/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/081202.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, December 2, 2008, Vol. 12, No. 287 Headlines AGRIPROCESSORS INC: Could Reopen Meatpacking Plant This Week ALOHA AIRLINES: To Get $2 Million Cash Settlement from Mesa Air AMACORE GROUP: New Auditor Cues Late 10-Q; Sees $2.4MM 3rdQ Net AMACORE GROUP: Taps McGladrey to Replace Brimmer as Ind. Auditor AMACORE GROUP: Sells Pref. Shares and Warrants to Vicis Capital AMERICA CAPITAL: Files First Amended Plan of Liquidation ATA AIRLINES: Wants to Auction L1011 Aircraft As Part of Wind-Down BH S&B HOLDINGS: U.S. Trustee Forms Three-Member Creditor Panel BH S&B HOLDINGS: Gets Initial OK to Use $44 Mil. Ableco Facility BH S&B HOLDINGS: To Conduct Store Closing Sales at 173 Stores BOSCOV'S INC: Deferred Deal Closing Cues Versa Deal Termination CAPITAL AUTOMOTIVE: Bank Debt Sells at Substantial Discount CHRYSLER LLC: In Talks With Union to Stop Idled Worker Payment CIRCUIT CITY: Aims for Dec. 18 Auction for Closing Store Leases CIRCUIT CITY: Court Sets Dec. 19 Bar Date for 503(b)(9) Claims CIRCUIT CITY: Gets Court Nod to Honor Gift Cards CIRCUIT CITY: Limits Trading of Securities to Keep Tax Attributes CIRCUIT CITY: Proposes to Pay $6.55-Mil. Owed to Foreign Vendors CIRCUIT CITY: To Pay Retained and Terminated Employees CLAIRES STORES: Bank Loan Sells at 59% Off in Secondary Market CLUB AT WATERFORD: Amends List of 20 Largest Unsecured Creditors CLUB AT WATERFORD: May Employ Martinec Winn as Bankruptcy Counsel CLUB AT WATERFORD: Secured Creditor Asks Court to Dismiss Case CLUB AT WATERFORD: Files Schedules of Assets and Liabilities COMMERCIAL ALLOYS: Case Summary & 18 Largest Unsecured Creditors COMMERCIAL ALLOYS: Files for Chapter 11 Bankruptcy in Ohio COMMERCIAL MORTGAGE: Owes More Than $60MM in Promissory Notes CONSECO INC: A.M. Best Cuts Issuer Credit, Sr. Debt Ratings to b+ COVENTRY HEALTH: A.M. Best Keeps "B" FSR & "bb+" ICR for 3 Units DELPHI CORP: Court Allows Reargument of Fraud Claim Order DELPHI CORP: Court Gives Go Signal for Auction of Exhaust Business DELPHI CORP: Delays Hearing on Bankruptcy Exit Plan to Dec. 17 DELPHI CORP: Gets Six Months Extension of $4.35-Bil. DIP Loan DELPHI CORP: Tranche C Lenders, et al., Balk at DIP Loan Extension EDUCATION RESOURCES: Asks Court to OK PNC Bank Collection Deals FORD MOTOR: In Talks With Union to Stop Idled Worker Payment FORD MOTOR: To Cut CEO's Pay Package & Focus on Making Small Cars FRONTIER AIRLINES: Names C. Kenyon as Lynx Aviation's Interim Head FRONTIER AIRLINES: Reaches Deal W/ IBT on Cabin Cleaners' Pay Cuts FRONTIER AIRLINES: Reports $15.9 Mil. Operating Loss in October FRONTIER AIRLINES: WFS Wants Payment of $3.7M Aviation Fuel GENERAL GROWTH: Gets Interim Two Weeks Extension from Lenders GENERAL MOTORS: In Talks With Union to Stop Idled Worker Payment GENERAL MOTORS: More Cuts Needed to Win Gov't Loan, Says Conway GLITNIR BANKI: Wants Icelandic Court to Administer Assets GLITNIR BANKI: Voluntary Chapter 15 Case Summary HARRAH'S ENTERTAINMENT: $4-Bil. Notes Tendered, Oversubscribed HAWAIIAN TELCOM: Files for Ch. 11 to Restructure Balance Sheet HAWAIIAN TELCOM: Amends Application Services Pact with Accenture HAWAIIAN TELCOM: Board Adopts One-Time Bonus Program for Execs HAWAIIAN TELECOM: Case Summary & 30 Largest Unsecured Creditors HAWTHORNE ON NORTH: Court Approves Dismissal of Chapter 11 Case HEALTH NET: A.M. Best Cuts Rating on $400MM 2017 Notes to "bb-" INTERSTATE BAKERIES: Teamsters Majority Accepts CBA Modifications INTERSTATE BAKERIES: Wants Armour and NE Bakeries Consolidation INTERSTATE BAKERIES: Wants Pref. Action Period Moved to Dec. 31 LAND STEWARDS: Involuntary Chapter 11 Case Summary LA STANZA: Involuntary Chapter 11 Case Summary LAS VEGAS SANDS: Bank Loan Sells at Substantial Discount LAS VEGAS SANDS: Names Leven to Audit Panel, Complies with NYSE LEAR CORP: Bank Loan Continues to Sell at Substantial Discount MARK BOTTONE: Case Summary & 9 Largest Unsecured Creditors MARTIN SHAT: Case Summary & 20 Largest Unsecured Creditors MICHAELS STORES: Bank Loan Sells at 50% Off in Secondary Market MICHAELS STORES: To Release Q3 Results Today, Sees Sales Drop MIDWAY GAMES: Sumner Redstone Sells Controlling Stake in Firm MIDWAY GAMES: Director Waxman Unloads Equity Stake MIDWAY GAMES: Slapped with 2 NYSE Non-Compliance Notices MIDWAY GAMES: Director Waxman Unloads Equity Stake NATIONAL ATLANTIC: A.M. Best Affirms Issuer Credit Rating at "bb" NATURE'S HARVEST: Collapse Is Due to Rising Interest Payments PAPER INTERNATIONAL: Files Schedules of Assets and Liabilities PILGRIM'S PRIDE: Files for Chapter 11 Bankruptcy in Texas PILGRIM'S PRIDE: Lines Up $450-Mil. DIP Loan from Bank of Montreal PILGRIM'S PRIDE: Case Summary & 50 Largest Unsecured Creditors POWERMATE HOLDING: Court Approves Settlement With Sun Capital POWERMATE CORP: Creditors Panel Settles with Sun Capital SCOTT BRASS: Involuntary Chapter 11 Case Summary SEMGROUP LP: Examiner Allowed to Probe Ex-Officers & Execs SENIOR HEALTH: A.M. Best Junks Financial Stregth Rating SPLIT SECOND: Seeks to Dispatch 4 of 14 Towing & Transport Trucks STH 6,8: Quail Run Voluntary Chapter 11 Case Summary STH 6,8: Sec. 341 Meeting of Quail Run Creditors on December 9 SUZANN MOONEY: Voluntary Chapter 11 Case Summary SURETY COMPANY: A.M. Best Cuts FSR to "B" & ICR to "bb" SUZANN MOONEY: Sec. 341 Creditors Meeting Slated for December 9 SWIFT TRANSPORTATION: Bank Loan Sells at Substantial Discount SYNTAX-BRILLIAN: Court Allows Panel to Commence D&O Actions SYNTAX-BRILLIAN: Taps KPMG Corporate Finance as Financial Advisors SUZANN MOONEY: Sec. 341 Creditors Meeting Slated for December 9 S-TRAN HOLDINGS: Wants Plan Filing Period Extended to March 2 TALAL ALGURAINI: Case Summary & Largest Unsecured Creditor TORRENT ENERGY: Sells Gas Wells to Y.A. Global for $4.5 Mil. TRIESTE INVESTMENTS: May Employ Brown McCarroll as Special Counsel TWEETER OPCO: Aims for Dec. 19 Auction to 94 Store Leases TROPICANA ENTERTAINMENT: Deal With Eldorado on Nixed Sale Approved UAL CORP: Former CFO Exercises Right to Purchase Common Stock UAL CORP: CFO Kathryn Mikells Discloses Ownership of 42,920 Shares UAL CORPORATION: Registers 10,000,000 Shares under Pilot Plan UAL CORPORATION: September 30 Balance Sheet Upside-Down by $1.2BB UTAH 7000: Pivotal Promontory's Chapter 11 Case Summary UTAH 7000: 341 Meeting of Pivotal Promontory Creditors on Dec. 11 VALUE CITY: Taps Hilco Real as Real Estate Consultant VALUE CITY: Wants Until January 10, 2009, to File Schedules WAVERLY GARDENS: Taps HTG Consultants as Valuation Expert WELLCARE HEALTH: A.M. Best Cuts FSR Ratings on 2 Florida Units YOURBUYER INC: Files for Chapter 7 Liquidation * Large Companies With Insolvent Balance Sheets ********* AGRIPROCESSORS INC: Could Reopen Meatpacking Plant This Week ------------------------------------------------------------ Agriprocessors Inc. could reopen its kosher meatpacking plant in Postville this week, The Associated Press reports, citing court- appointed receiver Joseph Sarachek. Lynda Waddington at The Iowa Independent relates that Mr. Sarachek plans to reopen Agriprocessor's poultry production lines as early as this week. According to the report, placing the plant back in production with a trained and loyal work force is more appealing than a facility that is defunct. Citing Sarachek, the report says that beef production could be in Agriprocessors' future. Agriprocessors has no revenue coming in to buy feeds for its hundreds of thousands of chickens, which will soon be too old to slaughter, The Cedar Rapids Gazette states, citing Mr. Sarachek. According to The AP, Mr. Sarachek said that a lender has agreed to finance Agriprocessors' three-week operations. First Bank, a creditor owed $35 million by Agriprocessors, was in favor of reopening the plant, The Independent relates, citing Mr. Sarachek. Mr. Sarachek said that the financing is awaiting court approval, states the report. Mr. Sarachek, The AP relates, said that workers who return immediately to Agriprocessors will receive their back pay and have a job. Citing Mr. Sarachek, The Des Moines Register states that Agriprocessors owes more than $500,000 in back pay to employees. Mr. Sarachek will start repaying those debts to the 170 workers he will re-hire to work at the plant this week, according to Des Moines Register. Mr. Sarachek has hired two executives familiar with the kosher process, according to The AP. The Rubashkin family, which owns Agriprocessors, is no longer in charge of the plant and isn't involved in making any decisions, the report says, citing Mr. Sarachek. The Independent relates that Mr. Sarachek is seeking to make Agriprocessors more attractive to buyers. According to the report, other kosher food producers are eyeing Agriprocessors' operations. Agriprocessors CEO Bernard Feldman said during a court hearing that discussions with possible buyers are under way, The Independent reports. About Agriprocessors Headquartered in Postville, Iowa, Agriprocessors Inc. -- http://www.agriprocessor.com/-- operates a kosher meat and poultry packing processors located at 220 North West Street. The company maintains an executive office with 50 employees at 5600 First Avenue in Brooklyn, New York. The company filed for Chapter 11 protection on Nov. 4, 2008 (Bankr. E. D. N.Y. Case No. 08- 47472). Kevin J. Nash, Esq., at Finkel Goldstein Rosenbloom & Nash represents the company in its restructuring effort. The company listed assets of $100 million to $500 million and debts of $50 million to $100 million. ALOHA AIRLINES: To Get $2 Million Cash Settlement from Mesa Air --------------------------------------------------------------- Mesa Air Group, Inc., entered into a settlement with the former controlling shareholder of Aloha Airlines Inc. concerning the Aloha Airlines lawsuit over Mesa's Hawaiian inter-island flight services operated under the go! brand name. Under the terms of the settlement, and without admitting any wrongdoing, the parties agreed to these terms: -- Mesa will make a cash payment of $2 million; -- Mesa will issue shares of Mesa common stock equal to 10% of its currently outstanding shares; -- Mesa will provide certain Hawaiian inter-island travel benefits to the former employees of Aloha Airlines; -- In the event the shareholder is able to purchase the "Aloha" name in the upcoming bankruptcy court auction, it will license the "Aloha" name to Mesa. "We are extremely pleased to resolve all claims put forward in this litigation and look forward to re-branding service under the Aloha name in the near future," said Jonathan Ornstein, chairman and chief executive officer of Mesa. "This settlement resolves all claims by Aloha Airlines related to Mesa's entry into the Hawaiian inter-island market and permits us to focus solely on our core competency of providing the best service, convenient schedules and low fare pricing to our customers. We intend to carry on Aloha's proud tradition, maintain Mesa's status as Hawaii's low cost air carrier and look forward to future growth opportunities made possible by this settlement." About Mesa Air Mesa Air -- http://www.mesa-air.com-- operates 152 aircraft with over 800 daily system departures to 126 cities, 38 states, the District of Columbia, Canada, and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, respectively, and independently as Mesa Airlines and go!. In June 2006, Mesa launched Hawaiian inter-island service as go!. This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 4,100 employees and was awarded Regional Airline of the Year by Air Transport World magazine in 1992 and 2005. Mesa is a member of the Regional Airline Association and Regional Aviation Partners. On May 14, 2008, Air Midwest, Inc., a wholly owned subsidiary of Mesa Air, unveiled plans to discontinue all operations by June 30 including its current scheduled services, citing record-high fuel prices, insufficient demand and a difficult operating environment as the main factors in its decision. About Aloha Airlines Inc. Based in Honolulu, Hawaii, Aloha Airgroup Inc., Aloha Airlines Inc. -- http://www.alohaairlines.com/-- and its affiliates are carriers that fly passengers and freight to Hawaii's five major airports, as well as to half a dozen destinations in the western U.S. They operate a fleet of about 20 aircraft, all Boeing 737s, including three configured as freighters. Aloha filed for Chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063), and emerged from Chapter 11 bankruptcy protection in February 2006. The company and its affiliates filed again for Chapter 11 protection on March 18, 2008 (Bankr. D. Hawaii Lead Case No. 08- 00337). Brian G. Rich, Esq., Jordi Guso, Esq., and Paul Steven Singerman, Esq., at Berger Singerman P.A., and David C. Farmer, Esq., represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors was represented by Sonnenschein Nath & Rosenthal LLP and Bronster Hoshibata, A Law Corporation. The Debtors' schedules reflected total assets of $74,600,000 against total liabilities of $197,100,000. On April 29, 2008, the Court converted the Debtors' cases into chapter 7 liquidation proceedings. The next day, the U.S. Trustee appointed Dane S. Field to serve as chapter 7 trustee for the cases. James Wagner, Esq., at Wagner Choi & Verbrugge, represents Mr. Field. AMACORE GROUP: New Auditor Cues Late 10-Q; Sees $2.4MM 3rdQ Net --------------------------------------------------------------- The Amacore Group, Inc. will not be able to file the Form 10-Q for the period ended Sept. 30, 2008. The company stated that its failure to file its financial report on time was caused by changes in its executive officers and board of directors in August 2008 and dismissal its former independent auditor and engagement of a new independent auditor in October 2008. The company added that the process of compiling and disseminating the information, well as the completion of the required review of the company's financial information, could not be completed without incurring undue hardship and expense. The company intends to file its quarterly report on Form 10-Q soon as practicable. The company anticipates these financial results: -- revenues for the three and nine months ended Sept. 30, 2008, of approximately $8,800,000 and $22,300,000; -- gross profit of approximately $2,400,000 and $7,100,000; -- operating expenses of approximately $9,380,000 and $20,700,000, including approximately $770,000 and $1,900,000 of stock and warrant compensation; -- operating loss of approximately $6,900,000 and $13,500,000; and -- net loss available to common shareholders of approximately $8,080,000 and $15,900,000 as a result of an selling and marketing expenses and stock and warrant compensation recognized under various consulting agreements. All of these results increased when compared to the company's results for three and nine months ended Sept. 30, 2007. About Amacore Group Inc. 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 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 June 30, 2008. The company's consolidated financial statements at June 30, 2008, also showed strained liquidity with $9.4 million in total current assets available to pay $11.3 million in total current liabilities. AMACORE GROUP: Taps McGladrey to Replace Brimmer as Ind. Auditor ---------------------------------------------------------------- The Amacore Group, Inc., upon approval of the board of directors, engaged McGladrey & Pullen, LLP, as the company's independent registered public accounting firm and dismissed Brimmer, Burek & Keelan LLP on Oct. 27, 2008. Brimmer's report on the financial statements of the company as of and for the years ended Dec. 31, 2006, and 2007, did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to audit scope, procedure or accounting principles. During the company's fiscal years ended Dec. 31, 2006, and 2007, and the subsequent interim period through Oct. 27, 2008, there were (i) no disagreements between the company and Brimmer on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Brimmer, would have caused it to make reference to the subject matter of the disagreement in connection with their reports on the company's financial statements for such years or periods for which services were performed; and (ii) there were no reportable events as described in Item 304(a)(1)(v) of Regulation S-K. The company has identified a material weakness in its internal control over financial reporting. During the company's two recent fiscal years ended Dec. 31, 2006, and 2007 and the subsequent interim period through Oct. 27, 2008, the company did not consult with McGladrey with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the company's financial statements, or any other matters or reportable events as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K. About Amacore Group Inc. 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 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 June 30, 2008. The company's consolidated financial statements at June 30, 2008, also showed strained liquidity with $9.4 million in total current assets available to pay $11.3 million in total current liabilities. AMACORE GROUP: Sells Pref. Shares and Warrants to Vicis Capital --------------------------------------------------------------- The Amacore Group, Inc., entered into an informal agreement with Vicis Capital Master Fund for the purchase of: a) 250 shares of the company's Series I Convertible Preferred Stock, par value $0.001 per share for an aggregate cash purchase price of $2,500,000; and b) a warrant to acquire 28,125,000 shares of the company's Class A Common Stock, par value $0.001 per share. The Informal Agreement is subject to the execution of definitive written agreements. The company received the $2,500,000 purchase price payment on Nov. 6, 2008. However, the company has not issued the Shares or the Warrant. The Shares and Warrant will be issued upon execution of definitive written agreements. As a result of this transaction, Vicis owns 850 shares of Series I Preferred Stock. In addition, Vicis owns 694.6 shares of the company's Series D Convertible Preferred Stock, 139 shares of the company's Series E Convertible Preferred Stock, 1,200 shares of the company's Series G Convertible Preferred Stock and 400 Shares of the company's Series H Convertible Preferred Stock. In addition, Vicis owns warrants to acquire 400,000 shares of the company's Class A Common Stock at an exercise price of $2.40 per share and, as a result of this transaction, warrants to acquire 208,125,000 shares of the company's Class A Common Stock exercisable at a current exercise price of $0.375 per share. The company anticipates that it will enter into definitive written agreements, including a stock purchase agreement, a warrant agreement and a registration rights agreement, with Vicis in the next few weeks with respect to these transactions. However, the company cannot guarantee that the terms and conditions of the definitive written agreements will be exactly as described. The definitive written agreements may also contain additional terms or terms different than those described. Shares of Series I Preferred Stock have rights and preferences senior to certain other classes and series of the company's capital stock. Each share of Series I Preferred Stock has a stated value of $10,000 and is convertible at any time, at the option of the holder, into that number of shares of Class A Common Stock equal to the Stated Value divided by $5.00. The Conversion Price is subject to adjustment for certain events. The Warrant is exercisable for five years at an exercise price of $0.375 per share, subject to adjustment for certain events, and has a cashless exercise feature. About Amacore Group Inc. 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 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 June 30, 2008. The company's consolidated financial statements at June 30, 2008, also showed strained liquidity with $9.4 million in total current assets available to pay $11.3 million in total current liabilities. AMERICA CAPITAL: Files First Amended Plan of Liquidation -------------------------------------------------------- America Capital Corp. delivered to the U.S. Bankruptcy Court for the Southern District of Florida on Nov. 18, 2008, its First Amended Plan of Liquidation and First Amended Disclosure Statement. The Debtor relates that holders of allowed claims will receive higher recovery under the terms of the Plan than in a liquidation under Chapter 7 of the Bankruptcy Code. Plan Funding America Capital's Amended Plan incorporates the plan of Transcapital Financial Corporation. American Capital has a 65.19% ownership interest in TFC, which in turn owns 100% of the common stock of Trasohio Savings Bank. The Plan will be funded entirely by the TFC distribution and recoveries, if any, in respect to certain litigation claims against third parties. Classifications and Distributions Under the Plan The classifications and distributions under the Plan are: Class Type of Claim Treatment ----- ------------- ---------- 1 Allowed Other Priority Claims Unimpaired 2 Allowed Secured Claim of Impaired SunTrust with regard to the AMCAP Notes Claim, which is based upon amounts owed under the AMCAP Notes Judgment, the the AMCAP Notes and the Indenture 3 Allowed Unsecured Claims for Unimpaired Senior Indebtedness 4 Allowed Unsecured Claims Impaired 5 Allowed Equity Interests Impaired Allowed Administrative Claims, Priority Tax Claims, and U.S. Trustee Fees will be paid in full. Professional Fees and Expense Claims, as allowed by the Court, will be paid in full on the Effective Date. Each holder of an Allowed Other Priority Claim under Class 1 will be paid in full. In full and complete satisfaction of any Class 2 Allowed Secured Claim held by SunTrust with regard to the AMCAP Notes, SunTrust will receive the Net TFC Distribution and the Net Proceeds of any Litigation Claims, other than Avoidance Actions (after the Liquidating Agent first funds the Senior Indebtedness Distribution, to the extent applicable). To the extent that it may exist, any Deficiency Claim SunTrust may have with regard to the AMCAP Notes Claim will be treated as a Class 4 Allowed Unsecured Claim, but will not share in the Unsecured Carve-Out. If the Court determines by Final Order that the Class 2 or Class 4 AMCAP Notes Claim is subordinate to the Allowed Unsecured Claims for Senior Indebtedness under Class 3, if any, each Holder of an Allowed Class 3 Claim will be entitled to receive its allocated share of the Senior Indebtedness Reserve in full satisfaction of its Allowed Claim. Otherwise such Claims will be treated as Class 4 Claims. Each Holder of an Allowed Class 4 Claim will be entitled to receive such Holder's Pro Rata Share of (i) the Net TFC Distribution following full and complete satisfaction of Allowed Administrative Claims, Allowed Priority Tax Claims, and Allowed Class 1 and 2 Claims (and in the case of SunTrust only, the net amount after deducting the Senior Indebtedness Distribution from the Pro Rata Share of the Net Distribution which Suntrust would otherwise be entitled to receive; (ii) to the extent SunTrust does have an Allowed Secured Claim, the Unsecured Carve-Out; provided however that the SunTrust Deficiency Claim will not receive a distribution from the Unsecured Carve-Out. Holders of Allowed Equity Interests under Class 5 will not retain or receive any property or Distribution under the Plan and all Equity Interests will be cancelled and extinguished as of the Effective Date. Classes 2 and 4 are impaired and entitled to vote. Equity interests are deemed to reject. Except as otherwise provided in the Plan, the Liquidating Agent will act as disbursing agent under the Plan with respect to all Distributions to holders of Claims and will make all Distributions required to be distributed under the applicable provisions of the Plan, provided however that the Debtor will make the Initial Distribution under the Plan. After the Effective Date, the Liquidating Agent will have the sole authority to compromise and settle, otherwise resolve, discontinue, abandon or dismiss all such Litigation Claims with approval of the Court. The Court has scheduled a hearing for Dec. 3, 2008, to consider the approval of the Disclosure Statement. A full-text copy of America Capital Corp.'s First Amended Plan of Liquidation is available for free at: http://researcharchives.com/t/s?357e A full-text copy of the First Amended Disclosure Statement for America Capital Corp.'s First Amended Plan of Liquidation is available for free at: http://researcharchives.com/t/s?357f About America Capital Corp. Based in Miami, Florida, America Capital Corp. holds a 65.19% interest in TransCapital Financial Corporation. TransCapital Financial is a holding and management company that conducted substantially all of its operations through its wholly owned subsidiary, Transohio Savings Bank, FSB. Transohio Savings' key activities as a savings and loans institution were banking and lending and its primary lending activity was the originating and purchasing of loans secured by mortgages on residential properties. Transohio Savings also endeavored to generate residential loan originations through branch personnel and real estate brokers. Mobile home and home improvement loans were generated through dealers and contractors and additionally, Transohio Savings made construction loans generated by contractors that usually extended to not more than one year in length. America Capital filed for chapter 11 relief on June 19, 2006 (Bankr. S.D. Fla. Case No. 06-12645). Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, Jeffrey I. Snyder, Esq., Mindy A. Mora, Esq., and Nicole Testa Mehdipour, Esq., at Bilzin Sumberg, represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed total assets of $52,005,000 and total debts of $207,170,268. TransCapital Financial Corporation also filed for Cchapter 11 relief on June 19, 2006 (Bankr. S.D. Fla. Case No, 06-12644). Its Chapter 11 Plan was confirmed on Sept. 23, 2008. ATA AIRLINES: Wants to Auction L1011 Aircraft As Part of Wind-Down ------------------------------------------------------------------ ATA Airlines decided to cease its business operations, after analyzing its fleet schedules and aircraft fleet, operating costs, relevant business goals and objectives, well as available financing sources and business combination possibilities. ATA is in the process of winding down its business operations and liquidating its assets in an orderly fashion. It has returned all of its leased aircraft and engines, and has sold or abandoned many of its tangible assets. Among the assets ATA still possesses as part of its business operations are the L1011 aircraft, which consist of (i) Lockheed L1011-500 (Tail No. N162AT, Manufacturer's Serial No. 1220); (ii) Lockheed L1011-500 (Tail No. N163AT, Manufacturer's Serial No. 1229); and (iii) Lockheed L1011-500 (Tail No. N164AT, Manufacturer's Serial No. 1238). By this motion, ATA asks the U.S. Bankruptcy Court for the Southern District of Indiana, to implement a set of solicitation and bidding procedures for the sale of its L1011 Aircraft. Also included in the proposed sale are engines, logs, books, and records related to the aircraft. Terry Hall, Esq., at Baker & Daniels, in Indianapolis, Indiana, notes that some companies have showed interest to buy the aircraft but have not yet submitted a letter of intent or other written proposal to the airline. "To accomplish the sale of the L1011 aircraft in the most efficient and effective manner and to promote an orderly marketing process, [ATA Airlines] believes it would be beneficial to establish procedures governing the solicitation and submission of bids," Ms. Hall said. ATA Airlines proposes these solicitation and bidding procedures: (1) Within two days after the Court approves the proposed procedures, ATA Airlines will serve a copy of the court order to all parties that have previously expressed an interest to acquire the aircraft, to the United States Trustee, JPMorgan Chase Bank, attorneys for the Official Committee of Unsecured Creditors and other concerned parties. (2) All bid proposals must conform to these requirements: (a) Each bid proposal must be in writing and must contain the terms governing the acquisition of the aircraft. The proposal (i) must provide that, if requested by ATA Airlines, the L1011 aircraft bearing Tail No. N163AT will remain under the airline's operational control until the closing of a chapter 11 plan confirmed in its bankruptcy case; and (ii) contemplate the consummation of the proposed sale, free and clear of liens, claims, interests and encumbrances. Each bid proposal is subject to the Court's approval but cannot contain any due diligence or financing contingencies. (b) A bid proposal may contemplate the acquisition of all the L1011 aircraft or any lesser combination of the L1011 aircraft. (c) The person or entity making the bid proposal must deliver to ATA Airlines these documents on or before Dec. 12, at 5:00 p.m. (prevailing eastern time): * copies of financial statements, letters of credit, and any other documents satisfactory to ATA Airlines evidencing the prospective purchaser's ability to consummate the transaction; and * the bid proposal. ATA Airlines, in its sole discretion, has the right to determine the adequacy of the information and documents provided. (d) The entity making a bid proposal must also tender to ATA Airlines a deposit, in cash or cash equivalent in an amount equal to 50% of the consideration specified in the proposal on or before the deadline. ATA Airlines will maintain each deposit in a segregated, non-interest bearing account. (3) To assist prospective purchasers in their evaluation of the aircraft, ATA Airlines will provide access during normal business hours to all logs and records related to the aircraft. (4) ATA Airlines, in its sole discretion but in consultation with JPMorgan Chase Bank and the Creditors Committee, will determine which bid proposal is the highest and best offer. These factors will influence the airline's determination: * the consideration offered to be paid; * the purchaser's financial strength and ability to timely close on the proposed transaction; and * whether the bid proposal contemplates the acquisition of all or less than all of the aircraft. ATA Airlines has the right not to accept any bid proposal or to waive any technical violation of and deviation from the bid procedures consistent with the goal of maximizing the sale price for the aircraft. All bid proposals must be delivered to: (1) ATA Airlines c/o Haynes and Boone, LLP Attn: Kourtney P. Lyda 1 Houston Center 1221 McKinney Street, Suite 2100 Houston, Texas 77010 Facsimile: (713) 236-5687 e-mail: kourtney.lyda@haynesboone.com (2) JPMorgan Chase Bank, N.A. c/o Simpson Thacher & Bartlett LLP Attn: Kathrine A. McLendon 425 Lexington Avenue New York, New York 10017 Facsimile: (212) 455-2502 e-mail: kmclendon@stblaw.com (3) The Official Committee of Unsecured Creditors c/o Otterbourg, Steindler, Houston & Rosen P.C. Attn: Steven B. Soll 230 Park Avenue New York, New York 10169 Facsimile: (917) 368-7139 e-mail: ssoll@oshr.com (4) Office of the United States Trustee Attn: Ronald J. Moore 101 West Ohio Street, Suite 1000 Indianapolis, Indiana 46204 Facsimile: (317) 226-6356 e-mail: ronald.moore@usdoj.gov A hearing to consider approval of the proposed solicitation and bidding procedures is scheduled for Nov. 21, at 11:00 a.m. Creditors and other concerned parties have until Nov. 18 to file their objections. To date, the company has not provided any update on this matter. About ATA Airlines Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a diversified passenger airline operating in two principal business lines -- a low cost carrier providing scheduled passenger service that leverages a code share agreement with Southwest Airlines; and a charter operator that focused primarily on providing charter service to the U.S. government and military. ATA is a wholly owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned subsidiary of New ATA Investment, Inc., which in turn, is a wholly owned subsidiary of Global Aero Logistics Inc. ATA Acquisition also owns another holding company subsidiary, World Air Holdings, Inc., which it acquired through merger on August 14, 2007. World Air Holdings owns and operates two other airlines, North American Airlines and World Airways. ATA Airlines and its affiliates filed for Chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). The Honorable Basil H. Lorch III confirmed the Debtors' plan of reorganization on Jan. 31, 2006. The Debtors' emerged from bankruptcy on Feb. 28, 2006. Global Aero Logistics acquired certain of ATA's operations after its first bankruptcy. The remaining ATA affiliates that were not substantively consolidated in the company's first bankruptcy case were sold or otherwise liquidated. ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D. Ind. Case No. 08-03675), citing the unexpected cancellation of a key contract for ATA's military charter business, which made it impossible for ATA to obtain additional capital to sustain its operations or restructure the business. ATA discontinued all operations subsequent to the bankruptcy filing. ATA's Chapter 22 bankruptcy petition lists assets and liabilities each in the range of $100 million to $500 million. The Debtor is represented in its Chapter 22 case by Haynes and Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel. The United States Trustee for Region 10 appointed five members to the Official Committee of Unsecured Creditors. Otterbourg, Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to the Committee. FTI Consulting, Inc., acts as the panel's financial advisors. The Court gave ATA Airlines Inc. until Feb. 26, 2009, to file its Chapter 11 plan and April 27, 2009, to solicit acceptances of that plan. (ATA Airlines Bankruptcy News, Issue No. 93; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). BH S&B HOLDINGS: U.S. Trustee Forms Three-Member Creditor Panel --------------------------------------------------------------- Diana G. Adams, the United States Trustee for Region 3, appointed three creditors to serve on an Official Committee of Unsecured Creditors for the Chapter 11 cases of BH S&B Holdings LLC and its debtor-affiliates. The creditors committee members are: a) CBL & Associates Management, Inc. Attn: Victoria Berghel, 2030 Hamilton Place Boulevard, Suite 500 Chattanooga, Tennessee 37421-6000 Tel: (423) 490-8684 b) Werner Enterprises, Inc. Attn: Richard Reiser, 14507 Frontier, Rd. Omaha, NE 68138 Tel: (402) 894-3000 c) Omni-Care Group Attn: S. Neil Ford, 1130 Cleveland St., Ste. 270 Clearwater, FL 33755 Tel: (727) 443-3334 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About BH S&B Holdings Headquartered in Port Washington, New York, BH S&B Holdings LLC operates certain Steve & Barry's LLC stores. The company and six of its affiliates filed for Chapter 11 protection on Nov. 19, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-14604). Joel H. Levitin, Esq., and Richard A. Stieglitz, Jr., Esq., at Cahill Gordon & Reindel LLP. The company proposes RAS Management Advisors LLC as chief restructuring officer and Kurtzman Carson Consultants LLC as claims, notice, and balloting agent. When the Debtors filed for protection from their creditors, they list assets and debts between $100 million to $500 million each. 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. Pursuant to the Purchase Agreement, the Court authorized 51 entities to change their corporate names. Lead Debtor Steve & Barry's Manhattan LLC (Case No. 08-12579) was changed to Stone Barn Manhattan LLC. Parent company Steve & Barry's LLC (Case No. 08-12615) is now known as Steel Bolt LLC. When Steve & Barry's LLC and its affiliates filed for bankruptcy, they listed $693,492,000 in total assets and $638,086,000 in total debts. BH S&B HOLDINGS: Gets Initial OK to Use $44 Mil. Ableco Facility ---------------------------------------------------------------- The Hon. Martin Glenn of the United States Bankruptcy Court for the Southern District of New York authorized BH S&B Holdings LLC and its debtor-affiliates to access, on an interim basis, up to $44 million in postpetition financing under a revolving credit facility from Ableco Finance LLC, as administrative and collateral agent, and A3 Funding LP, as lender, in accordance to a DIP credit agreement drafted on Nov. 19, 2008. The lenders have agreed to provide as much as $60 million in financing on a final basis. Under the DIP agreement, if the Debtors elect the LIBOR option, the facility will bear interest at the LIBOR Rate, which is calculated by dividing the Base LIBOR Rate by 100% minus the Reserve Percentage; Otherwise interest would be charged based upon the Reference Rate, which is the greater of 5% and the rate of interest announce by JPMorgan Chase Bank in New York from time to time as its reference rate, base rate or prime rate. Proceeds of the loan will be used to (i) fund working capital purposes; (ii) pay fees and expenses related to the DIP agreement; and (iii) fund the liquidation efforts for their assets. In connection with the liquidation of assets, the Debtors retained Great American Group LLC to assist in the sale of their remaining assets. The sale is expected to complete by the end of 2008. The DIP facility is subject to a $100,000 carve-out for payment of fees to the United States Trustee and the Bankruptcy Clerk, and unpaid wages and related payroll taxes for services rendered by the lenders' employees. The Debtors granted the lender senior priority liens and superpriority claims in all collateral in accordance to the DIP agreement to secure any and all of their obligations, indebtedness and liabilities. The DIP agreement contains customary and appropriate events of default including, among other things: -- failure to pay principal, interest or fees on any loan when due; -- breach of any representations or warranties, subject to a material adverse effect qualification; -- failure to perform or comply with certain covenants or agreements; -- interim or final DIP order is stayed, amended, reversed or vacated; -- appointment of a Chapter 11 trustee or examiner; -- conversion of Chapter 11 cases to Chapter 7 liquidation or dismissal of cases; and -- unauthorized entry of an order permitting any superpriority claims or liens senior or pari passu with the lenders. At closing, the lenders will be paid in an amount equal to 1% of the total credit facility. A hearing is set for Dec. 15, 2008, at 10:00 a.m., at One Bowling Green, Courtroom 501 in New York, to consider final approval of the motion. Objections, if any, are due Dec. 10, 2008. Prepetition Indebtedness Before their bankruptcy filing, the Debtors entered into two separate agreements: a) revolving credit agreement dated Oct. 14, 2008, with Ableco Finance LLC, as collateral and administrative agent. The Debtors owe about $90 million plus accrued and unpaid interests, and fees and costs, and all other amounts payable thereunder; and b) amended and restated subordinated second lien financing agreement dated Oct. 14, 2008, with non-debtor BH S&B Finco LLC, as collateral and administrative agent. The Debtors owe about $75 million plus accrued and unpaid interest, and fees and costs, and expenses. A full-text copy of DIP Credit Agreement between the Debtors and the lenders is available for free at: http://ResearchArchives.com/t/s?3572 A full-text copy of the Debtors' DIP Weekly Cash Flow is available for free at: http://ResearchArchives.com/t/s?3573 About BH S&B Holdings Headquartered in Port Washington, New York, BH S&B Holdings LLC operates certain Steve & Barry's LLC stores. The company and six of its affiliates filed for Chapter 11 protection on Nov. 19, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-14604). Joel H. Levitin, Esq., and Richard A. Stieglitz, Jr., Esq., at Cahill Gordon & Reindel LLP. The company proposes RAS Management Advisors LLC as chief restructuring officer and Kurtzman Carson Consultants LLC as claims, notice, and balloting agent. When the Debtors filed for protection from their creditors, they list assets and debts between $100 million to $500 million each. 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. Pursuant to the Purchase Agreement, the Court authorized 51 entities to change their corporate names. Lead Debtor Steve & Barry's Manhattan LLC (Case No. 08-12579) was changed to Stone Barn Manhattan LLC. Parent company Steve & Barry's LLC (Case No. 08-12615) is now known as Steel Bolt LLC. When Steve & Barry's LLC and its affiliates filed for bankruptcy, they listed $693,492,000 in total assets and $638,086,000 in total debts. BH S&B HOLDINGS: To Conduct Store Closing Sales at 173 Stores ------------------------------------------------------------- The Hon. Martin Glenn of the United States Bankruptcy Court for the Southern District of New York authorized BH S&B Holdings LLC and its debtor-affiliates to conduct going-out-of-business sales at their 173 stores and distribution center. Great American Ventures LLC, SB Capital Group LLC, Tiger Capital Group LLC and Hudson Capital Partners LLC were retained to provide consulting services to the Debtors as they sell their assets. Under the consultant agreement, the firms will be paid 2% of the gross proceeds related to the Debtors' merchandise and 20% of the gross receipts -- net only of applicable sales taxes, if any -- of the sale of their FF&E. In addition, the firms will be paid 10% of any savings realized between the actual expenses they incur in conducting the store closing sales. A full-text copy of the Debtors' Sale Closing Guidelines is available for free at: http://ResearchArchives.com/t/s?3579 A full-text copy of the Debtors' Consulting Agreement is available for free at: http://ResearchArchives.com/t/s?357a A full-text copy of the Debtors' Retail Stores and Warehouse locations is available for free at: http://ResearchArchives.com/t/s?357b A full-text copy of the Debtors' Pro Forma Budget is available for free at: http://ResearchArchives.com/t/s?357c About BH S&B Holdings Headquartered in Port Washington, New York, BH S&B Holdings LLC operates certain Steve & Barry's LLC stores. The company and six of its affiliates filed for Chapter 11 protection on Nov. 19, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-14604). Joel H. Levitin, Esq., and Richard A. Stieglitz, Jr., Esq., at Cahill Gordon & Reindel LLP. The company proposes RAS Management Advisors LLC as chief restructuring officer and Kurtzman Carson Consultants LLC as claims, notice, and balloting agent. When the Debtors filed for protection from their creditors, they list assets and debts between $100 million to $500 million each. 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. Pursuant to the Purchase Agreement, the Court authorized 51 entities to change their corporate names. Lead Debtor Steve & Barry's Manhattan LLC (Case No. 08-12579) was changed to Stone Barn Manhattan LLC. Parent company Steve & Barry's LLC (Case No. 08-12615) is now known as Steel Bolt LLC. When Steve & Barry's LLC and its affiliates filed for bankruptcy, they listed $693,492,000 in total assets and $638,086,000 in total debts. BOSCOV'S INC: Deferred Deal Closing Cues Versa Deal Termination --------------------------------------------------------------- Boscov's Inc. and its debtor-affiliates terminated the stalking horse Asset Purchase Agreement they entered into with Regio BDS, LLC, the entity created by Versa Capital Management. Regio, in a statement filed with the United States Bankruptcy Court for the District of Delaware said it considered itself released from all obligations under the prior Asset Purchase Agreement. Regio, however, reserves its rights, claims and actions with respect to the APA. According to the Debtors' counsel, David G. Heiman, Esq., at Jones Day, in Cleveland, Ohio, Versa was unable to turn in the necessary documents demonstrating its financing and equity commitments to close the purchase of the Debtors' assets as of the Oct. 15, 2008, deadline. Versa instead proposed to defer the sale closing until Jan. 7, 2009, by which date a significant amount of inventory would have been sold so that the purchase price to the Debtors would be lower, Mr. Heiman related. This change on timing, the Debtors disclosed, is the primary problem with the Versa transaction. Mr. Heiman said a January 2009 closing would pose several problems, including the potential dilution of creditor recoveries due to increased professional fees and employee obligations, among others. Versa, he added, refused the DIP Lenders' offer to "bridge the gap" between the financing Versa said it has and the necessary financing to consummate the sale. Mr. Heiman further related that around Oct. 15, 2008, the Debtors received the bid from BLF Acquisition, Inc. The Debtors' investment bankers, Barclays Capital, advised that BLF's proposal, although still subject to conditions, is superior to that of Versa because: (a) BLF's proposal involved greater capital contribution than that proposed by Versa; (b) the Debtors' existing lenders supported BLF's efforts and had told Barclays that they would no longer be willing to finance Versa's proposed transactions; and (c) BLF wants to close the transaction in November 2008, which is what the Debtors and the Official Committee of Unsecured Creditors want. Accordingly, the Debtors indicated that they no longer want to extend the period to exercise their mutual termination rights under the Regio/Versa APA. Backed by Barclays' recommendation, the Debtors' counsel, the Committee of Lenders, the Special Committee, which consists of the Debtors' chief restructuring officer and their independent director, recommended to the board of directors the termination of the Versa APA. The Debtors then terminated the Versa APA, and on the Special Committee's advice, entered into the Purchase Agreement with BLF. In response, Versa said it is disappointed of the Debtors' statement in support of the BLF APA. Versa said that the Debtors attempt to malign its now-terminated transaction with the Debtors. "Rather than simply focusing on the attributes of the insider transaction, for which they are now seeking Court approval, the Debtors divert their opening remarks to attack their potential transaction with Versa as if such attack would support the insider transaction," Robert S. Brady, Esq. at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, complained. Mr. Brady said the only logical explanation for the Debtors' preemptive action is to avoid their obligations to pay the break- up fee and compensative Versa for their decision to pursue a transaction with the Debtors' "insiders" led by their previous and current chairman and chief executive officer. Versa asserted that given the circumstances, it is entitled to a break-up fee under the Regio APA, and an administrative expense claim against the Debtors pursuant to the Regio APA and all principles of equity, particularly given the substantial value that Versa has preserved and created for the Debtors' estate by both providing a lifeline to stave off a liquidation and a platform on which to negotiate a going-concern transaction. In light of the termination of the Regio APA, Versa asks the Court to clarify any order approving the BLF APA to require that the insider group be responsible for Versa's break-up fee at the closing, or provide other assurances to preserve Versa's rights to the break-up fee and other claims under the Regio APA. About Boscov's Inc. Headquartered in Reading, Pennsylvania, Boscov's Inc. -- http://www.boscovs.com/-- is America's largest family-owned independent department store, with 49 stores in Pennsylvania, New York, New Jersey, Maryland, Delaware and Virginia. Boscov's Inc. and its debtor-affiliates filed for Chapter 11 protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637). Judge Kevin Gross presides over the cases. David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day, serve as the Debtors' lead counsel. The Debtors' financial advisor is Capstone Advisory Group and their investment banker is Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman Carson Consultants L.L.C. Boscov's listed assets of $538 million and liabilities of $479 million in its bankruptcy filing. (Boscov's Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) CAPITAL AUTOMOTIVE: Bank Debt Sells at Substantial Discount ----------------------------------------------------------- Participations in a syndicated loan under which Capital Automotive REIT is a borrower traded in the secondary market at 41.90 cents- on-the-dollar during the week ended November 28, 2008. This represents a drop of 6.10 percentage points from the previous week, the Journal relates. The syndicated loan matures on December 16, 2010, and Capital Automotive pays 175 basis points over LIBOR to borrow under the facility. The bank loan carries Moody's Ba1 rating and Standard & Poor's BB+ rating. Bank debt of other companies in the auto industry are also being sold at substantial discount, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. Participations in a syndicated loan under which Lear Corp. is a borrower traded in the secondary market at 49.50 cents-on-the- dollar during the same period, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 7.07 percentage points from the previous week -- when it traded at 56.57 cents-on-the-dollar -- the Journal relates. The syndicated loan matures on March 29, 2012, and Lear pays 250 basis points over LIBOR to borrow under the facility. The bank loan is unrated. Participations in a syndicated loan under which Swift Transportation Co. Inc., is a borrower traded in the secondary market at 43.08 cents-on-the-dollar during the same period, which represents a drop of 5.71 percentage points from the previous week. The syndicated loan matures on March 15, 2014, and Lear pays 275 basis points over LIBOR to borrow under the facility. The bank loan carries Moody's B1 rating and Standard & Poor's B+ rating. Capital Automotive -- http://www.capitalautomotive.com/-- headquartered in McLean, Virginia, is a self-administered, self- managed real estate investment trust. Formed in 1997, Capital Automotive acquires real property and improvements used by operators of multi-site, multi-franchised automotive dealerships and related businesses. The specialty finance company has more than $3.8 billion invested in more than 590 automotive franchise facilities, and more than 17.5 million square feet of buildings on more than 3,100 acres in 38 states and Canada. Capital Automotive common shareholders voted on December 14, 2005, to approve the Agreement and Plan of Merger among the company, Capital Automotive L.P., Flag Fund V LLC, a Delaware limited liability company, CA Acquisition REIT, a Maryland real estate investment trust, and CALP Merger LP, a Delaware limited partnership, and approve the merger, pursuant to which Flag Fund will acquire the company and its subsidiaries. CHRYSLER LLC: In Talks With Union to Stop Idled Worker Payment -------------------------------------------------------------- General Motors Corp., Ford Motor Co., and Chrysler LLC are negotiating with the United Auto Workers union to stop a program that pays idled workers, Matthew Dolan at The Wall Street Journal reports, citing people familiar with the matter. Gary Haber at The News Journal relates that "jobs bank" is a unique protection for laid-off workers. According to the report, laid-off workers are placed in the jobs bank, where they can get about 95% of their usual pay and benefits. WSJ says that GM, Ford Motor, and Chrysler are trying to eliminate or scale back the program as part of an effort to secure a $25 billion loan from the government. The News Journal states that the jobs bank doesn't start until laid-off employees exhaust a period of unemployment benefits and supplemental pay from the company. Citing GM spokesperson Tony Sapienza, the News Journal states that said that the workers can start benefiting from the jobs bank when they have been idled for 48 weeks. The report states that the workers would get unemployment benefits and supplemental pay of 85% of pay. GM, according to the report, can remain in the jobs bank for up to two years, but will lose their pay and benefits if they refuse a single job offer at a GM plant within 50 miles of their home plant, or turn down four job offers at GM plants more than 50 miles away. Critics say that the "jobs banks" are a disadvantage for GM, Ford Motor, and Chrysler, as they are an "overly generous benefit" at firms that report billions in losses, The News Journal states. The News Journal quoted UAW President Ron Gettelfinger as saying, "We're on the verge of eliminating that provision." UAW Wants Cos. to Curb Corporate Pay, Bonuses & Severance Pays Citing Gettelfinger, Reuters relates that Ford Motor, GM, and Chrysler should limit corporate pay, bonuses, and severance packages in return for government loans. Reuters quoted Mr. Getterlfinger as saying, "They need to establish that executive compensation is something that they're willing to curtail, as well as bonuses and 'golden parachutes' on exiting the business. They can also give the government an equity stake in the business." Mr. Gettelfinger said on CNN that the automakers need a loan to help them survive a tough period. According to WSJ, Mr. Gettelfinger said, "It's not just here in the United States and this is not a bailout, this is a loan, a bridge loan that will get us through until we can take a longer term look at what needs to be done in the industry." Union wages weren't the key cause of waning sales at the companies, Reuters states, citing Mr. Gettelfinger. 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 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. CIRCUIT CITY: Aims for Dec. 18 Auction for Closing Store Leases --------------------------------------------------------------- Circuit City Stores, Inc., and its affiliated debtors ask approval from the U.S. Bankruptcy Court for the Eastern District of Virginia to auction off property leases affected by their store closings. Circuit City, before filing for bankruptcy, commenced store- closing sales at 154 locations. The Debtors want to promptly auction off the leases to cut the $6,000,000 per month in rent that they are liable under those leases, and to obtain value from those leases. The Debtors contemplate a December 15, 2008 deadline to submit bids and a December 18 auction for those leases. All bids require a good-faith deposit equal to the greater of 15% of the bid amount, or $5,000 for each Lease on which the bidder submits a bid. The Debtors will pay amounts necessary to cure defaults, if any, under leases that will be assumed and assigned to the winning bidders. A full-text copy of the leases that have amounts outstanding is available for free at: http://bankrupt.com/misc/List_Cure_Amounts.pdf Deadline for landlords or contract counterparties to object to the listed cure amounts is on Dec. 10, 2008. To avoid unnecessary spending of estate resources, the Debtors propose that the leases not included in the sale be deemed rejected as of Dec. 31, 2008. The Debtors will post a list of the sold leases in their claims agent's Web site. Objections to the assumption and assignment, to the winning bidders, of the sold leases are due December 20. According to Bill Rochelle of Bloomberg News, Circuit City hopes "to be in a position to emerge from Chapter 11 in the first half of 2009." About Circuit City Stores, Inc. Headquartered in Richmond, Virginia, Circuit City Stores Inc. (NYSE: CC) -- http://www.circuitcity.com/-- is a specialty retailer of consumer electronics, home office products, entertainment software and related services. The company has two segments: domestic and international. Circuit City Stores, Inc. (NYSE: CC) together with 17 affiliates filed a voluntary petition for reorganization relief under Chapter 11 of the Bankruptcy Code on November 10 (E.D. Virg. Lead Case No.: 08-35653). InterTAN Canada, Ltd., which runs Circuit City's Canadian operations, also sought protection under the Companies' Creditors Arrangement Act in Canada. Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, are the Debtors' general restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, are the Debtors' local counsel. The Debtors also tapped Kirkland & Ellis LLP as special financing counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special securities counsel; and FTI Consulting, Inc. and Rotschild Inc. as financial advisors. The Debtors' Canadian general restructuring counsel is Osler, Hoskin & Harcourt LLP. Kurtzman Carson Consultants LLC is the Debtors' claims and voting agent. The Debtors disclosed total assets of $3,400,080,000 and debts of $2,323,328,000 as of Aug. 31, 2008. (Circuit City Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CIRCUIT CITY: Court Sets Dec. 19 Bar Date for 503(b)(9) Claims -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Virginia has imposed a December 19, 2008 deadline for filing, against Circuit City Stores, Inc., and its affiliates, administrative claims under Section 503(b)(9) of the Bankruptcy Code. Section 503(b)(9) of the Bankruptcy Code provides that sellers of goods may request allowance of an administrative expense claim for the value of goods received by a debtor in the ordinary course of business within 20 days of the Petition Date. The Debtors received goods in the ordinary course of business prior to the Petition Date. Thus, the Debtors believe that the vendors and suppliers of goods that delivered goods to the Debtors during the 20 days prior to the Petition Date will likely seek allowance of Section 503(b)(9) Claims. Gregg M. Galardi, Esq., Skadden, Arps, Slate, Meagher & Flom, LLP, in Wilmington, Delaware, relates that holders of Section 503(b)(9) Claims have likely received payment on prepetition invoices and, thus, the analysis and ultimate allowance of Section 503(b)(9) Claims might implicate issues regarding the holders' application of recent payments and whether a Section 503(b)(9) Claimant was the recipient of a voidable transfer. About Circuit City Stores, Inc. Headquartered in Richmond, Virginia, Circuit City Stores Inc. (NYSE: CC) -- http://www.circuitcity.com/-- is a specialty retailer of consumer electronics, home office products, entertainment software and related services. The company has two segments: domestic and international. Circuit City Stores, Inc. (NYSE: CC) together with 17 affiliates filed a voluntary petition for reorganization relief under Chapter 11 of the Bankruptcy Code on November 10 (E.D. Virg. Lead Case No. 08-35653). InterTAN Canada, Ltd., which runs Circuit City's Canadian operations, also sought protection under the Companies' Creditors Arrangement Act in Canada. Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, are the Debtors' general restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, are the Debtors' local counsel. The Debtors also tapped Kirkland & Ellis LLP as special financing counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special securities counsel; and FTI Consulting, Inc. and Rotschild Inc. as financial advisors. The Debtors' Canadian general restructuring counsel is Osler, Hoskin & Harcourt LLP. Kurtzman Carson Consultants LLC is the Debtors' claims and voting agent. The Debtors disclosed total assets of $3,400,080,000 and debts of $2,323,328,000 as of Aug. 31, 2008. (Circuit City Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CIRCUIT CITY: Gets Court Nod to Honor Gift Cards ------------------------------------------------ Circuit City Stores, Inc., won permission from the U.S. Bankruptcy Court for the Eastern District of Virginia to, among other things, honor gift cards, in connection with their customer satisfaction programs. Before filing for bankruptcy and in the ordinary course, the Debtors received from payments from customers, including those for gift or similar certificates that customers had not yet redeemed, and payments for warranties on products purchased from the Debtors. While the Bankruptcy Code requires prepetition claimants to line up with other creditors and wait for payment until a Chapter 11 plan is confirmed, the Debtors sought Court honor prepetition obligations under their customer satisfaction programs. The Debtors relate that the success and viability of their business, and ultimately their ability to successfully reorganize, are totally dependent upon the patronage and loyalty of their customers. The Debtors asked for permission to: -- receive, process and honor credit card transactions in the ordinary course of business; -- honor all rewards points earned through customers' use of the Debtors' private label credit cards; -- honor all obligations associated with merchandise warranties and guarantees established prior to the Petition Date; -- honor all gift cards issued prior to the Petition Date; -- honor all obligations associated with rebates offered; -- provide refunds to customers with respect to products purchased; -- honor all obligations to third-party customer service providers; and -- honor all other similar policies, programs and practices of the Debtors in the ordinary course of business. About Circuit City Stores, Inc. Headquartered in Richmond, Virginia, Circuit City Stores Inc. (NYSE: CC) -- http://www.circuitcity.com/-- is a specialty retailer of consumer electronics, home office products, entertainment software and related services. The company has two segments: domestic and international. Circuit City Stores, Inc. (NYSE: CC) together with 17 affiliates filed a voluntary petition for reorganization relief under Chapter 11 of the Bankruptcy Code on November 10 (E.D. Virg. Lead Case No. 08-35653). InterTAN Canada, Ltd., which runs Circuit City's Canadian operations, also sought protection under the Companies' Creditors Arrangement Act in Canada. Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, are the Debtors' general restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, are the Debtors' local counsel. The Debtors also tapped Kirkland & Ellis LLP as special financing counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special securities counsel; and FTI Consulting, Inc. and Rotschild Inc. as financial advisors. The Debtors' Canadian general restructuring counsel is Osler, Hoskin & Harcourt LLP. Kurtzman Carson Consultants LLC is the Debtors' claims and voting agent. The Debtors disclosed total assets of $3,400,080,000 and debts of $2,323,328,000 as of Aug. 31, 2008. (Circuit City Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CIRCUIT CITY: Limits Trading of Securities to Keep Tax Attributes ----------------------------------------------------------------- Circuit City Stores, Inc., and its affiliates obtained interim approval to limit trading of their securities in order to protect an asset -- their significant net operating losses. The U.S. Bankruptcy Court for the Eastern District of Virginia will hear the proposal on Dec. 5 if parties-in-interest object. Douglas M. Foley, Esq., at McGuireWoods LLP, in Richmond, Virginia, relates that the Debtors have gained tax attributes on account of losses in excess of $470,000,000. However, the Debtors may be unable to take advantage of trading of their stock is not restricted. Section 382 of the Internal Revenue Code limits the ability of a corporation that undergoes a change of ownership to use its NOL and certain other tax attributes to offset future income. "The Tax Attributes are of significant value to the Debtors and their estates because the Debtors can carry forward their NOLs to offset their future taxable income for up to 20 taxable years, thereby reducing their future aggregate tax obligations and freeing up funds to meet working capital requirements and service debt. [Those] NOLs may also be utilized by the Debtors to offset any taxable income generated by transactions completed during the Chapter 11 Cases," Mr. Foley says. About Circuit City Stores, Inc. Headquartered in Richmond, Virginia, Circuit City Stores Inc. (NYSE: CC) -- http://www.circuitcity.com/-- is a specialty retailer of consumer electronics, home office products, entertainment software and related services. The company has two segments: domestic and international. Circuit City Stores, Inc. (NYSE: CC) together with 17 affiliates filed a voluntary petition for reorganization relief under Chapter 11 of the Bankruptcy Code on November 10 (E.D. Virg. Lead Case No. 08-35653). InterTAN Canada, Ltd., which runs Circuit City's Canadian operations, also sought protection under the Companies' Creditors Arrangement Act in Canada. Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, are the Debtors' general restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, are the Debtors' local counsel. The Debtors also tapped Kirkland & Ellis LLP as special financing counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special securities counsel; and FTI Consulting, Inc. and Rotschild Inc. as financial advisors. The Debtors' Canadian general restructuring counsel is Osler, Hoskin & Harcourt LLP. Kurtzman Carson Consultants LLC is the Debtors' claims and voting agent. The Debtors disclosed total assets of $3,400,080,000 and debts of $2,323,328,000 as of Aug. 31, 2008. (Circuit City Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CIRCUIT CITY: Proposes to Pay $6.55-Mil. Owed to Foreign Vendors ---------------------------------------------------------------- Circuit City Stores, Inc., and its affiliates seek approval from the U.S. Bankruptcy Court for the Eastern District of Virginia to pay $6.55 million to non-U.S. based parties who supply them goods and services essential for their businesses. While the U.S. Bankruptcy Code allows a Chapter 11 debtor to delay payment of prepetition claims, Circuit City is worried that, absent payment, these Foreign Vendors may cease providing merchandise, to the detriment of the company. The Debtors transact business with numerous foreign vendors and other suppliers of goods and services in countries including Brazil, Canada, China, France, Germany, Great Britain, Hong Kong, India, Ireland, Italy, Japan, Korea, Malaysia, Mexico, New Zealand, Romania, and Taiwan, which manufacture merchandise, like digital electronic devices and electronics accessories, for the Debtors. The Debtors informed the Court that without the Foreign Vendors, they would likely be unable to provide merchandise to their customers. These Foreign Vendors, are not subject to the jurisdiction of the Court, and would likely halt delivery of goods absent payment of their claims. The Debtors relate that in return for the $6.55 million in payment, they will ask the Foreign Vendors to continue to provide goods and services on the most favorable terms in effect between the supplier and the Debtors during the past six months. Prior to making payment, the Debtors may also seek to settle prepetition claims by vendors at a discount. The Court has granted the request on an interim basis. Judge Huennekens will convene a final hearing on December 5, 2008, at 10:00 a.m., to consider the request. About Circuit City Stores, Inc. Headquartered in Richmond, Virginia, Circuit City Stores Inc. (NYSE: CC) -- http://www.circuitcity.com/-- is a specialty retailer of consumer electronics, home office products, entertainment software and related services. The company has two segments: domestic and international. Circuit City Stores, Inc. (NYSE: CC) together with 17 affiliates filed a voluntary petition for reorganization relief under Chapter 11 of the Bankruptcy Code on November 10 (E.D. Virg. Lead Case No. 08-35653). InterTAN Canada, Ltd., which runs Circuit City's Canadian operations, also sought protection under the Companies' Creditors Arrangement Act in Canada. Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, are the Debtors' general restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, are the Debtors' local counsel. The Debtors also tapped Kirkland & Ellis LLP as special financing counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special securities counsel; and FTI Consulting, Inc. and Rotschild Inc. as financial advisors. The Debtors' Canadian general restructuring counsel is Osler, Hoskin & Harcourt LLP. Kurtzman Carson Consultants LLC is the Debtors' claims and voting agent. The Debtors disclosed total assets of $3,400,080,000 and debts of $2,323,328,000 as of Aug. 31, 2008. (Circuit City Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CIRCUIT CITY: To Pay Retained and Terminated Employees ------------------------------------------------------ Circuit City Stores, Inc., sought permission from the U.S. Bankruptcy Court for the Eastern District of Virginia to pay amounts owing to employees -- both current and former -- for services rendered before their bankruptcy filing. The average monthly payroll for the employees in the typical non- Christmas season month is around $86,000,000, including employer payroll taxes. Proposed counsel for the Debtors, Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Wilmington, Delaware, informs the Court that as of November 1, 2008, approximately $7,900,000 exists in accrued but unpaid payroll for salaried employees, and $13,300,000 for hourly employees. He notes that there are presently no employees, who are owed in excess of $10,950 for prepetition wages or salaries. The Debtors ask the Court to: (a) authorize, but not direct, them to pay prepetition wages, salaries, bonuses, reimbursements, and other compensation; (b) authorize, but not direct, them to continue the maintenance of employee benefit programs, including prepetition withholdings and payroll-related taxes, in the ordinary course of business; and (c) direct all banks to honor prepetition checks for payment of prepetition employee obligations. Prior to the Petition Date, the Debtors notified over 700 employees that their employment was being terminated, and in accordance with the requirements of the Worker Adjustment and Retraining Notification Act, provided those employees with notice that the effective date of the termination would be 60 days from the notice date. Notwithstanding the provisions of the WARN Act, in the event employees are terminated prior to the commencement of a bankruptcy case, claims based on the WARN Act are not entitled to administrative expense priority under Section 503(b)(1) of the Bankruptcy Code, Mr. Galardi contends. The Debtors, however, seek the Court's authority to pay the WARN Employees the wages, salaries and benefits that the employees would be entitled to earn over the balance of the 60-day WARN Period, even though it is extremely unlikely that those employees will be recalled by the Debtors as a result of the commencement of the Chapter 11 cases, and thus, will provide no further services to the Debtors. The Debtors believe that, under the circumstances and given the Debtors' intent to attempt to successfully reorganize or sell their business as a going concern, the authorization is critical. They maintain that the payments are essential to stabilize their workforce, and improve overall employee morale in this critical period in the Debtors' restructuring efforts. The Debtors estimate that the aggregate cost associated with continuing the payment to the WARN Employees is approximately $8,000,000 to $10,000,000, which amount has been included in their DIP budget. Court Okays Certain Payments Circuit City Bankruptcy News reports that the Court has authorized the Debtors to pay their obligations to their employees, including prepetition wages, salaries, bonuses, reimbursements, and other compensation and benefit programs The Court, however, clarified that relief provided in the order with respect to payments to WARN employees is granted on an interim basis. If no objection is filed within 15 days, the relief will automatically become a final and non-appealable without further Court order. Panel Objects to WARN Payments According to Bankruptcy Law360, the committee of unsecured creditors of Circuit City objects to the Debtors' proposal to pay laid-off employees under the WARN Act. The Committee, the report says, believes it is best for the Debtors to keep the money at this critical juncture. About Circuit City Stores, Inc. Headquartered in Richmond, Virginia, Circuit City Stores Inc. (NYSE: CC) -- http://www.circuitcity.com/-- is a specialty retailer of consumer electronics, home office products, entertainment software and related services. The company has two segments: domestic and international. Circuit City Stores, Inc. (NYSE: CC) together with 17 affiliates filed a voluntary petition for reorganization relief under Chapter 11 of the Bankruptcy Code on November 10 (E.D. Virg. Lead Case No. 08-35653). InterTAN Canada, Ltd., which runs Circuit City's Canadian operations, also sought protection under the Companies' Creditors Arrangement Act in Canada. Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, are the Debtors' general restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, are the Debtors' local counsel. The Debtors also tapped Kirkland & Ellis LLP as special financing counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special securities counsel; and FTI Consulting, Inc. and Rotschild Inc. as financial advisors. The Debtors' Canadian general restructuring counsel is Osler, Hoskin & Harcourt LLP. Kurtzman Carson Consultants LLC is the Debtors' claims and voting agent. The Debtors disclosed total assets of $3,400,080,000 and debts of $2,323,328,000 as of Aug. 31, 2008. (Circuit City Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CLAIRES STORES: Bank Loan Sells at 59% Off in Secondary Market -------------------------------------------------------------- Participations in a syndicated loan under which Claire's Stores is a borrower traded in the secondary market at 40.84 cents-on-the- dollar during the week ended November 28, 2008, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 3.31 percentage points from the previous week, the Journal relates. The syndicated loan matures on May 29, 2014, and Claire's Stores pays 275 basis points over LIBOR to borrow under the facility. The bank loan carries Moody's B2 rating and Standard & Poor's B rating. Separately, Claire's Stores said November 14, 2008, that Mark Smith will no longer serve as President of its European operations as of January 18, 2009. Mr. Smith has agreed to serve as an advisor to the senior management of the company after his departure. Headquartered in Pembroke Pines, Florida, Claire's Stores Inc. (NYSE: CLE) -- http://www.clairestores.com/-- is a specialty retailer of value-priced jewelry and accessories for girls and young women through its two store concepts: Claire's and Icing. While the latter operates only in North America, Claire's operates worldwide. As of May 3, 2008, Claire's Stores, Inc. operated 3,053 stores in North America and Europe. Claire's Stores Inc. also operates through its subsidiary, Claire's Nippon Co. Ltd., 201 stores in Japan as a 50:50 joint venture with AEON Co. Ltd. The company also franchises 169 stores in the Middle East, Turkey, Russia, South Africa, Poland and Guatemala. * * * As reported in the Troubled Company Reporter on September 29, 2008, Moody's Investors Service confirmed Claire's Stores, Inc., long term ratings, including its probability of default rating at Caa1. In addition, Moody's affirmed Claire's speculative grade liquidity rating at SGL-4. The rating outlook is negative. The confirmation reflects Moody's view that the Caa1 appropriately reflects higher-than-average probability of default over the near to medium term, given what Moody's views as an overleveraged and unsustainable capital structure. It also reflects the view that the company will be able to fund its free cash flow deficits with excess cash over the next 12 months, providing it some time in order to improve operating performance. The TCR related on May 6, 2008, that Standard & Poor's Ratings Services lowered its corporate credit rating on Claire's Stores Inc. to 'B-' from 'B'. At the same time, S&P lowered the ratings on the company's US$1.65 billion senior secured credit facilities to 'B' from 'B+', its US$600 million senior unsecured notes to 'CCC+' from 'B-', and its US$335 million senior subordinated notes to 'CCC' from 'CCC+'. S&P said the outlook is negative. CLUB AT WATERFORD: Amends List of 20 Largest Unsecured Creditors ---------------------------------------------------------------- The Club at Waterford, LP, submitted to the U.S. Bankruptcy Court for the Western District of Texas an amended list of its 20 largest unsecured creditors: Entity Claim Amount ------ ------------ Greenberg Traurig $71,104 2200 Ross Avenue, Suite 5200 Dallas, TX 75201 Woodside Partners $60,500 812 Anacapa Street, Suite A Santa Barbara, CA 93101 B & B Electric $50,500 P.O. Box 4262 Austin, TX 78765 LCRA $50,000 11612 Bee Caves Rd. Bldg. 1, Suite 1501 Austin, TX 78738 Plant It, Inc. $39,116 10010 Creekwood Path Spring Branch, TX 78070 Apex Drilling $38,904 P.O. Box 867 Marble Falls, TX 78654 Textron Financial Corp./E-Z-Go $34,880 Dept. AT 40219 Atlanta, GA 31192-0219 Freeman & Corbett LLP $27,957 8500 Bluffstone Court, Suite B-104 Austin, TX 78759 Lone Star Geo Products, LLC $25,088 P.O. Box 60984 Charlotte, NC 28260 Planned Environment $22,734 2219 West Lake Drive Austin, TX 78746-2932 Willis-Sherman Associates, Inc. $19,204 310 Main Street Marble Falls, TX 78654 Marsh & Associates $18,382 383 Inverness Parkway Englewood, CO 80112 Triple S Petroleum $17,591 P.O. Box 6156 Austin, TX 78762 Contech Bridge Solutions, Inc. $16,063 9025 Centre Point Dr., Suite 400 Westchester, OH 45069 Home Depot/Citibank USA, NA $15,814 c/o LTD Financial Services, LP 7322 Southwest Freeway, Suite 1600 Houston TX 77074 Based in Marble Falls, Texas, The Club at Waterford, LP, is a single real estate debtor. The company filed for bankruptcy protection on Oct. 6, 2008 (Bankr. W.D. Tex. Case No. 08-11925). Joseph D. Martinec, Esq., at Martinec, Winn, Vickers & McElroy, P.C., represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of between $50 million and $100 million, and debts of between $10 million and $50 million. CLUB AT WATERFORD: May Employ Martinec Winn as Bankruptcy Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Texas granted The Club at Waterford, LP, permission to employ Martinec, Winn, Vickers & McElroy, P.C. as bankruptcy counsel. As the Debtor's bankruptcy counsel, Martinec Winn will provide these services: a) Counseling with the Debtor concerning the conduct of a bankruptcy case, preparation of the schedules, statement of affairs, Chapter 11 Disclosure Statement and Plan, and all other documents needed to conduct the case; b) Attendance, with the Debtor at the Section 341 meeting and the confirmation hearing in this case; c) Conferences and negotiations with the creditors in this case, especially with secured creditors concerning the issues of value of collateral, adequate protection, curing defaults, and other matters; d) Drafting and filing any needed amendments to the Disclosure Statement and Plan, objections to the Disclosure Statement and Plan, objections to claims, motions to sell or buy property, motions to approve postpetition financing, motions for orders approving the use of cash collateral, and other matters necessary to complete the Plan successfully; e) Representing the Debtor in connection with any motions to lift stay or adequate protection motions during the case; f) Counseling with the Debtor as needed throughout the course of the case; and g) Other matters as may be agreed upon by Debtor and Applicant which are related to business operations that may occur during the Plan process, including collection matters and litigation in federal and state court as may be required to enforce claims. Applicant is authorized to draw down on the retainer or funds for professional fees made available under any approved cash collateral order monthly, after 15 day negative notice to the Debtor, the United States Trustee, the top 20 unsecured creditors or any unsecured creditor committee, and any cash collateral creditor, in an amount not to exceed 100% of the expenses and 80% of the fees for services rendered that month. Any amount drawn down remains subject to an approved fee application. As compensation for their services, Martinec Winn's professionals bill: Hourly Rate ----------- Joseph D. Martinec, Esq. $350 Rebecca S. McElroy. Esq. $350 Ed Winn, Esq. $300 Lee Vickers, Esq. $300 Legal Assistants $90 Law Clerks $35 Administration $20 Joseph D. Martinec, an attorney at Martinec Winn, assured the Court that the firm has no connection with the Debtor, its creditors, any other party in interest, their respective attorneys and accountants, the U.S. Trustee, or any person employed in the office of the U.S. Trustee. Based in Marble Falls, Texas, The Club at Waterford, LP is a single real estate debtor. The company filed for bankruptcy protection on Oct. 6, 2008 (Bankr. W.D. Tex. Case No. 08-11925). Joseph D. Martinec, Esq., at Martinec, Winn, Vickers & McElroy, P.C., represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of between $50 million and $100 million, and debts of between $10 million and $50 million. CLUB AT WATERFORD: Secured Creditor Asks Court to Dismiss Case -------------------------------------------------------------- Stark Master Fund Ltd., a secured creditor of The Club at Waterford, LP, asks the U.S. Bankruptcy Court for the Western District of Texas to dismiss the Debtor's Chapter 11 bankruptcy case or, in the alternative, determine that the Debtor is subject to Sec. 362(d)(3), because: a) there is substantial and continuing loss to and diminution of the estate and there is no reasonable likelihood of rehabilitation; and b) the Debtor filed this bankruptcy in bad faith to delay Stark's scheduled foreclosure of its property. Stark states that on or about May 19, 2006, Stark's predecessor in interest, First National of America, Inc., made a loan of $28,600,000 to the Debtor for use in developing an approximately 561 acre tract near Austin, Texas to be known as the Waterford Club. Stark says that it is the sole beneficiary of the promissory note and holds a duly perfected first-priority security interest in the property and the golf course. As of the Petition Date, the Debtor owed Stark $28,345,295 in unpaid principal and $1,695,599 in unpaid interest. Stark tells the Court that the Debtor has completed but is not operating an 18-hole golf course on the property, that it has generated no income in at least two years, and that it cannot generate income through sales nor operate its assets to create cash flow. In addition, Stark tells the Court that the Debtor's principals do not have the money to fund a plan and because it has no access to funds, the Debtor will not be able to make the approximately $230,000 per month payments required by Sec. 362(d)(3)(B). Because the Debtor will not be able to comply with Sec. 362(d)(3), the stay should lift on or around Jan. 5, 2009, thus precluding any possibility that the Debtor can be rehabilitated. Based in Marble Falls, Texas, The Club at Waterford, LP is a single real estate debtor. The company filed for bankruptcy protection on Oct. 6, 2008 (Bankr. W.D. Tex. Case No. 08-11925). Joseph D. Martinec, Esq., at Martinec, Winn, Vickers & McElroy, P.C., represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of between $50 million and $100 million, and debts of between $10 million and $50 million. CLUB AT WATERFORD: Files Schedules of Assets and Liabilities ------------------------------------------------------------ The Club at Waterford, LP, filed with the U.S. Bankruptcy Court for the Western District of Texas, its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $49,657,500 B. Personal Property $1,850,043 C. Property Claimed as Exempt D. Creditors Holding $30,866,361 Secured Claims E. Creditors Holding $55,051 Unsecured Priority Claims F. Creditors Holding $4,103,343 Unsecured Non-priority Claims ----------- ----------- TOTAL $51,507,543 $35,024,755 Based in Marble Falls, Texas, The Club at Waterford, LP, is a single real estate debtor. The company filed for bankruptcy protection on Oct. 6, 2008 (Bankr. W.D. Tex. Case No. 08-11925). Joseph D. Martinec, Esq., at Martinec, Winn, Vickers & McElroy, P.C., represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of between $50 million and $100 million, and debts of between $10 million and $50 million. COMMERCIAL ALLOYS: Case Summary & 18 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Commercial Alloys Corporation 1831 E. Highland Road Twinsburg, OH 44087 Bankruptcy Case No.: 08-64060 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- M & M Drying, Ltd 08-64058 Chapter 11 Petition Date: November 26, 2008 Court: Northern District of Ohio (Canton) Judge: Russ Kendig Debtor's Counsel: Marc Merklin, Esq. mmerklin@brouse.com Brouse McDowell, LPA 388 S. Main Street, Suite 500 Akron, OH 44311 Tel: (330) 535-5711 Fax: (330) 253-8601 Estimated Assets: $10,000,000 to $50,000,000 Estimated Debts: $50,000,000 to $100,000,000 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ PSC Metals Inc. - $927,806 P.O. Box 643476 Cincinnati, OH 45264 AAP St. Marys Corporation - $813,219 1100 McKinley Road Saint Marys, OH 45885 Wise Recycling LLC - $643,784 857 Elkridge Landing Rd., #600 Linthicum Heights, MD 21090 Traco - $552,480 Yaffe Companies, The - $500,171 Progress Rail Services - $400,736 Indalex Inc. - $385,915 Wolfe Metals Company - $349,712 Huron Valley Steel Corp - $332,342 Suncoast Metals, LLC - $312,582 Kormet Enterprises, Inc. - $218,160 Joseph Freedman Co., Inc. - $202,733 Louisiana Scrap Metals - $189,912 Hayes Lemmerz - $187,596 Graham Architectural Products - $183,942 David J. Joseph Co. - $176,885 Macon Iron & Paperstock - $174,666 Metal Source, LLC - $145,838 The petition was signed by Lawrence C. Musarra, president of the company. COMMERCIAL ALLOYS: Files for Chapter 11 Bankruptcy in Ohio ---------------------------------------------------------- Commercial Alloys Corp. along with six of its affiliates sought protection from its creditors under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Ohio, citing unfavorable trading prices and inefficiencies at its plants, according to Erik Larson of Bloomberg News. The company said it lost revenue due to (i) poor inventory control; (ii) inefficient purchasing; (iii) inexperienced personnel; and (iv) a 50-day shutdown of a metal shredder, Mr. Larson relates. The company further said that the unfavorable impact of rising prices for contracts sold on the London Metal Exchange attributed to the bankruptcy filing, Mr. Larson continues. National City Corp., Mr. Larson says, cuts the company's credit when it defaulted on its obligation. The company owes $23.5 million on a 2006 revolving credit facility to its lenders who are units of National City, Mr. Larson citing papers filed with the Court. The company, Mr. Larson says, has assets of less than $50 million and debts of more than $100 million in its filing. Commercial Alloys' units are M&M Drying, National Transportation Solutions, Commercial Alloys Sales, Aluminum One of Alabama, Minerva Real Estate, GC Brown Family LP and 7525 Roy Owens Blvd., Mr. Larson notes. Commerical Alloys Corp. -- http://www.commercialalloys.com/-- provides aluminum scrap collections. COMMERCIAL MORTGAGE: Owes More Than $60MM in Promissory Notes ------------------------------------------------------------- Sean F. Driscoll at Rrstar.com reports that Commercial Mortgage & Finance Co. owes more than $60 million in promissory notes. According to Rrstar.com, the promissory notes had higher interest rates than traditional certificates of deposit and were offered by Commercial Mortgage on six- or nine-month terms. They weren't insured by the Federal Deposit Insurance Corp., Rrstar.com relates. They were purchased by individuals and firms that used them as investments for their savings, Rrstar.com states. Many investors rolled the notes over when they were due, according to the report. Court documents say that the investments range from more than a half-million dollars spread over multiple notes to thousands of dollars. Commercial Mortgage listed several businesses as holders of the promissory notes, Rrstar.com relates. Rrstar.com reports that a creditors meeting will be held at 10 a.m. on Dec. 12, 2008, at the Coronado Performing Arts Center, 314 N. Main Street, after a prior meeting was canceled because the venue couldn't accommodate the hundreds of people who attended the meeting. About Commercial Mortgage Rockford, Illinois-based Commercial Mortgage & Finance Co. offers promissory notes to customers on a nine- or 12-month term as an investment opportunity. The company filed for Chapter 11 protection on Oct. 7, 2008. Gregory J. Jordan, Esq., at Polsinelli Shalton Flanigan Suelthaus PC represents the Debtor in its restructuring effort. The company listed assets below $50,000 and liabilities below $50,000. CONSECO INC: A.M. Best Cuts Issuer Credit, Sr. Debt Ratings to b+ ----------------------------------------------------------------- A.M. Best Co. removed on November 20, 2008, all ratings from under review of Conseco, Inc. (Conseco) (Carmel, IN) [NYSE: CNO] and its core insurance subsidiaries. A.M. Best also has downgraded the issuer credit rating (ICR) and senior debt ratings to "b+" from "bb-" of Conseco. Concurrently, A.M. Best has affirmed the financial strength rating (FSR) of B+ (Good) and ICRs of "bbb-" of Conseco's core insurance subsidiaries. All the ratings have been assigned a negative outlook. These rating actions follow Conseco's recent completion of its plan to divest Conseco Senior Health Insurance Company (CSHI) (Bensalem, PA), which included a final capital contribution of $175 million to a newly formed independent trust. A.M. Best recognizes the favorable credit impact of the divestiture of CSHI and management's strategic efforts to stabilize Conseco's core insurance operations. However, given the significant equity market volatility and deteriorating investment and economic climate, A.M. Best is cautious regarding Conseco's ability to weather further declines in statutory or GAAP equity and the potential impact of additional investment losses without breaching its debt covenants. Specifically, A.M. Best believes that Conseco's level of financial flexibility is limited as its senior credit facility covenants require a debt-to-capital ratio below 30% (currently estimated at 28%) and minimum consolidated statutory surplus of $1.27 billion (roughly $1.43 billion as of September 30, 2008). A.M. Best notes that, consistent with the vast majority of the industry, Conseco's investment portfolio is in a substantial unrealized loss position mainly due to the widening of corporate credit spreads. A.M. Best believes that general account portfolios will experience further credit deterioration given the increased likelihood of rising defaults in corporate bonds and commercial mortgages in response to the severely stressed recessionary economic environment. Additionally, A.M. Best notes that Conseco's portfolio, consistent with industry peers, has a high percentage of unrealized losses related to bonds in the financial services sector, which may need to be impaired. Currently, Conseco is exploring several initiatives, which could potentially improve its statutory capital position materially. If one or more of these strategies are executed at favorable terms and overall economic conditions improve, A.M. Best would consider revising all rating outlooks to stable. These debt rating has been downgraded: Conseco, Inc. -- to "b+" from "bb-" on $300 million 3.5% senior unsecured convertible debentures, due 2035 The ICR has been downgraded to "b+" from "bb-" for Conseco, Inc. The FSR of B+ (Good) and ICRs of "bbb-" have been affirmed for the core life/health insurance subsidiaries of Conseco, Inc.: -- Bankers Life and Casualty Company -- Colonial Penn Life Insurance Company -- Conseco Health Insurance Company -- Conseco Insurance Company -- Bankers Conseco Life Insurance Company -- Conseco Life Insurance Company -- Washington National Insurance Company COVENTRY HEALTH: A.M. Best Keeps "B" FSR & "bb+" ICR for 3 Units ---------------------------------------------------------------- A.M. Best Co. on November 19, 2008, revised the outlook to negative from stable and affirmed the financial strength ratings (FSR), issuer credit ratings (ICR) and debt ratings of Coventry Health Care, Inc. (Coventry) [NYSE: CVH] (Delaware) and its subsidiaries. The negative outlook reflects Coventry's 34% decline in net income for the first nine months of 2008. The deterioration in earnings was driven by a 300 basis points increase in the commercial medical loss ratio as well as a 770 basis points increase in the Medicare Advantage medical loss ratio. Coventry implemented pricing actions and some operational improvements intended to reduce the medical loss ratio; however, earnings are not expected to return to the prior year's level in the near term. In addition, Coventry's financial leverage increased significantly following the Vista acquisition in 2007 and a $440 million credit facility borrowing in October 2008. The debt-to-capitalization ratio is expected to reach 35%-36% by year-end 2008 compared to 30.7% as of September 30, 2008. Earnings before interest and tax (EBIT) coverage has already declined to 7.7% as of September 30, 2008 compared to 13% as of year-end 2007 and is expected to drop further as the interest expense increases. Although the credit facility borrowing is intended to mitigate liquidity concerns related to the current economic environment, A.M. Best is concerned about the increased financial leverage combined with lower earnings and reduced dividends from the health plans. The ratings recognize Coventry's sufficient risk-based capitalization (RBC) level, growing business diversification and non-regulated cash flows. The company plans to support RBC levels at the subsidiaries through capital contributions as well as reduced dividends. Coventry's historical dependency on its regulated subsidiaries has diminished following the acquisitions of First Health Group Corporation (First Health) and Concentra workers compensation business (Concentra), which added diversification to Coventry's product portfolio and significantly expanded its geographic reach. The predominantly non-risk cash flow from First Health and Concentra have contributed to Coventry's non-regulated earnings growth as well as non-regulated cash flows. These debt ratings have been affirmed with a revised outlook to negative from stable: Coventry Health Care, Inc. -- "bbb-" on $250.0 million 5.875% seven year senior unsecured notes, due 2012 -- "bbb-" on $250.0 million 6.125% 10-year senior unsecured notes, due 2015 -- "bbb-" on $400.0 million 5.950% 10-year senior unsecured notes, due 2017 -- "bbb-" on $400.0 million 6.300% seven year senior unsecured notes, due 2014 The ICR of "bbb-" has been affirmed for Coventry Health Care, Inc., with a revised outlook to negative from stable. The FSR of A- (Excellent) and ICRs of "a-" have been affirmed with a revised outlook to negative from stable for these selected subsidiaries of Coventry Health Care, Inc.: * Carelink Health Plans, Inc. * Coventry Health and Life Insurance Company * Coventry Health Care of Georgia, Inc. * Group Health Plan, Inc. * HealthAmerica Pennsylvania, Inc. * HealthAssurance Pennsylvania, Inc. The FSR of B++ (Good) and ICRs of "bbb+" have been affirmed with a revised outlook to negative from stable for these subsidiaries of Coventry Health Care, Inc.: * Altius Health Plans * Coventry HealthCare of Iowa, Inc. * WellPath Select, Inc. * PersonalCare Insurance of Illinois, Inc The FSR of B++ (Good) and ICRs of "bbb" have been affirmed with a revised outlook to negative from stable for these subsidiaries of Coventry Health Care, Inc.: * First Health Life & Health Insurance Company * Cambridge Life Insurance Company * Coventry Health Care of Kansas, Inc. * Southern Health Services, Inc. The FSR of B+ (Good) and ICRs of "bbb-" have been affirmed with a revised outlook to negative from stable for these subsidiaries of Coventry Health Care, Inc.: * Coventry Health Care of Louisiana, Inc. * Coventry Health Care of Delaware, Inc. * Coventry Health Care of Nebraska, Inc. * HealthCare USA of Missouri, LLC * OmniCare Health Plan, Inc. An FSR of B (Fair) and ICRs of "bb+" have been affirmed with a revised outlook to negative from stable for these subsidiaries of Coventry Health Care, Inc.: * Vista Healthplan, Inc. * Vista Healthplan of South Florida, Inc. * Summit Health Plan, Inc. DELPHI CORP: Court Allows Reargument of Fraud Claim Order --------------------------------------------------------- Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York has issued a ruling with respect to Appaloosa Management, L.P. and A-D Acquisition Holdings, LLC's request under Rule 9023 of the Federal Rules of Bankruptcy Procedure, and Rule 9023-1 of the Local Rules for the United States Bankruptcy Court for the Southern District of New York, for an order: (i) granting reargument of the Court's August 11, 2008, decision and, upon reargument, dismissing: * Claims One (Breach of Contract against Investors under the Equity Purchase and Commitment Agreement) and Two (Breach of Contract against the parties to the Commitment Letter Agreements) to the extent that such claims seek specific performance or damages against ADAH and AMLP in excess of $250 million and * Claims Three (claim for all defendants to perform under Delphi's confirmed plan pursuant to Section 1142 of the Bankruptcy Code) and Four (claim of fraud against Appaloosa) as against ADAH and AMLP, and (ii) striking paragraphs 71 through 83, 129, 130, and 132 of the Complaint, which provides for, among many allegations, that even before the Court confirmed Delphi's Plan of Reorganization on Jan. 25, 2008, Appaloosa engaged in efforts to avoid its obligations under the EPCA and undermine the consummation of the Plan. 2 In his short ruling, Judge Drain said that he is granting AMLP and ADAH's motion to reargue and strike, to the extent of hearing reargument. "The motion in all other respects, is denied," he ruled. Delphi Corp., in May 2008, sued AMLP and other parties in light of their refusal to comply with their prior agreement to provide $2,550,000,000 in equity exit financing to Delphi. Appaloosa's termination of their EPCA stalled the consummation of Delphi's Plan of Reorganization, which was confirmed by the Court January 25, 2008, and kept Delphi in Chapter 11. The defendants to Delphi's $2.55-billion lawsuit are: - Appaloosa Management L.P.; - A-D Acquisition Holdings, LLC; - Harbinger Del-Auto Investment Company, Ltd.; - Pardus DPH Holding LLC; - Merrill Lynch, Pierce, Fenner & Smith Incorporated; - Goldman Sachs & Co.; - Harbinger Capital Partners Master Fund I, Ltd.; - Pardus Special Opportunities Master Fund L.P.; and - UBS Securities LLC. Delphi still insists that Appaloosa wrongfully terminated the EPCA and disputes the allegations that it breached the EPCA or failed to satisfy any condition to the Investors' obligations thereunder as asserted by Appaloosa in its April 4 letter. Delphi's fraud claims rely upon the events and allegations made by Delphi in Paragraphs 71-83 of its $2,550,000,000 lawsuit against Appaloosa and other parties. The allegations included that even before the Court confirmed Delphi's Plan of Reorganization on Jan. 25, 2008, Appaloosa engaged in efforts to avoid its obligations under the EPCA and undermine the consummation of the Plan. Appaloosa notes that while those "unsupported and incorrect allegations" have been dismissed as against every other defendant, Delphi continues to advance the false allegations as the "core" of its claims against Appaloosa. Accordingly, Appaloosa asked the Court to strike Par. 71-83. According to Reuters, Judge Drain said at a hearing on Oct. 8 that that he will reconsider Delphi's fraud claim against Appaloosa that he had earlier dismissed. "It seems to me that I was unclear in what aspects of the allegations needed to be dealt with," Judge Drain said. "I may well have been wrong." In that light, the parties submitted various memorandums that back their positions with respect to Delphi's fraudulent omission claim against Appaloosa. Delphi wants its fraudulent omission claim reinstated, citing that the claim is in compliance with Rule 9(b) of the Federal Rules of Civil Procedure. 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, Issue No. 151; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Court Gives Go Signal for Auction of Exhaust Business ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York approved the proposed bidding and auction procedures for the sale of Delphi Corp.'s exhaust business. The Official Committee of Unsecured Creditors in Delphi's cases says that it is particularly concerned that the sale of the exhaust business may not at that price may not benefit the Debtors, and it could be more advantageous to retain the business. The Committee, though, has not filed a formal objection to the sale, noting that its professionals have not yet had the opportunity to complete its due diligence with respect to the contemplated transaction. As reported by the Troubled Company Reporter, Delphi Corp., and its debtor affiliates Delphi Automotive Systems LLC, and Delphi Technologies, Inc., sought permission to sell their exhaust business to Bienes Turgon S.A. de C.V., subject to further market test through an auction on December 11. John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, relates that as part of its transformation plan, Delphi has identified its exhaust business as a non-core business subject to disposition. Accordingly, following broad marketing efforts, on November 10, 2008, Delphi Corp. and its debtor and non-debtor affiliates entered into a Master Sale and Purchase Agreement with Bienes Turgon S.A. de C.V. The Agreement contemplates a global divestiture of the Exhaust Business to Bienes Turgon for a purchase price of $17 million, subject to certain adjustments. Sale of Global Exhaust Biz. Delphi's global exhaust emissions business produces a broad array of catalytic converters and related assemblies that are sold globally and used in a variety of gas and diesel emissions control applications. The company began making catalytic converters in 1974 as the AC Spark Plug division of GM and at the time of the Spin-Off, the operations became part of Delphi. The Exhaust Business is part of Delphi's Powertrain business, a core business of the Company. The Exhaust Business has a global platform with operations at six primary manufacturing sites in Australia, China, India, Mexico, Poland, and South Africa, all of which -- other than the Mexican and South African sites -- also manufacture other Delphi products. Except for the Mexican site where Delphi Entities hold a minority interest in one joint venture, Katcon S.A. de C.V., all sites are wholly-owned or controlled by the Delphi Entities. Sixty percent of the Katcon joint venture is owned by Bienes Turgon and 40% is owned by Delphi Corp's non-Debtor affiliate, Delphi Controladora, S.A. de C.V. Delphi Automotive Systems (Holding), Inc. owns 99.99% of DCSA, and Delphi International Holdings Corp. owns .01% of DCSA. Both DASHI and DIH are Debtors. Pursuant to this transaction, the applicable non-Debtor Seller will be selling its equity interest in Katcon. In addition to certain engineering capabilities at the manufacturing sites, the Exhaust Business also has engineering resources located at technical centers in Luxembourg and Michigan where engineering personnel carry out their responsibilities to develop and test the Exhaust Business' products and associated processes. The dedicated workforce for the Exhaust Business is comprised of approximately 135 salaried and 158 hourly employees. Of these employees, 23 are U.S. employees, all of whom are salaried employees (primarily engineers). The Exhaust Business is benefiting because of increasingly stringent regulatory exhaust emission requirements in the global market which aim to reduce noxious emissions. For the year ended December 31, 2007, the Exhaust Business achieved revenue of $294.4 million and EBITDA of $19.1 million on a pro-forma basis, excluding certain Delphi Because of the increasingly stringent environmental requirements, the company believes that with the right buyer, the Exhaust Business has strong growth prospects. The revenue from the Exhaust Business is comprised of two different value streams: (i) 76% is through a customer-directed purchase process through which the Delphi Entities obtain catalyst material from a specified supplier and pass it to the customer, receiving a handling fee but not otherwise adding value to the product and (ii) 24% is generated from sale of product to which Delphi has added content, thereby increasing its value. Nearly two-thirds of the Exhaust Business sales are to GM and its affiliates, virtually all of which is sold outside of the U.S. In addition to its customer relationship with GM, the Exhaust Business has customer relationships with many other leading original equipment manufacturers, including AvtoVAZ, Brilliance, Ford, and Renault. Bidding Procedures The Sale of the Exhaust Business would be subject to higher or otherwise better offers. The Debtors propose a December 8, 2008 at 11 a.m. (prevailing Eastern time) deadline to submit bids for the Exhaust Business. In light of the short timeframe, the Debtors are commencing the process of contacting potential bidders and will open the virtual data room to such parties even prior to Nov. 24 hearing. Bids must at least have a value equal to the purchase price plus the amount of the Break-Up Fee, plus $650,000 (approximately $18,160,000). If the Selling Debtor Entities receive at least one "qualified bid" in addition to that of the Bienes Turgon, they would conduct an auction on December 11, 2008. Delphi will seek approval of the sale to Bienes Turgon or to the winning bidder on December 17, 2008 at 10:00 a.m. Objections are due December 10, 2008 at 4:00 p.m. A full-text copy of the Court-approved Bid Procedures is available for free at: http://bankrupt.com/misc/delphi_exhaust_bsns_bidprocedures.pdf 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, Issue No. 151; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Delays Hearing on Bankruptcy Exit Plan to Dec. 17 -------------------------------------------------------------- The hearing to consider preliminary approval of the Delphi Corp.' and its affiliates' proposed modifications to their confirmed First Amended Joint Plan of Reorganization has been adjourned to 10:00 a.m. on December 17, 2008. Delphi presented to the U.S. Bankruptcy Court for the Southern District of New York changes to an already confirmed Plan after Appaloosa Management, L.P., and other investors backed out from their commitment to provide $2.550 billion in exit financing. The new plan does not require financing from plan investors, but requires more funding from primary customer General Motors Corp., which is facing its own liquidity crisis, and $3.75 billion from an exit debt financing and a rights offering. The Preliminary Plan Modification Hearing has been adjourned three times. Under the original schedule, the Debtors contemplated an October 23, 2008 preliminary hearing and emergence from bankruptcy by Dec. 31, 2008. Delphi Corp. has signed deals with General Motors Corp. and its DIP Lenders, led by JPMorgan Chase Bank, N.A., in order to have access to borrowed cash until mid-2009. The Debtors' financing deals mature Dec. 31, 2008. On Oct. 3, the Debtors submitted proposed modifications to their Plan of Reorganization. Under the modified plan, the Debtors targeted a Dec. 17 confirmation hearing, and a Chapter 11 exit by year-end. The modified plan does not require, in addition to $4,700,000,000 of debt exit financing, Appaloosa's $2,550,000,000 cash-for-equity investment, which was the highlight of the Court- confirmed, but unconsummated, Jan. 25, 2008 PoR. The modified plan requires debt exit financing of $2.75 billion plus a $1,000,000,000 raised through a rights offering. Delphi, however, has said that "in the face of the current unprecedented turbulence in the credit markets and uncertainty in the automobile industry," it does not anticipate emerging from chapter 11 prior to December 31, 2008, when its financing deals mature. "Despite the efforts of the federal government to provide stability to the capital markets and banks, the markets have remained extremely volatile and liquidity in the capital markets has been nearly frozen, resulting in an unprecedented challenge for the Debtors to successfully attract emergence capital funding for their Modified Plan, particularly in light of the current conditions in the global automotive industry," John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, said, in a court filing. In its third quarter report on Form 10-Q, General Motors Corp., Delphi's primary customer, admitted, "Given the current credit markets and the challenges facing the automotive industry, there can be no assurance that Delphi will be successful in obtaining $3.8 billion in exit financing to emerge from bankruptcy." GM has recorded Delphi-related charges $4.1 billion for nine months ended Sept. 30, 2008. GM recorded a net loss of $2,542,000,000 on $37,503,000,000 of revenues for three months ended Sept. 30, 2008, compared with a net loss of $38,963,000,000 on $43,002,000,000 of sales during the same period in 2007. General Motors, along with Ford Motor Company and Chrysler LLC, has asked Congress to grant the U.S. carmakers access to $25 billion of the $700 billion Troubled Asset Relief Program approved by Congress to bail out financial institutions. Congress is expected to tackle on Nov. 18 and 19 the proposed bailout, which, according to reports, may be necessary to save the U.S. automakers from collapse or bankruptcy. A bankruptcy filing for GM could shatter its former unit Delphi's plans to finally exit bankruptcy this year or early next year, according to a report by Bloomberg News. "If GM fails, it's likely the Delphi reorganization fails, and Delphi converts to a case under Chapter 7 -- a liquidation," Nancy Rapoport, a law professor at the University of Nevada-Las Vegas, in an e-mail, according to Bloomberg News. "For the creditors of Delphi, this of course isn't optimal, and the usual issues in Chapter 7, determining the liquidation value of the company, will apply." 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, Issue No. 151; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Gets Six Months Extension of $4.35-Bil. DIP Loan ------------------------------------------------------------- Delphi Corp. won approval from the U.S. Bankruptcy Court for the Southern District of New York to extend until June 30, 2009, the maturity date of its $4.35 billion DIP financing, Bloomberg News reports. Delphi, according to the report, can use proceeds from its $4.35 billion bankruptcy loan to fund operations while working to emerge from Chapter 11 protection. Delphi previously contemplated a Dec. 31, 2008 emergence from bankruptcy but has found difficulty accessing credit. Delphi in October presented to the Bankruptcy Court changes to an already confirmed Plan after Appaloosa Management, L.P., and other investors backed out from their commitment to provide $2.550 billion in exit financing. The new plan does not require financing from plan investors, but requires more funding from primary customer General Motors Corp., which is facing its own liquidity crisis, and $3.75 billion from an exit debt financing and a rights offering. Delphi has deferred seeking approval of the plan and has instead sought an extension if its bankruptcy loan. The Debtors, on Nov. 7, filed with the Bankruptcy Court sought authority to continue their use of the proceeds from their DIP Facility through June 30, 2009, by entering into an accommodation agreement with JPMorgan Chase Bank, N.A., as administrative agent, and certain lenders that constitute the majority of holders by amount of Delphi's two most senior tranches of its DIP Credit Facility -- the "Required Lenders". Delphi stated that while the original form of the accommodation agreement was acceptable to GM, Delphi agreed with GM to reconsider certain of the subsequent amendments agreed to between Delphi and the "required lenders" under the DIP Facility. Delphi stated its intent to engage in discussions with GM and certain of Delphi's lenders under the existing DIP financing agreement in an attempt to identify acceptable changes to the documents presented to the Court. Delphi said that when filed, the Accommodation Agreement reflected the support of the administrative agent and the anticipated support of the Required Lenders for Delphi's transformation efforts, despite the current economic downturn and the unprecedented turmoil in the capital markets. The company made various changes to the Accommodation Agreement since the Nov. 7 filing in order to obtain support from as many DIP lenders as practicable and has received signature pages from more than the Required Lenders needed to implement the agreement. Delphi Will Go Through Half Its Cash By March Delphi, in a Nov. 28 filing with the Securities and Exchange Commission said that it would provide supplemental financial in connection with their solicitation of lenders' consents to the Accommodation Agreement. This information includes near-term forecast updates to cash flows and liquidity levels through March 31, 2009: (in millions) 2008 | 2009 -------------------------------------------|------------------ Actual | Projected Cash June Sep Oct | Nov Dec | Jan Feb Mar -------------------------------------------------------------- U.S. Cash $148 $1,136 $793 $417 $198 | $34 $28 $26 | Non-U.S. | Cash 985 788 843 862 1,176 | 935 857 715 -------------------------------------------------------------- Consoli- 1,133 1,904 1,636 1,279 1,374 | 969 885 741 ted Cash | -------------------------------------------------------------- Availa- bility DIP 613 138 46 - - | - - - GM Support 300 - - 300 300 | 300 215 110 -------------------------------------------------------------- Total $ 913 $138 $46 $300 $300 | $300 $215 $110 Avai- lability | -------------------------------------------------------------- Cash and | Availa- | bility $2,046 $2,042 $1,682 $1,579 $1,674 $1,269 $1,100 $851 ============================================================== DIP | Revolver | Balance 311 465 511 397 397| 370 370 370 GM Agreement | Balance - - - - - _ 85 190 | Memo: Borrowing Base Cash Collateral | - - - - 200| 200 155 150 According to Bloomberg News, the disclosure means that Delphi will burn through $633 million in cash from December through March, or almost half its reserves. The Debtors' $4,350,000,000 DIP facility consists of: Tranche Facility ------- -------- A $1,100,000,000 first priority revolving Credit facility B $500,000,000 first priority term loan C Approximately $2,750,000,000 second priority term loan. Through the Accommodation Agreement, certain Tranche A Lenders and Tranche B Lenders would agree to, among other things, allow the Debtors to continue using the proceeds of the DIP Facility notwithstanding, among other things, the DIP Facility's maturity date of December 31, 2008. Delphi is facing opposition from some of its lenders, who, according to CNNmoney.com, say the other lenders who agreed to the extension arranged a "sweetheart deal" for themselves. The third lender group who said the arrangement would "trample" their rights by giving additional liens to the other lenders that have consented to the change, Dow Jones reports. The lenders that are opposing the loan changes said their collateral is at risk as Delphi burns through cash. The opposing lenders also said a subset of lenders, led by JPMorgan, would see $200 million in unsecured claims elevated to first-priority lien status. 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, Issue No. 151; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Tranche C Lenders, et al., Balk at DIP Loan Extension ------------------------------------------------------------------ Greywolf Capital Management, LP, Tranche C Lender under Delphi Corp.'s DIP Credit Agreement, opposes an extension of the loan's maturity date, contending that Delphi sought an extension of the maturity date, without adhering to the requirements of the DIP Facility. As reported in today's Troubled Company Reporter, according to a Bloomberg News report, Delphi won approval from the U.S. Bankruptcy Court for the Southern District of New York to extend until June 30, 2009, the maturity date of its $4.35 billion DIP financing. Ronald R. Sussman, Esq. at Cooley Godward Kronish LLP, in New York, notes that Delphi, expecting that DIP Lenders' unanimous consent for the extension of the maturity date of the DIP Credit Agreement is not possible, seeks to force Greywolf into indentured servitude by holding by hostage for an additional six months, its funds in excess of $100,000,000, Mr. Sussman says. This, he adds is in direct contravention of the terms of the DIP Credit Agreement. To note, the extension of the maturity date of the DIP Credit Agreement is prohibited by the plain terms of the DIP Credit Agreement. The extension of the maturity date of the DIP Credit Agreement can only be obtained through a unanimous consent of all the Lenders, Mr. Sussman contends. M.D. Sasse Re/Enterprise Portfolio Company L.P., another Tranche C Lender, shares Greywolf's contentions regarding the need for the Debtors to get a unanimous consent of the Lenders as a requirement to obtain approval to supplement the DIP Credit Agreement. Other Tranche C Lenders also asked the Court to deny the terms of the proposed extension, citing that Delphi is seeking to elevate $200,000,000 of pre-existing unsecured hedging obligations to first priority liens status, thereby diluting the liens held by all first-lien lenders and priming holders of Tranche C Loans, with all these being done to the Lenders at a time when macroeconomic conditions and the automotive industry in particular, are their weakest point in decades. Furthermore, the Tranche C Collective asks the Court, pursuant to Sections 361(e) and 363(e) of the Bankruptcy Code in exchange for the Debtors' continued use of the collateral in these Chapter 11 cases. The Tranche C collective is composed of these Lenders: -- Sberdeen Loan Funding Ltd. -- Anchorage Capital Master Offshore, Ltd. -- Anchorage Crossover Credit Offshore Master Fund, Ltd. -- Carlson Capital, L.P -- Geer Mountain Financing Ltd. -- Highland Credit Opportunities CDO Ltd. -- Hillmark Funding Ltd. -- Luxor Capital, LLC -- Mariner LDC -- Mariner Tricadia Credit Strategies Master Fund Ltd. -- Monarch Alternative Capital LP -- OHP CBNA Funding LLC -- Pentwater Credit Partners, Ltd. -- RiverSource Investments, LLC -- Silver Point Capital Fund, L.P. -- Spectrum Investment Partners, L.P. -- Stoney Lane Funding Ltd. -- Tricadia Distressed and Special Situations Master Fund Ltd. -- West Gate Horizon Advisors -- WhiteHorse I, Ltd. -- Whitehorse II, Ltd. -- Whitehorse III, Ltd. -- Whitehorse IV, Ltd. Susheel Kirpalani, Esq., at Quinn Emmanuel Urquhart Oliver & Hedges, LLP, in New York, told the Court that the relief requested by the Tranche C Collective is narrowly tailored to the harms to be avoided, and is warranted when: (i) traditional means of adequate protection are not available based on the unique facts of these cases; and (ii) the Accommodation Agreement ensures the Collateral's trend toward decline will continue at alarming rate. Moreover, Mr. Kirpalani asserts, in operating the Debtors' businesses post-maturity, the Court should take measures, pursuant to Section 1107(a) of the Bankruptcy Code, to establish a closer watch over the estates and ensure that the rights of all parties in interest are continuously monitored consistent with the Bankruptcy Code, including the priority provisions therein and pursuant to the Court's prior DIP financing orders. Select Tranche A and B Lenders also objected to the Accommodation Agreement. Calyon New York Branch, a Tranche A Lender under the DIP Credit Agreement, asked the Court to deny the Debtors' motion or in the alternative, direct the Debtors and their Agents to count votes for or against the proposed Accommodation Agreement in accordance with the voting rules set out in the DIP Credit Agreement. Calyon contends that there are provisions of the DIP Credit Agreement that prohibit modifications of the type sought in the Proposed Accommodation Agreement which the Debtors did not discuss in their motion. In an addition, an ad hoc group of Tranche A and B DIP Lenders asked the Court to direct the Debtors to provide adequate protection for the use of their collateral. Represented by David Neier, Esq., at Winston & Strawn LLP, in New York, the Ad Hoc Group clarifies that it would support an accommodation agreement in aid of the Debtors' reorganization. However, the Ad Hoc Group wants the Accommodation Agreement, in its current form, denied because, among other things, the Debtors seek to provide liens for $200,000,000 of presently unsecured Hedging Obligations of the Debtors, and the liens will be pari passu with the DIP liens granted to the Ad Hoc Group, even though the Debtors will be in default of the DIP Credit Agreement on the maturity date, December 31, 2008. Other key parties, like the Official Committee of Equity Security Holders and the Official Committee of Unsecured Creditors, expressed support on the Accommodation Agreement. The Equity Committee said some of the lenders have been overreaching in certain respects, however it believes that the Debtors have sought the best and most beneficial arrangement they deem possible while attempting to resolve the issues raised by the lenders under the DIP Facility. The Creditors Committee says that while it does not object to other concessions the Debtors propose to make to the DIP lenders in the Accommodation Agreement, including to the Tranche C lenders, the Committee submits that granting voting rights where none currently exist makes little sense and increases the risk that actions of the Tranche C lenders may negatively affect the Debtors' restructuring efforts. The Debtors, in response to the objections, say that notwithstanding the various objections filed in opposition to the Accommodation Motion, nearly all of the Objecting Lenders actually agree that an accommodation is the preferred outcome. 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, Issue No. 151; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) EDUCATION RESOURCES: Asks Court to OK PNC Bank Collection Deals --------------------------------------------------------------- The Education Resources Institute, Inc., seeks permission from the U.S. Bankruptcy Court for the District of Massachusetts to enter into a collection services agreement with PNC Bank, N.A., to manage the collection of certain student loans issued by PNC Bank. In exchange, the Debtor will be paid for the services by being entitled to retain a percentage of the cash it recovers on defaulted student loans. Although the Debtor is not currently honoring its guaranty obligations, student loans continue to default, it has approached several lenders and discussed the terms by which it would perform collection management services for the lender's student loan portfolio, Gina Lynn Martin, Esq., at Goodwin Procter LLP, in Boston, Massachusetts, tells the court. Subject to the terms of the PNC Collection Agreement, the Debtor will be granted the authority to collect, settle, enforce, through commencement of litigation, enter into forbearance agreements, payment plans with respect to the defaulted loans. The Debtor has agreed to provide PNC Bank with periodic reports regarding its management of PNC Bank's portfolio. The PNC Collection Agreement may be terminated by either party on 30 days' notice. The Debtor believes that approval of the PNC Collection Agreement is in the best interest of the estate, as it will provide an ongoing source of revenue to fund its operations. The Debtor, however, didn't disclose how much it will be paid under the Collection Services Agreement. The Bankruptcy Court has denied the Debtor's request to expeditiously hear the request. 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. 16; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) FORD MOTOR: In Talks With Union to Stop Idled Worker Payment ------------------------------------------------------------ General Motors Corp., Ford Motor Co., and Chrysler LLC are negotiating with the United Auto Workers union to stop a program that pays idled workers, Matthew Dolan at The Wall Street Journal reports, citing people familiar with the matter. Gary Haber at The News Journal relates that "jobs bank" is a unique protection for laid-off workers. According to the report, laid-off workers are placed in the jobs bank, where they can get about 95% of their usual pay and benefits. WSJ says that GM, Ford Motor, and Chrysler are trying to eliminate or scale back the program as part of an effort to secure a $25 billion loan from the government. The News Journal states that the jobs bank doesn't start until laid-off employees exhaust a period of unemployment benefits and supplemental pay from the company. Citing GM spokesperson Tony Sapienza, the News Journal states that said that the workers can start benefiting from the jobs bank when they have been idled for 48 weeks. The report states that the workers would get unemployment benefits and supplemental pay of 85% of pay. GM, according to the report, can remain in the jobs bank for up to two years, but will lose their pay and benefits if they refuse a single job offer at a GM plant within 50 miles of their home plant, or turn down four job offers at GM plants more than 50 miles away. Critics say that the "jobs banks" are a disadvantage for GM, Ford Motor, and Chrysler, as they are an "overly generous benefit" at firms that report billions in losses, The News Journal states. The News Journal quoted UAW President Ron Gettelfinger as saying, "We're on the verge of eliminating that provision." UAW Wants Cos. to Curb Corporate Pay, Bonuses & Severance Pays Citing Gettelfinger, Reuters relates that Ford Motor, GM, and Chrysler should limit corporate pay, bonuses, and severance packages in return for government loans. Reuters quoted Mr. Getterlfinger as saying, "They need to establish that executive compensation is something that they're willing to curtail, as well as bonuses and 'golden parachutes' on exiting the business. They can also give the government an equity stake in the business." Mr. Gettelfinger said on CNN that the automakers need a loan to help them survive a tough period. According to WSJ, Mr. Gettelfinger said, "It's not just here in the United States and this is not a bailout, this is a loan, a bridge loan that will get us through until we can take a longer term look at what needs to be done in the industry." Union wages weren't the key cause of waning sales at the companies, Reuters states, citing Mr. Gettelfinger. 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 Nov. 11, 2008, Moody's Investors Service lowered the debt ratings of Ford Motor Company, Corporate Family and Probability of Default Ratings to Caa1 from B3. The company's Speculative Grade Liquidity rating remains at SGL-3 and the rating outlook is negative. In a related action Moody's also lowered the long-term rating of Ford Motor Credit Company to B3 from B2. The outlook for Ford Credit is negative. As reported in the Troubled Company Reporter on Oct. 10, 2008, Fitch Ratings downgraded the Issuer Default Rating of Ford Motor Company and Ford Motor Credit Company by one notch to 'CCC' from 'B-'. FORD MOTOR: To Cut CEO's Pay Package & Focus on Making Small Cars ----------------------------------------------------------------- Ford Motor Co. will present before the congress its business plan, which includes a reduction in CEO Alan Mulally's compensation package, Mike Spector, Mathew Dolan, and Greg Hitt at The Wall Street Journal report, citing a person familiar with the matter. According to WSJ, Ford Motor and General Motors Corp. directors met separately on Monday to vote on their viability plans to be presented to the Congress on Tuesday, to try to win support for $25 billion in low-cost loans from the federal government. Chrysler LLC top executives, WSJ relates, were finalizing their own plan to show that it can survive and return to profitability with government aid, after its private-equity owner Cerberus Capital Management LP reviewed the plan on Monday. Citing a source, WSJ states that it isn't yet clear how Mr. Mulally's pay package will be reduced, but Ford Motor is considering cutting off Mr. Mulally's salary until the firm becomes profitable again, or paying him through stock options. According to the report, Mr. Mulally has earned almost $50 million in total compensation since leading Ford Motor in 2006. WSJ reports that executive compensation became an issue when the Ford Motor, GM, and Chrysler asked the Congress for financial help in November 2008. Mr. Mulally, says WSJ, had been unwilling to accept a $1 yearly salary when he was asked during the first meeting of the Congress, and people familiar with the matter said that Ford Motor Executive Chairperson William Clay Ford and some other members of the company's board were unnerved by Mr. Mulally. Ford Motor to Focus on Small Cars Citing a person familiar with the matter, WSJ relates that Ford Motor will also mention in its business plan that it will shift to making small fuel-efficient cars and break from the past strategy of focusing mainly on large pick up trucks and sport-utility vehicles. According to the report, Ford Motor's plan would likely underscore its new fuel-efficient gasoline turbocharged direct- injection engines and bringing its high-mileage cars from its European operations to the U.S. Conway MacKenzie Says More Cuts Must be Implemented GM, Ford Motor, and Chrysler must implement more cuts, WSJ reports, citing restructuring firm Conway MacKenzie & Dunleavy senior managing director Van Conway. "I think you need to demonstrate sincerely that you are doing the very painful cuts -- white collar, blue collar, plant closings. They need to really look like they're suffering on the expense line so people believe they can make it," the report quoted Mr. Conway as saying. According to WSJ, a source said that Ford Motor and GM would be willing to seek further cost-cuts and concessions from the United Auto Workers union. The report says that once GM reaches an agreement with the United Auto Workers union on any wage or benefit concessions for a rescue of the company, Chrysler, Ford Motor will also insist on a similar arrangement. GM, according to the report, owes the health care trust for retiree union workers some $7.5 billion by 2010, which many suspect the company can't afford. Citing a source, WSJ says that UAW President Ron Gettelfinger is open to eliminating the jobs bank, which pays employees most of their wages even when they no longer work in plants, but Mr. Gettelfinger wants to see management sacrifices in return. The sacrifices, WSJ relates, would include limits on executive compensation and a retraining program that will help laid-off workers get high-tech jobs in areas like battery development for electric vehicles. WSJ relates that sources said that GM will plan more cuts to North American production capacity, an initiative to offer debt-holders equity to tidy its balance sheet, and cuts to executive pay, while aspects of the plan include goals to gain more labor concessions, and executive pay cuts. Citing a source, the report states that GM would also include in its plan cutting brands and details on new fuel-efficient vehicles and how the firm will meet new stringent federal mileage rules. The report says that GM hopes to start selling electric plug-in car Chevrolet Volt in 2010. Cerberus Capital is also interested in combining Chrysler with another firm, WSJ states. Cerberus Capital had discussed selling Chrysler to GM before the request for government aid, according to the report. Jeff Bennett at WSJ reports that Ford Motor is again considering selling its Swedish luxury vehicle maker Volvo Cars, saying on Monday that it will re-evaluate strategic options for the unit as part of a broader effort to strengthen Ford Motor's balance sheet. Ford Motor, according to WSJ, acquired Volvo Cars from Swedish truck maker AB Volvo for more than $6.5 billion in 1999. The review could take several months, during which time Volvo Cars will continue implementing a restructuring, which includes laying off a quarter of its workforce, states WSJ. Mr. Mulally had affirmed in November this year his decision in 2007 to keep Volvo Cars after a review of the advantages of selling the unit that year, according to the report. Mr. Mulally said last month that he was still committed to restoring Volvo Cars' financial health, the report states. According to WSJ, CSM Worldwide analyst Michael Robinet doubts that Ford Motor will be able to quickly find a suitor. The report quoted Mr. Robinet as saying, "Anyone who purchases Volvo would have to have very close ties to Ford because virtually every Volvo is using a Ford platform. It will be difficult because it's not like cutting a piece of pie that's already perforated and just cracking it off. They are very integrated and it could take years." AB Volvo said on Monday that it wasn't interested in purchasing back Volvo Cars from Ford Motor, WSJ reports. WSJ relates that GM, Ford Motor, and Chrysler were also devising alternative travel plans after the Congress criticized their CEOs for using expensive corporate jets to make their way to Capitol Hill. Ford Motor said on Monday that Mr. Mulally will drive by car to Washington this time, while Chrysler said that its CEO Robert Louis Nardelli has ruled out flying by private jet, according to the report. WSJ states that if the Congress approves the requests of GM, Ford Motor, and Chrysler for government financial assistance, the lawmakers would be called back to Washington next week. Jeff Green and John Lippert at Bloomberg News report that GM, Ford Motor, and Chrysler union leaders will hold an emergency meeting on Dec. 3 at the Detroit Marriott Hotel. Citing a person familiar with the matter, the report says that participants of the meeting will be asked to reopen a 2007 labor agreement to consider concessions. Sources said that GM also wants to change how it pays for a union retiree health care fund as part of a broader cost cutting plan designed to win government aid, Bloomberg states. 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 Nov. 11, 2008, Moody's Investors Service lowered the debt ratings of Ford Motor Company, Corporate Family and Probability of Default Ratings to Caa1 from B3. The company's Speculative Grade Liquidity rating remains at SGL-3 and the rating outlook is negative. In a related action Moody's also lowered the long-term rating of Ford Motor Credit Company to B3 from B2. The outlook for Ford Credit is negative. As reported in the Troubled Company Reporter on Oct. 10, 2008, Fitch Ratings downgraded the Issuer Default Rating of Ford Motor Company and Ford Motor Credit Company by one notch to 'CCC' from 'B-'. FRONTIER AIRLINES: Names C. Kenyon as Lynx Aviation's Interim Head ------------------------------------------------------------------ Frontier Airlines announced that Cameron Kenyon, the company's Vice President of Flight Operations, has been named interim President of Denver-based regional airline Lynx Aviation, effective November 21. Lynx is a subsidiary of Frontier Airlines Holdings, Inc. and operates feeder service for Frontier. Mr. Kenyon replaces Tom Nunn, who resigned as Lynx President in early November. "Cam has had a tremendous career with Frontier," said Sean Menke, Frontier president and CEO, "so moving him to the top leadership post at Lynx was a natural for me. His background as a pilot and Chief Pilot and then as Vice President of Flight Operations at Frontier gives Cam an ideal perspective on running our regional operation." Mr. Kenyon joined Frontier in 2000 as a pilot. He served as Director of Flight and Training Standards prior to being named Chief Pilot. He was promoted to Vice President of Flight Operations in 2007. Mr. Kenyon holds a JD degree from the University of Colorado School of Law and practiced law in Colorado for several years. Prior to receiving his JD, he graduated from the U.S. Naval Academy and served in the U.S. Navy as an instructor pilot. "It has been an honor for me to work with everyone in Flight Operations," Mr. Kenyon said. "At the same time, I am excited about the opportunity to serve with the professionals at Lynx, and to help a relatively young regional airline grow its customer base and increase its value to Frontier," he added. "It is a challenge that I look forward to." Lynx Aviation was formed by Frontier Airlines Holdings in September 2006, and began its feeder service from the Rocky Mountain Region into Denver in December 2007. About Frontier Airlines Inc. Headquartered in Denver, Colorado, Frontie2r Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. It operates jet service carriers linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, as 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. 27; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FRONTIER AIRLINES: Reaches Deal W/ IBT on Cabin Cleaners' Pay Cuts ------------------------------------------------------------------ Frontier Airlines and the International Brotherhood of Teamsters have reached an interim agreement providing for pay cuts for the airline's Union-represented 125 cabin cleaners over the next four years, according to the Denver Post. Matthew Fazakas, president of the Teamsters Local 961, told the newspaper that under the Agreement, Frontier's cabin cleaners "will take 6 percent pay cuts in the first and second years, 3 percent in the third year and 1 percent in the final year." Rocky Mountain News reports that the four-year deal "would not change employee benefits" and "stipulates that Frontier aircraft cleaners receive pay hikes if customer service agents get wage increases." The workers will vote on December 12, 2008, on whether to ratify the deal, says the report. Frontier in late October obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to amend its contracts with its Teamsters-represented mechanics. The Teamsters are appealing the ruling, which allows Frontier to outsource its aircraft maintenance, but only as "a last resort." Bill Rochelle of Bloomberg News notes that the Bankruptcy Court previously approved a new contract with the union representing dispatchers containing wage and benefit concessions through 2012. Frontier, according to Mr. Rochelle, is still negotiating long- term concessions with the pilots. About Frontier Airlines Inc. Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. It operates jet service carriers linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, as 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. 27; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FRONTIER AIRLINES: Reports $15.9 Mil. Operating Loss in October --------------------------------------------------------------- Frontier Airlines Holdings Inc. reported $15.9 million in operating loss and $20.5 million in consolidated net loss for October 2008. The company said, excluding fuel hedging activities and reorganization expenses, it would have reported a loss of $11.6 million. Its October results included $7.4 million in mark-to-market losses on fuel hedges and $1.5 million in reorganization costs. "October is a seasonally low month for the airline industry," said Frontier President and CEO Sean Menke. "Our October performance is in accordance with our plan, but we know we must continue to be diligent with our cash management efforts while keeping a careful eye on our costs as we move forward with our restructuring efforts." The company's cash balance for the month does not include proceeds realized from the sale of two aircraft at the beginning of November. The company said it also plans to close on the sale of two more aircraft in early December, further improving the company's cash position. Companies in Chapter 11 Bankruptcy protection are required to file monthly operating reports to the U.S. Trustee in addition to quarterly reports filed with the U.S. Securities and Exchange Commission. About Frontier Airlines Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. It operates jet service carriers linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, as 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: WFS Wants Payment of $3.7M Aviation Fuel ----------------------------------------------------------- World Fuel Services Corporation provided aviation fuel to Frontier Airline Holdings, Inc., with a total value of $3,734,826, 20 days before Frontier's bankruptcy filing. The fuel remains unpaid. World Fuel contends that pursuant to Section 503(b)(9) of the Bankruptcy Code, it is entitled to an allowed administrative expense claim for "the value of any goods received by the Debtor within 20 days before the Petition Date, in which the goods have been sold to the Debtor in the ordinary course of business." Accordingly, World Fuel asks the U.S. Bankruptcy Court for the Southern District of New York to allow the Administrative Claim for $3,734,826, and direct the Debtors to pay the Claim within 10 days from the Court's entry of its order. About Frontier Airlines Inc. Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. It operates jet service carriers linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, as 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. 27; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: Gets Interim Two Weeks Extension from Lenders ------------------------------------------------------------- General Growth Properties, Inc., said it has reached an agreement with its syndicate of lenders for an interim extension of two weeks for the November 28 maturity date on its Fashion Show and Palazzo mortgage loans totaling $900 million. The parties are continuing their discussions on a longer term extension. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner with 200-plus shopping malls in 44 states. General Growth is a self-administered and self-managed real estate investment trust. General Growth owns, manages, leases and develops retail rental property, primarily shopping centers. Substantially all of its properties are located in the United States, but the company also has retail rental property operations and property management activities -- through unconsolidated joint ventures -- in Brazil and Turkey. Its Master Planned Communities segment includes the development and sale of residential and commercial land, primarily in large-scale projects in and around Columbia, Maryland; Houston, Texas; and Summerlin, Nevada, well as the development and sale of its one residential condominium project located in Natick (Boston), Massachusetts. General Growth said in a regulatory filing September 30 that its potential inability to address its 2008 or 2009 debt maturities in a satisfactory fashion raises substantial doubts as to its ability to continue as a going concern. General Growth had $29.6 billion in total assets and $27.3 billion in total liabilities as at Sept. 30. As reported in the Troubled Company Reporter on Nov. 21, 2008, General Growth has hired Sidley Austin to assist it in debt restructuring negotiations. The TCR reported on Nov. 14 that General Growth acknowledged in a regulatory filing that it's working with lenders to gain more time to pay off debt, and is also considering asset sales and other ways to raise cash. General Growth has $1.13 billion in debt coming due by the end of the year, with more than $900 million due by Dec. 1, 2008 [Nov. 28]. General Growth said that even if it is successful in addressing these 2008 maturities, an additional $3.07 billion in debt is scheduled to mature in 2009. * * * As reported in the Troubled Company Reporter on Nov. 18, 2008, Moody's Investors Service has downgraded the ratings on General Growth Properties, Inc., certain of its subsidiaries and The Rouse Company LP (to Caa2 from B3 senior secured bank debt; to Caa2 from B3 senior unsecured debt). The ratings remain on review for further possible downgrade. The rating action reflects deepening concerns in the REIT's ability to meet its near term debt obligations and funding needs. GENERAL MOTORS: In Talks With Union to Stop Idled Worker Payment ---------------------------------------------------------------- General Motors Corp., Ford Motor Co., and Chrysler LLC are negotiating with the United Auto Workers union to stop a program that pays idled workers, Matthew Dolan at The Wall Street Journal reports, citing people familiar with the matter. Gary Haber at The News Journal relates that "jobs bank" is a unique protection for laid-off workers. According to the report, laid-off workers are placed in the jobs bank, where they can get about 95% of their usual pay and benefits. WSJ says that GM, Ford Motor, and Chrysler are trying to eliminate or scale back the program as part of an effort to secure a $25 billion loan from the government. The News Journal states that the jobs bank doesn't start until laid-off employees exhaust a period of unemployment benefits and supplemental pay from the company. Citing GM spokesperson Tony Sapienza, the News Journal states that said that the workers can start benefiting from the jobs bank when they have been idled for 48 weeks. The report states that the workers would get unemployment benefits and supplemental pay of 85% of pay. GM, according to the report, can remain in the jobs bank for up to two years, but will lose their pay and benefits if they refuse a single job offer at a GM plant within 50 miles of their home plant, or turn down four job offers at GM plants more than 50 miles away. Critics say that the "jobs banks" are a disadvantage for GM, Ford Motor, and Chrysler, as they are an "overly generous benefit" at firms that report billions in losses, The News Journal states. The News Journal quoted UAW President Ron Gettelfinger as saying, "We're on the verge of eliminating that provision." UAW Wants Corporate Pay, Bonuses & Severance Pay Limitation Citing Gettelfinger, Reuters relates that Ford Motor, GM, and Chrysler should limit corporate pay, bonuses, and severance packages in return for government loans. Reuters quoted Mr. Getterlfinger as saying, "They need to establish that executive compensation is something that they're willing to curtail, as well as bonuses and 'golden parachutes' on exiting the business. They can also give the government an equity stake in the business." Mr. Gettelfinger said on CNN that the automakers need a loan to help them survive a tough period. According to WSJ, Mr. Gettelfinger said, "It's not just here in the United States and this is not a bailout, this is a loan, a bridge loan that will get us through until we can take a longer term look at what needs to be done in the industry." Union wages weren't the key cause of waning sales at the companies, Reuters states, citing Mr. Gettelfinger. 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. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of $110.425 billion, total liabilities of $170.3 billion, resulting in a stockholders' deficit of $59.9 billion. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of $16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default. With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels. Fitch placed these on Rating Watch Negative: -- Senior secured at 'B/RR1'; -- Senior unsecured at 'CCC-/RR5'. As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corp. and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. economy. GENERAL MOTORS: More Cuts Needed to Win Gov't Loan, Says Conway --------------------------------------------------------------- General Motors Corp., Ford Motor Co., and Chrysler LLC must implement more cuts, The Wall Street Journal reports, citing restructuring firm Conway MacKenzie & Dunleavy senior managing director Van Conway. "I think you need to demonstrate sincerely that you are doing the very painful cuts -- white collar, blue collar, plant closings. They need to really look like they're suffering on the expense line so people believe they can make it," WSJ quoted Mr. Conway as saying. According to WSJ, Ford Motor and GM directors met separately on Monday to vote on their viability plans to be presented to the Congress on Tuesday, to try to win support for $25 billion in low- cost loans from the federal government. Chrysler LLC top executives, WSJ relates, were finalizing their own plan to show that it can survive and return to profitability with government aid, after its private-equity owner Cerberus Capital Management LP reviewed the plan on Monday. A source said that Ford Motor and GM would be willing to seek further cost-cuts and concessions from the United Auto Workers union, WSJ states. The report says that once GM reaches an agreement with the United Auto Workers union on any wage or benefit concessions for a rescue of the company, Chrysler, Ford Motor will also insist on a similar arrangement. GM, according to the report, owes the health care trust for retiree union workers some $7.5 billion by 2010, which many suspect the company can't afford. Citing a source, WSJ says that UAW President Ron Gettelfinger is open to eliminating the jobs bank, which pays employees most of their wages even when they no longer work in plants, but Mr. Gettelfinger wants to see management sacrifices in return. The sacrifices, WSJ relates, would include limits on executive compensation and a retraining program that will help laid-off workers get high-tech jobs in areas like battery development for electric vehicles. WSJ relates that sources said that GM will plan more cuts to North American production capacity, an initiative to offer debt-holders equity to tidy its balance sheet, and cuts to executive pay, while aspects of the plan include goals to gain more labor concessions, and executive pay cuts. Citing a source, the report states that GM would also include in its plan cutting brands and details on new fuel-efficient vehicles and how the firm will meet new stringent federal mileage rules. The report says that GM hopes to start selling electric plug-in car Chevrolet Volt in 2010. Cerberus Capital is also interested in combining Chrysler with another firm, WSJ states. Cerberus Capital had discussed selling Chrysler to GM before the request for government aid, according to the report. Jeff Bennett at WSJ reports that Ford Motor is again considering selling its Swedish luxury vehicle maker Volvo Cars, saying on Monday that it will re-evaluate strategic options for the unit as part of a broader effort to strengthen Ford Motor's balance sheet. Ford Motor, according to WSJ, acquired Volvo Cars from Swedish truck maker AB Volvo for more than $6.5 billion in 1999. The review could take several months, during which time Volvo Cars will continue implementing a restructuring, which includes laying off a quarter of its workforce, states WSJ. Mr. Mulally had affirmed in November this year his decision in 2007 to keep Volvo Cars after a review of the advantages of selling the unit that year, according to the report. Mr. Mulally said last month that he was still committed to restoring Volvo Cars' financial health, the report states. According to WSJ, CSM Worldwide analyst Michael Robinet doubts that Ford Motor will be able to quickly find a suitor. The report quoted Mr. Robinet as saying, "Anyone who purchases Volvo would have to have very close ties to Ford because virtually every Volvo is using a Ford platform. It will be difficult because it's not like cutting a piece of pie that's already perforated and just cracking it off. They are very integrated and it could take years." AB Volvo said on Monday that it wasn't interested in purchasing back Volvo Cars from Ford Motor, WSJ reports. WSJ relates that GM, Ford Motor, and Chrysler were also devising alternative travel plans after the Congress criticized their CEOs for using expensive corporate jets to make their way to Capitol Hill. Ford Motor said on Monday that Mr. Mulally will drive by car to Washington this time, while Chrysler said that its CEO Robert Louis Nardelli has ruled out flying by private jet, according to the report. WSJ states that if the Congress approves the requests of GM, Ford Motor, and Chrysler for government financial assistance, the lawmakers would be called back to Washington next week. Jeff Green and John Lippert at Bloomberg News report that GM, Ford Motor, and Chrysler union leaders will hold an emergency meeting on Dec. 3 at the Detroit Marriott Hotel. Citing a person familiar with the matter, the report says that participants of the meeting will be asked to reopen a 2007 labor agreement to consider concessions. Sources said that GM also wants to change how it pays for a union retiree health care fund as part of a broader cost cutting plan designed to win government aid, Bloomberg states. 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. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of $110.425 billion, total liabilities of $170.3 billion, resulting in a stockholders' deficit of $59.9 billion. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of $16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default. With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels. Fitch placed these on Rating Watch Negative: -- Senior secured at 'B/RR1'; -- Senior unsecured at 'CCC-/RR5'. As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corp. and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. economy. GLITNIR BANKI: Wants Icelandic Court to Administer Assets --------------------------------------------------------- Iceland-based Glitnir Banki hf, in its Chapter 15 petition before the U.S. Bankruptcy Court for the Southern District of New York, is asking the Bankruptcy Court to rule that the court in Iceland is home to the "foreign main proceeding." Glitnir Banki filed for Chapter 15 bankruptcy protection on November 26 to stay creditor actions in the United States. Bloomberg News notes that while Glatinir has few assets and no operations in the United States, the bank has sold more than $7 billion in debt offerings in the U.S. market in a span of three years. According to Bloomberg's Bill Rochelle, if the U.S. Bankruptcy Court grants the Chapter 15 petition, the court in Iceland will be entitled to administer the bank's assets and use the U.S. Bankruptcy Court to enforce its decisions if necessary. Creditors, Mr. Rochelle reports, then cannot sue in the U.S. and must submit their claims to the court in Iceland along with any other disputes. As reported by the Troubled Company Reporter, the District Court of Reykjavik granted a Moratorium order on Glitnir on Nov. 24, 2008. Glitnir said the Moratorium is not a bankruptcy proceeding and does not affect its banking licences or its ability to operate as a bank. The Moratorium is a specialized proceeding under Icelandic law designed to provide it with appropriate global protection from legal action taken by its creditors, Glitnir pointed out. Glitnir said the Moratorium order would ensure that all its creditors are treated fairly and appropriately under Icelandic law and EEA directives. The Moratorium will allow Glitnir time to consider all strategic alternatives including an arrangement with its creditors that will permit it to emerge from the Moratorium as a going concern. The Resolution Committee, according to Glitnir, said it has no plans of selling significant assets other than in exceptional circumstances. The Committee says that retaining and managing Glitnir's assets will maximize the value of those assets and will support its restructuring and its emergence from the Moratorium procedure. Supreme Court attorney and former member of the Glitnir Resolution Committee, Steinunn Gudbjartsdottir, was named Moratorium Administrator and will supervise the actions taken by the Resolution Committee. About Glatinir banki Headquartered in Reykjavik, Iceland, Glitnir banki hf -- http://www.glitnir.is/-- offers an array of financial services to corporation, financial institutions, investors and individuals. Glitnir banki filed a Chapter 15 petition on November 26, 2008 (Bankr. S.D. N.Y. Case No. 08-14757). The firm has retained Gary S. Lee, Esq., at Morrison & Foerster LLP, in New York, as counsel. In its Chapter 15 petition, the company estimated both its assets and debts to be than $1 billion each. GLITNIR BANKI: Voluntary Chapter 15 Case Summary ------------------------------------------------ Chapter 15 Debtor: Glitnir banki hf Steinunn Gudbjarsdottir as duly authorized foreign representative Kirkjusandur 2, IS-155 Reykjavik Iceland Bankruptcy Case No.: 08-14757 Type of Business: The Debtor offers an array of financial services to corporation, financial institutions, investors and individuals. See: http://www.glitnir.is/ Chapter 15 Petition Date: November 26, 2008 Court: Southern District of New York (Manhattan) Judge: Stuart M. Bernstein Debtor's Counsel: Gary S. Lee, Esq. glee@mofo.com Morrison & Foerster LLP 1290 Avenue of the Americas, 40th Floor New York, NY 10022 Tel: (212) 468-8042 Fax: (212) 468-7900 Estimated Assets: More than US$1 billion Estimated Debts: More than US$1 billion HARRAH'S ENTERTAINMENT: $4-Bil. Notes Tendered, Oversubscribed -------------------------------------------------------------- Harrah's Entertainment, Inc., said its direct wholly owned subsidiary, Harrah's Operating Company, Inc., is extending to 5:00 p.m., New York City time, on December 5, 2008, the Early Tender Date for all old notes maturing between 2010 and 2013 -- Priority 1 Notes -- in its private exchange offers to exchange certain of its outstanding debt securities for up to $2.1 billion aggregate principal amount of (i) new 10.00% Second-Priority Senior Secured Notes due 2015, for Old Notes maturing between 2010 and 2013, and (ii) new 10.00% Second-Priority Senior Secured Notes due 2018, for Old Notes maturing between 2015 and 2018. In addition, Harrah's said HOC is reducing the Acceptance Priority 2 Cap from $875 million to $500 million and is extending to 5:00 p.m., New York City time, on December 19, 2008, the Expiration Date for the Exchange Offers. HOC is also extending to 5:00 p.m., New York City time, on December 3, 2008, the Withdrawal Deadline for all Old Notes maturing between 2015 and 2018 -- i.e., Old Notes having an acceptance priority level of 2, 3 and 4. The Withdrawal Deadline for Priority 1 Notes, however, remains 5:00 p.m., New York City time, on November 28, 2008 and has passed, and therefore, Priority 1 Notes that are validly tendered through the new Expiration Date of the Exchange Offers may not be withdrawn except under the circumstances described in the Offering Memorandum. All of the other terms and conditions of the Exchange Offers remain unchanged. HOC said the Exchange Offers are currently oversubscribed. As of 5:00 p.m., New York City time, November 28, 2008, approximately $4 billion principal amount, or 36% of the outstanding principal amount, of Old Notes had been validly tendered and not withdrawn in the Exchange Offers. In addition, as of the Original Early Tender Date, approximately $286 million principal amount, or 19% of the outstanding principal amount, of Old Notes maturing in 2010 and 2011 have participated in the Exchange Offers and elected to receive cash in lieu of New 2015 Second Lien Notes that they would otherwise receive in the Exchange Offers pursuant to the "Modified Dutch Auction" process. Subject to the terms and conditions described in the Offering Memorandum, and based on the aggregate principal amount of Old Notes maturing in 2010 and 2011 validly tendered -- and not withdrawn -- as of the Original Early Tender Date, all holders that elected to receive cash in lieu of New 2015 Second Lien Notes will receive cash in full and will not be subject to proration. HOC estimates that it would pay approximately $209 million in cash to holders of these Old Notes. In addition, HOC confirmed that the Maximum Auction Amount remains $325 million. The Exchange Offers are not conditioned on a minimum principal amount of Old Notes being tendered or the issuance of a minimum principal amount of New Second Lien Notes. However, the Exchange Offer for each issue of Old Notes is subject to certain other terms and conditions, which terms and conditions may be different from the terms and conditions applicable to the other issues of Old Notes. In addition, HOC has the right to terminate or withdraw any of the Exchange Offers at any time and for any reason, including if any of the conditions described in the Offering Memorandum are not satisfied. The Exchange Offers are being made only to qualified institutional buyers and to certain non-U.S. investors located outside the United States. Subject to applicable law, HOC may amend, extend or terminate the Exchange Offers. Documents relating to the Exchange Offers will only be distributed to holders who complete and return a letter of eligibility confirming that they are within the category of eligible investors for this private offer. Noteholders who desire a copy of the eligibility letter should contact Global Bondholder Service Corporation, the information agent for the Exchange Offers, at (866) 736-2200 (Toll-Free) or (212) 925-1630 (Collect). As reported by the Troubled Company Reporter on November 18, 2008, Bloomberg News' Caroline Salas said holders of Harrah's $1 billion of 5.625% senior notes due in 2015, its $750 million of 6.5% securities maturing in 2016 and its $750 million of 5.75% debt due in 2017 will receive 40 cents-on-the-dollar's worth of new 2018 notes. Those who tender after 5 p.m. on Nov. 28 and by Dec. 12 will receive 37 cents worth of new debt, Bloomberg said. Ms. Salas also said that holders of Harrah's $718 million of 5.5% notes due in 2010 and its $363 million of 7.875% senior subordinated notes due in 2010 will receive as much as 100 cents on the dollar worth of 2015 notes. Harrah's $328 million of 8.125% senior subordinated notes due 2011 and its $500 million of 5.375% senior notes due in 2013 will be exchanged at a rate of 80 cents and 50 cents of new 2015 debt, according to Ms. Salas. Ms. Salas said Bank of America Corp. and Citigroup Inc. are managing the exchange offer. About Harrah's Entertainment Las Vegas, Nevada-based Harrah's Entertainment, Inc. -- http://www.harrahs.com-- operates nearly 40 casinos across the United States, primarily under the Harrah's(R), Caesars(R) and Horseshoe(R) brand names; Harrah's also owns the London Clubs International family of casinos and the World Series of Poker(R). Private equity firms Apollo Global Management and TPG Capital LP acquired Harrah's in January for $31 billion. HAWAIIAN TELCOM: Files for Ch. 11 to Restructure Balance Sheet -------------------------------------------------------------- Hawaiian Telcom Communications, Inc., and its affiliates on Monday filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware in Wilmington to continue its balance sheet restructuring process and ensure the company's long-term financial health. The company will continue to operate its business without interruption. As is standard in such cases, Hawaiian Telcom is seeking relief from the Court that will enable it to continue to operate its business without interruption to customers, employees and other critical constituents. The requests include authority to honor all customer programs such as discounts and rebates, to continue to pay wages and salaries, and to continue various benefits for employees. In addition, the company will seek authority to use its existing cash collateral to fund operations. "Our decision to restructure through a Chapter 11 filing allows the company to reduce its level of debt and reorganize its business, so we can emerge a stronger and more financially secure company better able to compete in the ever-changing communications industry. I strongly believe that the filing provides the right course of action to support what is in the best interests of our customers, employees, suppliers and other valued constituents." said Eric K. Yeaman, Hawaiian Telcom's president and chief executive officer. "Hawaiian Telcom has proudly served the communications needs of Hawaii's local community for over 125 years and our dedication to providing our customers with the best quality service remains the company's highest priority going forward," continued Mr. Yeaman. The company has been working with its creditors since October on a balance sheet restructuring that would be amenable to all parties while protecting the interests of the company's customers, employees and other constituents. Hawaiian Telcom determined that a Chapter 11 filing provided the best means to restructure its debt with minimal impact to the business. As reported by the Troubled company Reporter, Hawaiian Telcom chose not to make the interest payments due on November 1, 2008, and payable on November 3, 2008, with respect to its Senior Floating Rate Notes due 2013, its 9.75% Senior Fixed Rate Notes due 2013, and its 12.5% Senior Subordinated Notes due 2015. Instead, the company utilized the 30-day grace period applicable to the missed interest payments to continue balance sheet restructuring discussions with its creditors including the holders of those notes. The aggregate amount of these interest payments is approximately $26 million. As of October 31, 2008, the company had approximately $80 million of cash on hand. Hawaiian Telcom says its actions are a result of increased competition in an ever-evolving communications industry, an inability to satisfy its capital expenditure needs while continuing to meet its debt service requirements, a significant downturn in the economy, as well as the difficulties in the transition of certain back office functions from Verizon following the 2005 acquisition. While operating under Chapter 11, the company plans to continue implementing its strategic plan which is focused on improving its customer service, enhancing processes and systems to rebuild customer and community confidence in the company, simplifying its existing product offerings while focusing on the introduction of new products, and leveraging its network infrastructure. "The Hawaiian Telcom board fully supports the company's actions and believes that Eric Yeaman and his management team are making the hard, but necessary decisions to address the company's financial challenges," said Walter Dods, Hawaiian Telcom's chairman of the board. "As the State's premier communications company, I am pleased that Hawaiian Telcom's service, which is critical to the people of Hawaii, will continue without interruption." The company notes that the bankruptcy filing constituted an event of default that triggered repayment obligations under a number of debt instruments of the Debtors. As a result of the event of default, all obligations under the Debt Documents became automatically and immediately due and payable. The Debtors believe that any efforts to enforce the payment obligations under the Debt Documents are stayed as a result of the filing of the Chapter 11 Cases in the Bankruptcy Court. The Debt Documents and the approximate principal amount of debt currently outstanding are: 1. $574.6 million of loans under the Amended and Restated Credit Agreement, dated as of June 1, 2007, among Hawaiian Telcom Holdco, Inc., the company, the lenders party thereto, Lehman Commercial Paper Inc., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., as syndication agent, and CoBank, ACB and Wachovia Bank, N.A., as co-documentation agents; 2. $150 million senior floating rate notes due May 1, 2013; 3. $200 million of senior fixed rate notes due May 1, 2013; and 4. $150 million of senior subordinated notes due May 1, 2015. Hawaiian Telcom says it has sufficient liquidity to support its ongoing operating expenses in the near future. As of November 30, the company had approximately $75 million of cash on hand. This cash collateral, the use of which is subject to Court approval, will fund among other things, employee wages, customer programs, payments to vendors and suppliers, and the overall operation of the company's network. The company continues to work closely with the PUC and other local government agencies and officials during this process. Hawaiian Telcom has set-up a toll-free reorganization hotline, (888) 733-1409, for customers, employees, or other interested parties who may have questions related to the reorganization. In addition, parties are encouraged to visit the company Web site at http://www.hawaiiantel.com,for updates and other information surrounding Monday's announcement. About Hawaiian Telcom Based in Honolulu, Hawaiian Telcom Communications, Inc., is Hawaii's leading telecommunications provider, offering a wide spectrum of telecommunications products and services, which include local and long distance service, managed services, high- speed Internet, and wireless services. The company reported $34.6 million in net loss on $112.2 million in operating revenues for the quarter ended September 30, 2008. The company's balance sheet shows $1.3 billion in total assets, $1.2 billion in total liabilities and $83 million in shareholder's equity as of September 30. HAWAIIAN TELCOM: Amends Application Services Pact with Accenture ---------------------------------------------------------------- Hawaiian Telcom Communications, Inc., said in a regulatory filing with the Securities and Exchange Commission that it has entered into Amendment Number Thirteen, effective as of December 1, 2008, to the Application Services Agreement, effective as of February 5, 2007, by and between the company and Accenture LLP. The Amendment extends the term of the Agreement to January 31, 2009. The parties are currently engaged in a bid process to migrate part or all of the scope of the Application Services Agreement to a new Master Services Agreement. In the event that the New Agreement is executed prior to January 31, 2009, the terms of the New Agreement will supersede the Amendment for all migrated Statements of Work and the fixed monthly charges specified in Schedule A for the migrated SOWs will be prorated accordingly. About Hawaiian Telcom Based in Honolulu, Hawaiian Telcom Communications, Inc., is Hawaii's leading telecommunications provider, offering a wide spectrum of telecommunications products and services, which include local and long distance service, managed services, high- speed Internet, and wireless services. The company reported $34.6 million in net loss on $112.2 million in operating revenues for the quarter ended September 30, 2008. The company's balance sheet shows $1.3 billion in total assets, $1.2 billion in total liabilities and $83 million in shareholder's equity as of September 30. Hawaiian Telcom, its parent company, Hawaiian Telcom Holdco, Inc., and certain of its subsidiaries filed voluntary chapter 11 petitions on December 1, 2008 (Bankr. D. Del. Case No. 08-13086). The filings seek to allow the company to continue its balance sheet restructuring process. HAWAIIAN TELCOM: Board Adopts One-Time Bonus Program for Execs -------------------------------------------------------------- Hawaiian Telcom Communications, Inc., disclosed in a regulatory filing with the Securities and Exchange Commission that its board of directors consistent with the recommendations of the company's compensation consultant, adopted on November 28, 2008, a one-time performance-based incentive for executives to offset the company's lack of an adequate long-term performance program and to align executive performance with the overall performance of the company during the company's on-going balance sheet restructuring and for a subsequent defined period of time. The payment of performance incentives under the performance program is dependent upon achieving stated corporate targets for Adjusted EBITDA, free cash flow and revenue. The target performance incentives, ranging from $57,000 to $2.3 million depending upon position, are based on the long-term compensation commitments made to the executives at the time of hire. The actual amounts payable under the performance program are not guaranteed and may be less than or greater than the target performance incentives depending on actual company performance. Full payout under the performance program is deferred until, and contingent upon, the executive's continued employment through completion of the balance sheet restructuring and a subsequent defined period of time. Based in Honolulu, Hawaiian Telcom Communications, Inc., is Hawaii's leading telecommunications provider, offering a wide spectrum of telecommunications products and services, which include local and long distance service, managed services, high- speed Internet, and wireless services. The company reported $34.6 million in net loss on $112.2 million in operating revenues for the quarter ended September 30, 2008. The company's balance sheet shows $1.3 billion in total assets, $1.2 billion in total liabilities and $83 million in shareholder's equity as of September 30. Hawaiian Telcom, its parent company, Hawaiian Telcom Holdco, Inc., and certain of its subsidiaries filed voluntary chapter 11 petitions on December 1, 2008 (Bankr. D. Del. Case No. 08-13086). The filings seek to allow the company to continue its balance sheet restructuring process. HAWAIIAN TELECOM: Case Summary & 30 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Hawaiian Telecom Communications, Inc. 1177 Bishop Street Honolulu, HI 96813 Bankruptcy Case No.: 08-13086 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Hawaiian Telcom Holdco, Inc. 08-13087 Hawaiian Telcom, Inc. 08-13088 Hawaiian Telcom IP Service Delivery Research, LLC 08-13089 Hawaiian Telcom IP Video Research, LLC 08-13090 Hawaiian Telcom IP Service Delivery Investment, LLC 08-13091 Hawaiian Telcom IP Video Investment, LLC 08-13092 Hawaiian Telcom Services Company, Inc. 08-13093 Type of Business: The Debtors operate a telecommunications company, which offers an array of telecommunications products and services including local and long distance service, high- speed Internet, wireless services, and print directory and Internet directory services. See: http://www.hawaiiantel.com/ Chapter 11 Petition Date: December 1, 2008 Court: District of Delaware Debtor's Counsel: Richard M. Cieri, Esq. Paul M. Basta, Esq. Christopher J. Marcus, Esq. Kirkland & Ellis LLP Citigroup Center 153 East 53rd Street New York, NY 10022-4611 Tel: (212) 446-4800 Fax: (212) 446-4900 http://www.kirkland.com/ Restructuring & Conflicts Counsel: Domenic E. Pacitti, Esq. Michael Yurkewicz, Esq. Klehr, Harrison, Harvey, Branzburg & Ellers LLP 919 Market Street Wilmington, DE 19801-3062 Tel: (302) 426-1189 Fax: (302) 426-9193 http://www.klehr.com/ Investment Banker: Lazard Freres & Co. LLC Business Advisor: Zolfo Cooper Management LLC Independent Auditors: Deloitte & Touche LLP Notice and Claims Agent: Kurztman Carson Consultants LLC Total Assets: $1,352,000,000 as of September 30, 2008 Total Debts: $1,269,000,000 as of September 30, 2008 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ US Bank National Association 9.75% sec. unsec. $200,000,000 Attn: Michael M. Hopkins fixed rate notes 225 Asylum Street, Due 2013 23rd Floor Hartford, CT 06103 Tel: (860) 241-6820 Fax: (866) 640-1284 US Bank National Association 12.5% senior $150,000,000 Attn: Michael M. Hopkins Subordinated 225 Asylum Street, Notes due 2015 23rd Floor Hartford, CT 06103 Tel: (860) 241-6820 Fax: (866) 640-1284 US Bank National Association senior unsecured $150,000,000 Attn: Michael M. Hopkins floating rate 225 Asylum Street, notes due 2013 23rd Floor Hartford, CT 06103 Tel: (860) 241-6820 Fax: (866) 640-1284 Local Insight Media trade $6,770,149 188 Inverness Drive West, Suite 800 Englewood, CO 80112 Tel: (303) 867-1600 Fax: (303) 867-1604 Pacific Lightnet Inc. CLEC unliquidated 5512 NE 109th Court Suite N Vancouver, WA 98662 Tel: (808) 791-1000 Fax: (808) 791-3119 Hawaiian Electric Co. Inc. utility $1,221,372 900 Richards Street Honolulu, HI 96813 Tel: (808) 548-7311 Fax: (808) 543-7799 Acenture LLP services $1,038,781 11951 Freedom Drive Reston, VA 20190 Tel: (703) 947-2000 Fax: (703) 947-2002 Alakes LLC trade $1,000,000 1200 N. Main Street Suite 900 Santa Ana, CA 92701 Tel: (714) 543-9484 Fax: (714) 543-9972 Embarq Logistics trade $974,946 600 New Century Parkway New Century, KS 66031 Tel: (800) 755-1950 Fax: (800) 776-3952 Fujitsu Network trade $955,659 Communications Inc. 2801 Telecom Parkway Richardson Tel: (360) 694-9707 Fax: (360) 694-0323 DataProse services $931,890 1451 N. Rice Avenue, Suite A Oxnard, CA 03030 Tel: (805) 871-4438 Fax: (805) 278-7421 Hewlett Packard Company services $879,898 3000 Hanover Street Palo Alto, CA 94304 Tel: (650) 857-1501 Fax: (650) 857-5518 Universal Service tax $787,102 Administrative Company 2000 L Street N.W. Suite 200 Washington, DC 20036 Tel: (202) 776-0200 Fax: (202) 776-0080 Hawaii Electric Light utility $416,020 Company Inc. Alcatel USA Marketing Inc. trade $376,547 Inc. MCI trade $373,225 Sprint PCS trade $318,000 Commercial Roofing & trade $309,000 Waterproofing Ingram Micro Inc. trade $295,371 US Treasury trade $285,945 Maui Electric Company Ltd. trade $264,090 Sprint trade $226,518 Telmar Network Technology trade $210,379 Communication Consulting trade $198,335 Services Inc. Lucent Technologies trade $190,473 Commericial Data Systems trade $190,217 Latham & Watkins LLP legal $180,743 Milici Valenti Ng Pack Inc. services $178,098 Solix Inc. trade $174,257 Neustar Inc. trade $158,519 The petition was signed by senior vice president, chief financial officer and treasurer Robert F. Reich. HAWTHORNE ON NORTH: Court Approves Dismissal of Chapter 11 Case --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona approved on Nov. 24, 2008, the request of Howthorne on North 3rd, L.L.C., for the dismissal of its Chapter 11 bankruptcy case. On Sept. 29, 2008, the Court granted the request of Corus Bank, its largest creditor, for relief from the authomatic stay in order to foreclose on its loan. The Debtor told the Court that in deciding Corus' motion for relief from stay, the Court has already determined that there is no reasonable prospect for the Debtor's rehabilitation. The Debtor also told the Court that its case should be dismissed as there are no assets to liquidate, and no hope for reorganization. Based in Phoenix, Arizona, Hawthorne on North 3rd, L.L.C. is a single asset real estate debtor. The company operated an apartment complex which was converted to condominiums in 2005. The Debtor filed for Chapter 11 relief on April 14, 2008 (Bankr. D. Ariz. Case No. 08-04094). Jonathan P. Ibsen, at Jaburg & Wilk, P.C., represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets and debts of $10 million to $50 million each. HEALTH NET: A.M. Best Cuts Rating on $400MM 2017 Notes to "bb-" --------------------------------------------------------------- A.M. Best Co. downgraded on November 14, 2008, the financial strength ratings (FSR) to B+ (Good) from B++ (Good) and issuer credit ratings (ICR) to "bbb-" from "bbb+" of Health Net of California, Inc. and Health Net Life Insurance Company. Concurrently, A.M. Best has downgraded the FSR to B+ (Good) from B++ (Good) and ICRs to "bbb-" from "bbb" of Health Net Health Plan of Oregon, Inc. and Health Net of Arizona, Inc. A.M. Best also has downgraded the ICR and debt rating to "bb-" from "bb+" of the parent company, Health Net, Inc. (Health Net) (headquartered in Woodland Hills, CA) [NYSE: HNT]. The outlook for all the ratings has been revised to stable from negative, except for the outlook of Health Net Arizona, Inc., which remains negative and the outlook for the debt, which is stable. Additionally, A.M. Best has affirmed the FSRs of B+ (Good) and ICRs of "bbb-" of Health Net's remaining subsidiaries, Health Net of Connecticut, Inc., Health Net of New Jersey, Inc., Health Net of New York, Inc. and Health Net Insurance of New York, Inc. The outlook for these ratings is negative. The ratings of Health Net reflect the trend of declining risk- based capitalization, the increase in debt to capital to above 27% and forecasted lower interest coverage below 10 times, which demonstrates the enterprise's reduced financial flexibility. In addition, near-term earnings have declined due to increased medical cost trends and litigation charges stemming from a settlement against company practices. Health Net has experienced higher physician and hospital utilization trends negatively impacting earnings, coupled with higher utilization in the Medicare Advantage products. The profitability of the Medicare Advantage product line should improve in 2009 with the implementation of new rates and product design changes. However, the higher physician and hospital utilization trends may take longer to correct as Health Net evaluates the causes for the increase and implements corrective measures. Furthermore, on November 4, 2008, Health Net announced changes in its senior management responsibilities. The board has instructed the Chief Executive Officer to focus efforts on the company's strategy, with particular emphasis on how best to deploy Health Net's assets in the current competitive and economic environment. The positive rating factors include the earnings strength added from the TRICARE contract. Earnings from administering the TRICARE contract have been very favorable since the contract was awarded in 2003, and while the contract is up for renewal it has been extended into 2010. In addition to the TRICARE contract, Health Net maintains a diversified stream of revenues generated from Medicare/Medicaid, behavioral health services through Managed Health Network, Inc. and the remainder from commercial risk business. However, commercial membership has been declining over the past few years, and this trend is expected to continue due to the economic environment. A.M. Best believes the commercial segment still may be challenged for membership growth as it competes with large national and Blue Cross and Blue Shield plans in an economically challenging environment that is expected to see a rise in employer group dis-enrollment. The negative outlook for Health Net of Arizona, Inc. reflects a 13.6% increase in membership through June 2008, resulting from the Medicare Advantage product line, combined with a statutory underwriting loss of $7.2 million for the same time period. The negative outlook for Health Net of Connecticut, Inc., Health Net of New Jersey, Inc., Health Net of New York, Inc. and Health Net Insurance of New York, Inc., reflects the Northeast operations' struggle to return to and maintain profitability, declining membership and operating in the very competitive New York City metropolitan area. This debt rating has been downgraded: Health Net, Inc. -- to "bb-" from "bb+" on $400 million 6.375% of senior unsecured notes, due 2017 INTERSTATE BAKERIES: Teamsters Majority Accepts CBA Modifications ----------------------------------------------------------------- An overwhelming majority of the members of the International Brotherhood of Teamster from across the United States of America voted to accept modifications to their collective bargaining agreements with Interstate Bakeries Corporation, the Union said in a statement posted on its Web site on Nov. 12, 2008. Leaders of local unions representing IBC's workers endorsed the Modification Agreement, which was negotiated, along with a created financial plan, between the private equity firm Ripplewood Holdings, L.L.C., and Silver Point Finance Capital LLC. Ripplewood Holdings, through its affiliate, IBC Investors I, LLC, has agreed to (i) invest $44,200,000 in cash in the Reorganized Company in exchange for 4,420,000 shares of common stock of the Reorganized Company, and (ii) purchase $85,800,000 in New Convertible Secured Notes, which will be issued by the Reorganized Company and will be convertible into New Common Stock. Silver Point will inject $339 million of secured term loan credit facility in IBC, along with Monarch Alternative Capital L.P., in exchange for debt and equity instruments worth approximately one- half of the secured obligations owed to them by IBC. The Modification Agreement provides that, among other things: * IBC employees will share in a Teamsters Equity Sharing Plan and receive 7% of the Company's total equity, in exchange for certain pay reductions. * IBC will establish a Profit Sharing Program for all union- represented, hourly paid or non-exempt employees, of 10% of its net income. * IBC may adopt a large format, direct store delivery and "drop and go" delivery system for bread and cake no earlier than Aug. 1, 2010, after a successful test in an area not represented by the Teamsters. * IBC has the right to convert Transport hourly rates to trip rates, provided that the trip rates are equal to, or better than, the hourly rates for that year. * IBC will consider re-entry into southern California, Northern Washington and Michigan markets, where all work formerly performed by Teamsters will be assigned to Teamsters. * IBC will agree to a Neutrality and Protection of Jurisdiction Agreement. The Modification Agreement, which covers more than 9,000 workers, will be deemed effective on the first Sunday after IBC exits bankruptcy. It will expire on July 31, 2014. The Teamsters relate that in September 2008, they reached a tentative labor agreement with Ripplewood Holdings that enabled it to line up financing with Silver Point Capital. With the ratification of the Modification Agreement, IBC can anticipate to "exit bankruptcy as early as December 2008 and no later than February 2009," according to the statement. Teamsters General President Jim Hoffa called the membership's acceptance of the Modification Agreement a decision "to preserve good American jobs" at IBC. "The newly ratified agreement paves the way for the company to exit bankruptcy as a stand-alone entity which is the best opportunity for our members to keep their jobs," Mr. Hoffa said. "Our members knew this [A]greement was, by far, the best choice in order to provide IBC with a sound financial footing," said Richard Volpe, director of the Teamsters Bakery and Laundry Conference. He noted that during Agreement negotiations, the Union prioritized "to protect Teamsters' jobs, achieve value their sacrifices and put the Company in the best position to grow." "We have confidence in Ripplewood Holdings and believe that we can work together with the new management team at IBC so that it may survive and rebuild," Mr. Volpe added. The Teamsters has noted that it will provide IBC with the official results referendum, "as soon as practical after the ratification vote." 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 Nov. 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 receive 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 Debtors, on Oct. 4, 2008, filed another Plan of Reorganization, which contemplates IBC's emergence from Chapter 11 as a stand-alone company. The filing of the Plan was made in connection with the plan funding commitments, on Sept. 12, 2008, from an affiliate of Ripplewood Holdings L.L.C. and from Silver Point Finance, LLC, and Monarch Master Funding Ltd. (Interstate Bakeries Bankruptcy News, Issue No. 118; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) INTERSTATE BAKERIES: Wants Armour and NE Bakeries Consolidation --------------------------------------------------------------- Interstate Bakeries Corporation and eight of its subsidiaries and affiliates ask the he U.S. Bankruptcy Court for the Western District of Missouri to approve the substantive consolidation of these three entities into IBC: (1) Armour and Main Redevelopment Corporation; (2) New England Bakery Distributors, LLC; and (3) Mrs. Cubbison's Foods, Inc. According to the Debtors, Armour and NE Bakery are "inactive, essentially empty corporate shells." Armour has had no business or operations of any kind since the transfer of its property in May 1998, to Interstate Brands Corporation, of which Armour is a wholly-owned subsidiary. Similarly, NE Bakery has been inactive for at least four and a half years, and has no value on a liquidation basis. The trade claims filed against NE Bakery -- which aggregate less than $3,700 -- appear to be vendor claims that are incorrectly filed against NE Bakery because the creditors were located in the New England region, not because of a creditor relationship with NE Bakery. The reconciliation process involving the De Minimis Trade Debt of NE Bakery is continuing, the Debtors note. Mrs. Cubbison's is an operating entity whose entire business is outsourced either to third parties or other subsidiaries of the Company. All of the employees that perform work on behalf of Mrs. Cubbison's are employed by Brands. Mrs. Cubbison's trademark is owned by and registered in the name of Brands. Mrs. Cubbison's participates in the Debtors' consolidated cash management system. It maintains only two bank accounts in its own name, consisting of (i) a zero-balance checking account that receives funding from Brands only on an as-needed basis, and (ii) a deposit account with funds that are swept regularly into the Debtors' primary concentration account. Mrs. Cubbison's also has nominal trade debt totaling less than $14,000. The Debtors estimate that, in a Chapter 7 liquidation, Mrs. Cubbison's would yield perhaps substantially less than the $300,000 distribution provided for in IBC's New Plan of Reorganization filed on Oct. 4, 2008. $19.3-Mil. Control Group Claims The Debtors note that they have recently entered into settlements with the control group creditors, composed of a number of pension plans and the Pension Benefit Guaranty Corporation, with respect to withdrawal liability and other related claims aggregating $19.3 million. Pursuant to Section 1301(b)(1) of the Bankruptcy Code, each of the Debtors, including Armour, NE Bakery and Mrs. Cubbison's, is jointly and severally liable to the Control Group Creditors on account of the Control Group Claims under the Employee Retirement Income Security Act of 1974. Debtors: Substantive Consolidation is Appropriate J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, explains that the consolidation of Armour and NE Bakeries is warranted because it facilitates the Debtors' restructuring by eliminating the corporate vestiges of long-ago completed transactions. In the same manner, he says, Mrs. Cubbison's is dependent upon IBC and its operating Debtor- subsidiaries, hence, its value is derivative of, and inseparable from, that of IBC. Mr. Ivester explains that the substantive consolidation of the Entities into IBC should be approved because it will: * relieve the Debtors from seeking Court authority to formally dissolve or merge the Entities, as permitted by corporate law; * eliminate the burdens associated with maintaining the Entities' corporate existence; and * avoid the time, cost and expense that would likely ensue if Control Group Creditors should fail to vote for the Plan, and if Chapter 7 Liquidation or judicial dissolution proceedings should follow. Mr. Ivester relates that the New Plan of Reorganization filed by the Debtors on Oct. 4, 2008, ensures that creditors of each of the Entities to be consolidated into IBC will receive more than they would in a Chapter 7 liquidation, which is the likely alternative to the confirmation of the Plan. In particular, he says, the Plan provides that the Entities' creditors will have the right to share pro rata in a cash distribution. Since neither Armour nor NE Bakery has any assets, consolidation of each of them into IBC can have no negative impact upon their creditors. Because IBC is already jointly and severally liable for the Control Group Claims, consolidation will not cause any harm to any of IBC's creditors, Mr. Ivester tells Judge Venters. Furthermore, he contends, the consolidation of Mrs. Cubbison's with IBC "works no harm, because a liquidation would very likely result in no material distribution to creditors, and avoids the unjust result . . . of allocating to the Control Group Creditors substantially all of the de minimis value that would result from Mrs. Cubbison's liquidation." For these reasons, the Debtors ask the Court to approve the substantive consolidation of Armour, NE Bakery and Mrs. Cubbison's into IBC. A hearing to consider the Substantive Consolidation Motion is scheduled on Dec. 5, 2008. Parties-in-interest must file their objections to the Request, if any, on or before Nov. 28, 2008. 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 Nov. 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 receive 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 Debtors, on Oct. 4, 2008, filed another Plan of Reorganization, which contemplates IBC's emergence from Chapter 11 as a stand-alone company. The filing of the Plan was made in connection with the plan funding commitments, on Sept. 12, 2008, from an affiliate of Ripplewood Holdings L.L.C. and from Silver Point Finance, LLC, and Monarch Master Funding Ltd. (Interstate Bakeries Bankruptcy News, Issue No. 118; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) INTERSTATE BAKERIES: Wants Pref. Action Period Moved to Dec. 31 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Missouri extended to Dec. 31, 2008, the deadline within which Interstate Bakeries Corporation and its debtor-affiliates may pursue certain preference and other potential actions. The Debtors have noted that pursuant to separate Tolling Agreements with Action parties, the Debtors are required to seek the consent of the Parties to an extension of the Deadline if the Debtors need additional time to investigate: -- potential actions under Sections 544, 555, 547, 548 and 554 of the Bankruptcy Code; and -- potential actions that may be subject to Section 108, including state law fraudulent conveyance actions and derivative claims. Paul M. Hoffman, Esq., at Stinson Morrison Hecker LLP, in Kansas City, Missouri, relates that pending the anticipated confirmation of the Debtors' New Plan of Reorganization on Dec. 5, 2008, the Debtors will need more time to determine to pursue the Actions. If the Plan is confirmed on Dec. 5, 2008, it will become effective on or about Dec. 15, leaving the Debtors less than two weeks to commence service of process in the Actions, including approximately 200 Actions that are proposed to be assigned to the Creditors' Trust under the Plan, Mr. Hoffman, tells the Court. The Creditors' Trust will be established for the benefit of certain claims that existed and were estimated in the Disclosure Statement filed by the Debtors with the Court on Jan. 30, 2008, pursuant to a prior Plan. Accordingly, the Debtors ask the Court to allow them to commence service of process in the Preference and Prepetition Lenders Actions, specifically involving Adversary Actions 06-04191 and 06-04192, to June 30, 2009. Judge Venters will convene a hearing on Dec. 5, 2008, to consider the Debtors' request. Objections to the Extension Motion, if any, must be filed with the Court on or before Dec. 1. 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 Nov. 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 receive 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 Debtors, on Oct. 4, 2008, filed another Plan of Reorganization, which contemplates IBC's emergence from Chapter 11 as a stand-alone company. The filing of the Plan was made in connection with the plan funding commitments, on Sept. 12, 2008, from an affiliate of Ripplewood Holdings L.L.C. and from Silver Point Finance, LLC, and Monarch Master Funding Ltd. (Interstate Bakeries Bankruptcy News, Issue No. 118; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LAND STEWARDS: Involuntary Chapter 11 Case Summary -------------------------------------------------- Involuntary Debtor: Land Stewards, LC 1355 Beverly Rd. Suite 240 McLean, Va 22101 Tel: (703) 734-9730 Bankruptcy Case No.: 08-35895 Chapter 11 Petition Date: November 21, 2008 Bankruptcy Court: United States Bankruptcy Court Eastern District of Virginia (Richmond) Bankruptcy Judge: Kevin R. Huennekens Involuntary Debtor's Counsel: Pro Se Petitioning Creditors' Counsel: Paul S. Bliley, Jr., Esq. Williams, Mullen, Clark & Dobbins 1021 East Cary Street P. O. Box 1320 Richmond, VA 23218-1320 Tel: (804) 783-6448 E-mail: pbliley@williamsmullen.com Petitioning Creditors Nature of Claim Amount of Claim ----------- --------------- --------------- Frank P. Ellis, IV Unsecured Debt $154,199 9707 Woodlake Place New Market, MD 21774 Tel: (301) 865-3494 Joseph Betz Unsecured Debt $41,625 3221 Ramsland Way Frederick, MD 21704 Westwinds Properties, LLC Unsecured Debt $41,879 4502 Deer Spring Rd. Middleton, MD 21769 LA STANZA: Involuntary Chapter 11 Case Summary ---------------------------------------------- Involuntary Debtor: La Stanza Diva Ristorante,Inc. 315 Main Street Woburn, MA 01801 Bankruptcy Case No.: 08-18911 Chapter 11 Petition Date: November 21, 2008 Bankruptcy Court: United States Bankruptcy Court District of Massachusetts (Boston) Bankruptcy Judge: Joan N. Feeney Involuntary Debtor's Counsel: Pro Se Petitioning Creditors' Counsel: Paul S. Bliley, Jr., Esq. Williams, Mullen, Clark & Dobbins 1021 East Cary Street P. O. Box 1320 Richmond, VA 23218-1320 Tel: (804) 783-6448 E-mail: pbliley@williamsmullen.com Petitioning Creditors Nature of Claim Amount of Claim ----------- --------------- --------------- Scalley Real Estate,Inc. Loans $87,727 c/o Daniel P. Scalley, President 3 Oxford Place Woburn, MA 01801 Boston Factors, Inc. Loans $157,696 c/o Daniel Scalley, President 3 Oxford Place Woburn, MA 01801 Daniel P. Scalley Credit advance: $12,500 3 Oxford Place AMEX Woburn, MA 01801 Kristin A. Viveiros Wages $515 10 Hickory Ln Billerica, MA 01862 LAS VEGAS SANDS: Bank Loan Sells at Substantial Discount -------------------------------------------------------- Participations in a syndicated loan under which Las Vegas Sands is a borrower traded in the secondary market at 48.68 cents-on-the- dollar during the week ended November 28, 2008, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 7.55 percentage points from the previous week, the Journal relates. The syndicated loan matures on May 1, 2014, and Las Vegas Sands pays 175 basis points over LIBOR to borrow under the facility. The bank loan carries Moody's B2 rating and Standard & Poor's B+ rating. Based in Las Vegas, Nevada, Las Vegas Sands Corp. (NYSE: LVS) -- http://www.lasvegassands.com/-- owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo and convention center. The company also owns and operates the Sands Macao, the first Las Vegas-style casino in Macao, China. As of Sept. 30, 2008, the company has $14.7 billion in total assets, and $12.4 billion in total liabilities. Unrestricted cash balances as of September 30, stood at $1.28 billion while restricted cash balances were $239.1 million. Of the restricted cash balances, $199.6 million is restricted for Macao-related construction and $32.3 million is restricted for construction of Marina Bay Sands in Singapore. As of Sept. 30, total debt outstanding, including the current portion, was $10.35 billion. PricewaterhouseCooppers, Las Vegas Sands' auditors, previously concluded that there was substantial doubt about the company's ability to continue as a going concern. As reported by the Troubled Company Reporter, commencing September 30, 2008, Las Vegas Sands' U.S. senior secured credit facility and FF&E financings require the company's Las Vegas operations to comply with certain financial covenants, including to maintain a maximum leverage ratio of net debt, as defined, to trailing 12-month adjusted earnings before interest, income taxes, depreciation and amortization. The company initially concluded that if the capital raising program was unsuccessful and the company did not have access to the available borrowings under the U.S. senior secured credit facility, the company would need to immediately suspend portions, if not all, of its ongoing global development projects and consider other alternatives. The company raised substantial doubt about its ability to continue as a going concern. On November 10, 2008, Las Vegas Sands announced revised development plans and capital raising program. The company temporarily or indefinitely suspended portions of its global development projects to focus its development efforts on those projects with the highest rates of expected return on invested capital given the liquidity and capital resources available to the company. On November 14, the company completed the sale of 200,000,000 shares of its common stock and 10,446,300 shares of its 10% Series A Cumulative Perpetual Preferred Stock with warrants to purchase up to an aggregate of 174,105,348 shares of common stock, resulting in net proceeds of approximately $2.1 billion. The company received proceeds from the sale of the Preferred Stock to the public and the Adelson family of $504.0 million and $525.0 million, respectively, net of underwriter's discounts and commissions. The company also received net proceeds from the sale of its common stock of $1.06 billion. If the holders of the Preferred Stock exercise the cash settlement feature provided under the Warrants on or prior to their expiration date, the company could receive additional proceeds of up to $1.04 billion from the issuance of shares of its common stock. As reported by the Troubled Company Reporter on November 18, 2008, Las Vegas Sands said in a regulatory filing with the Securities and Exchange Commission that based on the actions that management has taken subsequent to November 5, 2008, together with net proceeds obtained from the transactions, management has concluded that the substantial doubt about the company's ability to continue as a going concern has been removed. In addition, PwC removed that substantial doubt. LAS VEGAS SANDS: Names Leven to Audit Panel, Complies with NYSE --------------------------------------------------------------- Las Vegas Sands Corp. said in a regulatory filing with the Securities and Exchange Commission that on November 24, 2008, its Board of Directors elected Michael A. Leven, a current member of the Board of Directors, to serve as a member of the Audit Committee. As a result, the company said it became in compliance with the requirements of Section 303.07(a) of the New York Stock Exchange's Listed Company Manual. The company related that on November 19, 2008, it notified the NYSE that Andrew R. Heyer had resigned as a member of its Board and all committees of the Board on which he served, including the Audit Committee. As a result, the membership of the company's Audit Committee was reduced to two directors. On November 20, 2008, Las Vegas Sands received a notice from the NYSE that the company is deficient in meeting the requirements of Section 303.07(a) of the NYSE's Listed Company Manual that requires that the audit committee of a listed company have three members. The company said Mr. Heyer resigned due to the increased demands on his time related to his personal business interests. Based in Las Vegas, Nevada, Las Vegas Sands Corp. (NYSE: LVS) -- http://www.lasvegassands.com/-- owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo and convention center. The company also owns and operates the Sands Macao, the first Las Vegas-style casino in Macao, China. As of Sept. 30, 2008, the company has $14.7 billion in total assets, and $12.4 billion in total liabilities. Unrestricted cash balances as of September 30, stood at $1.28 billion while restricted cash balances were $239.1 million. Of the restricted cash balances, $199.6 million is restricted for Macao-related construction and $32.3 million is restricted for construction of Marina Bay Sands in Singapore. As of Sept. 30, total debt outstanding, including the current portion, was $10.35 billion. PricewaterhouseCooppers, Las Vegas Sands' auditors, previously concluded that there was substantial doubt about the company's ability to continue as a going concern. As reported by the Troubled Company Reporter, commencing September 30, 2008, Las Vegas Sands' U.S. senior secured credit facility and FF&E financings require the company's Las Vegas operations to comply with certain financial covenants, including to maintain a maximum leverage ratio of net debt, as defined, to trailing 12-month adjusted earnings before interest, income taxes, depreciation and amortization. The company initially concluded that if the capital raising program was unsuccessful and the company did not have access to the available borrowings under the U.S. senior secured credit facility, the company would need to immediately suspend portions, if not all, of its ongoing global development projects and consider other alternatives. The company raised substantial doubt about its ability to continue as a going concern. On November 10, 2008, Las Vegas Sands announced revised development plans and capital raising program. The company temporarily or indefinitely suspended portions of its global development projects to focus its development efforts on those projects with the highest rates of expected return on invested capital given the liquidity and capital resources available to the company. On November 14, the company completed the sale of 200,000,000 shares of its common stock and 10,446,300 shares of its 10% Series A Cumulative Perpetual Preferred Stock with warrants to purchase up to an aggregate of 174,105,348 shares of common stock, resulting in net proceeds of approximately $2.1 billion. The company received proceeds from the sale of the Preferred Stock to the public and the Adelson family of $504.0 million and $525.0 million, respectively, net of underwriter's discounts and commissions. The company also received net proceeds from the sale of its common stock of $1.06 billion. If the holders of the Preferred Stock exercise the cash settlement feature provided under the Warrants on or prior to their expiration date, the company could receive additional proceeds of up to $1.04 billion from the issuance of shares of its common stock. As reported by the Troubled Company Reporter on November 18, 2008, Las Vegas Sands said in a regulatory filing with the Securities and Exchange Commission that based on the actions that management has taken subsequent to November 5, 2008, together with net proceeds obtained from the transactions, management has concluded that the substantial doubt about the company's ability to continue as a going concern has been removed. In addition, PwC removed that substantial doubt. LEAR CORP: Bank Loan Continues to Sell at Substantial Discount -------------------------------------------------------------- Participations in a syndicated loan under which Lear Corp. is a borrower traded in the secondary market at 49.50 cents-on-the- dollar during the week ended November 28, 2008, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 7.07 percentage points from the previous week -- when it traded at 56.57 cents-on-the-dollar - - the Journal relates. The syndicated loan matures on March 29, 2012, and Lear pays 250 basis points over LIBOR to borrow under the facility. The bank loan is unrated. Bank debt of other companies in the auto industry are also being sold at substantial discount, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. Participations in a syndicated loan under which Capital Automotive REIT is a borrower traded in the secondary market at 41.90 cents- on-the-dollar during the same period. This represents a drop of 6.10 percentage points from the previous week, the Journal relates. The syndicated loan matures on December 16, 2010, and Capital Automotive pays 175 basis points over LIBOR to borrow under the facility. The bank loan carries Moody's Ba1 rating and Standard & Poor's BB+ rating. Participations in a syndicated loan under which Swift Transportation Co. Inc., is a borrower traded in the secondary market at 43.08 cents-on-the-dollar during the same period, which represents a drop of 5.71 percentage points from the previous week. The syndicated loan matures on March 15, 2014, and Lear pays 275 basis points over LIBOR to borrow under the facility. The bank loan carries Moody's B1 rating and Standard & Poor's B+ rating. Based in Southfield, Michigan, Lear Corp. is a global automotive supplier, conducting business in two product operating segments: seating and electrical and electronic. The seating segment includes seat systems and the components. The electrical and electronic segment includes electrical distribution systems and electronic products, primarily wire harnesses, junction boxes, terminals and connectors, various electronic control modules, as well as audio sound systems and in-vehicle television and video entertainment systems. The assembly process with respect to the electrical and electronic segment is performed in low-cost labor sites in Mexico, Honduras, the Philippines, Eastern Europe and Northern Africa. Lear has divested substantially all of the assets of its interior segment, which included instrument panels and cockpit systems, headliners and overhead systems, door panels, flooring and acoustic systems and other interior products. MARK BOTTONE: Case Summary & 9 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Mark Bottone 63 Round Swamp Road Huntington, NY 11743 Bankruptcy Case No.: 08-76384 Chapter 11 Petition Date: November 13, 2008 Bankruptcy Court: United States Bankruptcy Court Eastern District of New York (Central Islip) Bankruptcy Judge: Robert E. Grossman Debtor's Counsel: Raymond W. Verdi, Jr., Esq. 48 South Service Road, Suite 102 Melville, NY 11747 Tel: (631) 465-0042 Fax: (631) 465-0049 E-mail: hellerverdi@aol.com Estimated Assets: $100,000 to $1,000,000 Estimated Debts: $1,000,000 to $100,000,000 A list of the Debtor's nine largest unsecured creditors is available at no charge at: http://bankrupt.com/misc/nyeb08-76384.pdf MARTIN SHAT: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Martin Brian Shat aka Marty Shat 7441 Darby Avenue Las Vegas, NV 89117 Joint Debtor: Anjanette Shat aka Anjanette Bryant Bankruptcy Case No.: 08-23136 Chapter 11 Petition Date: November 5, 2008 Bankruptcy Court: United States Bankruptcy Court District of Nevada (Las Vegas) Debtor's Counsel: CHRISTOPHER G. GELLNER, ESQ. 302 E. CARSON AVE. #808 LAS VEGAS, NV 89101 Tel: (702) 386-9393 E-mail: cggellner@lvcoxmail.com Total Assets: $1,990,600 Total Debts: $3,159,810 A list of the Debtor's 20 largest unsecured creditors is available at no charge at: http://bankrupt.com/misc/nvb08-23136.pdf MICHAELS STORES: Bank Loan Sells at 50% Off in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which Michaels Stores, Inc., is a borrower traded in the secondary market at 49.20 cents- on-the-dollar during the week ended November 28, 2008, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 4.70 percentage points from the previous week, the Journal relates. The syndicated loan matures on October 31, 2013, and Michaels Stores pays 225 basis points over LIBOR to borrow under the facility. The bank loan carries Moody's B2 rating and Standard & Poor's B rating. Based in Irving, Texas, Michaels Stores, Inc. -- http://www.michaels.com/-- is a specialty retailer in North America of arts, crafts, framing, floral, wall d�cor, and seasonal merchandise for the hobbyist and do-it-yourself home decorator. As of November 18, 2008, the Company owns and operates 1,014 Michaels stores in 49 states and Canada and 163 Aaron Brothers stores. Based in Irving, Texas, Michaels Stores, Inc. -- http://www.michaels.com/-- is a specialty retailer in North America of arts, crafts, framing, floral, wall decor, and seasonal merchandise for the hobbyist and do-it-yourself home decorator. As of November 18, 2008, the Company owns and operates 1,014 Michaels stores in 49 states and Canada and 163 Aaron Brothers stores. As of August 2, 2008, Michaels' balance sheet showed $1.7 billion in total assets; $4.6 billion in total liabilities, of which $3.8 billion are long-term debt; and $2.9 billion in stockholders' deficit. MICHAELS STORES: To Release Q3 Results Today, Sees Sales Drop ------------------------------------------------------------- Michaels Stores, Inc., is scheduled to release its third quarter results today, December 2, 2008. It is slated to conduct a conference call at 4:00 p.m. CT. In November, Michaels Stores said total sales for the third quarter were $906 million, a 3.0% decrease from last year's $934 million. Same-store sales for the quarter decreased 6.5% on a 2.8% decrease in average ticket, a 3.9% decrease in transactions, and a 0.2% increase in custom frame deliveries. Year-to-date sales of $2.549 billion decreased 0.5% from $2.561 billion for the same period last year. Same-store sales year-to-date were down 4.1% over the same period a year ago on a 1.2% decrease in average ticket, and a 2.9% decrease in transactions. Canadian currency translation reduced the average ticket for the third quarter by approximately 0.7% and added approximately 0.3% for the first nine months of fiscal 2008. Michaels Stores also said in November that its cash position at the end of the third quarter was approximately $92 million. In addition to its cash balance, the company has an asset-based revolving credit facility, which provides senior secured liquidity of up to $1.0 billion subject to a borrowing base. On September 19, 2008, Michaels Stores drew an aggregate of $120 million under its October 31, 2006 senior secured asset-based revolving credit facility with Banc of America, N.A. and other lenders. The company said it took this proactive step to ensure that it had adequate liquidity to meet its cash needs while there are disruptions in the debt markets. It said the funds would be used to support seasonal working capital needs, as well as semi- annual interest payments associated with the company's 10% Senior Notes due 2014 and 11-3/8% Senior Subordinated Notes due 2016. As of October 14, 2008, the borrowing base was $966 million with $515 million of unused availability. Borrowings under the Asset- based revolving credit facility bear interest at a rate per annum equal to, at the company's option, either (a) a base rate determined by reference to the higher of (1) the prime rate of Bank of America, N.A. and (2) the federal funds effective rate plus 1/2 of 1% or (b) a LIBOR rate subject to certain adjustments, in each case plus an applicable margin. The initial applicable margin for borrowings is 0.50% for base rate borrowings and 1.50% for LIBOR borrowings. With respect to any last out tranche borrowings, the initial applicable margin is 1.50% for base rate borrowings and 2.50% for LIBOR borrowings. The applicable margin is subject to adjustment each fiscal quarter based on the excess availability under the Asset-based revolving credit facility. Swingline Loans bear interest at a rate per annum equal to the base rate plus the applicable margin. Based in Irving, Texas, Michaels Stores, Inc. -- http://www.michaels.com/-- is a specialty retailer in North America of arts, crafts, framing, floral, wall decor, and seasonal merchandise for the hobbyist and do-it-yourself home decorator. As of November 18, 2008, the Company owns and operates 1,014 Michaels stores in 49 states and Canada and 163 Aaron Brothers stores. As of August 2, 2008, Michaels' balance sheet showed $1.7 billion in total assets; $4.6 billion in total liabilities, of which $3.8 billion are long-term debt; and $2.9 billion in stockholders' deficit. MIDWAY GAMES: Sumner Redstone Sells Controlling Stake in Firm ------------------------------------------------------------- Merissa Marr at The Wall Street Journal reports that National Amusements Inc. owner Sumner Redstone has sold his 87.2% controlling stake in Midway Games Inc. to private investor, Acquisition Holdings Subsidiary I LLC's Mark Thomas, for about $100,000, to help pay for his debts. WSJ relates that Mr. Redstone's stake had a market value of $30 million on Friday. Mr. Redstone, National Amusements, and Sumco, Inc., on Nov. 28, 2008, entered into a Stock Purchase Agreement with Acquisition Holdings, pursuant to which the Sellers sold to the Purchaser all of the Midway Games Common Shares the Sellers beneficially owned, which shares represent roughly 87.2% of the total issued and outstanding Common Shares of the company. Concurrently with the execution of the Stock Purchase Agreement, NAI and the Purchaser entered into a Participation Agreement, pursuant to which NAI granted to the Purchaser an undivided interest and participation in certain of the loans and advances made by NAI to Midway Games: NAI has agreed to make advances and loans to Midway and its affiliates in an aggregate amount not to exceed at any time outstanding (i) $30,000,000 under a Loan and Security Agreement, dated as of Feb. 29, 2008, and (ii) $40,000,000 under an Unsecured Loan Agreement, dated as of Feb. 29, 2008. A full-text copy of the Participation Agreement is available at no charge at: http://ResearchArchives.com/t/s?3585 Mr. Thomas will assume $70 million of senior secured and unsecured debt at Midway Games, says WSJ. According to WSJ, the sale represents a significant loss on Mr. Redstone's investment but secures a big tax benefit as he tries to sell other assets. Citing a person familiar with the situation, WSJ states that National Amusements would realize a tax loss of more than $800 million in 2008. The source said that and the company could use a portion of the loss against income earned this year and a tax refund of amounts paid in prior years, the report states. WSJ relates that National Amusements negotiating with its banks to restructure its $1.6 billion debt pile after breaching one of its debt covenants. The Redstone family has been discussing selling some of its assets, as part of the restructuring, the report says. WSJ states that the sale of the Midway Games stake was agreed on Friday and wasn't conducted as part of a deal with the banks. The sale would ease the pressure on the Redstone family and potentially contribute to a final deal with the banks, according to the report. According to WSJ, Mr. Redstone already sold $233 million of his holdings in Viacom Inc. and CBS Corp. to help ease his family's debt issues, and has promised not to sell any more of his holdings in those firms. Midway Games Falls Below Listing Standards at NYSE On Nov. 14, 2008, Midway Games received notification from the New York Stock Exchange that it has fallen below the standard for continued listing of its common stock on the NYSE that requires a minimum average closing price of $1.00 per share over 30 consecutive trading days. Under NYSE rules, Midway Games has six months from the date of the notice, subject to possible extension, to cure the deficiency. During this cure period, the company's shares will continue to be listed and traded on the NYSE. The company plans to notify the NYSE that it will seek to cure the deficiency. Midway Games' business operations and Securities and Exchange Commission reporting requirements are unaffected by this notice. About Midway Games Based in Chicago, Illinois, Midway Games, Inc. (NYSE: MWY), formerly Midway Manufacturing -- http://www.midway.com/-- is a video game publisher. The company sells video games for play on home consoles, handheld devices and personal computers to mass merchandisers, video rental retailers, software specialty retailers, Internet-based retailers and entertainment software distributors. It sells video games primarily in North America, Europe, Asia, and Australia for the major video game platforms and handheld devices. Bloomberg News says Midway is controlled by billionaire Sumner Redstone. Lender National Amusements is Mr. Redstone's holding company. Bloomberg says National Amusements and Redstone control 87% of Midway shares. MIDWAY GAMES: Director Waxman Unloads Equity Stake -------------------------------------------------- Robert N. Waxman, a director at Midway Games, Inc., disclosed in a regulatory filing with the Securities and Exchange Commission that he has disposed of his equity stake in the company on four separate transactions. Mr. Waxman unloaded a total of 8,000 shares on November 25, 2008. Mr. Waxman no longer holds company common stock. Mr. Waxman first filed a Form 4 with the SEC on November 26, 2008, to disclose the transaction. He filed an amended form two days later, indicating that the original filing incorrectly disclosed a derivative security transaction; however, no derivative security transactions occurred. About Midway Games Based in Chicago, Illinois, Midway Games, Inc. (NYSE: MWY), formerly Midway Manufacturing -- http://www.midway.com/-- is a video game publisher. The company sells video games for play on home consoles, handheld devices and personal computers to mass merchandisers, video rental retailers, software specialty retailers, Internet-based retailers and entertainment software distributors. It sells video games primarily in North America, Europe, Asia, and Australia for the major video game platforms and handheld devices. As reported in the Troubled Company Reporter on Nov. 13, 2008, Midway Games said that it continues to face significant challenges with respect to liquidity. In a regulatory filing with the Securities and Exchange Commission, Midway reported $75.9 million in net loss for the three months ended Sept. 30, 2008. Midway also disclosed $167.5 million in total assets, including $10.3 million in cash and cash equivalents, as of Sept. 30, 2008. The company had $271.0 million in total liabilities, including $189.2 million in current liabilities. Midway said it has experienced annual operating losses since its fiscal year ended June 30, 2000. MIDWAY GAMES: Slapped with 2 NYSE Non-Compliance Notices -------------------------------------------------------- Midway Games Inc., on November 24, 2008, received notice from NYSE Regulation, Inc. that it was not in compliance with the New York Stock Exchange's continued listing criteria under Section 802.01B of the NYSE Listed Company Manual because its average market capitalization over a consecutive 30 trading-day period was less than $75 million and its most recently reported stockholder' equity was less than $75 million. Under NYSE rules, the company has 45 days from the date of the notice to submit a plan to the NYSE to demonstrate its ability to achieve compliance with the continued listing standards within 18 months of receiving the notice. The company intends to submit such a plan. During this cure period, the company's shares will continue to be listed and traded on the NYSE, subject to the Company's compliance with other NYSE continued listing standards. The company's business operations and Securities and Exchange Commission reporting requirements are unaffected by this notice. The November 24 notice is in addition to the notice received on November 14, 2008, relating to the company's non-compliance with Section 802.01C of the Listed Company Manual. NYSE Regulation has said the company was not in compliance with the NYSE Listed Company Manual because the average closing price of its common stock was less than $1.00 per share over a consecutive 30 trading- day period as of the notification date. With respect to the November 14 notice, the company has said it is exploring its options in respect to this deficiency. Under NYSE rules, the company must notify the NYSER within 10 business days of receipt of the NYSER Notice of its intent to cure this deficiency, or it will be subject to the NYSE's suspension and delisting procedures. The company has six months from the date of the NYSER Notice to cure the deficiency. About Midway Games Based in Chicago, Illinois, Midway Games, Inc. (NYSE: MWY), formerly Midway Manufacturing -- http://www.midway.com/-- is a video game publisher. The company sells video games for play on home consoles, handheld devices and personal computers to mass merchandisers, video rental retailers, software specialty retailers, Internet-based retailers and entertainment software distributors. It sells video games primarily in North America, Europe, Asia, and Australia for the major video game platforms and handheld devices. As reported in the Troubled Company Reporter on Nov. 13, 2008, Midway Games said that it continues to face significant challenges with respect to liquidity. In a regulatory filing with the Securities and Exchange Commission, Midway reported $75.9 million in net loss for the three months ended Sept. 30, 2008. Midway also disclosed $167.5 million in total assets, including $10.3 million in cash and cash equivalents, as of Sept. 30, 2008. The company had $271.0 million in total liabilities, including $189.2 million in current liabilities. Midway said it has experienced annual operating losses since its fiscal year ended June 30, 2000. MIDWAY GAMES: Director Waxman Unloads Equity Stake -------------------------------------------------- Robert N. Waxman, a director at Midway Games, Inc., disclosed in a regulatory filing with the Securities and Exchange Commission that he has disposed of his equity stake in the company on four separate transactions. Mr. Waxman unloaded a total of 8,000 shares on November 25, 2008. Mr. Waxman no longer holds company common stock. Mr. Waxman first filed a Form 4 with the SEC on November 26, 2008, to disclose the transaction. He filed an amended form two days later, indicating that the original filing incorrectly disclosed a derivative security transaction; however, no derivative security transactions occurred. About Midway Games Based in Chicago, Illinois, Midway Games, Inc. (NYSE: MWY), formerly Midway Manufacturing -- http://www.midway.com/-- is a video game publisher. The company sells video games for play on home consoles, handheld devices and personal computers to mass merchandisers, video rental retailers, software specialty retailers, Internet-based retailers and entertainment software distributors. It sells video games primarily in North America, Europe, Asia, and Australia for the major video game platforms and handheld devices. As reported in the Troubled Company Reporter on Nov. 13, 2008, Midway Games said that it continues to face significant challenges with respect to liquidity. In a regulatory filing with the Securities and Exchange Commission, Midway reported $75.9 million in net loss for the three months ended Sept. 30, 2008. Midway also disclosed $167.5 million in total assets, including $10.3 million in cash and cash equivalents, as of Sept. 30, 2008. The company had $271.0 million in total liabilities, including $189.2 million in current liabilities. Midway said it has experienced annual operating losses since its fiscal year ended June 30, 2000. NATIONAL ATLANTIC: A.M. Best Affirms Issuer Credit Rating at "bb" ----------------------------------------------------------------- A.M. Best Co. on November 26, 2008, removed from under review with negative implications and affirmed the financial strength rating (FSR) of B++ (Good) and the issuer credit ratings (ICR) of "bbb" of the Palisades Group (Palisades) (Berkeley Heights, NJ) and its members. The ratings have been assigned a stable outlook. Concurrently, A.M. Best has removed from under review with negative implications and affirmed the financial strength rating FSR of B++ (Good) and ICRs of "bbb" of the High Point companies (Red Bank, NJ). The outlook assigned to these ratings is stable. Additionally, A.M. Best has removed from under review with negative implications and affirmed the ICR of "bb" on National Atlantic Holdings Corporation. Subsequently, A.M. Best has withdrawn the rating and assigned an "nr" as the company has filed for dissolution. The ratings reflect Palisades Group's adequate risk-adjusted capitalization, favorable operating earnings and well-established market position as a leading writer of personal lines business in New Jersey. Partially offsetting these positive rating factors are the group's elevated underwriting leverage position and business concentration in New Jersey. This concentration exposes the group to potential catastrophic weather-related losses, unfavorable judicial decisions, regulatory actions and increasing competitive pressures. The group's positive operating income over the latest five-year period was generated as a direct result of its steady investment income, focused operating strategy and knowledge of local market conditions. The outlook reflects the group's level of risk- adjusted capitalization, operating income and position within the New Jersey insurance market. The ratings also consider the August 1, 2008 acquisition of Proformance Insurance Company, a New Jersey-domiciled, personal lines carrier (renamed Palisades Property Casualty Insurance Company). Upon closing, Palisades streamlined claim handling processes and strengthened loss and LAE reserves. As a result of this transaction, Palisades will gain increased market share, become the largest independent agent carrier in New Jersey, create expense synergies and strengthen its competitive position in the state. The Palisades Group is comprised of Palisades Safety and Insurance Association, the lead company, and its wholly-owned subsidiaries: Palisades Insurance Company Palisades Property and Casualty Insurance Company High Point Preferred Insurance Company High Point Property and Casualty Insurance Company High Point Safety and Insurance Company Twin Lights Insurance Company Teachers Auto Insurance Company of New Jersey NATURE'S HARVEST: Collapse Is Due to Rising Interest Payments ------------------------------------------------------------- Michael Sasso at The Tampa Tribune reports that the declining economy, rising interest payments on a business loan, and chain competition has brought about Nature's Harvest Market and Deli, Inc.'s collapse. David Taylor, who sold the business in August 2008 to small natural foods chain Rollin' Oats, expanded the store to 18,000 square feet from 13,000 square feet, started carrying a larger selection of organic wine, and launched a new marketing campaign to better compete with Wild Oats -- now Whole Foods -- which was opening the Bay area's first natural foods superstore a mile away from his store. Tampa, Florida-based Nature's Harvest Market and Deli, Inc. -- http://www.naturesharvestmarket.com/-- is a family owned natural foods grocery store serving the Tampa Bay area for 20 years. The company filed for Chapter 11 protection on Oct. 9, 2007 (Bankr. M. D. Fla. Case No. 07-09454). Russell M. Blain, Esq., at Stichter, Riedel, Blain & Prosser, P.A., represents the company in its restructuring effort. The company listed assets of $100,000 to $1 million and debts of $1 million to $100 million. PAPER INTERNATIONAL: Files Schedules of Assets and Liabilities -------------------------------------------------------------- Paper International Inc. and its debtor-affiliates delivered to the United States Bankruptcy Court for the Southern District of New York their schedules of assets and liabilities: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property B. Personal Property $112,781,426 C. Property Claimed as Exempt D. Creditors Holding Secured Claims E. Creditors Holding $4,412,483 Unsecured Priority Claims F. Creditors Holding $545,169,311 Unsecured Non-priority Claims ------------ ------------ TOTAL $112,781,426 $549,581,794 About Paper International Headquartered in Prewitt, New Mexico, Paper International, Inc. -- http://www.internationalpaper.com-- manufactures paper and packaging products with operations in North America, Europe, Latin America, Russia and North Africa. The Debtors have more than 50,000 employees in in 20 countries. The company and Fiber Management of Texas, Inc. filed for Chapter 11 protection on Oct. 6, 2008 (Bankr. S.D. N.Y. Lead Case No.08-13917). Larren M. Nashelsky, Esq., at Morrison & Foerster LLP, represents the Debtors. The Debtor selected Meade Monger as their chief restructuring officer. The Debtors also selected AP Services, LLC, as their restructuring advisor. Corporacion Durango, S.A.B. de C.V. of Durango, Mexico, owns 100% of the Debtors' interests as of October 6, 2008. Corporacion Durango filed a voluntary Chapter 15 petition in the United States Bankruptcy Court for the District of New York, Case No. 08-13911. Paper International listed assets between $100 million and $500 million, and debts between $500 million to $1 billion, while Fiber Management listed assets between $1 million to $10 million and debts between $500 million and $1 billion. PILGRIM'S PRIDE: Files for Chapter 11 Bankruptcy in Texas --------------------------------------------------------- Pilgrim's Pride Corporation together with certain of its wholly owned subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas in an effort to address certain short-term operational and liquidity challenges. Richard A. Cogdill, chief financial officer of Pilgrim's Pride, relates that over the past 12 months, the underlying economics of the poultry industry have deteriorated dramatically. Profitability in the chicken industry is materially affected by the commodity prices of feed ingredients. The cost of corn and soybeans, the company's primary feed ingredients, increased significantly over the past year as a result of, among other things, increasing demand for these products around the world and because of the passage of the Energy Independence and Security Act of 2007. That act requires a gradual increase in the production of biofuels, including ethanol from nine billion gallons in 2008 to 36 billion gallons by 2022. As a result, the demand for, and price of, corn has increased. The price of corn has historically been in the $2 to $3 per bushel range, but rose as high as $7.65 per bushel in late June of 2008, resulting in significantly higher feed expenses for the company which in turn, contributed to significant financial losses. The company's attempt to hedge their feed ingredients costs against an increase in commodity prices during the fourth quarter of fiscal year 2008 resulted in increased losses when the price of corn abruptly reversed course from its record highs and began to decline in July and throughout the remainder of the summer and into the fall of 2008. The company related that the cost of energy has also significantly increased. The company operates almost three dozen processing plants and their infrastructure includes production and manufacturing equipment, as well as associated transportation delivery costs. The company said it is necessary for the it to allocate more of their budget to fund fuel and other energy costs to ensure the smooth functioning of the the company's operations due to higher energy prices. In addition to the increases in the cost of feed ingredients and the cost of energy, the supply of chicken products has continued to exceed profitable demand, leading to an oversupply in the industry. Further, in addition to increased competition from other meat proteins as these meat proteins liquidated livestock to mitigate the adverse effects of soaring feed ingredient costs, the U.S. chicken industry, like others has been negatively affected by the downturn in the nation's economy. This has resulted in reduced demand for chicken products in general, including Pilgrim's Pride's products, and has made it more difficult for the Debtors to increase product pricing to offset their higher costs for feed and energy. The company stated that market pricing for chicken breast meat during the summer months -- historically a time of peak demand -- proved much weaker than expected in the summer of 2008. In the months prior to the bankruptcy filing, the Debtors considered various out-of-court restructuring alternatives. They retained Bain Corporate Renewal Group, LLC and Lazard Freres & Co. LLC to work as their advisors in connection with operational and balance sheet restructuring alternatives. In November 2008, PPC also appointed William K. Snyder, managing partner of CRG Partners Group, LLC, as chief restructuring officer to assist the company in capitalizing on cost reduction initiatives, developing restructuring plans, and exploring opportunities to improve PPC's long-term liquidity. However, due to the worldwide credit crisis, no viable out-of-court balance sheet restructuring alternative materialized. As the Debtors' liquidity position continued to worsen, and the end of the waiver period granted by lenders approached, the Debtors determined that the only method to protect the interests of all stakeholders was to seek protection under the Bankruptcy Code. The company's operations are expected to continue as normal throughout the bankruptcy process while it develops a reorganization plan to resolve its temporary operational and liquidity issues. According to the company, its operations in Mexico and certain operations in the United States were not included in the filing and will continue to operate outside of the Chapter 11 process. Capital Structure The company said it had approximately $224.9 million in general unsecured claims as of Nov. 24, 2008. In addition, the company said it is the issuer of notes under three indentures aggregating approximately $657 million in unsecured indebtedness. According to the company, its primary sources of funding are: i) a revolving credit facility, dated as of Feb. 8, 2007, as amended and restated, by among others, the company and its affiliates To-Ricos, Ltd. and To-Ricos Distribution, Ltd., and Bank of Montreal, Chicago Branch administrative agent; and ii) revolving credit facility and term loan dated Sept. 21, 2006, as amended and restated, by among others, the company and CoBank ACB, as administrative agent, and the other agents and syndication parties signatory thereto. The BMO Credit Agreement provides for a revolving credit facility of $300 million and is secured by all inventory and farm products whether now owned or existing or hereafter created, including all claims and rights of the company against any of its growers. The agreement matures on Feb. 8, 2013. The company said Pilgrim Interests, Ltd., an entity controlled by Lonnie Pilgrim and his family, is a guarantor with respect to 50% of the obligations under the agreement. As of Nov. 28, 2008, the aggregate principal amount outstanding under the BMO Agreement was approximately $311 million. The CoBank Credit Agreement provides for a revolving credit facility of $550 million and a term loan of $750 million secured by all of the company's real property interests, furniture, fixtures and equipment located at, or used in connection with, the poultry hatching, raising, slaughtering, processing, packaging, and shipping operations and facilities. The agreement matures on Sept. 16, 2011. Pilgrim Interests, Ltd. is a guarantor under the agreement with respect to 50% of the obligations of the company. As of Nov. 28, 2008, the aggregate principal amount outstanding was $1.127 billion under the agreement. Amended and Restated Receivables Purchase Agreement The company said it is also party to (i) an Amended and Restated Receivables Purchase Agreement dated Sept. 26, 2008, by and among the company and a non-debtor subsidiary, Pilgrim's Pride Funding Corporation, BMO Capital Markets Corp. and various purchasers; and (ii) a Purchase and Contribution Agreement dated June 26, 2008, by and between the company and its non-debtor unit. On the one hand, under the Purchase and Contribution Agreement routinely sells a pool of accounts receivable from customers, on a revolving basis, to Pilgrim's Pride Funding and, on the other hand, under the Amended and Restated Receivables Purchase Agreement, PPFC then sells undivided interests in the receivables to an outside conduit, which has committed, under certain circumstances and subject to certain conditions, to purchase undivided interests in those receivables. The company said it retains servicing responsibility over servicing all receivables subject to the Amended and Restated Receivables Purchase Agreement. The Amended and Restated Receivables Purchase Agreement also, among other things, gives BMO Capital Markets certain control over lock-box and collection accounts established in connection with the agreement, the company noted. As of Nov. 28, 2008, the aggregate principal amount outstanding under the Amended and Restated Receivables Purchase Agreement was approximately $224.9 million, the company adds. Notes and Debt Securities The company stated that it is the issuer under three indentures: i) approximately $400 million 7 5/8% Senior Notes due May 1, 2015; ii) approximately $250 million aggregate principal amount outstanding of 8 3/8% Senior Subordinated Notes due May 1, 2017; and iii) approximately $6.996 million aggregate principal amount outstanding of 9 1/4% Senior Subordinated Notes, due Nov. 15, 2013. According to the company, None of its subsidiaries is a guarantor under any of the Notes. The company said that the Senior Notes are its unsecured senior obligations and rank equally with all of its other senior indebtedness and are effectively subordinated to its existing and future secured obligations and to the indebtedness of its subsidiaries. In addition, the Subordinated Notes are the company's unsecured senior subordinated obligations which are subordinated to its senior obligations and are effectively subordinated to its existing and future secured obligations and the indebtedness of its subsidiaries. The Senior Subordinated Notes rank pari passu with the Subordinated Notes, the company noted. Industrial Revenue Bond Debt The company said it is a number of lease agreements backing certain Industrial Revenue Bonds issued by various municipalities. The IRBs were issued to fund construction of facilities in these municipalities, which in turn were leased to the company. The lease payments on the facilities satisfy the amounts due on the bonds. As of its bankruptcy filing, the company had at least $39.2 million outstanding pursuant to IRBs held by third parties. Common Stock The company further said that it had over 74 million shares of common stock outstanding. Through two limited partnerships and related trusts and voting agreements, Lonnie Pilgrim, his wife Patricia Pilgrim, and his son, Lonnie Ken Pilgrim, control 62.225% of the voting power of the company's outstanding stock. "Over the past year, Pilgrim's Pride has faced a number of significant challenges including high feed-ingredient costs, an oversupply of chicken, weak market pricing and softening demand," said Clint Rivers, president and chief executive officer. "After careful consideration of all available alternatives, the company's Board of Directors determined that a Chapter 11 filing was a necessary and prudent step and the best way to obtain the financing necessary to maintain regular operations and allow for a successful restructuring. We expect to emerge from this restructuring a stronger, more competitive company that is well positioned for growth and enhanced profitability. We are proud of the consistently high quality of our products, our valued customer relationships and the high level of service we provide." In conjunction with the filing, the company is seeking approval to enter into a $450 million debtor-in-possession financing facility arranged by Bank of Montreal as lead agent. If approved by the Court, the DIP Financing will provide an immediate source of funds to the Company, enabling it to satisfy the customary obligations associated with the daily operation of its business, including the timely payment of employee wages and other obligations. Moreover, the company has asked the Court for additional authorizations, including permission to continue paying employee wages and salaries, to provide employee benefits without interruption, and to continue with its various customer programs. The company said suppliers should expect to be paid for post-petition purchases of goods and services in the ordinary course of business during the Chapter 11 process. "On behalf of the entire management team, I would like to thank our customers and suppliers for their continued support during this process. I also want to recognize our dedicated employees, whose continued support and commitment are crucial to the future success of our company. We are all dedicated to making this financial restructuring a success," Mr. Rivers concluded. About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation (NYSE: PPC) -- http://www.pilgrimspride.com/-- produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the U.S., Mexico and in Puerto Rico. In addition, the company owns 34 processing plants in the United States and 3 processing plants n Mexico. The processing plants are supported by 42 hatcheries, 31 feed mills and 12 rendering plants in the United States and 7 hatcheries, 4 feed mills and 2 rendering plants in Mexico. Moreover, the company owns 12 prepared food production facilities in the United States. The company employs about 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah. * * * As reported in the Troubled Company Reporter on Sept. 29, 2008, Standard & Poor's Ratings Services lowered its ratings on Pilgrim's Pride Corp., including its corporate credit rating to 'CCC+' from 'BB-'. In addition, S&P revised the CreditWatch implications to developing from negative. Moody's Investors Service lowered the ratings of Pilgrim's Pride Corporation, including: (i) corporate family rating to B2 from B1; (ii) probability of default rating to B2 from B1; (iii) $400 million 7.625% senior notes due 2015 to Caa1 from B3 and (iv) $250 million senior subordinated notes due in 2017 and $5.1 million (original $100 million) senior subordinated notes due 2013 to Caa1 from B3 PILGRIM'S PRIDE: Lines Up $450-Mil. DIP Loan from Bank of Montreal ------------------------------------------------------------------ Pilgrim's Pride Corporation and its debtor affiliates ask the United States Bankruptcy Court for the Northern District of Texas Fort Worth Division for approval to obtain $450 million of debtor- in-possession financing from Bank of Montreal as lead agent. Richard A. Cogdill, chief financial officer of Pilgrim's Pride, relates that the proposed financing will be senior to all obligations under (i) the BMO Agreement, of which $311 million is owed to Bank of Montreal, Chicago Branch administrative agent, and other lenders and (ii) the CoBank Agreement, under which $1.27 billion is outstanding and owed t CoBank ACB, as administrative agent, and the other agents and syndication parties signatory thereto. As such, the liens created pursuant to this financing arrangement are priming liens with respect to liens currently held by the BMO Lending Group and the CoBank Lending Group. Prior to the commencement of the Debtors' chapter 11 cases, the Debtors and Lazard Freres & Co. LLC, the Debtors' financial advisors, surveyed various sources of postpetition financing, including financing from the Prepetition Lenders and unrelated third parties. The Debtors and Lazard approached various other parties having the capability of providing a facility of the size required, including the proposed DIP Lenders. Although they approached several parties, they were only able to solicit proposals from two parties who indicated interest in providing postpetition financing and provided concrete pricing and structure proposals. In exploring their options, the Debtors recognized that the obligations owed to the Prepetition Lenders are secured by substantially all of the Debtors' real and personal property, such that either (i) the liens of the Prepetition Lenders would have to be primed to obtain postpetition financing, or (ii) the Debtors would have to find a postpetition lender willing to extend credit that would be junior to the liens of the Prepetition Lenders. Indeed, each of the proposals the Debtors received required liens priming those of the Prepetition Lenders. The Prepetition Lenders advised the Debtors that they would not grant a blanket consent to be primed by another lender group; however, a subset of the Prepetition Lenders indicated a willingness to negotiate terms of a postpetition financing facility the Debtors believed other Prepetition Lenders would find acceptable. The Debtors are seeking authorization to enter into the DIP Credit Agreement on an interim basis pending a final hearing. Based on their cash needs during the interim period and the inherent uncertainties in collection of accounts receivable, the Debtors have determined that during the interim period and until the Final Order is entered, they will need to borrow from the DIP Lenders approximately $365 million. The availability of the Interim DIP Loan will not only ease the Debtors' liquidity constraints beyond access to the cash collateral, but will allow the Debtors to satisfy the aggregate principal amount outstanding under the Amended and Restated Receivables Purchase Agreement. The A/R Takeout will enable the receivables that have been sold pursuant to the Amended and Restated Receivables Agreement to be repurchased by the Debtors. Without the A/R Takeout, the Debtors' liquidity and access to funds under the DIP Facility will be negatively impacted. Availability under the DIP Facility is determined by a borrowing base consisting of eligible receivables. By repurchasing the accounts receivables subject to the Amended and Restated Receivables Agreement, the Debtors, therefore, increase their access to funds available under the DIP Facility and as a result, improve liquidity. Moreover, upon the repurchase of the receivables subject to the Amended and Restated Receivables Agreement, these receivables will become assets of the Debtors' estate, Mr. Cogdill explains. Ultimately, the DIP Lenders, who comprise certain of the Prepetition Lenders, were willing to extend postpetition financing on the terms and conditions described in the Motion, including pricing and fee structure more favorable, in the aggregate, than any alternative proposal. Moreover, nonparticipating Prepetition Lenders have consented to the provisions of the proposed DIP financing. In order to address their working capital needs and fund their reorganization efforts, the Debtors also require the use of cash collateral of the Prepetition Lenders. Coupled with the proceeds of the DIP Credit Facility, the use of Cash Collateral will provide the Debtors with necessary additional capital to operate their businesses, pay their employees, maximize value, and successfully reorganize under chapter 11. The proposed financing includes adequate protection in the form of replacement liens and other payments to the Prepetition Lenders for use of the Cash Collateral. Mr. Codgill avers that the credit provided under the DIP Credit Facility and the use of Cash Collateral will enable the Debtors to continue to satisfy their customers' needs, provide customer care and marketing services, pay their employees, and operate their businesses in the ordinary course and in an orderly and reasonable manner to preserve and enhance the value of their estates for the benefit of all parties in interest. The availability of credit under the DIP Credit Facility will provide confidence to the Debtors' creditors that will enable and encourage them to continue their relationships with the Debtors. Finally, the implementation of the DIP Credit Agreement will be viewed favorably by the Debtors' employees, customers and vendors, thereby promoting a successful reorganization. PILGRIM'S PRIDE: Case Summary & 50 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Pilgrim's Pride Corporation P.O. Box 93 Pittsburg, Texas 75686 Tel: (800) 824-1159 Bankruptcy Case No.: 08-45664 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- PFS Distribution Company 08-45661 PPC Transportation Company 08-45665 To-Ricos, Ltd. 08-45669 To-Ricos Distribution, Ltd. 08-45670 PPC of West Virginia, Inc. 08-45673 PPC Marketing, Ltd. 08-45676 Type of Business: The Debtors produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the U.S., Mexico and in Puerto Rico. In addition, the company owns 34 processing plants in the United States and 3 processing plants in Mexico. The processing plants are supported by 42 hatcheries, 31 feed mills and 12 rendering plants in the United States and 7 hatcheries, 4 feed mills and 2 rendering plants in Mexico. Moreover, the company owns 12 prepared food production facilities in the United States. The company employs about 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah. See: http://www.pilgrimspride.com/ Chapter 11 Petition Date: December 1, 2008 Court: Northern District of Texas Debtor's Counsel: Stephen A. Youngman, Esq. Weil, Gotshal & Manges LLP 200 Crescent Court, Suite 300 Dallas, Texas 75201 Tel: (214) 746-7700 Special Counsel: Baker & McKenzia LLP Investment Bankers: Lazard Freres & Co. LLC Chief Restructuring Officer: CRG Partners Group LLC Claims and noticing agent: Kurztman Carson Consulting LLC Total Assets: $3,751,759,571 as of Sept. 27, 2008 Total Debts: $2,718,971,294 as of Sept. 27, 2008 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo 7.625% Senior $15,250,000 Attn: Patrick Giordano Notes, Due May 1 1445 Ross Avenue 2015 2n Floor Dallas, TX 75202 Tel: (214) 740-1573 Fax: (214) 777-4086 Wells Fargo 8.375% Senior $10,468,750 Attn: Patrick Giordano Notes, Due May 1 1445 Ross Avenue 2017 2n Floor Dallas, TX 75202 Tel: (214) 740-1573 Fax: (214) 777-4086 International Paper Inc. trade debt $6,087,998 Attn: Don Washington PO Box 676565 Tel: (901) 413-6244 Fax: (318) 994-6275 Tom Wade Companies trade debt $2,611,942 In Care of Vendor Relations PO Box 133 347 South Main Dyer, TN 38330 Tel: (731) 692-3677 Aviagen Inc. trade debt $2,048,311 Attn: Shannon Burasco 5015 Bradford Dr. Huntsville, AL 35805 Tel: (479) 524,4718 Fax: (256) 890-3895 Southern Hens Inc. trade debt $1,987,369 PO Box 8000 329 Moselle-Seminary Road Moselle, MS 39459 Tel: (601) 582-2262 Fax: (601) 584-4747 Novus International Inc. trade debt $1,712,830 Attn: Shawn Atkins 20 Research Park Drive St. Charles, MO 63304 Tel: (314) 576-8886 Fax: (314) 576-6499 Cargill Inc. trade debt $1,450,950 Attn: John Coffelt PO Box 841674 Dallas, TX 75284 Tel: (952) 742-4590 Fax: (316) 264-8798 CR England & Sons Inc. trade debt $1,349,990 Attn: Mike Bunnell PO Box 52888 Phoenix, AZ 86072 Tel: (801) 974-3246 Fax: (801) 977-6623 Elkhart Grain trade debt $1,290,843 Attn: Don Ludwig PO Box 216 Elkhart, IL 62634 Tel: (217) 947-2751 Fax: (217) 947-2942 Trouw Nutrition USA LLC trade debt $1,282,936 Attn: David Bradham PO Box 219 115 Executive Drive Highland, IL 62249 Tel: (864) 226-0384 Fax: (618) 654-6700 Kokomo Grain Company Inc. trade debt $1,278,704 Attn: Tom Madru PO Box 745 1002 W. Morgan Street Kokomo, NY 46903 Tel: (765) 457-7536 Fax: (765) 456-1207 Cobb Vantress Inc. trade debt $1,214,041 Attn: Heath Wessels PO Box 1030 Siloam Springs, AR 72761 Tel: (479) 524-3166 Fax: (479) 549-2860 Newly Weds Foods Inc. trade debt $1,160,191 Attn: Loy Shaw PO Box 95056 150 S. Wacker Drive, Ste. 3200 Chicago, IL 60606 Tel: (214) 683-4299 Fax: (479) 756-5211 Demeter LP trade debt $1,067,710 Attn: Bob Seegerss Jr. 23619 Route 173 Harvard, IL 60033 Tel: (815) 459-1600 Fax: (815) 943-5132 Airgas Dryice trade debt $1,018,345 Attn: Phil Filer 6340 Sugar Loaf Pkwy. Suite 300 Duluth, GA 30097 Tel: (770) 717-2200 ext. 114 Fax: (877) 212-6081 Ecolab trade debt $799,887 Attn: Dan Siegler PO Box 905327 Charlotte, NC 28290 Tel: (651) 261-0075 Fax: (651) 293-2069 Motion Industries Inc. trade debt $799,887 Attn: Gerald Siegler PO Box 9055327 Charlotte, NC 28290 Tel: (205) 951-1195 Fax: (205) 951-1580 Illes Company Inc. trade debt $694,349 Attn: Rick Illes PO Box 35412 5527 Redfield St. Dallas, TX 75235 Tel: (214) 689-1304 Fax: (214) 951-9625 Alpharma Inc. trade debt $674,130 Attn: Travis Goodner 440 RT 2E Bridgewater, NJ 08807 Tel: (936) 564-4328 Fax: (908) 566-4137 Elanco Animal Health trade debt $656,429 Attn: Bryana Clover PO Box 121020 Dallas, TX, 75312 Tel: (903) 216-2812 Fax: (317) 276-9434 PCS Sales (USA) Inc. trade debt $645,621 Attn: Shane Williams PO Box 71029 Chicago, IL 60694 Tel: (847) 849-4381 DeGussa-Huls Corporation trade debt $612,538 Attn: Joe Parsley 65 Challenger Road Ridgefield Park, NJ 07660 Tel: (479) 986-0720 Fax: (201) 807-3183 JM Swank Company Inc. trade debt $604,397 Attn: Rond Pardekooper 395 Herky Street North Liberty, IA 52317 Tel: (800) 593-6375 Fax: (402) 516-0639 Lease Plan USA Inc. equipment lease $603,495 In Care of Vendor Relations PO Box 930927 Atlanta, GA 31193 Tel: (770) 933-9090 Fax: (678) 202-8700 Advantage Packaging & Paper trade debt $562,745 Attn: Mike Chisholm 4019 Lake Brazos Lane Richmond, TX 77406 Tel: (281) 413-0987 W C Rice Oil Co. Inc. trade debt $554,670 Attn: Joe Fields 2511 28th St. SW Birmingham, AL 35211 Tel: (205) 795-2814 Fax: (205) 648-0213 RFW Construction Group trade debt $532,600 Attn: Larry Rogers PO Box 1206 1801 Hwy. 51 Bypass N. Dyersburg, TN 38024 Tel: (731) 286-5661 Fax: (731) 286-4564 Millard Refrigerated Service trade debt $490,403 Attn: Mark Conklin 4715 South 132nd St. Omaha, NE 68137 Tel: (817) 626-2800 Fax: (601) 936-6330 Colormaster LLC trade debt $488,167 Attn: Ben Fryer PO Box 2289 632 Smith Road Albertvivlle, AL 35950 Tel: (256) 572-3735 Fax: (256) 878-8835 OK Foods Inc. trade debt $465,102 PO Box 1787 4601 N. 6th St. Fort Smith, AR 72902 Tel: (501) 783-4186 Fax: (501) 784-1135 Flint River Services Inc. trade deb $460,176 Attn: Zack Aultman PO Box 50065 1019 Worth St. Albany, GA 31703 Tel: (229) 883-1912 Fax: (229) 883-2301 McCormick & Company Inc. trade debt $452,396 Attn: Phil Kafarakis 211 Schilling Circle Hunt Valley, MD 21-31 Tel: (410) 771-7453 Fax: (972) 579-7308 Alatrade Foods LLC trade debt $448,393 Attn: Dale Carroll 725 Blount Avenue Guntersville, AL 35976 Tel: (256) 593-3152 Fax: (256) 571-9977 KLLM Inc. trade debt $445,194 Attn: Tood Gooch 134 Riverview Drive Richland, MS 39218 Tel: (866) 475-1036 Fax: (770) 983-7116 Kennesaw Transportation Inc. trade debt $444,351 Attn: Coy Parker PO Box 249 White, GA 30184 Tel: (800) 443-0768 ext. 1214 Fax: (770) 382-3011 Hubbard Farms Inc. trade debt $434,154 Attn: Gary Warren PO Box 10065 Uniondale, NY 11555 Tel: (479) 750-1531 Fax: (423) 447-6661 Southern Refrigerated Inc. trade debt $433,432 Attn: Rodney Danley 8055 Hwy. 67 N. Texarkana, AR 71854 Tel: (888) 778-8190 Fax: (870) 216-4170 Hood Packaging Corporation trade debt $427,144 Attn: Brian Steinwagner 1887 Gateway Blvd. Arden Hills, MN 55347 Tel: (612) 718-7155 Fax: (601) 833-9354 Key Equipment Finance trade debt $424,690 Division PO Box 1865 Albany, NY 12201 Tel: (800) 746-2436 Fax: (800) 800-3671 C.H. Robinson Worldwide Inc. trade debt $410,776 Attn: Paul Moline 14701 Charson Road Eded Prairie, MN 55347 Tel: (800) 580-3385 Fax: (224) 224-1801 John R. White Company Inc. trade debt $402,248 Attn: Brian Smith PO Box 10043 3701 8th Avenue N. Birmingham, AL 35222 Tel: (205) 595-8381 Fax: (205) 595-8386 Kerry Specialty Ingredients trade debt $388,042 Attn: Kevin Williams PO Box 409141 Tel: (972) 516-1814 Fax: (608) 363-1598 Integral Texas Pallet trade debt $378,503 Operations Attn: Randy Womack 6829 Flintlock Road Houston, TX 77040 Tel: (210) 917-6624 Fax: (713) 674-3492 DST Transportation trade debt $367,423 Attn: Deborah Shope 2565 Thompson BR Rd. Suite 110 Gainsville, GA 30501 Tel: (800) 895-9088 Fax: (770) 532-0027 Specialty Industries Inc. trade debt $250,225 Attn: Lloyd Cunningham 8685 Grand Ledge Hwy. Sunfield, MI 48890 Tel: (517) 566-7251 Fax: (517) 566-7314 Polytec Inc. trade debt $348,490 Attn: Martin Guthrie PO Box 659 191 Barley Park Mooresville, NC 28115 Tel: (704) 660-5195 Fax: (704) 662-3498 Atlas Cold Storage USA trade debt $347,913 Attn: Stan Chatlen North York, Ontario M2N 5P8 Tel: (678) 432-6729 Fax: (416) 225-2353 Ivesco Holdings LLC trade debt $339,791 Attn: Drew Weir 124 Country Club Rd. Iowa Falls, IA 50126 Tel: (479) 717-1840 Fax: (479) 717-1836 Bank of New York Mellon 9.25% Senior $323,565 Attn: Alma Burgess Subordinated Towermarc Plaza Notes, Due Nov. 101161 Centurion Parkway 15, 2013 Jackonsville, FL 32256 Alma Burgess 601 Travis St. 16th floor Houston, TX 77002 Tel: (713) 216-5969 Fax: (712) 483-6959 Ryder Attn: Kevin P. Sauntry 6000 Windward Pkwy. Alpharetta, GA 30005 Tel: (770) 569-6511 Fax: (314) 298-3814 The petition was signed by chief financial officer Richard A. Cogdill. POWERMATE HOLDING: Court Approves Settlement With Sun Capital ------------------------------------------------------------- Bill Rochelle of Bloomberg News reports that the Official Committee of Unsecured Creditors of Powermate Holding Corp. obtained approval from United States Bankruptcy Court for the District of Delaware for a settlement of an August lawsuit against Sun Capital Partners Inc. According to Mr. Rochelle, the Committee asserted that Sun Capital, who bought 95% of Powermate Holdings in 2004, caused the company to make a $20 million dividend, which the company argues was a fraudulent transfer and breach of fiduciary duty. Mr. Rochelle relates that a $4.7 million fund will be created for unsecured creditors and Sun Capital will waive unsecured claims to stop the lawsuit. The unsecured creditors' fund will receive one- third of collections from specified assets that they wouldn't otherwise see, Mr. Rochelle continues. About Powermate Holdings Headquartered in Aurora, Illinois, Powermate Corp. -- http://www.powermate.com/-- manufactures portable and home standby generators, air compressors, and pressure washers. Powermate Holding Corp. is the parent of Powermate Corp. In turn, Powermate Corp. owns 100% of Powermate International Inc. Powermate Corp. operates the companys assets located in the United States. Powermate International has sales employees in Hong Kong and the Philippines. Powermate Holding has no employees or operations. Sun Capital Partners bought 95% of Powermate in 2004. Powermate Holding has two other non-debtor subsidiaries,Powermate Canadian Corp., located in Canada and Powermate S. de R.L. de C.V., which is domiciled in Mexico. The three companies filed for chapter 11 protection on March 17, 2008 (Bankr. D. Del. Lead Case No.08-10498). Kenneth J. Enos, Esq. and Michael R. Nestor, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors. The Official Committee of Unsecured Creditors, which has seven creditor members, is represented by Monika J. Machen, Esq., at Sonnenschein Nath Rosenthal LLP. On May 23, 2008, the Debtors' summary of schedules posted total assets of US$60,139,442 and total debts of US$85,700,759. POWERMATE CORP: Creditors Panel Settles with Sun Capital -------------------------------------------------------- According to Bill Rochelle of Bloomberg News, the official committee of unsecured creditors appointed in Powermate Corp.'s Chapter 11 cases obtained approval from the U.S. Bankruptcy Court for the District of Delaware to settle a lawsuit against Sun Capital Partners Inc., the private-equity investor that bought 95% of Powermate in 2004. According to Bill Rochelle, in exchange for the withdrawal of the suit, a $4.7 million fund will be created for unsecured creditors, while Sun Capital will waive unsecured claims. In addition, the unsecured creditors' fund will receive one-third of collections from specified assets that they wouldn't otherwise see. As reported by the Troubled Company Reporter in September, the Creditors Committee sued Sun Capital Partners alleging fraudulent transfer and breach of fiduciary duty. The Committee questioned a transaction whereby Sun Capital caused Powermate to distribute US$20 million dividend, using a US$15 million in secured loan from a Sun Capital affiliate. The Committee, according to Mr. Rochelle, also asserted that Sun Capital made "low margin" sales to Home Depot Inc. and Lowe's Cos. in order to sell Powermate, which process drained away working capital. As a result, Powermate made another US$10 million loan to address its liquidity problems. The Committee previously proposed that the loans from Sun Capital be "recharacterized as equity" or "equitably subordinated" to other loans, in light of its wrongdoings. About Powermate Headquartered in Aurora, Illinois, Powermate Corp. -- http://www.powermate.com/-- manufactures portable and home standby generators, air compressors, and pressure washers. Powermate Holding Corp. is the parent of Powermate Corp. In turn, Powermate Corp. owns 100% of Powermate International Inc. Powermate Corp. operates the companys assets located in the United States. Powermate International has sales employees in Hong Kong and the Philippines. Powermate Holding has no employees or operations. Sun Capital Partners bought 95% of Powermate in 2004. Powermate Holding has two other non-debtor subsidiaries, Powermate Canadian Corp., located in Canada and Powermate S. de R.L. de C.V., which is domiciled in Mexico. The three companies filed for chapter 11 protection on March 17, 2008 (Bankr. D. Del. Lead Case No.08-10498). Kenneth J. Enos, Esq.. and Michael R. Nestor, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors. The Official Committee of Unsecured Creditors, which has seven creditor members, is represented by Monika J. Machen, Esq., at Sonnenschein Nath Rosenthal LLP. On May 23, 2008, the Debtors' summary of schedules posted total assets of US$60,139,442 and total debts of US$85,700,759. SCOTT BRASS: Involuntary Chapter 11 Case Summary ------------------------------------------------ Involuntary Debtor: Scott Brass, Inc. 1637 Elmwood Avenue Cranston, RI 02910 Bankruptcy Case No.: 08-13702 Chapter 11 Petition Date: November 21, 2008 Bankruptcy Court: United States Bankruptcy Court District of Rhode Island (Providence) Involuntary Debtor's Counsel: Pro Se Petitioning Creditors' Counsel: Jed Horwitt, Esq. Zeisler & Zeisler, PC 558 Clinton Avenue Bridgeport, CT 06605 Tel: (203) 368-4234 William M. Dolan, III, Esq. Brown Rudnick Berlack Israels LLP 121 South Main Street Providence, RI 02903 Tel: (401) 276-2600 E-mail: wdolan@brownrudnick.com Petitioning Creditors Nature of Claim Amount of Claim ----------- --------------- --------------- Prime Materials Goods sold $1,085,442 Recovery, Inc. c/o Bernard Schilberg, CEO 99 East River Drive East Hartford, CT 06108 Atlantic Copper Goods sold $384,552 Company, Inc. c/o Micahel Rosoff, President 293 Rt. 100, Ste. 206 Somers, NY 10589 Leonard Levine Goods sold $203,744 Metals Corp. c/o Matthew Levine, Vice-President 1910 First St., Suite 404 Highland Park, IL 60035 SEMGROUP LP: Examiner Allowed to Probe Ex-Officers & Execs ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Louis J. Freeh to conduct examinations of SemGroup L.P.'s current and former officers, directors and employees, as well as their auditors, corporate counsel, lenders, investors, and other counterparties to certain financial transactions. The Court authorized Mr. Freeh to issue subpoenas as may be necessary to compel the production of documents and the testimony of the witnesses in connection with their examination. The Witnesses are also directed to submit to oral examination. "Although the examiner will make every effort to obtain such information from the witnesses on a voluntary basis, he anticipates that certain witnesses will refuse to voluntarily submit for an examination or produce documents relevant to the investigation," The Tulsa World quoted Mr. Freeh's counsel as saying. The examiner "believes it is imperative that he obtain and maintain the right to issue subpoenas." The Court approved the Examiner's motion to conduct investigations under Rule 2004 of the Federal Rules of Bankruptcy Procedure, notwithstanding the objection raised by Fortis Bank, SA/NV and Fortis Capital Corp. Fortis told the Court the Examiner's request impermissibly seeks to modify the substantive rights of witnesses, and asked the Court to limit the access of documents only to the Examiner, his professionals, and the Debtors. Fortis also suggested that the Examiner retail all produced materials. Fortis has a legal right and significant interest in reviewing the produced materials, as a prepetition secured lender and one of the largest counterparties to swap contracts, William E. Chipman, Esq., at Edwards Angell Palmer & Dodge, LLP, in Wilmington, Delaware, argued. He also stated that the ability of legitimate parties to access the produced documents must be balanced against the Examiner's need to complete the investigation as quickly and efficiently as possible. The Examiner, in its proposal, said that while the unsecured creditors panel and the secured lenders have cooperated with his investigation, certain potential witnesses -- including Thomas Kivisto, the Debtors' former president and chief executive officer, and Brent C. Cooper, the Debtors' former treasurer -- are outside of the control of those parties, and have not voluntarily agreed to meet with the Debtors and provide information. The U.S. Trustee for Region 3 called for an appointment of an examiner after parties-in-interest raised fraud and impropriety allegations against the Debtors with respect to their prepetition trading strategy, the transfer of their trading account to Barclays Bank, and the propriety of the use of a trading firm owned by the Debtors' former chief executive officer in the trades. The U.S. Trustee noted that the Debtors' Chapter 11 filings were caused, in large part, by a severe liquidity crisis occasioned by massive margin calls related to large New York Mercantile Exchange and Over-the-Counter futures and options positions they held before the Petition Date. The Debtors sold their NYMEX trading account to Barclays approximately one week before the Petition Date. About SemGroup SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream service company providing the energy industry means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminaling and storing energy. SemGroup serves customers in the United States, Canada, Mexico, Wales, Switzerland and Vietnam. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08- 11525). These represent the Debtors' restructuring efforts: Jo7hn H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq. at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq. and Sherri L. Toub, Esq. at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq. and Sylvia A. Mayer, Esq. at Weil Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. The CCAA stay expires on Nov. 21, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed $5,429,038,000 in total assets and $5,033,214,000 in total debts. In their petition, they showed more than $1,000,000,000 in estimated total assets and more than $1,000,000,000 in total debts. (SemGoup Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SENIOR HEALTH: A.M. Best Junks Financial Stregth Rating ------------------------------------------------------- A.M. Best Co. on November 20, 2008, removed from under review and downgraded the financial strength rating to C (Weak) from C++ (Marginal) and issuer credit rating to "ccc+" from "b" of Senior Health Insurance Company of Pennsylvania (SHIP, formerly known as Conseco Senior Health Insurance Company) (Bensalem, PA) to reflect its stand-alone status as part of a newly-formed independent trust. The outlook assigned to these ratings is stable. The downgrading of SHIP's ratings reflects its ownership by an independent trust with regulatory oversight by the Pennsylvania Insurance Department. While SHIP's current absolute and risk- adjusted capitalization has improved due to the $175 million contribution from Conseco, Inc. ($50 million in cash), over 40% of statutory capital is subject to the credit risk of Conseco, Inc. The $125 million 6% senior note due 2013 is payable by Conseco, Inc. in five equal annual installments. A.M. Best believes that SHIP may require a combination of rate increases, reduced benefits and policyholder forfeitures to maintain sufficient capitalization over the long term. Additionally, as a private company, SHIP has no access to additional capital. SPLIT SECOND: Seeks to Dispatch 4 of 14 Towing & Transport Trucks ----------------------------------------------------------------- Michael Sasso at The Tampa Tribune reports that Jeffrey Peters wants to sell four of the 14 Split Second Towing & Transport, Inc., trucks, as he hopes to restructure the company's debt. Citing Mr. Peters, The Tampa Tribune relates that hauling away and impounding illegally parked vehicles accounts for 5% of his business. The report says that Split Second mainly moves heavy equipment for contractors. That business, according to the report, was hit hard by falling home construction and increasing fuel prices. Fuel costs for the trucks doubled when diesel prices hit $3 a gallon, the report states. The report quoted Mr. Peters as saying, "We went from $200 fill-ups to $400 fill-ups overnight." According to The Tampa Tribune, Mr. Peters had less money coming in to pay off the trucks. Many of the trucks, says The Tampa Tribune, were leased or purchased using loans. Mr. Peters said that he tried passing along the higher fuel costs to clients, but he started losing clients by doing so, the report states. Mr. Peters ruled out plans of filing for Chapter 7 liquidation and is still in business, The Tampa Tribune reports. Seffner, Florida-based Split Second Towing & Transport, Inc. -- http://www.sstowing.com/-- offers tow truck, recovery, roadside assistance and heavy equipment transportation services to Tampa, Florida, and its surrounding areas. The company filed for Chapter 11 protection on July 25, 2008 (Bankr. M. D. Fla. Case No. 08- 11066). Miriam L. Sumpter Richard, Esq., at Fresh Start Law Firm, Inc., represents the company in its restructuring effort. The company listed assets of $60,027 and debts of $1,123,976. STH 6,8: Quail Run Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Quail Run Investors, LLC Bankruptcy Case No.: 08-15675 Chapter 11 Petition Date: November 4, 2008 Debtor-affiliates filing separate chapter 11 petitions: Entity Case Number Filing Date ------ ----------- ----------- El Paseo Partners, L.P. 08-15368 10/30/08 El Rancho Partners, L.P. 08-15370 10/30/08 Elite Cross Creek, Inc. 08-14336 10/16/08 Red Valley Investments, LLC 08-13724 10/07/08 STH 6, 8, 10, 11, 13, Inc. 08-10479 08/13/08 Business Address: 16009 North 81st Street, Suite 200 Scottsdale, AZ 85260 Bankrutpcy Judge: Hon. Redfield T. Baum Sr. Bankruptcy Court: United States Bankruptcy Court District of Arizona (Phoenix) Counsel to Quail Run Investors, El Paseo Partners, L.P., El Rancho Partners, Elite Cross and Red Valley when they filed for bankruptcy: Paul Sala, Esq. Allen, Sala & Bayne, PLC Viad Corporate Center 1850 N. Central Ave., #1150 Phoenix, AZ 85004 Tel: (602) 256-6000 E-mail: psala@asbazlaw.com Counsel to STH 6, 8, 10, 11, 13, Inc. when it filed for bankruptcy: JARED G. PARKER, ESQ. DECONCINI MCDONALD YETWIN & LACY, P.C. 7310 N 16TH ST STE. 330 PHOENIX, AZ 85020 Tel: (602) 282-0500 Fax: (602) 282-0520 E-mail: jparker@dmylphx.com -- and -- SHELTON L. FREEMAN, ESQ. DECONCINI MCDONALD YETWIN & LACY PC 7310 NORTH 16th STREET #330 PHOENIX, AZ 85020 Tel: (602) 282-0500 Fax: (602) 282-0520 E-mail: tfreeman@dmylphx.com Debtors' financial status as of the petition date: Estimated Estimated Entity Assets Debts ------ --------- --------- Quail Run Investors, LLC $1MM to $10MM $1MM to $10MM El Paseo Partners, L.P. $1MM to $10MM $1MM to $10MM El Rancho Partners, L.P. $1MM to $10MM $1MM to $10MM Elite Cross Creek, Inc. $10MM to $50MM $10MM to $50MM Red Valley Investments, LLC $1MM to $10MM $1MM to $10MM STH 6, 8, 10, 11, 13, Inc. $10MM to $50MM $10MM to $50MM A list of Quail Run's four largest unsecured creditors is available at no charge at: http://bankrupt.com/misc/azb08-15675.pdf STH 6,8: Sec. 341 Meeting of Quail Run Creditors on December 9 -------------------------------------------------------------- The United States Trustee for the District of Arizona will convene a meeting of creditors in the bankruptcy case of Quail Run Investors, LLC, on Dec. 9, 2008, at 10:30 a.m. at the US Trustee Meeting Room, 230 N. First Avenue, Suite 102, in Phoenix. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. The U.S. Trustee will be meeting with creditors of Quail Run's affiliates El Paseo Partners, L.P., and El Rancho Partners, L.P., at 11:30 a.m. today. Scottsdale, Arizona, STH 6, 8, 10, 11, 13, Inc. and its affiliates filed separate chapter 11 petitions on various dates (Lead Case No. 08-10479). The cases are jointly administered before Chief Judge Redfield T. Baum, Sr. Quail Run Investors, El Paseo Partners, L.P., El Rancho Partners, Elite Cross and Red Valley were represented by Allen, Sala & Bayne, PLC, when they filed for bankruptcy. STH 6, 8, 10, 11, 13, Inc., is represented by DECONCINI MCDONALD YETWIN & LACY, P.C. The United States Trustee has indicated that it has been unable to appoint an Official Committee of Unsecured Creditors in the bankruptcy cases. STH 6, 8, 10, 11, 13, Inc., and Elite Cross Creek estimated both their assets and debts to be between $10,000,000 and $50,000,000 at the time of filing. The other debtors estimated both their assets and debts to be between $1,000,000 and $10,000,000 at the time of filing. SUZANN MOONEY: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Suzann Mooney 11302 Greenbay St. Houston, TX 77024 Bankruptcy Case No.: 08-37165 Chapter 11 Petition Date: November 4, 2008 Bankruptcy Court: United States Bankruptcy Court Southern District of Texas (Houston) Bankruptcy Judge: Marvin Isgur Debtor's Counsel: Reese W. Baker, Esq. Baker & Associates 5151 Katy Freeway, Ste. 200 Houston, TX 77007 Tel: (713) 869-9200 Fax: (713) 869-9100 E-mail: courtdocs@bakerassociates.net Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together wiht its petition. SURETY COMPANY: A.M. Best Cuts FSR to "B" & ICR to "bb" ------------------------------------------------------ A.M. Best Co. downgraded on November 25, 2008, the financial strength rating (FSR) to B (Fair) from B+ (Good) and issuer credit rating (ICR) to "bb" from "bbb-" of Surety Company of the Pacific (SCP) (Encino, CA). Both ratings have been placed under review with negative implications. The ratings downgrade is due to the continued and substantial decrease in capital through September 30, 2008, which was driven by operating losses. Such losses were driven primarily by the need to substantially increase unearned premium reserves as the company ramped up premium writings through rate increases. As a result, current capital levels fall below A.M. Best's minimum requirements for a secure rating. Furthermore, SCP disclosed in its third quarter statutory filings that it has reached a tentative agreement to be sold to HCC Insurance Holdings, Inc. (Houston, TX) (HCC), subject to regulatory approval. Consequently, the ratings have been placed under review until the transaction closes, which is expected in the very near future. Plans call for SCP to be merged into American Contractors Indemnity Company (Los Angeles, CA) (ACIC), a HCC affiliate. If this occurs, A.M. Best will withdraw its ratings on SCP as this legal entity will cease to exist, with all assets and liabilities absorbed by ACIC. However, if the sale is not consummated, A.M. Best remains concerned with the significant decrease in surplus through September 30, 2008, historically poor operating performance driven by inadequate pricing levels and heavy expense loads, and a perceived lack of financial flexibility of the owner. As a result, SCP could see further slippage of its already thin level of capitalization through year-end 2008. SCP is a leading writer of contractor license and permit bonds in its home state of California. SUZANN MOONEY: Sec. 341 Creditors Meeting Slated for December 9 --------------------------------------------------------------- The United States Trustee in Houston, Texas, will convene a meeting of creditors in the bankruptcy case of Suzann Mooney on December 9, 2008, at 1:30 p.m. at Houston, 515 Rusk Suite 3401. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Additionally, creditors may file proofs of claim in the case by March 9, 2009. Based in Houston, Texas, Suzann Mooney filed for bankruptcy protection on November 4, 2008 (Bankr. S.D. Tex. Case No. 08-37165). The Hon. Marvin Isgur presides over the case. Reese W. Baker, Esq., at Baker & Associates, represents the Debtor. When it filed for bankruptcy, the Debtor estimated both its assets and debts to be between $1,000,000 and $10,000,000. SWIFT TRANSPORTATION: Bank Loan Sells at Substantial Discount ------------------------------------------------------------- Participations in a syndicated loan under which Swift Transportation Co. Inc., is a borrower traded in the secondary market at 43.08 cents-on-the-dollar during the week ended November 28, 2008, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 5.71 percentage points from the previous week, the Journal relates. The syndicated loan matures on March 15, 2014, and Lear pays 275 basis points over LIBOR to borrow under the facility. The bank loan carries Moody's B1 rating and Standard & Poor's B+ rating. Bank debt of other companies in the auto industry are also being sold at substantial discount, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. Participations in a syndicated loan under which Capital Automotive REIT is a borrower traded in the secondary market at 41.90 cents- on-the-dollar during the same period, which represents a drop of 6.10 percentage points from the previous week, the Journal relates. The syndicated loan matures on December 16, 2010, and Capital Automotive pays 175 basis points over LIBOR to borrow under the facility. The bank loan carries Moody's Ba1 rating and Standard & Poor's BB+ rating. Participations in a syndicated loan under which Lear Corp. is a borrower traded in the secondary market at 49.50 cents-on-the- dollar during the same period. This represents a drop of 7.07 percentage points from the previous week -- when it traded at 56.57 cents-on-the-dollar -- the Journal relates. The syndicated loan matures on March 29, 2012, and Lear pays 250 basis points over LIBOR to borrow under the facility. The bank loan is unrated. Swift Transportation Co., Inc., a truckload carrier headquartered in Phoenix, Arizona, operates a fleet of truckload carrier equipment in the United States with regional operations throughout the continental United States. On May 10, 2007, Swift Transportation completed its merger with Saint Acquisition Corporation, pursuant to the Agreement and Plan of Merger, dated January 19, 2007. In connection with the completion of the Merger, at the close of the market on May 10, 2007, Swift Transportation's common stock ceased trading on NASDAQ. SYNTAX-BRILLIAN: Court Allows Panel to Commence D&O Actions ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware, upon motion of Syntax-Brillian Corp. and its debtor-affiliates, granted the Official Committee of Unsecured Creditors appointed in the Debtors' bankruptcy cases authority to: a) commence and prosecute all claims and causes of actions against the Debtors' present and former directors ("D&O Actions); b) enforce and judgments arising from the D&O Actions; and c) exercise, enforce and prosecute any rights of the Debtors' estates. Any proposed settlement of any D&O Actions by the Committee will be subject to Bankruptcy Court approval. In their motion, the Debtors told the Court that James S. Feltman, the Chapter 11 examiner appointed in the Debtors' cases, had undertaken an investigation regarding potential causes of action against the Debtors' directors and officers. As a result of these investigations, the Debtors believe that their estates have valid causes of action against such directors and officers. The Debtors also related that its insurance policies contain standard "insured versus insured" liability exclusions that prevent them from obtaining a recovery from their insurers on account of claims made against their directors and officers. If the Debtors are unable to successfully prosecute the D&O actions in a manner that would require their insurers to pay under the terms of the policies, creditors and other parties-in-interest of these estates could lose potential recoveries on account of their allowed claims. Pursuant to the Court's order, the Debtors' estates, and their legal successors, will indemnify, defend and hold harmless the Committee members and their respective employees and representatives from all claims, causes of action, liabilities, obligations, losses, damages or expenses in connection with the commencement and prosecution of the D&O Actions, except when these were determined to be due to their own negligence or willful misconduct. The Committee is also authorized to retain the law firm of Anthony Ostlund Baer Louwagie & Ross P.A. as co-counsel for the purpose of commencing and prosecuting the D&O Actions. About Syntax-Brillian Based in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq: BRLC) -- http://www.syntaxbrillian.com/-- and its affiliated debtors, Syntax-Brillian SPE, Inc. and Syntax Groups Corp. design, develop, and distribute high-definition televisions (HDTVs) utilizing liquid crystal display (LCD) and, formerly, liquid crystal (LCoS) technologies. The Debtors sell their HDTVs under the Olevia brand name. SBC is also the sole shareholder of Vivitar Corp., a suplier of film cameras and a line of digital imaging products, including digital camerasl. The Debtors filed separate petitions for Chapter 11 relief on July 8, 2008 (Bankr. D. Del. Lead Case No. 08-11407). Nancy A. Mitchell, Esq., Allen G. Kadish, Esq., and John W. Weiss, Esq., at Greenberg Traurig LLP in New York, represent the Debtors as counsel. Victoria Counihan, Esq., at Greenburg Traurig LLP in Wilmington, Delaware, represents the Debtors as Delaware counsel. Five members compose the Official Committee of Unsecured Creditors. Epiq Bankruptcy Solutions, LLC is the Debtors' balloting, notice, and claims agent. Syntax-Brillian cut a deal to sell its business assets to Olevia International Group LLC. On Sept. 10, 2008, OIG told the Bankruptcy Court that it won't pursue the deal, contending that the Debtors irreparably breached various covenants and representations contained in the Purchase Agreement, causing various Closing Conditions to fail, and rendering it unable to comply with its obligations under the Purchase Agreement. OIG also accused the Debtors of violating their sale contract by losing business from Target Corp., the Debtors' main customer. The following day, the Debtors filed a lawsuit asking the Court to compel Olevia International to complete the purchase. On Oct. 10. the Bankruptcy Court denied OIG's emergency request to excuse it from its obligations. OIG has taken an appeal of that order. When the Debtors filed for protection from their creditors, they listed total assets of $175,714,000 and total debts of $259,389,000. SYNTAX-BRILLIAN: Taps KPMG Corporate Finance as Financial Advisors ------------------------------------------------------------------ Syntax-Brillian Corp. and its affiliated debtors ask the U.S. Bankruptcy Court for the District of Delaware for authority to employ KPMG Corporate Finance LLC (KPMGCF) as their financial advisors, nunc pro tunc to Nov. 17, 2008. The Debtors seek to employ KPMGCF as their exclusive financial advisor in connection with the proposed sale by SBC of its intellectual property assets, including the "Olevia" brand, patents, licenses, customer lists, other general intangible assets, and other assets, but excluding accounts receivables. Services to be provided by KPMGCF will include, among others, analyzing proposals received from potential buyers, and providing testimony in court, on behalf of SBC, if nessary or as reasonably requested by SBC. Lorie R. Beers, a managing director at KPMGCF, assures the Court that KPMGCF does not hold or represent any interest adverse to the Debtors or their estates, and is a "disinterested person" as that term is defined in Sec. 101(14) of the Bankruptcy Code. As compensation for its services, KPMGCF will receive: a) An earned upon receipt Retention Fee of $75,000 which fee will not be creditable against any Transaction Fee. b) A Monthly Fee in the amount of $50,000 for each of the first first four thirty-day periods of the Engagement Period. All such Monthly Fees will be creditable against any Transaction Fee. c) KPMG will be entiled to the following Transaction Fees: i. If during the Engagement Period SBC announces, or enters into a definitive agreement for the sale of some or all of the Intellectual Property and, if applicable, any Other Assets, SBC will pay KMGCF cash fees equal to the applicable percentage of the aggregate total value of all cash consideration in connection with the sale, net of any adjustments, credits or offsets: 1. 4% if the Consideration is less than $10 million; 2. 5% if the Consideration exceeds $10 million and is less than $15 million; 3. 6% if the Consideration exceeds $15 million and is less than $20 million; or 4. 7% if the Consideration exceeds $20 million. ii. For the sale of some or all of the Other Assets only , SBC will pay KPMGCF cash fees equal to 2% of the aggregate Consideration payable in connection with such sale. iii. The minimum Transactions Fees payable to KPMGCF will be $500,000. iv. In the event that a sale of the Intellectural Property is consummated with Olevia International Group, LLC, Mr. John Wu, or any of their affilates which involves a settlement or compromise of the judgment held by SBC against such parties, KMPGCF will be entitled to a Transaction Fee in an amount equal to the greater of (x) the Minimum Transaction Fee, or (y) the maximum Transaction Fee that KPMGCF would have earned had SBC consummated a sale with any Identified Buyer for a cash sale in form reasonably acceptable to SBC. About Syntax-Brillian Based in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq: BRLC) -- http://www.syntaxbrillian.com/-- and its affiliated debtors, Syntax-Brillian SPE, Inc. and Syntax Groups Corp. design, develop, and distribute high-definition televisions (HDTVs) utilizing liquid crystal display (LCD) and, formerly, liquid crystal (LCoS) technologies. The Debtors sell their HDTVs under the Olevia brand name. SBC is also the sole shareholder of Vivitar Corp., a suplier of film cameras and a line of digital imaging products, including digital camerasl. The Debtors filed separate petitions for Chapter 11 relief on July 8, 2008 (Bankr. D. Del. Lead Case No. 08-11407). Nancy A. Mitchell, Esq., Allen G. Kadish, Esq., and John W. Weiss, Esq., at Greenberg Traurig LLP in New York, represent the Debtors as counsel. Victoria Counihan, Esq., at Greenburg Traurig LLP in Wilmington, Delaware, represents the Debtors as Delaware counsel. Five members compose the Official Committee of Unsecured Creditors. Epiq Bankruptcy Solutions, LLC is the Debtors' balloting, notice, and claims agent. Syntax-Brillian cut a deal to sell its business assets to Olevia International Group LLC. On Sept. 10, 2008, OIG told the Bankruptcy Court that it won't pursue the deal, contending that the Debtors irreparably breached various covenants and representations contained in the Purchase Agreement, causing various Closing Conditions to fail, and rendering it unable to comply with its obligations under the Purchase Agreement. OIG also accused the Debtors of violating their sale contract by losing business from Target Corp., the Debtors' main customer. The following day, the Debtors filed a lawsuit asking the Court to compel Olevia International to complete the purchase. On Oct. 10. the Bankruptcy Court denied OIG's emergency request to excuse it from its obligations. OIG has taken an appeal of that order. When the Debtors filed for protection from their creditors, they listed total assets of $175,714,000 and total debts of $259,389,000. SUZANN MOONEY: Sec. 341 Creditors Meeting Slated for December 9 --------------------------------------------------------------- The United States Trustee in Houston, Texas, will convene a meeting of creditors in the bankruptcy case of Suzann Mooney on December 9, 2008, at 1:30 p.m. at Houston, 515 Rusk Suite 3401. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Additionally, creditors may file proofs of claim in the case by March 9, 2009. Based in Houston, Texas, Suzann Mooney filed for bankruptcy protection on November 4, 2008 (Bankr. S.D. Tex. Case No. 08-37165). The Hon. Marvin Isgur presides over the case. Reese W. Baker, Esq., at Baker & Associates, represents the Debtor. When it filed for bankruptcy, the Debtor estimated both its assets and debts to be between $1,000,000 and $10,000,000. S-TRAN HOLDINGS: Wants Plan Filing Period Extended to March 2 ------------------------------------------------------------- S-Tran Holdings Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend their exclusive periods to: a) file a plan from Dec. 1, 2008, through and including March 2, 2009, and b) solicit acceptances of that plan from Feb. 2, 2009, through and including May 4, 2009. The Debtors tell the Court that the further extensions will not harm or prejudice the Debtors' creditors or other parties in interest. The Debtors tell the Court that they have sold substantially all of their assets, completed the transition to operating as Chapter 11 debtors in possession, prepared and filed their schedules and statements, responded to discovery requests propounded by the Committee of Unsecured Creditors and other counsel, collected outstanding accounts receivable, actively pursued recoveries related to avoidance actions and other litigation under the Bankruptcy Code, negotiated and filed their proposed Plan and Disclosure Statement, received approval of the Disclosure Statement and the Voting Procedures, and pursued objections to Claims. The Debtors have sought a rescheduling of the Plan confirmation hearing. The request for a further extension of the Exclusive Periods is in order to protect their rights with respect to the Plan, any amendment, and associated solicitation under the Voting Procedures. A hearing on both the extension of the plan filing period and the rescheduling of the confirmation hearing is scheduled for Jan. 13, 2009. Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc., provides common carrier services and specialized in less-than- truckload shipments and also supplies overnight and second day service to shippers in 11 states in the Southeast and Midwestern United States. The company and its debtor-affiliates filed for Chapter 11 relief on May 13, 2005 (Bankr. D. Del. Case No. 05-11391). Bruce Grohsgal, Esq., Laura Davis Jones, Esq., Michael Seidl, Esq., and Sandra G.M. Selzer, Esq., at Pachulski Stang Ziehl Young & Jones LLP represent the Debtors as counsel. Christopher A. Ward, Esq., at Polsinelli Shalton Flanigan Suelthaus, Mary E. Augustine, Esq., at Ciardi, Ciardi & Astin, P.C., and Steven M. Yoder, Esq., at Potter Anderson & Corroon LLP, represent the Official Committee of Unsecured Creditors as counsel. When the Debtors filed for protection from their creditors, they listed total assets of $22,508,000 and total debts of $30,891,000. On April 11, 2008, the Court approved the Debtors' First Amended Disclosure Statement explaining the First Amended Plan of Liquidation and fixed the voting procedures associated with approval of the Plan. TALAL ALGURAINI: Case Summary & Largest Unsecured Creditor ---------------------------------------------------------- Debtor: Talal Alguraini 5639 Desert View Drive La Jolla, CA 92037 Bankruptcy Case No.: 08-11399 Chapter 11 Petition Date: November 10, 2008 Bankruptcy Court: United States Bankruptcy Court Southern District of California (San Diego) Bankruptcy Judge: Laura S. Taylor Debtor's Counsel: David L. Speckman, Esq. Speckman & Associates 835 Fifth Ave, Suite 301 San Diego, CA 92101 Tel: (619) 696-5151 Email: dlspeckman@hotmail.com Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 The Debtor listed Marriott Grand Chateau, at 75 E. Harmon, 36th Flr. Mailrm, in Las Vegas, Nevada, as its single largest unsecured creditor, allegedly holding $24,000 pursuant to a certain time- share loan. TORRENT ENERGY: Sells Gas Wells to Y.A. Global for $4.5 Mil. ------------------------------------------------------------ Bloomberg News' Erik Larson reports that the Hon. Elizabeth Perris of the United States Bankruptcy Court for the District of Oregon authorized Torrent Energy Corp to sell its assets to Y.A. Global Investments LP for $4.5 million. The assets include 11 unfinished natural-gas wells on 118,000 acres near Coos Bay, Oregon, and 76,000 acres near Chehalis, Washington, according to Mr. Larson. According to Mr. Larson, Y.A. Global who provided up to $4.5 million to the Debtor to fund its reorganization plan made a credit bid instead of cash. However, the plan was scrapped by the Debtor when Y.A. Global stopped funding, Mr. Larson notes. About Torrent Energy Headquartered in Portland, Oregon, Torrent Energy Corporation -- http://www.torrentenergy.com/-- is an exploration stage company engaged in the exploration for coalbed methane in the Coos Bay region of Oregon and in the Chehalis Basin region of Washington State. The company and two of its affiliates filed for Chapter 11 protection on June 2, 2008 (Bankr. D. Ore. Case Nos. 08-32638 through 08-32640). Jeanette L. Thomas, Esq., at Perkins Coie LLP, represents the Debtors in their restructuring efforts. The company has $35.3 million in total assets and $24.8 million in total liabilities as June 30, 2008. TRIESTE INVESTMENTS: May Employ Brown McCarroll as Special Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Arizona granted Trieste Investment, LLLP, authority to employ Brown McCarroll L.L.P. as special appeals counsel, nunc pro tunc. The Debtor told the Court that it holds investment property in Liberty County, Texas which at the Petition Date was the subject of litigation proceedings in the District Court for Liberty County, Texas (Case no. CV 73, 473), by and betwwen Debtor and the seller/secured crediter (Akers) of the Property. The Lawsuit resulted in a judgment for Akers permitting the pursuit of his foreclosure sale on the Property which, among others, precipitated the filing of this bankruptcy case. As the Debtor's bankruptcy counsel, Brown McCarroll will: a) give Debtor legal advice and representation with respect to the appeal of the Lawsuit; b) assist the Debtor's bankruptcy counsel in connection with the appeal of the Lawsuit, any settlement of the Lawsuit, and including any matters relating to attempts by Akers to lift the automatic stay under Sec. 362 of the Bankruptcy Code in order to proceed with the foreclosure proceedings permitted by the Lawsuit; and c) To continue to pursue actions of Debtor to collect obligations owed to Debtor involving the Lawsuit or its appeal, whether or not such appeal is successful for the Debtor, or, if the automatic stay is lifted, as set forth in the Verified Statement. As compensation for their services, Brown McCarroll's professionals bill: Hourly Rate ----------- Kurt Kuhn, Esq., Partner $375 Chase Hamilton, Esq., Associate $185 Paralegals $90 To the best of the Debtor's knowledge, Brown McCarroll is disinterested and has no connection with the creditors, any other party in interest or their respective attorneys or the United States Trustee's Office. Scottsdale, Arizona-based Trieste Investments, LLLP, filed for Chapter 11 protection on Oct. 6, 2008 (Bankr. D. Ariz. Case No. 08-13674). Franklin D. Dodge, Esq., at Ryan Rapp & Underwood, P.L.C., represents the company as counsel. The company listed assets of $10 million to $50 million and debts of $10 million to $50 million. TWEETER OPCO: Aims for Dec. 19 Auction to 94 Store Leases --------------------------------------------------------- Tweeter Opco, LLC, and its debtor affiliates intend to auction off leases to their 94 closing stores on Dec. 19. Tweeter Opco has filed a motion before the U.S. Bankruptcy Court in Delaware bidding procedures for leases affected by the closing of its stores. According to Bloomberg's Bill Rochelle, the bid procedures provide: -- a Dec. 17 deadline to submit bids; -- a Dec. 19 auction for the leases; and -- a Dec. 30 hearing before the Bankruptcy Court to consider approval of the sale/s. Tweeter Opco is currently conducting store-closing sales pursuant to their prepetition agreement with a joint venture consisting of SB Capital Group, LLC, Tiger Capital Group, LLC and Hudson Capital Partners, LLC. Bloomberg notes that the Court on Nov. 25 approved arrangements allowing the sale of merchandise on consignment, while giving the consignment suppliers protection for their claims. As reported by the Troubled Company Reporter, Tweeter Opco was formed in July 2007 to acquire the business operations and assets of Tweeter Home Entertainment Group, Inc., -- designated as Old Tweeter -- in Tweeter's Chapter 11 bankruptcy cases. Tweeter Opco paid roughly $38 million for the assets of Old Tweeter. Bankruptcy Judge Walsh of the District of Delaware approved the sale transaction. There is no affiliation of relationship between Old Tweeter and Tweeter Opco. Majority of Tweeter Opco's equity interests are owned by Schultze Holding Corp., an affiliate of Schultze Agency Services LLC, which serves as agent under a Second Lien Credit Agreement the Company entered into. Tweeter Opco, LLC, Wells Fargo Retail Finance, LLC, and Schultze Asset Management first engaged CRG Partners Group LLC in mid September 2008 to perform a three week assessment of the Debtors' near term cash flow, business plan and business model. On Oct. 7, 2008, CRG was contacted by George Granoff, who at the time was serving as chief executive officer of Tweeter Opco, to assess a new business plan, which involved a reduced store count, reduced workforce, and the elimination of distribution centers. The assessment was to be completed in five business days. On October 13, 2008, Mr. Granoff was terminated from the position of Chief Executive Officer by the Tweeter Opco Board of Directors. Craig M. Boucher, a partner at CRG, was named chief restructuring officer. About Tweeter Home Based in Canton, Massachusetts, Tweeter Home Entertainment Group Inc. -- http://www.tweeter.com/-- retails mid-to high-end audio and video consumer electronics products. Tweeter and seven of its affiliates filed for chapter 11 Protection on June 11, 2007 (Bankr. D. Del. Case Nos. 07-10787 through 07-10796). Gregg M. Galardi, Esq., Mark L. Desgrosseilliers, Esq., and Sarah E. Pierce, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the Debtors. Kurtzman Carson Consultants LLC acted as the Debtors' claims and noticing agent. Bruce Grohsgal, Esq., William P. Weintraub, Esq., and Rachel Lowy Werkheiser, Esq., at Pachulski Stang Ziehl & Jones LLP; and Scott L. Hazan, Esq., Lorenzo Marinuzzi, Esq., and Todd M. Goren, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represented the Official Committee of Unsecured Creditors. As of Dec. 21, 2006, Tweeter had total assets of $258,573,353 and total debts of $190,417,285. The Debtors' exclusive period to file a plan of reorganization expired on June 5, 2008. About Tweeter Opco Tweeter Opco, LLC, was formed in July 2007 to acquire the business operations and assets of Tweeter Home Entertainment Group, Inc. The company filed for Chapter 11 protection on Nov. 5, 2008 (Bankr. D. Delaware Case No. 08-12646). Chun I. Jang, Esq., and Cory D. Kandestin, Esq., at Richards, Layton & Finger, P.A., assists the company in its restructuring effort. The company listed assets of $50 million to $100 million and debts of $50 million to $100 million. (Tweeter Bankruptcy News, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TROPICANA ENTERTAINMENT: Deal With Eldorado on Nixed Sale Approved ------------------------------------------------------------------ According to Bloomberg News' Bill Rochelle, Tropicana Entertainment LLC obtained approval from the U.S. Bankruptcy Court for the District of Delaware of a settlement with Eldorado Resorts, LLC, regarding the cancellation of the sale of Tropicana's casino in Evansville, Indiana, to Eldorado. As reported by the Troubled Company Reporter, Tropicana, through Aztar Indiana Gaming Company, LLC, owns the Casino Aztar Evansville riverboat casino located in Evansville. In March 2008, Aztar and Eldorado inked a deal for the sale of the Debtors' membership interests in Casino Aztar for $190,000,000 in cash, $10,000,000 of that amount was deposited in an escrow account with Wells Fargo. Tropicana sought bankruptcy protection before closing could occur. In their six-month old Chapter 11 cases, the Debtors sought approval from the U.S. Bankruptcy Court for the District of Delaware to sell the assets to Eldorado, or to another party with a better offer through a Court-sanctioned auction. The Debtors, however, said that they have elected not to pursue the sale due to various reasons, including: -- key constituencies in the Chapter 11 cases object to the sale; -- Eldorado has not obtained gaming approvals in connection with the purchase of the casino. -- There is very high likelihood that Eldorado won't be able to close on the sale because of "onerous terms" provided by its lenders who are supposed to finance the purchase. -- The financial turmoil has caused a downturn to the gaming industry and access to credit by firms, including Eldorado difficult. Rather than pursue litigation, Tropicana decided to settle with Eldorado. Pursuant to the settlement Tropicana will release Eldorado from all liability for failing to complete the purchase, and the two sides will split the $10 million deposit. About Tropicana 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. 22; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) UAL CORP: Former CFO Exercises Right to Purchase Common Stock ------------------------------------------------------------- Frederic F. Brace, former executive vice president and chief financial officer of UAL Corp., in a filing with the U.S. Securities and Exchange Commission dated Nov. 4, 2008, disclosed that on Oct. 31, 2008, he acquired stock options or the right to buy: * 109,666 shares of UAL common stock at $34.18 per share, exercisable on Oct. 31, 2008, * 109,667 shares of UAL common stock at $35.91 per share, exercisable on Oct. 31, 2008, and * 109,667 shares of UAL common stock at $35.65 per share, exercisable on Oct. 31, 2008. Consequently, Mr. Brace disposed of the options on the same day, at the same price/share. The options expire on Jan. 31, 2016. Mr. Brace clarified that the reported transactions involved the amendment of his outstanding option awards extending the post- termination exercise of the option awards from three months to the original terms. The amendment is treated under Section 16 rules like a cancellation of the original option awards and the grant of replacement option awards. The option award was scheduled to become exercisable in equal installments on Aug. 1, 2006, Feb. 1, 2007, Feb. 1, 2008, Feb. 1, 2009, and Feb. 1, 2010. Upon termination of employment, the unvested portion of this option award became fully vested and immediately exercisable. About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. UAL CORP: CFO Kathryn Mikells Discloses Ownership of 42,920 Shares ------------------------------------------------------------------ Kathryn A. Mikells, senior vice president and chief financial officer of UAL Corp., disclosed in a filing with the U.S. Securities and Exchange Commission dated Nov. 4, 2008, that she beneficially owns 42,920 shares of UAL common stock after acquiring 30,000 shares of UAL common stock on Nov. 3. Ms. Mikells also has the option to buy 50,000 shares of UAL common stock, which option award will vest in four equal annual installments beginning on Nov. 3, 2008. Moreover, Ms. Mikells has disclosed that she has options to buy shares of UAL common stock aggregating 36,072, which options will Vest in five equal installments. The first three installments became exercisable on Aug. 1, 2007, Feb. 1, 2007, and Feb. 1, 2008, and the next two installments will become excisable on Feb. 1, 2009, and Feb. 1, 2010. About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. UAL CORPORATION: Registers 10,000,000 Shares under Pilot Plan ------------------------------------------------------------- Pursuant to Rule 416 of the Securities Act of 1933, UAL Corp., the holding company of United Air Lines, Inc., filed a registration statement dated Oct. 24, 2008, which will cover any additional shares of UAL Common Stock that will become issuable under the United Airlines Pilot Directed Account Plan by reason of any stock dividend, stock split, recapitalization or other similar transaction affected without receipt of consideration resulting to an increase in the number of outstanding shares of UAL Common Stock. UAL disclosed that 10,000,000 shares of UAL Common Stock will be registered at the maximum offering price of $11 per share totaling to $110,000,000. UAL will pay $4,323 as registration fee. A full-text copy of the Registration Statement is available for free at http://ResearchArchives.com/t/s?357d About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. UAL CORPORATION: September 30 Balance Sheet Upside-Down by $1.2BB ----------------------------------------------------------------- UAL Corp., the holding company of United Air Lines, Inc., filed with the U.S. Securities and Exchange Commission a Form 10Q dated Oct. 24, 2008, disclosing UAL's financial results for the quarter ended Sept. 30, 2008. A full-text copy of UAL Corp.'s 2nd Quarter 2008 Results is available for free at: http://ResearchArchives.com/t/s?3450 UAL Corporation and Subsidiary Companies Statements of Consolidated Financial Position Three Months Ended September 30, 2008 (In Millions) Assets Current assets: Cash and cash equivalents $$2,931 Short-term investments - Receivables, net 1,037 Prepaid fuel 524 Fuel hedge collateral deposits 354 Aircraft fuel 283 Restricted cash 91 Deferred income taxes 127 Prepaid expenses and other 623 ------- Total Current assets 5,970 ------- Operating property and equipment: Owned Flight equipment 9,239 Advances on flight equipment - Other property and equipment 1,758 ------- 10,997 Less -- accumulated depreciation and amortization (1,458) ------- Total owned 9,539 ------- Capital leases Flight equipment 1,289 Other property and equipment 35 ------- 1,324 Less -- accumulated amortization (200) ------- Total capital leases 1,124 ------- Total operating property and equipment 10,663 Other assets: Intangibles, net 2,726 Goodwill - Restricted cash 306 Aircraft lease deposits 157 Investments 92 Other, net 817 ------- Total other assets 4,098 ------- Total Assets $20,731 ======= Liabilities and Stockholders' Equity Current liabilities: Advance ticket sales 2,251 Mileage Plus deferred revenue 1,381 Accounts payable 821 Accrued salaries, wages and benefits 785 Advanced purchase of miles 749 Long-term debt maturing within one year 524 Fuel purchase commitments 116 Current obligations under capital lease 115 Accrued interest - Distribution payable 4 Other 807 ------- Total current liabilities 7,553 Long-term debt 6,145 ------- Long-term obligations under capital leases 1,049 ------- Other liabilities and deferred credits: 2,635 Mileage Plus deferred revenue 1,852 Postretirement benefit liability 1,099 Deferred income taxes 660 Other 1,020 ------- Total other liabilities and deferred credits 7,266 ------- Mandatorily convertible preferred securities - Commitments and contingent liabilities - ------- Stockholders' equity: Preferred stock - Common stock at par 1 Additional capital invested 2,536 Retained earnings (deficit) (3,896) Stock held in treasury, at cost (25) Accumulated other comprehensive income 102 ------- Total stockholders equity (1,282) ------- Total Liabilities and Stockholders' equity $20,731 ======= According to Bloomberg News, quarterly losses posted by UAL Corp., and other US carriers brought by charges tied to jet-fuel contracts bought in advance may be good news. The report, citing The Wall Street Journal, related that recent changes in 0energy costs from $4.36 a gallon in July to $2.07 as of October 27, 2008, could bring in profits to the carriers. Accordingly, any drop in fuel prices strengthens the carriers' ability to minimize losses. The report mentioned that Southwest Airlines, Northwest Airlines Corp. and Alaska Air Group, Inc., all disclosed that they would have made money if not for last quarter's fuel-hedge charges. UAL, for one, has implemented involuntary and voluntary furloughs programs. UAL has also grounded fleets and disposed of other assets to boost liquidity. UAL Stock Tumbled Bloomberg News reported that as of Nov. 12, 2008, shares of United Air Lines, Inc.'s parent, UAL Corp., tumbled, on concerns that the weakening U.S. economy will affect travel. Specifically, UAL lost $3.50 or 27% in Nasdaq Stock Market trading, the steepest decline, according to Bloomberg, since May, in the same way that Delta fell $1.47 or 17% in NYSE composite trading while AMR dropped $1.31 or 16$ to $7.05. Ray Neidl, analyst at Calyon Securities in New York, in an interview with Bloomberg, attributed the plunge to "the overall markets" and said that "people are worried about what demand is going to do in the later part of the year." Bloomberg, citing Hunter Keay, an analyst at Stifel Nicolaus & Co., stated that airline investors may be selling on reports of Tontine Associates LLC's plan to liquidate two stock hedge funds. Tontine Associates is run by Jeffrey Gendell, who has shares in AMR, UAL and Continental Airlines, Inc., as of June 30. Mr. Keay added that investors are also worried that the decline in oil prices may force airlines to post cash collateral in the current quarter on fuel hedge funds thus triggering minimum liquidity covenants in loans. About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. UTAH 7000: Pivotal Promontory's Chapter 11 Case Summary ------------------------------------------------------- Debtor: Pivotal Promontory TRC, L.L.C. 8758 N. Promontory Ranch Road Park City, UT 84098 Bankruptcy Case No.: 08-27712 Chapter 11 Petition Date: November 4, 2008 Involuntary petitions were filed on March 28, 2008, and an order for relief was entered on March 31, 2008, regarding these affiliates of the Debtor: Entity Case Number ------ ----------- Utah 7000, L.L.C. 08-21869 Utah 7000 Development, L.L.C. 08-21870 Utah 7000 Capital, L.L.C. 08-21872 Voluntary petitions were filed on April 3, 2008, on behalf of these affiliates of the Debtor: Entity Case Number ------ ----------- Utah 7000 Realty, L.L.C. 08-22077 Utah 7000 Cabins, L.L.C 08-22075 Pivotal Promontory TRC's case is jointly administered, for procedural purposes only, under Chapter 11 Case No. 08-21869. Bankruptcy Court: United States Bankruptcy Court District of Utah (Salt Lake City) Debtor's Counsel: Gregory K. Jones, Esq. Stutman, Treister & Glatt P.C. 1901 Avenue of the Stars 12th Floor Los Angeles, CA 90067 Tel: (310) 228-5600 Fax: (310) 228-5788 E-mail: gjones@stutman.com Estimated Assets: $0 to $50,000 Estimated Debts: $100,000,000 to $500,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. UTAH 7000: 341 Meeting of Pivotal Promontory Creditors on Dec. 11 ----------------------------------------------------------------- The United States Trustee in Salt Lake City, Utah, will convene a meeting of creditors in the bankruptcy case of Pivotal Promontory TRC, L.L.C. at 3:30 p.m. at 405 South Main. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Additionally, creditors, including governmental units, have until December 3, 2008, to file proofs of claim against TRC. Based in Park City, Utah, Utah 7000 LLC fka Pivotal Promontory LLC operates and develops resort community near Park City and Deer Valley ski resorts. On March 28, certain holders of junior and second priority liens filed for involuntary Chapter 11 petitions against the Company (Bankr. D. Utah Lead Case No.08-21869). Kenneth L. Cannon, II, Esq., at Durham Jones & Pinegar, represents the petitioners. On April 3, 2008, the Debtors gave their consent to the entry of an order for Chapter 11 bankruptcy relief. Danny C. Kelly, Esq., at Stoel Rives LLP and Eve H. Karasik, Esq., at Stutman Treister & Glatt Professional Co., represent the Debtors in their restructuring efforts. The U.S. Trustee for Region 19 appointed an Official Committee of Unsecured Creditors in the cases. J. Thomas Beckett, Esq., at Parsons Behle & Latimer, represents the Committee. According to Bloomberg, Judge Judith A. Boulden estimated the value of Utah 7000's property at $560.1 million. The Debtor owes about $431.5 million to several secured creditors. VALUE CITY: Taps Hilco Real as Real Estate Consultant ----------------------------------------------------- Value City Holdings Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of New York to employ Hilco Real Estate LLC as their real estate consultant and advisor. The firm will: a) assist the Debtors ascertain their goals, objectives and financial parameters; b) negotiate the termination, assignment of other disposition of leases and the sale of the owned property; c) negotiate waivers or reductions of prepetition cure amounts and lease claims arising under Section 502(b)(6) of the Bankruptcy Code; d) assist the Debtors at an auction for the leases and the sale of owned property, if needed; and e) report periodically to the Debtors regarding the status of negotiations. The firm will be paid $80,000 fee payable with two business days after entry of the Court's order and will be credited against any other fees earned hereunder. The firm will charge $400 per hour for additional consulting services. Furthermore, the firm is expected to receive, among other things, 4% of the gross proceeds of the disposition and another 4% of the gross proceeds for owned property. Joseph Malfitano, vice president and assistant general counsel of the firm, assures the Court that the firm does not hold any interest adverse to the Debtors' estate and their creditors, and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Value City Headquartered in Columbus, Ohio, Value City Holdings Inc. -- http://www.valuecity.com/-- operates a chain of department stores in the United States. The company and eight of its affiliates filed for Chapter 11 protection on Oct. 26, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-14197). John Longmire, Esq., and Lauren C. Cohen, Esq., at Willkie Farr & Gallagher LLP, represents the Debtors' in their restructuring efforts. The company selected Epiq Bankruptcy Solutions LLC as its claims, noticing and balloting agent. The United States Trustee for Region 2 has named a nine-member official committee of unsecured creditors. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million and $500 million each. VALUE CITY: Wants Until January 10, 2009, to File Schedules ----------------------------------------------------------- Value City Holdings Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of New York to further extend until Jan. 10, 2009, the deadline to file schedules of assets and debts, and statements of financial affairs. The initial deadline is Dec. 10, 2008. The Debtors tell the Court that they were unable to complete their schedules and statements by Dec. 10, 2008, when several of key employees resigned effective Nov. 30, 2008, from the company that affected the information gathering process to complete their schedules. According to John C. Longmire, Esq., at Willkie Farr & Gallagher LLP, much of the required information necessary to prepare the schedules is maintain by the Debtors' former parent, Retail Ventures Inc. Mr. Longmire says the Debtors propose Verdolino & Lowey P.C. as their tax and financial services consultants. The firm will assist the Debtors to prepare their schedules, he continues. About Value City Headquartered in Columbus, Ohio, Value City Holdings Inc. -- http://www.valuecity.com/-- operates a chain of department stores in the United States. The company and eight of its affiliates filed for Chapter 11 protection on Oct. 26, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-14197). John Longmire, Esq., and Lauren C. Cohen, Esq., at Willkie Farr & Gallagher LLP, represents the Debtors' in their restructuring efforts. The company selected Epiq Bankruptcy Solutions LLC as its claims, noticing and balloting agent. The United States Trustee for Region 2 has named a nine-member official committee of unsecured creditors. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million and $500 million each. WAVERLY GARDENS: Taps HTG Consultants as Valuation Expert --------------------------------------------------------- Waverly Gardens of Memphis, LLC and Kirby Oaks Integra, LLC, dba Waverly Glen, ask the U.S. Bankruptcy Court for the Western District of Tennessee for authority to employ HTG Consultants, LLC, a licensed appraiser, as their vaulation expert. As the Debtors' valuation expert, HTG will advise the Debtors and provide, if necessary, expert testimony in connection with issues in connection with their cases, including the Debtors' motion to use cash collateral and objections filed by First Tennessee Bank, N.A. and in connection with valuation issues that may arise in connection with confirmation of a plan of reorganization. David S. Passero, a principal at HTG, assures the Court that the firm does not represent or hold any interest adverse to the Debtors or their estates, and that it is a "disinterested person" as defined under Sec. 101(14) of the Bankruptcy Code. HTG has agreed to undertake the appraisal of the Debtors' real property and business for a fee of $18,000 plus travel and out of pocket expense, plus additional compensation at the rate of $300 for expert testimony. About Waverly Garden Memphis, Tennessee-based Waverly Gardens of Memphis, LLC -- http://www.waverlygardens.com/-- owns and operates an independent living facility comprised of 19 interconnected single story modular structures on an 11.5 acre site. Kirby Oaks Integra, LLC, dba. Waverly Glen, owns and operates a 52 unit assisted living facility, with Alzeheimer's unit. The Debtors filed separate petitions for Chapter 11 relief on Oct. 2, 2008 (Bankr. W.D. Tenn. Lead Case No. 08-30218). Michael P. Coury, Esq., at Farris Bobango Branan PLC, represents the Debtors as counsel. When Waverly Gardens filed for protection from its creditors, it listed assets of between $10 million to $50 million, and debts of $1 million to $10 million. When Waverly Glen filed for protection from its creditors, it listed assets and debts of between $1 million and $10 million each. WELLCARE HEALTH: A.M. Best Cuts FSR Ratings on 2 Florida Units -------------------------------------------------------------- A.M. Best Co. on November 24, 2008, took various rating actions on the financial strength ratings (FSR) and issuer credit ratings (ICR) of the health maintenance organization (HMO) subsidiaries of WellCare Health Plans, Inc. (WellCare) (Tampa, FL) [NYSE: WCG]. The companies' Best's public data (pd) ratings reflect a quantitative analysis of the company's results based on publicly available financial information. This quantitative analysis includes a review of important tests in three categories: balance sheet strength, operating performance and business profile. Best's pd ratings do not include analysis based on interaction with insurance company management or non-public financial information. WellCare's HMO ratings reflect the companies' reliance on the government-sponsored programs of Medicaid and Medicare, a decrease in investment income, additional medical and administrative costs relating to its Medicare PDP product, as well as the government and special committee investigations. A.M. Best expects that this may hinder WellCare's HMOs' profitability and their ability to grow their already modest capital position in the near term. Offsetting positive rating factors include WellCare's HMOs' manageable premium growth and strong market presence. -- The FSR has been downgraded to B- pd (Fair) from B pd (Fair) and ICR to "bb- pd" from "bb pd" for HealthEase of Florida, Inc., a subsidiary of WellCare Health Plans, Inc. -- The FSR has been downgraded to C++ pd (Marginal) from B- pd (Fair) and ICR to "b pd" from "bb- pd" for WellCare of Florida, Inc., a subsidiary of WellCare Health Plans, Inc. -- The FSR of C++ pd (Marginal) and ICR of "b pd" have been affirmed for Harmony Health Plan of Illinois, Inc., a subsidiary of WellCare Health Plans, Inc. -- The FSR of C+ pd (Marginal) and ICR of "b- pd" have been affirmed for WellCare of Connecticut, Inc., a subsidiary of WellCare Health Plans, Inc. YOURBUYER INC: Files for Chapter 7 Liquidation ---------------------------------------------- John G. Edwards at Las Vegas Review-Journal reports that YourBuyer Inc. has filed for Chapter 7 liquidation, listing $16.1 million in liabilities and $2,000 in assets. YourBuyer reported $4.9 million in gross income in 2007 and $3.6 million in 2006, court documents say. According to Las Vegas Review-Journal, YourBuyer owes Ronald Richardson, one of its investors, about $7 million. Las Vegas Review-Journal relates that that Mark Brown, YourBuyer's founding president and a major investor, guaranteed $500,000 of Mr. Richardson's loan. Mr. Brown also is owed $600,000, the report states. Other creditors included the landlord for the firm's office in Shanghai, China, the report says. About YourBuyer YourBuyer Inc. is a purchasing company established by two former managers at failed PurchasePro.com. Mark McNally, a former data processing manager at PurchasePro, and Chief Operating Officer Doug Miller, another former worker at PurchasePro, started the company six years ago. Mr. McNally owned about 30 percent of the shares in YourBuyer. * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Share- Total Holders Working Assets Equity Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------ ------- ------- ABSOLUTE SOFTWRE ABT CN 106.78 (2.62) 30.90 APP PHARMACEUTIC APPX US 1,105.06 (41.69) 259.64 ARBITRON INC ARB US 162.41 (9.33) (39.23) BARE ESCENTUALS BARE US 272.49 (24.77) 125.37 BLOUNT INTL BLT US 485.28 (20.09) 119.08 CABLEVISION SYS CVC US 9,716.99 (4,965.85) (1,583.16) CENTENNIAL COMM CYCL US 1,393.93 (1,025.77) 86.00 CHENIERE ENERGY LNG US 3,049.32 (266.00) 423.48 CHENIERE ENERGY CQP US 2,020.62 (311.81) 178.97 CHOICE HOTELS CHH US 349.93 (90.51) (7.61) CLOROX CO CLX US 4,587.00 (364.00) (396.00) CV THERAPEUTICS CVTX US 391.99 (225.60) 285.98 DELTEK INC PROJ US 187.99 (61.84) 34.16 DISH NETWORK-A DISH US 7,177.25 (2,129.50) (1,318.20) DOMINO'S PIZZA DPZ US 440.85 (1,437.39) 84.39 DUN & BRADSTREET DNB US 1,642.30 (554.20) (205.90) ENERGY SAV INCOM SIF-U CN 464.04 (263.35) (92.06) EXELIXIS INC EXEL US 254.76 (23.45) (1.44) EXTENDICARE REAL EXE-U CN 1,621.33 (31.08) 124.99 GARTNER INC IT US 1,115.42 (14.96) (253.32) GENERAL MOTORS GM US 110,425.00 (58,994.00) (18,461.00) GENERAL MOTORS C GMB BB 110,425.00 (58,994.00) (18,461.00) HEALTHSOUTH CORP HLS US 1,980.50 (874.10) (217.90) IMAX CORP IMX CN 238.28 (90.53) 40.71 INCYTE CORP INCY US 264.72 (177.38) 216.20 INTERMUNE INC ITMN US 205.78 (92.04) 133.89 KNOLOGY INC KNOL US 646.88 (43.63) 12.89 LINEAR TECH CORP LLTC US 1,664.87 (377.94) 1,108.62 MOODY'S CORP MCO US 1,694.30 (893.80) (331.00) NATIONAL CINEMED NCMI US 569.10 (475.90) 86.40 NAVISTAR INTL NAV US 11,557.00 (228.00) 1,501.00 NPS PHARM INC NPSP US 201.96 (207.84) 90.48 OCH-ZIFF CAPIT-A OZM US 2,224.17 (172.89) - OSIRIS THERAPEUT OSIR US 28.55 (8.19) (14.45) OVERSTOCK.COM OSTK US 145.46 (3.68) 33.49 PROTECTION ONE PONE US 644.94 (63.74) 3.16 REGAL ENTERTAI-A RGC US 2,557.50 (223.90) (111.90) REVLON INC-A REV US 876.60 (999.30) 8.10 ROTHMANS INC ROC CN 545.25 (213.23) 101.53 SALLY BEAUTY HOL SBH US 1,527.02 (697.08) 367.20 SONIC CORP SONC US 836.31 (64.12) (13.12) STEREOTAXIS INC STXS US 55.08 (5.26) 2.87 SUCCESSFACTORS I SFSF US 167.82 (2.93) 3.97 SUN COMMUNITIES SUI US 1,221.85 (28.24) - SYNTA PHARMACEUT SNTA US 90.76 (34.61) 57.71 TAUBMAN CENTERS TCO US 3,181.86 (20.38) - TEAL EXPLORATION TEL SJ 55.61 (22.27) (62.15) THERAVANCE THRX US 255.26 (125.15) 184.02 UAL CORP UAUA US 20,731.00 (1,282.00) (1,583.00) UST INC UST US 1,402.19 (325.57) 236.75 WARNER MUSIC GRO WMG US 4,476.00 (86.00) (623.00) WEIGHT WATCHERS WTW US 1,110.40 (900.83) (269.75) WESTERN UNION WU US 5,504.20 (90.20) 318.90 WR GRACE & CO GRA US 3,754.20 (178.90) 970.10 ********* 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. Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Luke Caballos, Sheryl Joy P. Olano, Carlo Fernandez, 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- mail. Additional e-mail subscriptions for members of the same firm 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 ***