, LGD-6, reflecting the nominal, if any, recovery
expected for these note holders. Subsequent to this rating action
Moody's will withdraw all of Motor Coach's ratings.
Headquartered in Schaumburg, Illinois, Motor Coach Industries
International, Inc. is a leading designer, manufacturer and
marketer of inter-city coaches and related replacement parts for
the North American market.
MOVIE GALLERY: Changes Board of Directors and Management Team
-------------------------------------------------------------
Movie Gallery Inc.'s board of directors has elected C.J. "Gabe"
Gabriel, Jr., chief executive officer of Movie Gallery, as a
director, effective Aug. 19, 2008, the company said in a press
release.
Mr. Gabriel's appointment will fill the vacancy created by the
departure of Joe T. Malugen from the board.
"We are delighted that [Mr. Gabriel] is joining Movie Gallery's
board of directors and look forward to his playing an active role
on the board," Neil Subin, chairman of the board of directors of
Movie Gallery, said.
"Movie Gallery has already greatly benefited from [Mr. Gabriel's]
leadership and guidance as chief executive officer, and we
believe the company will continue to benefit from his significant
strategic expertise and vision, as well as his decades of
experience in the consumer products and retail industries," added
Mr. Subin.
Mr. Gabriel stated, "I am pleased and honored that the Board has
elected me as a director. Movie Gallery is an increasingly
strong company with much to be proud of and I am committed to
taking the steps necessary to keep everyone focused on the future
of the company. I look forward to joining the board while
continuing my work with our outstanding senior management team,
dedicated employees and loyal customers."
In a separate statement dated August 29, 2008, Movie Gallery
disclosed that Thomas D. Johnson, Jr., terminated his
relationship with the company as executive vice president and
chief financial officer. On July 23, Mr. Johnson will be replaced
by Lucinda M. Baier, who will be reporting directly to Mr.
Gabriel.
Mr. Johnson joined Movie Gallery in April 2004, and served as the
company's chief financial officer from June 1, 2006, through
July 27, 2008. He became as the company's executive vice
president from June 1, 2006, through Aug. 29, 2008.
"[Mr. Johnson] has been a valued member of our senior management
team and we thank him for his significant contributions to the
company over the last four years. We wish him all the best in his
future endeavors," Mr. Gabriel said.
Mr. Johnson stated, "I am proud to have been associated with
Movie Gallery and continue to believe in its great potential. I
have reached a point in my career where I have the unique
opportunity to pursue new challenges and I am looking forward to
doing so."
In connection with Mr. [Johnson's] resignation, Movie Gallery
disclosed in a regulatory filing with the Securities and Exchange
Commission that it entered into a Confidential Separation
Agreement and Release with Mr. Johnson, dated Aug. 29, 2008.
The Agreement provides in part for:
-- a lump sum payment by the Company to Mr. Johnson of
$751,062, which represents 18 months' severance pay of
$487,500 and $263,562 to pay all applicable taxes related
to the severance pay;
-- reimbursement of Mr. Johnson's premium payments for
continuation coverage under COBRA for 12 months;
-- a mutual release of all claims by the Company and Mr.
Johnson; and
-- a confidentiality agreement by Mr. Johnson.
About Movie Gallery
Headquartered in Dothan, Alabama, Movie Gallery Inc. --
http://www.moviegallery.com/-- is a home entertainment specialty
retailer. The company owns and operates 4,600 retail stores that
rent and sell DVDs, videocassettes and video games. The company
has operations in Mexico.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849
to 07-33853). Anup Sathy, Esq., Marc J. Carmel, Esq., and
Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represent the
Debtors. Michael A. Condyles, Esq., and Peter J. Barrett, Esq.,
at Kutak Rock LLP, is the Debtors' local counsel. The Debtors'
claims & balloting agent is Kurtzman Carson Consultants LLC.
When the Debtors' filed for protection from their creditors,
they listed total assets of US$891,993,000 and total liabilities
of US$1,419,215,000.
The Official Committee of Unsecured Creditors has selected
Robert J. Feinstein, Esq., James I. Stang, Esq., Robert B.
Orgel, Esq., and Brad Godshall, Esq., at Pachulski Stang Ziehl &
Jones LLP, as its lead counsel, and Brian F. Kenney, Esq., at
Miles & Stockbridge PC, as its local counsel.
The U.S. Bankruptcy Court for the Eastern District of Virginia
confirmed the Debtors' Second Amended Chapter 11 Plan of
Reorganization on April 9, 2008. (Movie Gallery Bankruptcy News
Issue No. 33; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000)
MOVIE GALLERY: Delays Filing of Report for Quarter Ended July 6
---------------------------------------------------------------
In a regulatory filing with the Securities and Exchange Commission
dated Aug. 21, 2008, Movie Gallery Inc., disclosed that it was
unable to file its report for the quarter ended July 6, 2008, on
Form 10-Q by the August 20 deadline.
The Reorganized Debtors were focused on stabilizing and
restructuring their operations in accordance with their business
plan, including identifying and closing certain of their under-
performing video rental stores, the SEC filing disclosed.
At the same time, key personnel within the Company's accounting
and finance organization were actively involved with finalizing
necessary financing arrangements that enabled the Reorganized
Debtors to exit from Chapter 11.
Lucinda M. Baier, Movie Gallery's executive vice president and
chief financial officer, disclosed that the Company has spent
significant time during the first, second, and third quarters of
2008, preparing for confirmation of its Plan and the Reorganized
Debtors' emergence from Chapter 11. Subsequent to the Effective
Date, the Debtors focused on implementing the post-emergence
aspects of the Plan.
In addition, the Debtors spent time reviewing inventories,
leases, goodwill and other assets for possible impairment
charges, and adopting the accounting requirements under AICPA
Statement of Position 90-7, Financial Reporting of Entities in
Reorganization Under the Bankruptcy Code, including the "fresh
start" provisions of SOP 90-7, Ms. Baier told the SEC.
According to Ms. Baier, the amounts and classification of certain
items previously reported in the Company’s consolidated financial
statements will be materially different in the second quarter
2008 financial results, owing to the consummation by the
Reorganized Debtors of the transactions contemplated by the Plan.
As a result of the adoption of the provisions of SOP 90-7, the
Company's consolidated financial statements for Q2 2008 will
require, among other things, that assets and liabilities be
restated to their fair values as of the Effective Date, and,
therefore, will not be comparable to those of prior periods, Ms.
Baier added.
The results of operations that the Company will include in its
second quarter Form 10-Q needs to be finalized by management and
reviewed by the Company's independent registered public
accounting firm. Accordingly, Ms. Baier asserts that "it is not
appropriate to provide an estimate of [the second quarter]
results at this time."
The Company is making diligent efforts to file its Form 10-Q for
the second quarter of 2008, as soon as possible, Ms. Baier
assured the SEC.
About Movie Gallery
Headquartered in Dothan, Alabama, Movie Gallery Inc. --
http://www.moviegallery.com/-- is a home entertainment specialty
retailer. The company owns and operates 4,600 retail stores that
rent and sell DVDs, videocassettes and video games. The company
has operations in Mexico.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849
to 07-33853). Anup Sathy, Esq., Marc J. Carmel, Esq., and
Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represent the
Debtors. Michael A. Condyles, Esq., and Peter J. Barrett, Esq.,
at Kutak Rock LLP, is the Debtors' local counsel. The Debtors'
claims & balloting agent is Kurtzman Carson Consultants LLC.
When the Debtors' filed for protection from their creditors,
they listed total assets of US$891,993,000 and total liabilities
of US$1,419,215,000.
The Official Committee of Unsecured Creditors has selected
Robert J. Feinstein, Esq., James I. Stang, Esq., Robert B.
Orgel, Esq., and Brad Godshall, Esq., at Pachulski Stang Ziehl &
Jones LLP, as its lead counsel, and Brian F. Kenney, Esq., at
Miles & Stockbridge PC, as its local counsel.
The U.S. Bankruptcy Court for the Eastern District of Virginia
confirmed the Debtors' Second Amended Chapter 11 Plan of
Reorganization on April 9, 2008. (Movie Gallery Bankruptcy News
Issue No. 33; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000)
MOVIE GALLERY: Sopris Wants $205MM Debt Converted Into Equity
-------------------------------------------------------------
In a regulatory filing with the Securities and Exchange Commission
dated Sept. 9, 2008, Movie Gallery Inc., disclosed that on
September 4, the company and Sopris Capital Advisors LLC, on
behalf of itself and certain related parties, gave notice of the
parties' desire to enter into a transaction to convert certain
first lien debt into equity.
According to C. J. Gabriel, Jr., Movie Gallery's president and
chief executive officer, the Notice is pursuant to the Amended
and Restated First Lien Credit and Guaranty Agreement, dated
March 8, 2007, as amended and restated as of May 20, 2008, among
the company and certain of its subsidiaries as Guarantors,
Wilmington Trust company, as administrative agent, and Deutsche
Bank Trust company Americas, as collateral agent.
The Notice specifies that:
(1) the company and Contributing Lenders desire to enter into
a transaction pursuant to which the Contributing Lenders
will assign Term Loans to the company in the aggregate
principal amount of up to $205,000,000, but not less than
$130,000,000, in exchange for shares of common stock, par
value $.001 per share of the company at the rate of
$10.00 per share; and
(2) the transaction would be subject to a number of
conditions, including:
-- the execution of mutually agreeable, definitive
documentation containing customary representations
and warranties and closing conditions;
-- the approval of the Audit Committee and the Board of
Directors of Movie Gallery; and
-- no existing Default or Event of Default to occur
under the Agreement on the date of conversion.
In accordance with the terms of the Agreement, each Lender has
the right to participate in the transaction by assigning its Term
Loans to Movie Gallery in exchange for Common Stock at the
Exchange Rate and under substantially similar documentation.
Movie Gallery has expressed a willingness to accept assignments
from Contributing Lenders and other assigning Lenders up to an
aggregate principal amount of $250,000,000 at the Exchange Rate.
As required under the terms of the Agreement, only a Notice of
the proposed transaction has been given by the company and
Sopris. No definitive documentation regarding the transaction
has been entered into by the parties and the company's Audit
Committee and Board of Directors has not yet approved the
proposed transaction.
Assuming all conditions of closing are satisfied, the transaction
is expected to close on or about October 6, 2008. However, no
assurance can be given that the transaction will be consummated.
A full text copy of the Capital Contribution Notice is available
for free at:
http://ResearchArchives.com/t/s?3235
About Movie Gallery
Headquartered in Dothan, Alabama, Movie Gallery Inc. --
http://www.moviegallery.com/-- is a home entertainment specialty
retailer. The company owns and operates 4,600 retail stores that
rent and sell DVDs, videocassettes and video games. The company
has operations in Mexico.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849
to 07-33853). Anup Sathy, Esq., Marc J. Carmel, Esq., and
Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represent the
Debtors. Michael A. Condyles, Esq., and Peter J. Barrett, Esq.,
at Kutak Rock LLP, is the Debtors' local counsel. The Debtors'
claims & balloting agent is Kurtzman Carson Consultants LLC.
When the Debtors' filed for protection from their creditors,
they listed total assets of US$891,993,000 and total liabilities
of US$1,419,215,000.
The Official Committee of Unsecured Creditors has selected
Robert J. Feinstein, Esq., James I. Stang, Esq., Robert B.
Orgel, Esq., and Brad Godshall, Esq., at Pachulski Stang Ziehl &
Jones LLP, as its lead counsel, and Brian F. Kenney, Esq., at
Miles & Stockbridge PC, as its local counsel.
The U.S. Bankruptcy Court for the Eastern District of Virginia
confirmed the Debtors' Second Amended Chapter 11 Plan of
Reorganization on April 9, 2008. (Movie Gallery Bankruptcy News
Issue No. 33; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000)
NBE LLC: Case Summary & Five Largest Unsecured Creditors
--------------------------------------------------------
Debtor: NBE LLC
14 Shorefront Park
Norwalk, CT 06854
Bankruptcy Case No.: 08-50862
Type of Business:
Chapter 11 Petition Date: September 16, 2008
Court: District of Connecticut (Bridgeport)
Judge: Alan H.W. Shiff
Debtors' Counsel: Ira B. Charmoy, Esq.
icharmoy@znclaw.com
Zeldes Needle & Cooper
1000 Lafayette Blvd
P.O. Box 1740
Bridgeport, CT 06601
Tel: (203) 333-9441
Fax: (203) 333-1489
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
Debtors' Consolidated List of Five Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Harleysville Insurance Co. Merchandise/services $2002.20
PO Box 37712
Philadelphia, PA 19101
Star Insurance Co Merchandise/services $2787.05
PO Box 4213
Sarasota, Fl 34230-4213
NKB Gas Sales Loan $46,500.00
14 Shorefront Park
Norwalk CT 06854
Oscar Lopez General Contractor Merchandise/services $6,912.00
4 Beechwood Lane
Westport, CT 06880
Francis Infurchia Merchandise/services $210.00
Public Accountants
45 East Avenue
Norwalk, CT 06851
NETBANK INC: Will Auction Domain Names & Trademarks in October
--------------------------------------------------------------
IpAuctions, Inc., will offer NetBank Inc.'s NetBank.com domain
names and trademarks in October, as part of a Chapter 11 disposal.
Many of the domains are being sold for the first time, since
NetBank was founded in 1996 at the peak of the Internet surge.
The bank had more than $4.8 billion in deposits with more than
285,000 customers in 2005 prior to its 2007 bankruptcy.
NetBank had a history of lawsuits challenging their use of their
early service mark, NetBank. In June 2001, a New Jersey banking
institution, Interstate NetBank, filed a suit against NetBank and
NetBank filed a counter claim for trademark infringement. The
District Court of New Jersey ruled "NETBANK" is generic for online
banking services delivered over the Internet.
About IpAcutions
IpAuctions Inc. is the leading online auction firm specializing in
the sale of intellectual property assets. The firm has a
proprietary database of more than 7,500 corporate and private
buyers, Internet Protocol attorneys and venture capitalists, who
wish to invest in IP assets. IpAuctions is a member of the
National Auctioneers Association and the ABI. The company is
based in Reno, Nev.
About NetBank
Headquartered in Jacksonville, Florida, NetBank, Inc. --
http://www.netbank.com/-- is a financial holding company of
Netbank, the United States' oldest Internet bank serving retail
and business customers in all 50 states. NetBank, Inc. does
retail banking, mortgage banking, business finance, and provides
ATM and merchant processing services.
The company filed for chapter 11 protection on Sept. 28, 2007
(Bankr. M.D. Fla. Case No. 07-04295). Alan M. Weiss, Esq., at
Holland & Knight LLP, represents the Debtor. The U.S. Trustee for
Region 21 appointed six creditors to serve on an Official
Committee of Unsecured Creditors of the Debtor's case. Rogers
Towers, Esq. at Kilpatrick Stockton LLP, represents the Committee
in this case. Rogers Towers P.A. serves as co-counsel to the
Committee. As of Sept. 25, 2007, the Debtor listed total assets
of $87,213,942 and total debts of $42,245,857.
NEW YORK RACING: Emerges From Chapter 11 Bankruptcy
---------------------------------------------------
Jerry Bossert at NY Daily News reports that The New York Racing
Association Inc., a.k.a. NYRA, emerged from Chapter 11 bankruptcy
on Friday.
As reported in the Troubled Company Reporter on Aug. 14, 2008,
NYRA pushed back its exit from Chapter 11 bankruptcy to Sept. 2,
2008, as it sought for a video-lottery operator for its Aqueduct
track. NYRA was expected to emerge on June 30, 2008, but it
postponed its emergence until July 31, 2008, while it made
improvements to the approved franchise that permits NYRA to
operate horse races for 25 years. The postponement surfaced after
the state of New York reached an agreement with NYRA on June 13,
2008, that enabled the state to control its off-track betting.
According to NY Daily, the new NYRA officially went into business
last week after filing Articles of Incorporation with the
Secretary of State of New York, and will continue operating racing
at Aqueduct, Belmont, and Saratoga for the next 25 years.
NY Daily relates that the old NYRA gave up its claim to the land
where its three tracks are built for $105 million, of which
$75 million will be paid to creditors, property taxes, and pension
debts. The debt it owes to the state has been forgiven, the
report adds.
The Hon. James M. Peck of the U.S. Bankruptcy Court for the
Southern District of New York approved NYRA's reorganization plan,
which includes revenue from the 4,500-VLT racino at Aqueduct, on
Thursday, NY Daily says.
An operator for the racino will be named in the next couple of
weeks, NY Daily says, citing a spokesperson New York's David
Patterson. According to NY Daily, NYRA will also have a new Board
of Trustees comprised of 14 members appointed by NYRA and 11
state-appointed members.
About NYRA
Based in Jamaica, New York, The New York Racing Association
Inc. aka NYRA -- http://www.nyra.com/-- operates racing tracks in
Aqueduct, Belmont Park and Saratoga. The company filed for
chapter 11 protection on Nov. 2, 2006 (Bankr. S.D.N.Y. Case No.
06-12618). Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP,
Henry C. Collins, Esq., at Cooper, Erving & Savage LLP, and
Irena M. Goldstein, Esq., at Dewey Ballantine LLP represent the
Debtor in its restructuring efforts. Jeffrey S. Stein of The
Garden City Group Inc. serves as the Debtor's claims and noticing
agent. The U.S. Trustee for Region 2 appointed an Official
Committee of Unsecured Creditors and Edward M. Fox, Esq., Eric T.
Moser, Esq., and Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart
Preston Gates Ellis LLP, represent the Committee.
When the Debtor sought protection from its creditors, it listed
assets of $153 million and debts of $310 million.
NORTHLAKE FOODS: Files for Chapter 11 Bankruptcy in Florida
-----------------------------------------------------------
Michael Bathon of Bloomberg News reports that Northlake Foods,
Inc., filed for Chapter 11 bankruptcy protection on Sept. 15,
2008, with the U.S. Bankruptcy Court for the Middle District of
Florida (Case No. 08-14131) to prevent Waffle House, Inc., from
ending its franchise agreement.
The Debtor, according to the report, said it manages 146 Waffle
House Franchises throughout Florida, Georgia and Virginia, and has
about 3,000 employees. Ninety of the restaurants, according to
the report, are located in Florida, court papers show.
The Debtor, according to the report, said it was faced with an
immediate cash flow shortage, and the "current economic conditions
have only exacerbated the situation."
The report notes that Bank of America NA, has a secured claim of
$9.7 million against the Debtor. Unsecured creditors, mainly
landlords and vendors, are owed about $33 million. The Debor
said, according to the report, that the value of its assets is
unknown "but is presumed to be less than the value of the secured
debt."
The Debtor said that it had gross revenue of about $88 million for
2007, according to the report.
Tampa, Florida-based Northlake Foods, Inc., operates a Waffle
House, Inc., restaurant franchise. Roberta A. Colton, Esq., at
Trenam Kemker represents the Debtor in its restructuring efforts.
In its filing, it listed between $10,000,000 to $50,000,000 in
estimated assets and $10,000,000 to $50,000,000 in estimated
liabilities.
ONYX: Consents to Involuntary Chapter 11 Bankruptcy
---------------------------------------------------
Hubble Smith at the Las Vegas Review-Journal reports that David
Winterton -- the counsel for Onyx, f.k.a. Tropicana Inn Investors,
LLC -- said in a status hearing last week that the company
consents to the entry of an order for relief, which marks the
start of a Chapter 11 bankruptcy proceeding against Onyx.
The Review-Journal relates that these firms had filed the
involuntary bankruptcy petition against Onyx in the U.S.
Bankruptcy Court for the District of Nevada:
-- Jeffrey Stone,
-- Perlman Architects of California,
-- High Point Construction,
-- Alpine Steel,
-- Precision Concrete and
-- Sundance Pools & Spas, Inc.
The Review-Journal relates that attorney Laurel Davis, whose
client holds a mechanics' lien of about $4 million, said that a
potential buyer made a $35 million offer, though there's been no
verification of earnest money deposit or ability to close escrow.
The Hon. Mike Nakagawa is handling the case, the report says.
According to the Review-Journal, a number of deadlines for the
case will be established once the Judg eNakagawa issues an order
on the petition.
About Onyx
Las Vegas, Nevada-based Onyx, f.k.a. Tropicana Inn Investors, LLC,
owns a 2-acre, 63-unit condominium project. The $28 million mid-
rise project was announced in 2005 as an affordable alternative to
the high rises that were being constructed near the Strip. Units
at Onyx ranged from 740 square feet to 2,300 square feet and were
priced from $400,000 to more than $900,000.
The company filed for Chapter 11 protection on Aug. 4, 2008
(Bankr. D.Nev. Case No. 08-18719). Laurel E. Davis, Esq., at
Fennemore Craig, P.C., represents the Debtor in its restructuring
effort.
OPTIGENEX INC: Files Amended 2007 Annual Report With SEC
--------------------------------------------------------
On September 10, 2008, Optigenex Inc. delivered to the Securities
and Exchange Commission an amended Form 10-KSB. That amendment
still carries Stark Winter Schenkein & Co., LLP's opinion raising
substantial doubt about the company's ability to continue as a
going concern. Stark Winter audited the company's financial
statements as of December 31, 2007, and noted that the company has
incurred significant losses from operations and has working
capital and stockholder deficiencies. "These factors raise
substantial doubt about the Company's ability to continue as a
going concern."
At Dec. 31, 2007, the company's balance sheet showed $1,888,290 in
total assets, $9,570,619 in total liabilities, and $7,682,329 in
total stockholders' deficiency. The company has suffered
recurring losses from operations aggregating $25,822,860 and has a
working capital deficiency of $4,516,543.
A full-text copy of Optigenex's Amended Form 10-KSB is available
for free at http://researcharchives.com/t/s?3221
About Optigenex Inc.
Headquartered in Lyndhurst, N.J., Optigenex Inc. (OTC BB: OPGX.OB)
supplies bulk material and finished products featuring its
patented and wholly natural compound AC-11(R) as a core ingredient
to wholesale distributors, skin care and nutraceutical marketing
companies. In addition, the company licenses its technology and
trademark to third party marketers and manufacturers of skin care
and nutraceutical products.
The Troubled Company Reporter reported on May 28, 2008, that
Optigenex, Inc.'s consolidated balance sheet at March 31, 2008,
showed $1,768,727 in total assets and $13,084,660 in total
liabilities, resulting in a $11,315,933 total stockholders'
deficit. At March 31, 2008, the company's consolidated balance
sheet also showed strained liquidity with $434,830 in total
current assets available to pay $9,932,366 in total current
liabilities.
OXIS INTERNATIONAL: Marvin Hausman Resigns as Director
------------------------------------------------------
Maurice Spitz, president and acting chief executive officer of
OXIS International, disclosed in a regulatory filing with the
Securities and Exchange Commission that on September 4, 2008,
Marvin S. Hausman resigned as a director of OXIS International.
Dr. Hausman served as chairman of the board of directors and was a
member of the Compensation Committee.
Based in Foster City, California, Oxis International Inc. (OTC BB:
OXIS) -- http://www.oxis.com/-- focuses on the research and
development of technologies and therapeutic products in the field
of oxidative stress/inflammatory reaction, diseases that are
associated with damage from free radicals and reactive oxygen
species. A prime objective of OXIS is to use its broad portfolio
of oxidative stress biomarkers to identify associations between
reactive biomarker signals and various disease etiologies and
conditions. The company presently derives its revenues primarily
from sales of research diagnostic reagents and assays to medical
research laboratories. The company's diagnostic products include
approximately 45 research reagents and 26 assays to measure
markers of oxidative and nitrosative stress. The company holds
the rights to four therapeutic classes of compounds in the area of
oxidative stress and inflammation. One such compound is L-
Ergothioneine, a potent antioxidant produced by OXIS that may be
appropriate for sale over-the-counter as a dietary supplement.
Going Concern Doubt
Williams & Webster, P.S., in Spokane, Wash., expressed substantial
doubt about Oxis International 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 significant and ongoing operating losses.
The company has incurred an accumulated deficit of $73,475,000
through June 30, 2008. On a consolidated basis, the company had
cash and cash equivalents of $232,000 at June 30, 2008. The
company will need to seek additional loan or equity financing to
pay for basic operating costs, or to expand operations, implement
its marketing campaign, or hire additional personnel.
The Troubled Company Reporter reported on Aug. 29, 2008, that Oxis
International Inc.'s consolidated balance sheet at June 30,
2008, showed $1,387,000 in total assets and $4,154,000 in total
liabilities, resulting in a $2,767,000 stockholders' deficit. The
company reported a net loss of $2,533,000 on total revenue of
$1,476,000 for the second quarter ended June 30, 2008, compared
with net income of $1,085,000 on total revenue of $1,813,000 in
the same period last year.
PAETEC HOLDING: Gilder Gagnon Discloses 3.7% Equity Stake
---------------------------------------------------------
Gilder, Gagnon, Howe & Co. LLC disclosed in a regulatory filing
with the Securities and Exchange Commission that as broker, it may
be deemed to beneficially own 5,411,246 shares of PAETEC Holding
Corp.'s common stock, which is 3.7% of the total outstanding
shares.
The shares reported include:
-- 5,019,448 shares held in customer accounts over which
partners and employees of Gilder Gagnon have discretionary
authority to dispose of or direct the disposition of the
shares,
-- 293,123 shares held in accounts owned by the partners of
Gilder Gagnon and their families, and
-- 98,675 shares held in the account of the profit-sharing
plan of Gilder Gagnon.
Headquartered in Fairport, New York, PAETEC Holding Corp.
(NASDAQ GS: PAET) -- http://www.paetec.com/-- provides large,
medium-sized and, to a lesser extent, small business end-user
customers in metropolitan areas with a package of integrated
communications services that includes local and long distance
voice, data, and broadband Internet access services. PAETEC
Holding had approximately 3,900 employees as of March 1, 2008.
As of March 1, 2008, excluding the effect of the McLeodUSA merger,
PAETEC Holding had in service 124,261 digital T1 transmission
lines, which represented the equivalent of 2,982,264 telephone
lines, for over 30,000 business customers in a service area
encompassing 53 of the top 100 metropolitan statistical areas.
* * *
PAETEC Holding Corp. still carries Moody's Investors Service's
Caa1 senior unsecured debt rating assigned on June 21, 2007.
The Troubled Company Reporter, on Aug. 12, 2008, reported that
Standard & Poor's Rating Services revised its outlook on Fairport,
N.Y.-based competitive local exchange carrier (CLEC) PAETEC
Holding Corp. to stable from positive following the company's
announcement that 2008 revenue and EBITDA would fall short of its
original guidance. S&P affirmed all ratings, including the 'B'
corporate credit rating. Total operating lease-adjusted debt is
approximately $1.2 billion.
PEOPLE AGAINST DRUGS: Case Summary & Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: People Against Drugs Affordable Public Housing Agency
1702 N. Jupiter
Garland, TX 75042
Bankruptcy Case No.: 08-34696
Type of Business: The Debtor is an exempt charitable non-profit
corporation.
See: http://www.peopleagainstdrugs.org/
Chapter 11 Petition Date: September 17, 2008
Court: Northern District of Texas (Dallas)
Judge: Stacey G. Jernigan
Debtor's Counsel: Gerrit M. Pronske, Esq.
gpronske@pronskepatel.com
Pronske & Patel, P.C.
1700 Pacific Avenue, Suite 2260
Dallas, TX 75201
Tel: (214) 658-6500
Fax: (214) 658-6509
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Sessions Lambert Selwyn Legal Services $52,875
1700 Pacific Ave., Suite 2250
Dallas, TX 75201
Munsch Hardt Legal Services $48,022
3800 Lincoln Plaza
Dallas, TX 75201
Bank of America Platinum Visa Credit Card $47,964
P.O. Box 15731
Wilmington, DE 19886
Strasburger & Price Legal Services $40,448
Commerce Bank Credit Card $31,700
Advanta Credit Card $24,690
Meadows, Collier, Reed Legal Services $19,366
Shell Credit Card $12,530
Home Depot Credit Card $12,471
The Associates Credit Card $11,866
Home Depot Credit Card $11,044
Office Depot Credit Card $10,698
Citibusiness Advantage Credit Card $9,986
Wm. Stukey & Associate Accounting Services $9,500
GMAC Car Loan $9,202
American Express Credit Card $6,521
Exxon Mobil Credit Card $4,944
Athletic World Advertising Marketing $3,989
Office Max Credit Card $3,487
HSBC Business Solutions
TNT Painting Painting Services $3,188
PEREGRINE PHARMA: Reports $5MM Net Loss for July 2008
-----------------------------------------------------
Peregrine Pharmaceuticals Inc. reported $5,086,000 net loss on
total revenues of $1,517,000 for the three months ended July 31,
2008, compared to $4,656,000 net loss on total revenues of
$1,625,000 for the same period a year ago.
The company's consolidated balance sheets showed total assets of
$22,808,000 and total debts of $12,028,000 resulting in a
$10,780,000 stockholder's equity.
The company said that it had $9,963,000 in cash and cash
equivalents at July 31, 2008. It has expended substantial funds
on (i) the research, development and clinical trials of its
product candidates, and (ii) funding the operations of Avid.
As a result, it experienced negative cash flows from operations
since its inception and its expects to continue to experience
negative cash flows from operations for the foreseeable future,
the company pointed out.
The company said that it will need to raise additional capital
through one or more methods, including equity or debt financings,
in order to support the costs of its clinical and pre-clinical
programs.
Going Concern Doubt
Ernst & Young LLP expressed substantial doubt about Peregrine
Pharmaceuticals Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements as
of the years ended April 30, 2008, and 2007. The auditing firm
pointed several uncertainties surrounding the company's future
cash flow including termination of contracts and technical
challenges, which would delay or reduce the company's future
projected cash-inflows.
A full-text copy of the company's consolidated balance sheets for
the quarter period ended July 31, 2008, is available for free at:
http://ResearchArchives.com/t/s?323b
Headquartered in Tustin, California, Peregrine Pharmaceuticals
Inc. (NASDAQ:PPHM) -- http://www.peregrineinc.com/-- is a
clinical-stage biopharmaceutical company developing monoclonal
antibodies for the treatment of cancer and hepatitis C virus
infection. The company is advancing three separate clinical
programs with its compounds bavituximab and Cotara that employ its
two platform technologies: Anti-Phosphatidylserine therapeutics
and Tumor Necrosis Therapy.
PLASTECH ENGINEERED: Disclosure Statement Hearing Moved to Oct. 8
-----------------------------------------------------------------
The United States Bankruptcy Court for the Eastern District of
Michigan adjourned the hearing to consider approval of the
Disclosure Statement explaining Plastech Engineered Products Inc.
and its debtor-affiliates' Joint Plan of Liquidation to October 8,
2008. The Court will also determine on that date approval of the
Debtors' proposed Solicitation Packages as well as the Voting and
Tabulation Procedures on the Plan.
General Electric Capital Corporation, Eisenmann Corporation,
Philip Martens, and H.S. Die Engineering, Inc., in separate
filings, ask the Court to deny approval of the Disclosure
Statement.
(A) GE Capital
GE Capital complains that the Disclosure Statement (i) failed to
state the available amount to equipment lessors' administrative
expense claim under the Plan; and (ii) does not provide for equal
treatment on the timing and manner of payment between equipment
lessors and other administrative expense claim holders.
The Plan and the Disclosure Statement provides for administrative
expense claim payments in full on the Plan Effective Date.
However, GE Capital notes that the Plan and Disclosure Statement
provides that a Liquidating Trustee pay equipment lessors'
administrative expense claims only upon entry of a final order on
the claims out of a lease reserve which, Daniel G. Kielezewski,
Esq., counsel to GE Capital, at Abbott Nicholson Quilter Esshaki
& Youngblood, P.C., in Detroit, Michigan, says, the Debtors will
determine in their sole judgment.
"It is clear . . . that lease claims that arise under Section
365(d)(5) [of the Bankruptcy Code]. . . are generally no
different from other administrative expense claims and that the
Bankruptcy Code requires that all administrative expense claims
be paid in full, in cash," Mr. Kielezewski argues.
GE Capital asserts that the Debtors should have separately
classified Equipment Lessors in the Plan and Disclosure Statement
on account of Decoma International of America, Inc.'s or JCIM,
LLC's additional protection of back-stop to equipment lessors,
pursuant to their Asset Purchase Agreements. "At the very least,
the Debtors should make it explicit in the Plan and Disclosure
Statement that the Equipment Lessors are not limited in their
recovery of administrative expense . . . during the time period
which Decoma or JCIM agreed to back-stop the amounts," Mr.
Kielezewski asserts.
GE Capital is also concerned that the Debtors have not presented
a budget for equipment lease payments beyond August 31, 2008. GE
Capital has certain leases with the Debtors that are yet to be
rejected effective September 30 or October 31, 2008, Mr.
Kielezewski tells the Court.
(B) Eisenmann
Eisenmann complains that the Disclosure Statement, not only
failed to provide adequate information on the Plan, but also
burdens the creditors with the Disclosure Statement's overly
technical language. "Disclosure statements must contain simple
and clear language to enable creditors to intelligently accept or
reject a plan," Eisenmann emphasizes.
Eisenmann further complains that the Disclosure Statement did not
provide adequate information on the value of available assets,
asset valuation methods, and the liens against those assets. To
that extent, Eisenmann tells the Court that it cannot determine
the value of the property on which it holds a mechanic lien
against Debtor LDM Technologies, the proposed property
disposition or any other liens and the priority of those other
liens on the Debtors' property.
(C) Philip J. Martens
Philip J. Martens asserts that the Disclosure Statement failed to
provide adequate information on the Debtors' proposed settlement
terms with the Brown Family and other insiders.
Thomas R. Morris, Esq., counsel to Mr. Martens, at Silverman &
Morris, P.L.L.C., in West Bloomfield, Michigan, complains that
although the Disclosure Statement explained that Julie Brown
received a $9,250,000 sale fee pursuant to the Brown Settlement,
the Disclosure Statement did not explain the term "sale fee", and
why Ms. Brown was paid that sale fee.
Mr. Morris adds that the Disclosure Statement also failed to
explain if the Brown Settlement fully released Julie N. Brown,
James A. Brown, and other Brown Family members, noting that the
Brown Settlement provided for the release of the Browns by the
Debtors and certain non-debtors.
Mr. Morris asserts that if the Browns were fully released under
the Brown Settlement, why then did the Disclosure Statement
mention that the Plan confirmation will result to certain
releases in favor of the Browns? Along that line, Mr. Morris
proposed that if the Brown Settlement was not a complete and
final settlement, the Disclosure Statement should explain what
claims or causes of action are to be waived in favor of the Brown
entities, and why those claims or causes of action are to be
waived. Mr. Morris further points out that the Disclosure
Statement did not mention if the Debtors' transactions with the
Brown Entities and Plastech Holdings were investigated, and what
were the results of that investigation, if any.
Furthermore, Mr. Morris says that pursuant to the Plan, other
members of the Debtors' management, as well as professionals
retained in these Chapter 11 cases would also be released. The
Plan also failed to adequately inform creditors of the benefits,
necessity and possible significance of those releases, Mr. Morris
tells the Court.
(D) H.S. Die
H.S. Die asserts that the Disclosure Statement did not advise
creditors and parties-in-interest on the Debtors' sealed Tooling
Orders with Chrysler, LLC, and with Ford Motor Company,
substituting for Chrysler. The Disclosure Statement should be
amended not only to include reference to the Tooling Orders but
also to disclose that the terms and obligations under the Tooling
Orders will remain fully enforceable after the Plan confirmation,
notwithstanding any contrary provisions in the Disclosure
Statement or the Plan, H.S. Die asserts.
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. 31; 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.
POKAGON GAMING: S&P Lifts Issuer Credit Rating to 'B+' from 'B'
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on the
Pokagon Gaming Authority; the issuer credit rating was raised to
'B+' from 'B'. The rating outlook is stable. The PGA owns and
operates the Four Winds Casino & Resort in New Buffalo, Michigan.
"The upgrade reflects solid operating performance at Four Winds in
the first half of 2008, and our expectation that this trend will
continue given the quality of the resort, which continues to
attract significant visitation," said Standard & Poor's credit
analyst Ariel Silverberg.
Operating results for this new property are tracking close to
management's original expectations, and credit measures remain
good for the rating, providing a cushion to absorb an increase in
regional competition and/or the potential for additional
expansion-related spending over time. In addition, required
amortization payments associated with loans from Great Lakes
Gaming, the manager of the Four Winds property, and the furniture,
fixture, and equipment loan will result in debt balances declining
each year in the future.
Four Winds is located about 75 miles east of Chicago, Illinois,
and is conveniently located off I-94. The facility features 3,000
slot machines, 100 table games, and a 165-room full-service hotel.
Standard & Poor's expects that, given Four Winds' high-quality
relative to its competition, the facility will continue to attract
visitors and drive EBITDA growth. S&P expects the facility to
maintain a good position in its northern Indiana and Chicago-area
market, as it is not subject to the same commercial tax rates as
its competitors and it is the only land-based facility in the
market.
The 'B+' rating reflects the PGA's lack of diversity in its gaming
operations, a high interest and amortization burden, and a
competitive market environment. These issues are somewhat
tempered by the relatively higher quality of the Four Winds
facility as compared to its competitors.
While financial information is not publicly available, operating
performance in the first six months of 2008 has tracked in line
with management's initial expectations, leading to meaningful cash
flow generation in the first half of the year. Credit measures
are good for the rating, providing a cushion for additional
competition and for potential expansion-related spending in the
future.
POPE & TALBOT: BC Court Grants CCAA Protection to Canadian Units
---------------------------------------------------------------
At the request of PricewaterhouseCoopers Inc., the receiver for
the Pope & Talbot Inc.'s Canadian affiliates' assets, the Supreme
Court of British Columbia, on Aug. 27, 2008, ruled that until
Oct. 17, 2008, no proceeding or enforcement process in any court
or tribunal may be commenced or continued against or in respect of
the Applicants and the Receiver.
The Canadian Court, however, clarified that the right of Western
Forest Products Inc., to terminate its fiber supply agreements
will be governed by the Court Order dated Aug. 13, 2008.
The Canadian Court authorized the relief of the Applicants from
any forfeiture of their chip supply agreement and residual fiber
supply agreement with Canadian Forest Products Ltd., subject to:
-- the Receiver's payment of all amounts due under the fiber
Supply Agreements; and
-- the assignment of the Mackenzie pulp mill to its purchaser.
The Receiver will either pay the amounts to Canfor, or a trust,
pending determination of the outstanding amounts under the fiber
Supply Agreements, the Canadian Court held.
The Honourable Justice Brenner enjoined Canfor from terminating
the fiber Supply Agreements by virtue of any monetary default by
the Applicants.
The Canadian Court, however, granted Canfor leave to appeal its
August 27 Order, pursuant to Section 13 of the Companies
Creditors Arrangement Act.
About Pope & Talbot
Based in Portland, Oregon, Pope & Talbot Inc. (Other OTC:
PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products
business. Pope & Talbot was founded in 1849 and produces market
pulp and softwood lumber at mills in the US and Canada. Markets
for the company's products include the US, Europe, Canada, South
America and the Pacific Rim.
PricewaterhouseCoopers Inc. petitioned for Chapter 15 Bankruptcy
on Aug. 22, 2008, (Bankr. D. Del. Lead Case No.: 08-11933) 14
debtor-affiliates with pending Chapter 7 cases also filed for
separate Chapter 15 petitions. Michael R. Lastowski, Esq. at
Duane Morris LLP represents the Debtors in their restructuring
efforts. The Debtors listed assets between $100 million to $500
million and debts between $100 million to $500 million.
On Oct. 28, 2007, the company and its U.S. and Canadian
subsidiaries applied for protection under the Companies' Creditors
Arrangement Act of Canada. The Debtors' CCAA Stay expired
on Jan. 16, 2008.
On Nov. 19, 2007, the company and 14 of its debtor-affiliates
filed for Chapter 11 protection (Bankr. D. Del. Lead Case No.
07-11738). The Court converted their Chapter 11 cases to a
Chapter 7 liquidation proceeding.
Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21,
2007, filed an application for relief under Belgian bankruptcy
laws in the commercial court in Brussels. If the Belgian court
grants Pope & Talbot Europe's application, it is expected it will
be liquidated through the bankruptcy proceeding.
(Pope & Talbot Bankruptcy News, Issue No. 26; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
POPE & TALBOT: Court Recognizes Filing as Foreign Main Proceeding
-----------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
recognized the receivership proceedings of Pope & Talbot Inc. and
its debtor-affiliates in British Columbia, Canada, as a foreign
main proceeding under Section 1517 of the Bankruptcy Code.
Judge Christopher Sontchi ruled on Sept. 5, 2008, that all
provisions of Section 1520 of the Bankruptcy Code will apply to
the Debtors' Chapter 15 cases, including the enforcement of the
automatic stay throughout the duration of their bankruptcy
proceedings.
The Bankruptcy Court entitled the PricewaterhouseCoopers Inc.,
the Canadian Court-appointed receiver and duly authorized foreign
representative for Pope & Talbot in a Canadian receivership
proceeding pending in British Columbia:
(1) protections of the stay accorded to a Chapter 11 Trustee;
and
(2) participation as a party-in-interest in the Debtors'
Chapter 7 cases.
Judge Sontchi enjoined all entities, except those authorized by
the Receiver, from:
* commencing or continuing an action concerning the Debtors'
assets, rights, obligations or liabilities;
* executing against the Debtors' assets within the territorial
jurisdiction of the United States;
* taking any act to exercise control over the Debtors or any
assets of their assets;
* taking any act to create, perfect or enforce a lien or other
security interest, setoff or other claim against the Debtors
or the Receiver;
* transferring, encumbering, relinquishing or disposing any of
the Debtors' assets to any entity other than the Receiver;
or
* managing, exercising control over, or possessing any of the
Debtors' assets.
The Bankruptcy Court granted the Receiver, on an interim basis:
-- authority for the administration or realization of all of
the Debtors' assets within the U.S; and
-- the rights, powers, protections, privileges and immunities
of a trustee in a bankruptcy in the U.S.
During the interim period, no action by the Receiver will be
deemed as a waiver of the immunity afforded by Sections 306 and
1510 of the Bankruptcy Code, the Court held.
About Pope & Talbot
Based in Portland, Oregon, Pope & Talbot Inc. (Other OTC:
PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products
business. Pope & Talbot was founded in 1849 and produces market
pulp and softwood lumber at mills in the US and Canada. Markets
for the company's products include the US, Europe, Canada, South
America and the Pacific Rim.
PricewaterhouseCoopers Inc. petitioned for Chapter 15 Bankruptcy
on Aug. 22, 2008, (Bankr. D. Del. Lead Case No.: 08-11933) 14
debtor-affiliates with pending Chapter 7 cases also filed for
separate Chapter 15 petitions. Michael R. Lastowski, Esq. at
Duane Morris LLP represents the Debtors in their restructuring
efforts. The Debtors listed assets between $100 million to $500
million and debts between $100 million to $500 million.
On Oct. 28, 2007, the company and its U.S. and Canadian
subsidiaries applied for protection under the Companies' Creditors
Arrangement Act of Canada. The Debtors' CCAA Stay expired
on Jan. 16, 2008.
On Nov. 19, 2007, the company and 14 of its debtor-affiliates
filed for Chapter 11 protection (Bankr. D. Del. Lead Case No.
07-11738). The Court converted their Chapter 11 cases to a
Chapter 7 liquidation proceeding.
Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21,
2007, filed an application for relief under Belgian bankruptcy
laws in the commercial court in Brussels. If the Belgian court
grants Pope & Talbot Europe's application, it is expected it will
be liquidated through the bankruptcy proceeding.
(Pope & Talbot Bankruptcy News, Issue No. 26; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
POPE & TALBOT: Receiver to Sell Washington Assets for $95,820
-------------------------------------------------------------
PricewaterhouseCoopers Inc., the duly recognized foreign main
representative of Pope & Talbot Inc. and its debtor-affiliates'
Chapter 15 cases, and receiver for the Debtors' assets, seeks
authority from the United States Bankruptcy Court for the District
of Delaware to sell the Debtors' real property located in
Northport, Washington, free and clear of all liens, to 351513 B.C.
Ltd., for $95,820.
The Receiver retained Colliers International Inc. to market the
Washington Property in both Canada and the U.S.
Michael R. Lastowski, Esq., at Duane Morris LLP, in Wilmington,
Delaware, relates that Colliers solicited bids from a number of
interested parties. 351513 BC, a subsidiary of H&M Group,
submitted the highest bid, Mr. Lastowski tells Judge Sontchi.
The Purchased Assets includes all trade fixtures found in the
property, except a 1973 CAT Loader. 351513 BC has provided
earnest money for $4,791 on March 20, 2008. Moreover, 351513 BC
has been paying all costs of security and utility services for
the Northport Property since February 2008, totaling $14,525, Mr.
Lastowski discloses.
Mr. Lastowski states that the purchase price will be paid in cash
at the closing on September 30, 2008, and is not subject to any
financing condition. He clarifies that 351513 BC will not assume
any liabilities or obligations of, or relating to, the Debtors or
the Northport Property, including liabilities relating to
products, employees or environmental matters.
Moreover, 351513 BC has already deposited the $4,791 earnest
money deposit with Columbia Title Company of Colville Washington,
Mr. Lastowski states. The funds will be credited towards the
Purchase Price at closing, he adds. In the event no Closing
occurs, either the Earnest Money will be refunded to 351513 BC or
the Receiver will seek for the reimbursement to 351513 for all
reasonable expenses. The reimbursement will be taken from the
proceeds of the sale of the Northport Property.
Mr. Lastowski points out that the Receiver can recover $100,000
on the Sale for the Debtors' estates. If no sale happens, either
Ableco Finance LLC, the Debtors' term loan agent pursuant to a
Credit Agreement, will foreclose on the Northport Property; or,
the Receiver will seek abandonment, none of which will confer
benefit to the parties-in-interest, he reasons out.
Craig Bushell, senior vice president of the Receiver, filed a
declaration in support of the Receiver's request to sell the
Northport Property to 351513 BC.
About Pope & Talbot
Based in Portland, Oregon, Pope & Talbot Inc. (Other OTC:
PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products
business. Pope & Talbot was founded in 1849 and produces market
pulp and softwood lumber at mills in the US and Canada. Markets
for the company's products include the US, Europe, Canada, South
America and the Pacific Rim.
PricewaterhouseCoopers Inc. petitioned for Chapter 15 Bankruptcy
on Aug. 22, 2008, (Bankr. D. Del. Lead Case No.: 08-11933) 14
debtor-affiliates with pending Chapter 7 cases also filed for
separate Chapter 15 petitions. Michael R. Lastowski, Esq. at
Duane Morris LLP represents the Debtors in their restructuring
efforts. The Debtors listed assets between $100 million to $500
million and debts between $100 million to $500 million.
On Oct. 28, 2007, the company and its U.S. and Canadian
subsidiaries applied for protection under the Companies' Creditors
Arrangement Act of Canada. The Debtors' CCAA Stay expired
on Jan. 16, 2008.
On Nov. 19, 2007, the company and 14 of its debtor-affiliates
filed for Chapter 11 protection (Bankr. D. Del. Lead Case No.
07-11738). The Court converted their Chapter 11 cases to a
Chapter 7 liquidation proceeding.
Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21,
2007, filed an application for relief under Belgian bankruptcy
laws in the commercial court in Brussels. If the Belgian court
grants Pope & Talbot Europe's application, it is expected it will
be liquidated through the bankruptcy proceeding.
(Pope & Talbot Bankruptcy News, Issue No. 26; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
PORTOLA PACKAGING: Gets Initial OK to Use GECC's $75 Mil. Facility
------------------------------------------------------------------
The Hon. Christopher S. Sontchi of the United States Bankruptcy
Court for the District of Delaware authorized Portola Packaging
Inc. and its debtor-affiliates to obtain, on an interim basis,
up to $75,000,000 in debtor-in-possession financing from (i) GE
Capital Markets Group Inc., as syndication agent, and General
Electric Capital Corporation, as administrative and collateral
agent, and (ii) Wayzata Investment Partners LLC, as administrative
and collateral agent. He also authorized the Debtors to use cash
collateral securing repayment of secured loan to the lenders.
A hearing is set for Sept. 22, 2008, at 4:00 p.m., to consider
final approval of the Debtors' motion.
The Debtors told the Court that the lenders agreed to provide up
to $79,000,000 in financing, on a final basis. The committed
$79,000,000 consists of (i) a $50,000,000 million in postpetition
financing under the fifth amended and restated senior postpetition
credit agreement dated Aug. 27, 2008, between the Debtors and
GECC, and (ii) a $79,000,000 less the GECC payoff amount under the
second amended and restated postpetition credit agreement dated
Aug. 27, 2008, among the Debtors and Wayzata.
As of their bankruptcy filing, the Debtors owe at least
$48,306,767 plus accrued and unpaid interest of $239,126 to GECC
and $22,500,000 plus accrued and unpaid interest of $329,000 to
Wayzata.
Sean T. Greecher, Esq., at Young Conaway Stargatt & Taylor LLP,
said that the Debtors have an immediate need to obtain the DIP
financing and use cash collateral to permit the Debtors to, among
other things:
-- continue to operate their businesses;
-- maintain business relationships with vendors, suppliers and
customers;
-- pay employee wages in the ordinary course;
-- make necessary capital expenditures;
-- satisfy other working capital and operational needs; and
-- make intercompany transfers to non-debtor affiliates for
similar purposes.
Under the first lien DIP financing agreement, the DIP loan will
incur a variable rate of 2.5% per annum plus a floating rate equal
to the higher of (i) the rate publicly quoted from time to time by
The Wall Street Journal as the "base rate on corporate loans
posted by at least 75% of the nation's 30 largest banks" and (ii)
the Federal Funds Rate plus 50 basis points per annum. Under the
second lien DIP financing agreement, the DIP loan will accrue
interest at 12.0%. Furthermore, the DIP liens will incur default
rate of interest at 2.0% in excess of the rates otherwise payable,
after the occurrence and during the continuance of an event of
default.
Furthermore, the DIP liens are subject to $1,250,000 carve-out
for payment of fees, expenses and costs of professionals retained
by the Debtors or the committee.
To secure their DIP obligations, the lenders will be granted
allowed superpriority administrative expense claims over any and
all other administrative claims against the Debtor pursuant to
Section 364(c)(1) of the Bankruptcy Code.
The DIP credit agreements contain customary and appropriate events
of default including, among other things, failure to make required
payments, default under other debt agreements, and breach of
covenants and warranties.
A full-text copy of the Second Amended and Restated Senior
Postpetition Credit Agreement dated Aug. 27, 2008, is available
for free at http://ResearchArchives.com/t/s?3227
A full-text copy of the Fifth Amended and Restated Senior
Postpetition Credit Agreement dated Aug. 27, 2008, is available
for free at http://ResearchArchives.com/t/s?3228
A full-text copy of the the 13 Week Cash Flow Budget is available
for free at http://ResearchArchives.com/t/s?3229
About Portola Packaging
Portola Packaging Inc. -- http://www.portpack.com/-- designs,
manufactures, and markets a full line of tamper-evident plastic
closures, bottles, and equipment for the beverage and food
industries, as well as plastic closures and containers for the
cosmetics industry. The company and 6 of its debtor-affiliates
filed for Chapter 11 reorganization on Aug. 27, 2008 (Bankr. D.
Del. Lead Case No. 08-12001). Edmon L. Morton, Esq., Robert S.
Brady, Esq., and Sean T. Greecher, Esq., at Young, Conaway,
Stargatt & Taylor, represent the Debtors as counsel. When the
Debtors filed for protection from their creditors, they listed
assets of between $50 million and $100 million, and debts of
between US$100 million and US$500 million. The company has
locations in China, Mexico and Belgium.
PPM RIVIERA: Fitch Lifts Ratings on Two Notes Classes to 'CCC'
--------------------------------------------------------------
Fitch Ratings has upgraded and removed from Rating Watch Negative
two classes of notes issued by PPM Riviera Loan Fund, Ltd. These
rating actions are effective immediately:
-- $21,735,000 class A-1 to 'CCC' from 'CC';
-- $11,665,000 class A-2 to 'CCC' from 'CC';
-- $22,000,000 class B remain at 'CC'.
The rating actions reflect the application of methodology outlined
under Fitch's updated Market Value Structures criteria. In
addition, the ratings consider the sustained market value decline
in the secondary leveraged loan market that has increased the
vulnerability of these classes to a deteriorating credit
environment. Fitch continues to be concerned about pricing
volatility in leveraged loan secondary markets.
The class A-1 and A-2 notes were originally downgraded to 'CC'
when the transaction breached its liquidation trigger and a
liquidation of the portfolio appeared imminent. Since then the
transaction has stabilized due to a reduction in the TRS
referenced amount and a rebound in loan prices from February 2008
levels.
The upgrade of class A-1 and A-2 notes to 'CCC' reflects its
distance-to-trigger metric relative to the advance rate ranges
published in Fitch's updated MVS criteria. The DTT is back above
4% according to Fitch's most recent calculation, with the
portfolio categorized into 74% Category 2 assets, 22% Category 3
assets, and 4% Category 4 assets. The ratings of the class A-1
and A-2 notes also benefit from an additional cushion above the
transaction's liquidation trigger coupled with the additional
subordination provided by the class B notes.
The class B notes remain at 'CC', reflecting their significant
negative net asset value coverage level based on Fitch's
calculations. The class is not receiving interest payments and
may not receive any additional payments over the life of the
transaction.
PPM Riviera Loan Fund is a synthetic total rate of return
collateralized loan obligation with a market value termination
trigger. The transaction closed on Aug. 14, 2007 and is managed
by PPM America, Inc.
The ratings on the class A-1, A-2, and B notes address the timely
receipt of scheduled interest payments and the ultimate receipt of
principal as per the transaction's governing documents.
PRESCIENT APPLIED: Inks Merger Deal with Park City Group
--------------------------------------------------------
Prescient Applied Intelligence, Inc., disclosed in a Securities
and Exchange Commission filing that on Aug. 28, 2008, it entered
into an Agreement and Plan of Merger with Park City Group, Inc.,
PAII Transitory Sub, Inc. a wholly owned subsidiary of Park City,
and Randy Fields, Chairman and CEO of Park City. The Agreement
contemplates a merger of Sub with and into the Company pursuant to
which the Company will become a wholly owned subsidiary of Park
City.
Pursuant to the Agreement, at the effective time of the Merger,
(i) holders of shares of the common stock, $0.001 par value per
share, other than shares held by Park City or for which
holders have perfected appraisal rights under applicable
Delaware law, will receive cash payment of $0.055 per
share,
(ii) holders of shares of the Series G Convertible Preferred
Stock, $0.001 par value per share, other than shares held
by Park City or for which holders have perfected appraisal
rights under applicable Delaware law, will receive cash
payment of $1,136.36 per share; and
(iii) holders of shares of the Series E Convertible Preferred
Stock, $0.001 par value per share, other than shares held
by Park City or for which holders have perfected appraisal
rights, will receive cash payment of $4,098 per share.
At the Effective Time, all of the officers and directors will
resign and the Common Stock will no longer be registered under the
Securities Exchange Act of 1934, as amended, or eligible for
trading on the OTCBB.
The Merger Agreement provides for the appointment of Mr. Fields to
serve as the Company's Chief Executive Officer. Until the
Effective Time, the Agreement prohibits Mr. Fields from:
(i) executing any checks (except as a co-signor) or authorizing
any transfer of any funds of the Company;
(ii) causing the Company to make, offer or agree to make any
loan to any person;
(iii) causing the Company to incur or agree to incur any debt
except for trade debt in the ordinary course of business
consistent with past practice;
(iv) selling or offering or agreeing to sell any of the
Company's assets except in the ordinary course of business
consistent with past practice; or
(v) causing the Company to enter into any agreement with Park
City.
The Merger must be approved by the Company's stockholders. The
Agreement requires Park City to place into escrow $2,500,000 prior
to the date the Company mails a definitive proxy statement to its
stockholders and the balance of the funds necessary to complete
the Merger (approximately $2,300,000) at least one day prior to
the date of its stockholders meeting to approve the Merger.
Closing is conditioned upon approval of the Merger by the
Company's stockholders, there being no preliminary or permanent
injunction or other court order that prohibits the consummation of
the Merger, and Park City's and Mr. Fields' compliance in all
material respects all obligations required to be performed by them
under the Agreement.
The company may terminate the Agreement if Park City or Mr. Fields
breaches any provision of the Agreement, after an opportunity to
cure in some cases, in which event:
(i) all amounts placed into escrow will be transferred to the
Company and become its property; and
(ii) the company will be able to purchase from Park City at a
purchase price of $0.001 per share, 100% of the Privately
Purchased Shares, if $2,500,000 has been placed into escrow
or 50% of the Privately Purchased Shares if the full escrow
amount has been placed into escrow.
The company may also terminate the Agreement in the event it
withdraws its recommendation that the Merger be approved by
stockholders as a result of an alternative acquisition proposal or
otherwise in which event the company will be obligated to pay Park
City $250,000. The Agreement may also be terminated by mutual
consent of the Company and Park City or in the event that the
closing shall not have occurred by March 31, 2009.
Concurrent with the execution of the Agreement, Park City entered
into separate securities purchase agreements with certain
principal shareholders of the Company pursuant to which it
purchased an aggregate of 715.96 shares of Series E Stock, and
intends to purchase an additional 382.536 shares of Series E Stock
at a purchase price of $3,865.00 per share.
The Privately Purchased Shares constitute 66% of the issued and
outstanding shares of Series E Stock. Park City intends to
purchase all shares of Series G Stock and Common Stock held by
such persons at or prior to the Effective Time at per share
purchase prices of $1,136.36 and $0.05, respectively. In
connection with the forgoing, these holders entered into voting
agreements with Park City pursuant to which each has agreed to
vote all shares beneficially owned by them in favor of the Merger.
The forgoing covers 458.68 shares of Series G Stock, representing
96% of the issued and outstanding shares of Series G Stock, and
12,176,700 shares of Common Stock, representing 37% of the issued
and outstanding shares of Common Stock. The voting agreement
terminates in the event that the Agreement is terminated.
A copy of the agreement and plan of merger is available free of
charge at http://researcharchives.com/t/s?3207
About Prescient
Based in West Chester, Pa., Prescient Applied Intelligence, Inc.
(OTCBB:PPID) -- http://www.prescient.com/-- provides supply chain
and advanced commerce solutions for retailers and suppliers.
founded in 1985, Prescient's solutions capture information at the
point of sale, provide greater visibility into real-time demand
and turn data into actionable information across the entire supply
chain.
Going Concern Doubt
Amper, Politziner & Mattia P.C. expressed substantial doubt
Prescient's ability to continue as a going concern after it
audited the Company's financial statements for the years ended
Dec. 31, 2005. The auditing firm pointed to the Company's
recurring losses from operations and resulting dependence upon
access to additional external financing.
PROBE MANUFACTURING: Balance Sheet Upside-Down by $273,030
----------------------------------------------------------
Probe Manufacturing, Inc. filed with the U.S. Securities and
Exchange Commission on Sept. 3, 2008, an amendment to its
Annual Report on Form 10K/A for the year ended Dec. 31, 2007.
The Company had $1,897,127 in total assets and $2,170,157 in total
liabilities as of December 31, 2007. The Company had a net profit
of $374,896, generated $668,293 in net cash from operations and
improved their total stockholders deficit by $472,433 for the year
ended December 31, 2007. However, it still had a working capital
deficit of $174,657 and a total shareholder deficit of $273,030
as of December 31, 2007.
Probe Manufacturing said its ability to operate as a going concern
is still dependent upon its ability (1) to obtain sufficient debt
or equity capital; or (2) to continue generating positive cash
flow from operations.
Management is taking these steps to address this situation:
(a) to continue improving operational efficiencies by: (i) re-
negotiating direct material cost with all suppliers, (ii) by
setting up Managed inventory Solutions, such as bonded inventory
levels and auto-release programs with Probe Manufacturing's major
suppliers, whereby they maintain stock at their facilities and
deliver "Just-in-Time". This will improve the utilization of the
Company's line of credits with suppliers and maintains inventory
at its lowest value point; however from time to time inventory
levels may increase temporarily, due to scheduling issues and
acquisition of new customers or products; (iii) by improving all
systems and processes across operations and streamlining
production lines;
(b) The Company has refinanced its lines of credit with
agreements that have more attractive terms, as well as increased
the credit lines with suppliers;
(c) To increase revenue; (i) the Company is acquiring new
customers that are a better fit, (ii) and the Company is growing
the business with its existing customers with offering more value
added; and finally (iii) the Company is focusing on more stable
customer base such as medical device, aerospace, and alternative
fuel industries that have a better chance of maintaining their
manufacturing in Southern California instead of moving it to low
cost and offshore regions;
(d) to ensure long term sustainability of the Company, it is
allocating more resources to develop propriety technology within
the alternative energy industry while continuing to operate its
EMS business.
"The future success of the Company is likely dependent on its
ability to attain additional capital to support growth and
ultimately, upon its ability to continue profitable operations.
There can be no assurance that the Company will be successful in
obtaining such financing, or that it will continue to generate
sufficient positive cash flow from operations. The successful
outcome of these or any future activities cannot be determined at
this time and there is no assurance that if achieved, the Company
will have sufficient funds to execute its business plans. The
financial statements do not include any adjustments relating to
the recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that might result
should the Company be unable to continue as a going concern," the
Company said.
Probe Manufacturing's amended annual report can be viewed at
http://researcharchives.com/t/s?322c
About Probe Manufacturing
Based in Lake Forest, Calif., Probe Manufacturing Inc. (OTCBB:
PMFI) -- http://www.probemi.com/-- provides electronics
manufacturing services to original equipment manufacturers of
industrial, automotive, semiconductor, medical, communication,
military, and high technology products. It offers engineering,
supply chain management, and manufacturing services. The
company's engineering services include product design, printed
circuit board layout, prototyping, and test development. Its
supply chain management solutions comprise purchasing, management
of materials, and order fulfillment. The company's manufacturing
services include printed circuit board assembly, subsystem
assembly, box build and systems integration, the process of
integrating sub-systems, and downloading software before producing
a fully configured product. It also offers computer-aided, in-
circuit testing of assembled printed circuit boards; and final
system assembly, and test assemblies and modules, as well as
distribution services. The company was founded in 1993. It was
formerly known as Probe Manufacturing Industries, Inc., and
changed its name to Probe Manufacturing Inc., in 2005.
Going Concern Doubt
Denver-based Jaspers + Hall, PC, raised substantial doubt about
the ability of Probe Manufacturing, Inc., 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 accumulated deficit from operations and its difficulties
in maintaining sufficient working capital.
The company had a net profit of $374,896, generated $668,293 in
net cash from operations and improved its total stockholders
deficit by $472,433 for the year ended, Dec. 31, 2007. However,
the company still had a working capital deficit of $174,657 and a
shareholder's deficit of $273,030 as of Dec. 31, 2007. Therefore,
the ability of the company to operate as a going concern is still
dependent upon its ability to obtain sufficient debt or equity
capital and to continue generating positive cash flow from
operations.
The company posted net income of $374,896 on total sales of
$6,882,302 for the year ended Dec. 31, 2007, as compared with net
income of $150,894 on total sales of $9,310,464 in the prior
year.
At Dec. 31, 2007, the company's balance sheet showed $1,897,127 in
total assets and $2,170,157 in total liabilities, resulting in a
$273,030 stockholders' deficit.
The company's consolidated balance sheet at Dec. 31, 2007, also
showed strained liquidity with $1,685,345 in total current assets
available to pay $1,860,002 in total current liabilities.
R & G PROPERTIES: Case Summary & 8 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: R & G Properties, Inc.
149 Partridge Rd.-Berlin
Barre, VT 05641
Bankruptcy Case No.: 08-10876
Type of Business: Single Assets Real Estate
Chapter 11 Petition Date: September 17, 2008
Court: District of Vermont (Rutland)
Debtor's Counsel: Michelle M. Kainen, Esq.
mkainen@sover.net
Kainen Law Office
P.O. Box 919
White River Junction, VT 05001
Tel: (802) 296-2100
Fax: (802) 296-2055
Estimated Assets: $2,525,028
Estimated Debts: $4,023,725
Debtor's Eight Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Biederman Law Office Legal services $1,961.00
P.O. Box 6001
Rutland, VT 05702
Capmark Finance Inc. 5 mobile home $3,207,871.00
5 Park Plaza #400 parks ($2,525,000.00
Irvine, CA 92614 secured)
Lauren Kolitch Legal services $1,701.00
502 Mikhal Dr.
Waitsfield, VT 05673
Lisa Chalidze Legal services $39,324.00
548-560 Herrick St.
Benson, VT 05743
R & G Properties II, Inc. Loan $400.00
149 Partridge Rd.-Berlin
Barre, VT 05641
R & G Properties III, Inc. Legal fees $179.00
149 Partridge Rd.-Berlin
Barre, VT 05641
Ran-Mar Corporation Mobile Home parks $712,805.00
149 Partridge Rd.-Berlin ($2,350,000.00
Barre, VT 05641 secured)
Ran-Mar Corporation Services, 59,484.00
149 Partridge Rd.-Berlin maintenance and
Barre, VT 05641 repairs
RANCHO MANANA: Panel Has Not Been Appointed, Says U.S. Trustee
--------------------------------------------------------------
Ilene J. Lashinsky, U.S. Trustee for the District of Arizona, told
the U.S. Bankruptcy Court for the District of Arizona, that
despite efforts to contact unsecured creditors, there has not been
a sufficient showing of creditor interest to allow the appointment
of a Committee of Unsecured Creditors pursuant to
Sec. 1102(s) of the Bankruptcy Code.
About Rancho Manana
Based in Cave Creek, Ariz., Rancho Manana Ventures, LLC filed for
Chapter 11 relief of Aug. 13, 2008 (D. Ariz. Case No. 08-10441).
Thomas E. Littler, Esq., at Warnicke & Littler, P.L.C., represents
the Debtor as counsel. When the Debtor filed for protection from
its creditors, it listed assets of between $1 million and
$10 million, and debts of between $10 million and $50 million.
REALOGY CORP: Thinning Covenant Cushion Cues S&P's Rating Cut
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered Parsippany, New Jersey-
based Realogy Corp.'s corporate credit rating to 'B-' from 'B' and
lowered each of the company's issue ratings by one notch. The
outlook is negative.
"The downgrade reflects a thinning cushion in Realogy's senior
secured leverage covenant," said Standard & Poor's credit analyst
Emile Courtney, "at a time when market conditions so far in 2008
have worsened more than we expected earlier this year." In
addition, the timing for recovery in the U.S. residential real
estate market remains uncertain. Senior secured leverage was 4.9x
and the covenant requirement was 5.6x at June 2008, but the
leverage covenant steps down to 5.35x at the Sept. 30, 2008,
quarter and to 5.0x at Sept. 30, 2009. The downgrade also
reflects the rapid low-20% area rate of decline in transaction
sides and more-than-50% rate of decline in EBITDA in the six
months ended June 2008. "Another factor," added Mr. Courtney, "is
the expectation that Realogy's businesses will experience a
worsening pace of price declines for the remainder of the 2008 and
possibly into 2009."
REHRIG INT'L: Organizational Meeting to Form Panel Today
--------------------------------------------------------
The United States Trustee for Region 3, will hold an
organizational meeting in the Chapter 11 cases of Rehrig
International Incorporated on September 18, 2008 at 10:00 a.m. at
J. Caleb Boggs Federal Building, 844 King Street, Room 5209 in
Wilmington, Delaware.
The sole purpose of the meeting will be to form a committee or
committees of unsecured creditors in the Debtors' cases.
The organizational meeting is not the meeting of creditors
pursuant to Section 341 of the Bankruptcy Code. A representative
of the Debtor, however, may attend the Organizational Meeting, and
provide background information regarding the bankruptcy cases.
About Rehrig International
Headquartered in Richmond, Virginia, Rehrig International
Incorporated -- http://www.rehrig.org-- manufactures wire
products, plastic processed plastics, industrial trucks &
tractors, conveyors & conveying equipment, laminated plasticsand
sheet metal fabricator.
The company and its two affiliates filed for Chapter 11 protection
on September 5, 2008 (Bankr. D. Del. Case No. 08-12064). Richard
W. Riley, Esq., at Duane Morris LLP represents the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors they listed estimated assets
between $10 million and $50 million and estimated debts between
$10 million and $50 million.
REUNION INDUSTRIES: Inks Ch. 11 Settlement with Steel Partners
--------------------------------------------------------------
Reunion Industries Inc. has entered into a settlement agreement
with Steel Partners LLC, Steel Partners II L.P., WebFinancial
Corporation, and U.S. Bank, successor trustee under the Indenture.
The agreement was intended to resolve, discharge and settle the
Released Claims by the parties and their respective successors,
heirs, representatives and assigns.
A full-text copy of the Settlement Agreement is available for free
at http://ResearchArchives.com/t/s?3238
Headquartered in Pittsburgh, Pennsylvania, Reunion Industries,
Inc. owns and operates industrial manufacturing operations that
design and manufacture engineered, high quality products for
specific customer requirements. These products include large
diameter seamless pressure vessels, manufactured by its CP
Industries division, and hydraulic and pneumatic cylinders,
manufactured by its Hanna Cylinders division. In addition,
the Debtor has a 65% interest in Shanghai Klemp Metal Products
Co., Ltd., a Chinese company located in Shanghai, China.
Shanghai Klemp manufactures metal bar grating.
Reunion Industries filed for chapter 11 protection on Nov. 26,
2007 (Bankr. D. Conn. Case No. 07-50727). Two Reunion Industries
stockholders, Charles E. Bradley, Sr. Family, L.P., and John Grier
Poole Family, L.P., filed separate chapter 11 petitions on the
same day (Bankr. D. Conn. Case Nos. 07-50725 and 07-50726). Carol
A. Felicetta, Esq. at Reid and Riege, P.C.s represents the Debtors
in their restructuring efforts.
RHODE ISLAND HEALTH: S&P Alters Outlook on 1998 Bonds to Stable
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on the 'BB'
rating on Rhode Island Health & Educational Building Corp.'s
series 1998 revenue bonds, issued for Roger Williams Hospital,
formerly Roger Williams General Hospital, to stable from positive
and also affirmed the rating.
The rating actions reflect Roger Williams' stabilized financial
position with hospital management reporting close to break-even
results for fiscal 2007, through the first nine months of fiscal
2008 (interim period), and more than likely for fiscal 2009.
Roger Williams' lack of a profitability trend precludes a higher
rating with financial ratios that are not currently comparable to
an investment-grade credit. Its light cash position, with 41
days' cash on hand through the interim period, also precludes a
higher rating.
In addition, system management is involved in early affiliation
discussions with another provider in the Providence area. Given
these discussions, it is likely the current rating will remain
until details are more clearly defined.
The stable outlook reflects Roger Williams' ability to improve its
financial performance and usage following a difficult time in the
organization's history.
"We believe Roger Williams' management team will continue to
improve its financial profile," said Standard & Poor's credit
analyst Jennifer Soule. "If Roger Williams' financial position
were to improve or deteriorate significantly over the next year to
two years, we would consider raising or lowering the rating
accordingly."
Roger Williams' fiscal 2007 audited results reflect a modest
$238,000 operating loss, excluding investment income, and a
$1.8 million excess profit that generated a strong 2.8x maximum
annual debt service coverage. These results were significantly
stronger than the $1.6 million operating loss and $1.7 million
excess loss reported in fiscal 2006. Management attributes its
financial improvement to tight expense controls, revenue
enhancement initiatives, and a renewed relationship with its
physicians. Management strength is also a significant
contributing factor.
Through the interim period, Roger Williams' is reporting a slight
operating loss of roughly $323,000 and an $880,000 excess profit.
Management expects the year to end with break-even results, and it
is projecting fiscal 2009 will likely carry the same result.
Management has indicated fiscal 2008 volume was lighter during the
winter due, in part, to a lighter-than-expected flu season, which
also appears to have been a statewide issue.
Through the interim period, Roger Williams' unrestricted cash
declined slightly to $19.0 million, or 41 days' cash on hand, from
$22.8 million, or 51 days. This level of liquidity is low for the
current speculative-grade rating and is especially low when
compared to an investment-grade credit. In addition, the cash-to-
debt ratio is 70%, which is closer to investment-grade quality;
but the leverage ratio at 57% is also high for an investment-grade
credit. Management's focus is to continue to improve its
financial position and spend prudently on capital updates.
The rating action affects roughly $16.3 million of debt
outstanding.
RIVENDELL LOAN: Fitch Junks Rating on $18.75MM Class B Notes
------------------------------------------------------------
Fitch Ratings has downgraded and removed from Rating Watch
Negative two classes of notes issued by Rivendell Loan Fund, LLC.
The following rating actions are effective immediately:
-- $28,750,000 Class A Notes to 'B' from 'BB+';
-- $18,750,000 Class B Notes to 'CCC' from 'BB'.
The rating actions reflect the application of methodology outlined
under Fitch's updated Market Value Structures criteria, published
April 18, 2008. In addition, the ratings consider the sustained
market value decline in the secondary leveraged loan market that
has increased the vulnerability of these classes to a
deteriorating credit environment. Fitch continues to be concerned
about pricing volatility in leveraged loan secondary markets.
The downgrade of class A notes to 'B' reflects its distance-to-
trigger metric relative to the advance rate ranges published in
Fitch's updated MVS criteria. The DTT is now below 7% according
to Fitch's most recent calculation, with the portfolio categorized
into 73% Category 2 assets, 21% Category 3 assets, and 6% Category
4 assets.
The downgrade of class B notes to 'CCC' reflects its subordinated
position to class A notes coupled with a negative net asset value
coverage level based on Fitch's calculations. Although there is
negative NAV coverage, the class B rating indicates that there is
the potential for this class to receive principal and interest
payments.
Rivendell Loan Fund, LLC is a synthetic total rate of return
collateralized loan obligation with a market value termination
trigger. The transaction closed on July 12, 2006 and is managed
by Nationwide Mutual Insurance Company.
The rating on the class A notes addresses timely payment of
interest and repayment of principal by the stated maturity date.
The rating assigned to the class B notes addresses the likelihood
of the payment of amounts to holders of the class B notes
sufficient to produce a yield to maturity on the class B notes of
not less than the class B interest rate, if held to the stated
maturity, but does not address the timing of payments.
RYAN'S STEAKHOUSE: Closes Doors After 20 Years in Operation
-----------------------------------------------------------
KATC.com reports that Ryan's Steakhouse on Ambassador Caffery
Parkway, in Louisiana, has closed its doors.
According to the report, the company decided to close the
restaurant because it was "under-performing". In January, Buffets
Inc., owner of Ryan's Steakhouse filed for Chapter 11 bankruptcy.
"We knew that business had dwindled down, but I wasn't expecting
us to close this quickly, at all," said former supervisor Rachel
Hayden. KATC.com added that the employees were disappointed with
the decision and the low $200 severance offering.
Buffets Inc. said the low severance offering was affected by the
Chapter 11 filing. This is the second Ryan's in Acadiana to
close. An Opelousas location was the first.
About Ryan's Steakhouse
Ryan's Steakhouse was, prior to its closure, a restaurant offering
southern staple, home-style favorites in Lafayette, La. The
eatery is owned by Buffets Inc., a subsidiary of Buffets Holdings
Inc. Bufvets Inc. filed for Chapter 11 bankruptcy in January
2008.
Headquartered in Eagan, Minnesota, Buffets Holdings Inc. --
http://www.buffet.com/-- is the parent company of Buffets,
Inc., which operates 626 restaurants in 39 states, comprised of
615 steak-buffet restaurants and eleven Tahoe Joe's Famous
Steakhouse restaurants, and franchises sixteen steak-buffet
restaurants in six states. The restaurants are principally
operated under the Old Country Buffet, HomeTown Buffet, Ryan's and
Fire Mountain brands. Buffets, Inc. employs approximately 37,000
team members and serves approximately 200 million customers
annually.
The company and all of its subsidiaries filed Chapter 11
protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to
08-10158). Joseph M. Barry, Esq., M. Blake Cleary, Esq., and
Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP,
represent the Debtors in their restructuring efforts. The Debtors
selected Epiq Bankruptcy Solutions LLC as claims and balloting
agent. The U.S Trustee for Region 3 appointed seven creditors to
serve on an Official Committee of Unsecured Creditors. The
Committee selected Otterbourg Steindler Houston & Rosen PC and
Pachulski Stang Ziehl Young & Jones as counsels. The Debtors'
balance sheet as of Sept. 19, 2007, showed total assets of
$963,538,000 and total liabilities of $1,156,262,000.
SASCO 2008-C2: S&P Slashes Real Estate CDO Rating to 'CC' from 'A'
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on class A
from SASCO 2008-C2 LLC, a commercial real estate collateralized
debt obligation transaction, to 'CC' from 'A'.
The rating action follows the downgrade of various Lehman Bros.
entities, as detailed in "Lehman Bros. Holdings Downgraded To
'Selective Default'; Other Lehman Entities To 'BB-' Or 'R',"
published Sept. 15, 2008, and "Lehman Bros. Holdings Inc. Rating
Lowered To 'D'," published Sept. 16, 2008.
The rating on class A from SASCO 2008-C2 LLC is partially
dependent on the rating of the sellers, Lehman Bros. Holdings Inc.
(D/--/D) and Lehman Bros.-Lehman CP Inc. (A-1+). SASCO 2008-C2
was not structured as a true sale and title of the assets remains
with the applicable seller. As such, the assets may be affected
by Lehman Bros. Holdings Inc.'s bankruptcy or by any subsequent
bankruptcy of Lehman Bros.-CP Inc. In addition, the collateral
manager for SASCO 2008-C2 is an affiliate of Lehman Bros. Holdings
Inc.
According to the trustee report dated Aug. 26, 2008, the
transaction's current assets included 48 commercial real estate
assets totaling $3.0 billion, including 18 commercial real loans
or loan participations ($2.1 billion, 68%) and 30 mezzanine loans
($983.2 million, 32%) secured by the borrowers' equity interests
in commercial real estate properties. The aggregate liabilities
totaled $3.2 billion.
Standard & Poor's will update or resolve the CreditWatch placement
after it analyzes the transaction's documents and the credit
characteristics of the assets in the pools.
SEA CONTAINERS: Files Amended Plan and Disclosure Statement
-----------------------------------------------------------
Sea Containers Caribbean Inc., Sea Containers Ltd., and Sea
Containers Services Ltd. delivered to the U.S. Bankruptcy Court
for the District of Delaware a first amended joint plan of
reorganization and accompanying disclosure statement on Sept. 16,
2008.
The Amended Plan offers more details about the company's intended
activity once it emerges from bankruptcy protection.
The Court will convene a hearing on September 19, 2008, to
consider the adequacy of the information contained in the
Debtors' Disclosure Statement.
The hearing to consider confirmation of the Plan is scheduled on
November 17, 2008. Parties have until November 10 to file
objections to the Plan.
New Equity
The Amended Plan provides that equity of Newco, the entity to
which SCL will transfer its remaining container interests, will
vest in the Plan Administrator and, subject to certain holdbacks
and trusts set aside for certain claims, beneficial ownership
interest in Newco Equitv will be distributed on a pro rata basis
to holders of allowed claims.
The value of Newco Equity in large part will derive, in large
part, from (i) the value of SCL's interests in GE SeaCo SRL, the
joint-venture entity between SCL and General Electric Capital
Corporation, and (ii) the value of SCL's interests in Sea
Containers SPC Ltd., the special purpose subsidiary established
by SCL that owns a substantial portion of SCL's shipping
containers and related lease revenues.
To ensure that Non-Debtor Subsidiary directors do not seek to
enforce intercompany claims, the Amended Plan contemplates the
establishment of the Non-Debtor Subsidiary Reserve, which will
consist of cash and Newco Equity that will be available to fund
certain payments to creditors of the Non-Debtor Subsidiaries that
are currently known, or that the Debtors will know of by Nov. 30,
2008. The payments will be paid according to an entity priority
model dividend rate so as to approximate what those creditors
would have received in a simultaneous group-wide liquidation.
The Non-Debtor Subsidiary Reserve is estimated to have $6,000,000
of cash and $3,000,000 in aggregate value of Newco Equity shares.
Equalization Escrow Account
The Amended Plan also contemplates the establishment of an
equalization escrow account, which will hold the equalization
claim reserve, to be administered by the equalization escrow
agent. The Equalization Claim Reserve will be used to satisfy
any valid Equalization Claim. In addition, a separate reserve
will be established to satisfy equalization-related employee
claims, if any. The Equalization-Related Employee Claim Reserve
is currently estimated to consist of $4,500,000 in cash and
shares of Newco Equity with an aggregate value of $13,100,000.
The Amended Plan provides that any residual value in the
Equalization Claim Reserve after satisfaction of the allowed
Equalization Claim will be transferred to the Equalization-
Related Employee Claim Reserve subject to a $23,800,000 maximum
limit of Newco Equity that can be transferred to the
Equalization-Related Employee Claim Reserve.
All Newco Equity that was maintained by the Equalization Claim
Reserve that is not transferred to the Equalization-Related
Employee Claim Reserve will be cancelled. Any residual property
remaining in the Equalization-Related Employee Claim Reserve
other than Newco Equity after satisfaction of Allowed
Equalization-Related Employee Claims will revert to Reorganized
SCL, and, after payment of post-emergence costs, will be used to
pay the Newco Repatriation Note.
After the Newco Repatriation Note is paid in full, any remaining
property of Reorganized SCL, other than Newco Equity, will be
distributed to Reorganized SCL for distribution to the holders of
Allowed Claims on a pro rata basis.
Bermuda and U.K. Scheme of Arrangement
In light of SCL being incorporated in Bermuda, the Bermuda Scheme
of Arrangement is necessary to ensure that the Plan can be
implemented under the laws of Bermuda. The Debtors have also
determined that the U.K. Scheme of Arrangement is necessary to
implement the Pension Schemes Settlement Agreement, which settles
significant claims against the Debtors, and is a major aspect of
the Plan. The effectiveness of the Schemes of Arrangement is a
condition to consummation of the Plan.
Because of certain English regulatory requirements, the Pension
Schemes Claims against SCSL can only be compromised by way of a
U.K. scheme of arrangement or their treatment must be otherwise
approved by the U.K. Pension Protection Fund. As a consequence,
the Pension Schemes will participate in the U.K. Scheme of
Arrangement. The Amended Plan says that there will only be a
single class of U.K. Scheme Claims in the U.K. Scheme of
Arrangement consisting of the 1983 Pension Scheme Claims and the
1990 Pension Scheme Claims.
It is anticipated that the English Court will have held the
hearing to approve the UK Scheme of Arrangement prior to the
close of voting for the Plan. Voting on the U.K. Scheme of
Arrangement and any Debtor affiliate schemes of arrangement is
separate from voting on the Plan.
New Provisions Added to the Plan
The Plan Proponents have inserted to the Amended Plan a section
relating to their settlement negotiations with GECC with respect
to GE SeaCo. In the section on disposal of the Debtors' non-core
business, a provision was added to reflect that each Non-Debtor
Subsidiary will pay the costs of its own liquidation and wind-
down, including the costs of disposing of non-container-leasing
businesses and assets.
The Plan is also amended to add sections relating to, among other
things, risks with respect to the Sea Containers America pension
plan. In that section, the Debtors express their disagreement
with the assertions of Pension Benefit Guaranty Corporation that,
among other things, SC America and the Debtors are jointly and
severally obligated to contribute to the Pension Plan the amounts
necessary to satisfy the minimum funding standards of the
Employee Retirement Income Security Act of 1974 and the Internal
Revenue Code.
Exit Financing
The Amended Plan discloses that in an effort to obtain the most
attractive exit financing, the Debtors approached 10 potential
exit lenders, including their existing bondholders, who were
already knowledgeable about the Debtors' container interests and
leasing activities. The Debtors received three preliminary, non-
binding letters of intent from the 10 parties.
After consulting with its advisors and the Official Committee of
Unsecured Creditors' representatives, the Debtors selected a
still unnamed exit lender with significant experience financing
container leasing companies as the preferred lender because of
its more attractive offers. The Debtors subsequently negotiated
extensively for weeks to reach agreement on a financing term
sheet that best meets the Debtors' requirements.
The term sheet, which is in the final stages of negotiation,
contemplates a financing facility of up to $150,000,000 to Newco
to repay the DIP Facility, fund certain payments contemplated
under the Plan, and provide working capital for Newco.
According the Plan, the Debtors expect shortly to complete
negotiation of the term sheet, and to receive a financing
commitment. They assure the Court that a summary of the material
terms of the term sheet will be subsequently filed. They
anticipate that any financing commitment will be subject to
certain customary conditions, which will need to be satisfied
prior to funding.
Avoidance Actions
The Debtors have analyzed potential avoidance of prepetition
transfers under Sections 547 and 550 of the Bankruptcy Code,
identifying approximately $10,000,000 of potentially preferential
transfers in the aggregate.
Based upon their analysis, the Debtors believe that prosecution
of these transfers through adversary proceedings likely will not
produce sufficient recoveries to justify the costs incurred in
connection with prosecution. The Debtors, however, believe that
the existence of the transfers may provide the basis for the
disallowance of one more proofs of claim filed against the
Debtors, pursuant to Section 502(d) of the Bankruptcy Code.
The Debtors are currently engaged in discussions with advisors to
the Creditors Committees with respect to the benefits and
associated costs of prosecuting preference actions. In any
event, the Debtors assert that nothing in the Amended Plan or
Amended Disclosure Statement will be construed to restrict or
constitute a waiver of the Debtors' ability to bring avoidance
actions against any entity, except with respect to those entities
expressly released under the Plan.
A full-text copy of the Debtors' First Amended Chapter 11 Plan is
available for free at:
http://ResearchArchives.com/t/s?3253
A full-text copy of the Debtors' First Amended Disclosure
Statement is available for free at:
http://ResearchArchives.com/t/s?3254
A blacklined copy of the Debtors' First Amended Plan is available
for free at:
http://ResearchArchives.com/t/s?3255
A blacklined copy of the Debtors' First Amended Disclosure
Statement is available for free at:
http://ResearchArchives.com/t/s?3256
Based in Hamilton, Bermuda, Sea Containers Ltd. --
http://www.seacontainers.com/-- provides passenger and freight
transport and marine container leasing. Registered in Bermuda,
the company has regional operating offices in London, Genoa, New
York, Rio de Janeiro, Sydney, and Singapore. The company is
owned almost entirely by United States shareholders and its
primary listing is on the New York Stock Exchange (SCRA and
SCRB) since 1974. On Oct. 3, the company's common shares and
senior notes were suspended from trading on the NYSE and NYSE
Arca after the company's failure to file its 2005 annual report
on Form 10-K and its quarterly reports on Form 10-Q during 2006
with the U.S. Securities and Exchange Commission.
Through its GNER subsidiary, Sea Containers Passenger Transport
operates Britain's fastest railway, the Great North Eastern
Railway, linking England and Scotland. It also conducts ferry
operations, serving Finland and Estonia as well as a commuter
service between New York and New Jersey in the U.S.
Sea Containers Ltd. and two subsidiaries filed for chapter 11
protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156).
Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady,
Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at
Young, Conaway, Stargatt & Taylor, represent the Debtors in
their restructuring efforts.
The Official Committee of Unsecured Creditors and the Financial
Members Sub-Committee of the Official Committee of Unsecured
Creditors of Sea Containers Ltd. is represented by William H.
Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris,
Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s
Official Committee of Unsecured Creditors is represented by
attorneys at Willkie Farr & Gallagher LLP.
In its schedules filed with the Court, Sea Containers disclosed
total assets of $62,400,718 and total liabilities of
$1,545,384,083. (Sea Containers Bankruptcy News, Issue No. 50;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
SEA CONTAINERS: SCL Panel, et al., Balk at Disclosure Statement
---------------------------------------------------------------
The Official Committee of Unsecured Creditors of Sea Containers,
Ltd., relates that the Debtors' request to approve the settlement
of the Pension Claims has been briefed, tried and argued, and the
parties await the decision of the U.S. Bankruptcy Court for the
District of Delaware.
The SCL Committee asserts that the Court could resolve the
Settlement Request in one of these ways:
(i) the Court could grant the Settlement Request, and
approve the proposed Pension Settlement;
(ii) the Court could deny the Settlement Request outright; or
(iii) the Court could deny the Settlement Request, while
providing guidance reflecting the Court's view of
reasonable settlement elements and a reasonable
settlement range.
The Debtors are asking the Court to move forward immediately with
proceedings to approve their disclosure statement explaining
their proposed joint plan of reorganization, and to solicit and
confirm the Plan that assumes and permits only one outcome on the
Settlement Request -- approval of the Pension Settlement -- even
if that settlement is one of the most hotly contested issues in
the bankruptcy cases, asserts William H. Sudell, Jr., Esq., at
Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Delaware.
"Dissemination of the Plan prior to a ruling on the Settlement is
premature and is a potentially needless waste of the time and
resources of the Court and the estates," Mr. Sudell contends. He
points out that if the Settlement Request is denied, or if the
Pension Settlement is modified, the Debtors would be required to
prepare a new disclosure statement and plan, and re-solicit votes
from the creditors.
The proposed Plan is premised on fundamental and critical
uncertainties, Mr. Sudell says. He notes that the Plan requires
that the Court grant the Settlement Request in its entirety, and
thus, it is impossible for Plan confirmation to proceed unless
the Court rules to approve the Pension Settlement. He adds that
if the Settlement Request is denied, parties would likely be
forced for an expeditious re-negotiation with the relevant facts
and law now on the table.
Against this backdrop, the SCL Committee maintains that the most
prudent, practical, economical, and expeditious way to arrive at
a confirmable Plan is for the Court to issue an order (i) denying
approval of the adequacy of the Disclosure Statement, and (ii)
denying the pending Settlement Request, and that provides
guidance reflecting the Court's view of a reasonable settlement
range.
SCSL Committee & Trustees Object Too
Although the disclosure statement accompanying the Debtors' joint
plan of reorganization purports to characterize the factors that
will inform the Pension Schemes' decision to accept or reject the
Plan, it fails to disclose that the Pension Schemes intend to
vote to reject the Plan if, by the voting deadline, there is any
chance that the Plan will be consummated in a way that would
jeopardize the Pension Schemes' ability to enter the Pension
Protection Fund or trigger a Pension Protection Fund assessment
period, the Official Committee of Unsecured Creditors of Sea
Containers Services Limited and the Pension Schemes' Trustees
tell Judge Carey.
David B. Stratton, Esq., at Pepper Hamilton LLP, in Wilmington,
Delaware, relates that the Plan contemplates that one of the
joint provisional liquidator in Bermuda or Ernst & Young LLP will
be appointed Plan administrator, with the Reorganized Sea
Containers Limited to pay all reasonable amounts needed by the
administrator and currently pegged at $8,000,000.
Mr. Stratton argues that further disclosure is required with
respect to the contemplated terms of the Plan Administrator's
engagement. The Plan sets forth procedures for the appointment
of the initial Plan Administrator; however, the Disclosure
Statement fails to disclose in any detail the terms of the Plan
Administrator's compensation, he points out.
"As the Plan Administrator's compensation will be paid from the
same assets that will be used to satisfy distributions to
creditors of the Reorganized SCL, holders of claims against
Reorganized SCL should be made fully aware of the terms of
compensation prior to voting on the Plan," Mr. Sudell tells the
Court. "As currently drafted, the Disclosure Statement does not
provide sufficient information regarding compensation and any
other material terms of the engagement to enable claim holders to
make an informed judgment about the Plan," he continues.
The SCSL Committee and the Pension Trustees have identified
several disclosure issues to the Debtors, Mr. Sudell discloses.
He states that as of the Disclosure Statement deadline, many of
those issues remained unresolved. He notes that in a number of
instances, and in the hope of reaching a compromise on certain
open issues, the SCSL Committee and the Pension Trustees proposed
their own language for inclusion in the Disclosure Statement.
To the extent that any of the issues raised by the SCSL Committee
and the Pension Trustees remain unresolved at the time of the
Disclosure Statement hearing, the SCSL Committee and the Pension
Trustees reserve their right to raise any objections in respect
of those issues at the hearing.
Accordingly, the SCSL Committee and the Pension Trustees ask the
Court to deny the Debtors' request for approval of Disclosure
Statement's adequacy, unless the Disclosure Statement is revised
to disclose:
(a) that the Pension Schemes will vote to reject the Plan if
they believe by the voting deadline that the Plan is
likely to be consummated in a way that would jeopardize
the Schemes' Pension Protection Fund Eligibility; and
(b) the contemplated terms of the Plan Administrator's
compensation.
Contrarian, et al., See Flaws
Bondholders Contrarian Capital Advisors, LLC, J.P. Morgan
Securities Inc., Credit Trading Group, Post Advisory Group, LLC,
Trilogy Capital LLC, and Varde Investment Partners, L.P., jointly
submit their reservation of rights to the Court with respect to
the Debtors' request for the Court to find their proposed
disclosure statement as containing adequate information.
As mentioned by the Debtors' counsel during the recent status
conference, the Debtors have been working with, among others, the
Official Committee of Unsecured Creditors of Sea Containers,
Ltd., and the Bondholders' counsel to resolve any open issues
with respect to the Disclosure Statement, relates Neal J.
Levitsky, Esq., at Fox Rothschild LLP, in Wilmington, Delaware.
He notes that the Bondholders are hopeful that the open issues
will be resolved.
If there are still additional information requested by the
Bondholders that the Debtors have not yet finalized or filed by
the deadline for filing Disclosure Statement objections, the
Bondholders reserve all of their rights to raise any objections
they may have at the Disclosure Statement hearing.
Based in Hamilton, Bermuda, Sea Containers Ltd. --
http://www.seacontainers.com/-- provides passenger and freight
transport and marine container leasing. Registered in Bermuda,
the company has regional operating offices in London, Genoa, New
York, Rio de Janeiro, Sydney, and Singapore. The company is
owned almost entirely by United States shareholders and its
primary listing is on the New York Stock Exchange (SCRA and
SCRB) since 1974. On Oct. 3, the company's common shares and
senior notes were suspended from trading on the NYSE and NYSE
Arca after the company's failure to file its 2005 annual report
on Form 10-K and its quarterly reports on Form 10-Q during 2006
with the U.S. Securities and Exchange Commission.
Through its GNER subsidiary, Sea Containers Passenger Transport
operates Britain's fastest railway, the Great North Eastern
Railway, linking England and Scotland. It also conducts ferry
operations, serving Finland and Estonia as well as a commuter
service between New York and New Jersey in the U.S.
Sea Containers Ltd. and two subsidiaries filed for chapter 11
protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156).
Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady,
Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at
Young, Conaway, Stargatt & Taylor, represent the Debtors in
their restructuring efforts.
The Official Committee of Unsecured Creditors and the Financial
Members Sub-Committee of the Official Committee of Unsecured
Creditors of Sea Containers Ltd. is represented by William H.
Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris,
Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s
Official Committee of Unsecured Creditors is represented by
attorneys at Willkie Farr & Gallagher LLP.
In its schedules filed with the Court, Sea Containers disclosed
total assets of $62,400,718 and total liabilities of
$1,545,384,083. (Sea Containers Bankruptcy News, Issue No. 50;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
SERVES 2006-1: Fitch Keeps 'CCC' Ratings on Four Notes Classes
--------------------------------------------------------------
Fitch Ratings removed six classes of notes from Rating Watch
Negative issued by SERVES 2006-1. These rating actions are
effective immediately:
-- $157,500,000 class A-1 revolving notes remain at 'BB';
-- $312,500,000 class A-2 notes remain at 'BB';
-- $29,167,000 class B notes remain at 'CCC';
-- $50,000,000 class C notes remain at 'CCC';
-- $2,080,000 class D-1 notes remain at 'CCC';
-- $2,087,000 class D-2 notes remain at 'CCC'.
The rating actions reflect the application of methodology outlined
under Fitch's updated Market Value Structures criteria, published
April 18, 2008. In addition, the ratings consider the sustained
market value decline in the secondary leveraged loan market that
has increased the vulnerability of these classes to a
deteriorating credit environment. Fitch continues to be concerned
about pricing volatility in leveraged loan secondary markets.
There has been an additional $90,000,000 class X notes (unrated)
added to this transaction that is junior to the class A-1 and A-2
notes, but senior to the class B, C, D-1 and D-2 notes. The
effect of this new class has been to increase the amount of market
value declines the transaction can withstand before a termination
event occurs.
The ratings of the class A-1 and A-2 notes remaining at 'BB'
reflects the distance-to-trigger metric relative to the advance
rate ranges published in Fitch's updated MVS criteria. The DTT is
now approximately 16% according to Fitch's most recent
calculation, with the portfolio categorized into 67% Category 2
assets, 25% Category 3 assets, and 8% Category 4 assets. The
rating of the class A-1 and A-2 notes also benefits from an
additional cushion above the transaction's liquidation trigger
coupled with the additional subordination provided by the other
classes.
The class B notes have positive net asset value coverage levels
and continue to receive interest payments. Although classes C,
D-1, and D-2 have positive par coverage, the transaction has been
amended so that these notes will defer interest until the maturity
of the transaction. The ratings of these four classes remain at
'CCC' because the high coupon of the senior class X notes reduces
the amount of proceeds available to the subordinate classes upon
maturity.
SERVES 2006-1 is a total rate of return collateralized loan
obligation with a market value termination trigger. The
transaction closed on Feb. 24, 2006 and is managed by PPM America
Inc.
The ratings of the class A-1, A-2, B, and C notes address the
likelihood that investors will receive full and timely payments of
interest and ultimate receipt of principal by the scheduled
maturity date. The ratings of the class D-1 and D-2 notes address
the return of principal by the final maturity date. The rating
does not address the likelihood of repayment of principal prior to
the stated maturity date.
SPECTRUM RESTAURANT: Sells Guaymas to Specialty for $2.2 Mln.
-------------------------------------------------------------
Marin Independent Journal reports that Spectrum Restaurant Group
has sold its Tiburon waterfront restaurant, Guaymas, for a
reported $2.2 million to Specialty Restaurants Corp.
Marin Independent relates that the sale is part of Spectrum
Restaurant's efforts to dispose of properties after years of being
in Chapter 11 bankruptcy.
According to Marin Independent, Spectrum Restaurant is also
selling the last of its restaurants, which included McArthur Park
in Palo Alto and Prego in San Francisco.
About Spectrum Restaurant
Headquartered in Irvine, Calif., Spectrum Restaurant Group Inc.
-- http://www.spectrumfoods.com/-- operates a franchise of fine
dining restaurants, including Grandy's Inc., Crabby Bob's
Franchise Corp. and Spoons Restaurant Inc. The company filed a
chapter 22 petition on Aug. 29, 2006 (Bankr. C.D. Calif. Case No.
06-11444). The Debtor filed its first chapter 11 petition on Aug.
6, 2003 (Bankr. C.D. Calif. Case No. 03-15911). Evan D. Smiley,
Esq. at Weiland, Golden, Smiley, Wang, Ekvall & Strok, LLP,
represents the Debtor in its restructuring efforts. When the
Debtor sought protection from its creditors, it listed assets and
debts between $10 million to $50 million.
STATION CASINOS: Likely Covenant Breach Cues S&P's Rating Cuts
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Las Vegas-based Station Casinos Inc. to 'B-' from 'B'.
The issue-level ratings on the company's debt were also lowered by
one notch. At the same time, these ratings were removed from
CreditWatch, where they were placed with negative implications
Aug. 1, 2008. The rating outlook is negative.
"The ratings downgrade reflects our assessment that a covenant
violation is likely in the next few quarters, despite a recently
proposed amendment to the senior secured credit facility, which
would loosen financial covenants through Sept. 30, 2009,"
explained Standard & Poor's credit analyst Ben Bubeck.
"Our projections assume that revenue trends observed during the
first half of 2008 continue through the remainder of 2008, and
that declines begin to moderate in 2009. We project that recent
cost-containment initiatives will slow the pace of EBITDA declines
from the 11.5% decline posted in the six months ended June 30,
2008, although EBITDA growth will not occur until at least the
second half of 2009. These assumptions result in a covenant
violation potentially as soon as March 31, 2009. Given minimal
excess cash on the balance sheet and negative free operating cash
flow generation thus far in 2008, Station's liquidity profile
relies heavily upon access to its revolving credit facility."
"At this point, given our expectation for at least a modest
rebound in the gaming industry in the second half of 2009, S&P
believes that it is probable that there are sufficient economic
incentives in place such that the owners would step in to cure a
covenant default under the equity cure provision in the credit
facility. However, continued economic weakness and poor
performance in the Las Vegas locals market, such that a rebound
appears further out than currently anticipated, could reduce this
incentive and may result in a lower rating," S&P says.
"The 'B-' corporate credit rating reflects our expectation for
continued negative trends in net revenues and EBITDA over the next
few quarters, and a highly leveraged financial risk profile. In
addition, our expectation for a near-term covenant violation
threatens an already weak liquidity profile. These factors are
offset by Station's leadership position in the Las Vegas locals
market and S&P's favorable long-term view of its growth prospects,
given the strong demographics and anticipated job growth stemming
from the pipeline of development activity on the Las Vegas Strip,"
S&P adds.
STEVE & BARRY'S: Seeks Open-Ended Extension of Removal Period
-------------------------------------------------------------
Steve & Barry's LLC, now known as Steel Bolt LLC; Steve & Barry's
Manhattan LLC, now known as Stone Barn Manhattan LLC, and their
affiliate debtors ask the U.S. Bankruptcy Court for the Southern
District of New York, pursuant to Section 105(a) of the Bankruptcy
Code and Rules 9006(b) and 9027 of the Federal Rules of Bankruptcy
Procedure, to extend their time to file notices of removal of
civil actions and proceedings in state and federal courts until
the date an order is entered confirming any Chapter 11 plan.
The current deadline to remove civil actions is October 7, 2008.
Section 1452 of the Judiciary and Judicial Procedures Code
provides that any party may remove any claim or cause of action
in a civil action other than a proceeding before the United
States Tax Court or a civil action by a government unit to the
district court for the district where the civil action is
pending. It also provides that the court to which the claim or
cause of action is removed may remand those claims or causes of
action on any equitable ground, Shai Y. Waisman, Esq., at Weil,
Gotshal & Manges LLP, in New York, notes.
Bankruptcy Rule 9027 sets forth the time periods for filing
notices to remove claims or causes of action. Bankruptcy Rule
9006 permits the Court to enlarge the Removal Period, Mr. Waisman
relates.
Because their Debtors' Chapter 11 cases are large and complex,
the Debtors have not had the opportunity to thoroughly examine
each of the Civil Actions to determine the feasibility or benefit
of removing each case, Mr. Waisman says.
He tells the Court that since the Petition Date, the Debtors and
their professionals have devoted their time to the critical tasks
of stabilizing business operations and obtaining consent to the
use of lenders' cash collateral to address the Debtors' liquidity
needs on an interim basis and more permanently.
The Debtors, their management, and their professionals have also
devoted a substantial portion of their time to a sale of
substantially all of the Debtors' assets. As a result, the
Debtors require additional time to complete the task of analyzing
whether any pending Civil Action should be removed to the Court,
Mr. Waisman states.
Without the extension, the Debtors will not be able to complete
their review adequately, and the result could unnecessarily
hinder the Debtors' ability to prosecute their Chapter 11 cases
successfully, Mr. Waisman contends.
About Steve & Barry's
Based 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.
On Aug. 22, 2008, the Debtors obtained permission from the Court
to sell substantially all of their assets for $168 million to a
joint venture by Bay Harbour Management and York Capital, BHY S&B
Holdings, LLC. Under the terms of the purchase agreement,
majority of the Debtors' 276 stores will remain open.
Pursuant to the Purchase Agreement, the Court authorized the 51
Debtors to change their corporate names. Lead Debtor Steve &
Barry's Manhattan LLC (Case No. 08-12579) has been changed to
Stone Barn Manhattan LLC. Parent company Steve & Barry's LLC
(Case No. 08-12615) is now known as Steel Bolt LLC.
When the Debtors filed for bankruptcy, they listed $693,492,000 in
total assets and $638,086,000 in total debts. (Steve & Barry's
Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
STRATFORD NURSING: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Stratford Nursing and Convalescent Center
18 W. Laurel Road
Stratford, NJ 08084
Bankruptcy Case No.: 08-27733
Type of Business: The Debtor is a rehabilitation institute.
See: http://www.stratfordnursingcenter.com/
Chapter 11 Petition Date: September 17, 2008
Court: District of New Jersey (Camden)
Judge: Judith H. Wizmur
Debtor's Counsel: Albert A. Ciardi, III, Esq.
aciardi@ciardilaw.com
Nicole M. Nigrelli, Esq.
nnigrelli@ciardilaw.com
Ciardi Ciardi & Astin, P.C.
One Commerce Square
2005 Market Street, Suite 1930
Philadelphia, PA 19103
Tel: (215) 557-3550
Fax: (215) 557-3551
Estimated Assets: $50,000 to $100,000
Estimated Debts: $1,000,000 to $10,000,000
A list of the Debtor's largest unsecured creditors is available
for free at http://bankrupt.com/misc/njb08-27733.pdf
SUNCAL COS: Creditors Force Lehman Partnership into Bankruptcy
--------------------------------------------------------------
Mark Mueller at the Orange County Business Journal reports that
creditors have filed bankruptcy petition against a partnership of
SunCal Cos. and one of its biggest financiers, Lehman Brothers
Holdings Inc. of New York, in the U.S. Bankruptcy Court for the
Central District of California.
According to the Business Journal, creditors also filed bankruptcy
petitions against three of the SunCal-Lehman Brothers
partnership's larger planned developments in Bakersfield and
Riverside County, which are slated for auction.
The Business Journal relates that the creditors claimed that the
partnership and affiliated development entities owed them about
$3 million.
The Business Journal states that the petitions target three
stalled SunCal developments that Lehman has invested in or is a
lender on:
-- the McAllister Ranch, a 6,000-home development near
Bakersfield and two other SunCal projects in Riverside
County;
-- the 1,600-home McSweeney Farms project in Hemet; and
-- the 3,683-home Summer Wind Ranch project in Calimesa.
SunCal, according to the Business Journal, defaulted on a loan for
McAllister Ranch in April 2008. The report says that debt on
McAllister Ranch is tied to the two Riverside County projects.
The Business Journal reports that the three developments had been
scheduled for a foreclosure auction. No update is available as of
press time.
About SunCal Companies
SunCal Companies -- http://www.suncal.com/-- has more than
250,000 residential lots and 10 million square feet of commercial
space in various stages of development throughout California,
Arizona, Nevada and New Mexico. Some of SunCal's communities
include Amerige Heights in Fullerton, Lincoln Crossing near
Sacramento and Terra Lago and Fairway Canyon near Palm Springs.
SunCal Companies recently added an active-adult, commercial,
homebuilding, multifamily and urban divisions; and expanded to
Florida, Texas and Washington, D.C.
SUNGARD DATA: Fitch Rates Proposed $500MM Sr. Unsec. Notes 'B/RR5'
------------------------------------------------------------------
Fitch Ratings has assigned new issue ratings to SunGard Data
Systems, Inc.:
-- Proposed $500 million senior unsecured seven-year notes
'B/RR5';
-- Incremental $500 million secured term loan under its existing
senior secured term loan due 2014 'BB+/RR1'.
Proceeds from the debt offering and the term loan will be used to
fund SunGard's previously announced acquisition of GL TRADE and to
redeem the company's $250 million senior notes due Jan. 15, 2009.
SunGard agreed to acquire GL Trade, a Paris- and London-based
financial software solutions company, for approximately Eur400
million (approximately US$567 million at current exchange rates).
The transaction is expected to close in fourth-quarter 2008.
The current ratings and Outlook incorporate Fitch's expectation
for ongoing acquisition activity at SunGard, given maturing
organic growth rates for certain of its businesses. Fitch's
expectations include debt-financed acquisitions that could result
in leverage above Fitch's 5-5.5 times target range on a short-term
basis, with the anticipation that EBITDA growth rather than
material debt reduction would drive subsequent deleveraging.
Leverage is expected to increase modestly for this transaction
although Fitch estimates that SunGard will remain below 6x
leverage for the short term.
Proforma for the issuance, Fitch rates SunGard, with a Stable
Rating Outlook:
-- IDR 'B+';
-- $1 billion senior secured revolving credit facility due 2011
'BB+/RR1';
-- $4.8 billion senior secured term loan due 2014 'BB+/RR1';
-- $250 million 3.75% senior notes due 2009 'B+/RR4';
-- $250 million 4.875% senior notes due 2014 'B+/RR4';
-- $1.6 billion senior unsecured notes due 2013 'B/RR5';
-- $500 million proposed senior unsecured notes due 2013
'B/RR5';
-- $1 billion 10.25% senior subordinated notes due 2015
'B-/RR6'.
The Recovery Ratings reflect Fitch's belief that SunGard would be
reorganized rather than liquidated in a bankruptcy scenario, given
Fitch's estimates that the company's ongoing concern value of
$7.3 billion is significantly higher than its projected
liquidation value, due mostly to the significant value associated
with SunGard's intangible assets. In estimating ongoing concern
value, Fitch assumes a 7x multiple and discounts SunGard's
normalized operating EBITDA by 30%, reflecting some concentration
to FS and annual rollover risk of 25% of the company's long-term
contract portfolio along with examining the EBITDA levels that
would breach financial covenants.
After reductions for administrative and cooperative claims, Fitch
arrives at an adjusted reorganization value of approximately $6.6
billion. The analysis is proforma for the new term loan, as well
as the proposed unsecured notes and the redemption of the 2009
senior notes. Based upon these assumptions, the recovery values
for all tranches are largely unchanged, and as a result recovery
ratings are unaffected by the transaction.
The senior secured debt, including $1 billion revolving credit,
and $4.8 billion of term loan facilities recover approximately
95%, resulting in 'RR1' ratings for both tranches of debt. The
senior notes' 'RR4' recovery rating reflects the partial security
these notes received during the leveraged buyout process and
Fitch's belief that the secured bank debt is in a superior
position due to its right to the company's intellectual property.
The 'RR5' recovery rating for the $2.1 billion senior unsecured
debt reflects Fitch's estimate that 11%-30% recovery is
reasonable, while the 'RR6' recovery rating for the $1 billion of
subordinated debt reflects Fitch's belief that negligible recovery
would be achievable due to its deep subordination to other
securities in the capital structure.
SUN-TIMES MEDIA: Davidson Kempner Discloses 5.9% Equity Stake
-------------------------------------------------------------
Twenty-five parties disclosed in a regulatory filing that they may
be deemed to beneficially own shares of Sun-Times Media Group,
Inc.'s Class A Common Stock:
Entity No. of Shares Percentage
------ ------------- ----------
DAVIDSON KEMPNER PARTNERS 581,752 0.7%
DAVIDSON KEMPNER
INSTITUTIONAL PARTNERS, L.P. 1,259,909 1.5%
M.H. DAVIDSON & CO. 104,012 0.1%
DAVIDSON KEMPNER INTERNATIONAL, LTD. 2,240,925 2.7%
DAVIDSON KEMPNER DISTRESSED
OPPORTUNITIES FUND LP 94,990 0.1%
DAVIDSON KEMPNER DISTRESSED
OPPORTUNITIES INTERNATIONAL LTD. 250,738 0.3%
DAVIDSON KEMPNER EVENT DRIVEN
EQUITIES FUND LP 230,629 0.3%
DAVIDSON KEMPNER EVENT DRIVEN
EQUITIES INTERNATIONAL LTD. 95,118 0.1%
MHD MANAGEMENT CO. 581,752 0.7%
DAVIDSON KEMPNER ADVISERS INC. 1,259,909 1.5%
DAVIDSON KEMPNER
INTERNATIONAL ADVISORS, L.L.C. 2,240,925 2.7%
DK GROUP LLC 325,619 0.4%
DK MANAGEMENT PARTNERS LP 345,856 0.4%
DK STILLWATER GP LLC 345,856 0.4%
THOMAS L. KEMPNER, JR. 4,858,073 5.9%
MARVIN H. DAVIDSON 4,858,073 5.9%
STEPHEN M. DOWICZ 4,858,073 5.9%
SCOTT E. DAVIDSON 4,858,073 5.9%
MICHAEL J. LEFFELL 4,858,073 5.9%
TIMOTHY I. LEVART 4,858,073 5.9%
ROBERT J. BRIVIO, JR. 4,858,073 5.9%
ERIC P. EPSTEIN 4,858,073 5.9%
ANTHONY A. YOSELOFF 4,858,073 5.9%
AVRAM Z. FRIEDMAN 4,858,073 5.9%
CONOR BASTABLE 4,858,073 5.9%
Funds for the purchase of the Shares reported held by Davidson
Kempner Partners, Davidson Kempner Institutional Partners, L.P.,
M.H. Davidson & Co., Davidson Kempner International, Ltd.,
Davidson Kempner Distressed Opportunities Fund LP, Davidson
Kempner Distressed Opportunities International Ltd., Davidson
Kempner Event Driven Equities Fund LP, and Davidson Kempner Event
Driven Equities International Fund Ltd., were derived from their
general working capital. A total of approximately $26.2 million
was paid to acquire those Shares.
As of the close of business on September 3, 2008, the Reporting
Persons beneficially owned an aggregate of 4,858,073 Shares,
constituting approximately 5.9% of the Shares outstanding. The
percentages are based on 82,209,875 shares reported to be
outstanding as of July 31, 2008, by Sun-Times Media in its
Quarterly Report on Form 10-Q for the period ended June 30, 2008,
filed with the SEC on August 8, 2008.
Over time, the Reporting Persons have become concerned about Sun-
Times Media's performance and the many challenges facing Sun-Times
Media. As a result of this concern, the Reporting Persons
have been analyzing Sun-Times Media's operations, obligations and
governance structure with a view to determining how best to
maximize value for shareholders. In connection with this review,
the Reporting Persons have had, and from time to time may continue
to have, discussions with third parties and other shareholders and
management regarding Sun-Times Media, its prospects and potential
means for enhancing shareholder value. In these discussions, the
Reporting Persons may suggest or take a position with respect to
future plans for Sun-Times Media, including, without limitation,
potential changes in the business, strategy, operations, board
composition, management or capital structure of Sun-Times Media as
a means of enhancing shareholder value.
A full-text copy of Davidson Kempner, et al.'s Schedule 13D filing
is available for free at:
http://researcharchives.com/t/s?3216
About Sun-Times Media
Headquartered in Chicago, Sun-Times Media Group Inc. (NYSE: SVN) -
- http://www.thesuntimesgroup.com/-- is a newspaper publisher.
Its media properties include the Chicago Sun-Times and
Suntimes.com as well as newspapers and Web sites serving more
than 200 communities throughout the Chicago area.
The Troubled Company Reporter reported on Aug. 14, 2008, that at
June 30, 2008, Sun-Times Media Group Inc.'s consolidated balance
sheet showed $721.2 million in total assets and $870.8 million in
total liabilities, resulting in a roughly $149.5 million
stockholders' deficit. The company reported a net loss in the
second quarter of 2008 of $37.8 million, versus net income of
$528.0 million in the same period in 2007.
On Aug. 1, 2007, Hollinger Inc. -- http://www.hollingerinc.com/--
which owns approximately 70.0% voting and 19.7% equity interest in
Sun-Times Media Group Inc., along with two affiliates, 4322525
Canada Inc. and Sugra Limited, filed separate Chapter 15 petitions
(Bankr. D. Del. Case Nos. 07-11029 through 07-11031). Hollinger
also initiated Court-supervised restructuring under the Companies'
Creditors Arrangement Act (Canada) on the same day.
SWIFT & COMPANY: Moody's Rates Proposed $500MM Term Loan 'Ba3'
--------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating, subject to review
of final documentation, to the proposed new $500 million 6 year
senior secured guaranteed term loan of Swift & Company, to be
renamed JBS USA, Inc. The rating was simultaneously placed under
review for possible downgrade, given that the ratings of ultimate
parent and guarantor JBS S.A. are under for review for possible
downgrade. Should JBS's B1 corporate family rating be downgraded
to B2 at the conclusion of its review, then the rating of Swift's
term loan would likely be downgraded to B1.
Rating assigned, and placed under review for possible downgrade:
-- New $500 million senior secured 6 year term loan, guaranteed
by JBS S.A., at Ba3.
The proceeds of this term loan, along with about $685 million
equity from JBS and a new unrated $750 million 5 year senior
secured asset-based revolving credit facility, will finance over
$1.7 billion for the pending acquisition of National Beef Packing
Company LLC, the beef processing operations of Smithfield Foods,
Inc. and Smithfield's cattle feeding operations Five Rivers, in
addition to expenses and working capital.
This is the first time that Moody's has rated debt of Swift under
JBS ownership. Moody's had rated Swift before its acquisition by
JBS; those ratings were withdrawn on July 16, 2007, after Swift
was purchased by JBS and Swift's debt repaid. On September 2,
2008, Moody's announced that the ratings of JBS itself would
continue under review for possible downgrade until regulators and
antitrust authorities in the U.S. rule on the pending acquisitions
of National Beef and Smithfield Beef. However, if acquisitions of
National Beef and Smithfield Beef are approved in their current
form, the most probable outcome is a downgrade of JBS's ratings to
B2.
Swift's rating reflects the company's highly volatile historical
operating earnings and cash flow and its moderately high leverage
at June 29, 2008. The rating also incorporates Swift's scale; its
current position as the third largest beef and pork processor in
the US and the largest beef processor in Australia; and its much
improved domestic beef profitability. Should the acquisition of
National Beef and Smithfield Beef be completed as contemplated,
Swift will become the largest beef processor in the United States.
Swift is ultimately wholly owned by JBS. JBS has total control of
Swift, including the ability to formulate strategy and to
determine financial policy; JBS will guarantee Swift's new bank
facilities; and JBS has made intercompany loans to the
intermediate holding company that owns Swift. The intercompany
debt does not have recourse to Swift or its subsidiaries. For
these reasons, the corporate family rating of JBS is the basis of
the rating for Swift's term loan.
However, the rating of the senior secured term loan is one notch
above the corporate family rating because it will have a second
lien on the assets securing the unrated asset based revolving
credit facility and a first lien on the other assets of Swift and
its subsidiary guarantors, excluding the assets in Five Rivers and
excluding certain Australian assets.
Moody's ongoing review for possible downgrade of JBS S.A. will
focus on its ability to generate positive cash flow from
operations and free cash flow for debt amortization over the
medium term.
Swift & Company, to be renamed JBS USA, Inc., is one of the
world's leading beef and pork processing companies. Its largest
business segments are domestic beef processing (62.9% of gross
sales for the twenty-six weeks ended June 29, 2008), domestic pork
processing (20.1%) and beef operations in Australia (17%). Sales
from July 10, 2007, when Swift was purchased by JBS S.A., to
June 29, 2008 were approximately $10.6 billion.
TECH DATA: Fitch Affirms 'BB+' ID and Debt Ratings; Outlook Stable
------------------------------------------------------------------
Fitch has affirmed the Issuer Default Rating and outstanding debt
ratings of Tech Data as:
-- IDR at 'BB+';
-- Senior unsecured credit facility at 'BB+';
-- 2.75% senior unsecured convertible debentures at 'BB+'.
The Rating Outlook is Stable.
The rating and Stable Outlook reflect these considerations:
-- TECD is one of the largest global wholesale distributors with
broad customer and geographic diversification;
-- Ongoing weak operating margins in its European segment (53%
of fiscal year-2008 revenue), the result of significant
execution issues in 2006. Although TECD has undertaken
several initiatives to return this segment to more normalized
results including restructuring operations and rationalizing
facilities, profitability has only improved modestly and
Fitch does not expect material improvement for several more
quarters;
-- Fitch's expectations that credit metrics will remain fairly
stable over the intermediate term, with leverage in the 1.0
times-2.0x range;
-- Lack of a presence in the fastest growing geographic market
segment, Asia Pacific, unlike its leading competitor, Ingram
Micro, which Fitch believes could constrain TECD's long-term
growth rate;
-- TECD has significant exposure to HP as a supplier, whose
products represented 28% of revenue in fiscal 2008, but
maintains broad supplier diversification beyond HP with no
other vendor accounting for greater than 10% of sales.
Rating strengths include:
-- TECD's scale of operations including its global footprint,
financial capability and breadth of product offering, which
provides a competitive advantage and a moderate barrier to
entry;
-- Importance of the wholesale distribution model for OEMs,
particularly for serving the small to medium business market
which is one of the fastest growing end-market segments for
IT equipment.
Rating concerns include:
-- Exposure to the cyclicality of IT demand and general global
economic conditions. Current weak macroeconomic conditions
are expected to continue to weigh on TECD's results for at
least the next several quarters;
-- Low margin and high working capital nature of the wholesale
distribution model which can lead to significant volatility
in free cash flow;
-- Potential for the use of FCF and/or debt issuance for
acquisitions, largely due to the fragmentary nature of the
competitive landscape in Europe, or for shareholder friendly
actions.
Liquidity was sufficient as of July 31, 2008 and consisted
primarily of $468 million in cash and cash equivalents, an undrawn
$250 million senior unsecured revolving credit facility expiring
Mar-2012 and a $305 million accounts receivable securitization
program that is on-balance sheet and undrawn which matures in Dec-
2008. TECD has other, mostly uncommitted, lines of credit which
totaled approximately $652 million in available capacity, of which
$57 million was outstanding at quarter end, which the company uses
as additional sources of liquidity. In addition, TECD has an off-
balance sheet trade receivables purchase facility agreement which
may hold up to $344 million in outstanding receivables, of which,
$208 million remained outstanding.
Fitch expects quarterly FCF to remain volatile in the foreseeable
future due to changes in working capital requirements but should
remain slightly positive on an annualized basis given current
growth expectations. TECD's CCC days have averaged in the high
20-day range over the past year, significantly higher than
competitor Ingram Micro. Fitch believes that, given the current
difficult macroeconomic environment, material CCC improvement is
unlikely. Should TECD's growth rate continue to slow amid the
general economic downturn. Fitch expects that a corresponding
decline in working capital needs would lead to an increase in free
cash flow.
Total debt was $422 million as of July 31, 2008 and consisted
primarily of $350 million in 2.75% senior convertible debentures
due 2026, which are convertible at $54.26 per share, and
$57 million outstanding under various credit facilities. In
addition, TECD has off-balance sheet debt including $208 million
outstanding under its trade receivables purchase facility
agreement.
TEEVEE TOONS: Wants Until Nov. 30 to Propose Liquidation Plan
-------------------------------------------------------------
Bill Rochelle of Bloomberg News reports that TeeVee Toons, Inc.,
asked the U.S. Bankruptcy Court for the Southern District of New
York to extend to Nov. 30 the Debtor's exclusive right to propose
a liquidating Chapter 11 plan.
According to the report, there are liens on all the assets, and
the Debtor lacks enough free cash to pay costs of the Chapter 11
case and other priority claims that must be paid in full before a
plan can be confirmed.
The Official Committee of Unsecured Creditors has sued the Debtor
to "knock holes" in its security interest, the report points out.
The Committee, the report further reveals, also filed papers
trying to bring into the bankruptcy case the assets of two non-
bankrupt affiliates, TVT Music, Inc., and Wax Trax Records, Inc.
The Debtor believes that extending exclusivity will avoid the
distraction of a competing plan and enable the parties to focus on
settlement, says the report.
In June, the Debtor obtained permission to sell most of its
assets, including the music catalogue, to Orchard Enterprises,
Inc., for $5 million cash. The report says Orchard also will pay
$1 million to cure defaults on contracts it will assume as part of
the purchase.
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. Sonnenschein Nath & Rosenthal LLP is counsel to the
Committee. When the Debtor filed for protection from its
creditors, it listed estimated assets between $10 million and
$50 million and debts between $10 million and $50 million.
TELKONET INC: Enters Into $1,000,000 Line of Credit With Thermo
---------------------------------------------------------------
Telkonet, Inc., disclosed in a regulatory filing with the
Securities and Exchange Commission that on September 9, 2008, the
company entered into a two-year line of credit facility in the
aggregate principal amount of $1,000,000 with Thermo Credit, LLC.
The outstanding principal balance bears interest at the greater
of:
(i) the Wall Street Journal Prime Rate plus nine percent per
annum, adjusted on the date of any change in such prime or
base rate, or
(ii) Sixteen percent.
Interest, computed on a 365/360 simple interest basis, and fees on
the credit facility are payable monthly in arrears on the last day
of each month and continuing on the last day of each month until
the maturity date. The occurrence of one or more of these
situations will constitute an event of default under the credit
facility:
(i) the failure of the company to make any payment on any loan
when due,
(ii) the failure of the company to observe or perform promptly
when due any covenant, agreement or obligation under the
loan agreement or under any of the other loan documents or
under any other obligation to Thermo Credit,
(iii) a default under any of the loan documents, or
(iv) the material inaccuracy at any time of any warranty,
representation or statement made to Thermo Credit by the
company under the loan agreement.
Upon the occurrence of an event of default, Thermo Credit, at its
option, will have the right to exercise any and all of its rights
and remedies under the loan documents, including, but not limited
to, the right to foreclose on the assets pledged by the company as
security for the credit facility. The company may prepay amounts
outstanding under the credit facility in whole or in part at any
time. In the event of a prepayment, Thermo Credit will be
entitled to receive a prepayment fee of four percent of the
highest aggregate loan commitment amount if prepayment occurs
before the end of the first year and three percent if prepayment
occurs thereafter. The credit facility is secured by the
company's inventory pursuant to a security agreement.
In a press release, the company said that the proceeds from the
$1 million line of credit, together with the Thermo Credit
$2.5 million receivable financing agreement signed in February
2008, will be used for the working capital requirements of the
company to support growth opportunities and accelerate revenue.
"As we discussed in our second quarter conference call, this
completes our goal of securing asset-based financing, helping us
to shape the financing to our specific business needs. The funding
will enable us to take advantage of the tremendous market
potential for our energy management products, as the demand for
our technology has been continually growing," stated Jason Tienor,
Telkonet CEO.
Mr. Tienor said this latest inventory-based funding will help
Telkonet fulfill the pipeline demand for its energy management
products, expand its opportunities with energy-saving programs, as
well as continue to increase sequential quarterly growth and
achieve its goal of operating cash flow breakeven within 2008.
A full-text copy of the Promissory Note is available for free at:
http://researcharchives.com/t/s?321d
A full-text copy of the Commercial Business Loan Agreement for
Telkonet Inc. Line of Credit is available for free at:
http://researcharchives.com/t/s?321e
A full-text copy of the Security Agreement is available for free
at:
http://researcharchives.com/t/s?321f
About Thermo Credit
Thermo Credit, LLC -- http://www.thermocredit.com/-- is a
financial services company focused exclusively on the
telecommunications industry. Thermo Credit serves established,
well-run companies that need capital to expand or improve their
operations. The company provides asset based solutions, loans,
lines of credit and capital investment programs.
About Telkonet
Based in Germantown, Md., Telkonet Inc. (AMEX: TKO) --
http://www.telkonet.com/-- provides centrally managed solutions
for integrated energy management, networking, building automation,
and proactive support services in the United States and Canada.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 22, 2008,
RBSM LLP, in McLean, Va., expressed substantial doubt about
Telkonet 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 auditing firm pointed to
the company's significant operating losses in the current year and
also in the past. The company believes that anticipated revenues
from operations will be insufficient to satisfy its ongoing
capital requirements for at least the next 12 months.
The TCR reported on June 11, 2008, that Telkonet Inc. reported a
net loss of $5,121,031 on total revenues of $4,959,021 in the
first quarter ended March 31, 2008, compared with a net loss of
$5,401,476 on total revenue of $1,246,269 in the same period last
year. At March 31, 2008, the company's consolidated balance sheet
showed $36,133,160 in total assets, $13,049,437 in total
liabilities, $3,855,877 in minority interest, and $19,227,846 in
total stockholders' equity. The company's consolidated balance
sheet at March 31, 2008, showed strained liquidity with $4,715,470
in total current assets available to pay $8,960,987 in total
current liabilities.
TEXAS HEMATOLOGY: Discloses Up to 199 Creditors
-----------------------------------------------
Joyce Tsai at the Dallas Business Journal reports that Dallas-
based Texas Hematology/Oncology Center PA's documents filed in the
U.S. Bankruptcy Court for the Northern District of Texas indicate
that the company owes up to 199 creditors.
Dallas, Texas-based Texas Hematology has served the Dallas-Fort
Worth area for almost 30 years. The company was founded in 1979,
and is owned by physicians. It employs about 100 physicians and
workers. It is located on the campus of RHD Memorial Medical
Center. Texas Hematology expanded its network in 2001 to include
the Patients' Comprehensive Cancer Center in Carrollton, and in
2005, the McKinney Regional Cancer Center.
The company filed for Chapter 11 protection on Aug. 26, 2008,
(Bankr. N.D. Texas Case No. 08-34204). Gerrit M. Pronske, Esq.,
at Pronske & Patel, P.C., represents the Debtor in its
restructuring effort. When the company filed for bankruptcy, it
listed assets of between $10 million and $50 million and debts of
between $10 million and $50 million.
TITAN ENERGY: Posts $289,701 Net Loss in Quarter Ended June 30
--------------------------------------------------------------
For the three months ended June 30, 2008, Titan Energy Worldwide
Inc. reported a net loss of $289,701 on total sales of $2,694,919.
As of June 30, 2008, the company's balance sheet showed total
assets of $6,839,878, total liabilities of $2,551,950, and total
stockholders' equity of $4,287,928.
The company incurred a net loss for the six months ended June 30,
2008 of $1,020,375 and at June 30, 2008, had an accumulated
deficit of $22,659,701. The accumulated deficit includes a charge
of $9,767,847 for the early extinguishment of the Series A, B and
C Preferred Stock and issuance of Common Stock in 2007. In
addition, the company issued Series D Convertible Preferred Stock
with a beneficial conversion feature which resulted in recording a
preferred stock dividend of $4,076,646. The accumulated deficit
without these transactions would have been $8,815,208. However,
Titan Energy said, these conditions raise substantial doubt as to
the company's ability to continue as a going concern. "These
financial statements do not include any adjustments that might
result from the outcome of this uncertainty. These financial
statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, or
amounts and classification of recorded asset amounts, or amounts
and classification of liabilities that might be necessary should
the company be unable to continue as a going concern." Titan
Energy's management has taken these steps that it believes will be
sufficient to provide the company with the ability to continue in
existence:
-- Management has acquired companies that they believe will be
cash positive.
-- Management has completed an offering for Series D Preferred
Stock with detachable warrants. The result of the offering
was to raise approximately $6.0 million of cash and to
convert $1.8 million of debt into common stock. An
additional $491,000 of debt was converted into Series D
Preferred Stock. As of June 30, 2008, the company had cash
balances of approximately $670,715.
-- The company has received an order for five units of the
Sentry 5000TM, which are scheduled to ship in July and
August with a sales price of $625,000. The first unit was
shipped in July and the second unit was shipped August 1,
2008.
About Titan Energy
Headquartered in New Hudson, Mich., Titan Energy Worldwide Inc.
(OTC BB: TEWI) -- http://www.titanenergy.com/-- is a
manufacturer, distributor and service provider for power
generation equipment, emergency power equipment and specialized
mobile utility systems in the U.S. and internationally. The
company provides equipment and service to fire stations, police
stations, the US military, hospitals, schools, manufacturers,
municipalities, businesses and homes from manufacturers such as
Generac Power Systems Inc.
Going Concern Doubt
UHY LLP, in Southfield, Mich., expressed substantial doubt about
Titan Energy Worldwide 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 losses and accumulated deficit.
TITAN ENERGY: Extends to the Caribbean with Purchase of RB Grove
----------------------------------------------------------------
Titan Energy Worldwide, Inc. has signed a definitive agreement to
acquire RB Grove, Inc., an established 50 year provider of power
generation equipment and service in southern Florida.
Combined with the agreement announced in August to acquire CJ's
Sales and Service in northern Florida, this new agreement gives
Titan Energy a sales and service territory covering the state of
Florida, and extending into the Caribbean, a market valued at more
than $150 million in power generation equipment sales per annum.
Founded in 1953, RB Grove's operates a successful generator sales
and service business with offices in Miami and Pensacola. Last
year, the company generated more than $8.4 million in total
revenues and was EBITDA positive. Titan Energy expects to close
this acquisition in October of 2008.
John Tastad, Chief Executive Officer of Titan Energy Worldwide,
stated, "RB Grove is a solid performer with a long track record of
success and excellence in Southern Florida. We are pleased to have
signed this agreement and are ready to welcome them as part of the
Titan Energy family."
"Together with our agreement to acquire CJ's Sales and Service,
this completes the first stage in our strategy to build a national
footprint for Titan Energy. Florida is a vital market, one that
has tremendous need for power generation equipment and service, an
area that is frequently affected by storms, and a state with
defined legislation requiring many industries to have back-up and
emergency power."
"Together, these transactions effectively more than double the
revenue base of Titan Energy Worldwide, helping us achieve our
target of $30 million in sales next year. We also project Titan
Energy to be profitable in 2009," Mr. Tastad added.
About Titan Energy
Headquartered in New Hudson, Mich., Titan Energy Worldwide Inc.
(OTC BB: TEWI) -- http://www.titanenergy.com/-- is a
manufacturer, distributor and service provider for power
generation equipment, emergency power equipment and specialized
mobile utility systems in the U.S. and internationally. The
company provides equipment and service to fire stations, police
stations, the US military, hospitals, schools, manufacturers,
municipalities, businesses and homes from manufacturers such as
Generac Power Systems Inc.
Going Concern Doubt
UHY LLP, in Southfield, Mich., expressed substantial doubt about
Titan Energy Worldwide 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 losses and accumulated deficit.
For the three months ended June 30, 2008, Titan Energy Worldwide
Inc. reported a net loss of $289,701 on total sales of $2,694,919.
As of June 30, 2008, the company's balance sheet showed total
assets of $6,839,878, total liabilities of $2,551,950, and total
stockholders' equity of $4,287,928.
TRIANT HOLDINGS: TSX to Delist Common Shares on October 16
----------------------------------------------------------
The Toronto Stock Exchange disclosed that the common shares of
Triant Holdings Inc. will be delisted at the close of market on
Oct. 16, 2008 for failure to meet the continued listing
requirements of TSX.
Headquartered in Vancouver, British Columbia, Triant Holdings Inc.
(Symbol: TNT) -- http://www.triant.com-- designs health
monitoring equipment.
TRONOX INC: S&P Lowers Corporate Credit Rating to CCC- from CCC+
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on chemical
company Tronox Inc., including its corporate credit rating to
'CCC-' from 'CCC+'.
The ratings on Tronox remain on CreditWatch with negative
implications, where S&P placed them on July 31, 2008, following
uncertainty regarding the company's ability to comply with
financial covenants, and the appointment of an investment bank to
advise on strategic alternatives. In addition, the CreditWatch
now reflects uncertainty related to Tronox's attempts to extend
the September 2008 maturity of a receivable securitization
program, which is an important source of liquidity.
As of June 30, 2008, Tronox had approximately $800 million in
debt.
"The downgrade reflects heightened concern on Tronox's liquidity,
specifically related to near-term covenant compliance and its
ability to meet an upcoming interest payment in December without
covenant relief," said Standard & Poor's credit analyst Paul
Kurias.
An additional, but potential longer-range concern, relates to
Tronox's recent announcement that it received notice of a lawsuit
for the recovery of $280 million incurred by the EPA in the
cleanup of a New Jersey wood treatment site.
Tronox's liquidity remains constrained by its covenant situation,
and by its need to refinance a $75 million asset securitization
program, which matures on Sept. 24, 2008. Although Tronox has
alternate sources of liquidity such as its $250 million revolving
credit facility, which had about $69 million in utilization at
June 30, 2008, the securitization program forms an important
component of liquidity. The company's ability to meet its third-
quarter 2008 covenant requirement is contingent on an improvement
in EBITDA from about $6 million in the second-quarter. The
company has announced several price increases in recent weeks, but
Tronox's operating environment remains challenging, and could
forestall the meaningful improvement in earnings required to
comply with covenants. In the absence of sufficient covenant
relief or successful steps to preserve access to liquidity, the
company could be challenged to make an upcoming interest payment
of approximately $16 million on Dec. 1, 2008.
The amount Tronox provides for in its reserves is far lower than
the $280 million claimed by the EPA in its lawsuit. Although the
outcome of the lawsuit is unlikely to result in a cash outflow in
the near term, the lawsuit raises the possibility of additional
financial pressure on Tronox's already weakened financial profile
at a time when the improvement of operating performance remains
uncertain and a breach of financial covenants is increasingly
likely.
Oklahoma-based Tronox, with about $1.4 billion in annual sales, is
the third-largest global producer of TiO2, behind industry leader
E.I. DuPont de Nemours & Co. and Millennium Inorganic Chemicals.
S&P will resolve the CreditWatch within the next few weeks after
the company clarifies the outcome of its strategic review, and
after it can reassess prospects for improving operating
performance and liquidity, which includes covenant compliance and
an extension of the maturity on the securitization program. S&P
will also review the company's ability to meet its near-term
interest payment in the absence of covenant relief.
The CreditWatch listing indicates that another downgrade is likely
if operating performance and liquidity management do not improve
meaningfully, or if the outcome of the company's review of
strategic alternatives results in actions with potentially
negative implications for credit quality.
TRONOX INC: FMR LLC Discloses Minimal Equity Stake
--------------------------------------------------
FMR LLC disclosed in a regulatory filing with the Securities and
Exchange Commission that it has ceased to be the beneficial owner
of more than five percent of the class of securities of Tronox
Incorporated. FMR may be deemed to beneficially own 206,300
shares of Tronox's Class A Common Stock, which represents about
1.1% of the outstanding shares.
Headquartered in Oklahoma City, Tronox Incorporated (NYSE:TRX) --
http://www.tronox.com/-- is a producer and marketer of titanium
dioxide pigment. Titanium dioxide pigment is an inorganic white
pigment used in paint, coatings, plastics, paper and many other
everyday products. The company's five pigment plants, which are
located in the United States, Australia, Germany and the
Netherlands, supply performance products to approximately 1,100
customers in 100 countries. In addition, Tronox produces
electrolytic products, including sodium chlorate, electrolytic
manganese dioxide, boron trichloride, elemental boron and lithium
manganese oxide.
The Troubled Company Reporter reported on Aug. 6, 2008, that
Tronox Incorporated reported a preliminary loss from continuing
operations of $29.9 million for the second quarter ended June 30,
2008, compared with a loss from continuing operations for the 2007
second quarter of $20.0 million. Including discontinued
operations, net loss for the quarter was $34.4 million, versus a
net loss of $21.2 million in the 2007 second quarter.
On Aug. 27, the TCR reported that the company has $1.7 billion in
total assets, including $703.5 million in current assets, as at
June 30. The company has $937.8 million in current debts and
$336.9 million in total non-current debts.
TROPICANA ENTERTAINMENT: Court OKs Evansville Sale Procedures
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
the proposed bidding procedures for the sale of Tropicana
Entertainment's Casino Aztar Evansville. The Debtors are
authorized, but not directed, to take all necessary actions to
implement the Bidding
Procedures.
The Sale hearing will be on November 18, 2008. Objections to the
Casino Aztar Sale Motion must be filed on or before 4:00 p.m., on
November 7, 2008.
A full-text copy of the Bid Procedures Order is available for at
no charge at http://bankrupt.com/misc/Tropi_AztarBidProcOrd.pdf
Eldorado Challenges Protocol
Resorts Indiana, LLC and Eldorado Resorts, LLC, tried to block the
approval of the Bidding Procedures. On Eldorado's behalf, Michael
L. Temin, Esq., at Wolf Block LLP, in Philadelphia, Pennsylvania,
pointed out that the Debtors make clear in their Motion that they
have not decided whether to sell or hold the Evansville Assets.
The proposed Bidding Procedures order contain reservations that
are inconsistent with the Purchase Agreement between Debtor Aztar
Riverboat Holding Company, LLC, and Resorts Indiana, Mr. Temin
argued.
In reliance of the March 31, 2008 Purchase Agreement and
Eldorado's inability to terminate the Agreement without Court
approval, Mr. Temin told the Court that Eldorado has already
spent more than $850,000, as of July 31, 2007. Moreover,
Eldorado anticipates spending an additional $1,000,000 through
December 31, 2008, in relation to the Agreement.
If the Debtors determine not to sell the Evansville Assets and
the proposed Bidding Procedures Order is entered, Eldorado notes
that it will not be entitled to any compensation for the amounts
it has spent. "This result is unfair to Eldorado and is not in
accordance with the Purchase Agreement," Mr. Temin said.
"The reservation which Tropicana has imposed on the process --
that it may not sell -- is likely to deter bidding because
prospective bidders are unlikely to be willing to expend the
monies necessary to do due diligence, arrange financing and
obtain regulatory approval in the absence of an actual intent to
sell," Mr. Temin said.
Tropicana President Scott Butera said that "a company that is
willing to pay a fair amount won't let such questions worry it,"
Evansville Courier & Press related in a separate report. "If you
make a genuine offer, you should have a genuine expectation that
you will be successful," Mr. Butera added.
Silverton Enterprises also objected to the Debtors' sale request
in a separate filing. Silverton did not state any specific
reason for its objection.
On the Debtors' behalf, Katherine Good, Esq., at Richards, Layton
& Finger, P.A., in Wilmington, Delaware, said the sales process
was negatively influenced the Debtors' liquidity issues,
litigation, impending Chapter 11 filing, and the threat of
potential new competition. Casino Aztar has consistently been one
of the Debtors' top performers, she said. In addition, she notes,
it has withstood the recent downturn of the gaming industry much
better than the Debtors' other properties.
The Debtors believe that there are significant opportunities with
the Casino Aztar with additional capital investments and attention
from the new senior management. Thus, it is doubtful that a sale
of Casino Aztar would have been considered, Ms. Good said. She
related that when the Debtors and Eldorado negotiated the Purchase
Agreement, both parties were aware that a Chapter 11 filing was
imminent and have even negotiated various bidding procedures for a
sale through Section 363 of the Bankruptcy Code. Much has changed
since the Purchase Agreement was executed on March 31, 2008, as
detailed in the Debtors' recently filed status report, Ms. Good
pointed out. The new senior management and their professionals
must determine whether a sale of the Evansville Assets is
appropriate, or whether the Debtors should hold the Evansville
Assets and reorganized around them or sell them in the future, she
said.
However, Ms. Good argued, any sell- or hold-decision must wait
until (i) a re-marketing process is completed, (ii) a business
plan is finalized, and (iii) the Debtors can engage in dialogue
with their stakeholders and the regulatory authorities regarding
which option maximizes value for, and is in the best interest of,
all constituents. With respect to Eldorado's objections, Ms. Good
maintained that the Casino Aztar Sale Motion is entirely
consistent with the Purchase Agreement. "A debtor's duty to
continually evaluate how to dispose its assets to maximize value
is immutable and cannot be bargained away in a prepetition
agreement," she pointed out.
Ms. Good emphasized that Eldorado did not bargain for deal
protections to ensure that it would receive a break-up fee if the
Debtors decided not to proceed with a sale. "[Thus,] Eldorado
cannot, through the guise of a bidding procedures objection, ask
this Court to foist upon the Debtors a prepetition deal that they
did not negotiate," she argued.
The Debtors assured Eldorado that they will proceed with a sale
if they determine, in consultation with all stakeholders, that
the highest bid at the auction exceeds the Evansville Asset's
reorganization value. However, the Debtors inform the Court that
they cannot make this determination at this time.
With respect to the objection of the Official Committee of
Unsecured Creditors, Ms. Good pointed out that courts have
approved break-up fees and expense reimbursements of similar or
greater percentages of the purchase price than those considered
for the Casino Aztar sale. The $6,600,000 Break-Up Fee and
Expense Reimbursement of up to $500,000 are reasonable when
compared with the market and are amply supported by the Debtors'
business judgment, she asserts.
In a separate filing, Daniel M. Aronson, managing director at the
Debtors' investment banker and financial advisor, Restructuring
Group of Lazard Freres & Company LLC, in New York, noted his
firm's support of the Casino Aztar Sale Motion. He tells the
Court that (i) a public auction of the Evansville Assets will
enable the Debtors to obtain the highest and best offer for those
assets at this time, and (ii) the Bidding Procedures and bid
protections are reasonable and appropriate in light of the
circumstances and will ensure that the Debtors maximize the value
of the Evansville Assets.
Mr. Aronson added that requiring the Debtors to decide whether to
assume or reject the Purchase Agreement before they can complete
their financial analysis and before the auction process is
completed would impair the Debtors' ability to evaluate, analyze,
compare, and consider all alternatives to assuming the agreement.
Court Ruling
All Objections that have not been withdrawn, waived, or settled
at the hearing or by stipulation are deemed overruled.
The Sale Notice is also approved, the Court ruled. Selling
Debtor Aztar Riverboat Holding Company, LLC, will publish the
Publication Notice in the Evansville Courier & Press and the
national editions of The Wall Street Journal and USA Today.
The Court also approved the Break-Up Fee and the Expense
Reimbursement. The Debtors are authorized, without further Court
action, to make those payments in accordance to the terms and
conditions of the Purchase Agreement and the Bid Procedures
Order.
Aztar Riverboat is authorized to conduct an Auction as set forth
in the Bidding Procedures.
If Resorts Indiana LLC, as buyer, becomes entitled to receive the
Break-Up Fee and the Expense Reimbursement, then it is granted an
allowed superpriority administrative claim in Aztar Riverboat's
Chapter 11 case.
The Debtors or any of their affiliates will not have any
liability with respect to Resorts Indiana or any other entity
under the Purchase Agreement in excess of the Break-Up Fee and
the Expense Reimbursement in the event the Agreement terminates,
the Court clarified. Claims, rights or causes of action by
Resorts Indiana or any other entity against the Debtors or their
affiliates with respect to the termination in excess of the
applicable Break-Up Fee and the Expense Reimbursement will be
deemed fully waived, released, and forever discharged.
No entity other than Resorts Indiana will be entitled to any
expense reimbursement, break-up fees, "topping," termination,
contribution, or other similar fee or payment.
If Resorts Indiana makes all necessary filings under the HSR Act
on or before November 15, 2008, and the Debtors do not consummate
a Closing under the Purchase Agreement for reasons other than
breach or failure to perform on the part of the Buyer, the
Debtors will reimburse Resorts Indiana up to $125,000 as an
administrative expense for the filing fees.
About Tropica Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada and Atlantic City, New Jersey.
Tropicana Entertainment LLC filed for Chapter 11 protection on
May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor-
affiliates filed for separate Chapter 11 petitions but with no
case numbers assigned yet. Kirkland & Ellis LLP and Mark D.
Collins, Esq., at Richards Layton & Finger, represent the Debtors
in their restructuring efforts. Their financial advisor is Lazard
Ltd. Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors'
Web site administration agent. AlixPartners LLP is the Debtors'
restructuring advisor.
Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell
LLP represent the Official Committee of Unsecured Creditors in
this case. Capstone Advisory Group LLC is financial advisor to
the Creditors' Committee.
The Court has extended the Debtors' exclusive period to file a
plan through and including January 12, 2009, and to solicit votes
on the plan through and including March 13, 2009.
(Tropicana Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
TROPICANA ENTERTAINMENT: UAW Cries Unfair Labor Practice
--------------------------------------------------------
Members of the UAW bargaining team at Tropicana Entertainment have
filed unfair labor practice charges with the National Labor
Relations Board against the temporary management of the casino,
charging a failure to bargain in good faith.
"We won our representation election by 80 percent to 20 percent,"
said Al Welenc, a UAW bargaining team member. "That's a strong
mandate for a strong contract -- but Judge Stein has said flat out
that he won't reach an agreement with us."
Former New Jersey Supreme Court Justice Gary Stein was appointed
by the New Jersey Casino Control Commission as conservator of the
Tropicana casino in December 2007, when the previous management
lost its operating license.
In January 2008, Judge Stein told UAW representatives that he
would engage in bargaining but would not reach an agreement
because he would not bind a prospective purchaser. Since then, he
has engaged in surface bargaining during negotiations, has refused
to bargain over disciplinary issues, and has unilaterally changed
terms and conditions of employment.
"Even if he's only running the casino for a limited time, Judge
Stein of all people should understand he has an obligation to
follow the law," said Joe Ashton, director of UAW Region 9, which
includes New Jersey, Pennsylvania, and western New York. "Federal
labor law is very clear: If you come to the table and state up
front you have no intent to reach an agreement, that's bargaining
in bad faith -- and that's illegal."
"Our goal is to reach a fair agreement at Tropicana, and our
bargaining team is prepared to make this process work," said UAW
Secretary-Treasurer Elizabeth Bunn, who directs the union's
Technical, Office and Professional Department. "Casino workers
expect and deserve that whoever is managing the casino will
recognize our rights and comply with the law."
Full- and part-time dealers, dual rate workers and simulcast
workers at Tropicana voted to become part of the UAW on Aug. 25,
2007. In all, six groups of workers at four Atlantic City casinos
voted in favor of UAW representation in 2007, in addition to
workers at Casino Aztar in Evansville, Ind., and Foxwoods Casino
in Ledyard, Conn.
On June 21 thousands of casino workers, UAW members, trade
unionists, political and religious leaders, as well as community
supporters marched in Atlantic City to support the UAW campaign
for fair contracts.
About the United Auto Workers
The UAW is one of the nation's largest and most diverse labor
unions with more than one million active and retired members,
including more than 8,800 casino workers in Connecticut, Indiana,
Michigan, New Jersey and Rhode Island.
About Tropica Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada and Atlantic City, New Jersey.
Tropicana Entertainment LLC filed for Chapter 11 protection on
May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor-
affiliates filed for separate Chapter 11 petitions but with no
case numbers assigned yet. Kirkland & Ellis LLP and Mark D.
Collins, Esq., at Richards Layton & Finger, represent the Debtors
in their restructuring efforts. Their financial advisor is Lazard
Ltd. Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors'
Web site administration agent. AlixPartners LLP is the Debtors'
restructuring advisor.
Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell
LLP represent the Official Committee of Unsecured Creditors in
this case. Capstone Advisory Group LLC is financial advisor to
the Creditors' Committee.
The Court has extended the Debtors' exclusive period to file a
plan through and including January 12, 2009, and to solicit votes
on the plan through and including March 13, 2009.
(Tropicana Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
TROPICANA ENTERTAINMENT: Commission Says Crisis Could Affect Sale
-----------------------------------------------------------------
The New Jersey Casino Control Commission is concerned that the
current crisis affecting major Wall Street firms could directly
affect chances of finding a buyer for Tropicana Atlantic City,
pressofAtlanticCity.com reports.
Retired New Jersey Gary S. Stein has been appointed as
conservator of the Tropicana Atlantic City casino and has been
tasked to find a buyer for the casino. The New Jersey Commission
ruled in favor of a casino sale in light of certain regulatory
violations perpetuated by the Tropicana Atlantic management. A
potential buyer for the casino was not readily identified in the
first half of the year due to certain factors, among them, a weak
economy. Presently, Mr. Stein has been given until mid-October
2008 to complete a sale of the casino.
According to pressofAtlanticCity.com, New Jersey Casino Control
Commission Chair Linda M. Kassekert feels that the stock market
crisis will not help any in improving the chances of locating a
buyer for the Tropicana Atlantic City casino. "I think,
frankly, we only have to look at what is going on on Wall Street
to understand why the sale is moving so slowly," the news source
quoted Ms. Kassekert as saying in an interview at a Sept. 17,
2008 board meeting of the Commission.
At the September 17 meeting, the Commission approved the
retention of Moelis & Co. and J.P. Morgan Securities as co-
financial advisors in the contemplated casino sale,
pressofAtlanticCity.com added. Pursuant to executed contracts,
the financial advisors will be entitled to 0.625% of sale price
of Tropicana Atlantic. Of that amount, Moelis will receive 60%
and J.P. Morgan will receive 40%, the news source quoted
Commission spokesman Daniel Heneghan as saying.
Mr. Stein was not able to attend the September 17 board meeting,
Donald Wittkowski of pressofAtlanticCity.com states.
Ms. Kassekert did not relate if the Commission is amenable to a
further extension of the casino sale deadline, Mr. Wittkowski
adds.
About Tropica Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada and Atlantic City, New Jersey.
Tropicana Entertainment LLC filed for Chapter 11 protection on
May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor-
affiliates filed for separate Chapter 11 petitions but with no
case numbers assigned yet. Kirkland & Ellis LLP and Mark D.
Collins, Esq., at Richards Layton & Finger, represent the Debtors
in their restructuring efforts. Their financial advisor is Lazard
Ltd. Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors'
Web site administration agent. AlixPartners LLP is the Debtors'
restructuring advisor.
Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell
LLP represent the Official Committee of Unsecured Creditors in
this case. Capstone Advisory Group LLC is financial advisor to
the Creditors' Committee.
The Court has extended the Debtors' exclusive period to file a
plan through and including January 12, 2009, and to solicit votes
on the plan through and including March 13, 2009.
(Tropicana Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
TUCKAHOE DEVELOPMENT: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Tuckahoe Development, LLC
L-4
11285 Elkins Road
Roswell, GA 30076
Bankruptcy Case No.: 08-78032
Chapter 11 Petition Date: September 12, 2008
Court: Northern District of Georgia (Atlanta)
Judge: Mary Grace Diehl
Debtor's Counsel: Rex Cornelison, Esq.
The Cornelison Group, LLC
Building D, Suite 1
500 Sun Valley Drive
Roswell, GA 30076-5636
Tel: (770) 587-0082
Total Assets: $4,500,000
Total Debts: $2,100,000
The Debtor did not file a list of its largest unsecured creditors.
The Debtor does not have any creditors who are not insiders.
TURKEY LAKE: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Turkey Lake Partners LLC
4523 Avenue H
Brooklyn, NY 10234
Bankruptcy Case No.: 08-08174
Type of Business: The Debtor is a Single Assets Real
Estate Debtor.
Chapter 11 Petition Date: September 12, 2008
Court: Middle District of Florida (Orlando)
Judge: Arthur B. Briskman
Debtor's Counsel: Raymond S Sussman, Esq.
4523 Avenue H
Brooklyn, NY 10234
Tel: (718) 338-3302
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
The Debtor did not file a list of its largest unsecured creditors.
UNIGENE LABORATORIES: SEC Grants Confidential Treatment
-------------------------------------------------------
The Division of Corporation Finance of the U.S. Securities and
Exchange Commission granted on Sept. 3, 2008, a request by Unigene
Laboratories, Inc. for confidential treatment for information it
excluded from certain exhibits to a Form 10-Q filed on May 12,
2008.
Timothy Levenberg, Special Counsel, said that based on
representations by Unigene Laboratories that this information
qualifies as confidential commercial or financial information
under the Freedom of Information Act, 5 U.S.C. 552(b)(4), the
Division of Corporation Finance has determined not to publicly
disclose the Exhibits through May 12, 2017.
About Unigene Laboratories
Based in Fairfield, N.J., Unigene Laboratories Inc. (OTC BB: UGNE)
-- http://www.unigene.com/-- is a biopharmaceutical company
focusing on the oral and nasal delivery of large-market peptide
drugs. Due to the size of the worldwide osteoporosis market,
Unigene is targeting its initial efforts on developing calcitonin
and PTH-based therapies.
Fortical(R), Unigene's nasal calcitonin product for the treatment
of postmenopausal osteoporosis, received FDA approval and was
launched in August 2005. Unigene has licensed the U.S. rights for
Fortical to Upsher-Smith Laboratories, worldwide rights for its
oral PTH technology to GlaxoSmithKline and worldwide rights for
its calcitonin manufacturing technology to Novartis.
As reported in the Troubled Company Reporter on March 28, 2008,
Grant Thornton, in Edison, N.J., expressed substantial doubt about
Unigene Laboratories Inc.'s ability to continue as a going
concern after auditing the company's financial statements for
the years ended Dec. 31, 2007, and 2006. The auditing firm
pointed to the company's recurring losses from operations and
accumulated deficit.
The company has incurred annual operating losses since inception
and, as a result, at March 31, 2008, had an accumulated deficit of
$125,106,934. The company says it needs additional cash from
sales, milestones or upfront payments or from financings in order
to meet its obligations for the next 12 months.
UNI-MARTS: Wants Until Dec. 23 to File Chapter 11 Plan
------------------------------------------------------
Bill Rochelle of Bloomberg News reports that Uni-Marts, LLC, and
its debtor-affiliates asked the U.S. Bankruptcy Court for the
District of Delaware to extend the Debtors' exclusive period to
file their Chapter 11 reorganization plan to Dec. 23. The report
also says that the Debtors intend to complete the sale of their
assets by the end of September.
At an auction in August, no bids were submitted to compete with
the $17.7 million offer from Atlantis Petroleum LLC, the report
notes.
The price in the contract with Atlantis Petroleum calls for paying
additional amounts for inventories of fuel and other merchandise,
the report notes.
The Debtors' debt includes $21.5 million owing to trade suppliers
and $14.2 million for mortgages on stores in Ohio, the report
says.
According to the reports, the Court has set a hearing on Oct. 21
to consider the request.
About Uni-Marts
Headquartered in State College, Pennsylvania, Uni-Marts LLC sells
consumer goods. The company and six of its affiliates filed for
Chapter 11 protection on May 29, 2008 (Bankr. D. Del. Lead Case
No.08-11037). Michael Gregory Wilson, Esq., at Hunton & Williams
LLP represents the Debtors in their restructuring efforts. The
Debtor selected Epiq Bankruptcy Solutions LLC as its claims,
notice and balloting agent. The U.S. Trustee for Region 3
appointed seven creditors to serve on an Official Committee of
Unsecured Creditors. The Committee selected Blank Rome LLP as its
counsel in these cases.
US AIRWAYS: Spends $520,000 in Lobbying Fees for 2nd Quarter
------------------------------------------------------------
US Airways Group Inc. spent $520,000 in the second quarter to
lobby for legislation on (i) curbing oil speculation, (ii)
funding for the Federal Aviation Administration and (iii) other
issues, The Associated Press reports, citing a recent disclosure
form.
The report says USAir also lobbied:
* on bills that would have established a cap-and-trade system
aimed at reducing greenhouse gas emissions.
* on flight restrictions at Ronald Reagan Washington National
Airport near Washington, D.C., and on passenger processing
and user fee issues.
For the period, AP says, US Airways lobbied the FAA and the
departments of Homeland Security and Transportation, aside from
Congress.
Many airline executives blamed oil price speculators for the
crude price increase in summer and the debate over offshore
drilling delayed legislation aimed at curbing speculation,
Forbes.com said.
About US Airways
Based in Tempe, Arizona, US Airways Group Inc.'s (NYSE: LCC) -
http://www.usairways.com/-- primary business activity is the
ownership of the common stock of US Airways, Inc., Allegheny
Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc.,
MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc.,
Material Services company, Inc., and Airways Assurance Limited,
LLC.
Under a Chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P.
Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq.,
at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas
M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in
their restructuring efforts. In the company's second bankruptcy
filing, it lists $8,805,972,000 in total assets and $8,702,437,000
in total debts.
The Debtors' Chapter 11 plan for its second bankruptcy filing
became effective on Sept. 27, 2005. The Debtors completed their
merger with America West on the same date.
(US Airways Bankruptcy News, Issue No. 165; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported in the Troubled company Reporter on July 24, 2008,
Moody's Investors Service downgraded the Corporate Family and
Probability of Default Ratings of US Airways Group Inc. to Caa1
from B3 and lowered the ratings of its outstanding corporate debt
instruments and certain Enhanced Equipment Trust Certificates
(EETC). Moody's lowered the Speculative Grade Liquidity
Assessment to SGL-4 from SGL-3. The rating outlook is negative.
US AIRWAYS: To Slash 10% of Phoenix Flights Starting October
------------------------------------------------------------
US Airways Group Inc. will reduce flights in Phoenix by 10%
starting October, said US Airways Spokesman Morgan Durrant,
reports Hanna Scott of the KTAR.com.
US Airways will also cut jobs that include 300 pilots of which
175 are based in Phoenix, says the report. The airline will not
lay off flight attendants in Phoenix and will manage the work
force through resignation, retirement, or leaves of absence.
"We hope . . . to save $400 to $500 million on an annual basis,"
Durrant said, reports KTAR.com.
Based in Tempe, Arizona, US Airways Group Inc.'s (NYSE: LCC) -
http://www.usairways.com/-- primary business activity is the
ownership of the common stock of US Airways, Inc., Allegheny
Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc.,
MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc.,
Material Services company, Inc., and Airways Assurance Limited,
LLC.
Under a Chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P.
Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq.,
at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas
M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in
their restructuring efforts. In the company's second bankruptcy
filing, it lists $8,805,972,000 in total assets and $8,702,437,000
in total debts.
The Debtors' Chapter 11 plan for its second bankruptcy filing
became effective on Sept. 27, 2005. The Debtors completed their
merger with America West on the same date.
(US Airways Bankruptcy News, Issue No. 165; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported in the Troubled company Reporter on July 24, 2008,
Moody's Investors Service downgraded the Corporate Family and
Probability of Default Ratings of US Airways Group Inc. to Caa1
from B3 and lowered the ratings of its outstanding corporate debt
instruments and certain Enhanced Equipment Trust Certificates
(EETC). Moody's lowered the Speculative Grade Liquidity
Assessment to SGL-4 from SGL-3. The rating outlook is negative.
UTSTARCOM INC: SVP Mark Green Selling Up to 352,316 Shares
----------------------------------------------------------
On September 8, 2008, Mark Green, Senior Vice President, Human
Resources, entered into a Rule 10b5-1 plan with a broker to sell
shares of common stock of UTStarcom, Inc. for personal financial
management purposes. The shares to be sold pursuant to the Plan
relate to Company awards of restricted stock, performance shares
and restricted stock units. Under the Plan, up to 352,316 shares
may be sold beginning in November 2008. The Plan will terminate
upon the earlier of the sale of all shares or September 30, 2011.
Sales under the Plan will be reported through appropriate filings
with the Securities and Exchange Commission.
Susan Marsch, vice president and general counsel, relates that the
Plan is intended to comply with Rule 10b5-1 of the Securities
Exchange Act of 1934, as amended, and the Company's insider
trading policy. Rule 10b5-1 allows corporate insiders to
establish pre-arranged written stock trading plans at a time when
the insider is not aware of material, non-public information.
Subsequent receipt by the insider of material, non-public
information will not prevent pre-arranged transactions under the
Rule 10b5-1 plan from being executed.
About UTStarcom Inc.
Headquartered in Alameda, California, UTStarcom Inc. (Nasdaq:
UTSI) -- http://www.utstar.com/-- provides IP-based, end-to-end
networking solutions and international service and support. The
company develops, manufactures and markets its broadband,
wireless, and terminal solutions to network operators in both
emerging and established telecommunications markets worldwide.
UTStarcom was founded in 1991 and is headquartered in Alameda,
California. The company has research and development centers in
the USA, Canada, China, Korea and India.
Going Concern Doubt
PricewaterhouseCoopers LLP, in San Jose, California, expressed
substantial doubt about UTStarcom 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 net losses, negative cash flows
from operations and significant debt obligations.
On March 3, 2008, the company repaid the convertible subordinated
notes of $289.5 million which included a principal payment of
$274.6 million and the accrued interest of $14.9 million.
The company reported an operating loss of $30.9 million for the
quarter ended March 31, 2008.
At March 31, 2008, the company's consolidated balance sheet showed
$1.7 billion in total assets, $1.1 billion in total liabilities,
and $616.2 million in total stockholders' equity.
UVUMOBILE INC: Reports $1.2 Million Net Loss for June 2008
----------------------------------------------------------
uVuMobile Inc. reported $1,299,182 net loss on total revenues of
$55,670 for the three months ended June 30, 2008, compared to
$3,123,105 net loss on total revenues of $278,169 for the same
period a year earlier.
The company's consolidated balance sheets at June 30, 2008, showed
total assets of $1,305,902, and total liabilities of $3,254,576
resulting in a $1,948,674 stockholders' deficit.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $684,600 in total current assets
available to pay $3,254,576 in total current liabilities.
The company said that its operations are not an adequate source of
cash to fund future operations and these matters raise substantial
doubt about its ability to continue as a going concern. To fund
its cash requirements, the company has relied on private
placements of equity and loans from stockholders and other related
entities. Although the company closed on a $2.0 million debt
financing on December 17, 2007, its ability to continue its
operations is contingent upon obtaining additional financing and
attaining profitable operations.
The company stated that cash flows generated from operating
activities during the year ended Dec. 31, 2007, were not
sufficient to offset its operating expenditures. Based on
information available regarding its proposed plans and assumptions
relating to operations, the company anticipates that the net
proceeds from its last financing in 2007, together with projected
cash flow from operations, will not be sufficient to meet its cash
requirements for working capital and capital expenditures beyond
third quarter of 2008.
The company related that it will be necessary for it to secure
additional financing to support its operations. If adequate funds
are not available or not available on acceptable terms, it will be
unable to continue as a going concern, the company continued.
The company noted that it has no firm commitments for any
additional capital.
Going Concern Doubt
Sherb & Co. LLP, in Boca Raton, Florida, expressed substantial
doubt about Smart Video Technologies Inc. nka. uVuMobile Inc.'s
ability to continue as a going concern after auditing the
company's consolidated financial statements as of the years ended
Dec. 31, 2007, and 2006. The auditing firm pointed to the
company's recurring losses from operations, net cash used in
operations, net working capital deficit, stockholders' deficit and
accumulated deficit.
About uVuMobile Inc.
Headquartered in Duluth, Georgia, uVuMobile Inc. (OTC BB: UVUM.OB)
-- http://www.uvumobile.com/-- fka. SmartVideo Technologies Inc.
is a provider of video content distribution services and
technology.
VALLEY STEEL: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Valley Steel Construction, Inc.
1400 Highway 20
Decatur, AL 35601
Bankruptcy Case No.: 08-82878-11
Chapter 11 Petition Date: September 17, 2008
Court: Northern District of Alabama (Decatur)
Judge: Jack Caddell
Debtor's Counsel: Garland C. Hall, III, Esq.
gch@chhlawpc.com
Chenault, Hammond & Hall
P.O. Box 1906
Decatur, AL 35602
Tel: (256) 353-7031
Estimated Assets: $500,000 to $1 million
Estimated Debts: $1 million to $10 million
The Debtor did not file a list of its largest unsecured creditors.
The Debtor does not have any creditors who are not insiders.
VERASUN ENERGY: Reduced Liquidity Cues Moody's to Cut CFR to B3
---------------------------------------------------------------
Moody's Investors Service downgraded VeraSun Energy Corporation's
corporate family rating to B3 from B2 and left the rating under
review for further downgrade. VeraSun's unsecured notes were
lowered to Caa1 from B3 and the secured notes were lowered to B1
from Ba3.
These actions follow the company's SEC filing and the substantial
reduction in liquidity since the end of the second quarter.
VeraSun is currently attempting to issue $100 million of equity to
provide funds to support on-going working capital requirements.
The SGL-4 (poor) speculative grade liquidity rating was affirmed.
VeraSun Energy Corporation
Ratings downgraded:
* Corporate family rating -- B3 (from B2)
* Probability of default rating -- B3 (from B2)
* $210mm Sr sec notes due 2012 -- B1 (LGD2, 27%) from Ba3
(LGD2, 27%)
* $450mm Sr unsec notes due 2017 -- Caa1 (LGD5, 77%) from B3
(LGD5, 77%)
Ratings affirmed:
* Speculative grade liquidity rating -- SGL4
* Ratings Outlook --Under Review
The downgrade reflects the decline in VeraSun's liquidity during
the third quarter as unsuccessful hedging activities, weak cash
margins and on-going working capital and capital spending
requirements have utilized the vast majority of available
liquidity. According to the company's SEC filing, VeraSun was
forced to exit certain hedges in July due to the negative impact
of increased margin requirements on the company's liquidity.
Additionally, they remain exposed to above market corn purchase
contracts for the remainder of the quarter and to a lesser degree
in the fourth quarter. Working capital and capital spending
requirements have increased due to the on-going construction of
one plant and the start-up of three plants. As a result of these
issues, Moody's is concerned about the company's ability to fund
the December interest payment (roughly $31 million).
The company is currently in the market attempting to raise roughly
$100 million of additional cash equity. The ability/willingness
of the company to issue sufficient shares to generate $100 million
of proceeds will be a critical factor in the rating review. If
the company has difficulty in placing this additional equity,
Moody's would likely lower the company's ratings by multiple
notches. In a Form 8-K filing with the SEC dated September 16,
2008, the company stated that existing shareholders would be
willing to purchase an additional $25 million of stock and that
certain other cash in-flows were expected over the next two to
three months.
Moody's review will seek to determine the willingness of existing
shareholders to provide more equity and the company's ability to
raise sufficient capital to provide a reasonable level of
liquidity. Additionally, Moody's will focus on the ability of the
company to reduce capital spending, manage the volatility of corn
and ethanol prices going forward, provide greater transparency
with regard to its hedging activities, and generate cash from its
new and existing facilities given the difficult operating
environment.
VeraSun expects to record average corn prices of $6.75 to $7.00
per bushel and incur a net loss of $63 million to $103 million for
the third quarter. The company incurred cash losses when it chose
to exit corn hedges to mitigate margin exposure in its futures
positions and was further negatively impact by positions in
accumulator contracts when corn prices fell sharply in July.
Ethanol industry conditions remain unattractive due to high corn
prices, elevated natural gas commodity input costs and
unattractive ethanol pricing that has led to slim cash operating
margins, elevated working capital requirements and lackluster cash
flows from operations. Despite the large increase in VeraSun's
production capacity, margins are volatile and cash flow from
operations is not predictable enough to be a reliable source of
liquidity.
VeraSun's cash balances and external liquidity sources have
declined steadily following several quarters of elevated capital
expenditures for the construction of new ethanol plants and the
acquisition of ASAlliances Biofuels LLC such that current cash
balances no longer provide a large cushion against adverse
industry conditions. More recently, VeraSun has experienced a
disruption in payments from customers due to Hurricane Ike, which
struck the Texas coast September 13, 2008, resulting in a surge in
accounts receivable and necessitating further borrowings under its
revolving credit facility. Cash balances have not been sufficient
to allow the company to effectively hedge its corn exposure, while
remaining comfortable that it can meet potential margin
requirements.
Moody's SGL-4 rating reflects the lack of availability
($6 million) under its $125 million revolving credit facility due
May 2011 (as of September 16, 2008) and unrestricted cash balances
of $3.5 million (as of July 31, 2008) available to VeraSun Energy
Corporation. VeraSun is required to make representations as to no
material adverse change in the business each time it borrows under
the revolver. VeraSun's project financed subsidiaries have
additional revolver availability and $25.3 million of cash (as of
July 31, 2008), on which there may be restrictions concerning
dividends to its parent.
Moreover, current ethanol industry conditions will limit cash
margins and gross cash flow from operations making it difficult to
accurately estimate cash usage over the next six to nine months.
VeraSun Energy Corporation, headquartered in Brookings, South
Dakota, is a producer of ethanol in the United States with 14
facilities having a production capacity totaling 1,420 million
gallons per year. It has two additional ethanol plants due for
start up in the second half of 2008, which will bring total
capacity to 1,640 MGPY. The firm acquired US BioEnergy
Corporation in April 2008. Revenues for the LTM ended June 30,
2008, which do not reflect the full year operations of all of
VeraSun's plants, were approximately $2.1 billion.
VERSO TECHNOLOGIES: Gets Green Light to Use Cash Collateral
-----------------------------------------------------------
William Rochelle of Bloomberg News reports that the U.S.
Bankruptcy Court for the Northern District of Georgia has
temporarily authorized Verso Technologies, Inc., and its debtor-
affiliates to use cash representing collateral for a junior
secured creditor. The lender has a security interest in all the
assets to secure $6.5 million in debt.
The Court, the report says, had set a final hearing on use of cash
on Oct. 3.
The Debtors sold three businesses, paying off the first-lien
credit while retaining one business known as the Telmate
operation. They were authorized to sell the voice-over-Internet
protocol and switching businesses to three buyers for a total of
$1.9 million earlier, the report states.
About Verso Technologies
Headquartered in Atlanta, Georgia, Verso Technologies Inc.
(OTC:VRSOQ) -- http://www.verso.com/-- provides
telecommunications service in the United States. The company and
its affiliates manufacture, deliver, and provide support for
hardware, software and service solutions primarily to large
wireline, cellular, wireless and satellite carriers.
The company and four of its affiliates filed for Chapter 11
protection on April 25, 2008 (Bankr. N.D. Ga Lead Case No.08-
67659). J. Robert Williamson, Esq., at Scroggins and Williamson,
represents the Debtors in their restructuring efforts. The
Debtors selected Logan and Company Inc. as their claims agent. The
Debtors proposed to hire John L. Palmer at
NachmanHaysBrownstein Inc. as their chief administration officer.
The U.S. Trustee for Region 21 appointed creditors serve on an
Official Committee of Unsecured Creditors. Darryl S. Laddin,
Esq., at Arnall Golden Gregory LLP, and Michael S. Fox, Esq., at
Olshan Grundman Frome Rosenzweig & Wolosky LLP, represent the
Committee in these cases. When the Debtors filed for protection
against their creditors, they listed total assets of $34,263,000
and total debts of $36,657,000.
VERTIS HOLDINGS: Should Pay Fees, U.S. Trustee Says
---------------------------------------------------
Roberta A. DeAngelis, the Acting United States Trustee for
Region 3, contends that for Vertis Holdings, Inc., and its
debtor-affiliates' six Chapter 11 cases to be closed and final
decreed, the Vertis Debtors must pay any and all fees pursuant to
Section 1930(a)(6) of the Judiciary and Judicial Procedures Code.
Vertis asked the United States Bankruptcy Court for the District
of Delaware to issue a final decree closing the Chapter 11 cases
of its affiliates, including Vertis Holdings, Inc., Enteron Group,
LLC, Webcraft, LLC, Vertis Mailing, LLC, Webcraft Chemicals, LLC,
and USA Direct, LLC.
Ms. DeAngelis maintains that as the payment of quarterly fees is
required by law, the Vertis Debtors may not avert, abrogate or
avoid their obligation to pay the Fees.
Post-confirmation reports are also required to be filed prior to
the Court's entry of a final decree closing the Vertis Debtors'
cases, she adds.
Against this backdrop, the U.S. Trustee asks the Court to grant
the Vertis Debtors' request contingent on their payment of
quarterly fees and submission of post-confirmation report.
The Court will convene a hearing on Sept. 22, 2008, to consider
the Debtors' Final Closing request.
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 (Bankr. 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.
VIEW SYSTEMS: Settles Sigma Lawsuit & Satisfies Judgment
--------------------------------------------------------
View Systems, Inc., informed the Securities and Exchange
Commission that on Sept. 4, 2008, it received documents with the
acknowledgment of full Satisfaction of Judgment effective on
Aug. 29, 2008, in the District Court of Denver, Colorado.
The judgment is related to the case entitled, Sigma International
Holdings, Inc. v. View Systems, Inc.
In August 2006, the company entered into a consulting agreement
with The Riderwood Group, a Maryland limited liability investment
banker, for the purpose of assisting in raising private equity
financing and finding suitable acquisition targets. The Riderwood
Group subsequently introduced the company to Sigma International
Holdings in 2007 which signed a non-binding merger and acquisition
agreement and in addition loaned the company $250,000. Sigma soon
thereafter demanded satisfaction of their note or a control block
of the company. The company's board of directors decided not to
give Sigma control of View Systems. Sigma sued the company on the
note and was awarded a judgment on May 11, 2008, in Montgomery
County Maryland, case number 288395-V, for $296,000, which
included interest and legal fees.
The Board of Directors of View Systems after several meetings
decided to settle the debt, $296,000 plus another $5,196.50
interest and costs for a total of $301,196.50, which was paid to
Sigma International Holdings for full and final settlement. Of
the total, $100,000 was paid by the company. View Systems
Director, Dr. Michael Bagnoli, provided the balance of
$201,196.50.
About View Systems
Based in Baltimore, Md., View Systems Inc. (OTC BB: VYST) --
http://www.viewsystems.com/-- manufactures and installs unique
security products to government agencies, schools, courthouses,
event and sports venues, the Military and commercial businesses.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 30, 2008,
Davis, Sita & Company, P.A, in Greenbelt, Md., expressed
substantial doubt about View Systems 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 said, "The company has incurred ongoing operating
losses and does not currently have financing commitments in place
to meet expected cash requirements through 2008. In addition,
certain notes payable have come due and the note holders have
demanded payment."
On June 10, 2008, the TCR reported that View Systems' consolidated
balance sheet at March 31, 2008, showed $1,455,882 in total assets
and $2,180,188 in total liabilities, resulting in a $724,306 total
stockholders' deficit. At March 31, 2008, the company's
consolidated balance sheet also showed strained liquidity with
$202,848 in total current assets available to pay $2,180,188 in
total current liabilities. The company reported a net loss of
$65,942, on net revenues of $290,431, for the first quarter ended
March 31, 2008, compared with a net loss of $323,506, on net
revenues of $250,706, for the same period ended March 31, 2007.
VILLAGE FOODS: Closes After Chapter 7 Bankruptcy
------------------------------------------------
Village Foods IGA on Snoqualmie Ridge closed last week after
entering Chapter 7 bankruptcy, Snoqualmie Valley (Wash.) Record
reports citing Zachary Mosner, Esq., a state bankruptcy attorney.
According to the report, the debt-ridden store had been open and
reorganizing since filing for Chapter 11 bankruptcy in January.
It struggled to turn a profit since it opened in February of 2006,
the report stated citing court documents.
VINEYARD CHRISTIAN: Case Summary & 20 Largest Unsec. Creditors
--------------------------------------------------------------
Debtor: Vineyard Christian Fellowship of Malibu
23825 Stuart Ranch Road
Malibu, CA 90265
Bankruptcy Case No.: 08-16951
Chapter 11 Petition Date: September 12, 2008
Court: Central District of California in San Fernando Valley
Judge: Geraldine Mund
Debtor's Counsel: James Stang, Esq.
jstang@pszjlaw.com
Pachulski Stang Ziehl & Jones LLP
10100 Santa Monica Boulevard 1100
Los Angeles, CA 90067
Tel.: 310-277-6910
Fax: 310-201-0760
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
The Estate of Loan $2,988,303.13
Robert Bruce Scott II
and/or Mary Devine Scott
20677 W. Rockpoint Way
Malibu, CA 90265
Byron Scott Minerd Loan 341,622.29
128 Reef Mall
Marina Del Rey
CA 90292
B. Joan Gibson, Trade Debt 111,100.00
Accountants
P.O. Box
Alta Loma
CA 91701-0907
Dance for Kids LL Tenant Deposit 34,000.00
Beitler Commercial Commission 28,652.40
Realty Services
Holthouse Carlin & Trade Debt 17,340.40
Van Tright LLP
John Gibson Trade Debt 15,000.00
John E. Cadenhead, Jr. Trade Debt 9,130.00
James E. Arden, Esq. Payroll 8,554.48
Southern California Utilities 6,637.74
Edison
Philipps 66 - Conoco 76 Credit Card 2,685.76
Ford Motor Credit Co. Loan 2,504.82
Acey Decy Equipment Co. Trade Debt 2,480.53
LA County Waterworks Utilities 1,563.13
Amtech Elevator Services Trade Debt 1,541.16
Security Life Insurance Insurance Premium 1,312.75
Company of America
EPD Construction Trade Debt 1,200.00
Malibu Business and Trade Debt 1,118.68
Shipping Center
Waste Management Trade Debt 770.05
GI Industries
TSI, Inc. Trade Debt 585.00
WACHOVIA CORP: In Merger Talks With Morgan Stanley
--------------------------------------------------
Aaron Lucchetti, Randall Smith, and Jenny Strasburg at The Wall
Street Journal report that Morgan Stanley is in preliminary merger
talks with Wachovia Corp. and other banks in hopes of insulating
itself from the growing financial pressures.
Morgan Stanley aims to regain investor confidence, citing people
familiar with the matter. Jessica Hall and Joseph A. Giannone at
Reuters report that Morgan Stanley's stock dropped sharply on
Wednesday, suffering its worst one-day decline ever and falling to
a 10-year low during the session. Reuters adds that Morgan
Stanley's credit default swaps traded as if it were in imminent
danger of default.
The New York Times relates that relates that Morgan Stanley
approached Wachovia about a potential deal, earlier this year, but
was rebuffed.
Telegraph.co.uk relates that Morgan Stanley wants a commercial
bank with a significant deposit base to increase its access to
capital in light of the continued credit crunch. According to
WSJ, commercial banks like Wachovia, perceived to be more stable,
could create strong incentive for the investment banks to link up
with them. A source said that Wachovia is also seeking ways to
limit short sales of its stock, Bloomberg reports. Wachovia Chief
Executive Officer Robert Steel is cutting the firm's expenses by
$1.5 billion and reducing risk to cope with increasing losses from
the company's $122 billion of option adjustable-rate mortgages.
According to Reuters, Wachovia "has been hobbled by mortgage
losses, stemming from its ill-timed takeover of Golden West at the
peak of the housing boom in 2006," and the company has reportedly
been seeking a merger partner, hiring Goldman Sachs to study its
options.
WSJ relates that Morgan Stanley's chief executive, John Mack, said
earlier in a Fortune magazine interview that he was "not thinking
about selling the firm," but when its stock price continued to
decline, Mr. Mack received a call from Mr. Steel about a potential
merger.
"I don't think Morgan Stanley can buy Wachovia because of
regulatory hurdles. And I don't know that Wachovia has the
capital to buy Morgan Stanley," Reuters quoted Danielle Schembri,
a bond analyst covering broker-dealers at BNP Paribas in New York,
as saying.
Morgan Stanley is also exploring preliminary mergers with other
banks all over the world, WSJ relates, citing people familiar with
the matter. These sources, according to WSJ, said that Morgan
Stanley may remain independent, but if a merger deal would be
reached it could "come with the likes of HSBC Holdings PLC of the
U.K., Banco Santander SA of Spain, Japan's Nomura Holdings Inc., a
Chinese financial institution or a domestic partner such as Bank
of New York Mellon Corp."
WSJ reports that Mr. Mack also called U.S. Treasury Secretary
Henry Paulson, Securities and Exchange Commission Chairperson
Christopher Cox, and Goldman Sachs CEO Lloyd Blankfein, to discuss
how to stop the drop in share prices. Morgan Stanley and Goldman
Sachs focused on how to stop short-sellers betting on a decline in
Goldman and Morgan shares, the report says, citing sources.
Former Morgan Stanley market strategist Byron Wien suggested that
greater transparency and controls be placed on the market for
credit-default swaps, which measure the cost of insuring a
company's debt, WSJ relates. Mr. Wien said that the increasing
cost of those swaps has influenced stock-price drops, according to
the report.
WSJ relates that Morgan Chief Financial Officer Colm Kelleher said
Tuesday that the company doesn't need to issue debt or new stock
until 2009.
CNBC reports that Morgan Stanley was also having deal discussions
with CITIC, the China-controlled conglomerate that owns brokerage
firm CITIC Securities.
About Morgan Stanley
New York-based Morgan Stanley -- http://www.morganstanley.com--
is a global financial services firm that, through its subsidiaries
and affiliates, provides its products and services to a group of
clients and customers, including corporations, governments,
financial institutions and individuals. Morgan Stanley’s business
segments include Institutional Securities, Global Wealth
Management Group and Asset Management. The company conducts its
business from New York City, its regional offices and branches
throughout the United States and its principal offices in London,
Tokyo, Hong Kong and other world financial centers.
As reported in the Troubled Company Reporter on May 9, 2008, Fitch
cut Morgan Stanley's certificate rating to C/DR4 from CC/DR2.
About Wachovia Corporation
Based in Charlotte, North Carolina, Wachovia Corporation (NYSE:WB)
-- http://www.wachovia.com/-- is one of the nation's diversified
financial services companies, with assets of
$812.4 billion at June 30, 2008.
Wachovia provides a broad range of retail banking and brokerage,
asset and wealth management, and corporate and investment banking
products and services to customers through 3,300 retail financial
centers in 21 states from Connecticut to Florida and west to Texas
and California, and nationwide retail brokerage, mortgage lending
and auto finance businesses. Clients are served in selected
corporate and institutional sectors and through more than 40
international offices. Its retail brokerage operations under the
Wachovia Securities brand name manage more than $1.1 trillion in
client assets through 18,600 registered representatives in 1,500
offices nationwide. Online banking is available at wachovia.com;
online brokerage products and services at wachoviasec.com; and
investment products and services at evergreeninvestments.com.
As reported in the Troubled Company Reporter on July 22, 2008,
reports say that a team of regulators from more than five states
investigated the St. Louis headquarters of Wachovia Corp.'s
securities division in relation to its auction-rate bonds sales,
reports say. The regulators were from Missouri, Illinois,
Massachusetts, Pennsylvania, New Jersey and other states.
Missouri Secretary of State Robin Carnahan said in a statement the
investigation was prompted because Wachovia hasn't "fully
complied" with a Missouri probe on the matter. Investors have
filed complaints after they were unable to access money frozen
when firms in the auction-rate bonds market abandoned their
operations in February.
The team delivered more than a dozen subpoenas to the unit's
executives and agents on July 17 as part of its probe into sales
practices, internal evaluations of the auction-rate securities
market and marketing strategies.
Bloomberg News reports that up to $218 billion of auction-rate
bonds sold by student-loan providers, municipalities and closed-
end mutual funds remained frozen.
WASHINGTON MUTUAL: Shareholder Waives Compensation Agreement
------------------------------------------------------------
Ari Levy at Bloomberg News reports that Washington Mutual Inc.
said that its biggest shareholder, TPG Inc., waived its right for
compensation from WaMu's declining stock price.
Bloomberg states that TPG will no longer get $8.75 a share, the
price it paid. According to Bloomberg, TPG -- which holds a 13%
stake in WaMu -- would have gotten paid if WaMu raised more than
$500 million or sold itself 18 months after TPG's $7 billion
investment in the company in April. TPG said in a statement, "It
became clear that it would be in the best interests of Washington
Mutual and our investors to waive the price reset payment
provisions that were agreed to."
The waiver revived speculation that WaMu is preparing a sale,
Heidi N. Moore at the Wall Street Journal relates. "TPG is
acknowledging that they invested too soon. It sounds as though
WaMu is negotiating with someone to sell itself," Bloomberg quoted
Gary Townsend, CEO of Hill-Townsend Capital LLC in Chevy Chase, as
saying.
According to WSJ, TPG permitted gave WaMu the green light to raise
more capital. TPG said in a statement, "Our goal is to maximize
the bank's flexibility in this difficult market environment."
WaMu, says WSJ, has already hired Goldman Sachs to "seek strategic
alternatives," which possibly includes a sale of the firm.
WSJ reports that people familiar with the matter said that Wells
Fargo & Co., Citigroup Inc. and other large banks, including one
based outside the U.S., have expressed interest in WaMu.
About Washington Mutual Inc.
Washington Mutual Inc. (NYSE: WM) -- http://www.wamu.com/-- is a
consumer and small business banking company with operations in
United States markets. The Company is a savings and loan holding
company. It owns two banking subsidiaries, Washington Mutual Bank
and Washington Mutual Bank fsb, as well as numerous non-bank
subsidiaries. The company operates in four segments: the Retail
Banking Group, which operates a retail bank network of 2,257
stores in California, Florida, Texas, New York, Washington,
Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada,
Utah, Idaho and Connecticut; the Card Services Group, which
operates a nationwide credit card lending business; the Commercial
Group, which conducts a multi-family and commercial real estate
lending business in selected markets, and the Home Loans Group,
which engages in nationwide single-family residential real estate
lending, servicing and capital markets activities.
WASHINGTON MUTUAL: S&P Chips Ratings on Two Note Classes to 'BB+'
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on various
classes of certificates and notes issued by Washington Mutual
Master Trust's series 2007-B and Washington Mutual Master Note
Trust. S&P removed all of the lowered ratings from CreditWatch
with negative implications, where they were placed on June 27,
2008. In addition, S&P affirmed four ratings on Washington Mutual
Master Trust's series 2007-A and removed them from CreditWatch
negative. Lastly, S&P affirmed four ratings on Washington Mutual
Master Note Trust.
The downgrades reflect significant deterioration in trust
performance, as evidenced by the rapid acceleration of the charge-
off rate and the declining total payment rate. Net charge-offs
for the underlying credit card receivables increased to 13% in
August 2008 from 8% in November 2007, which is more than a 60%
increase over the course of the past eight months. This rate of
deterioration is almost double the industry average. The average
charge-off rate for the trusts measured by Standard & Poor's
Credit Card Quality Index increased approximately 30% during the
same period.
The increase in charge-offs may be attributable to the trust's
higher-than-average concentrations in states that have been the
most affected by significant home-price declines and higher
unemployment rates, such as California and Florida, as well as the
trust's larger exposure to nonprime cardholders. Approximately
48% of the borrowers, as a percentage of the trust balance, have
FICO scores below 660.
In addition, delinquencies continue to rise, indicating that
losses may continue to increase. As of the September payment
date, 6.1% of the current trust balance was 60 days or more past
due, compared with 4.5% for the same period in 2007, while
30-plus-day delinquency rates increased to 8.6% from 6.5% during
the same period. Furthermore, the total payment rate, which
determines how quickly investors are paid out under adverse
conditions, declined to 8.65% in August 2008 (with a three-month
rolling average of 9.2%) from an average of 10.4% in 2007.
In addition, the ability of the originator to continue generating
and transferring receivables to the trust is a key factor in S&P's
analysis when rating credit card securitizations. Credit card
charges and the subsequent transfer of receivables affect the
level of principal receivables in the trust and the monthly
collections available to repay the outstanding principal balance
of the notes. As such, the downgrade of Washington Mutual Bank
to BBB-/Negative/A-2 from BBB/Negative/A-2 on Sept. 15, 2008,
combined with deterioration in trust performance and S&P's revised
base-case modeling assumptions of key performance variables
prompted them to downgrade the affected classes. WaMu is the
originator and servicer of the underlying credit card receivables
in the master trust.
S&P assumes base-case modeling assumptions ranging from 14% to 16%
for net charge-off rates and 8% to 9% for total payment rates,
both of which exceed its previous assumptions.
S&P believes the available credit enhancement is now sufficient to
cover the ratings at their revised levels.
Ratings Lowered and Removed from Creditwatch Negative
Washington Mutual Master Trust
Rating
------
Series Class To From
------ ----- -- ----
2007-B A AA AAA/Watch Neg
2007-B B A+ AA/Watch Neg
2007-B C A- A/Watch Neg
2007-B D BB+ BBB/Watch Neg
Washington Mutual Master Note Trust
Rating
------
Class To From
----- -- ----
A AA AAA/Watch Neg
M A+ AA/Watch Neg
B A- A/Watch Neg
C BB+ BBB/Watch Neg
Ratings Affirmed and Removed from Creditwatch Negative
Washington Mutual Master Trust
Rating
------
Series Class To From
------ ----- -- ----
2007-A A AAA AAA/Watch Neg
2007-A B AA AA/Watch Neg
2007-A C A A/Watch Neg
2007-A D BBB BBB/Watch Neg
Ratings Affirmed
Washington Mutual Master Note Trust
Class Rating
----- ------
2005-A2 AAA
2005-M2 AA
2005-B2 A
2005-C2 BBB
WASHINGTON MUTUAL: Says S&P's Rating Downgrade Not Material
-----------------------------------------------------------
Ari Levy at Bloomberg News reports that Washington Mutual Inc.
doens't expect a "material" effect from Standard & Poor's decision
to junk the company's credit rating.
According to Bloomberg, WaMu said that the downgrade was based on
worsening market conditions, not on the company's financial
health. WaMu said in a statement on Monday that its unsecured
debt won't accelerate in maturity due to ratings changes. "The
company does not expect the impact of S&P's actions on borrowings,
collateral or margin requirements to be material," Bloomberg
quoted WaMu as saying. "The company has not experienced any
significant trading losses related to counterparty defaults or
disruptions and does not believe that ongoing market disruptions
will result in any such losses," WaMu said in a statement.
As reported in the Troubled Company Reporter on Sept. 16, 2008,
Standard & Poor's Ratings Services lowered its counterparty credit
rating on WaMu to 'BB-/B' from 'BBB-/A-3'.
WaMu said it has minimal trading exposure to Lehman Brothers
Holdings and no trading exposure to American International Group,
Dayton Business Journal relates.
About Washington Mutual Inc.
Washington Mutual Inc. (NYSE: WM) -- http://www.wamu.com/-- is a
consumer and small business banking company with operations in
United States markets. The Company is a savings and loan holding
company. It owns two banking subsidiaries, Washington Mutual Bank
and Washington Mutual Bank fsb, as well as numerous non-bank
subsidiaries. The company operates in four segments: the Retail
Banking Group, which operates a retail bank network of 2,257
stores in California, Florida, Texas, New York, Washington,
Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada,
Utah, Idaho and Connecticut; the Card Services Group, which
operates a nationwide credit card lending business; the Commercial
Group, which conducts a multi-family and commercial real estate
lending business in selected markets, and the Home Loans Group,
which engages in nationwide single-family residential real estate
lending, servicing and capital markets activities.
WESTOVER DEVELOPMENT: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Westover Development Corp.
2777 Summer Street
Suite 202
Stamford, CT 06905
Bankruptcy Case No.: 08-51053
Chapter 11 Petition Date: September 15, 2008
Court: Western District of North Carolina (Wilkesboro)
Judge: J. Craig Whitley
Debtor's Counsel: Richard M. Mitchell, Esq.
rmmatty@mitchellculp.com
Mitchell & Culp, PLLC
1001 Morehead Square Drive
Suite 330
Charlotte, NC 28203
Tel: (704) 333-0630
Fax : (704) 333-4975
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
Debtor's 3 Largest Unsecured Non-Priority Creditors:
Entity Claim Amount
------ ------------
Capital Crossing Bank $760,000.00
101 Summer Street
Boston, MA 02110
Carter Bank & Trust 720,613.02
P.O. Box 1776
Martinsville, VA 24115
Midfirst Bank 2,475,438.38
Lending Operations
P.O. Box 268879
Oklahoma City, OK
(731) 26-8879
WEXFORD DEVELOPMENT: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: Wexford Development Corp.
5 Trillium Way
Old Field, NY 11733
Bankruptcy Case No.: 08-75042
Chapter 11 Petition Date: September 17, 2008
Court: Eastern District of New York (Central Islip)
Judge: Robert E. Grossman
Debtor's Counsel: Miriam Lazofsky, Esq.
mlazofsky@verizon.net
Miriam Lazofsky
103-14 Avenue M.
Brooklyn, NY 11236-4510
Tel: (718) 531-1478
Fax: (718) 251-2155
Estimated Assets: $2,700,000
Estimated Debts: $0
The Debtor does not have any creditors who are not insiders.
WHEELER AUTO: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Wheeler Auto Sales, Inc
1338 West 200 South
Parawan, UT 84761
Bankruptcy Case No.: 08-26176
Chapter 11 Petition Date: September 15, 2008
Court: District of Utah (Salt Lake City)
Debtors' Counsel: Andres Diaz
courtmailrr@expresslaw.com
Red Rock Legal Services P.L.L.C.
P.O. Box 165165
Salt Lake City, UT 84116
Tel: (435) 634-1000
Fax: (801) 359-6803
Estimated Assets: $0 to $50,000
Estimated Debts: $1 million to $10 million
Wheeler Auto Sales' List of 9 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
American Express Business Line of 24,888.00
P.O. Box 360002 Credit
Fort Lauderdale
FL 33336
American Express Platinum Business Charges 138,748.00
PO Box 650448
Dallas TX 75265-0448
Bob and Lee Wheeler Business Loans 100,000.00
930 McColl Court
Corona, CA 92881
Bob Escobar Business Loans 115,762.00
P.O. Box 4622
Anaheim, CA 92803
David Gardner Business Loans 100,000.00
12022 Old Mill Road
Los Alamitos, CA 90720
James K. Harms Business Loans 600,000.00
224220 Skyline Dr.
Yorba Linda, CA 92887
Robert Theodore Wheeler Money loaned to 700,000.00
PO Box 454 Debtor
Parowan, UT 84761
Wells Fargo Bank Business Line of 107,000.00
P.O. Box 30086 Credit
Los Angeles, CA 90030-0086
WHITEHALL JEWELERS: Asks Court to OK Management Incentive Plan
--------------------------------------------------------------
Whitehall Jewelers Holdings, Inc., and Whitehall Jewelers, Inc.,
ask the U.S. Bankruptcy Court for the District of Delaware for
permission to implement the company's management incentive plan.
The Debtors tell the Court that the Incentive Plan is
performance-based and covers four members of the Debtors' senior
management who will take on additional responsibilties and expend
more hours working:
-- Mark Funasaki, the Debtors' Executive Vice President
and Chief Administrative Officer;
-- Peter Michielutti, the Debtors' Executive Vice
President and Chief Financial Officer;
-- Robert Nachwalter, the Debtors' Senior Vice President
and General Counsel; and
-- Michael Yager, the Debtors' Vice President and
Controller.
Implementation of the plan will maximize the proceeds available
for distribution to the Debtors' creditors. According to the
Debtors, the success or failure in their cases hinges on the
efforts of the four incentive plan paricipants, who are
experienced and familiar with the Debtors' business, and who are
critically involved in the Debtors' current going-out-of-business
sales (GOB Sales) and other asset disposition efforts, and in all
other phases of the Debtors' wind-down.
On Aug. 8, 2008, ths Court authorized the Debtors to conduct GOB
sales at their store locations. The Court also authorized the
Debtors to enter into a consulting agreement with a joint ventue
consisting of Great American Group, LLC, Hudson Capital Parners,
LLC, Silverman Consultants, LLC, and Gordon Brothers Retail
Parners, LLC. The consortium will act as the Debtors' liquidation
consultants in conducting the GOB Sales -- which will have a sale
term expected to run at least through Dec. 31, 2008.
The payments to be made under the Incentive Plan would be in the
range of $670,000 to $700,000, although actual payments may be
higher or lower depending on actual creditor recoveries. Details
of the plan is available at:
http://bankrupt.com/misc/whitehall
The Debtors tell the Court that the unsecured creditors' committee
and the lenders already approved the Incentive Plan.
Objections on the Incentive Plan must be filed by Oct. 1, 2008, at
4:00 p.m. prevailng Eastern time. A hearing on the plan will be
held on Oct. 3, 2008 at 2:00 p.m., prevailng Eastern time.
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 brand
names Whitehall Jewellers, Marks Bros. Jewellers and Lundstrom
Jewellers. 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 is their claims, noticing and
balloting agent.
When the Debtors filed for protection against their creditors,
they listed total assets of $207,100,000 and total debts of
$185,400,000.
WHITEHALL JEWELERS: Asks Court to Set Dec. 1 as Claims Bar Date
---------------------------------------------------------------
Whitehall Jewelers Holdings, Inc. and Whitehall Jewelers, Inc.,
ask the U.S. Bankruptcy Court for the District of Delaware to
establish deadlines for filing proofs of claim in their cases.
The Debtors also proposed procedures for the filing of claims.
In August 2008, the Court entered an order authorizing the Debtors
to conduct store closing sales pursuant to a consulting agreement
entered into by and among the Debtors and a joint venture
comprised of Great American Group, LLC, Hudson Capital Parners,
LLC, Silverman Jeweler Consultants, Inc. and Gordon Brothers
Retail Parners, LLC. The Debtors have commenced store closing
sales at their approximately 355 remaining store locations and are
engaged in other efforts to maximize the value of their assets for
the benefit of their creditors and estates. The Debtors also have
commenced the process of winding down their operations and intend
to file a plan of liquidation in the near future.
In furtherance oftheir wind-down and plan promulgation efforts,
the Debtors require the establishment of bar dates and related
procedures for the filing of proofs of claim based on prepetition
claims held or asserted against the Debtors.
The Debtors ask the Court to set:
1. Dec. 1, 2008, as the last date and time for each person
or entity -- including, without limitation, individuals,
partnerships, corporations, joint ventures, estates and
trusts -- to file proofs of claim based on prepetition
claims;
2. Dec. 23, 2008, as the last date and time for governmental
units to file Proofs of Claim.
If the Proof of Claim Form is sent by mail, it should be sent to:
Whitehall Jewelers Holdings, Inc.
Claims Processing Center
c/o Epiq Bankptcy Solutions, LLC
FDR Station, P.O. Box 5015
New York, NY 10150-5015
If the Proof of Claim Form is delivered by hand, courier service
or overnight service, it should be sent to:
Whitehall Jewelers Holdings, Inc.
Claims Processing Center
c/o Epiq Banptcy Solutions, LLC
757 Third Avenue, 3rd Floor
New York, NY 10017
The Debtors propose to publish a notice of the Bar Dates once in
both the New York Times (National Edition) and a leading national
jewelry industry publication.
Whitehall Jewelers Holdings, Inc. and Whitehall Jewelers, Inc.
filed their schedules of assets and liabilties on Aug. 5, 2008.
Whitehall Jewelers Holdings disclosed that it had $112,707,780 in
secured debts. Whitehall Jewelers Inc. disclosed $246,571,775 in
total assets and $173,694,918 in total debts.
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 brand
names Whitehall Jewellers, Marks Bros. Jewellers and Lundstrom
Jewellers. 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 is their claims, noticing and
balloting agent.
When the Debtors filed for protection against their creditors,
they listed total assets of $207,100,000 and total debts of
$185,400,000.
WHITE RIVER: Can Access Standard Bank's Cash Collateral
-------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Indiana
granted the request of White River Coal Inc. and its debtor-
affiliates to access cash collateral securing its obligation to
Standard Bank PLC.
The Debtors propose to use a portion of the cash collateral to
continue funding the existing advisory proceedings, litigation of
the Debtors' Causes of Action, reclamation activities of Hazelton
Mine and other activities related to the shutdown of the Debtors'
coal mine and this Chapter 11 case.
The Bank has a valid and perfected DIP lien for postpetition
obligations of at $8,000,000 on all of the Debtors' assets.
A copy of the Debtors' request to use Cash Collateral, which
includes the current amended DIP Budget, is available for free at:
http://ResearchArchives.com/t/s?324d
Headquartered in Hazleton, Indiana, White River Coal, Inc.,
operates a mining company. The company and its debtor-affiliates
filed for chapter 11 protection on May 22, 2006 (Bankr. S.D. Ind.
Case Nos. 06-70375 through 06-70379). C.R. Bowles, Jr., Esq., at
Greenbaum Doll & McDonald PLLC, represents the Debtors in their
restructuring efforts. When the Debtor filed for protection from
their creditors, they listed assets totaling $2 million and debts
totaling $35 million.
WHITE RIVER: Court Establishes September 22 as Claims Bar Date
--------------------------------------------------------------
The Hon. Basil H. Lorch III of the U.S. Bankruptcy Court for the
Southern District of Indiana set Sept. 22, 2008, as the deadline
for creditors of White River Coal Inc. and its debtor-affiliates,
to file proofs of unsecured claim.
Contact:
Greenebaum Doll & McDonald PLLC
3500 National City Tower
101 South Fifth Street
Louisville, Kentucky 40202
Tel: (502) 589-4200
Fax: (502) 587-3695
Headquartered in Hazleton, Indiana, White River Coal, Inc.,
operates a mining company. The company and its debtor-affiliates
filed for chapter 11 protection on May 22, 2006 (Bankr. S.D. Ind.
Case Nos. 06-70375 through 06-70379). C.R. Bowles, Jr., Esq., at
Greenbaum Doll & McDonald PLLC, represents the Debtors in their
restructuring efforts. When the Debtor filed for protection from
their creditors, they listed assets totaling $2 million and debts
totaling
$35 million.
WISCO ENTERPRISES: Athletica Facility Sold for $875,000
-------------------------------------------------------
The Post-Crescent staff writer Michael King reports that Judge
Donald Poppy of Calumet County, Wisconsin, approved early this
month an $875,000 offer by a local investor group to acquire a
former Athletica Fitness facility in Menasha, Wisconsin.
Atlas Partners, LLC acted as real estate advisor to Michael
Polsky, the court-appointed receiver in the liquidation of the
former Athletica Fitness facility. Atlas marketed and sold a
fully-equipped, 24,000 square foot property located on 4.2 acres.
Atlas was assisted locally by CB Richard Ellis in Appleton,
Wisconsin, and was referred to the assignment by Beck, Chaet,
Bamberger & Polsky, S.C. in Milwaukee.
According to the report, Mr. Polsky was appointed to dispose of
the assets of Wisco Enterprises, the city of Menasha's developer-
partner at Lake Park Villas. The Athletica fitness center was the
centerpiece of the Lake Park Villas development, the report says.
Mr. Polsky closed the facility in late May 2007.
Mr. King reports that Lake Park Swim and Fitness plans to open in
mid-November at the former Athletica facility.
Wisco Enterprises was forced into receivership by Fox Communities
Credit Union in late 2006, according to the report.
According to the report, the city of Menasha invested $2.2 million
in building the fitness center. The report says "the city will
not directly benefit because it held only a second mortgage
position, but it had figured to recoup its investment through
sales of more than 250 residential and commercial lots."
The report adds that Lake Park Swim and Fitness will be run by
Jane Dias, Town of Menasha; Felicia Christianson, Town of
Harrison; and, Megan Collins, Appleton.
To contact Atlas Partners:
Atlas Partners LLC
55 E. Monroe Street, Suite 2910
Chicago, Illinois 60603
Biff Ruttenberg
Tel: (312) 516-5702
biff@atlaspartners.com
Joel Schneider
Tel: (312) 516-5707
joel@atlaspartners.com
WOODSIDE GROUP: Court Converts Involuntary Chapter 11 Case
----------------------------------------------------------
The Deal's Carolyn Okomo reported that the Hon. Peter H. Carroll
of the United States Bankruptcy Court for the Central District of
California converted on Sept. 16, 2008, Woodside Group Inc.'s
involuntary Chapter 11 case to a voluntary bankruptcy proceeding.
On Aug. 20, 2008, ad Ad Hoc Group of Noteholders -- including John
Hancock Life Insurance, AXA Equitable Life Insurance, Metropolitan
Life Insurance, New York Life Insurance, Security Life of Denver
Insurance Company -- filed involuntary petitions against the
Debtor. On the same day, JPMorgan Chase Bank, N.A., filed certain
joinders in involuntary petition.
Two days later, the noteholders, JPMorgan and the Debtor reached
certain agreements regarding the resolution of the involuntary
petitions. Under the agreement, the Debtor will, without court
approval:
-- enter any bulk sale of assets and any transaction to convert
the corporate or merged into any other entity;
-- invest any fund to any non-debtor subsidiary, provided that
between Aug. 20, 2008 and Sept. 16, 2008, the Debtor may fund
up to $2 million in fully reimbursable payroll and payables
obligations; and
-- pay any dividend to any equity holder.
The Debtor selected Pachulski Stang Ziehl & Jones LLP as counsel.
Kurtzman Carson Consultants LLC will serve as the Debtor's claims
agent.
Snell & Willmer LLP in Phoenix, Arizona, represents JPMorgan
Chase.
A hearing is set for Sept. 19, 2008, at 10:30 a.m., to consider
the Debtor's first day motions. Objections, if any, will be
entertained before the hearing.
About Woodside Group
Woodside Group LLC and its debtor-affiliates --
http://www.woodside-homes.com/-- are homebuilders. The Debtor
group, together with several other homebuilders, is continuing to
develop the Inspirada master-planned community in Henderson,
Nevada. The company and its affiliates were forced into
involuntary Chapter 11 protection by certain of their noteholders
on Aug. 20, 2008 (Bankr. C.D. Calif. Lead Case No. 08-20682).
Susy Li, Esq., at Bingham McCutchen LLP, represents the Debtors in
their restructuring efforts.
* S&P Puts 10 Emerging Market ABS Transactions Under Dev. Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on 10
emerging market asset-backed securities transactions on
CreditWatch with developing implications.
The rating actions follow S&P's Sept. 15, 2008, placement of its
long-term ratings on Merrill Lynch & Co. Inc. ('A') on CreditWatch
with developing implications.
The ratings and the structure are based, in part, on Merrill's
provision of a swap contract, guaranty, or cash management
agreement; or the underlying collateral.
S&P will continue to surveil the ratings on these ABS
securitizations and will revise them as necessary to reflect any
changes in the transactions' credit quality. In addition, S&P may
take further rating actions on these transactions pending the
resolution of the ongoing CreditWatch status of Merrill's ratings.
Ratings Placed on Creditwatch Developing
Transaction Series/ Rating
tranche To From
----------- ------- -- ----
CRPAO PEN Trust #1
2008-100 BB+/Watch Dev BB+
Latam Trust
2007-105 A-/Watch Dev A-
2007-108 A+/Watch Dev A+
2008-101 A+/Watch Dev A+
2008-102 A+/Watch Dev A+
ML MXN Notes
2007-1 mxAAA/Watch Dev mxAAA
Peru Enhanced Pass-Through Finance Ltd.
A-1 BB+/Watch Dev BB+
A-2 BB+/Watch Dev BB+
TIIETMX Bonos
2008-1 mxAAA/Watch Dev mxAAA
UDICX Bonos
2008-1 mxAA+/Watch Dev mxAA+
* Moody's Publishes Underlying Ratings on Various Note Issuers
--------------------------------------------------------------
Moody's Investors Service has published the Underlying Ratings on
the notes issued by Option One that are guaranteed by the
financial guarantor. The Underlying Rating reflects the intrinsic
credit quality of the notes in the absence of the guarantee.
The current ratings on the notes are consistent with Moody's
practice of rating insured securities at the higher of the
guarantor's insurance financial strength rating and any Underlying
Rating that is public.
Complete rating actions are:
Issuer: Option One Mortgage Loan Trust 2007-FXD1 Option One
Mortgage Loan Trust 2007-FXD1
Class Description: Cl. 1-A-1 820001393
-- Current Rating: Aa3
Financial Guarantor: Ambac Assurance Corporation (Aa3)
-- Underlying Rating: Ba3
Class Description: Cl. II-A-1
-- Current Rating: Aa3
Financial Guarantor: Ambac Assurance Corporation (Aa3)
-- Underlying Rating: Ba3
Class Description: -- Cl. III-A-1
-- Current Rating: Aaa
Financial Guarantor: Ambac Assurance Corporation (Aa3)
-- Underlying Rating: Aaa
Class Description: Cl. III-A-2
-- Current Rating: Aaa
Financial Guarantor: Ambac Assurance Corporation (Aa3)
-- Underlying Rating: Aaa
Class Description: Cl. III-A-3
-- Current Rating: Aaa
Financial Guarantor: Ambac Assurance Corporation (Aa3)
-- Underlying Rating: Aaa
Class Description: Cl. III-A-4
-- Current Rating: Aa3
Financial Guarantor: Ambac Assurance Corporation (Aa3)
-- Underlying Rating: A3
Class Description: Cl. III-A-5
-- Current Rating: Aa3
Financial Guarantor: Ambac Assurance Corporation (Aa3)
-- Underlying Rating: Caa2
Class Description: Cl. III-A-6
-- Current Rating: Aa3
Financial Guarantor: Ambac Assurance Corporation (Aa3)
-- Underlying Rating: A3
Issuer: Option One Mortgage Loan Trust 2007-HL1 Option One
Mortgage Loan Trust 2007-HL1
Class Description: Cl. II-A-1
-- Current Rating: Aaa
Financial Guarantor: Syncora Guarantee Inc. (B2)
-- Underlying Rating: Aaa
Class Description: Cl. II-A-2
-- Current Rating: Aaa
Financial Guarantor: Syncora Guarantee Inc. (B2)
-- Underlying Rating: Aaa
Class Description: Cl. II-A-3
-- Current Rating: A3
Financial Guarantor: Syncora Guarantee Inc. (B2)
-- Underlying Rating: A3
Class Description: Cl. II-A-4
-- Current Rating: Ba3
Financial Guarantor: Syncora Guarantee Inc. (B2)
-- Underlying Rating: Ba3
Class Description: Cl. I-A-1
-- Current Rating: Baa1
Financial Guarantor: Syncora Guarantee Inc. (B2)
-- Underlying Rating: Baa1
Issuer: Option One Mortgage Securities Corp NIM Trust 2006-1
Option One Mortgage Securities Corp NIM Trust 2006-1
Class Description: Notes
-- Current Rating: Aaa
Financial Guarantor: Financial Security Assurance Inc. (Aaa)
-- Underlying Rating: Ca
Issuer: Option One Mortgage Securities Corp NIM Trust 2006-2
Option One Mortgage Securities Corp NIM Trust 2006-2
Class Description: Notes
-- Current Rating: Aaa
Financial Guarantor: Financial Security Assurance Inc. (Aaa)
-- Underlying Rating: Ca
Issuer: Option One Mortgage Securities Corp. NIM Trust 2005-1
Option One Mortgage Securities Corp. NIM Trust 2005-1
Class Description: Notes
-- Current Rating: Aaa
Financial Guarantor: Financial Security Assurance Inc. (Aaa)
-- Underlying Rating: B2
Issuer: Option One Mortgage Securities Corp. NIM Trust 2005-2
Option One Mortgage Securities Corp. NIM Trust 2005-2
Class Description: Notes
-- Current Rating: Aa3
Financial Guarantor: Ambac Assurance Corporation (Aa3)
-- Underlying Rating: Ca
Issuer: Option One Mortgage Securities III Corp. Re-NIM Trust
2007-1 Option One Mortgage Securities III Corp. Re-NIM Trust
2007-1
Class Description: Notes
-- Current Rating: Aaa
Financial Guarantor: Financial Security Assurance Inc. (Aaa)
-- Underlying Rating: Caa3
Issuer: Option One Mortgage Securities Nim Trust 2007-3 Option One
Mortgage Securities Nim Trust 2007-3
Class Description: Notes
-- Current Rating: Aaa
Financial Guarantor: Financial Security Assurance Inc. (Aaa)
-- Underlying Rating: Ca
Issuer: Option One Mortgage Securities NIM Trust 2007-4 Option One
Mortgage Securities NIM Trust 2007-4
Class Description: Notes
-- Current Rating: Aaa
Financial Guarantor: Financial Security Assurance Inc. (Aaa)
-- Underlying Rating: Caa3
Issuer: Option One Mortgage Securities NIM Trust 2007-5 Option One
Mortgage Securities NIM Trust 2007-5
Class Description: Notes
-- Current Rating: Aaa
Financial Guarantor: Financial Security Assurance Inc. (Aaa)
-- Underlying Rating: Ba3
Issuer: Option One Mortgage Securities NIM Trust 2007-CP1 Option
One Mortgage Securities NIM Trust 2007-CP1
Class Description: Notes
-- Current Rating: Aaa
Financial Guarantor: Financial Security Assurance Inc. (Aaa)
-- Underlying Rating: Ba3
Issuer: Option One Mortgage Securities NIM Trust 2007-FXD1 Option
One Mortgage Securities NIM Trust 2007-FXD1
Class Description: Option One Mortgage Securities NIM Trust 2007-
FXD1 Notes, Series 2007-FXD1
-- Current Rating: Aaa
Financial Guarantor: Financial Security Assurance Inc. (Aaa)
-- Underlying Rating: Ba3
Issuer: Option One Mortgage Securities NIM Trust 2007-FXD2 Option
One Mortgage Securities NIM Trust 2007-FXD2
Class Description: Notes
-- Current Rating: Aaa
Financial Guarantor: Financial Security Assurance Inc. (Aaa)
-- Underlying Rating: Ba2
* Federal Reserve Injecting $180 Billion Into Financial Markets
---------------------------------------------------------------
Agence France-Presse reports that the U.S. Federal Reserve
disclosed on Thursday a $180 billion liquidity line to fight
financial crisis.
According to AFP, the Federal Reserve has coordinated with central
banks to pump cash into the financial system amid a credit squeeze
that has dried up lending among commercial banks. The Federal
Reserve in New York said in a statement it will arrange a special
overnight repo operation, a 24-hour credit to banks needing cash.
The special repo operation will be followed by the regular
Thursday morning 14-day repo operation, for $5 billion, AFP says,
citing the Federal Reserve.
AFP relates that the Federal Reserve said eariler it was expanding
by $180 billion its temporary arrangements for banks to obtain
funds "to provide dollar funding for both term and overnight
liquidity operations by other central banks" to fight "continued
elevated pressures in U.S. dollar short-term funding markets."
According to the report, the Federal Reserve hopes "to improve the
liquidity conditions in global financial markets."
The Federal Reserve said in a press statement that it had
"authorized increases in the existing swap lines with the European
Central Bank and the Swiss National Bank." AFP states that the
Bank of England had said that leading central banks around the
world would make a concerted onslaught through intervention in
money markets. AFP reports that the Federal Reserve said
Japanese, British, and Canadian central banks had also increased
their arrangements, giving access to dollars through "swap
arrangements" in these amounts:
-- $60 billion by the Japanese bank,
-- $40 billion by the Bank of England, and
-- $10 billion by the Canadian bank.
According to AFP, the Federal Reserve said its "latest massive
liquidity window for the banking system would back up such support
of 110 billion dollars by the European Central Bank, marking an
increase in its facility of 55 billion dollars, and 27 billion
dollars by the Swiss bank, an increase of 15 billion dollars."
The Wall Street Journal relates that a proposal is expected to be
advanced on Sept. 19, 2008, that would join U.S. efforts with
those of international regulators. Richard Simon at Los Angeles
Times relates that Senate Majority Leader Harry Reid said that a
prosed comprehensive plan would be presented to the Congress.
* Financial Health of Florida's Banks Slipping
----------------------------------------------
The financial health of Florida's banks is slipping, Robert
Trigaux, Times Business columnist said, citing data from Bauer
Financial.
Bauer Financial, a banking analysis firm, uses information
supplied by banks to the Federal Deposit Insurance Corp. to assign
the "stars" to banks depending on their financial health. Five
stars is a top rating, while zero stars — the lowest rating —
indicates significant weakness.
Citing data from Bauer Financial, Mr. Trigaux adds that Florida
has seven "zero" star banks that, in the greater Tampa Bay area,
include: Freedom Bank of Bradenton (not the one in St.
Petersburg), Ocala National Bank, Riverside Bank of the Gulf Coast
in Cape Coral, and Community National Bank of Sarasota County in
Venice. There are just two one-star banks, in Sarasota and
Immokalee.
There are 26 two-star banks in the latest quarter, up from just
eight in the fourth quarter of 2007. And the 71 top five-star
banks listed in the last quarter of 2007 have declined to 40 in
the latest quarter.
* Shelly DeRousse Joins Stahl Cowen as Restructuring Partner
------------------------------------------------------------
Shelly DeRousse has joined Stahl Cowen Crowley Addis LLC as a
partner. Ms. DeRousse brings a range of experience counseling
debtors and creditors matters in all aspects of business
restructuring. Ms. DeRousse has also spent time as a commercial
litigator, often dealing with the business ramifications of
restructuring or advising corporate clients in litigation.
Ms. DeRousse has represented both creditors and debtors in many
high profile bankruptcy cases, including the teams representing
the debtors in the Federal Mogul, Owens Corning, and Meridian
Automotive cases. She also represented the secured creditor banks
in the ANC Rental Corp. and Edgewater Medical Center bankruptcy
cases; the fiduciary of the employee shareholders in the U.S.
Airways case and a variety of creditors in the Kmart Corporation,
Halo Industries, Enron, and Worldcom cases.
"[Ms. DeRousse's] broad range of experience makes her especially
well suited to the varying needs of Stahl Cowen's diverse client
base," Stahl Cowen's hiring partner Trent Cornell says.
"[Ms. DeRousse] is a great addition to our firm. She brings big-
firm experience, common sense and great legal skills to help us
continue to build our restructuring team," Scott Schreiber, chair
of Stahl Cowen's Bankruptcy and Restructuring Group, added.
In addition to her general experience, Ms. DeRousse also has a
gained focus on healthcare and hospital insolvencies. She
represented Heartland Memorial Hospital in its bankruptcy case in
the Northern District of Indiana. In the Edgewater Medical Center
bankruptcy case in the Northern District of Illinois, she
represented the secured creditor bank for its $50+ million claim,
and the debtor, as special counsel, in litigation against the
debtor's insiders. She also represented the secured creditor bank
and the debtor, as special counsel, in the Grant Hospital sale and
post-sale distribution of assets in an Illinois State Court
dissolution.
Ms. DeRousse's commercial litigation representations include
prosecuting breach of fiduciary duty and fraudulent transfer
claims on behalf of corporations; defending and prosecuting
foreclosure actions for secured creditors and debtors; and
enforcing contracts and breach of contract claims.
Ms. DeRousse received her J.D. with honors in 2001 from the DePaul
University College of Law and previously practiced with Sidley
Austin LLP and Sugar & Felsenthal LLP in Chicago.
About Stahl Cowen
Headquartered in Chicago, Illinois, Stahl Cowen Crowley Addis LLC
-- http://www.stahlcowen.com/-- is a law firm focused on serving
the needs of business enterprises. The firm provides
sophisticated, yet cost effective legal counsel to organizations
ranging from the entrepreneurial to large, publicly traded
corporations and municipalities. Practice areas include
bankruptcy & restructuring, corporate, mergers & acquisitions,
litigation, local government, real estate and trusts & estates.
* BOOK REVIEW: Strategies for Investing in Intellectual Property
----------------------------------------------------------------
Author: David S. Ruder
Publisher: Beard Books
Softcover: 172 pages
List Price: $79.95
Order your personal copy at:
http://www.amazon.com/exec/obidos/ASIN/1587982927/internetbankrupt
This book, Strategies for Investing in Intellectual Property by
David S. Ruder, provides an overview of strategies for investing
into intellectual property assets of all forms (patents,
copyrights, trademarks, trade secrets, and other rights).
It is an invaluable introduction to the subject for all types of
investors, from private equity and venture capital investors
looking at private deals to hedge fund and mutual fund investors
looking at public market opportunities.
This book is also of particular help to corporate and intellectual
property lawyers that want to understand current trends relating
to intellectual property investing.
Among the topics covered are: accounting and valuation,
intellectual property analytics, equity investment strategies,
arbitrage, and securitization.
The book also provides guidance as to why intellectual property
assets continue to be of interest to investors, how investors
might establish investment criteria, and provides some commentary
as to whether intellectual property should be viewed as a discrete
asset class.
*********
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.
*********
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. Sheryl Joy P. Olano, Ronald C. Sy, Joel Anthony G. Lopez,
Cecil R. Villacampa, Melanie C. Pador, Ludivino Q. Climaco, Jr.,
Loyda I. Nartatez, Tara Marie A. Martin, Joseph Medel C. Martirez,
Ma. Cristina I. Canson, Christopher G. Patalinghug, and Peter A.
Chapman, Editors.
Copyright 2008. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $775 for 6 months delivered via e-
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for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***