/raid1/www/Hosts/bankrupt/TCR_Public/090114.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, January 14, 2009, Vol. 13, No. 13
Headlines
5925 ALMEDA: Files for Chapter 11 Bankruptcy Protection
ABBOTT LABARATORIES: Moody's Affirms Ratings on AMO Merger Deal
AMERICAN AXLE: S&P Junks Corp. Credit Rating; Outlook Negative
AMERICAN INT'L: Steep Market Decline May Hinder Asset Sale
AMF BOWLING: S&P Downgrades Corporate Credit Rating to 'B-'
APEX SILVER: In Chapter 11, Prepackaged Plan Built on Mine Sale
APEX SILVER: Case Summary & 20 Largest Unsecured Creditors
ARVINMERITOR INC: To Post Q1 Results Jan. 26; to Break Up LVS
ARVINMERITOR INC: S&P Downgrades Corporate Credit Rating to 'B'
ASHTON WOODS: Offers to Swap $125MM Notes with New Notes, Stock
ASHTON WOODS: Seeks Covenant Relief From Holders of 9.5% Notes
ATA AIRLINES: May Now Send Chapter 11 Plan to Creditors for Voting
ATLANTIC EXPRESS: Elects Timothy L. Carden Member of the Board
B. DUB: Files for Chapter 11 Bankruptcy Protection in Florida
BARE ESCENTUALS: S&P Raises Issue-Level Rating on Loans to 'BB'
BERNARD L. MADOFF: Not Jailed, Court Denies Prosecutors' Plea
BYRAM CONCRETE: Voluntary Chapter 11 Case Summary
CALAMP CORP: In Talks with Lenders for Loan Covenant Relief
CAPLEASE INC: Buys Back 2027 Conv. Sr. Notes for 62% Discount
CDX GAS: Can Use Secured Lenders' Cash Collateral on Final Basis
CHARLES HINKLEY: Voluntary Chapter 11 Case Summary
CHARYS HOLDING: Court Extends Plan Solicitation Period to Jan. 30
CHESAPEAKE CORP: U.S. Trustee Forms Seven-Member Creditors Panel
CHESAPEAKE CORP: Committee Balks Asset Sale Bidding Procedures
CHRYSLER LLC: Tries to Sell Key Assets to Nissan-Renault & Magna
CIRCUIT CITY: Moves Auction for Business to 3 P.M. Today
CITIGROUP INC: CEO Has Board's Support Despite Expected Losses
CITIGROUP INC: To Undergo Major Reorganization
COLLINS MBANUGO: Voluntary Chapter 11 Case Summary
CONGOLEUM CORP: Owens-Illinois Opposes Plan Confirmation
CONSTAR INT'L: Disclosure Statement Hearing Set for February 3
CPI PLASTIC: Voluntary Chapter 15 Case Summary
CREATIVE CHOICE: Case Summary & 20 Largest Unsecured Creditors
CYRUS REINSURANCE: Moody's Withdraws Low-B Ratings on Bank Loans
DBSI INC: Two Units' Voluntary Chapter 11 Case Summary
DELTA PICTURE: Voluntary Chapter 11 Case Summary
DESTINATION MATERNITY: S&P Affirms 'B-' Corporate Credit Rating
DHP HOLDINGS: U.S. Trustee Forms Seven-Member Creditor Committee
DIRECTV GROUP: S&P's 'BB' Rating Unmoved by $2BB Stock Repurchase
DOMINO'S PIZZA: 10 Locations Closed; 9 Franchisees Bankrupt
DUNEDIN MARINA: Voluntary Chapter 11 Case Summary
EARTH BIOFUELS: Consummates Convertible Exchangeable Notes Deal
EARTH BIOFUELS: Finalizes Exchange Agreement with Castlerigg PNG
ELITE LANDINGS: Court Authorizes Inter-Co. Transfers to Petters
ELITE LANDINGS: May Extend Revolving Line of Credit to Sun Country
FASHION HOUSE: September 30 Balance Sheet Upside-Down by $198MM
FEDERAL-MOGUL CORP: S&P Affirms 'BB-' Corporate Credit Rating
FHLB SEATTLE: To Disclose Risk-Based Capital Deficiency
FIRST AMERICANS: Case Summary & 20 Largest Unsecured Creditors
FLYING J: Bakersfield Plant Remains Closed
FOAMEX LP: Moody's Downgrades Corporate Family Rating to 'Caa2'
FREMONT GENERAL: CapitalSource Transaction Delays 10-Q Filing
GENERAL DATACOMM: Eisner LLP Resigns as Ind. Public Accountants
GENERAL DATACOMM: Mortgage Loan Extended to July 31, 2010
GENERAL DATACOMM: Financial Woes Cue Delay of Annual Report
GLOBAL CROSSING: Names David R. Carey as Chief Marketing Officer
GOODY'S FAMILY: Starts Going Out of Business Sale
GENERAL GROWTH: Must Extend $3.5-Bil. Debt Payment Deadlines
GENERAL MOTORS: To Step Up Union, Lender Talks for Viability Plan
GERMAN ELECTRONICS: Voluntary Chapter 11 Case Summary
GOODYEAR TIRE: S&P Affirms Corporate Credit Rating at 'BB-'
HAYES LEMMERZ: S&P Downgrades Corporate Credit Rating to 'B-'
INTERSTATE BAKERIES: Talks with Exit Financing Lenders Continue
JACKSON FORD MERCURY: Voluntary Chapter 11 Case Summary
JEFFERSON COUNTY: To Vote on March 12 Forbearance Extension
KB TOYS: Gift Cards Can be Swapped With Toys R Us Coupons
KIRBY JAN TRUMBO: Voluntary Chapter 11 Case Summary
KIRK PIGFORD: Wants Plan Filing Period Extended to January 30
KUSHNER LOCKE: May Use Lenders' Cash Collateral Until January 31
LANDMARK FBO: Weak Expected Earnings Cue Moody's Junk Ratings
LANDRY'S RESTAURANTS: Terminates $217.4MM Sale Deal With CEO
LEHMAN BROTHERS: BNC Mortgage Files for Bankruptcy in New York
LENNAR CORP: Clarifies Allegations on "Off-Balance-Sheet" Debt
LIZ CLAIBORNE: Loan Facility Reduced, Financial Covenants Relaxed
LYONDELL CHEMICAL: Royal Bank of Scotland Has $3.5BB Exposure
LYONDELL CHEMICAL: Mid-America Seeks Adequate Protection
MARK IV: Dropping Auto Sales Cues S&P to Junk Corp. Credit Rating
MARK WORLEY: Case Summary & 11 Largest Unsecured Creditors
MERRILL LYNCH: BofA Will Keep Merrill Logo, Faces Labor Lawsuit
MILTON PETRO: Voluntary Chapter 11 Case Summary
MOUNT VERNON: Moody's Affirms 'Ba3' Rating on Revenue Bonds
MUZAK HOLDINGS: Moody's Downgrades Corp. Family Rating to 'Ca'
NEIMAN MARCUS: Moody's Reviews Low-B Rating for Possible Cuts
NEW YORK SKYLINE: Case Summary & 20 Largest Unsecured Creditors
NTAG INTERACTIVE: Files for Chapter 7 Liquidation
OCEANFREIGHT INC: Nordea Bank Relaxes Covenant Under $325MM Loan
OLYMPIC ON GRANDE: Case Summary & 20 Largest Unsecured Creditors
PRECISION PARTS: Asks Court to OK Protocol for Sale of All Assets
PRESERVE LLC: Court Says Debtor Not Subject to Single Asset Rule
RETAIL PRO: Case Summary & 35 Largest Unsecured Creditors
REUNION INDUSTRIES: Discloses Changes in Certifying Accountant
RONALD LEONARD: Voluntary Chapter 11 Case Summary
RONALD MUNIZ: Case Summary & Four Largest Unsecured Creditors
SBARRO INC: Moody's Downgrades Corporate Family Rating to 'Caa2'
SCO GROUP: Court to Review Reorganization Plan on February 25
SEAGATE TECHNOLOGY: Stephen Luczo Replaces William Watkins
SHANE CO: Blames Chapter 11 on Recession, SAP Systems Delays
SHANE CO: Seeks Debtor-in-Possession Financing from Owner
SHANE CO: Wants Court Approval to Use Lenders' Cash Collateral
SHEARSON FINANCIAL: Completes $500,00 DIP Funding From AJW
SMITTY'S BUILDING: Gets Initial Okay to Use $16MM BofA Facility
SUPERIOR AIR: Expects Court OK on Bidding Process by January 15
TALGOOD TRAVEL: Files for Chapter 7 Liquidation
TRANSMERIDIAN EXPLORATION: $8.7MM Interest Payment Due Jan. 15
TRONOX INC: Bankruptcy Filing Does Not Affect Joint Venture
TRONOX INC: Hires Kurtzman Carson as Claims & Notice Agent
TRONOX INC: Seeks Feb. 27 Extension of Schedules Filing Deadline
TRONOX INC: To Hire Kirkland as Bankruptcy Counsel
TRONOX INC: Wins Interim Approval to Borrow $100-Mil.
TRONOX WORLDWIDE: US Units' Bankruptcy Cues Fitch's Default Rating
TRONOX WORLDWIDE: Chapter 11 Filing Cues S&P's Rating Cut to 'D'
TRONOX WORLDWIDE: Moody's Downgrades Corp. Family Rating to 'Ca'
US AIRWAYS: Court Issues Ruling on World Trade Lessee's Damages
US AIRWAYS: Prepays $100,000,000 Under GECC Loan Agreement
USG CORP: $500,000,000 JPMorgan Unsecured Loan Now Secured
USG CORP: Cancels $170,000,000 JPMorgan Credit Facility
VISTEON CORP: To Post Q4 Results Feb. 2 Amid Low Auto Demand
VISTEON CORP: S&P Junks Corp. Credit Rating on Weak Auto Sales
VERASUN ENERGY: Can Hire Rothschild as Investment Bankers
VERASUN ENERGY: Cash Collateral Order Revised on AgStar-UBS Rift
VERASUN ENERGY: CHS Reports $70,00,000 Impairment on Bankruptcy
VERASUN ENERGY: Janesville Unit Can Access $500,000 AgStar Loan
VERASUN ENERGY: Secures $110,000,000 AgStar DIP Loan for 7 Plants
WASHINGTON MUTUAL: Can't Abandon Shareholder Actions, Court Says
WASHINGTON MUTUAL: IRS Wants to Set Off $55,000,000 Debt
WASHINGTON MUTUAL: May Sell Investments in Strategic Capital Fund
WASHINGTON MUTUAL: Sec. 341 Meeting to Resume January 28
WASHINGTON MUTUAL: Sets March 31, 2009 as Claims Bar Date
WORLDSPACE INC: WorldSpace Systems Files Amended Schedules
WP HICKMAN: Seeks to Pay Soprema's Claims to Maintain Supplies
WP HICKMAN: Panel Objects to Payment of Soprema Prepetition Claim
X-RITE INC: Quarter Revenue Results Won't Affect S&P's 'B' Rating
* Michael Sage Joins Dechert LLP From O'Melveny
* Willkie Farr's Callari to Join Venable LLP in New York
* Proskauer Rose Unveils Supplement to Int'l Legal Practice Guide
* U.S. Auto Production in 2009 to Impact Fate of Suppliers
* Upcoming Meetings, Conferences and Seminars
*********
5925 ALMEDA: Files for Chapter 11 Bankruptcy Protection
-------------------------------------------------------
Jennifer Dawson at Houston Business Journal reports that 5925
Almeda North Tower LP has filed for Chapter 11 bankruptcy
protection in the U.S. Bankruptcy Court for the Southern District
of Texas.
According to Houston Business, 5925 Almeda was scheduled to be
foreclosed on Jan. 6, 2009. 5925 Almeda filed its bankruptcy
petition on Jan. 5, says the report.
Houston Business states that the adjacent Montage apartment tower
being developed by Phillips Development & Realty LLC of Tampa and
Florida Capital Real Estate Group Inc., the developers of 5925
Almeda, isn't included in the bankruptcy filing.
5925 Almeda North Tower LP is a 394-unit Mosaic condominium tower,
which opened near the Museum District in November 2007.
ABBOTT LABARATORIES: Moody's Affirms Ratings on AMO Merger Deal
---------------------------------------------------------------
Moody's Investors Service affirmed the A1/Prime-1 ratings of
Abbott Laboratories following the company's announcement that it
will acquire Advanced Medical Optics for $2.8 billion, inclusive
of net debt. The rating outlook is stable.
At the same time, Moody's changed the direction of AMO's rating
review from possible downgrade to possible upgrade. Moody's
anticipates that Moody's would withdraw the Corporate Family and
Probability of Default Ratings of AMO upon closing of the
transaction. If AMO's debt is assumed by Abbott, Moody's would
need to consider the presence of any guarantees and where the debt
falls within Abbott's overall capital structure.
Moody's believes that this transaction helps to further diversify
Abbott's portfolio by adding a new segment in the medical device
arena. AMO's favorable market position in refractive and cataract
products help to support its standing as one of the top players in
eye care. However, relative to other medical products, eye care
products and in particular, those related to refractive surgery,
are more vulnerable to a weak economy as highlighted by lackluster
organic growth rates.
Moody's expects the transaction to be funded with cash and
incremental debt. Size-wise, AMO reduces Abbott's financial
flexibility and is somewhat outside of the expectations Moody's
had when Abbott's outlook was changed to stable earlier this year.
However, Abbott has enjoyed stronger than anticipated free cash
flow during fiscal 2008.
Diana Lee, a Senior Credit Officer at Moody's said, "Higher debt
levels associated with AMO are offset by Moody's expectation that
Abbott will see ongoing improvement in future free cash flow
generation."
That said, Abbott must maintain adequate liquidity over the near-
term, as the company has two $500 million debt maturities in the
first half of 2009, as well as anticipated cash outflows related
to pensions, dividends, and share buybacks. "While AMO could be
favorable from a diversification perspective, Moody's believes
that Abbott may be paying a high premium based on recent trends in
refractive surgery and a possible prolonged economic downturn,"
comments Lee.
The stable outlook assumes that Abbott will maintain adequate
liquidity and achieve stronger credit metrics. If liquidity is
impaired or ratios do not improve because the company continues to
pursue acquisitions or aggressively buys back shares, the ratings
could come under pressure.
Ratings affirmed:
Abbott Laboratories:
-- A1 Senior unsecured notes
-- (P)A1 Senior shelf rating
-- P-1 Short-term rating
Abbott Japan Co., Ltd.:
-- A1 Backed senior unsecured notes
The last rating action on Abbott was a change in the rating
outlook to stable from negative on May 5, 2008.
Ratings with review direction changed from possible downgrade to
possible upgrade:
Advanced Medical Optics, Inc.:
-- B2 Corporate Family Rating
-- B2 Probability of Default Rating
-- Ba2 (LGD2/14%) $300 million Senior Secured Revolver due 2013
-- Ba2 (LGD2/14%) $445 million Senior Secured Term Loan due 2014
-- B2 (LGD3/46%) $250 million Senior Subordinated Notes due 2017
-- Caa1 (LGD5/80%) $246 million Convertible Senior Subordinated
Notes due 2024
The last rating action on AMO was taken on October 10, 2008 when
the company's ratings were placed under review for possible
downgrade.
Abbott Laboratories, headquartered in Abbott Park, Illinois is a
global, diversified healthcare company focused on pharmaceuticals
and medical products, including nutritionals, devices and
diagnostics. For the twelve months ended September 30, 2008,
Abbott generated about $28.8 billion in revenues.
Advanced Medical Optics, Inc., headquartered in Santa Ana,
California, is a leader in the development, manufacturing and
marketing of medical devices, therapeutic equipment and other
products for the eye. For the twelve months ended September 26,
2008, AMO generated approximately $1.2 billion in revenues.
AMERICAN AXLE: S&P Junks Corp. Credit Rating; Outlook Negative
--------------------------------------------------------------
Standard & Poor's Ratings Services said it has lowered its
corporate credit rating on Detroit-based American Axle
Manufacturing & Holdings Inc. to 'CCC+' from 'B' and removed all
the ratings from CreditWatch, where they had been placed with
negative implications on Oct. 9, 2008. The outlook is negative.
At the same time, S&P also lowered its issue-level ratings on the
company's debt.
The downgrade reflects S&P's view that declining North American
auto production by primary customer General Motors Corp.
(CC/Negative/--) in 2009 will severely reduce American Axle's
profitability and cash flow generation, straining liquidity.
American Axle's revenue is heavily dependent on sales of GM's SUVs
and pickup trucks, and demand for these products has weakened
substantially. Despite government assistance, GM's condition
remains precarious.
"We expect U.S. light-vehicle sales to fall about 24% in 2009, to
about 10.0 million units," said Standard & Poor's credit analyst
Lawrence Orlowski. GM's production in the first quarter of 2009
is expected to be down more than 50% year over year. S&P expects
production to also be down for other customers in North America
and for Europe as well in 2009.
American Axle's credit ratios were weakened considerably in 2008
by a prolonged strike and lower production by GM even after the
strike. S&P project minimal improvement in credit measures during
2009 because auto production will remain low.
Tempering these challenges are the substantial cost benefits (GM
is paying for some of the restructuring costs) American Axle will
realize over the next year from its new contract with the United
Auto Workers and the resizing of its salaried workforce. As a
result, the company expects to realize more than $350 million in
annual labor cost reductions.
Moreover, American Axle's new manufacturing facilities in Mexico,
Brazil, Poland, and China will continue to support the company's
efforts to diversify its customer base and enhance low-cost
production capacity. However, substantial diversification will
take a number of years to accomplish. The company's backlog
stands at $1.4 billion, almost 60% of which is dependent on new-
product development for all-wheel- and rear-wheel-drive passenger
cars and crossover vehicles. In addition, American Axle has
sourced 85% of this backlog to non-U.S. facilities, expanding its
global presence. The company expects to launch $800 million of
its new business backlog in 2009, 2010, and 2011.
The outlook is negative. S&P expects 2009 to be another weak year
for American Axle's sales and profitability because of a further
decline in auto demand and the likelihood of lower production at
GM, its major customer. S&P could lower the rating further if
American Axle is unable to maintain access to its bank facility,
or if its EBITDA drops roughly 10% below S&P's 2009 EBITDA
projection of $193 million. This could occur if demand for
American Axle's products is lower than S&P currently expect. For
example, a gross margin of 9.3% and a 15% decline in 2009 revenue
would bring EBITDA down to a level that would be insufficient to
cover interest expense and reasonable capital spending.
S&P could revise the outlook to positive or raise the rating if
GM's financial situation stabilizes and its production of vehicles
that American Axle serves appears to also stabilize, and if
American Axle stops using cash. The company would also have to
demonstrate potential for generating at least breakeven free cash
flow and increasing the cushion under its existing covenants.
This would likely require U.S. light-vehicle sales to go well
above the 10.0 million units S&P expects for 2009.
AMERICAN INT'L: Steep Market Decline May Hinder Asset Sale
----------------------------------------------------------
Liam Pleven at The Wall Street Journal reports that steep market
deterioration could hinder American International Group Inc.'s
asset sale and the winding down of AIG Financial Products Corp.,
the unit that led to the company's collapse.
WSJ states that AIG is trying to sell AIGFP or contain the huge
risks it amassed in its financial products unit. WSJ quoted Gerry
Pasciucco, new head of AIGFP, as saying, "We have letters of
intent" for the sale of one line. According to the report,
Mr. Pasciucco said that he wouldn't be "so foolhardy" as to say
there could never be a liquidity risk to AIG.
AIG Names Vice Presidents
AIG reported that Teri L. Watson, Vice President, Rating Agency
Relations, will assume additional responsibility for AIG's
Investor Relations. She succeeds AIG Vice President Charlene M.
Hamrah, who is retiring at the end of January after an AIG career
spanning 23 years. Ms. Watson's new title will be Vice President,
Investor & Rating Agency Relations.
Ms. Watson joined AIG in 1999 to develop the company's rating
agency relationships and was named AIG Vice President in January
2008. Prior to joining AIG, Ms. Watson was an Assistant Vice
President at A.M. Best Company, leading a team of property-
casualty analysts responsible for rating some of the largest
insurance and reinsurance companies in the world. Prior to that,
Ms. Watson was Vice President of Planning and Budgeting for GRE
Insurance Group and Manager of Financial Reporting at Skandia
America Re. Ms. Watson received her Bachelor of Science in
Business Administration-Accounting from Millersville University in
Pennsylvania.
Ms. Hamrah has headed AIG's investor relations department since
1991, and was elected an AIG Vice President and Director of
Investor Relations in 2004. After joining AIG in 1986, she served
in several financial management positions, including Manager of
Financial Planning and Analysis in AIG's corporate center,
Comptroller for AIG Specialty Agencies and Starr Technical Risks
Agency, as well as special projects in both AIG's foreign and
domestic general insurance operations.
AIG reports that Christina Pretto has joined AIG as Vice
President, Corporate Media Relations. Ms. Pretto will oversee all
aspects of AIG's corporate media relations, including developing
and implementing AIG's media relations strategy, counseling senior
management on media affairs, and coordinating media activities
with AIG's communications professionals around the world.
Ms. Pretto joins AIG from Citigroup Inc., where she was Managing
Director and Global Head of Public Affairs, serving as chief media
spokesperson with responsibilities for managing all of the
company's media relations at the parent company level.
Previously, she was Global Head of Corporate Affairs for
Citigroup's corporate and investment banking division, responsible
for media relations, internal communications, branding,
advertising, digital media, community affairs, and external
positioning.
Ms. Pretto joined Citigroup in 2001 as Deputy Director of Public
Affairs. Prior to joining Citigroup, she was the Director of
Communications for Standard & Poor's, and before that worked as a
journalist covering global debt capital markets and U.S. public
finance. She earned a bachelor's degree in political science from
the University of Wisconsin.
Based in New York, American International Group, Inc. (AIG) is the
leading international insurance organization with operation in
more than 130 countries and jurisdictions. AIG companies serve
commercial, institutional and individual customers through the
most extensive worldwide property-casualty and life insurance
networks of any insurer. In addition, AIG companies are leading
providers of retirement services, financial services and asset
management around the world. AIG's common stock is listed on the
New York Stock Exchange, as well as the stock exchanges in Ireland
and Tokyo.
During the third quarter of 2008, requirements to post collateral
in connection with AIG Financial Products Corp.'s credit default
swap portfolio and other AIGFP transactions and to fund returns of
securities lending collateral placed stress on AIG's liquidity.
AIG's stock price declined from $22.76 on Sept. 8, 2008, to $4.76
on Sept. 15, 2008. On that date, AIG's long-term debt ratings
were downgraded by Standard & Poor's, a division of The McGraw-
Hill Companies, Inc., Moody's Investors Service and Fitch Ratings,
which triggered additional requirements for liquidity. These and
other events severely limited AIG's access to debt and equity
markets.
On Sept. 22, 2008, AIG entered into an $85 billion revolving
credit agreement with the Federal Reserve Bank of New York and,
pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000
shares of Series C Perpetual, Convertible, Participating Preferred
Stock to a trust for the benefit of the United States Treasury.
At Sept. 30, 2008, amounts owed under the facility created
pursuant to the Fed Credit Agreement totaled $63 billion,
including accrued fees and interest.
Since Sept. 30, AIG has borrowed additional amounts under the
Fed Facility and has announced plans to sell assets and businesses
to repay amounts owed in connection with the Fed Credit Agreement.
In addition, subsequent to Sept. 30, 2008, certain of AIG's
domestic life insurance subsidiaries entered into an agreement
with the NY Fed pursuant to which the NY Fed has borrowed, in
return for cash collateral, investment grade fixed maturity
securities from the insurance subsidiaries.
On Nov. 10, 2008, the U.S. Treasury agreed to purchase, through
its Troubled Asset Relief Program, $40 billion of newly issued AIG
perpetual preferred shares and warrants to purchase a number of
shares of common stock of AIG equal to 2% of the issued and
outstanding shares as of the purchase date. All of the proceeds
will be used to pay down a portion of the Federal Reserve Bank of
New York credit facility. The perpetual preferred shares will
carry a 10% coupon with cumulative dividends.
AIG and the Fed also agreed to revise the existing FRBNY credit
facility. The loan terms were extended from two to five years to
give AIG time to complete its planned asset sales in an orderly
manner. The equity interest that taxpayers will hold in AIG,
coupled with the warrants, will total 79.9%.
At Sept. 30, 2008, AIG had $1.022 trillion in total consolidated
assets and $950.9 billion in total debts. Shareholders' equity
was $71.18 billion, including the addition of $23 billion of
consideration received for preferred stock not yet issued.
AMF BOWLING: S&P Downgrades Corporate Credit Rating to 'B-'
-----------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its corporate
credit and issue-level ratings on Mechanicsville, Virginia-based
AMF Bowling Worldwide Inc. by one notch. S&P lowered the
corporate credit rating to 'B-' from 'B'. The rating outlook is
stable.
"The downgrade reflects weak operating performance, widening
negative discretionary cash flow, and shrinking liquidity," said
Standard & Poor's credit analyst Hal F. Diamond.
APEX SILVER: In Chapter 11, Prepackaged Plan Built on Mine Sale
---------------------------------------------------------------
Apex Silver Mines Limited and Apex Silver Mines Corporation filed
voluntary petitions under Chapter 11 before the U.S. Bankruptcy
Court for the Southern District of New York citing unexpected
increases in price of silver, lead, and zinc, which required their
subsidiaries -- Minera San Cristobal SA, Apex Metals Marketing
Gmbh, and Apex Silver Finance Ltd. -- to make substantial
settlement payments under their hedge positions.
The company said it funded 65% of the settlements payments and
paid about $210 million under the hedge positions and another 65%
of certain costs including, among other things, operations costs
that surpassed projections due to spiraling costs of energy and
consumable commodities. The company added that San Cristobal
Mine's production was slow and more costly that expected because
of equipment failures coupled with unavailability of sufficient
water sources.
In summer of 2008, Jefferies & Co. Inc. was retained by the
company to solicit bids for the sale of its interest in the San
Cristobal Mine. The company named Sumitomo Corp. as the winning
bidder, based in part of its commitment to continue funding the
San Cristobal Mine and to consummate the deal. In August 2008,
the company and Sumitomo reached an agreement, wherein Sumitomo
would provide $50 million subordinated facility, which was
increased to $150 million, all of which has been fully drawn.
In September 2008, the company was in talks with certain hedge
banks and senior lenders including Sumitomo concerning a potential
restructuring that resulted in a series of transactions:
a) the company and Sumitomo entered into a letter of intent on
Nov. 13, 2008, that contemplated Sumitomo's purchase of the
company's indirect interest in Minera San Cristobal and
Apex Metals Marketing;
b) hedge banks, Sumitomo and the company executed a settlement
and release agreement under which the banks terminated the
hedge positions, released the company and its subsidiaries
from their respective obligations under the hedge positions
and distributed $24.5 million plus accrued interest to the
company from its cash collateral account; and
c) Sumitomo purchase 90% of the facility loans from the senior
lenders and executed a standstill agreement with the
company under which Sumitomo agreed to forbear from
exercising its rights and remedies with respect to any
defaults under the facility until Jan. 8, 2009.
In addition, the senior lenders allowed Sumitomo to control the
exercise of rights and remedies with remedies with respect to any
defaults under the facility. Sumitomo agreed to extend this
standstill agreement until Jan. 12, 2009.
Plan Support Agreement
On Jan. 12, 2009, the company entered into a plan support
agreement with Sumitomo, 11 of the 12 lenders under the San
Cristobal project finance facility, and the holders of
approximately 65% of the outstanding principal amount of the
company's 2.875% and 4.0% convertible senior subordinated notes
due 2024. Under the terms of the agreement, each of the parties
thereto has agreed, following receipt of the court-approved
disclosure statement, to vote in favor of a joint plan of
reorganization of the company on the terms and conditions set
forth in the plan term sheet.
Under the proposed plan of reorganization contemplated by the plan
term sheet, if the class of subordinated noteholders accepts the
plan, the senior lenders will waive and release their senior
claims and subordinated noteholders will receive a pro rata share
of approximately $45 million in cash plus common stock in the
reorganized company. However, if the class of subordinated
noteholders rejects the proposed plan, the class would receive an
allocation of cash only after payment in full under the project
financing facility of Sumitomo and the senior lenders. In such
circumstances, the subordinated noteholders would receive common
stock of the reorganized company, but might not receive any cash
distributions under the proposed plan. The company's existing
shareholders would receive no distributions under the proposed
plan.
San Cristobal Purchase and Sale Agreement
The company certain of its wholly-owned subsidiaries entered on
Jan. 12, 2009, into a purchase and sale agreement with Sumitomo
and one of its wholly-owned subsidiaries under which Sumitomo has
agreed to purchase all of the company's direct and indirect
interests in the San Cristobal mine for $27.5 million in cash.
Under the terms of the purchase agreement, the company will be
released from liabilities associated with the San Cristobal mine,
including its guarantee of San Cristobal indebtedness, and will be
reimbursed for $2.5 million in expenses which were previously paid
by the company for the benefit of the San Cristobal mine. The
consummation of the transaction is subject to certain conditions,
including the court approval of the plan of reorganization.
Proceeds from the transaction will be used, in part, to provide
cash distributions to creditors of the company.
San Cristobal is located in the Potosi district of southwestern
Bolivia.
Upon consummation of an alternative transaction, the company has
agreed to repay the obligations under the DIP Financing Facility
in full as well as Sumitomo's $131.625 million claim as a lender
to the San Cristobal mine.
The agreement requires the closing of the transaction by
March 31, 2009, court document shows.
Notice of Delisting
NYSE Alternext US LLC has notified the company that it had halted
trading of the company's ordinary shares and planned to issue a
notice of delisting of the company's shares. The Exchange noted
that it reached this decision in light of the Company's decision
to file a voluntary petition for reorganization relief under
Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.
The Exchange said that the company's ordinary shares last traded
was Jan. 9, 2009. The company does not intend to take any further
action to appeal the Exchange's decision, and therefore it is
expected that the ordinary shares will be delisted after the
completion of the Exchange's application to the U.S. Securities
and Exchange Commission.
Securities and Exchange Commission Wells Notice
Two years ago, the U.S. Securities and Exchange Commission and the
U.S. Department of Justice informed the company that they had
commenced an investigation with respect to potential payments to
government officials made by certain senior employees of one of
its South American subsidiaries in 2003 and 2004 in connection
with an inactive, early stage exploration property.
The company received on Jan. 7, 2009, a "Wells notice" from the
staff of the Commission, which notice states that the staff
intends to recommend to the Commission that it bring an
enforcement action against the company, alleging that the Company
violated Sections 13(b)(2)(A), 13(b)(2)(B), 13(b)(5) and 30A of
the Securities Exchange Act of 1934.
The notice further states the staff may seek permanent injunctive
relief, disgorgement and civil monetary penalties against the
company. Under the Commission's procedures, the recipient of a
Wells notice has the opportunity to respond to the staff before
the staff makes its formal recommendation on whether any civil
action should be brought by the Commission.
Capital Structure
The company entered into a $225 million senior secured project
finance facility, initially arranged by BNP Paribas and Barclays
Capital, and funded by a group of international financial
institutions in 2005. All of the company's assets including the
San Cristobal Mine are pledged to secure the Facility. The
company also pledged its equity interests in the subsidiaries and
guaranteed, on a senior basis, a pro rata share of Minera San
Cristobal's obligations under the facility. Sumitomo guaranteed
its pro rata share (35%) of Minera San Cristobal's obligations
under the facility. On Dec. 15, 2008, the first principal payment
of $33 million was due under the Facility but was not paid.
Under the facility, a company subsidiary was required to obtain
price protection for a portion of Minera San Cristobal's planned
metals production by purchasing derivatives. To comply with this
obligation, the subsidiary entered into derivative positions with
BNP Paribas and Barclays Capital. Minera San Cristobal also
purchased puts from the banks in September 2007, as required
pursuant to an amendment to the facility.
The company and Sumitomo each guaranteed, on a pro rata basis, the
obligations under the hedge positions and also pledged all of
Minera San Cristobal's assets. The company had pledged
$91 million in cash collateral to secure the obligations under the
hedge positions.
The company has issued 2.875% convertible senior subordinated
notes due 2024 and 4.0% convertible senior subordinated notes due
2024. The aggregate outstanding principal amount of the
subordinated notes is $290 million, with accrued interest payable
in March and September of each year. The Subordinated Notes are
contractually subordinated to the company's guarantee of the
facility.
The company, which has about 99 creditors, listed assets and debts
between $500 million and $1 billion in its filing. The company
disclosed in a regulatory filing with the SEC that it has $721.3
million in total assets and 930.9 million in total liabilities as
of Sept. 30, 2008.
A full-text copy of Asset Purchase Agreement between the company
and Sumitomo is available for free at
http://ResearchArchives.com/t/s?37f3
A full-text copy of the company's consolidated balance sheets as
of Sept. 30, 2008, is available for free at:
http://ResearchArchives.com/t/s?37f4
Headquartered in Denver, Coloroda, Apex Silver Mines Limited --
http://www.apexsilver.com/restructure-- explores and develops
silver and other mineral properties in Central and South America.
The company is based in George Town, Cayman Islands.
APEX SILVER: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Apex Silver Mines Limited
1700 Lincoln Street, Suite 3050
Denver, CO 80203
Bankruptcy Case No.: 09-10182
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Apex Silver Mines Corporation 09-10183
Type of Business: The Debtors explore and develop silver and other
mineral properties in Central and South America.
The company is based in George Town, Cayman
Islands.
See: http://www.apexsilver.com/restructure
Chapter 11 Petition Date: January 12, 2009
Court: Southern District of New York
Judge: James M. Peck
Debtor's Counsel: James L. Bromley, Esq.
Sean A. O'Neal, Esq.
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, NY 10006
http://www.clearygottlieb.com
Tel: (212) 225-2500
Fax: (212) 225-3999
Special Purpose Counsel: Davis Graham & Stubbs LLP
Financial Advisor: Jefferies & Co, Inc.
Claims Agent: Epiq Bankruptcy Solutions LLC
757 Third Avenue, 3rd Floor
New York, NY 10017
Estimated Assets: $500 million to $1 billion
Estimated Debts: $500 million to $1 billion
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
American Express employee business $50,000
Travel Related Services Co credit cards
PO BOX 360001
Fort Lauderdale, FL 33336
Tel: (800) 528-2122
AT&T Mobility phone services $11,563
National Business Services
PO Box 9004
Carol Stream, IL 60197-9004
Tel: (800) 999-5445
The Rygnestad Group cost engineering $10,238
11302 West 28th Avenue consultant
Lakewood, CO 80203
Hein & Associates LLP internal audit $10,000
KPMG LLP tax consulting $8,500
Fred R. Banta, Inc. engineering $6,244
services
SRK Consulting engineering $6,048
services
Doug Halbe, Consultant P.C. exploration $6,048
consulting
services
CIT Technology copier leases $3,600
Cooper-Richards, LLC internal audit $3,250
consultant
Office Team temporary $3,894
employees
Employers Council Services immigration $3,320
Inc. services
Stivers Staffing Services temporary $2,395
employees
Avaya Financial Services phone equipment $2,168
lease
Federal Express Corp. delivery $2,000
parking
Purchase Power postage meter $1,500
EON Office Products office supplies $1,200
ACC Business IT services $1,100
Konica Minolta Business office equipment $1,000
Solutions USA Inc. lease
The petition was signed by Robert P. Vogels, vice president
and controller of the company.
ARVINMERITOR INC: To Post Q1 Results Jan. 26; to Break Up LVS
-------------------------------------------------------------
Automotive supplier ArvinMeritor Inc. (NYSE: ARM) is expected to
post its results for its fiscal first quarter ended Dec. 31, 2008,
on Jan. 26, amidst a setback in disposing of its light-vehicle
systems business, and losses due to low demand for automobiles.
Standard and Poor's on Jan. 12 cut ArvinMeritor's rating one notch
to "B," five steps below investment grade, from "B-plus."
S&P also said that it remains on review for further downgrade,
after the company on Thursday halted plans to sell its light-
vehicle system business.
ArvinMeritor in May 2008 conveyed its plans to spin off its light
vehicle systems business. Since then, due to the continuing
decline in automotive sales and demand, ArvinMentor's plans have
been reduced to selling the unit, possibly by breaking it into
pieces.
In May 6, 2008, ArvinMeritor said that the planned spin-off of the
LVS business -- to be named Arvin Innovation, Inc. -- would be
implemented through a pro rata tax-free dividend to ArvinMeritor
shareholders. Upon completion of the spinoff, ArvinMeritor
shareholders will own 100% of the common stock of Arvin
Innovation. Approval of the spinoff by ArvinMeritor shareholders
is not required, and the company said its expects to complete the
spinoff within the next 12 months, contingent upon satisfactory
financial and automotive market conditions as well as other
customary approvals. J.P. Morgan Securities Inc. and UBS
Securities were named financial advisors for the proposed
transactions.
On Oct. 31, the company announced its plan to explore strategic
alternatives for the LVS business. "Declining global market and
credit conditions are the primary factors that have led us to
expand our options for separating the LVS business group,
excluding the Wheels business located in South America and
Mexico," said CEO and President Chip McClure. "After a
comprehensive review of those options, we have determined that a
sale will be our primary focus."
Two months later, on Jan. 8, 2009, ArvinMeritor said it is
reorganizing its LVS business, as it struggles to sell the unit.
"We are firmly committed to our long-term strategy of focusing on
the commercial vehicle on- and off-highway market segments for
both original equipment manufacturers and aftermarket customers,"
said Mr. McClure. "As previously announced, we were in
negotiations to sell the LVS business group in its entirety.
However, in light of the unprecedented challenges in the credit
markets and the volume weakness in our industry, we have
determined that in this financial environment we cannot capture
the appropriate value for LVS by selling the business as a whole.
We are confident that this decision will ultimately generate the
best returns for our shareholders."
The company will reorganize its LVS business group to include:
* Body Systems. While the company continues to pursue a sale of
the Body Systems business separately, it will be managed to
continue to improve its financial performance and to ensure
that a future sale will provide an acceptable return to
ArvinMeritor shareholders.
* Chassis Systems. The company will continue to explore and
evaluate strategic alternatives for a timely and orderly exit
from this business.
* Wheels. ArvinMeritor expects to retain the Wheels business.
According to The Oakland Press, the company has asked employees to
take temporary paycuts to be able to adjust to the slow
production. ArvinMeritor said it is cutting executives' pay by
10%, BusinessWeek reported.
The firm incurred a net loss of $101 million on $7.17 billion of
sales in fiscal year ended Sept. 30, 2008. It also incurred net
losses of $219 million and $175 million in fiscal years 2007 and
2006. LVS accounted for 33% of sales in fiscal year ended
Sept. 30, 2008.
ArvinMeritor has assets of $4.67 billion and debts of $4.21
billion as of Sept. 30, 2008.
Other suppliers have also been facing problems due to declining
business with automakers due to lower demand for their
automobiles. Aside from ArvinMeritor, S&P cut the ratings of five
other suppliers, due to a forecast 24% decrease in auto sales in
2009. In Dec. 16, 2008, Johnson Controls Inc. said that it is
expected to report a loss in its fiscal first quarter of 2009,
based on the lowered estimates of 9.3 million auto units in North
America and 16.2 million units in Europe. JCI previously
projected American auto production of 12.3 million vehicles and
European production of 21.2 million vehicles.
About LVS
ArvinMeritor's LVS Body Systems is a world leader in the design
and manufacture of components, systems and modules for car and
light truck window, door, access control and roof applications.
The LVS Chassis Systems business is focused on components and
complete suspension systems for car and light trucks for global
OEMs and the aftermarket.
About ArvinMeritor
Troy, Michigan based ArvinMeritor, Inc. is a premier global
supplier of a broad range of integrated systems, modules and
components to the motor vehicle industry. The company serves
commercial truck, trailer and specialty original equipment
manufacturers and certain aftermarkets, and light vehicle
manufacturers. ArvinMeritor common stock is traded on the New York
Stock Exchange under the ticker symbol ARM. For more information,
visit the company's Web site at: http://www.arvinmeritor.com/.
* * *
As reported by the Troubled Company Reporter on December 26, 2008,
Fitch Ratings downgraded the Issuer Default Ratings of
ArvinMeritor to 'B-' from 'B'. The downgrade of ArvinMeritor is
based on the severe weakening of commercial truck demand in Europe
that is expected to occur in 2009, expectations of continued
weakness in already-weak commercial vehicle U.S. demand from
depressed 2008 levels, and financial stress among ArvinMeritor's
customers in this segment. ArvinMeritor receives approximately 2/3
of its revenue from its commercial vehicle systems group.
ArvinMeritor's light vehicle systems segment is also expected to
experience operating losses in 2009 due to severe production
cutbacks in the U.S. and a steep decline in global production.
ArvinMeritor has been unable to divest its light-vehicle systems
operations, which are expected to produce operating losses and a
deteriorating competitive position through 2009 given the low
margins in the business and the sharp drop in near-term global
production.
ArvinMeritor currently has substantial availability under its
revolving credit facility, and Fitch forecasts that additional
drawings will be required in 2009, as other access to capital is
limited. ArvinMeritor is also reliant on short-term receivables
securitization facilities, the majority of which have recently
been extended into late 2009, but the deteriorating quality of
receivables or the unwillingness of banks to offer the facilities
could cause the company to migrate borrowings to its revolving
credit facilities, thereby utilizing a substantial portion of
available liquidity.
ARVINMERITOR INC: S&P Downgrades Corporate Credit Rating to 'B'
---------------------------------------------------------------
Standard & Poor's Ratings Services said it has lowered its
corporate credit rating on Troy, Michigan-based ArvinMeritor Inc.
to 'B' from 'B+'. At the same time, S&P also lowered its issue-
level ratings on the company's debt. The ratings remain on
CreditWatch because the company announced on Jan. 8 that it has
halted plans to sell its light-vehicle system business. This unit
has been a user of cash. S&P will resolve the CreditWatch
following S&P's analysis of the effect on ArvinMeritor's
prospective liquidity of retaining the LVS business.
"The downgrade reflects our view that commercial vehicle sales and
production will continue to decline in North America and will
decrease sharply in Europe during 2009," said Standard & Poor's
credit analyst Lawrence Orlowski, "resulting in lower
profitability and cash flow generation." ArvinMeritor has
leadership positions in several market segments and fair
customer and platform diversity, but the global economy continues
to weaken, partly because of falling housing prices and tightening
credit standards. The falling economy has sharply reduced demand
for all vehicles, especially SUVs and pickups, and S&P expects
demand to continue dropping in 2009.
In response to the ongoing deterioration in truck demand, the
company has accelerated its restructuring efforts, including
workforce reductions and tighter control on discretionary
spending. ArvinMeritor is also focused on improving operational
performance by better managing its supply chain and driving down
inventory. Now that the company has said it will retain the LVS
unit, the grim outlook for U.S. light-vehicle sales in 2009 is
also a concern. For example, for the last three months of 2008,
the seasonally adjusted annual rate of light-vehicle sales in the
U.S. was below 11 million units, and S&P expects sales in 2009 to
be 10 million units, 24% below 2008 actual sales.
S&P believes the company's liquidity could come under pressure
during 2009 from the retention of the LVS business. As a result
of less-restrictive financial covenants, the company's liquidity
has risen significantly. In December 2007, the company amended
its revolving credit facility, reducing it to $700 million from
$900 million, and replaced the financial covenants with less-
restrictive requirements.
S&P expects to resolve the CreditWatch in the next 60 days. S&P
could lower the rating further if S&P determine that retaining the
LVS business will drain the company's liquidity significantly,
taking account of S&P's expectation that the commercial vehicle
system downturn is not likely to end in early 2009. Demand could
improve in the second half of 2009, as some in the truck industry
buy ahead of the new emissions regulation slated to take effect in
2010. However, the industry may remain weak through 2010 and
2011, and the challenges of the LVS businesses will not abate in
2009.
ASHTON WOODS: Offers to Swap $125MM Notes with New Notes, Stock
---------------------------------------------------------------
Ashton Woods USA L.L.C. commenced an offer to exchange any and all
of its 9.5% Senior Subordinated Notes due 2015 in a private
placement for:
(i) new 11.0% senior subordinated notes due 2015 in an
aggregate of up to $65.0 million principal amount
guaranteed by Ashton Woods' existing and future restricted
subsidiaries; and
(ii) a ratable share of Class B membership interests in Ashton
Woods representing, in the aggregate, up to 20% of the
outstanding membership interests in Ashton Woods.
As of January 9, 2009, there was $125 million aggregate principal
amount of Old Notes outstanding.
In connection with the exchange offer, Holders representing 70.8%
of the aggregate principal amount of Old Notes have agreed to
tender their Old Notes in connection with the exchange offer. In
addition, certain of Ashton Woods current equity holders have
agreed to invest $20 million of equity simultaneously with the
closing of the exchange offer.
The consummation of the exchange offer and consent solicitation is
conditioned upon the satisfaction or waiver of the conditions set
forth in the offering memorandum and consent solicitation
statement dated January 13, 2009. The exchange offer and consent
solicitation will expire at 5:00 p.m., New York City time, on
February 11, 2009, unless extended or earlier terminated. Holders
must validly tender and not validly withdraw their Old Notes on or
before the Expiration Date, unless extended, to receive New Notes
and Class B Interests.
Ashton Woods' obligations to accept any Old Notes tendered and to
pay the applicable consideration for them are set forth solely in
the Offering Memorandum and the accompanying Letter of
Transmittal. Documents relating to the exchange offer and consent
solicitation will only be distributed to eligible Holders of the
Old Notes.
Headquartered in Atlanta, Georgia, Ashton Woods USA L.L.C. is
a homebuilder with operations in Atlanta, Dallas, Houston,
Orlando, Phoenix, Denver and Tampa.
Ashton Woods posted $14.97 million in net losses on $78.26 million
in net revenues for the three months ended Aug. 31, 2008, compared
with $10.62 million in net losses on $97.5 billion in net revenues
for the three months ended Aug. 31, 2007. The company's balance
sheet as of Aug. 31, 2008, showed $252
million in total assets, $207.86 million in total liabilities, and
$43.73 million in shareholders' equity.
* * *
Standard & Poor's Ratings Services lowered its corporate credit
ratings on Ashton Woods USA LLC and its subsidiary, Ashton Woods
Finance Co., to 'D' from 'CCC' and downgraded Ashton Woods'
$125 million 9.5% senior subordinated notes due 2015 to 'D' from
'CC' after the company failed to make its Oct. 1, 2008, interest
payment on this obligation. The recovery rating on the senior
subordinated notes remains a '6'. The ratings were on CreditWatch
negative before being lowered, where they were placed on Aug. 6,
2008.
ASHTON WOODS: Seeks Covenant Relief From Holders of 9.5% Notes
--------------------------------------------------------------
Ashton Woods USA L.L.C said that -- concurrent with its offer to
exchange any and all of its 9.5% Senior Subordinated Notes due
2015 in a private placement -- the company is also soliciting
consents from the holders of Old Notes for certain amendments to
the indenture pursuant to which the Old Notes were issued to
eliminate or amend substantially all of the restrictive covenants,
waive certain defaults and modify certain of the events of default
and various other provisions contained in the Old Indenture.
Ashton Woods is also asking Holders to release and waive any and
all claims they may have against Ashton Woods and its current
equity holders, including claims that may have arisen from prior
non-compliance by Ashton Woods with any of the terms of the Old
Indenture. Ashton Woods said a tender by any Holder in the
exchange offer will also constitute an approval by such Holder of
the Amendment and Release.
As reported in today's Troubled Company Reporter, is proposing to
swap $125,000,000 in 9.5% Senior Subordinated Notes due 2015 with:
(i) new 11.0% senior subordinated notes due 2015 in an
aggregate of up to $65.0 million principal amount
guaranteed by Ashton Woods' existing and future restricted
subsidiaries; and
(ii) a ratable share of Class B membership interests in Ashton
Woods representing, in the aggregate, up to 20% of the
outstanding membership interests in Ashton Woods.
Ashton Woods also said that, in connection with the exchange
offer, Holders representing 70.8% of the aggregate principal
amount of Old Notes have agreed to tender their Old Notes in
connection with the exchange offer. In addition, certain of
Ashton Woods current equity holders have agreed to invest
$20 million of equity simultaneously with the closing of the
exchange offer. Ashton Woods has also negotiated amendments to
the existing Senior Credit Facility, which will cure existing
defaults under the Senior Credit Facility and provide the company
with a replacement line of credit of $95 million. Consummation of
the amendment is conditioned upon closing of the exchange offer.
As reported by the Troubled Company Reporter on October 21, 2008,
as a result of the company's financial performance during the
fiscal year ended May 31, 2008, and the fiscal quarter ended
Aug. 31, 2008, at the end of the quarter, the company was in
default under certain maintenance covenants of its senior credit
facility. On Aug. 21, 2008, the lenders under the senior credit
facility delivered a notice of default to the company with respect
to the covenant compliance issues existing as of the end of the
fiscal year, which among other things prohibits payments on its
9.5% Senior Subordinated Notes due 2015. As a result, subsequent
to the end of the quarter, the company defaulted in the payment of
interest under its Subordinated Notes. As a result of the
company's tangible net worth at the end of the quarter and fiscal
year, the company is currently required to offer to purchase 10%
of the Subordinated Notes, which is also prohibited as a result of
the defaults under the senior credit facility.
Headquartered in Atlanta, Georgia, Ashton Woods USA L.L.C. is
a homebuilder with operations in Atlanta, Dallas, Houston,
Orlando, Phoenix, Denver and Tampa.
Ashton Woods posted $14.97 million in net losses on
$78.26 million in net revenues for the three months ended
Aug. 31, 2008, compared with $10.62 million in net losses on $97.5
billion in net revenues for the three months ended Aug. 31, 2007.
The company's balance sheet as of Aug. 31, 2008, showed $252
million in total assets, $207.86 million in total liabilities, and
$43.73 million in shareholders' equity.
* * *
Standard & Poor's Ratings Services lowered its corporate credit
ratings on Ashton Woods USA LLC and its subsidiary, Ashton Woods
Finance Co., to 'D' from 'CCC' and downgraded Ashton Woods'
$125 million 9.5% senior subordinated notes due 2015 to 'D' from
'CC' after the company failed to make its Oct. 1, 2008, interest
payment on this obligation. The recovery rating on the senior
subordinated notes remains a '6'. The ratings were on CreditWatch
negative before being lowered, where they were placed on Aug. 6,
2008.
ATA AIRLINES: May Now Send Chapter 11 Plan to Creditors for Voting
------------------------------------------------------------------
Judge Basil Lorch of the U.S. Bankruptcy Court for the Southern
District of Indiana ruled that the disclosure statement submitted
by ATA Airlines Inc. contains adequate information necessary for
claim holders to make an informed judgment on ATA's Chapter 11
plan.
According to Bloomberg, ATA may now begin soliciting votes on
their Chapter 11 plan. The solicitation packages, which will be
sent to impaired creditors, will contain a ballot, together with
the Plan and Disclosure Statement.
ATA Airlines will be responsible for receiving, tabulating, and
reporting on Plan ballots. Holders of claims and equity interests
must submit their ballots to this address:
HAYNES AND BOONE, LLP
Attn: Jermaine K. Johnson
1 Houston Center
1221 McKinney, Suite 2100
Houston, Texas 77010
ATA Airlines submitted to the Court its Chapter 11 Plan of
Reorganization and accompanying Disclosure Statement on Dec. 12,
2008, along with a motion to approve the Disclosure Statement and
the procedures for soliciting votes for that plan.
ATA Airlines' Chapter 11 Plan, which salient terms are presented
in the Disclosure Statement, provides for the implementation of a
global settlement of claims among the airline, the Creditors
Committee, Global Aero Logistics, Jefferies Finance, JPMorgan
Chase Bank, five labor unions representing the airline's
employees, and non-unionized employees. It also provides for ATA
Airlines' reorganization pursuant to the issuance of the
membership interest in the reorganized company to Southwest
Airlines Co.
Under the plan, ATA Airlines proposed to pay unsecured creditors
about 1.3% of their claims totaling almost $420 million while it
proposed to pay secured creditors about 13.9 percent of their
claims totaling $365 million. Secured creditors agreed to share
proceeds from potential lawsuits against suppliers that could
yield as much as $12.2 million in damages under the proposed plan.
ATA Airlines filed its proposed plan barely two weeks after the
Court approved the bid proposal of Southwest Airlines to purchase
its assets, including its takeoff and landing slots at LaGuardia
Airport in New York, for $7.5 million. The sale can't go through
until a final plan is approved by the Court. "It is our intent,
with the successful conclusion of the transaction, to make plans
to initiate service from LaGuardia," Southwest's Chairman,
President, and CEO Gary Kelly, had said in a statement. "Even in
this volatile environment, we have said we must monitor the
competitive landscape and take advantage of prudent market
opportunities."
Southwest said once the acquisition is finalized, it would work
with the Federal Aviation Administration and the Port Authority of
New York to commence service at LaGuardia, including acquisition
of the necessary airport gates and facilities.
According to ATA Airlines Bankruptcy News, the date for the
confirmation hearing has not yet been set. Southwest airlines'
bid proposal, however, requires Ata Airlines to have its chapter
11 plan confirmed by march 2
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., was 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 submitted to the Court its Chapter 11 Plan of
Reorganization and accompanying Disclosure Statement on Dec. 12,
2008, two weeks after it completed the sale of its key assets to
Southwest Airlines Inc.
(ATA Airlines Bankruptcy News; Bankruptcy Creditors' Services Inc.
http://bankrupt.com/newsstand/or 215/945-7000).
ATLANTIC EXPRESS: Elects Timothy L. Carden Member of the Board
--------------------------------------------------------------
Atlantic Express Transportation Corp. disclosed in a regulatory
filing that Timothy L. Carden was elected as a member of the board
of directors. Mr. Carden was elected to fill a vacancy created by
the resignation of Adam Draizin, who resigned from the board as of
Dec. 15, 2008. The resignation of Mr. Draizin was not a result of
any disagreement with the company.
Mr. Carden is a founding partner of The Public Private Strategy
Group, a consulting firm that specializes in capital finance and
integrating private sector services into public and non-profit
enterprises. PPSG has guided government and non-profit agencies
through transformative reorganizations and has secured private
capital to fund or supplement the cost of public projects. Prior
to starting PPSG in 1997, Mr. Carden was a senior vice president
of a subsidiary of Lockheed Martin that provided revenue
management services to public and not-for-profit enterprises.
Mr. Carden also was a principal of Donaldson, Lufkin & Jenrette
and a vice president of Kidder Peabody & Co. and has had various
government posts, including the Commissioner of New Jersey
Department of Human Services, Cabinet Secretary to the Governor of
New Jersey and Executive Assistant to Commissioner of the New
Jersey Department of Transportation. Mr. Carden serves as a board
member of various non-profit organizations, including the New
Jersey Economic Development Authority and the New Jersey
Conservation Foundation. Mr. Carden earned his Bachelor of Arts,
cum laude, in Government from Harvard University.
As an independent director, Mr. Carden will be entitled to receive
from the company $5,000 for each meeting of the board of directors
he attends in person.
Amendments to Employment Agreements
The company amended the employment agreements of Domenic Gatto,
chief executive officer, president and member of the board of the
company, and of Nathan Schlenker, chief financial officer of the
company. The amendments conform the employment agreements to
Section 409A of the Internal Revenue Code. In addition, each of
the agreements were amended to delete those provisions granting
Messrs. Gatto and Schlenker annual bonuses in the event the
company achieves results that exceed projected EBITDA.
A full-text copy of the Sixth Amended and Restated Employment
Agreement - Domenic Gatto http://ResearchArchives.com/t/s?37e6
A full-text copy of the Sixth Amended And Restated Employment
Agreement - Nathan Schlenker http://ResearchArchives.com/t/s?37e7
About Atlantic Express
Headquartered in New York City, Atlantic Express Transportation
Corp. -- http://www.atlanticexpress.com/-- is a provider of
school bus transportation in the United States and the leading
provider in New York City.
The company has contracts with approximately 104 school districts
in New York, Missouri, Massachusetts, California, Pennsylvania,
New Jersey, and Illinois. For fiscal 2008, the company has a
contract to provide paratransit services in New York to physically
and mentally challenged passengers who are unable to use standard
public transportation. The company also provides other
transportation services, including fixed route transit, express
commuter line and charter and tour buses through its coach
services. As of March 31, 2008, the company had a fleet of
approximately 5,600 vehicles operating from approximately
50 facilities.
At Sept. 30, 2008, the company's balance sheet showqed total
assets of $181,361,588 and total liabilities of $249,125,388,
resulting in a shareholders' deficit of $67,763,800.
For three months ended Sept. 30, 2008, the company posted net loss
of $16,168,288 compared with net loss of $20,891,838 for the same
period in the previous year.
B. DUB: Files for Chapter 11 Bankruptcy Protection in Florida
-------------------------------------------------------------
Tampa Bay Business Journal reports that B. Dub Partners Clearwater
LLC has filed for Chapter 11 bankruptcy protection in the U.S.
Bankruptcy Court for the Middle District of Florida.
Court documents say that B. Dub listed $100,001 to $500,000 in
assets and liabilities of twice that much.
B. Dub Partners Clearwater LLC is the limited liability
corporation that owns the Clearwater Buffalo Wild Wings. The
company is headquartered in Cincinnati, Ohio.
BARE ESCENTUALS: S&P Raises Issue-Level Rating on Loans to 'BB'
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it raised its issue-
level ratings on Bare Escentuals Beauty Inc.'s secured facilities,
consisting of a $25 million revolving credit facility and a $359
million term loan (about $244 million outstanding as of Sept. 28,
2008) to 'BB' (two notches above the 'B+' corporate credit
rating), from 'BB-' and revised the recovery rating to '1',
indicating the expectation of very high (90%-100%) recovery in the
event of a payment default, from '2'. The improved recovery
prospects and resulting issue-level upgrade primarily results from
significant repayment of debt under the term loan. If Bare
Escentuals accessed the capital markets and incurred additional
indebtedness, S&P would reassess S&P's ratings.
The complete recovery report on Bare Escentuals' secured
facilities will appear on RatingsDirect following this update.
For the latest rating rationale on Bare Escentuals, see Standard &
Poor's research update published on Sept. 5, 2008.
Ratings List
Bare Escentuals Beauty Inc.
Corp. credit rating B+/Positive/--
Ratings Raised
To From
-- ----
$25 mil. revolving credit facil BB BB-
Recov. rating 1 2
$359 mil. term loan BB BB-
Recov. rating 1 2
BERNARD L. MADOFF: Not Jailed, Court Denies Prosecutors' Plea
-------------------------------------------------------------
U.S. Magistrate Judge Ronald Ellis has denied prosecutors' request
to imprison Bernard Madoff for allegedly violating a court order
by mailing more than $1 million worth of valuables to friends and
family, Amir Efrati and Chad Bray at The Wall Street Journal
report.
WSJ relates that Judge Ellis ruled that Mr. Madoff must give the
government an inventory of his transportable valuables. WSJ
states that a private security firm will regularly check that the
items are still with him.
Mr. Madoff's attorneys had assured Judge Ellis that the mailings
were "innocent" and that Mr. Madoff didn't pose a flight risk or a
danger to the community.
Banco Santander Being Probed
WSJ relates that Spanish prosecutors are conducting a probe on how
Banco Santander SA lost more than EUR2.3 billion for clients in
the Madoff fraud. According to the report, Banco Santander lost
EUR17 million.
Prosecutors, WSJ reports, said that they want to know the details
of Banco Santander's relationship with Mr. Madoff's company and
when Banco Santander knew about problems related to it.
The office of Spain's anticorruption prosecutor said that it will
be investigating the relationship between Santander and the Madoff
funds, WSJ states.
According to WSJ, investigators said that they want to know why
Santander Chairperson Emilio Botin sent one of his chief
lieutenants to see Mr. Madoff in New York weeks before the scheme
collapsed. WSJ reports that the investigators said that they are
also focusing on the role of Fairfield partner Andres Piedrahita,
who lives in Madrid. Marketing materials show that Mr. Botin
funneled client money into the Madoff funds, WSJ relates.
The prosecutor is looking into Banco Santander's Swiss-based
hedge-fund unit, Optimal Investment Services SA, WSJ states,
citing a spokesperson. Investigators are trying to find out if
managers at Optimal knew of problems at Mr. Madoff's company, WSJ
reports.
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC was a market maker in
US stocks, including all of the S&P 500 and more than 350 Nasdaq
stocks. The firm moved large blocks of stock for institutional
clients by splitting up orders or arranging off-exchange
transactions between parties. It also performed clearing and
settlement services. Clients included brokerages, banks, and
other financial institutions. In addition, Madoff Securities
managed assets for high-net-worth individuals, hedge funds, and
other institutional investors.
The firm is being liquidated in the aftermath of a fraud scandal
involving founder Bernard L. Madoff.
As reported by the Troubled Company Reporter on Dec. 15, 2008, the
Securities and Exchange Commission charged Bernard L. Madoff and
his investment firm, Bernard L. Madoff Investment Securities LLC,
with securities fraud for a multi-billion dollar Ponzi scheme that
he perpetrated on advisory clients of his firm. The estimated
losses from Madoff's fraud were at least $50 billion.
Also on Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S.
District Court for the Southern District of New York granted the
application of the Securities Investor Protection Corporation for
a decree adjudicating that the customers of BLMIS are in need of
the protection afforded by the Securities Investor Protection Act
of 1970. Irving H. Picard, Esq., was appointed as trustee for the
liquidation of BLMIS, and Baker & Hostetler LLP was appointed as
counsel.
BYRAM CONCRETE: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Byram Concrete & Supply Inc.
56 Lafayette Avenue
White Plains, NY 10603
Bankruptcy Case No.: 09-22037
Type of Business: The Debtor supplies ready mixed concrete in
Westchester and Putnam and adjacent areas of
New York.
See: http://www.byramconcrete.com/
Chapter 11 Petition Date: January 12, 2009
Court: Southern District of New York (White Plains)
Debtor's Counsel: Erica R. Feynman, Esq.
efeynman@rattetlaw.com
Jonathan S. Pasternak, Esq.
jsp@rattetlaw.com
Rattet, Pasternak & Gordon-Oliver, LLP
550 Mamaroneck Avenue
Harrison, NY 10528
Tel: (914) 381-7400
Fax: (914) 381-7406
Estimated Assets: $1 million to $10 million
Estimated Debts: $10 million to $50 million
The Debtor did not file a list of 20 largest unsecured creditors.
The petition was signed by the firm's president, Leonard J. Luiso.
CALAMP CORP: In Talks with Lenders for Loan Covenant Relief
-----------------------------------------------------------
Oxnard, California-based CalAmp Corp. discloses that it was not in
compliance with one of its financial covenants at the end of
December 2008 that requires a minimum level of wireless datacom
revenues on a rolling three-month basis. The Company has
requested a waiver of this covenant violation and is currently in
discussions with the banks, but thus far the banks have not waived
this noncompliance. Consequently, the Company has classified the
entire term loan balance as a current liability in the
consolidated balance sheet at November 30, 2008.
At November 30, 2008, the Company had total cash of $5.7 million,
with $25.2 million in total outstanding bank debt and a
$4.5 million note payable to a key Direct Broadcast Satellite
customer. Net cash provided by operating activities was
$2.5 million for the three months ended November 30, 2008. For
the nine month period ended November 30, 2008, net cash generated
by operating activities was approximately $3.3 million. During the
latest quarter, the principal on the Company's bank term loan was
paid down by $750,000 and the principal on the note payable to the
DBS customer was paid down by $528,000.
On January 12, 2009, the Company received a cash payment of
$9 million from Rogers Corporation in an out-of-court litigation
settlement. Under the terms of the Company's bank credit
agreement as amended, the Company is obligated to pay 50% of the
net cash proceeds of this legal settlement, or $4.1 million, to
the banks as a reduction of the term loan balance. After giving
effect to this principal payment, the balance of the term loan is
approximately $20.3 million. The Company is continuing to seek a
waiver of the covenant violation, and expects that it will
ultimately refinance the bank debt from the proceeds of an asset-
based loan at or before the December 31, 2009 maturity date.
CalAmp also reported results for its fiscal 2009 third quarter
ended November 30, 2008, including:
-- Consolidated third quarter revenues of $25.8 million up
11% on a sequential quarter basis driven by the shipment
ramp of Direct Broadcast Satellite products.
-- GAAP loss from continuing operations of $1.8 million,
within expectations; Adjusted Basis (non-GAAP) loss from
continuing operations of $0.7 million, also within
expectations.
-- Consolidated gross margin percentage of 29.6%; wireless
datacom gross margin percentage of 40.0%.
-- Positive third quarter operating cash flow; positive cash
flow from operations of $3.3 million for the first nine
months of fiscal 2009.
Rick Gold, CalAmp's President and Chief Executive Officer,
commented, "I'm encouraged to see sequential growth in revenue
during this latest quarter despite the tough macroeconomic
conditions. This growth was driven by the resumption of volume
shipments of satellite products to what has historically been our
largest DBS customer. We are currently rebuilding our competitive
position in the DBS market with revenue of $7.4 million in the
third quarter, more than two times higher than the previous
quarter. However, similar to most of our peers and customers, the
global economic downturn is impacting the top line results of our
wireless datacom business. Midway through our fiscal third
quarter, we started seeing sluggishness in short-term demand with
some customers delaying contracts and postponing orders. That
said, I continue to be encouraged with our operating execution and
our ability to make steady progress within a challenging economic
environment. Our recent product development activities have
enabled us to extend our portfolio of wireless datacom products
and improved our ability to serve existing customers and reach
adjacent vertical markets. In addition, we continue to expand our
market reach by developing partners and indirect channels.
Finally, our intensified focus on inventory management has
improved our liquidity position and helped generate
$3.3 million in cash flow from operating activities through the
first nine months of fiscal 2009."
CalAmp Cuts 8% of Jobs
Mr. Gold continued, "In response to current economic challenges,
last week we took certain actions to realign the cost structure of
our wireless datacom business. We have reorganized our Public
Safety Mobile and Industrial Monitoring and Controls business
units by combining the research and development groups, merging
sales management and consolidating manufacturing operations. As
part of this restructuring we have reduced our work force by 8%,
which is expected to yield annualized savings of approximately
$2.5 million. This will result in a charge of approximately
$800,000 in the fourth quarter. We believe these changes will
streamline operations and allow the Company to become more
responsive to changing market dynamics and customer demand."
Mr. Gold concluded, "Subsequent to the end of the quarter, we
announced the out-of-court settlement of litigation with Rogers
Corporation, resulting in a $9 million cash payment to CalAmp. The
dispute related to product performance issues involving laminate
supplied by Rogers that was included in certain products
manufactured by CalAmp and sold to a DBS customer. I am pleased
that we have reached a satisfactory resolution of this matter.
This settlement significantly improves CalAmp's financial strength
and we believe is the best outcome for our shareholders."
Business Outlook
Commenting on the Company's business outlook for the fourth
quarter of fiscal 2009, Mr. Gold said, "We expect to see
sequential growth in our satellite business but expect our
wireless datacom business to remain sluggish as a result of the
difficult economic conditions. We continue to experience customer
delays including a postponement of our recently announced
driverless train project in Australia. Based on our current
forecast, we believe fiscal 2009 fourth quarter consolidated
revenues will be in the range of $22 to $26 million, with GAAP
basis net income in the range of $0.06 to $0.10 per diluted share.
The Adjusted Basis (non-GAAP) results of operations for the fourth
quarter, which exclude amortization of intangible assets and
stock-based compensation expense net of tax, are expected to be
net income of $0.10 to $0.14 per diluted share. The GAAP and non-
GAAP expected results for the fourth quarter include per share
income net of tax of approximately $0.20 attributable to the $9
million legal settlement and the workforce reduction charge of
$800,000. We expect to continue generating positive operating
cash flow in the fourth quarter, even without the benefit of the
Rogers legal settlement."
About CalAmp Corp.
CalAmp -- http://www.calamp.com/-- provides wireless
communications solutions that enable anytime/anywhere access to
critical data and content. The Company serves customers in the
public safety, industrial monitoring and controls, mobile resource
management and direct broadcast satellite markets. The Company's
products are marketed under the CalAmp, Dataradio, SmartLink,
Aercept, LandCell and Omega trade names.
CAPLEASE INC: Buys Back 2027 Conv. Sr. Notes for 62% Discount
-------------------------------------------------------------
CapLease, Inc., has repurchased $8.74 million of its $75 million
7.50% Convertible Senior Notes due 2027, for approximately $3.27
million in cash, plus accrued interest on the notes. CapLease's
purchase price represents an average discount of 62.6% to the face
amount of the notes and a yield to maturity in excess of 40%.
CapLease funded the repurchase with cash on hand and short-term
borrowings.
Paul McDowell, Chairman and Chief Executive Officer, stated, "The
repurchase transactions are consistent with CapLease's stated
objective to utilize excess cash flow to fund debt repurchases
that are highly accretive to income and book value, while reducing
leverage. We expect to continue to opportunistically strengthen
our balance sheet and enhance stockholder value throughout 2009."
CapLease, Inc., is a real estate investment trust, or REIT, that
invests primarily in single tenant commercial real estate assets
subject to long-term leases to high credit quality tenants.
CDX GAS: Can Use Secured Lenders' Cash Collateral on Final Basis
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas
authorized CDX Gas LLC and its debtor-affiliates to access, on a
final basis, cash collateral securing repayment of loans to their
secured lenders.
The Debtors told the Court that they have an immediate need for
use of cash collateral to continue the operations of their
businesses. The Debtors said they will be unable to pay wages,
salaries, rent, and general and administrative operating expenses,
and lease acquisition and maintenance costs, among other things.
The Debtors further said they will be compelled to shut down all
of their operations if they unable to use cash collateral.
The secured lenders have all of the Debtors' cash other than cash
balances held by their unit, CDX Acquisition Company LLC.
The Debtors said that the secured lenders' interest in their
prepetition collateral would be adequately protected in three
ways. First, there is a significant equity cushion in the
prepetition collateral over and above the sum total of the first
lien indebtedness to protect the first lien lenders against any
decrease in the value of their interests in the prepetition
collateral. Second, the Debtors propose to continue to pay and
keep current accruing interest at the default rate under a certain
first lien credit agreement. Third, the Debtors propose to
provide the secured lenders adequate protection for their use of
the lenders' cash collateral and other prepetition collateral
interests.
The Debtors' use of cash collateral will be subject to a budget.
A full-text copy of the cash collateral budget is available for
free at: http://ResearchArchives.com/t/s?37c9
About CDX Gas
Headquartered in Houston, Texas, CDX Gas LLC --
http://www.cdxgas.com/-- is an independent gas company that
explores, develops, and produces onshore North American
unconventional natural gas resources located in coal, shale, and
tight gas sandstone formations. The company and 19 of its
affiliates filed for Chapter 11 protection on Dec. 12, 2008
(Bankr. S.D. Tex. Lead Case No. 08-37922). Harry Allen Perrin,
Esq., John E. Mitchell, Esq., and Michaela Christine Crocker,
Esq., at Vinson Elkins LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed assets and debts between
$500 million and $1 billion in their filing.
CHARLES HINKLEY: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Charles Allen Hinkley
4335 Londontown Road
Titusville, FL 32796
Bankruptcy Case No.: 08-11909
Chapter 11 Petition Date: December 15, 2008
Court: Middle District of Florida (Orlando)
Debtor's Counsel: Robert B. Branson
lawbankruptcy1@aol.com
Law Office of Robert Branson
1524 East Livingston St.
Orlando, FL 32803
Tel.: (407) 894-6834
Fax: (407) 896-7370
Total Assets: $2,370,157
Total Debts: $3,330,323
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/fmb08-11909.pdf
CHARYS HOLDING: Court Extends Plan Solicitation Period to Jan. 30
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extended on
Jan. 9, 2009, Charys Holding Company, Inc., and its affiliated
debtor, Crochet & Borel Services, Inc.'s exclusive period to
solicit acceptances of their proposed Chapter 11 plan through and
including Jan. 30, 2009.
As reported in the Troubled Company Reporter on Jan. 13, 2009, the
Court approved on Jan. 8, the adequacy of the modified disclosure
statement for the Debtors' First Amended Joint Plan of
Reorganization, dated Jan. 6, 2009. The Debtors were ordered to
mail the Solicitation Packages by no later than Jan. 16.
The confirmation hearing will be held at 11:00 a.m. (prevailing
Eastern Time) on Feb. 25. Any objections to confirmation of the
Amended Plan must be filed so as to be received no later than 4:00
p.m. (prevailing Eastern Time) on Feb. 10.
A full-text copy of the First Amended Joint Plan of Reorganization
is available for free at:
http://ResearchArchives.com/t/s?37e8
A full-text copy of the Disclosure Statement is available for free
at: http://ResearchArchives.com/t/s?37e9
About Charys Holding
Headquartered in Atlanta, Georgia, Charys Holding Co., Inc. --
http://www.charys.com/-- provides remediation & reconstruction
and wireless communications & data infrastructure. The company
and its affiliated debtor, Crochet & Borel Services, Inc., filed
for Chapter 11 protection on Feb. 14, 2008 (Bankr. Del. Lead Case
No. 08-10289). Harvey R. Miller, Esq., Stephen Karotkin, Esq.,
and Lydia T. Protopapas, Esq., at Weil, Gotshal & Manges LLP,
represent the Debtors as counsel. Chun I. Jang, Esq., Mark D.
Collins, Esq., and Paul N. Heath, Esq., at Richards, Layton &
Finger, P.A., represent the Debtors as Delaware counsel. Matthew
S. Barr, Esq., at Milbank, Tweed, Hadley & McCloy, LLP represents
the Official Committee of Unsecured Creditors as counsel. Chad A.
Fights, Esq., and Gregory W. Werkheiser, Esq., at Morris, Nichols,
Arsht & Tunnell, represent the Committee as Delaware counsel.
Chary's Holdings Co. Inc. reported total assets of $242.7 million
and total liabilities of $378.6 million in its operating report
for August 2008.
CHESAPEAKE CORP: U.S. Trustee Forms Seven-Member Creditors Panel
----------------------------------------------------------------
W. Clarkson McDow, Jr., the United States Trustee for Region 4,
appointed seven creditors to serve on an Official Committee of
Unsecured Creditors for the Chapter 11 cases of Chesapeake
Corporation and its debtor-affiliates.
The creditors committee members are:
1) US Bank National Association
as Indenture Trustee
Attn: Sandra Spivey
2300 West Sahara- 2nd Floor
Las Vegas, NV 89102
Tel: (702) 251-1656
Fax: (702) 251-1657
sandra.spivey@usbank.com
2) The Bank of New York Mellon
Attn: Donna J. Parisi
6525 West Campus Oval
New Albany, OH 43054
Tel: (614) 775-5279
Fax: (614) 775-5636
donna.parisi@bnymellon.com
3) Peter R. Chiericozzi
2255 Oregon Rd.
Salvisa, KY 40372
Tel: (859) 865-1114
pbasn@aol.com
4) Robert S. Argabright, II
8011 River Rd.
Richmond, VA 23229
Tel: (804-288-3287
Fax: (804) 288-1966
rargabright@verizon.net
5) Samual J. Taylor
2900 Park Ridge Rd.
Midlothian, VA 23113
Tel: (804) 330-4166
sjandcj@verizon.net
6) Jack L. Creech
2291 Charleston Place
Richmond, IN 47374
Tel: (765) 966-4701
marjack85@aol.com
7) Clifford Paper, Inc.
Attn: Brian O'Sullivan/Michael Policatti
600 East Crescent Ave.
Upper Saddle River, NJ 07458
Tel: (201) 934-5115
Fax: (201) 786-2815
mpolicatti@cliffordpaper.com
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtor's
expense. They may investigate the Debtor's 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 Chesapeake Corp.
Chesapeake Corporation protects and promotes the world's great
brands as a leading international supplier of value-added
specialty paperboard and plastic packaging. Headquartered in
Richmond, Va., the company is one of Europe's premier suppliers of
folding cartons, leaflets and labels, as well as plastic packaging
for niche markets. Chesapeake has 44 locations in Europe, North
America, Africa and Asia and employs approximately 5,400 people
worldwide.
As of September 30, 2008, Chesapeake's consolidated balance sheets
showed $936.4 million in total assets, including
$340.7 million in current assets; and $937.1 million in total
liabilities, including $469.2 million in current liabilities,
resulting in $500,000 in stockholders' deficit.
Chesapeake Corporation, and 18 affiliates filed Chapter 11
petitions (Bankr. E.D. Virginia, Lead Case No. 08-336642) on
Dec. 29, 2008. Benjamin C. Ackerly, Esq., Jason W. Harbour, Esq.,
Peter S. Partee, Esq., at Hunton & Williams LLP, are the proposed
bankruptcy counsel. Chesapeake has also tapped Alvarez and Marsal
North America LLC, and Goldman Sachs & Co. as financial advisors.
It also brought along Tavenner & Beran PLC as conflicts counsel
and Hammonds LLP as special counsel. Its claims agent is Kurtzman
Carson Consultants LLC.
CHESAPEAKE CORP: Committee Balks Asset Sale Bidding Procedures
--------------------------------------------------------------
The official committee of unsecured creditors of Chesapeake Corp.
and its affiliated debtors objects to the proposed bidding
procedures in connection with the sale of substantially all of the
Debtors' assets.
To recall, the Debtors have signed an agreement to sell
substantially all of their assets to an entity formed by Irving
Place Capital Management L.P., and Oaktree Capital Management,
L.P., for $485 million, absent higher and better bids for those
assets. The Debtors will grant bid protections to Irving/Oaktree
as stalking horse bidders.
The Creditors Committee told the United States Bankruptcy Court
for the Eastern District of Virginia that the expedited sale
process must be denied in its entirety. The Committee cites that
the "stalking horse" bid is an illusory offer to potentially buy
the Debtors' assets within the next 38 days. "It is not a firm
commitment to purchase the Debtors' assets," Virginia E. Robinson,
Esq., at Greenberg Traurig, LLP, says. "The stalking horse
purchasers have several 'outs' under their assets purchase
agreement and do not even have financing in place in order to
close the sale," Ms. Robinson relates. Ms. Robinson points out
several of the provisions of the proposed stalking horse asset
agreement which make it illusory:
a) The stalking horse purchasers are not obligated to close if
they cannot renegotiate the terms of Debtors' 2004 credit
facility with a result acceptable to them, in their "sole
and absolute discretion".
b) The actual amount of the purchase price cannot be
determined, may be zero and will not be definitively known
until the closing date.
c) Material liabilities of the Debtors are not being assumed by
the stalking horse purchasers and instead are being left for
the estates, including the Debtors' significant environmental
liabilities and all liabilities constituting indebtedness of
Debtors -- other than certain intercompany debt and Debtors'
2004 credit facility as renegotiated by Purchaser --
specifically including certain note and bond liabilities.
d) Until the bid procedures order is entered, the Debtors are
not permitted to solicit, negotiate or discuss any competing
bids and are not permitted to provide any due diligence
materials regarding the Debtors to any competing bidders
or support any better offer than the agreement.
e) The Debtors must pay the stalking horse purchasers
$1,503,440 on the day the bid procedures order is entered to
pay for the stalking horse purchasers' past prepetition
expenses and as a deposit towards future expenses. If the
stalking horse purchasers do not close, this money is not
returned to the Debtors.
f) If the stalking horse purchasers default in their
obligations under the agreement, the Debtors are not
entitled to specific performance and the Stalking Horse
Purchasers' liability to the Debtors is limited.
g) If the agreement is terminated for any reason including the
Stalking Horse Purchasers' default, the Debtors are
obligated to pay the stalking horse purchasers the amount of
their expenses up to $5,000,000. If stalking horse
purchasers close, up to $10,000,000 of their expenses is
reimbursed due to the purchase price reduction.
h) The stalking horse purchasers are not obligated to close if
there was or will be a material adverse change after
September 28, 2008.
i) The stalking horse purchasers are entitled to an aggregate
$16,000,000 breakup fee if this Court decides to: (i) allow
competing bids to be due later than 3 days after entry of
the bid procedures order, (ii) allow the auction to occur on
a date later than 4 days after bids are due, or (iii) not
enter an order approving the sale within 2 days of the
auction.
j) The Schedules to the agreement are an integral part of the
document and identify those assets being purchased or
excluded and the employee benefits plans being assumed, if
any. The Schedules were not filed with the Court, and
Debtors have not made them available to the Committee
notwithstanding the Committee's written request.
k) The stalking horse purchasers may exclude assumed
liabilities and add acquired assets -- with no change to
purchase price -- up to one day before the auction.
The Troubled Company Reporter on Jan. 7, 2009, said that the
Debtors sought approval from the Court to sell substantially all
of their assets and businesses to entities controlled by Irving
Place Capital Management L.P., and Oaktree Capital Management,
L.P., or through another party providing for a higher and better
offer for the assets.
Chesapeake has already signed an asset purchase agreement with
Irving/Oaktree, under which Chesapeake will receive consideration
of $485 million, subject to reductions. Chesapeake, however, will
entertain competing bids for its assets, but will grant
Irving/Oaktree bid protections as stalking-horse bidder.
Chesapeake will conduct an auction on Feb. 24, 2009, if it timely
receives additional qualified bids for its assets.
Chesapeake engaged in negotiations with a number of parties
including holders of 70% of its subordinated notes regarding the
terms of a potential restructuring or sale. Chesapeake had
retained Goldman Sachs & Co., and Alvarez & Marsal prepetition to
help it evaluate alternatives.
Asset Purchase Agreement
The assets Irving/Oaktree's Baltimore US Inc. has proposed to
acquire include substantially all operating assets of the Debtors
and the outstanding capital stock or other equity securities of
Chesapeake's foreign subsidiaries.
The parties also agreed that the purchase price will be computed
based on the $485,000,0000 "transaction value" deducted by
$181,000,000 on account of foreign pension obligations and the
amounts outstanding under Chesapeake's prepetition credit
facility, which had Wachovia Bank, N.A., as admin. Agent., among
other things.
Baltimore US has agreed to purchase the company as a going concern
and have agreed to offer employment to all active employees of
Chesapeake.
Baltimore US may terminate the Agreement if the Bankruptcy Court
fails to approve the bid procedures by Jan. 12.
Irving Place Capital Management, L.P., OCM Principal Opportunity
Fund IV, L.P., and OCM European Principal Opportunity Fund II,
L.P. or their investing affiliates will be the equity sponsors of
Baltimore.
Proposed Bid Procedures
Chesapeake will market test the assets through an auction to make
sure that it will obtain the highest and best offer for the
assets. Chesapeake asks the Court to approve these procedures:
-- Interested parties must, by Feb. 12, 2009, and must, among
other things, sign a confidentiality agreement, and show
proof of financial ability to close the sale.
-- Potential bidders who have complied with the Feb. 12
requirements will be granted access to due diligence
materials.
-- Bidders must submit their initial bids by Feb. 20, 2009 at
12:00 p.m. to, among other parties,
A. Counsel for the Debtors,
Hunton & Williams LLP,
Riverfront Plaza, East Tower,
951 East Byrd Street,
Richmond, VA 23219
Attn: Benjamin C. Ackerly, Esq., and Hunton & Williams
200 Park Avenue, New York, NY 10166
Attn: Peter S. Partee, Esq.
B. Counsel for Irving/Oaktree
Kirkland and Ellis LLP,
153 East 53rd Street,
New York, NY 10022,
Attn: Michael T. Edsall, Esq. and Lisa
Laukitis, Esq., and McGuireWoods LLP, One James
Center, 901 East Cary Street,
Richmond, Virginia 23219,
Attn: Dion W. Hayes, Esq.
-- Minimum bids must exceed the purchase price offered by
Irving/Oaktree plus the break-up fee plus $5,000,000.
-- Irving/Oaktree will receive a $16 million break-up fee and
expense reimbursement of up to $5,000,000 if Chesapeake
completes a sale with another party. After the Court's
approval of the Bid Procedures, Irving/Oaktree will receive
$1,000,000 as security for the payment of postpetition
expenses plus $503,440 as an expense true-up for their
prepetition unpaid expenses.
-- If a qualified bid, in addition to Irving/Oaktree's is
timely received, an auction will be held on Feb. 24, 2009,
at the offices of Hunton & Williams in New York.
-- Chesapeake will seek approval of the sale to Irving/Oaktree
or the winning bidder at a hearing on Feb. 26, 2009.
The Bankruptcy Court will convene a hearing to consider approval
of the Bid Procedures on Jan. 12. Objections are due Feb. 9.
A copy of the Bid Protocol and the Irving/Oaktree APA is available
for free at:
http://bankrupt.com/misc/Chesapeake_Sale_Protocol_APA.pdf
About Chesapeake Corp.
Chesapeake Corporation protects and promotes the world's great
brands as a leading international supplier of value-added
specialty paperboard and plastic packaging. Headquartered in
Richmond, Va., the company is one of Europe's premier suppliers of
folding cartons, leaflets and labels, as well as plastic packaging
for niche markets. Chesapeake has 44 locations in Europe, North
America, Africa and Asia and employs approximately 5,400 people
worldwide.
As of September 30, 2008, Chesapeake's consolidated balance sheets
showed $936.4 million in total assets, including
$340.7 million in current assets; and $937.1 million in total
liabilities, including $469.2 million in current liabilities,
resulting in $500,000 in stockholders' deficit.
Chesapeake Corporation, and 18 affiliates filed Chapter 11
petitions (Bankr. E.D. Virginia, Lead Case No. 08-336642) on
Dec. 29, 2008. Benjamin C. Ackerly, Esq., Jason W. Harbour, Esq.,
Peter S. Partee, Esq., at Hunton & Williams LLP, are the proposed
bankruptcy counsel. Chesapeake has also tapped Alvarez and Marsal
North America LLC, and Goldman Sachs & Co. as financial advisors.
It also brought along Tavenner & Beran PLC as conflicts counsel
and Hammonds LLP as special counsel. Its claims agent is Kurtzman
Carson Consultants LLC.
CHRYSLER LLC: Tries to Sell Key Assets to Nissan-Renault & Magna
----------------------------------------------------------------
Chrysler LLC has started negotiating with its partners, Nissan-
Renault and Magna, to sell its key assets to the two companies,
Poornima Gupta, Soyoung Kim, and Kevin Krolicki at Reuters report,
citing people familiar with the matter.
Reuters relates that the potential deals would deepen ties between
Chrysler and the two companies, and would end Chrysler's
independent venture. The talks included Chrysler's iconic Jeep
brand, the report says, citing sources. One of those sources said
that Renault-Nissan has been seeking to clarify whether a deal to
acquire assets from Chrysler would jeopardize the company's access
to U.S. government funding, Reuters states.
According to Reuters, Chrysler CEO Bob Nardelli has said this week
that he wasn't preparing the company for sale. Reuters states
that Sen. Bob Corker said on Tuesday that Chrysler could be made
more viable by merging with a larger automaker. Reuters relates
that Renault-Nissan chief Carlos Ghosn said that he wouldn't
consider a deal that would involve spending cash in an uncertain
market.
Citing three people familiar with the negotiations, Reuters
reports that Chrysler is in talks to sell its Belvidere assembly
plant to Magna, in exchange for long-term production contracts.
Those sources added that Chrysler is also seeking to sell the
tooling and other assets related to its PT Cruiser model, Reuters
states.
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 Dec. 3, 2008,
Dominion Bond Rating Service downgraded the ratings of Chrysler
LLC, including Chrysler's Issuer Rating to CC from CCC (high).
Chrysler's First Lien Secured Credit Facility and Second Lien
Secured Credit Facility have also been downgraded to CCC and CC
(low) respectively. All trends are Negative. The ratings action
reflects Chrysler's challenge to maintain sufficient liquidity
balances amid severe industry conditions that have deteriorated
alarmingly over the past few months and are not expected to
improve in the near term. With this ratings action, Chrysler is
removed from Under Review with Negative Implications, where it was
placed on Nov. 7, 2008.
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.
As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating
Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC,
including Chrysler's Issuer Rating to CC from CCC (high).
Chrysler's First Lien Secured Credit Facility and Second Lien
Secured Credit Facility have also been downgraded to CCC and CC
(low) respectively. All trends are Negative. The ratings action
reflects Chrysler's challenge to maintain sufficient liquidity
balances amid severe industry conditions that have deteriorated
alarmingly over the past few months and are not expected to
improve in the near term. With this ratings action, Chrysler is
removed from Under Review with Negative Implications, where it was
placed on Nov. 7, 2008.
CIRCUIT CITY: Moves Auction for Business to 3 P.M. Today
--------------------------------------------------------
Bloomberg News reports that Circuit City Stores Inc., postponed
for 24 hours the scheduled auction of its assets.
The auction, according to the report, will start Jan. 14 at 3:00
p.m. New York time, immediately after liquidators finish bidding
for the right to conduct store-closing sales. Initial bids for
the entire chain were due Jan. 13 at 3 p.m.
Bloomberg notes that the auction is designed to save the company
from liquidation. The deadline was extended for potential
investors to submit bids.
As reported by yesterday's Troubled Company Reporter, Circuit
City won permission from the U.S. Bankruptcy Court for the Eastern
District of Virginia to sell its assets through an auction.
Circuit City filed on January 5, 2009, a motion with the
Bankruptcy Court that seeks approval of procedures that would
formally put the company up for sale, as a going concern, as
separate business units or as individual assets -- including the
sale of inventory.
On Friday, the company provided an update on its restructuring.
The company said it was engaged in significant discussions,
meetings and negotiations with two highly motivated and interested
parties concerning the terms of a going concern transaction.
These interested parties are considering providing additional
financing to allow the company to sustain operations and move
forward with a subsequent restructuring through a stand-alone plan
or purchasing the company or all or substantially all of the
company's assets. The parties have substantially completed due
diligence and now are in negotiations with the company and the
company's major stakeholders in order to finalize such a
transaction. While the company is optimistic that a transaction
can be successfully finalized, no assurance can be given that this
will occur.
The motion was originally filed under seal and was "unsealed," or
made public, by the Bankruptcy Court in connection with Friday's
hearing. The company was required to file the motion pursuant to
an amendment to the company's debtor-in-possession credit
agreement, which was approved under seal by the Bankruptcy Court
on December 23, 2008. The motion currently provides that an
auction of the company and its assets would commence January 13,
2009, and a sale hearing would occur on January 16, 2009.
Circuit City said its discussions with the interested parties
could result in a sale agreement, or the company and the lenders
could further amend the DIP agreement prior to the January 16,
2009 sale hearing. If no agreement is approved with a party
interested in a going concern transaction by January 16, 2009, and
the auction does not result in a sale of the company's assets, the
motion provides that the company may enter into a transaction that
will result in an asset liquidation process commencing soon after
the sale hearing scheduled for January 16, 2009, absent any
further amendment to the DIP credit agreement deadlines.
Restructuring and Operations Update
Circuit City has said it continues to operate its business without
interruption, and management is focused on developing and
executing a comprehensive corporate restructuring plan. Initial
successes toward restructuring the company's business and
operations include:
-- As planned, in the months of November and December, the
company completed liquidation sales in and subsequently
closed 155 domestic stores that were underperforming or
were no longer a strategic fit for the company.
-- The company has achieved significant selling, general and
administrative expense reductions as it restructures it
business to align operations with its smaller national
store base and has implemented more stringent expense
controls.
-- The company has retained DJM Realty Services, Inc. to
negotiate reduced rent for leased properties and to sell
owned properties.
-- The company's sales trends improved significantly during
the last two weeks of December, and the combination of
the improvement in sales and focus on gross margin has
enabled the company to continue to operate well within
the operating budget required by the amended DIP credit
agreement.
Major Shareholder May Present Bid
Bloomberg has reported that Ricardo Salinas Pliego, Mexico's
fourth-richest man, may bid for the retailer. According to
Bloomberg, Mr. Salinas, the owner of Mexican electronics retailer
Grupo Elektra SAB, has been reviewing Circuit City since November
to consider boosting his 28% stake in the chain, his spokesman
said. On Nov. 19, Mr. Salinas reported that he had signed a
nondisclosure agreement with Circuit City to gain access to
information about the retailer, Bloomberg said.
About Circuit City
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; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000).
CITIGROUP INC: CEO Has Board's Support Despite Expected Losses
--------------------------------------------------------------
David Enrich at The Wall Street Journal reports that Citigroup
Inc.'s lead independent director Richard Parsons said that the
board hasn't lost its confidence in CEO Vikram Pandit, even though
the company is expected to post fourth-quarter losses that are
billions of dollars greater than previously anticipated.
WSJ quoted Mr. Parsons as saying, "We have confidence in the
current management and leadership of Vikram." The report says
that Mr. Parsons has denied rumors that Mr. Pandit might be
replaced as CEO. Citing a person familiar with the matter, the
report states that Mr. Parsons would replace Sir Win Bischoff as
Citigroup's chairperson this month.
According to WSJ, sources said that Citigroup is expected to
report an operating loss of at least $10 billion in the fourth
quarter 2008. The report says that Citigroup's quarterly net loss
will be almost $6 billion, due to a one-time gain of $4 billion
from the sale of its German retail-banking business, a deal that
closed in 2008. Wall Street analysts, according to the report,
have projected a $4.1 billion loss for Citigroup.
WSJ relates that Citigroup's expected fourth-quarter loss would be
Citigroup's fifth straight quarter in the red and could bring the
company's total losses for 2008 to more than $20 billion.
Citigroup's losses, says WSJ, will include additional reserves
that the company allocated to cover bad loans in the fourth
quarter 2008. The sources said that Citigroup's fourth quarter
results will be released on Jan. 22, the report states.
About Citigroup
Based in New York, Citigroup Inc. (NYSE: C) --
http://www.citigroup.com-- is organized into four major segments
-- Consumer Banking, Global Cards, Institutional Clients Group,
and Global Wealth Management. Citi had $2.0 trillion in total
assets on $1.9 trillion in total liabilities as of Sept. 30, 2008.
As reported in the Troubled Company Reporter on Nov. 25, 2008, the
U.S. government entered into an agreement with Citigroup to
provide a package of guarantees, liquidity access, and capital.
As part of the agreement, the U.S. Treasury and the Federal
Deposit Insurance Corporation will provide protection against the
possibility of unusually large losses on an asset pool of
approximately $306 billion of loans and securities backed by
residential and commercial real estate and other such assets,
which will remain on Citigroup's balance sheet. As a fee for this
arrangement, Citigroup will issue preferred shares to the Treasury
and FDIC. In addition and if necessary, the Federal Reserve will
backstop residual risk in the asset pool through a non-recourse
loan.
CITIGROUP INC: To Undergo Major Reorganization
----------------------------------------------
Citigroup Inc. will disclose a major reorganization that will
result in further downsizing of its operations, narrowing its
overall mission to wholesale banking for large corporate clients
and retail banking for customers in selected markets around the
world, David Enrich at The Wall Street Journal reports, citing
people familiar with the matter.
According to WSJ, Citigroup is being pressured to rapidly
downsize. Citing people familiar with the matter, WSJ relates
that the shakeup would shrink about a third of the assets from
Citigroup's balance sheet, now at $2 trillion in size.
According to WSJ, other businesses that would likely be shed
include:
-- Citigroup's consumer-finance operation (Primerica
Financial Services and CitiFinancial);
-- private-label credit cards;
-- many of Citigroup's consumer-related businesses in Japan;
and
-- some of Citigroup's proprietary-trading activity, which
had been consuming significant amounts of capital.
Citigroup, says WSJ, would disclose the planned changes during the
release of its fourth-quarter results on Jan. 22.
Citing sources, WSJ states that Citigroup decided that it needs to
make more "dramatic action," as directors and executives brace for
a fourth-quarter operating loss of at least $10 billion. The
report says that federal officials worried about previous
turnaround efforts.
Citigroup will assign management teams to handle the gradual
disposal of units and other assets, WSJ says. Citing people
familiar with the matter, WSJ reports that Citigroup executives
are also considering the creating what is known as a "good bank-
bad bank" structure, wherein the company would form a new
corporate entity to house what it considers as its core
businesses. According to the report, the "bad bank" would hold
about $700 billion in assets, with the remaining $1.1 trillion
considered core. Sources said that the entity would face
accounting-related complications, and Citigroup hasn't settled on
the approach, WSJ states.
Citigroup to Form Joint Venture With Morgan Stanley
Morgan Stanley and Citigroup said on Jan. 13 that they have
reached a definitive agreement to combine Morgan Stanley's Global
Wealth Management Group and Citigrjoup's Smith Barney, Quilter in
the UK, and Smith Barney Australia into a new joint venture to be
called Morgan Stanley Smith Barney. This joint venture will be
the industry's leading wealth management business. It will
exclude Citi Private Bank or Nikko Cordial Securities.
The joint venture combines businesses that have:
-- More than 20,000 high-quality financial advisors;
-- $1.7 trillion in client assets;
-- $14.9 billion in pro-forma combined revenues;
-- $2.8 billion in pro-forma combined pre-tax profit;
-- 6.8 million client households globally -- with a strong
presence in the critically important high-net-worth client
segment; and,
-- a footprint of more than 1,000 offices around the globe.
Under the terms of the agreement, Citigroup will exchange 100
percent of its Smith Barney, Smith Barney Australia and Quilter
units for a 49 percent stake in the joint venture and an upfront
cash payment of $2.7 billion. Morgan Stanley will exchange 100
percent of its Global Wealth Management business for a 51 percent
stake in the joint venture. After year three, Morgan Stanley and
Citigroup will have various purchase and sale rights for the joint
venture, but Citigroup will continue to own a significant stake in
the joint venture at least through year five.
Morgan Stanley and Citigrjoup each will distribute their products
through what will be the leading global wealth management
platform. Each organization will retain its deposits as of the
close of the transaction. New deposits collected in the joint
venture will be allocated based on ownership of the new company.
The transaction, which has been approved by the Boards of
Directors of both companies, is expected to close in the third
quarter, subject to regulatory approvals and other customary
closing conditions.
Morgan Stanley CEO and Chairperson John Mack said, "By bringing
together Morgan Stanley's and Citi's strong wealth management
businesses we are creating a new industry-leading wealth
management franchise. Morgan Stanley Smith Barney will become the
first choice for clients and high-quality financial advisors by
offering an even broader range of financial products and services,
as well as the best market intelligence and investment
opportunities from both Morgan Stanley's and Citi's global
networks. This joint venture is an important step forward in our
effort to build our wealth management franchise, which we believe
will be an increasingly important and profitable part of Morgan
Stanley's business in the years ahead."
Citigroup will benefit from this transaction by monetizing its
investment in its wealth management business, while continuing to
benefit from a multi-year earnings stream as it simplifies and
streamlines its organizational structure. The joint venture
expands Citigroup's access to retail customers for our capital
markets products and research, allowing us to better serve our
issuing clients. In addition, Citigroup will continue to capture
our current levels of order flow for our investing clients. At
closing, Citigroup will recognize a pre-tax gain of approximately
$9.5 billion, or approximately $5.8 billion on an after-tax basis,
and will create approximately $6.5 billion of tangible common
equity.
Citigroup CEO Vikram Pandit said, "This joint venture creates a
peerless global wealth management business and provides tremendous
value for Citi. Once this transaction is completed, our clients
and Financial Advisors will benefit from the combined intellectual
capital, market intelligence and product capability of Citi and
Morgan Stanley. For Citi the joint venture provides significant
synergies and scale, substantially reduces our expenses and
enables us to retain a significant stake in a company that
immediately becomes the industry leader with real growth
opportunities. We will own 49 percent of this leading wealth
management business and will continue to participate in its
earnings and growth. In addition, we will generate equity capital
that we can deploy to other core businesses which are well
positioned to deliver attractive returns in the future. Citi and
its clients will maintain access to the industry's leading wealth
management platform for capital markets transactions."
The joint venture is expected to achieve cost savings of
approximately $1.1 billion -- in part by rationalizing and
consolidating key functions including technology, operations,
sales support, product development and marketing. These
operational efficiencies represent approximately 15 percent of the
combined firm's estimated expense base, excluding financial
advisors' commission compensation.
Morgan Stanley Smith Barney will operate as one fully integrated
organization with a world-class management team drawn from both
companies.
-- Morgan Stanley Co-President James Gorman, who has
spearheaded a significant turnaround of the Firm's Global
Wealth Management Group and previously led Merrill Lynch's
Global Private Client Group to renewed profitability, will
serve as chairperson of the new company. Mr. Gorman will
continue to serve as Co-President of Morgan Stanley.
-- Charles Johnston, who has 30 years of experience in wealth
management, most recently as President of Citigroup's
Global Wealth Management business in the U.S. and Canada,
will serve as president.
Additional senior management will be drawn from the ranks of both
companies. The new venture will be governed by a newly formed
Board of Directors comprised of representatives from both
companies.
This joint venture will provide a superior platform with
resources, intellectual capital, and research for financial
advisors to grow their business. It also will provide broad new
opportunities for growth and professional development to employees
across the organization including financial advisors, branch
managers, product, marketing and client service specialists, and
technology and operations professionals.
Mr. Gorman said, "This transaction brings together two of the
leading global brands in wealth management and some of the most
talented and productive financial advisors in the industry. I
truly believe this combination will offer those financial advisors
the best possible platform and resources, as well as exciting new
opportunities for growth and development. Both Morgan Stanley and
Citi's wealth management businesses have a culture that is focused
on first-rate advice, superior client service and a true spirit of
partnership, and we are committed to building upon those same
values in the new Morgan Stanley Smith Barney."
The scale of this venture will provide clients with access to both
Morgan Stanley and Citigroup's extensive global networks for the
best market intelligence and investment opportunities wherever
they originate around the world, while continuing to enjoy the
first-rate client service that has long characterized both wealth
management organizations.
Mr. Johnston said, "This new business will offer clients unrivaled
wealth management services by bringing together two industry
leaders and giving clients the ability to access the best of both
organizations' products, investment expertise and global reach.
At the same time, it will allow clients to continue working with
the trusted financial advisors who understand their needs and
their goals and remain committed to a superior level of customer
service."
Morgan Stanley was advised by its Institutional Securities Group
and Wachtell Lipton Rosen & Katz. Citigroup was advised by its
Institutional Clients Group and Davis Polk & Wardwell.
About Citigroup
Based in New York, Citigroup Inc. (NYSE: C) --
http://www.citigroup.com-- is organized into four major segments
-- Consumer Banking, Global Cards, Institutional Clients Group,
and Global Wealth Management. Citi had $2.0 trillion in total
assets on $1.9 trillion in total liabilities as of Sept. 30, 2008.
As reported in the Troubled Company Reporter on Nov. 25, 2008, the
U.S. government entered into an agreement with Citigroup to
provide a package of guarantees, liquidity access, and capital.
As part of the agreement, the U.S. Treasury and the Federal
Deposit Insurance Corporation will provide protection against the
possibility of unusually large losses on an asset pool of
approximately $306 billion of loans and securities backed by
residential and commercial real estate and other such assets,
which will remain on Citigroup's balance sheet. As a fee for this
arrangement, Citigroup will issue preferred shares to the Treasury
and FDIC. In addition and if necessary, the Federal Reserve will
backstop residual risk in the asset pool through a non-recourse
loan.
COLLINS MBANUGO: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Collins A. Mbanugo
dba Skyline Terrace
dba Ridgemont Development
90 Skyway Lane
Oakland, CA 94619
Bankruptcy Case No.: 08-47449
Chapter 11 Petition Date: December 15, 2008
Court: Northern District of California (Oakland)
Debtor's Counsel: James F. Beiden
attyjfb@yahoo.com
Law Office of James F. Beiden
850 Hinckley Road, #245
Burlingame, CA 94010
Tel.: (650) 697-6100
Estimated Assets: $1,000,000 to $10,000,000
Estimated Debts: $1,000,000 to $10,000,000
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/cnb08-47449.pdf
CONGOLEUM CORP: Owens-Illinois Opposes Plan Confirmation
--------------------------------------------------------
Owens-Illinois, Inc., filed with the U.S. Bankruptcy Court for the
District of New Jersey its preliminary objection to the Amended
Joint Plan of Reorganization which was filed by Congoleum Corp.
and its debtor-affiliates together with their official committee
of bondholders on Nov. 14, 2008.
As reported in the Troubled Company Reporter on Nov. 20, 2008, the
Plan calls for the creation of a Plan Trust pursuant to Sec.
524(g) of the Bankruptcy Code. On the Plan's effective date, all
Plan Trust Asbestos Claims will be assumed by and transferred to
the Plan Trust.
The Plan Trust will assume liability for all Asbestos Personal
Injury Claims, including the claims of Owens-Illinois. The Plan
will administer the Trust Assets, liquidate Claims and make
distribution to holders of Asbestos Personal Injury Claims in
accordance with the Plan Trust Documents.
Owens-Illinois raises these objections to the confirmation of the
Plan:
A. The Plan Trust fails to protect the interests of Asbestos
co-defendants.
B. The Asbestos Settlement Trust Distribution Procedures
encourage volitional delays and facilitates duplicative
recoveries for the same injuries.
Owens-Illinois tells the Court that the Plan Trust and Trust
documents incorporated into the Plan fail to satisfy the legal
requirements of Sec. 1129 of the Bankruptcy Code. In view of the
above reasons, Owens-Illinois requests the Court to deny
confirmation of Plan.
About Owens-Illinois
Owens-Illinois, Inc. is a member the class of asbestos claimants,
but claims it had no meaningful representation on the Asbestos
Claimants Committee. Owens-Illinois, Inc. is one of the largest
manufacturer of glass containers in the world. The company,
through its subsidiaries, manufactures and sells glass containers
primarily in Europe, North America, Asia Pacific, and South
America. It produces glass containers for beer and ready-to-drink
low alcohol refreshers, spirits, wine, food, tea, juice, and
pharmaceuticals. The company also produces glass containers for
soft drinks and other non-alcoholic beverages. The company was
founded in 1903 and is headquartered in Perrysburg, Ohio.
About Congoleum
Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM)
-- http://www.congoleum.com/-- manufactures and sells resilient
sheet and tile floor covering products with a wide variety of
product features, designs and colors. The company filed for
chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No. 03-
51524) as a means to resolve claims asserted against it related to
the use of asbestos in its products decades ago.
Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A.
Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP, and Paul S.
Hollander, Esq., and James L. DeLuca, Esq., at Okin, Hollander &
DeLuca, LLP, represent the Debtors.
The Asbestos Claimants' Committee is represented by Peter Van N.
Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drysdale,
Chtd. The Bondholders' Committee is represented by Michael S.
Stamer, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer
& Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC,
represents the Official Committee of Unsecured Creditors.
R. Scott Williams, Esq., of Haskell Slaughter Young & Rediker,
LLC, the Court-appointed Futures Claimants Representative, is
represented by Roger Frankel, Esq., Richard Wyron, Esq., and
Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and
Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC.
American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum,
is represented by Matthew Ward, Esq., Mark S. Chehi, Esq.,
Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden
Arps Slate Meagher & Flom.
CONSTAR INT'L: Disclosure Statement Hearing Set for February 3
--------------------------------------------------------------
Constar International Inc. and its debtor-affiliates will present
on Feb. 3, 2009, at 11:30 a.m., before the Hon. Peter J. Walsh of
the United States Bankruptcy Court for the District of Delaware
the proposed disclosure statement for their joint Chapter 11 plan
of reorganization dated Dec. 30, 2008.
Approval of the adequacy of the Disclosure statement -- i.e., the
disclosure statement should contain adequate information necessary
for claim holders to make an informed judgment on the plan -- is
required before the debtor could begin soliciting votes on the
plan.
Overview of the Plan
According to the Disclosure Statement, the Plan provides that the
Debtors will offer to exchange 100 shares of common equity of the
company for every $1,000 of principal amount of the 11% senior
subordinated notes due 2012.
On the Plan's effective date, each holder of senior subordinated
note claim will receive its pro rata portion of the distribution
shares. All equity interest will be canceled and extinguished,
and equity interest holders will not receive any distribution
under the plan.
The Plan enables the Debtors to, either, (i) convert the DIP
facility into an exit facility on the conversion date; or (ii)
enter into alternative exit facility to fund the Debtors'
operations, if the Debtors chose not to convert the DIP facility.
The plan classifies interests against and liens in the Debtors in
seven classes. The classification of treatment of interests and
claims are:
Treatment of Claims
Type Estimated
Class of Claims Treatment Recovery
----- --------- --------- ---------
1 other priority unimpaired 100%
claims
2 senior secured unimpaired 100%
FRN claims
3 other secured unimpaired 100%
claims
4 senior subordinated impaired pro rata
note claim share of new
equity
5 other general unimpaired 100%
6 Section 510(b) impaired 0%
claims
7 equity interests impaired 0%
Holders of Class 4 senior subordinated note claim will be allowed
to vote to accept or reject the plan.
Holders of Class 1 priority claims will be paid in full in cash.
Each holder of Class 2 senior secured FRN claims will be allowed
and such claims will be reinstated in full.
Holders of Class 3 other secured claims are expected to receive
one of these treatments:
-- a payment of the allowed other secured claims in full in
cash;
-- recover the collateral securing any of the other secured
claim and payment of any interest in accordance to Section
506(b) of the United States Bankruptcy Code;
-- reinstate any allowed other secured claim in full; or
-- allowed other secured claim will be treated unimpaired.
Class 4 senior subordinated noteholders will receive their pro
rata share portion of the distribution shares.
Holders of Class 5 other general unsecured claims will be
reinstated in full or paid in the ordinary course of the
reorganized Debtors' business.
Holders of Class 6 and 7 will not receive any distribution under
the plan.
A full-text copy of the Debtors' disclosure statement for their
joint Chapter 11 plan of reorganization is available for free at:
http://ResearchArchives.com/t/s?37d3
About Constar International
Headquartered in Philadelphia, Pennsylvania, Constar International
Inc. (NASDAQ: CNST) -- http://www.constar.net-- produces
polyethylene terephthalate plastic containers for food, soft
drinks and water. The company provides full-service packaging
services. The company and five of its affiliates filed for
Chapter 11 protection on Dec. 30, 2008 (Bankr. D. Del. Lead Case
No. 08-13432). Wilmer Cutler Pickering Hale and Dorr LLP
represents the Debtors as their bankruptcy counsel. The Debtors
proposed Bayard, P.A., as local counsel; Pricewaterhouse Coopers
as auditors and accountants; Greenhill & Co. LLC as financial
advisor; and Epiq Systems Inc. Claims and Balloting Agent. When
the Debtors filed for protection from their creditors, they posted
$420,000,000 in total assets and $538,000,000 as of
Nov. 30, 2008.
CPI PLASTIC: Voluntary Chapter 15 Case Summary
----------------------------------------------
Chapter 15 Debtor: CPI Plastics Group (Canada) Ltd.
151 Courtney Park Drive W
Mississauga, ON L5W 1Y5
Chapter 15 Case No.: 09-20181
Debtor-affiliates filing separate Chapter 15 petitions:
Entity Case No.
------ --------
CPI Plastics Group Limited 09-20175
CPI Plastics Group Inc. 09-20180
Crila Investments Inc. 09-20177
Crila Plastics Industries Inc. 09-20179
Type of Business: The Debtors design and sell thermoplastic
products.
See: http://www.cpiplastics.com/
Chapter 15 Petition Date: January 8, 2009
Court: Eastern District of Wisconsin (Milwaukee)
Judge: Pamela Pepper
Chapter 15 Debtors' Counsel: Aaron L. Hammer, Esq.
Freeborn & Peters LLP
311 South Wacker Dr., Suite 3000
Chicago, IL 60606
Tel: (312) 360-6558
AHammer@freebornpeters.com
Estimated Assets: $1 million to $100 million
Estimated Debts: $1 million to $100 million
CREATIVE CHOICE: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Creative Choice West LP
aka Buena Vista Springs Apartments
2417 Morton Avenue
Las Vegas, NV 89030
Bankruptcy Case No.: 09-10151
Type of Business: The Debtor operates apartment buildings.
Chapter 11 Petition Date: January 7, 2009
Court: District of Nevada (Las Vegas)
Judge: Bruce A. Markell
Debtor's Counsel: Carlos L. De Zayas, Esq.
cdz@lydeckerlaw.com
1201 Brickell Avenue 5th Floor
Miami, Florida 33131
Tel: (305) 416-3180
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Navtel (P) Ltd. $1,447,000
3rd Floor, IT Tower
Infocity Cpx Indrora Cir
Airport Rd, Gandinaghar
INDIA
City of N Las Vegas $76,096
2200 Civic Center
N Las Vegas, NV 89030
City of N Las Vegas $46,828
2200 Civic Center Drive
N Las Vegas, NV 89030
Latin's Glass $20,302
Cooling and Heating Technician $9,645
Las Vegas Valley Water Dist. $6,845
Samuel Purvis $6,400
Allen Temporary Staffing $5,376
Riccel Carpet Cleaning $4,603
Limpio Janitorial & Carpet Cle $4,300
NVEnergy $3,635
HSBC Business Solutions $2,021
GE Capital $1,684
Pitney Bowes Inc. $1,520
Department of Finance & Bus. $1,205
Services
Bank of America $1,191
Richard DeWald $1,060
Hm Carpet Nevada, Inc. $1,030
Riveria Finance $916
The petition was signed by Keith Dusenbery, president, corporate
manager of genl. partner.
CYRUS REINSURANCE: Moody's Withdraws Low-B Ratings on Bank Loans
----------------------------------------------------------------
Moody's Investors Service has withdrawn its ratings on the bank
loans of Cyrus Reinsurance II Limited after the loans were prepaid
in full effective December 31, 2008. The lenders did not suffer
any loss of interest or principal during the life of the
transaction. Cyrus Re II is a limited purpose reinsurer that
provides quota share coverage to certain subsidiaries of XL
Capital Ltd. for property catastrophe risks. At the mutual
agreement of XL and Cyrus Re II, the quota share reinsurance
arrangement has been cut-off effective December 31, 2008 with XL
assuming the unexpired liabilities.
These ratings have been withdrawn:
* Cyrus Reinsurance II Limited -- $65 million senior secured
term loan at Ba1;
* Cyrus Reinsurance II Limited -- $20 million senior
subordinated secured term loan at Ba3;
* Cyrus Reinsurance II Limited -- $20 million junior
subordinated secured term loan at B3.
The last rating action on Cyrus Re II occurred on November 27,
2007 when Moody's assigned ratings to its bank loans.
DBSI INC: Two Units' Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: DBSI Inc.
1550 S. Tech Lane
Meridian, ID 83642
Bankruptcy Case No.: 08-12687
Debtor-affiliates filing separate Chapter 11 petitions on Jan. 9,
2008:
Entity Case No.
------ --------
FOR 1031 Broadway Plaza LLC 09-10080
Florissant Market Place Acquisition LLC 09-10081
Debtor-affiliates filing separate Chapter 11 petitions on Jan. 7,
2008:
Entity Case No.
------ --------
Belton Town Center Acquisition LLC 09-10034
DBSI Broadway Plaza LeaseCo LLC 09-10035
DBSI Collins Offices LLC 09-10036
DBSI Development Services LLC 09-10037
DBSI-Renaissance Flowood LLC 09-10038
DBSI Land Development LLC 09-10039
DBSI Lexington LLC 09-10040
DBSI Meridian 184 LLC 09-10041
DBSI One Hernando Center North LLC 09-10042
DBSI Republic LeaseCo LLC 09-10043
South Cavanaugh LLC 09-10044
DBSI 121/Alma Land L.P. 09-10045
DBSI 121/Alma LLC 09-10046
Debtor-affiliates filing separate Chapter 11 petitions on Nov. 10,
2008:
Entity Case No.
------ --------
DBSI South 75 Center LeaseCo LLC 08-12688
DBSI 14001 Weston Parkway LeaseCo LLC 08-12689
DBSI CP Ironwood LeaseCo LLC 08-12690
DBSI Lake Ellenor LeaseCo LLC 08-12691
DBSI 12 South Place LeaseCo LLC 08-12692
DBSI 13000 Weston Parkway LeaseCo LLC 08-12693
DBSI 2001A Funding Corporation 08-12694
DBSI 2001B Funding Corporation 08-12695
DBSI 2001C Funding Corporation 08-12696
DBSI 2005 Secured Notes Corporation 08-12697
DBSI 2006 Secured Notes Corporation 08-12698
DBSI 2008 Notes Corporation 08-12699
DBSI 2nd Street Quad LeaseCo LLC 08-12700
DBSI 700 Locust LeaseCo LLC 08-12701
DBSI Abbotts Bridge LeaseCo LLC 08-12702
DBSI Allison Pointe LeaseCo LLC 08-12703
DBSI Amarillo Apartments LeaseCo LLC 08-12704
DBSI Anna Plaza LeaseCo LLC 08-12705
DBSI Arlington Town Square LeaseCo LLC 08-12706
DBSI Arrowhead LeaseCo LLC 08-12707
DBSI Avenues North Center LeaseCo LLC 08-12708
DBSI Bandera Trails LeaseCo LLC 08-12709
DBSI Battlefield Station LeaseCo LLC 08-12710
DBSI Belton Town Center LeaseCo LLC 08-12711
DBSI Breckinridge LeaseCo LLC 08-12712
DBSI Brendan Way LeaseCo LLC 08-12713
DBSI Brookfield Pelham LeaseCo LLC 08-12714
DBSI Cambridge Place LeaseCo LLC 08-12715
DBSI Carolina Commons LeaseCo LLC 08-12716
DBSI Cedar East and Cypress LeaseCo LLC 08-12717
DBSI Clear Creek Square LeaseCo LLC 08-12718
DBSI Corporate Woods LeaseCo LLC 08-12719
DBSI CP Clearwater LeaseCo LLC 08-12720
DBSI Cranberry LeaseCo LLC 08-12721
DBSI Cross Pointe LeaseCo LLC 08-12722
DBSI Crosstown Woods LeaseCo LLC 08-12723
DBSI Daniel Burnham LeaseCo LLC 08-12724
DBSI Decatur LeaseCo LLC 08-12725
DBSI Eagle Landing LeaseCo LLC 08-12726
DBSI Embassy Tower LeaseCo LLC 08-12727
DBSI Executive Dr LeaseCo LLC 08-12728
DBSI Executive Park LeaseCo LLC 08-12729
DBSI Fairlane Green LeaseCo LLC 08-12730
DBSI Fairway LeaseCo LLC 08-12731
DBSI Florissant Market Place LeaseCo LLC 08-12732
DBSI Gadd Crossing LeaseCo LLC 08-12733
DBSI Ghent Road LeaseCo LLC 08-12734
DBSI Grant Street Portfolio LeaseCo LLC 08-12735
DBSI Green Street Commons Leaseco LLC 08-12736
DBSI Guaranteed Capital Corporation 08-12737
DBSI Hampton LeaseCo LLC 08-12738
DBSI Hickory Plaza LeaseCo LLC 08-12739
DBSI Highlands & Southcreek LeaseCo LLC 08-12740
DBSI Houston Levee Galleria Leaseco LLC 08-12741
DBSI Kemper Pointe LeaseCo LLC 08-12742
DBSI Kenwood Center LeaseCo LLC 08-12743
DBSI Keystone Commerce LeaseCo LLC 08-12744
DBSI Lake Natoma LeaseCo LLC 08-12745
DBSI Lamar LeaseCo LLC 08-12746
DBSI Landmark Towers Leaseco LLC 08-12747
DBSI Lifestyle Center LeaseCo LLC 08-12748
DBSI Lincoln Park 10 LeaseCo LLC 08-12749
DBSI Mansell Forest LeaseCo LLC 08-12750
DBSI Mansell Place LeaseCo LLC 08-12751
DBSI Master Leaseco, Inc. 08-12752
DBSI Meadow Chase Apartments LeaseCo LLC 08-12753
DBSI Megan Crossing LeaseCo LLC 08-12754
DBSI Metropolitan Square LeaseCo LLC 08-12755
DBSI Missouri LeaseCo LLC 08-12756
DBSI Network LeaseCo LLC 08-12757
DBSI North Logan Retail Center LeaeCo LLC 08-12758
DBSI North Park LeaseCo LLC 08-12759
DBSI North Stafford LeaseCo LLC 08-12760
DBSI Northlite Commons II LeaseCo LLC 08-12761
DBSI Northpark Ridgeland LeaseCo LLC 08-12762
DBSI Northridge LeaseCo LLC 08-12763
DBSI Oakwood Plaza LeaseCo LLC 08-12764
DBSI Old National Town Center LeaseCo LLC 08-12765
DBSI One Executive Center LeaseCo LLC 08-12766
DBSI One Hanover LeaseCo LLC 08-12767
DBSI Park Creek-Gainesville LeaseCo LLC 08-12768
DBSI Parkway III LeaseCo LLC 08-12769
DBSI Peachtree Corners Pavilion LeaseCo LLC 08-12770
DBSI Phoenix Peak LeaseCo LLC 08-12771
DBSI Pinehurst Square East LeaseCo LLC 08-12772
DBSI Pinehurst Square West LeaseCo LLC 08-12773
DBSI Plano Tech Center LeaseCo LLC 08-12774
DBSI Portofino Tech Center LeaseCo LLC 08-12775
DBSI Properties Inc. 08-12776
DBSI Real Estate Funding Corporation 08-12777
DBSI Realty Inc. 08-12778
DBSI Road 68 Retail Center LeaseCo LLC 08-12779
DBSI Sam Houston Tech Center LeaseCo LLC 08-12780
DBSI Sapphire Pointe LeaseCo LLC 08-12781
DBSI Securities Corporation 08-12782
DBSI Sherwood Plaza LeaseCo LLC 08-12783
DBSI Shoppes at Misty Meadows LeaseCo LLC 08-12784
DBSI Shoppes at Trammel LeaseCo LLC 08-12785
DBSI Signature Place LeaseCo LLC 08-12786
DBSI Silver Lakes Leaseco LLC 08-12787
DBSI Southport Pavilion LeaseCo LLC 08-12788
DBSI Spalding Triangle LeaseCo LLC 08-12789
DBSI Spring Valley Road LeaseCo LLC 08-12790
DBSI Springville Corner Leasco LLC 08-12791
DBSI ST Tower LeaseCo LLC 08-12792
DBSI St. Andrews Place LeaseCo LLC 08-12793
DBSI Stone Glen Village LeaseCo LLC 08-12794
DBSI Stony Brook South LeaseCo LLC 08-12795
DBSI Streetside at Towne Lake LeaseCo LLC 08-12796
DBSI Topsham Fair Mall LeaseCo LLC 08-12797
DBSI Torrey Chase LeaseCo LLC 08-12798
DBSI Treasure Valley Business Center LeaseCo LLC 08-12799
DBSI Trinity Ridge Business Center LeaseCo LLC 08-12800
DBSI University Park LeaseCo LLC 08-12801
DBSI Vantage Drive LeaseCo LLC 08-12802
DBSI Watkins LeaseCo LLC 08-12803
DBSI West Oaks Square LeaseCo LLC 08-12804
DBSI Wilson Estates LeaseCo LLC 08-12805
DBSI Winchester Office LeaseCo LLC 08-12806
DBSI Windcom Court LeaseCo LLC 08-12807
DBSI Wisdom Pointe LeaseCo LLC 08-12808
DBSI Woodlands Medical Office LeaseCo LLC 08-12809
DBSI Woodside Center LeaseCo LLC 08-12810
DCJ Inc. 08-12811
DBSI Draper LeaseCo LLC 08-12812
FOR 1031 LLC 08-12813
Spectrus Real Estate Inc. 08-12814
DBSI Academy Park Loop LeaseCo LLC 08-12815
DBSI Copperfield Timbercreek LeaseCo LLC 08-12816
DBSI Corporate Center II LeaseCo LLC 08-12817
DBSI Executive Plaza LeaseCo LLC 08-12818
DBSI Northgate LeaseCo LLC 08-12819
DBSI Two Notch Rd. LeaseCo LLC 08-12820
DBSI Asset Management LLC 08-12821
DBSI 2006 Land Opportunity Fund LLC 08-12822
DBSI Shoppes at Trammel LLC 08-12823
DBSI 2007 Land Improvement & Development Fund LLC 08-12824
DBSI 2008 Land Option Fund LLC 08-12825
DBSI Alma/121 Office Commons LLC 08-12826
DBSI Cottonwood Plaza Development LLC 08-12827
DBSI Draper Technology 21 LLC 08-12828
DBSI Escala LLC 08-12829
DBSI Short-Term Development Fund LLC 08-12830
DBSI Telecom Office LLC 08-12831
DBSI Discovery Real Estate Services LLC 08-12834
Chapter 11 Petition Date: November 10, 2008
Related Information: The Debtors operate a real estate company.
See: http://www.dbsi.com
Court: District of Delaware (Delaware)
Judge: Peter J. Walsh
Debtor's Counsel: James L. Patton, Esq.
bankfilings@ycst.com
Joseph M. Barry, Esq.
bankfilings@ycst.com
Michael R. Nestor, Esq.
bankfilings@ycst.com
Young, Conaway, Stargatt & Taylor LLP
The Brandywine Bldg.
1000 West Street, 17th Floor
PO Box 391
Wilmington, DE 19899-0391
Tel: (302) 571-6684
(302) 571-6600
(302) 571-1253
http://www.ycst.com
Notice Claims and Balloting Agent Claims: Kurztman Carson
Consultants LLC
Estimated Assets: $100 million to $500 million
Estimated Debts: $100 million to $500 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Ellen Kwiatkowski- investment $26,743,328
Schwinge
402 Kilarney Pass
Mundeleim, IL 60060
Michael Kanoff investment $18,696,689
3500 Flamingo Drive
Miami Beach, Fl 33140
Harold Rubin investment $17,854,893
100 North Street
Teterboro, NJ 07608
Bill Ramsey investment $15,500,000
PO Box 690
Salinas, CA 93902
Frederick Nicholas investment $14,250,863
3844 Culver Center Street
Suite B
Culver City, CA 90232
Peter Evans investment $7,317,633
17046 Marina Bay Drive
Huntington Beach, CA 92649
Jeffrey Johnston investment $7,200,000
1751 Wst. Citracado Pkwy.
Clubhouse
Escondido, CA 92029
Yim Chow investment $7,200,000
702 Los Pinos Avenue
Milpitas, CA 95035
Phyllis Chu investment $6,191,068
3020 Gough Street
San Francisco, CA 94123
Elizabeth Noonan investment $5,395,000
316 Chapin Lane
Burlingame, CA 94010
John Roeder investment $5,375,848
PO Box 23490
San Jose, CA 95153
Jim Nicholas investment $5,325,000
385 Hilcrest Road
Englewood, NJ 07632
Robert Markstein investment $5,220,000
696 San Ramon Valley
Boulevard, #347
Danville, CA 94526
Robert Angelo investment $4,542,500
33316 S.E. 34th Street
Washougal, WA 98671
Henry Vara investment $4,509,982
16960 Bohlman Road
Saratoga, CA 95070
Alan Destefani investment $4,500,000
PO Box 20968
Bakersfield, CA 93390
Kevin Pascoe investment $4,476,000
9400 Etchart Road
Bakersfield, CA 93314
Martha Walker investment $4,324,349
863 S. Bates Street
Birmingham, AL 48009
Tina Bernard investment $4,277,596
19336 Collier Street
Tarzana, CA 91356
Paul Wendland investment $4,208,999
1034 N. Datepalm Drive
Gilbert, AZ 85234
William Marvel investment $3,579,289
492 Escondido Circle
Grand Junction, CO 81503
James Fritts investment $3,424,900
309 W. Washington Street
Charlestown, WV 25414
Joan Kresse investment $3,410,909
5100 Figueroa Mountain Road
Los Olivios, CA 93441
John Baklayan investment $3,400,000
16105 Whitecap Land
Huntington Beach, CA 92649
Robert Rifkin investment $3,360,000
697 Red Arrow Trail
Palm Desert, CA 92211
Gerard Keller investment $3,200,783
12-161 Saint Andrews Drive
Ranco Mirage, CA 92270
Kristi Wells investment $3,120,000
2860 Old Quarry Road
West Point, IA 92656
Michael Cooper investment $3,000,000
6465 S. 3000 E, Suite
Salt Lake City, UT 84121
Gladys Esponda investment $3,000,000
PO Box 609
Buffalo, NY 82834
Arthur Hossenlopp investment $3,000,000
228 18th Street
Ft. Madison, IA 52627
Richard Newman investment $3,000,000
13679 Orchard Gate Road
Poway, CA 92064
Bernard Posner investment $3,000,000
6222 Primrose Avenue
Los Angeles, CA 90068
Kent Schroeder investment $3,000,000
5697 McIntyre Street
Golden, CO 80403
Bernard Ineichen investment $2,900,000
650 South Avenue, B122
Yuma, Arizona 85346
Alan Sacks investment $2,900,000
5 Horizon Road, #1407
Fort Lee, NJ 07024
Joseph Stokley investment $2,843,461
PO Box 1231
Bethel Island, CA 94511
JoAnn Picket investment $2,800,000
3769 E. 125th Drive
Thornton, CO 80241
Bill Hall investment $2,740,593
PO Box 16172
Lubbock, TX 79490
Max Buchmann investment $2,716,186
14464 Rand Rail Drive
El Cajon, CA 92021
Brian Schuck investment $2,701,027
700 Maldonado
Pensacola Beach, Fl 32561
James Jensen investment $2,616,648
2125 Cypress Point
Discovery Bay, CA 94505
Robert Etzel investment $2,600,000
2623 Avenue H.
Ft. Madison, IA 52627
Theodore Mintz investment $2,554,458
751 Georgia Trail
Lincolnton, NC 28092
Joyce Jongsma investment $2,540,000
2012 E. Burrville
Crete, IL 60417
Kent Wright investment $2,488,694
2115 Marwood Circle
Salt Lake City, UT 84124
James Veugler investment $2,442,397
c/o Georgia Veugler
Material Recovery Corp.
820 E. Terra Cotta Ave.
Unit 116
Crystal Lake, IL 60014
Virgil Gentzler investment $2,427,301
2707 Bressi Ranch Way
Carlsbad, CA 92009
Karen Hughes investment $2,417,886
1050 The Old Drive
Pebble Drive, CA 93953
Robert Goldberg investment $2,407,915
PO Box 8807
Boise, ID 83707
DELTA PICTURE: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Delta Picture Frame Co., Inc.
67 NW 77 Court, Suite 130
Miami, FL 33166
Tel: (305) 592-6456
Fax: (305) 594-9085
Bankruptcy Case No.: 08-29139
Chapter 11 Petition Date: December 15, 2008
Court: Southern District of Florida (Miami)
Judge: A. Jay Cristol
Company Description: Delta Picture Frame Co., offers the framing
industry one of the largest selections of
wood and polystyrene mouldings, imported from
around the world. Delta stocks large
quantities of mouldings.
See:
http://www.deltapictureframe.com/
Debtor's Counsel: Jacqueline Calderin
jc@ecccounsel.com
Ehrenstein Charbonneau Calderin
800 Brickell Ave., #902
Miami, FL 33131
Tel.: (305) 722-2002
Fax: (305) 722-2001
Estimated Assets: $100,001 to $500,000
Estimated Debts: $1,000,001 to $10,000,000
The petition was signed by Jeffrey Mandel, president of the
company.
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/fsb08-29139.pdf
DESTINATION MATERNITY: S&P Affirms 'B-' Corporate Credit Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services said it revised its outlook on
Philadelphia-based Destination Maternity Corp. to stable from
negative. At the same time, S&P affirmed all ratings on the
company, including the corporate credit rating of 'B-'.
"The outlook revision reflects the company's recent payments under
its term loan, commitment to further leverage reductions, and
improved cushion under its covenants," said Standard & Poor's
credit analyst David Kuntz.
DHP HOLDINGS: U.S. Trustee Forms Seven-Member Creditor Committee
----------------------------------------------------------------
Roberta A. DeAngelis, the United States Trustee Region 3,
appointed seven creditors to serve on an Official Committee of
Unsecured Creditors for the Chapter 11 cases of DHP Holdings II
Corporation and its debtor-affiliates
The creditors committee members are
1) Winnspec International Co.
Attn: Norman Jou
13F-1, 207, Fu Sing Road
Taoyuan City, Taiwan, 33066
Phone: 880-3-333-2107
Fax: 886-3-333-2752
2) Winners Products Engineering Ltd.
Attn: John Neumann
221Arsenal Drive
Ninety-Six, SC, 29666
Phone: 864-543-4334
Fax: 852-2891-1300
3) Garden Flame Gas Appliances Co., Ltd.
Attn: Michael Wong
4-402 Hua Jiang Road, Hua Lin Tu,
Riverside Garden, Dashi, Panyu
Guangzhou, China, 511431
Phone: 86-20-84592859
Fax: 86-20-84592851
4) Construction Bolt & Fasteners Inc.
Attn: Daniel Monroe Campagna
409 Waco St.
Wichita Falls, TX 76301
Phone: 940-767-8473
Fax: 940-767-5856
5) KBK Financial, Inc.
Attn: Robert J. McGee, Jr.
301 Commerce Street, 2200 City Center
Fort Worth, TX 76102
Phone: 817-258-6020
Fax: 817-420-6705
6) Maas-Hansen Steel Corp.
Attn: Joseph Brack Hudson
2435 E. 37th Street
Vernon, CA 90058
Phone: 323-583-6321
Fax: 323-586-0171
7) Burner Systems International
Attn: Curtis J. Arnold, CFO
3600 Cummings Road
Chattanooga, TN 37419
Phone: 423-822-4010
Fax: 423-822-2221
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtor's
expense. They may investigate the Debtor's 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 DHP Holdings
Headquartered in Bowling Green, Kentucky, DHP Holdings II
Corporation is the parent of DESA Heating, which sells and
distributes heating commercial products in Europe and Mexico under
brand names including ReddyHeater, Comfort Glow and Master
Portable Heaters. The company has manufacturing, storage and
distribution facilities in Alabama and California.
DHP Holdings II and six of its affiliates filed for Chapter 11
protection on December 29, 2008 (Bankr. D. Del. Lead Case No. 08-
13422). The company's international arm, HIG-DHP Barbados, has
not filed for bankruptcy. HIG-DHP Barbados holds 100% of the
equity of all foreign nondebtor subsidiaries, which manufacture,
distribute and sell commercial and consumer goods in Europe,
Mexico, and Canada.
Bruce Grohsgal, Esq., Laura Davis Jones, Esq., and Timothy P.
Cairns, Esq., at Pachulski, Stang, Ziehl Young & Jones LLP,
represent the Debtors. The Debtor proposed AEG Partners as
restructuring consultants, and Craig S. Dean as chief
restructuring officer and Kevin Willis as assistant chief
restructuring officer. The Debtora also proposed Epiq Bankruptcy
Solutions LLC as claims agent. When the Debtors filed for
protection from their creditors, they listed assets and debts
between $100 million to $500 million each. According to Reuters,
as of Nov. 29, the company, along with its nondebtor subsidiaries
and affiliates, had assets of $132.5 million and liabilities of
$133.2 million.
DESA Holdings Corporation and DESA International LLC filed
voluntary petitions on June 8, 2002. HIG-DESA Acquisition nka
DESA LLC acquired on Dec. 13, 2002, substantially all assets of
the DESA Entities for $198 million comprised of $185 million in
cash plus unsecured subordinated notes in the original aggregate
amount of $13 million priced at 10% per annum due payable on
Dec. 24, 2007. The sale closed on Dec. 24, 2002.
The Chapter 11 cases of the form DESA Entities is still
active; However, activity occurring in those cases consists of
limited claims resolution, and required filing of necessary
postconfirmation reports and payment of postconfirmation fees. No
claims of ther issues remain open between the Debtors and the
former DESA Entities.
According to the Troubled company Reporter on April 22, 2005,
the Hon. Walter Shapero of the United States Bankruptcy Court
for the District of Delaware confirmed the Second Amended Joint
Plan of Liquidation of DESA Holdings Corporation and its debtor-
affiliate -- DESA International LLC. The Court confirmed the Plan
on April 1, 2005, and Plan took effect the same day.
Kirkland & Ellis, LLP, and Pachulski, Stang, Ziehl Young Jones &
Weintraub, P.C., represented the DESA entities.
DIRECTV GROUP: S&P's 'BB' Rating Unmoved by $2BB Stock Repurchase
-----------------------------------------------------------------
Standard & Poor's Ratings Services said its ratings and outlook on
El Segundo, California-based The DIRECTV Group Inc. (BB/Stable/--)
are not affected by the company's announcement that the board of
directors has approved the repurchase of an additional $2 billion
of its common stock.
The share repurchase program, which will be funded out of the
company's sizable cash balance and free cash flow, should not
result in incremental debt. The company had substantial liquidity
from $3.0 billion of cash as of Sept. 30, 2008, and generated
$1.6 billion of net free cash flow for the last 12 months, ended
Sept. 30, 2008. The new program replaces a recently completed
$3 billion stock repurchase program that was put in place in May
2008.
DOMINO'S PIZZA: 10 Locations Closed; 9 Franchisees Bankrupt
-----------------------------------------------------------
Reuters reports that Domino's Pizza CEO David Brandon said on
Monday that nine of its franchisees have filed for Chapter 11
bankruptcy protection since November 2007, causing 10 locations to
close.
Domino's Pizza said that the filings occurred between November
2007 and January 2009, according to Reuters.
Reuters relates that Domino's Pizza, which has a heavy debt load
amid a year-long recession, introduced oven-baked sandwiches
priced at $4.99, as part of a strategy to boost sales at
lunchtime. Reuters states that Domino's Pizza's clients have
lessened spending by switching to cheaper chains or cooking their
own meals rather than ordering in.
Citing Domino's Pizza CEO David Brandon, Reuters says that the
company added 70 new franchisees in the first nine months of 2008,
compared to 93 in 2007. Domino's Pizza said in October 2008 that
it would save cash and that it might make loans directly to
franchisees, Reuters relates. Domino's Pizza, the report states,
said that it might help its best franchisees purchase weaker
operators.
According to Reuters, Domino's Pizza is seeking to boost its
global retail sales by 4 to 6 percent per year, with U.S. same-
store sales up 1 to 3 percent and international same-store sales
up 3 to 5 percent. Domino's Pizza would add 200 to 250 locations
per year, Reuters says, citing Mr. Brandon.
Standard & Poor's restaurant analyst Mark Basham affirmed his
"sell" recommendation on shares of Domino's Pizza, Reuters report.
According to Reuters, Mr. Basham said that Domino's Pizza has
"quietly moved to an everyday low/high approach to menu pricing,"
by decreasing prices on certain items while still offering a
premium product at a premium price.
About Domino's Pizza
Founded in 1960, Domino's Pizza -- http://www.dominos.com-- is
the recognized world leader in pizza delivery. Domino's is listed
on the NYSE under the symbol "DPZ." Through its primarily
franchised system, Domino's operates a network of 8,671 franchised
and Company-owned stores in the United States and 60 international
markets. The Domino's Pizza brand, named a Megabrand by
Advertising Age magazine, had global retail sales of over $5.4
billion in 2007, comprised of $3.2 billion domestically and $2.2
billion internationally.
As reported by the Troubled Company Reporter on Oct. 17, 2008,
Domino's Pizza's balance sheet as of Sept. 7, 2008, showed $440.85
million in total assets, $1.74 million in total liabilities,
resulting to $1.44 billion in shareholders' deficit.
DUNEDIN MARINA: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Dunedin Marina View, LLC
3308 Summerfield Cove
Palm Harbor, FL 34683
Bankruptcy Case No.: 09-00215
Chapter 11 Petition Date: January 8, 2009
Court: Middle District of Florida (Tampa)
Judge: K. Rodney May
Debtor's Counsel: Michael C Markham, Esq.
mikem@jpfirm.com
Johnson Pope Bokor Ruppel & Burns LLP
Post Office Box 1368
Clearwater, FL 33757
Tel: (727) 461-1818
Fax: (727) 443-6548
Estimated Assets: unstated
Estimated Debts: unstated
The Debtor did not file a list of 20 largest unsecured creditors.
The petition was signed by manager Kelly W. Prior, Jr.
EARTH BIOFUELS: Consummates Convertible Exchangeable Notes Deal
---------------------------------------------------------------
Earth Biofuels Inc. disclosed in a filing with the Securities and
Exchange Commission that it entered into an Amendment and Exchange
Agreement with one of the holders of the Amended and Restated
Senior Secured Convertible Exchangeable Notes and Series B Senior
Secured Convertible Exchangeable Notes. Earth Biofuels Inc.
consummated the transactions contemplated therein, pursuant to
which, among other things:
-- the company exchanged:
a) $26,000,000 of an Amended and Restated Senior Secured
Convertible Exchangeable Note for a senior secured
convertible note in the aggregate principal amount of
$13,235,000, which is convertible in shares of common
stock, par value $0.001 per share, of the company, in
accordance with the terms thereof; and
b) $2,000,000 of the outstanding principal amount of
existing Series B Senior Secured Convertible
Exchangeable Note issued to the Investor for a senior
secured convertible note in the aggregate principal
amount of $1,765,000, which is convertible in shares of
Common Stock in accordance with the terms thereof.
Neither the Series C Note nor the Series D Note is exchangeable
into shares of common stock, par value $0.001 per share of PNG
Ventures, Inc., a Nevada corporation:
-- Subject to the satisfaction of certain equity conditions,
the company may at any time, at it option, require the
Investor to convert the remaining aggregate principal
amount of $5,000,000 of the Amended and Restated Senior
Secured Convertible Exchangeable Note of the Investor in
Common Stock, in whole or in part; and
-- The company, certain of its subsidiaries and the Investor
entered into a reaffirmation agreement, which reaffirms the
security interest granted by the company and certain of its
subsidiaries with respect to the Amended and Restated
Senior Secured Convertible Exchangeable Notes, the Series B
Senior Secured Convertible Exchangeable Notes, the Series C
Note and the Series D Note.
The Series C Note ranks pari passu with the Amended and Restated
Senior Secured Convertible Exchangeable Notes and the Series D
Note ranks pari passu with the existing Series B Senior Secured
Convertible Exchangeable Notes.
The holders of the company's Amended and Restated Senior Secured
Convertible Exchangeable Notes and Series B Senior Secured
Convertible Exchangeable Notes consented to the transactions
contemplated by the Exchange Agreement.
A copy of the Series C Note, the Series D Note, the Form of
Consent, the Amendment and Exchange Agreement and the
Reaffirmation Agreement are available for free at:
SERIES C NOTE - http://ResearchArchives.com/t/s?37e1
SERIES D NOTE - http://ResearchArchives.com/t/s?37e2
FORM OF CONSENT - http://ResearchArchives.com/t/s?37e3
AMENDMENT AND EXCHANGE AGREEMENT - http://ResearchArchives.com/
t/s?37df
REAFFIRMATION AGREEMENT - http://ResearchArchives.com/t/s?37e0
About Earth Biofuels Inc.
Headquartered in Dallas, Texas, Earth Biofuels Inc. (OTC BB: EBPF)
-- http://www.earthbiofuels.com/-- is engaged in the domestic
production, supply and distribution of alternative based fuels
consisting of biodiesel and previously liquid natural gas and
ethanol. Earth's primary bio-diesel operations are located in
Oklahoma and Texas. Earth sold its subsidiary which produced LNG,
at the end of the second quarter 2008, and restructured its debts
with significant investors.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $14.2 million and total liabilities of $147.9 million,
resulting in stockholders' deficit of $133.7 million.
For three months ended Sept. 30, 2008, the company posted net loss
of $10.7 million compared with net loss of $35.4 million for the
same period in the previous year.
For nine months ended Sept. 30, 2008, the company posted net loss
of $85.8 million compared with net loss of $95.0 million for the
same period in the previous year.
Going Concern Doubt
Montgomery Coscia Greilich LLP, in Plano, Texas, expressed
substantial doubt about Earth Biofuels Inc.'s ability to continue
as a going concern after auditing the company's consolidated
financial statements for the year ended Dec. 31, 2007. The
auditing firm pointed to the company's recurring operating losses
and working capital deficit.
The company has incurred significant losses from operations
through June 30, 2008, and has limited financial resources. The
company also has an accumulated deficit of $279.3 million,
negative current ratios and negative tangible net worth at
June 30, 2008.
In addition, investors holding $52.5 million in senior unsecured
notes filed with the bankruptcy courts a Chapter 7 Involuntary
Liquidation against the company during the second quarter of 2007.
However, on Nov. 14, 2007, the company negotiated and executed a
settlement agreement with the above note holders. The agreement
required the creditors to dismiss their petition of bankruptcy.
EARTH BIOFUELS: Finalizes Exchange Agreement with Castlerigg PNG
----------------------------------------------------------------
Earth Biofuels Inc. disclosed in a regulatory filing with the
Securities and Exchange Commission that it finalized an Amendment
and Exchange Agreement with Castlerigg PNG Investments, LLC, which
granted the conversion of 5.6 million shares of its ownership in
PNG Ventures, Inc., and new convertible debentures in the amount
of $20,000,000.
On Nov. 14, 2007, Earth Biofuels executed an agreement with the
group of noteholders who had petitioned for the company's
involuntary bankruptcy. The agreement required the Noteholders to
dismiss their petition of bankruptcy, and required the company to
grant certain security interests to the Noteholders pursuant to a
restructuring plan that confirmed the entire amount of debt due
under the original notes held by the Noteholders to be
$100,651,173.
On June 30, 2008, as part of the restructuring plan, the company
closed on its share exchange agreement with PNG Ventures that
exchanged the ownership of the company's subsidiary, New Earth
LNG, for 7,000,000 PNG common shares, which were secured by the
Noteholders.
The new convertible debentures are convertible within 12 months at
$0.50 per share, and the resulting debt reduction will reflect an
approximate $70,000,000 gain on the company's income statement.
Castlerigg maintains certain security interests over the company's
assets, and the remaining 1.4 million shares of PNG Ventures, Inc.
common stock owned by the company remain secured by the remaining
Noteholders.
About Earth Biofuels Inc.
Headquartered in Dallas, Texas, Earth Biofuels Inc. (OTC BB: EBPF)
-- http://www.earthbiofuels.com/-- is engaged in the domestic
production, supply and distribution of alternative based fuels
consisting of biodiesel and previously liquid natural gas and
ethanol. Earth's primary bio-diesel operations are located in
Oklahoma and Texas. Earth sold its subsidiary which produced LNG,
at the end of the second quarter 2008, and restructured its debts
with significant investors.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $14.2 million and total liabilities of $147.9 million,
resulting in stockholders' deficit of $133.7 million.
For three months ended Sept. 30, 2008, the company posted net loss
of $10.7 million compared with net loss of $35.4 million for the
same period in the previous year.
For nine months ended Sept. 30, 2008, the company posted net loss
of $85.8 million compared with net loss of $95.0 million for the
same period in the previous year.
Going Concern Doubt
Montgomery Coscia Greilich LLP, in Plano, Texas, expressed
substantial doubt about Earth Biofuels Inc.'s ability to continue
as a going concern after auditing the company's consolidated
financial statements for the year ended Dec. 31, 2007. The
auditing firm pointed to the company's recurring operating losses
and working capital deficit.
The company has incurred significant losses from operations
through June 30, 2008, and has limited financial resources. The
company also has an accumulated deficit of $279.3 million,
negative current ratios and negative tangible net worth at
June 30, 2008.
In addition, investors holding $52.5 million in senior unsecured
notes filed with the bankruptcy courts a Chapter 7 Involuntary
Liquidation against the company during the second quarter of 2007.
However, on Nov. 14, 2007, the company negotiated and executed a
settlement agreement with the above note holders. The agreement
required the creditors to dismiss their petition of bankruptcy.
ELITE LANDINGS: Court Authorizes Inter-Co. Transfers to Petters
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Minnesota granted
Elite Landings, LLC, authority to make inter-company transfers to
Petters Aviation, LLC, in order to provide operating funds to
Petters Aviation through the end of Feb. 28, 2009.
The transfers are subject to a budget. The total budget for the
Dec. 1, 2008, through Feb. 28, 2009 is $492,287.
As reported in the Troubled Company Reporter on Nov. 21, 2008, the
company told the Court that until the filing of the bankruptcies
of Petters Aviation and the Debtor, Petters Aviation regularly
received inter-company transfers from its subsidiaries.
Elite related that it knows of no creditor with a security
interest in its assets, and that the proposed use of assets is in
the best interests of the estate. If Petters Aviation ceased
operations, there would be no entity to oversee the operations of
the subsidiaries, which would be detrimental to Petters Aviations
creditors.
Based in Minnetonka, Minnesota, Elite Landings, LLC was, prior to
filing for bankruptcy, engaged in the business of purchasing
Airbus Corporate Jet Aircraft from Airbus S.A.S. and reselling
them. The company filed for Chapter 11 relief on Oct. 9, 2008
(Bankr. D. Minn. Case No. 08-45210). James A. Rubenstein, Esq.,
at Moss & Barnett, represents the Debtor as counsel. The company
listed total assets of between $10 million and $50 million, and
the same range in total debts.
The company is a wholly owned subsidiary of Petters Aviation.
Petters Aviation is a wholly owned subsidiary of Thomas Petters,
Inc., which is in turn owned 100% by Thomas J. Petters,
individually. Thomas Petters, the founder and former CEO of
Petters Group, remains in federal custody on charges of mail and
wire fraud, money laundering and obstruction of justice. Petters
Aviation LLC, and its debtor-affiliates MN Airlines LLC, and MN
Airline Holdings Inc. filed separate petitions for Chapter 11
relief on Oct. 6, 2008 (Bankr. D. Minn. Lead Case No. 08-45136).
Brian F. Leonard, Esq., Matthew R. Burton, Esq., at Leonard
O'Brien et al., represents the Debtors as counsel. When Petters
Aviation LLC filed for protection from its creditors, it listed
assets of $50 million and $100 million, and the same range of
debts.
About Petters Group Worldwide
Based in Minnetonka, Minn., Petters Group Worldwide LLC is named
for founder and chairman Tom Petters. The group is a collection
of some 20 companies, most of which make and market consumer
products. It also works with existing brands through licensing
agreements to further extend those brands into new product lines
and markets. Holdings include Fingerhut (consumer products via
its catalog and Web site), SoniqCast (maker of portable, WiFi MP3
devices), leading instant film and camera company Polaroid
(purchased for $426 million in 2005), Sun Country Airlines
(acquired in 2006), and Enable Holdings (online marketplace and
auction for consumers and manufacturers' overstock inventory).
Petters formed the company in 1988.
Petters Company, Inc. is the financing and capital-raising unit of
Petters Group Worldwide, LLC. Petters Company, Inc. and Petters
Group Worldwide, LLC, filed separate petitions for Chapter 11
relief on Oct. 11, 2008 (Bankr. D. Minn. Case No. 08-45257 and
08-45258, respectively). James A. Lodoen, Esq., at Lindquist &
Vennum P.L.L.P., represents the Debtors as counsel. In its
petition, Petters Company, Inc. listed debts of between
$500 million and $1 billion, while its parent, Petters Group
Worldwide, LLC listed debts of not more than $50,000.
As reported in the Troubled Company Reporter on Oct. 7, 2008,
Petters Aviation, LLC,, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline Holdings,
Inc., filed for Chapter 11 bankruptcy protection with the U.S.
Bankruptcy Court for the District of Minnesota on Oct. 6, 2008
(Lead Case No. 08-45136). Petters Aviation, LLC is a wholly owned
unit of Thomas Petters Inc. and owner of MN Airline Holdings,
Inc., Sun Country's parent company.
Polaroid Corp., which was owned by Petters since 2005, filed its
second voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr.
D. Minn., Lead Case No. 08-46617).
ELITE LANDINGS: May Extend Revolving Line of Credit to Sun Country
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The U.S. Bankruptcy Court for the District of Minnesota granted
Elite Landings, LLC, permission to extend a revolving line of
credit to MN Airlines LLC dba Sun Country Airlines, a wholly owned
subsidiary of Petters Aviation, LLC, which also owns 100% of the
Debtor. Sun Country will use the proceeds to pay aircraft lease
expenses. The amount of the revolving line was not disclosed.
A true and correct copy of the term sheet setting forth the basic
terms to the Loan Agreement has been filed under seal. The Debtor
tells the Court that disclosure of the terms of the Loan Agreement
could harm MN Airlines Holdings, Inc., and Sun Country Airlines by
giving competitors, vendors, lessors and customers access to
commercial information that could be utilized to the detriment of
MN Airlines Holdings, Inc. and Sun Country Airlines and their
estates.
Sun Country's obligations under the Loan Agreement are to be
secured by a first priority lien in all of the Debtor's
unecumbered assets, including after acquired assets and proceeds,
and a junior lien in all encumbered assets and proceeds. As of
Dec. 3, 2008, the Debtors estimate the value of the collateral to
be approximately $13,000,000. Debtor knows of no creditor with a
security interest in Debtor's assets.
All of the obligations are due and payable no later than the
earlier of (1) an uncured event of default, (2) confirmation of a
plan of reorganization, (3) sale of substantially all of Sun
Country's assets, or (4) April 30, 2009. Sun Country can extend
the April 30, 2009 due date for two ninety (90) day periods on
request of the Borrower at the discretion of the Lender.
Based in Minnetonka, Minnesota, Elite Landings, LLC was, prior to
filing for bankruptcy, engaged in the business of purchasing
Airbus Corporate Jet Aircraft from Airbus S.A.S. and reselling
them. The company filed for Chapter 11 relief on Oct. 9, 2008
(Bankr. D. Minn. Case No. 08-45210). James A. Rubenstein, Esq.,
at Moss & Barnett, represents the Debtor as counsel. The company
listed total assets of between $10 million and $50 million, and
the same range in total debts.
The company is a wholly owned subsidiary of Petters Aviation.
Petters Aviation is a wholly owned subsidiary of Thomas Petters,
Inc., which is in turn owned 100% by Thomas J. Petters,
individually. Thomas Petters, the founder and former CEO of
Petters Group, remains in federal custody on charges of mail and
wire fraud, money laundering and obstruction of justice. Petters
Aviation LLC, and its debtor-affiliates MN Airlines LLC, and MN
Airline Holdings, Inc. filed separate petitions for Chapter 11
relief on Oct. 6, 2008 (Bankr. D. Minn. Lead Case No. 08-45136).
Brian F. Leonard, Esq., Matthew R. Burton, Esq., at Leonard
O'Brien et al., represents the Debtors as counsel. When Petters
Aviation LLC filed for protection from its creditors, it listed
assets of $50 million and $100 million, and the same range of
debts.
About Petters Group Worldwide
Based in Minnetonka, Minn., Petters Group Worldwide LLC is named
for founder and chairman Tom Petters. The group is a collection
of some 20 companies, most of which make and market consumer
products. It also works with existing brands through licensing
agreements to further extend those brands into new product lines
and markets. Holdings include Fingerhut (consumer products via
its catalog and Web site), SoniqCast (maker of portable, WiFi MP3
devices), leading instant film and camera company Polaroid
(purchased for $426 million in 2005), Sun Country Airlines
(acquired in 2006), and Enable Holdings (online marketplace and
auction for consumers and manufacturers' overstock inventory).
Petters formed the company in 1988.
Petters Company, Inc. is the financing and capital-raising unit of
Petters Group Worldwide, LLC. Petters Company, Inc. and Petters
Group Worldwide, LLC, filed separate petitions for Chapter 11
relief on Oct. 11, 2008 (Bankr. D. Minn. Case No. 08-45257 and
08-45258, respectively). James A. Lodoen, Esq., at Lindquist &
Vennum P.L.L.P., represents the Debtors as counsel. In its
petition, Petters Company, Inc. listed debts of between
$500 million and $1 billion, while its parent, Petters Group
Worldwide, LLC listed debts of not more than $50,000.
As reported in the Troubled Company Reporter on Oct. 7, 2008,
Petters Aviation, LLC,, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline Holdings,
Inc., filed for Chapter 11 bankruptcy protection with the U.S.
Bankruptcy Court for the District of Minnesota on Oct. 6, 2008
(Lead Case No. 08-45136). Petters Aviation, LLC is a wholly owned
unit of Thomas Petters Inc. and owner of MN Airline Holdings,
Inc., Sun Country's parent company.
Polaroid Corp., which was owned by Petters since 2005, filed its
second voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr.
D. Minn., Lead Case No. 08-46617).
FASHION HOUSE: September 30 Balance Sheet Upside-Down by $198MM
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The Fashion House Holdings Inc. disclosed in a filing with the
Securities and Exchange Commission its financial results for three
and nine months ended Sept. 30, 2008.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $221,100 and total liabilities of $19,328,951, resulting in a
stockholders' deficit of $19,107,851.
For nine months ended Sept. 30, 2008, the company posted net loss
of $3,003,223 compared with net loss of $11,196,897 for the same
period in the previous year.
For three months ended Sept. 30, 2008, the company posted net loss
of $640,949 compared with net loss of $3,956,939 for the same
period in the previous year.
Liquidity and Capital Resources
During the nine months ended Sept. 30, 2008, company's net cash
position increased by $35,354 to $41,744. During 2007, as a
result of the Artful Minds lawsuit, a lien was placed on $136,847
of the company's cash and is classified as restricted cash. The
company's senior secured lender has filed a lawsuit to block the
payment of these funds to Artful Minds. On Sept. 3, 2008, the
company was able to recover the restricted cash.
The company's financing activity used net cash of $469,111 for the
nine months ended Sept. 30, 2008, due to the payment of $1,066,630
to its factor. The funds to pay the factor came from collections
of accounts receivable and also from borrowings from the company's
senior secured lender of $597,519. These borrowing are classified
as due to related parties at Sept. 30, 2008. There were no
advances from the factor during the nine months ended Sept. 30,
2008.
A full-text copy of the 10-Q filing is available for free at
http://ResearchArchives.com/t/s?37de
About The Fashion House Holdings Inc.
Based in Los Angeles, California, The Fashion House Holdings Inc.
(FHHIQ.OB) -- http://www.thefashionhouseinc.com/-- engages in the
design, development, and marketing of women's dress and casual
fashion footwear. Founded in 2002, the company's licensed brands
include Richard Tyler Couture, tyler, Richard Tyler, Oscar by
Oscar de la Renta, O Oscar by Oscar de la Renta, Blass by Bill
Blass, Bill Blass Couture, Isaac Isaac Mizrahi line, and Mizrahi
couture. The company sells its designer footwear through
independent retailers, specialty retailers, and department stores.
The Fashion House Holdings is formerly TDI Holdings Corp.,
Kimball-Decar Corp., Kimball-Decar Corp., TangibleData Inc.,
TangibleData Inc., TDI Holdings Corp., TangibleData Inc., TDI
Holdings Corp., and Kimball-Decar Corp.
On April 16, 2008, together with The Fashion House Inc., the
company filed chapter 11 (Bankr. C.D. Calif. Case Nos. 08-12359
and 08-12363). Judge Kathleen Thompson presides over the case.
Daniel J Weintraub, Esq., at Weintraub & Selth APC represents the
Debtors in their restructuring efforts. The Fashion House Inc.
listed total assets of $257,318 and total debts of $18,168,194 and
The Fashion House Holdings listed unknown value of assets and
total debts of $11,800,101 when they filed for bankruptcy.
Going Concern Doubt
Grobstein, Horwath & company LLP raised substantial doubt on the
ability of The Fashion House Holdings Inc., to continue as a going
concern after it audited the company's financial statements for
the year ended Dec. 31, 2007.
The auditor pointed to the company's recurring net losses and
working capital deficit of $15,481,970 and total capital deficit
of $16,104,628 as of Dec. 31, 2007. On April 16, 2008, the company
and its wholly owned subsidiary filed voluntary petitions under
chapter 11 of the U.S. Bankruptcy Code.
FEDERAL-MOGUL CORP: S&P Affirms 'BB-' Corporate Credit Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services said it has affirmed the
ratings on Federal-Mogul Corp., including the 'BB-' corporate
credit rating, and removed them from CreditWatch, where they had
been placed with negative implications on Nov. 13, 2008. The
outlook is negative.
The ratings reflect Federal-Mogul's weak business risk profile, as
a major participant in the highly competitive global auto industry
and its aggressive financial risk profile. The company
manufactures powertrain components, sealing products, bearings,
brake friction materials, and vehicle safety products for the
global automotive market. Its customers are original equipment
manufacturers and aftermarket participants operating in
automotive, heavy-duty, and industrial markets.
"Global market challenges on the demand and cost sides are
depressing profitability for auto suppliers, including Federal-
Mogul," said Standard & Poor's credit analyst Nancy Messer. For
the last three months of 2008, the seasonally adjusted annual rate
of light-vehicle sales in the U.S. was below 11 million units.
Standard & Poor's expects U.S. light-vehicle sales to fall to 10.0
million units for all of 2009, down 24% from the 13.2 million
units for full-year 2008. Demand deterioration is being driven by
the weak global economy, low consumer confidence, and tight credit
markets. Automakers in both North America and Europe are cutting
near-term production volumes dramatically. Federal-Mogul has
significant exposure to the North American and European automotive
markets. Higher raw material costs -- primarily for steel,
resins, copper, and other nonferrous materials -- that are not
entirely recouped from customers create an added problem.
In addition, sales in the North American commercial truck market
remain depressed because of the recession. S&P expects North
American truck sales to improve in advance of the next round of
emission regulation changes that go into effect in 2010, but
prospects for a material rebound have dimmed. European commercial
vehicle production volumes may also decline in 2009 year over year
because of the weakening economy. Total heavy-duty and industrial
sales account for about 30% of Federal-Mogul's revenues.
S&P expects revenues to decline less than 10% in 2009 for credit
ratios to remain consistent with the rating. S&P also expect the
company to expand through internal growth and small strategic
acquisitions, but S&P does not expect it to pursue transforming
acquisitions or large dividend payouts that could pressure credit
ratios. An internal growth strategy should enable Federal-Mogul
to generate free cash flow for possible debt reduction.
Federal-Mogul has a diverse customer base because of its various
end markets and maintains a No. 1 or No. 2 market share in most of
its markets, reflecting good technological expertise, quality, and
deliverability, and the company continued to win business even
during bankruptcy. The company's products tend to be critical
components (and thus are not subject to OE content reductions)and
are not platform-specific.
Even in 2008 and 2009, S&P expects free cash flow from operations
after working capital and capital expenditures to support
liquidity because of Federal-Mogul's disciplined cost control and
market diversity. S&P expects the company to conserve cash during
the economic downturn, possibly by deferring previously
anticipated acquisitions, deferring increasing joint-venture
positions, and curtailing certain capital spending.
In response to weakening global sales, Federal-Mogul announced in
the third quarter a restructuring plan designed to improve
financial performance through an 8% reduction in the global
workforce. The entire plan is expected to cost between
$60 million and $80 million by year-end 2009; and, also in the
third quarter, Federal-Mogul recorded $11 million in related
restructuring expenses. The company expects to announce the
closure of a number of facilities during 2009.
The negative outlook reflects S&P's concern that the company may
not be able to sustain EBITDA levels, despite restructuring
initiatives, in the face of very weak vehicle demand in both North
America and Europe for light and commercial vehicles. Lower
EBITDA in the year ahead could raise the company's total debt to
EBITDA above the appropriate range for the rating. In addition,
S&P expects deteriorating global economic conditions to pressure
EBITDA in upcoming quarters, leading to higher leverage.
S&P could lower the ratings if it appeared that EBITDA, including
S&P's adjustments, would fall 15% from the $861 million as of
Sept. 30, 2008, which would result in debt to EBITDA of 5x, using
Sept. 30 adjusted debt levels. The likelihood of a downgrade
depends on the depth and duration of the economic downturn,
combined with the company's ability to manage its cost structure
to fit the new market. For now, S&P expects Federal-Mogul to
generate free cash flow and maintain liquidity near currently
adequate levels.
S&P could revise the outlook to stable if Federal-Mogul's leverage
remains near 4x or better, liquidity remains sufficient, and free
cash is generated in the year ahead because of successful cost-
side actions in the face of weak production volumes, or because
global economic conditions improve materially.
FHLB SEATTLE: To Disclose Risk-Based Capital Deficiency
-------------------------------------------------------
The Federal Home Loan Bank of Seattle said in a regulatory filing
that it would likely report a risk-based capital deficiency as of
December 31, 2008.
The deficiency is being caused by the contribution to the risk-
based capital calculation of the unrealized market value losses of
FHLB Seattle's private-label mortgage-backed securities held as
investments. Under Federal Housing Finance Agency regulations, a
Federal Home Loan Bank that fails to meet any regulatory capital
requirement may not declare a dividend or redeem or repurchase
capital stock. As such, FHLB Seattle will not be able to redeem
or repurchase any excess Class A or Class B stock outstanding
while a risk-based capital deficiency exists.
FHLB Seattle, in its Jan. 12 letter to members, said, "We believe
that the calculation of risk-based capital under the current rules
significantly overstates our market risk in the current market
environment. In our opinion, the Seattle Bank-with nearly $2.8
billion in permanent capital (Class B stock plus retained
earnings)-has more than enough capital to cover the risks
reflected in the bank's balance sheet. While the market values of
mortgage-based assets are currently under extraordinary pressure,
the vast majority of the private-label mortgage-backed securities
that we hold are highly rated, credit-enhanced, adjustable-rate
securities that we have the ability and intent to hold until they
mature.
"We have communicated our concerns regarding the current risk-
based capital methodology to our regulator and have requested that
they review the regulation, but we have not yet received a final
determination as to whether or not there will be any relief on
this issue. It is important to note, however, that the Seattle
Bank calculates its risk-based capital requirement on a monthly
basis, and given the volatility in the mortgage market, it is
possible that we may return to compliance at a future reporting
period without changes to our balance sheet or capital position or
any change to the regulation. We remain in compliance with all of
our other regulatory capital requirements, specifically our
capital-to-assets ratio and our leverage capital ratio."
"We are confident that this issue will not affect our ability to
meet your liquidity and funding needs, as we continue to maintain
a strong capital position and have intentionally structured our
balance sheet to ensure our ready access to our usual, reliable
sources of liquidity."
According to Bloomberg, FHLB Seattle joins the San Francisco FHLB
in taking steps to guard its reserves after the U.S. housing
market collapse sent mortgage-backed bonds tumbling.
The report adds that the declines may leave as many as eight of
the 12 FHLBs below capital requirements, Moody's Investors Service
has said, eroding a below-market rate source of about $1 trillion
in financing for Citigroup Inc., JPMorgan Chase & Co. and other
companies that participate in the cooperatives.
"Systemic weakness in the FHLBs, which may require federal
action, could have a number of implications for U.S. banks and
thrifts, including: higher costs of FHLB borrowings, reduced
value of FHLB stock, and increased demand for alternative sources
of liquidity," Frederick Cannon, an analyst at Keefe, Bruyette &
Woods in San Francisco, wrote in the report to clients Jan. 12,
according to Bloomberg.
About FHLB Seattle
The Federal Home Loan Bank of Seattle provides liquidity, funding,
and services to enhance the success of its members and support the
availability of affordable homes and economic development in the
communities they serve.
FHLB Seattle is a member-owned cooperative, serving more than 375
community financial institutions. Its members-commercial banks,
savings institutions, credit unions, and insurance companies --
are its customers. FHLB Seattle provides them with access to
wholesale funding that they can use to make home mortgages, small
business, and other loans to the members of their communities.
FIRST AMERICANS: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: First Americans Insurance Service, Inc.
2621 West Highway 30
Grand Island, NE 68803
Bankruptcy Case No.: 09-40067
Type of Business: The Debtor operates an insurance company.
See: http://www.fais.com/
Chapter 11 Petition Date: January 12, 2009
Court: District of Nebraska (Lincoln Office)
Debtor's Counsel: Robert F. Craig, Esq.
robert@craiglaw.org
Robert F. Craig, P.C.
1321 Jones Street
Omaha, NE 68102
Tel: (402)408-6004
Fax: (402) 408-6001
Estimated Assets: $1 million to $10 million
Estimated Debts: $100 million to $500 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Johnson Brothers promissory note $5,720,834
45929 N. 350th Avenue
Genoa, NE 68640
Lloyd & Jean Johnson promissory note $3,804,167
33615 N. 460th St.
Genoa, NE 68640
Shovlain-Cates Joint Venture promissory note $3,656,000
2211 Riverside Drive
Grand Island, NE 68801
Roy Curry promissory note $2,850,000
2340 Trumble Creek Road
Kalispell, MT 59901
Howard Hamilton promissory note $2,800,000
PO Box 961
Whitefish, MT 59937
Eugene & Carolyn Cone promissory note $2,750,000
Box 128
Burwell, NE 68823
Kasselder Enterprises promissory note $2,468,500
PO Box 37
Bartlett, NE 68622
JSE Land Corporation promissory note $2,000,000
5040 I Street
Omaha, NE 68117
Dwain & Sharon Sutton promissory note $1,750,000
706 W. Avenue D.
Oshkosh, NE 69154-5402
Dolores Koeppen promissory note $1,722,500
302 Home St.
Lewellen, NE 69147
Paul Ellis promissory note $1,450,000
913 North St.
Cambridge, NE 69022
Ward & Shirley Lingo promissory note $1,450,000
2903 Hancock Place
Grand Island, NE 68803
D&J Equipment promissory note $1,440,000
PO Box 358
Sidney, NE 69162
Kelly & Tonie Schmaltz promissory note $1,400,000
20056 County Road 28
Scottsbluff, NE 69361
Vernon & Joyce Ann Bauer promissory note $1,380,000
3881 N. Highway 281
Grand Island, NE 68803
James Whiten promissory note $1,300,000
PO Box 281
Tocca, GA 30577
Kent Hasselbalch promissory note $1,250,000
Box 550
Genoa, NE 68640-0550
Robert & Lavonne Rosso promissory note $1,075,000
1276 E. Prairie Road
Grand Island, NE 68801
Buren Roberts promissory note $1,000,000
6384 E. Main St.
Bowersville, GA 30516
Myron & Glennabelle Batt promissory note $1,000,000
PO Box 107
Lisco, NE 69148
The petition was signed by Kenneth Mottin.
FLYING J: Bakersfield Plant Remains Closed
------------------------------------------
Land Line Magazine reports that Flying J Inc. has kept its
Bakersfield, California, plant closed, even after the planned 10-
day shutdown has passed.
Flying J officials had said that Flying J's Big West refinery
wouldn't operate for 10 days for maintenance, Land Line Magazine
states. Land Line Magazine says that many industry insiders
doubted the plant's reopening, which could lead to higher gas and
diesel prices in California in particular.
Land Line Magazine quoted Flying J spokesperson Peter Hill as
saying, "The tight credit markets combined with our Dec. 22
Chapter 11 filing created some unexpected supply disruptions to
our Big West refinery in Bakersfield, CA. They're working through
those supply issues, but those disruptions are ongoing."
Headquartered in Ogden, Utah, Flying J Inc. --
http://www.flyingj.com-- operate an oil company with operations
in the filed of exploration and refining of petroleum products.
The Debtors engage in online banking, card processing truck
and trailer leasing, and payroll services. The Debtors also
operate about 200 travel plazas in 41 states and six Canadian
provinces. The company and six of its affiliates filed for
Chapter 11 protection on Dec. 22, 2008 (Bankr. D. Del. Lead Case
No. 08-13384). Kirkland & Ellis LLP represents the Debtors' in
their restructuring efforts and Young, Conaway, Stargatt & Taylor
LLP as their Delaware Counsel. The Debtors proposed The
Blackstone Group LP as financial advisor and Epiq Bankruptcy
Solutions LLC as claims agent. When the Debtors filed for
protection from its creditors, they listed assets more than
$1 billion and debts between $100 million to $500 million.
FOAMEX LP: Moody's Downgrades Corporate Family Rating to 'Caa2'
---------------------------------------------------------------
Moody's Investors Service downgraded Foamex L.P.'s Corporate
Family and Probability of Default Rating to Caa2 from Caa1.
Moody's also downgraded the company's first lien term loan to Caa2
from Caa1 and its second lien term loan to Caa3 from Caa2. The
outlook is negative.
The downgrades reflect the greater than expected deterioration in
the operating performance of Foamex L.P., Foamex International
Inc.'s wholly-owned subsidiary. The continued downturn in the
domestic housing and automobile end markets, the main drivers of
the company's revenues, has severely impacted operating margins
and the company's ability to generate free cash flow. Key credit
metrics for the last twelve months through September 28, 2008 have
weakened in the following manner when compared to Foamex's FY07
results: revenues to about $980 million from $1.17 billion; EBITA
margin to 3.7% from 6.4%; and, EBITA/interest expense of 0.7x
versus 1.0x (all ratios adjusted per Moody's methodology).
Deteriorating sales for homes and automobiles are likely to
further constrain demand in 2009 for the company's foam products,
which are used in home products such as bedding and furniture and
in vehicles for seat cushions and insulation for dampening noises.
This weakening in operating performance is expected to result in
future credit metrics more commensurate with the lower rating even
though interest expense will be reduced relative to the past
twelve months due to the company's lower debt balances. The
company's ongoing restructuring efforts and attempts to improve
operating efficiencies are unlikely to fully offset the lack
luster demand in the housing and automobile sectors.
Furthermore, Foamex L.P.'s operating performance will likely
result in the need for a larger than expected cash infusion from
the company's equity owners for the company to be in compliance
with its financial covenants, which become more restrictive
beginning with 4Q08. Under Foamex's equity cure provision within
its bank credit agreements the equity owners are able to invest an
amount up to $20 million that would cure the financial covenant
violations in any two quarters within a four quarter time frame
and have these proceeds allocated to the company's EBITDA for bank
reporting purposes.
The negative outlook anticipates the continued weakening of
Foamex's credit metrics as it contends with the global economic
turmoil and the resulting severity in the domestic housing and
automotive end markets.
These ratings/assessments were affected by this action:
-- Corporate family rating lowered to Caa2 from Caa1;
-- Probability of default lowered to Caa2 from Caa1;
-- $325 million first lien senior secured term loan due 2013
downgraded to Caa2 (LGD4, 51%) from Caa1 (LGD4, 53%); and,
-- $47 million second lien senior secured term loan due 2014
downgraded to Caa3 (LGD5, 82%) from Caa2 (LGD5, 83%).
The last rating action was on September 30, 2008 at which time
Moody's downgraded Foamex's corporate family rating to Caa1.
Foamex International Inc., headquartered in Media, Pennsylvania
and operating primarily through its wholly-owned subsidiary Foamex
L.P., is a leading manufacturer and distributor of flexible
polyurethane and advanced polymer foam products. Last twelve
months revenues through September 28, 2008 approximated
$980 million.
FREMONT GENERAL: CapitalSource Transaction Delays 10-Q Filing
-------------------------------------------------------------
Fremont General Corporation disclosed in a filing with the
Securities and Exchange Commission that it was unable to file its
financial report for the period ended Sept. 30, 2008.
The company has not been able to file its Annual Report on Form
10-K for the year ended Dec. 31, 2007, or its Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2008, June 30, 2008,
and Sept. 30, 2008. The company is reviewing the feasibility of
completing its 2007 consolidated financial statements and its
consolidated quarterly financial statements for the quarters ended
March 31, 2008, June 30, 2008, and Sept. 30, 2008, in the context
of the company's bankruptcy filing and the termination of FIL's
banking activities after the CapitalSource Transaction.
On July 17, 2008, the Bankruptcy Court entered a court order
granting the motion which sought approval to consummate the
acquisition by CapitalSource Inc., through its newly formed
California industrial bank subsidiary, CapitalSource Bank, of a
substantial portion of the assets of Fremont Investment & Loan,
the company's indirect bank subsidiary. The acquisition included
all of FIL's branches, and the assumption of all of FIL's
deposits. On July 25, 2008, the CapitalSource Transaction was
consummated and FIL ceased operating as a California industrial
bank.
As a result of these matters confronting the company, the company
is not able to determine when it will be able to file its
Quarterly Report on Form 10-Q for the third quarter of 2008 with
the SEC.
About Fremont General
Headquatered in Santa Monica, California, Fremont General Corp.
(OTC: FMNTQ) -- http://www.fremontgeneral.com/-- was a financial
services holding company with $8.8 billion in total assets at
Sept. 30, 2007. Fremont General ceased being a financial services
holding company on July 25, 2008, when its wholly owned bank
subsidiary, Fremont Reorganizing Corporation (f/k/a Fremont
Investment & Loan) completed the sale of its assets, including all
of its 22 branches, and 100% of its $5.2 billion of deposits to
CapitalSource Bank.
Fremont General filed for Chapter 11 protection on June 18, 2008,
(Bankr. C.D. Calif. Case No. 08-13421). Robert W. Jones, Esq.,
and J. Maxwell Tucker, Esq., at Patton Boggs LLP, Theodore
Stolman, Esq., Scott H. Yun, Esq., and Whitman L. Holt, Esq. at
Stutman Treister & Glatt, represent the Debtor as counsel.
Kurtzman Carson Consultants LLC is the Debtor's Noticing
Agent/Claims Processor. Lee R. Bogdanoff, Esq., Jonathan S.
Shenson, Esq., and Jonathan D. Petrus, Esq., at Klee, Tuchin,
Bogdanoff & Stern LLP, represent the Official Committee of
Unsecured Creditors as counsel. The Debtor filed with the Court
an amended schedule of its assets and liabilities on Oct. 30,
2008, disclosing $330,036,435 in total assets and $326,560,878 in
total debts.
GENERAL DATACOMM: Eisner LLP Resigns as Ind. Public Accountants
---------------------------------------------------------------
General DataComm Industries Inc. disclosed in a regulatory filing
that Eisner LLP has resigned as the company's independent
registered public accountants. Eisner LLP notified the company
that its audit relationship with the company has terminated.
The reports of Eisner LLP on the financial statements of the
company as of Sept. 30, 2007, and 2006 and for the years then
ended contained no adverse opinion or disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope, or
accounting principles. However, the reports of Eisner LLP on the
financial statements of the company as of and for each of the two
years ended Sept. 30, 2007, contained an explanatory paragraph
which expressed substantial doubt about the ability of the company
to continue as a going concern.
During the years ended Sept. 30, 2007, and 2006, and through the
date of resignation by Eisner LLP, there were no disagreements
with Eisner LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure, which, if not resolved to the satisfaction of Eisner
LLP, would have caused them to make reference thereto in their
report on the company's financial statements for those years.
Eisner LLP, in a letter sent to the company, agrees with the
statements in the company's 8K filing.
About General DataComm
Based in Naugatuck, Connecticut, General DataComm Industries Inc.
(Other OTC: GNRD.PK) -- http://www.gdc.com/-- provides secure,
NEBS-compliant networking for telcos, governments and businesses.
GDC's solutions help customers to bridge technologies, maximize
their investments in existing voice and data networks, and
transition to the newest network architectures.
GDC's product offerings enable legacy and DSL network access;
bandwidth management, multiprotocol label switching (MPLS), voice
over IP (VoIP), Ethernet, power over Ethernet (PoE), and wireless
networking, and are supported by services for network
installation, maintenance, operations, repair, enterprise security
management and complete network outsourcing.
Going Concern Doubt
Eisner LLP, in New York, expressed substantial doubt about General
DataComm Industries Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the year ended Sept. 30, 2007. The auditing firm reported that
the company has both a working capital and stockholders' deficit
at Sept. 30, 2007, and has no current ability to obtain new
financing.
The company has no current ability to borrow additional funds. It
must, therefore, fund operations from cash balances, cash
generated from operating activities and any cash that may be
generated from the sale of non-core assets such as real estate and
others. The company has $28,306,954 of debentures including
accrued interest which mature on Oct. 1, 2008, which it is
presently unable to pay.
GENERAL DATACOMM: Mortgage Loan Extended to July 31, 2010
---------------------------------------------------------
General DataComm Industries Inc. disclosed in a regulatory filing
that it finalized an amendment of its subsidiary's mortgage loan
with Atlas Partners Mortgage Investors, LLC, for the purpose of
extending the maturity of the mortgage loan from July 31, 2009, to
July 31, 2010. As consideration for the extension, the interest
rate was increased effective Jan. 1, 2009, to 30-day LIBOR plus 8%
from 30-day LIBOR plus 6%, the minimum 30-day LIBOR was set at 4%,
and an extension fee of $45,000 is payable Aug. 1, 2009. All
other terms and conditions remain the same.
A full-text copy of the First Omnibus Amendment To Loan Documents
is available for free at http://ResearchArchives.com/t/s?37ea
Receivable Sales
Pursuant to the Receivable Sales Agreement dated Oct. 24, 2008,
Howard S. Modlin, the company's chief executive officer, has
purchased an additional $230,625 in receivables. The company has
indicated that, subject to Mr. Modlin's agreement, it may sell
additional receivables from time-to-time to Mr. Modlin but there
can be no assurance of any such transactions or the extent
thereof.
On Nov. 25, 2008, the company sold additional receivables with a
face value of $256,228 for an aggregate purchase price of
$250,000 to Mr. Modlin.
On Nov. 10, 2008, the company sold additional receivables with a
face value of $256,140 for an aggregate purchase price of $250,000
to Mr. Modlin.
A full-text copy of the RECEIVABLE SALES AGREEMENT is available
for free at: http://ResearchArchives.com/t/s?3447
About General DataComm
Based in Naugatuck, Connecticut, General DataComm Industries Inc.
(Other OTC: GNRD.PK) -- http://www.gdc.com/-- provides secure,
NEBS-compliant networking for telcos, governments and businesses.
GDC's solutions help customers to bridge technologies, maximize
their investments in existing voice and data networks, and
transition to the newest network architectures.
GDC's product offerings enable legacy and DSL network access;
bandwidth management, multiprotocol label switching (MPLS), voice
over IP (VoIP), Ethernet, power over Ethernet (PoE), and wireless
networking, and are supported by services for network
installation, maintenance, operations, repair, enterprise security
management and complete network outsourcing.
Going Concern Doubt
Eisner LLP, in New York, expressed substantial doubt about General
DataComm Industries Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the year ended Sept. 30, 2007. The auditing firm reported that
the company has both a working capital and stockholders' deficit
at Sept. 30, 2007, and has no current ability to obtain new
financing.
The company has no current ability to borrow additional funds. It
must, therefore, fund operations from cash balances, cash
generated from operating activities and any cash that may be
generated from the sale of non-core assets such as real estate and
others. The company has $28,306,954 of debentures including
accrued interest which mature on Oct. 1, 2008, which it is
presently unable to pay.
GENERAL DATACOMM: Financial Woes Cue Delay of Annual Report
-----------------------------------------------------------
General DataComm Industries disclosed in a regulatory filing with
the Securities and Exchange Commission that it will not be able to
file its Form 10-K for period ended Sept. 30, 2008, by the
prescribed due date.
The company related that the preparation of the Form 10-K has been
delayed because of its limited financial resources. the company
has also negotiated with its audit firm for its fees for the
audit.
The company plans to file its annual report on Form 10-K,
excluding financial statements, and its unaudited financial
statements on Form 8-K, on or before the fifteenth calendar day
after the original due date of the Form 10-K. The company plans
to file an amended Form 10-K upon completion of the audit.
Based in Naugatuck, Connecticut, General DataComm Industries Inc.
(Other OTC: GNRD.PK) -- http://www.gdc.com/-- provides secure,
NEBS-compliant networking for telcos, governments and businesses.
GDC's solutions help customers to bridge technologies, maximize
their investments in existing voice and data networks, and
transition to the newest network architectures.
GDC's product offerings enable legacy and DSL network access;
bandwidth management, multiprotocol label switching (MPLS), voice
over IP (VoIP), Ethernet, power over Ethernet (PoE), and wireless
networking, and are supported by services for network
installation, maintenance, operations, repair, enterprise security
management and complete network outsourcing.
Going Concern Doubt
Eisner LLP, in New York, expressed substantial doubt about General
DataComm Industries Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the year ended Sept. 30, 2007. The auditing firm reported that
the company has both a working capital and stockholders' deficit
at Sept. 30, 2007, and has no current ability to obtain new
financing.
The company has no current ability to borrow additional funds. It
must, therefore, fund operations from cash balances, cash
generated from operating activities and any cash that may be
generated from the sale of non-core assets such as real estate and
others. The company has $28,306,954 of debentures including
accrued interest which mature on Oct. 1, 2008, which it is
presently unable to pay.
GLOBAL CROSSING: Names David R. Carey as Chief Marketing Officer
----------------------------------------------------------------
Global Crossing Limited disclosed in a filing with the Securities
and Exchange Commission that David R. Carey left his role as
executive vice president, strategy and corporate development and
became chief marketing officer. Gary J. Breauninger will now lead
the company's Strategy and Corporate Development team.
In a separate filing, the company disclosed that the amended 2003
Global Crossing Limited Stock Incentive Plan was approved at a
special general meeting of shareholders of Global Crossing Limited
on Dec. 10, 2008.
Under the Amended Plan, the number of authorized shares of the
company's common stock reserved for issuance is increased to
19,378,261 shares. The Amended Plan provides incentives through
the granting of stock-based awards to the Company's employees,
members of its board of directors, or consultants who performs
bona fide services for the Company, in each case as selected by
the compensation committee of the board.
Headquartered in Bermuda, Global Crossing Ltd. (NASDAQ:GLBC) --
http://www.globalcrossing.com/-- is a communications solutions
provider, offering a suite of Internet protocol and legacy
telecommunications services worldwide. GCL uses a global IP-based
network that directly connects more than 390 cities in more than
30 countries, and delivers services to more than 690 cities in
more than 60 countries worldwide. It serves a number of
corporations and telecommunications carriers, providing a range of
managed data, and voice products and services.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $2.5 billion, total liabilities of $2.7 billion, resulting in a
shareholders' deficit of about $199 million.
* * *
As reported in the Troubled Company Reporter on Dec. 4, 2008
Standard & Poor's Ratings Services said it assigned a 'B-'
corporate credit rating to Bermuda-based global communications
solutions provider Global Crossing Ltd. In addition, S&P assigned
a 'CCC+' issue-level rating and a '5' recovery rating to GCL's
$350 million term loan due 2012. The '5' recovery rating
indicates expectations for modest (10%-30%) recovery in the event
of a payment default. The outlook is stable.
GOODY'S FAMILY: Starts Going Out of Business Sale
-------------------------------------------------
Corsicana Daily Sun reports that Goody's Family Clothing Inc. has
started its liquidation sale at its department store in
Corsicana's College Park Mall.
According to Corsicana Daily, Goody's Family said that it would
sell all of its 287 stores and that it would be reentering
bankruptcy protection, after emerging from Chapter 11 bankruptcy
in October 2008.
Corsicana Daily relates that Goody's Family was operating on
Saturday with an "all sales final" policy in effect. The report
states that Gordon Brothers Retail Partners LLC and Hilco Merchant
Resources LLC will handle the liquidation of Goody's Family
assets, which The Associated Press says should be completed by the
end of March.
About Goody's Family
Headquartered in Knoxville, Tennessee, Goody's Family Clothing
Inc. -- http://www.shopgoodys.com/-- operates chains of clothing
stores. The company is owned by Goody's Holdings Inc., a non-
debtor entity.
GENERAL GROWTH: Must Extend $3.5-Bil. Debt Payment Deadlines
------------------------------------------------------------
Kris Hudson at The Wall Street Journal reports that General Growth
Properties Inc. has payment deadlines of two debts -- $2.6 billion
credit line and a $900 million mortgage on two Las Vegas malls --
that lenders could call due a few weeks from now.
According to WSJ, people familiar with the matter said that
General Growth senior management and advisers outlined during a
meeting with lenders in New York on Monday separate scenarios of
the company operating under bankruptcy protection, and the company
struggling with its debt burden outside of bankruptcy court.
Citing people familiar with the matter, WSJ states that General
Growth CEO Adam Metz, President Thomas Nolan, and advisers said
that in bankruptcy court, General Growth would save money by
forgoing interest payments on its unsecured debt but would also
incur costs from the bankruptcy process and big tax bills if it
liquidates its holdings; outside bankruptcy court, General Growth
could determine its own path. Representatives of 10 banks put on
an advisory committee to represent the 180 lenders in General
Growth's $2.6 billion credit facility, WSJ states. According to
the report, these lenders include:
-- Eurohypo AG,
-- Bank of America Corp.,
-- Wachovia Corp.,
-- Emigrant Savings Bank,
-- Credit Agricole SA's Caylon investment-banking unit, and
-- Citigroup Inc.
The sources, WSJ reports, said that a bankruptcy filing by General
Growth isn't imminent.
WSJ says that General Growth secured an extension of the two loans
in December, giving it six to eight weeks. General Growth then
asked the lenders on Monday to extend their deadlines on the
credit line and Las Vegas loans to March 15, from Jan. 30 and Feb.
12, respectively, the report states, citing people familiar with
the matter.
General Growth, according to WSJ, is also facing so many other
loan maturities this year, which made some analysts including
Green Street Advisors Inc.'s Jim Sullivan to expect a bankruptcy
filing by the company. The report says that General Growth has
two dozen separate loans totaling more than $2 billion that will
expire this year. According to the report, General Growth must
pay off in March and April the $600 million in bonds owed by a
subsidiary that holds the malls that General Growth added in its
2004 acquisition of rival Rouse Co. Citing sources, the report
states that General Growth executives told lenders on Monday that
if it fails to persuade those bondholders to extend the bonds'
payment date, it won't have enough cash flow to both pay off those
bonds and meet its interest payments on other debt in the second
quarter.
About General Growth
Based in Chicago, Illinois, General Growth Properties, Inc.
(NYSE:GGP) -- 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, as well
as the development and sale of its one residential condominium
project located in Natick (Boston), Massachusetts.
General Growth said in a regulatory filing Sept. 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 by the Troubled Company Reporter on Dec. 11, 2008,
Fitch Ratings, has downgraded the Issuer Default Ratings and
outstanding debt ratings of General Growth Properties to 'C' from
'B'.
GENERAL MOTORS: To Step Up Union, Lender Talks for Viability Plan
-----------------------------------------------------------------
The New York Times reports that General Motors Corp. will step up
talks with unions, dealers, and lenders, as the Feb. 17 deadline
to complete reorganization plans tied to its federal loans
approaches.
GM's CEO Rick Wagoner said on Monday that the $13.4 billion
federal financial aid package is sufficient to keep GM solvent
until the end of March, The New York Times states. GM, according
to the report, is focused on its plan on cutting labor costs,
reorganizing debt, and reducing the number of dealers and brands.
The report quoted Mr. Wagoner as saying, "Those are the major
pieces and they all have to add up to a business plan that meets
the so-called financial viability test."
After the Feb. 17 submission of viability plans, GM and Chrysler -
- which received a $4 billion loan from the government -- will
then have until March 31 to show progress in executing the plans,
The New York Times relates. The government would revoke the loans
if the companies fail to do so, says the report.
Negotiations on how to cut labor costs are ongoing with the United
Automobile Workers, WSJ reports, citing Mr. Wagoner. The report
quoted him as saying, "It is only prudent for us to be prepared
for all options. But my personal view is that there are options
that can work in each of the areas -- working with the union,
working with the bondholders -- that can get us to the position
that we need to demonstrate viability. By March 31, we'll be able
to address whether additional funding may be forthcoming or not.
We really haven't said whether we will or we won't need money
after that period."
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 US$110.425 billion, total liabilities of
US$170.3 billion, resulting in a stockholders' deficit of
US$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 US$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.
GERMAN ELECTRONICS: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: German Electronics Company
1200 Starkey Rd., #205
Largo, FL 33771
Tel: (727) 530-0301
Bankruptcy Case No.: 08-19916
Chapter 11 Petition Date: December 15, 2008
Court: Middle District of Florida (Tampa)
Judge: K. Rodney May
Company Description: German Electronics Company offers support of
Hospital Biomedical and X-Ray service
companies by providing tested, high quality,
low cost, pre-owned replacement parts for
Siemens Medical X-ray and CT systems.
See: http://www.gecousa.com/
Debtor's Counsel: Alberto F. Gomez, Jr.
Morse & Gomez, PA
119 S. Dakota Avenue
Tampa, FL 33606
Tel: (813) 301-1000
algomez@morsegomez.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The petition was signed by Ralph Frizzle, president of the
company.
The Debtor did not file a list of 20 largest unsecured creditors.
GOODYEAR TIRE: S&P Affirms Corporate Credit Rating at 'BB-'
-----------------------------------------------------------
Standard & Poor's Ratings Services said it has affirmed its 'BB-'
corporate credit and other ratings on The Goodyear Tire & Rubber
Co. and removed them from CreditWatch, where they had been placed
with negative implications on Nov. 13, 2008. The outlook is
stable.
"The affirmation reflects our view that the company's credit
measures will support the current rating," said Standard & Poor's
credit analyst Lawrence Orlowski. S&P expects adjusted debt to
EBITDA to be less than 4x and funds from operations (FFO) to debt
greater than 15%. These credit measures imply that 2009 revenue
will decline by 2.5% and gross margin by 18%. Based on the 12
months ended Sept. 30, 2008, these measures were 3.9x and 18%,
respectively.
Although less than 20% of Goodyear's sales are tied to the
original equipment market, the unfolding severity of the current
downturn for automakers around the world concerns us. And
although demand in the replacement market typically provides
stability to the company's sales, an ongoing economic decline
could influence consumers to delay routine tire purchases. North
American operations continue to generate weak segment operating
margins, and this is unlikely to change in light of lower demand,
even though the company has been adapting to the economic downturn
by cutting production, enhancing manufacturing efficiencies, and
controlling spending.
Akron, Ohio-based Goodyear has an aggressive financial risk
profile characterized by weak earnings in North America and a
leveraged capital structure. The company has a weak business risk
profile, which reflects tough global tire industry conditions and
the company's high fixed-cost structure. These factors more than
offset the company's business strengths, including its position as
one of the three largest tire manufacturers in the world, good
geographic diversity, strong distribution, and a well-recognized
brand name.
The tire industry is characterized by excess production capacity,
leading to intense competition from large diversified global
players and more focused regional competitors. Fixed-capital and
R&D requirements are high, and raw material prices are volatile.
Goodyear's management continues to strengthen the company's
business model despite these issues by focusing on high-value-
added products, reducing exposure to low-margin segments, tapping
growth in emerging markets, reducing structural costs, and
improving both the balance sheet and liquidity.
Despite weak demand in North America, total revenue grew 2%, to
$5.2 billion, in the third quarter of 2008. Segment operating
income fell by 30%, to $266 million, because of sluggish industry
demand and the effects of unabsorbed overhead and higher
inflationary costs. Because of declines in discretionary income
and falling consumer confidence, S&P believes individuals are
driving less and postponing purchases. Management was projecting
weak demand for the rest of 2008. S&P expects that weakness to
continue into 2009.
Moreover, although commodity prices have fallen substantially, S&P
does not expect Goodyear to realize the earnings benefit of
declining raw material prices until the middle of 2009. The
company has not set a precise timeframe for achieving a 5% segment
operating margin for its North American operations, but instead
indicates that meeting this goal depends on prevailing economic
conditions in the U.S.
Goodyear has adequate liquidity. The company has substantial cash
balances and borrowing availability under multiple secured,
committed facilities that are sufficient to meet operating and
financing needs during the next year. Goodyear should continue to
improve earnings and cash flow but is vulnerable to falling
consumer demand in North America and Europe. On the other hand,
lower raw material costs should boost cash flow, helping to offset
declining unit sales.
The outlook is stable. The rating reflects S&P's expectation that
Goodyear's leverage will continue declining over the next year as
the company reduces its cost structure by improving labor
productivity, rationalizing its production, and sourcing raw
materials in low-cost countries. However, such improvements are
likely to be minimal at best, given the deteriorating economic
conditions over the next 12 to 18 months.
S&P could revise the outlook back to positive if demand and
profitability in North America and demand in Europe begin to
rebound and credit measures start to reflect this. S&P could
ultimately raise the ratings if the company sustained FFO to debt
at or above 25% and adjusted debt to EBITDA of less than 3.5x. A
gross margin of 19.5% and a 2.5% rise in revenue could bring the
debt-to-EBITDA ratio below 3.5x. A gross margin of 21.5% and a 5%
rise in revenue could achieve FFO to debt above 25%.
Conversely, S&P could revise the outlook to negative if adjusted
EBITDA looks to exceed 4x or FFO to debt seems poised to fall
below 15% on a sustained basis. This would most likely be caused
by volumes in most of Goodyear's markets that are lower than S&P
currently expect. For example, a gross margin of 17.6% and flat
revenue would exceed a debt-to-EBITDA ratio of 4.0x. A gross
margin of 15.3% and a 10% decline in revenue would yield FFO to
debt below 15%.
HAYES LEMMERZ: S&P Downgrades Corporate Credit Rating to 'B-'
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on automotive wheel manufacturer Hayes Lemmerz
International Inc. to 'B-' from 'B'. At the same time, S&P also
lowered its issue-level ratings on the company's debt. All
ratings on the company remain on CreditWatch with negative
implications, where they were placed on Nov. 14, 2008.
"The downgrades reflect our view that declining auto sales and
production in North America and Europe during 2009 could lead to
higher leverage and thin liquidity as Hayes struggles to reduce
its negative free operating cash flow over the next several
quarters," said Standard & Poor's credit analyst Gregg Lemos
Stein. Hayes's extensive restructuring efforts during the past
several years have improved margins and customer and geographic
diversity; however, S&P expects very weak automotive demand
globally-including in Europe, which represents nearly 60% of
Hayes's sales-to overwhelm these positive trends in 2009.
The continued CreditWatch listing reflects Hayes's ongoing
negotiation with lenders to obtain less-restrictive financial
covenants in its secured credit agreement beginning with the
fiscal fourth quarter, ending Jan. 31, 2009.
The ratings on Northville, Michigan-based Hayes reflect the
company's high leverage, negative cash flows, and declining
liquidity, as well as the multiple business risks inherent in the
automotive supply industry. These risks include intense
competition, high fixed costs, volatile raw material prices, and,
more recently, sharply declining vehicle demand in the United
States, Europe, and other key global markets. Partly offsetting
these risks are the company's solid market position and good
geographic and customer diversity as the world's largest wheel
manufacturer.
In recent years, Hayes has divested operations outside of its core
wheel business and sharply reduced its dependence on the Michigan-
based automakers' U.S. operations. This process continued in 2008
as the company announced plans to sell a powertrain facility in
Mexico and close an aluminum wheel plant in Georgia. The U.S.
market now accounts for just 13% of total sales, down from 60% in
2001.
However, the company's geographic diversity will provide little
benefit in 2009 as vehicle production has declined rapidly in
several Western and Eastern European countries and slowed
significantly in Latin America and Asia. S&P expects demand in
most global markets to remain weak throughout 2009 and perhaps
longer because of the weak economy.
One positive for Hayes has been the recent decline in aluminum and
steel prices, although S&P expects this trend to only partly
offset the detrimental effect of low production volumes on Hayes's
financial results. The weakening of the euro against the dollar,
if sustained, will result in lower sales and profitability from
Hayes's European operations when translated into dollars, although
much of Hayes's debt is euro-denominated as well, which should
mitigate much of the currency-related effect on leverage or other
credit ratios.
Sales in Hayes's fiscal third quarter, ended Oct. 31, 2008, were
down 10% from those of a year earlier, reflecting the sharp
decline of automotive production in Europe, which worsened in
November and December. S&P expects sales declines to be worse in
the fourth quarter, ending Jan. 31, 2009. The company withdrew
its EBITDA guidance for fiscal 2008 after acknowledging that it
would not come close to meeting its previous guidance of
$225 million to $240 million. S&P also expect free operating cash
flow to be flat or slightly negative in 2009, reflecting S&P's
assumption of a 20% revenue decline, including a negative foreign
exchange effect, thereby limiting the company's ability to
substantially bolster liquidity.
The CreditWatch negative listing reflects Hayes's ongoing
negotiation with lenders to obtain less-restrictive financial
covenants beginning in the fiscal fourth quarter, ending Jan. 31,
2009. If the company obtains an amendment that provides for the
necessary covenant relief and no substantial reduction in
borrowing availability, the most likely outcome would be that S&P
would affirm the ratings at the current level. Failure to obtain
an amendment would likely result in a downgrade, perhaps of more
than one notch, because of the significant risk that the company
would not remain in compliance with its covenants through the end
of the fiscal fourth quarter.
INTERSTATE BAKERIES: Talks with Exit Financing Lenders Continue
---------------------------------------------------------------
Interstate Bakeries Corporation said it has been engaged this week
in productive discussions with GE Capital Corp. to finalize
documentation for an asset-based revolving credit agreement. IBC
said it is hopeful that in the very near future documentation for
the revolving credit agreement will be finalized and the exit
financing will close.
IBC said that all parties in the discussion are focused on the
importance of completing the transaction, in order to allow IBC to
emerge from Chapter 11 and preserve the jobs of IBC's 22,000
employees.
IBC issued the statement in response to media and other inquiries.
The Troubled Company Reporter said yesterday IBC has admitted that
reaching the final agreements contemplated under their commitment
letters with investors -- upon which their emergence from Chapter
11 is hinged -- is taking more time and is "more complex than [the
Company] had hoped for," according to Reuters' Carey Gillam. IBC
spokesman Lew Phelps cited a difficult environment in the
financial markets and told Reuters that parties to the Letter
Commitments are working out certain details as the Agreements head
to being final contracts, "[which] is what is taking so long."
"The goal is to negotiate a deal, get the financing done and get
out of bankruptcy," Mr. Phelps told the Kansas City Star.
"Yes, negotiations are active and ongoing. We remain optimistic
we'll find agreement on the open issues," Ned Reynolds, a
spokesman for GE Capital, confirmed in an e-mail to Kansas City
Star on January 10, 2009.
As required by the Commitments, IBC must emerge from Chapter 11
by February 9, 2009.
The Debtors have won permission in October 2008, to enter into,
implement and execute commitment letters for an investment to be
made in Reorganized IBC in connection with the confirmation and
consummation of their Amended New Chapter 11
Plan of Reorganization:
Commitment Letter Commitment Party Commitment
----------------- ---------------- ----------
equity commitment IBC Investors I, LLC, $130,000,000
an affiliate of
Ripplewood Holdings L.L.C.
revolving loan or General Electric Capital 125,000,000
ABL Facility Corporation and GE Capital
Commitment Letter Markets, Inc.
a term loan Silver Point Finance, LLC, 339,000,000
commitment letter and Monarch Master
Funding Ltd.
Subsequent to the confirmation of IBC's Plan on December 5, 2008
-- which included the nearly $600 million in financing agreements
-- the Debtors had informed the U.S. Bankruptcy Court for the
Western District of Missouri that the Agreements were still being
completed so that IBC could emerge from bankruptcy as a stand-
alone company on December 15, noted the Kansas City Star. "If we
can't [get the financing Commitments] cleared, we will be back in
front of the judge and in a little bit of trouble," the report
said, recalling IBC Chief Executive Officer Craig Jung's statement
following the confirmation of the Plan.
The Revolving Loan or ABL Facility Commitment Letter specifically
provides that General Electric, as administrative and collateral
agent, and GE Capital, as lead arranger, will provide IBC with a
$125,000,000 senior secured revolving credit facility, under
which borrowings may be made and letters of credit may be issued
in connection with the consummation of the Plan.
About Interstate Bakeries
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 first filed their Chapter 11 Plan and Disclosure
Statement on Nov. 5, 2007. On Jan. 30, 2008, the Debtors received
court approval of the disclosure statement explaining their first
amended plan. IBC did not receive any qualifying alternative
proposals for funding its plan in accordance with the court-
approved alternative proposal procedures.
The Debtors, on Oct. 4, 2008, filed another Plan, 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.
On December 5, 2008, the Bankruptcy Court confirmed IBC's Amended
New Joint Plan of Reorganization. The plan was filed October 31,
2008. The exit financings that form the basis for the Plan are
reflected in corresponding debt and equity commitments.
(Interstate Bakeries Bankruptcy News; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
JACKSON FORD MERCURY: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Jackson Ford Mercury
11400 Highway 49
Martell, CA 95654
Tel: (800) 950-1116
Bankruptcy Case No.: 08-38452
Chapter 11 Petition Date: December 15, 2008
Court: Eastern District of California (Sacramento)
Judge: Michael S. McManus
Company Description: Jackson Ford Mercury operates a Ford Mercury
dealership in Martell, California. It offers
new Ford Mercury Cars, Trucks, SUVs and
Crossovers.
See: http://newjacksonfordmercury.dealerconnection.com/
Debtor's Counsel: David Foyil
18 Bryson Drive
Sutter Creek, CA 95685
Tel: (209) 223-5363
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The petition was signed by Charles Smith, president of the
company.
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/ceb08-19916.pdf
JEFFERSON COUNTY: To Vote on March 12 Forbearance Extension
-----------------------------------------------------------
According to Bloomberg News, Jefferson County, Alabama, will vote
today on extending forbearance agreements with JPMorgan Chase &
Co. and BayernLB on $120 million of general obligation bonds until
March 12, 2009.
The agreements with the two banks, which agreed to purchase the
debt after investors sold the securities, are set to expire
Jan. 15, the report says. County officials will also vote on
making a $5 million partial payment to JPMorgan and BayernLB.
The agreement allows the county to avoid making full payments on
its $3.2 billion of bond debts as it seeks a way to avert
bankruptcy. Since borrowing costs soared early this year, the
county has relied on such agreements to buy time to refinance its
debts, according Bloomberg.
As reported by the Troubled Company Reporter, on Oct. 13, 2008,
citing Bloomberg News, JPMorgan, the county's bond insurers and
other creditors have agreed to reduce the county's debts on its
bonds and related interest-rate swaps by about $1 billion,
officials say, as long as the county backs its refinanced debt
with higher sewer rates and a portion of the sales tax money that
is now collected for schools.
About Jefferson County
Jefferson County has its seat in Birmingham, Alabama. It has a
population of 660,000. It ended its 2006 fiscal year with a
$42.6 million general fund balance, according to Standard &
Poor's. The Birmingham firm of Bradley Arant Rose & White,
represents Jefferson County. Porter, White & Co. in Birmingham is
the county's financial adviser. A bankruptcy by Jefferson County
stands to be the largest municipal bankruptcy in U.S. history. It
could beat the record of $1.7 billion, set by Orange County,
California in 1994.
* * *
As reported by the TCR on Dec. 19, 2008, Standard & Poor's Ratings
Services has kept the ratings on Jefferson County, Alabama's
series 1997A, 2001A, 2003 B-1-A through series 2003 B-1-E, and
series 2003 C-1 through 2003 C-10 sewer system revenue bonds ('C'
underlying rating) on CreditWatch negative due to recent draws
against the system's cash and surety reserves beginning in
September 2008.
"Although the system has made two net system revenue payments to
the trustee in recent months for debt service, it has depleted its
cash reserves and a portion of its surety reserves since September
2008," said Standard & Poor's credit analyst Sussan Corson. The
trustee estimates the system currently has $176 million remaining
in total combined surety reserves with Financial Guaranty
Insurance Co., Syncora Guarantee Inc., and Financial Security
Assurance Inc., which can be applied on a prorata basis to any
parity debt.
KB TOYS: Gift Cards Can be Swapped With Toys R Us Coupons
---------------------------------------------------------
Los Angeles Times reports that Toys R Us Inc. said that it would
allow clients with KB Toys gift cards to exchange them for coupons
valid for 15% off any toy item at Toys R Us through the end of
January.
As reported by the Troubled Company Reporter on Jan. 8, 2009, KB
Toys stopped accepting gift cards in stores.
According to Los Angeles Times, Toys R Us' Senior Vice President
Greg Ahearn said that the company hopes "to familiarize KB Toys
customers with the advantages of shopping at Toys R Us."
Headquartered in Pittsfield, Massachusetts, KB Toys, Inc. --
http://www.kbtoys.com-- operates a chain of retail toy stores.
On Jan. 14, 2004, the Debtor and 69 of its affiliates filed for
protection under Chapter 11 of the Bankruptcy Code, which were
administratively consolidated under Case No. 04-10120. Two of the
200 bankruptcy cases remain open, KB Toys Inc. and KB Toy of
Massachusetts Inc. In connection with the emergence of KB Toys
from bankruptcy in August 2005, and the subsequent organizational
restructuring, the assets and operations of may of these prior
debtors were transferred among then existing debtor entities and
consolidated with KB Toys Group. Furthermore, most of the
entities involved were either dissolved or were merged into
surviving entities, and several of them changed their names. As
a result, nine Debtors and four inactive special purpose units
which are not debtors.
The company, together with eight of its affiliates, again filed
for Chapter 11 on December 11, 2008 (Bankr. D. Del. Lead Case No.
08-13269). Joel A. Waite, Esq., and Matthew Barry Lunn, Esq., at
Young, Conaway, Stargatt & Taylor LLP, represent the Debtors in
their restructuring efforts. The Debtors proposed Wilmer Cutler
Pickering Hale and Dorr LLP as their co-counsel, FTI Consulting
Inc. as financial and restructuring advisor, and Epiq Bankruptcy
Solutions LLC as claims and noticing agent.
According to Bloomberg, KB listed assets of $241 million against
debt totaling $362 million in its Chapter 11 petition filed
on Dec. 11. The debts include $143 million in unsecured claims;
and $200 million in secured claims, including $95.1 million owed
to first-lien creditors where General Electric Capital Corp.
serves as agent; and $95 million owed to second-lien creditors.
As reported by the Troubled Company Reporter on Dec 22. 2008, the
Hon. Kevin Carey of the U.S. Bankruptcy Court for the District of
Delaware has allowed KB Toys Inc. to start going-out-of-business
sales. KB Toys expects the liquidation sales to be completed by
Feb. 9, 2009.
KIRBY JAN TRUMBO: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Kirby Jan Trumbo
610 St. Andrews Rd.
Henderson, NV 89015
Bankruptcy Case No.: 08-24994
Chapter 11 Petition Date: December 15, 2008
Court: District of Nevada (Las Vegas)
Debtor's Counsel: Terry V. Leavitt
601 S. 6th St.
Las Vegas, NV 89101
Tel: (702) 385-7444
Fax: (702) 385-1178
terrylt1@ix.netcom.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/nb08-24994.pdf
KIRK PIGFORD: Wants Plan Filing Period Extended to January 30
-------------------------------------------------------------
Kirk Pigford Construction, Inc., asks the U.S. Bankruptcy Court
for the Eastern District of North Carolina to extend its exclusive
period to file a Plan of Reorganization and Disclosure Statement
to and including Jan. 30, 2009.
Pursuant to the Court's Order of Oct. 23, 2008, the Debtor's Plan
of Reorganization and Disclosure Statement are due Jan. 16, 2009.
The Debtor tells the Court that it requires additional time to
formulate and finalize a Plan.
About Kirk Pigford
Based in Wrightsville Beach, N.C., Kirk Pigford Construction Inc.
-- http://www.kirkpigfordconstruction.com/-- is engaged in the
construction of residential homes primarily in the New Hanover
County, North Carolina areas. The company filed for Chapter 11
relief on Oct. 14, 2008 (Bankr. E.D. N.C. Case No. 08-07139).
George M. Oliver, Esq., and Trawick H. Stubbs, Jr., Esq., at
Stubbs & Perdue, P.A. represent the Debtor as counsel. In its
schedules, the Debtor listed total assets of $13,960,930 and total
debts of $14,930,779.
KUSHNER LOCKE: May Use Lenders' Cash Collateral Until January 31
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
granted The Kushner-Locke Company and its debtor-affiliates
permission to use the cash collateral securing repayment of
secured loan to JPMorgan Chase Bank, fka Chemical Bank, and the
syndicate of lenders for which it serves as agent, in accordance
with the budget for the period Dec. 1, 2008, through Jan. 31,
2009. In addition, if the lenders, through JPMorgan Chase,
provide written consent to the Debtors' use of cash collateral for
the period Feb. 1, 2009, through May 31, 2009, the Debtors shall
be authorized to continue to use the cash collateral through and
including May 31, 2009, in accordance with the budget or a newly
proposed budget.
As reported in the Troubled Company Reporter on Nov. 19, 2008,
access to cash collateral will enable the Debtors to obtain funds
necessary for the consummation of a plan of reorganization and,
ultimately, an exit from Chapter 11 with a confirmed plan. In
addition the proceeds of the cash collateral will be used in the
ordinary course of the Debtors' business tp:
i) service the library;
ii) generate new postpetition accounts receivable;
iii) collect existing accounts receivable; and
iv) review and analyze creditor claims.
As adequate protection, the lender is granted replacement
liens in certain of the Debtors' postpetition assets.
A full-text copy of the Debtors' cash collateral budget is
available for free at http://ResearchArchives.com/t/s?34ec
Headquartered in Los Angeles, California, The Kushner-Locke
Company is a low-budget movie production studio. The company,
along with its debtor-affiliates filed for chapter 11 protection
on Nov. 21, 2001 (Bankr. C.D. Calif. Lead Case No. 01-44828).
Carol Chow, Esq., and Charles Axelrod, Esq., at Stutman, Treister
& Glatt; Mara Mornet-Ritt, Esq., at Brandon & Morner-Ritt; and
Martin Fineman, Esq., at Davis Wright Tremaine LLP, represent the
Debtors in their restructuring efforts. Jeremy V. Richards, Esq.,
at Pachulski Stang Ziehl & Jones LLP, represent the Official
Committee of Unsecured Creditors as counsel.
LANDMARK FBO: Weak Expected Earnings Cue Moody's Junk Ratings
-------------------------------------------------------------
Moody's Investors Service has downgraded the corporate family and
probability of default ratings of Landmark FBO, LLC to Caa1 from
B3. The rating outlook is negative.
The downgrade reflects several developments: 1) weaker than
expected earnings from lower general aviation volumes; 2) extra
costs the company faced in implementing its upgraded management
information systems; 3) use of the company's revolver to fund
acquisitions which has decreased financial flexibility. The Caa1
family rating incorporates greater than expected leverage and a
diminished liquidity profile, only partially mitigated by progress
that Landmark has made toward cutting expenses to weather the soft
demand period. Further, the company's diminished liquidity
profile stems from increased potential for financial ratio
covenant breaches in 2009 and the company's use of its revolver to
fund acquisitions.
The negative outlook reflects an expectation that general aviation
activity will further weaken in 2009 based on lower corporate
profits. Weaker cash flow from operations, potential for credit
facility covenant breaches and a diminished amount of total
available liquidity underscore the negative outlook.
Other ratings changed:
-- $30 million first lien revolver due 2014 to B2, LGD 3, 32%
from B1, LGD 3, 31%.
-- $188 million first lien term loan due 2015 to B2, LGD 3, 32%
from B1, LGD 3, 31%.
Ratings affirmed:
-- $120 million second lien term loan due 2016 Caa2, LGD 5, to
83% from 82%.
Landmark's ratings were assigned by evaluating factors Moody's
believe are relevant to the credit profile of the issuer, such as
i) the business risk and competitive position of the company
versus others within its industry, ii) the capital structure and
financial risk of the company, iii) the projected performance of
the company over the near to intermediate term, and iv)
management's track record and tolerance for risk. These
attributes were compared against other issuers both within and
outside of Landmark's core industry and Landmark's ratings are
believed to be comparable to those of other issuers of similar
credit risk. Moody's last rating action on Landmark occurred
January 16, 2008 when the B3 corporate family rating was assigned.
Landmark FBO, LLC, headquartered in Houston, Texas operates 43
bases for general aviation services across North America and
Western Europe. Principal offerings include refueling, light
maintenance and repair of private jets, fuel logistics for the
Department of Defense, replacement parts as well as airplane
parking, cleaning and chartering on behalf of owners. Annual
revenues are expected to be around $400 million (excluding certain
un-restricted subsidiaries).
LANDRY'S RESTAURANTS: Terminates $217.4MM Sale Deal With CEO
------------------------------------------------------------
Shirleen Dorman at The Wall Street Journal reports that Landry's
Restaurants Inc. has terminated its $217.4 million sale to
Chairperson and CEO Tilman Fertitta, due to "unusual
circumstances" with the lenders and the Securities and Exchange
Commission.
According to WSJ, Landry's Restaurants said that the SEC was
requiring the company to disclose information from a commitment
letter by Mr. Fertitta's lead lenders -- Jefferies & Co. and Wells
Fargo & Co.
WSJ relates that Landry's is finalizing a plan to refinance almost
$400 million in notes with Jefferies and Wells Fargo. The
report states that the refinancing will conclude in February.
Headquartered in Houston, Texas, Landry's Restaurants Inc.
(NYSE: LNY) -- http://www.landrysrestaurants.com/-- is a
restaurant and entertainment company engaged in the ownership and
operation of full-service, casual dining restaurants, primarily
under the names of Rainforest Cafe, Saltgrass Steak House,
Landry's Seafood House, The Crab House, Charley's Crab and The
Chart House. Its portfolio of restaurants consists of formats,
menus and price points that appeal to a wide range of markets and
customer tastes. It offers concepts ranging from steak and
seafood restaurants to casual theme-based restaurants. The
company is also engaged in the ownership and operation of select
hospitality businesses, including hotel and casino resorts that
provide dining, leisure and entertainment experiences.
* * *
As reported by the Troubled Company Reporter on Oct. 15, 2008,
Moody's Investors Service downgraded the corporate family rating
and probability of default rating of Landry's Restaurants Inc.
to Caa1 from B2. In addition, Moody's also downgraded
the CFR and PDR of the Golden Nugget Inc., a wholly owned
unrestricted subsidiary of Landry's, to B3 from B2. All ratings
remain on review for further possible downgrade.
The TCR reported on Oct. 22, 2008, that Standard & Poor's Ratings
Services that its ratings on Houston-based Landry's Restaurants
Inc., including the 'B' corporate credit rating, remain on
CreditWatch with negative implications, where they were placed on
Jan. 28, 2008. The ratings on its unrestricted subsidiary, Las
Vegas-based Golden Nugget Inc. would also remain on CreditWatch
with negative implication, where they were placed Jan. 28, 2008.
LEHMAN BROTHERS: BNC Mortgage Files for Bankruptcy in New York
--------------------------------------------------------------
Debtor: Lehman Brothers Holdings Inc.
745 Seventh Avenue
New York, NY 10019
Bankruptcy Case No.: 08-13555
Type of Business: The Debtor is an investment bank. The
company serves the financial needs of
corporations, governments and municipalities,
institutional clients, and high net worth
individuals worldwide. Founded in 1850, Lehman
Brothers is involved in equity and fixed income
sales, trading and research, investment
banking, private investment management, asset
management and private equity. The company
operates in three segments: Capital Markets,
Investment Banking, and Investment Management.
It has regional headquarters in London and
Tokyo, and operates in a network of offices
around the world. It has about 28,000 full-
time employees.
See: http://www.lehman.com/
Debtor-affiliate filing separate Chapter 11 petitions on
January 9, 2009:
Entity Case No.
------ --------
BNC Mortgage LLC 09-10137
Debtor-affiliate filing separate Chapter 11 petitions on
January 7, 2009:
Entity Case No.
------ --------
Luxembourg Residential Properties Loan 09-10108
Finance S.a.r.l.
Debtor-affiliates filing separate Chapter 11 petitions on
September 15, 2008:
Entity Case No.
------ --------
LB 745 LLC 08-13600
PAMI Statler Arms LLC 08-13664
Lehman Brothers Commodity Services Inc. 08-13885
Lehman Brothers Finance SA 08-13887
Lehman Brothers Special Financing Inc. 08-13888
Lehman Brothers Derivative Products Inc. 08-13899
Lehman Commercial Paper Inc. 08-13900
Lehman Brothers Commercial Corporation 08-13901
Lehman Brothers Financial Products Inc. 08-13902
Fundo de Investimento Multimercado Credito Privado 08-13903
Lehman Scottish Finance L.P. 08-13904
CES Aviation LLC 08-13905
CES Aviation V LLC 08-13906
CES Aviation IX LLC 08-13907
East Dover Limited 08-13908
Chapter 11 Petition Date: September 15, 2008
Court: Southern District of New York (Manhattan)
Debtor's Counsel: Harvey R. Miller, Esq.
harvey.miller@weil.com
Richard P. Krasnow, Esq.
Lori R. Fife, Esq.
Shai Y. Waisman, Esq.
Jacqueline Marcus, Esq.
Alfredo R. Perez, Esq.
Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, NY 10153
Tel: (212) 310-8000
Fax: (212) 310-8007
http://www.weil.com/
Total Assets Total Debts
------------ -----------
Lehman Brothers $639 billion $613 billion
LB 745 More than $1 billion More than $1 billion
Lehman Brothers More than $1 billion More than $1 billion
Commodity
Lehman Brothers More than $1 billion More than $1 billion
Finance
Lehman Brothers More than $1 billion More than $1 billion
Special
Lehman Brothers More than $1 billion More than $1 billion
Derivative
Lehman Commercial More than $1 billion More than $1 billion
Paper
Lehman Brothers More than $1 billion More than $1 billion
Commercial
Lehman Brothers More than $1 billion More than $1 billion
Financial
Fundo de More than $1 billion More than $1 billion
Investimento
Lehman Scottish More than $1 billion More than $1 billion
Finance
CES Aviation More than $1 billion More than $1 billion
LLC
CES Aviation More than $1 billion More than $1 billion
V LLC
CES Aviation More than $1 billion More than $1 billion
IX LLC
East Dover More than $1 billion More than $1 billion
Limited
PAMI Statler $20 million $38 million
A. Lehman Brothers' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Citibank, N.A., as indenture bond debt $138,000,000,000
trustee, and The Bank of New
York Mellon Corporation (with
respect to the Euro Medium
Term Notes only, as indenture
trustee, under the Lehman
Brothers Holdings. Senior
Notes.
Citibank, N.A.
399 Park Avenue
New York, NY 10043
Attn: Wafaa Orfy
Tel: (800) 422-2066
Fax: (212) 816-5773
The Bank of New York
One Canada Square
Canary Wharf, London E14 5AL
Attn: Raymond Morison
Tel: 44-207-964-8800
The Bank of New York bond debt $15,000,000,000
Mellon Corporation, as
indenture trustee under the
Lehman Brothers Holdings
Inc. subordinated debt.
The Bank of New York
Mellon Corporation
101 Barclay Street
New York, NY 10286
Attn: Chris O'Mahoney
Tel: (212) 815-4107
Fax: (212) 815-4000
AOZORA bank loan $463,000,000
1-3-1 Kudan-Minami
Chiyoda-ku, Tokyo 102-8660
Tel: 81-3-5212-9631
Fax: 81-3-3265-9810
Mizuho Corporate Bank Ltd. bank loan $289,000,000
Global Syndicated Financi
Division
1-3-3, Marunochi, Chiyoda-ku
Tokyo, Japan 100-8210
Timothy White
Managing Director - Head of
Originations Corporate and
Investment Bank Department
1251 Avenue of the Americas
32nd floor
New York, NY 10020-1104
Tel: (212) 282-3360
Fax: (212) 282-4487
Citibank N.A. Hong Kong bank loan $275,000,000
Branch
Financial Institutions Group
Asia Pacific
44f Citibank Tower
3 Garden Rd.
Central Hong Kong
Michael Mauerstein
MD - FIG
388 Greenwich Street
New York, NY 10013
Tel: (212) 816-3431
BNP Paribas bank loan $250,000,000
787 7th Avenue
New York, NY 10019
Tel: (212) 841-2084
Shinesi Bank Ltd. bank loan $231,000,000
1-8, Uchisaiwaicho 2-
Chome
Chiyoda-ku, Tokyo 100-8501
Tel: 81-3-5511-5377
Fax: 81-3-4560-2834
UFJ bank Limited bank loan $185,000,000
2-7-1, Marunouchi
Chiyoda-ku, TKY 100-8388
Stephen Small
vice president
head of financial
institutions
Bank of Tokyo-Mitsubishi
UFJ Trust Company
1251 Avenue of the Americas
New York, New York
10020-1104
Tel: (212) 782-4352
Fax: (212) 782-6445
Sumitomo Mitsubishi bank loan $177,000,000
Bank Corp.
13-6 Nihobashi-
Kodenma-Cho, Chuo-ku,
Tokyo, 103-0001
Yas Imai
Senior Vice President
Head of Financial
Institution Group
Sumitomo Mistui Banking
Corporation
277 Park Avenue
New York, NY 10172
Tel: (212) 224-4031
Fax: (212) 224-4384
Svenska Handelsbanken letter of credit $140,610,543
153 E. 53rd St., 37th floor
New York, NY 10022
Tel: (212) 258,9487
KBC Bank letter of credit
$100,000,000
125 W. 55th St.
New York, NY 10019
Tel: (212) 258-9487
Mizuho Corporate Bank Ltd. bank loan $93,000,000
1-3-3, Marunouchi
Chiyoda-ku, TKY 100-8219
Timothy White
Managing Director - Head of
Originations Corporate and
Investment Bank Department
1251 Avenue of the Americas
32nd floor
New York, NY 10020-1104
Tel: (212) 282-3360
Shinkin Central Bank bank loan $93,000,000
8-1, Kyobashi 3-Chome
Chuo-ku, Tokyo 104-0031
Shuji Yamada
Deputy General Manager
Financial Institution Dept.
Shinkin Central Bank
3-7, Yaesu 1-chome, Chuo-ku
Tokyo 104-0028
Tel: 81-3-5202-7679
Fax: 81-3-3278-7051
The Bank of Nova Scotia bank loan $93,000,000
Singapore Branch
1 Raffles Quay #201-01
One Raffles Quay North
Tower
Singapore 0485583
George Neofitidis
Director Financial
Institutions Group
One Liberty Plaza
New York, NY 10006
Tel: (212) 225-5379
Fax: (212) 225-5254
Chuo Mitsui Trust & Banking bank loan $93,000,000
3-33-1 Shiba, Minato-ku,
Tokyo, 105-0014
Tel: 81-3-5232-8953
Fax: 81-3-5232-8981
Lloyds Bank letter of credit $75,381,654
1251 Avenue of the Americas
39th Floor
P.O. Box 4873
New York, NY 10163
Tel: (212) 930-8967
Fax: (212) 930-5098
Hua Nan Commercial Bank bank loan $59,000,000
Ltd.
38 Chung-King South
Road Section 1
Taipei, Taiwan
Bank of China bank loan $50,000,000
New York Branch
410 Madison Avenue
New York, NY 10017
Tel: (212) 936-3101
Fax: (212) 758-3824
Nippon Life Insurance Co. bank loan $46,000,000
1-6-6, Marunouchi,
Chiyoda-ku, Tokyo 100-8288
Takayuki Murai
Deputy General Manager
Corporate Finance Dept. #1
Nippon Life Insurance Co.
Tel: 81-3-5533-9814
Fax: 81-3-5533-5208
ANZ Banking Group bank loan $44,000,000
Limited
18th Floor Kyobo Building
1 Chongro 1 Ku,
Chongro Ka,
Seoul, Korea
Michael Halevi
Director, Financial
Institutions
ANZ Banking Group
1177 Avenue of Americas
New York, NY 10036
Tel: (212) 810-9871
Fax: (212) 801-9715
Standard Chartered Bank bank loan $41,000,000
One Madison Avenue
New York, NY 10010-3603
Bill Hughes
SVP-FIG
Standard Chartered bank
One Madison Avenue
New York, NY 10010-3603
Tel: (212) 667-0355
Fax: (212) 667-0273
Standard Chartered Bank letter of credit $36,114,000
One Madison Avenue
New York, NY 10010-3603
Bill Hughes
SVP-FIG
Standard Chartered bank
One Madison Avenue
New York, NY 10010-3603
Tel: (212) 667-0355
Fax: (212) 667-0273
First Commercial Bank bank loan $25,000,000
Co. Ltd.
New York Agency
750 3rd Avenue, 34th Floor
New York, NY 10017
Jason C. Lee
Deputy General Manager
First Commercial Bank Co.
Ltd.
New York Agency
750 3rd Avenue, 34th Floor
New York, NY 10017
Tel: (212) 599-6868
Fax: (212) 599-6133
Bank of Taiwan bank loan $25,000,000
New York Agency
100 Wall Street, 11th Floor
New York, NY 1005
Eunice S.J. Yeh
Senior Vice President &
General Manager
100 Wall Street, 11th floor
New York, NY 10005
Tel: (212) 968-0580
Fax: (212) 968-8370
DnB NOR Bank ASA bank loan $25,000,000
NO-0021, Olso, Norway
Stranden 21, Aker Brygge
Tel: 47 22 9487 46
Fax: 47 22 48 29 84
Australia and New Zealand bank loan $25,000,000
Banking Group Limited
Melbourne Office
Level 6, 100 Queen
Street Victoria
Melbourne, VIC 3000
Australia
Michael Halevi
Director, Financial
Institutions
ANZ Banking Group
1177 Avenue of Americas
New York, NY 10036
Tel: (212) 810-9871
Fax: (212) 801-9715
Australia National Bank letter of credit $12,588,235
1177 Avenue of the
Americas, 6th Floor
New York, NY 10036
Michael Halevi
Director, Financial
Institutions
ANZ Banking Group
1177 Avenue of Americas
New York, NY 10036
Tel: (212) 810-9871
Fax: (212) 801-9715
National Australia Bank letter of credit $10,294,163
245 Park Avenue, 28th Fl.
New York, NY 10167
Michael Halevi
Director, Financial
Institutions
ANZ Banking Group
1177 Avenue of Americas
New York, NY 10036
Tel: (212) 810-9871
Fax: (212) 801-9715
Taipei Fubon Bank, New bank loan $10,000,000
York Agency
100 Wall Street, 14th floor
NY NY 10005
Tel: (212) 968-9888
Fax: (212) 968-9800
B. LB 745's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Rocky-Forty-Ninth LLC ground lease $0
c/o The Rockefeller Group
1221 Avenue of the Americas
New York, NY 10020
C. PAMI Statler's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Steingass trade debt $76,372
754 Progress Drive
Medina, OH 44256
Statler Arms Garage LLC litigation $50,000
1111 Euclid Ave. claim
Cleveland, OH 44115
Illuminating trade debt $40,182
P.O. Box 3638
Akron, OH 44309
TD Security trade debt $19,795
P.O. Box 81357
Cleveland, OH 44181
Marble Care trade debt $16,270
5184 Richmond Rd
Cleveland, OH 44146
IGS trade debt $13,901
P.O. Box 631919
Cincinnati, OH
WCCV trade debt $13,598
3479 State Rd.
Cuyahoga Falls, OH 44223
Demann trade debt $9,350
16919 Walden
Cleveland, OH 44128
Dominion trade debt $5,335
P.O. Box 26225
Richmond, VA 23260
Midwest Realty Advisors, LLC trade debt $5,000
37848 Euclid Avenue
Willoughby, OH 44094
RMC trade debt $3,340
P.O. Box 31315
Rochester, NY 14603
Republic Waste trade debt $3,338
P.O. Box 9001826
Louisville, KY 40290
Division Water trade debt $3,124
P.O. Box 94540
Cleveland, OH 44101
NorthEast trade debt $3,088
P.O. Box 9260
Akron, OH 44305
Time Warner trade debt $2,831
P.O. Box 0901
Carol Stream, IL 60132
Best Karpet trade debt $2,689
1477 E 357 street
EastLake, OH 44095
AT&T trade debt $2,232
P.O. 8100
Aurora, IL 60507
Account Temps trade debt $2,087
12400 Collections Drive
Chicago, IL 60693
Rentokil trade debt $1,742
8001 Sweet Valley Dr
Valleyview, OH 44125
LENNAR CORP: Clarifies Allegations on "Off-Balance-Sheet" Debt
--------------------------------------------------------------
Lennar Corporation on Monday provided information pertaining to
the personal home loans of its chief operating officer, its
outstanding joint ventures and its pending litigation in response
to allegations made by Barry Minkow.
Accoriding to Lennar, the dissemination of false statements about
the company last Friday resulted in the selling of an
unprecedented 58 million Lennar shares and a 20% decline in the
company's stock price.
"This has prompted numerous inquiries from investors, analysts and
the media," Lennar said in a news statement.
"While it is not Lennar's practice to respond to false and
scurrilous allegations in the context of litigation, Lennar has a
responsibility to its shareholders and the public to respond to
their legitimate requests for information.
As reported by the Troubled Company Reporter, Barry Minkow's Fraud
Discovery Institute questioned Lennar's off-balance-sheet debt and
a company executive's large personal loan. Michael Corkery and
Mark Maremont at The Wall Street Journal said Mr. Minkow
criticized in a written report Lennar's practice of putting large
amounts of debt in off-balance-sheet joint ventures, and said that
there is insufficient disclosure about them to investors. WSJ
said that Lennar has $4 billion in off-balance-sheet debt through
116 joint ventures and has given very few details about these
arrangements.
According to WSJ, Mr. Minkow said that Lennar's chief operating
officer, Jon Jaffe, took out a $5 million loan in 2007. Mr. Jaffe
secured the loan from a California real-estate broker who has done
business with a Lennar business partner, the report said, citing
Mr. Minkow. The report said that Mr. Minkow also accuses Lennar
of perpetrating a "giant Ponzi scheme" in its land deal with the
California Public Employees Retirement System, and that Lennar
moved other joint-venture assets into the venture LandSource and
depleted the venture of cash before it imploded amid the housing
downturn.
"In the event that additional false information leads to new
investor inquiries, we will continue to respond. In addition, we
intend to take appropriate action against the responsible
parties," Lennar said.
To protect investors, Lennar clarified that:
-- Lennar's chief operating officer, Jon Jaffe, did not
receive a mortgage on his home or any other indebtedness
connected to the company.
-- Lennar never "treated its joint ventures like a Ponzi
scheme."
-- Lennar has never siphoned cash from one joint venture to
another.
-- Lennar has never pledged its interest in any joint venture
for the benefit of another.
-- Lennar's litigation is accurately reported and reserved
for in accordance with generally accepted accounting
principles.
-- Lennar never has used lawsuits as a mechanism for avoiding
cash payments.
-- LandSource was an arm's-length transaction involving large
financial institutions that fully reviewed, vetted and
appraised the terms of the venture.
-- No money was ever misdirected in The Bridges project.
-- Lennar's co-member in The Bridges, Nicolas Marsch III, has
received the benefit of more than $50 million,
notwithstanding statements to the contrary.
-- There have been no reports of any whistleblower complaints
concerning these matters to Lennar management, the Board
of Directors, independent auditors or an outside employee
hotline.
-- Lennar has extensive confidential procedures in place to
ensure the free flow of communication by whistleblowers
and to ensure their protection from retaliation.
-- Lennar never ordered imported drywall from China and
never received a discount for its use as a substitute
material.
-- Lennar has been cited by the media as "the most responsive
builder" in dealing with the industry wide issue of
imported drywall.
(A) JON JAFFE'S LOAN
According to Lennar, senior executive Jon Jaffe's personal loan
has nothing to do with the company. Mr. Jaffe's loan was obtained
from sources wholly independent from Lennar and with no assistance
from Lennar or any of its business partners. There is not one
point of connection between the loan and Lennar's business.
In September 2007, Mr. Jaffe obtained a $5 million line of credit
secured by Mr. Jaffe's personal residence. Mr. Jaffe obtained the
loan from an independent loan broker named Robert Venneri and his
company Canyon Finance Inc. Neither Mr. Jaffe nor Lennar is
associated with Mr. Venneri, Canyon Finance or any other company
owned by Mr. Venneri. Mr. Venneri has a California real estate
broker's license, as did Canyon Finance, which later transferred
its license to Gulfstream Finance, also owned by Mr. Venneri. The
brokers' licenses permit the making of loans secured by real
estate. Mr. Jaffe was referred to Mr. Venneri by Mr. Jaffe's
personal attorney, who has never had a relationship with Lennar.
The loan Mr. Venneri placed for Mr. Jaffe was the first and only
time Mr. Venneri has done so for anyone employed by Lennar. No
part of the loan secured by Mr. Venneri for Mr. Jaffe came from
funds provided directly or indirectly by Lennar. The funds were
sourced from a lender unrelated to Lennar.
Mr. Venneri also secured loans for Bruce Elieff, a SunCal
employee. Mr. Venneri has informed Lennar that Mr. Elieff's loans
were sourced from a different lender than Mr. Jaffe's loan and had
nothing to do with Mr. Jaffe's loan or Lennar. Neither SunCal nor
Mr. Elieff played any role in connection with Mr. Jaffe's loan.
Mr. Venneri has a real estate development company called Canyon
Capital, Inc., which acquired, developed and marketed real estate
properties in Kern County. There is no connection between the
properties and Mr. Jaffe's loan or Lennar, nor is there a
connection to SunCal. Likewise, there is no connection between
Frank and Norma Fugitt or John Balfanz and Mr. Jaffe or Lennar.
Also, Lennar has never been a joint venture partner with SunCal on
any properties in Kern County.
Mr. Jaffe's $5 million line of credit was fully secured by a third
mortgage on Mr. Jaffe's house. The loan comes due in September
2012, accrues simple interest at the rate of 8% per annum, and
requires quarterly interest payments. Mr. Jaffe has made all such
payments. By any measure, the loan was made on the basis of
conservative underwriting guidelines. There was substantial equity
in Mr. Jaffe's house to fully secure the loan. At the time of the
loan, the house was appraised at $18 million by an independent
appraiser on behalf of the lender. The first mortgage was for $3
million; the second mortgage was a line of credit for $2.1
million. Together with the $5 million loan, the total equaled $10
million, a loan-to-value ratio of 55%.
Consistent with Mr. Jaffe's full commitment to and confidence in
Lennar and its future, he made use of the loan to increase his
ownership of Lennar's stock. To date, Mr. Jaffe has drawn down $4
million of the $5 million line. Mr. Jaffe drew down $3 million in
November 2007 and used $1,562,560 of these funds to pay for the
exercise of options on Lennar stock and the associated income tax.
Mr. Jaffe acquired 107,858 shares of "A" shares at $8.235 per
share and received 10,785 shares of "B" shares. The market price
of the stock at the time was $21.33 per share. The remaining
funds were used to reduce the balance of Mr. Jaffe's brokerage
account which at that time held 395,791 "A" shares and 48,151 "B"
shares. As of January 12, Mr. Jaffe has 442,243 "A" shares and
48,151 "B" shares in this brokerage account. Mr. Jaffe has
consistently retained the Lennar shares he has acquired in recent
years. In April 2008, Mr. Jaffe drew down $1 million to acquire a
passive investment in a technology company unrelated to Lennar.
Documents relating to Mr. Jaffe's loan are available at:
http://www.lennar.com/Campaigns/PR/default.htm
(B) JOINT VENTURES
Lennar strategically invests in unconsolidated entities that
acquire assets used in its homebuilding operations. Through these
entities, Lennar primarily seeks to reduce and share its risk by
limiting the amount of its capital invested in land, while
obtaining access to potential future homesites and allowing it to
participate in strategic ventures. Participants in these joint
ventures are land owners/developers, other homebuilders and
financial or strategic partners.
Lennar has included extensive financial disclosure regarding its
JVs on its quarterly conference calls with analysts and investors
and in its SEC filings. Since Lennar has not yet filed its Form
10-K for fiscal 2008 that is due at the end of January 2009,
Lennar provided preliminary information for fiscal 2008 and 2007.
Lennar will be working with analysts and investors in the coming
weeks to provide additional information regarding its joint
ventures. Some other facts regarding its joint ventures are:
-- Each joint venture is governed by an executive committee
consisting of members from all of the partners.
-- Lennar does not use its investment in one JV as collateral
for debt in another JV.
-- There is no cross collateralization of debt between
different unconsolidated entities.
-- Funds are never commingled among Lennar's JVs.
-- The financial position of Lennar's joint ventures is
comprised of substantial equity totaling $2.7 billion.
-- Lennar's aggregate equity investment in its unconsolidated
joint ventures is 29%, compared to its partners' equity
of 71%.
-- The joint venture debt is secured by joint venture real
estate assets that are adjusted for impairment on a
quarterly basis as necessary.
-- The debt financing of Lennar's JVs is primarily non-
recourse; in other cases, Lennar and its other partners
agree to provide a guarantee.
-- Lennar's maximum recourse exposure related to
unconsolidated JVs with recourse debt is $520 million.
In these ventures, there are $2.8 billion of assets and
$1.3 billion of equity.
-- Lennar's consolidated financial statements are audited
annually and reviewed quarterly by a top-tier,
independent registered public accounting firm.
As of November 30, 2008, Lennar had equity investments in 116
unconsolidated entities, compared to 214 unconsolidated entities
on November 30, 2007.
Lennar also provided a summarized financial information on a
combined 100% basis related to unconsolidated entities in which
Lennar had investments that are accounted for by the equity
method:
November 30,
2008 2007
(In thousands)
---- ----
Assets:
Cash and cash equivalents $135,081 $301,468
Inventories 7,115,360 7,941,835
Other assets 541,984 827,208
----------- -----------
$7,792,425 $9,070,511
Liabilities and equity:
Accounts payable and other
liabilities $1,042,002 $1,214,374
Debt 4,062,058 5,116,670
Equity of:
Lennar 766,752 934,271
Others 1,921,613 1,805,196
Total equity of
unconsolidated entities 2,688,365 2,739,467
----------- -----------
$7,792,425 $9,070,511
Lennar's equity in its 29% 34%
unconsolidated entities
Debt to total capital of Lennar's unconsolidated entities is
calculated as:
November 30,
2008 2007
(In thousands)
---- ----
Debt $4,062,058 $5,116,670
Equity 2,688,365 2,739,467
----------- -----------
Total capital $6,750,423 $7,856,137
Debt to total capital of Lennar's
unconsolidated entities 60.2% 65.1%
Debt to total capital of Lennar's
unconsolidated entities
(excluding LandSource) 49.8% 61.1%
The total debt of the unconsolidated entities in which Lennar has
investments was:
November 30,
2008 2007
(In thousands)
---- ----
Lennar's net recourse exposure $392,450 $794,934
Reimbursement agreements
from partners 127,428 238,692
Partner several recourse 285,519 465,641
Non-recourse land seller debt
or other debt 90,519 202,048
Non-recourse debt with completion
guarantees 820,435 1,432,880
Non-recourse debt without completion
guarantees 2,345,707 1,982,475
----------- -----------
Total debt $4,062,058 $5,116,670
The summary of Lennar's net recourse exposure related to the
unconsolidated entities in which it has investments was:
November 30,
2008 2007
(In thousands)
---- ----
Several recourse debt-repayment $78,547 $123,022
Several recourse debt-maintenance 167,941 355,513
Joint and several recourse
debt-repayment 138,169 263,364
Joint and several recourse
debt-maintenance 123,051 291,727
Land seller debt recourse exposure 12,170 -
Lennar's maximum recourse exposure 519,878 1,033,626
Less joint and several reimbursement
agreements with Lennar's partners (127,428) (238,692)
Lennar's net recourse exposure $392,450 794,934
The recourse debt exposure represents Lennar's maximum exposure to
loss from guarantees and does not take into account the underlying
value of the collateral.
Although Lennar, in some instances, guarantees the indebtedness of
unconsolidated entities in which it has an investment, its
unconsolidated entities that have recourse debt have a significant
amount of assets and equity. The summarized balance sheets of its
unconsolidated entities with recourse debt were:
November 30,
2008 2007
(In thousands)
---- ----
Assets $2,846,819 $3,220,695
Liabilities 1,565,148 2,311,216
Equity 1,281,671 909,479
(C) LITIGATION
During the past decade, Lennar has delivered more than 250,000
homes. The construction of those homes resulted in tens of
millions of underlying payments and contracts. In that context, as
of November 30, 2008, Lennar was defending or prosecuting
approximately 620 lawsuits that fall into the following
categories: homeowner construction, premises liability, personal
injury, contract and subcontract disputes, employment,
environmental and land use, insurance coverage, advertising,
collections, intellectual property, automobile liability, tax
matters and others. Reserves for litigation matters are
established and adjusted consistent with the guidelines set forth
in Financial Accounting Standards No. 5 (Reserves for Loss
Contingencies) and audited by Lennar's outside independent
accounting firm.
(D) THE BRIDGES LAWSUIT
This is a lawsuit filed in 2006 by Nicolas Marsch concerning The
Bridges project in San Diego County, California. Contrary to the
allegations, Lennar did not divert a $37.5 million judgment
contributed by Marsch to the venture. Lennar and Marsch had a 50-
50 interest in the judgment, and no part of the judgment or
proceeds from the judgment was misdirected.
The proceeds were used by and for the benefit of the venture to
pay for construction and operation costs. Marsch and his advisors
attributed zero value to the judgment and achieved tax benefits
from this position.
Contrary to the allegations, Marsch has received significant
proceeds from the Bridges venture. To date, payments made to or
on his behalf exceed $50 million.
Also contrary to the allegations, Lennar has provided substantial
information from inception. Lennar regularly provided balance
sheets and reports to Marsch for more than 10 years, in addition
to annual financial statements audited by an outside independent
accounting firm.
Lennar has never pledged The Bridges' assets for the obligations
of any other joint venture. Nor does The Bridges have a "bankrupt
partner" as a result of the LandSource bankruptcy.
Marsch has been involved in several lawsuits with Lennar. In 2006,
Marsch also filed another lawsuit against Lennar in connection
with a different project in San Diego. That case was ordered
dismissed in its entirety by the California court in November 2008
without a trial.
(E) LANDSOURCE
In 2003, Lennar and others formed LandSource to acquire and hold
various real estate interests. In February 2007, Lennar reduced
its interest from 50% to 16%. In June 2008, LandSource filed
bankruptcy as a result of the collapse of the real estate market.
The claim that Lennar caused the other investors and lenders to
lose approximately $1 billion in connection with LandSource is
false. The LandSource bankruptcy is a matter of public record
with complete financial disclosures. The lenders and investors are
large institutional entities who conducted their own extensive due
diligence with the aid of independent experts. The LandSource
bankruptcy was the product of unprecedented market shifts.
(F) CHINESE DRYWALL
Lennar has never specified imported drywall from China for
installation in its homes and never received a discount when it
was substituted for domestic products. Lennar has been working
diligently with its homeowners in an effort to address this
industry-wide defective product issue. In part, these efforts are
reflected in today's Wall Street Journal article concerning
Chinese drywall in Florida. On Sunday, the Sarasota Herald-Tribune
characterized Lennar as "[t]he most responsive builder so far" on
the issue of Chinese drywall. In addition, Lennar fully intends to
seek remedies from the manufacturer and other responsible parties.
(G) WHISTLEBLOWER
Lennar has created two mechanisms for the public, investors,
associates and other interested parties to communicate their
concerns directly to the company's Board of Directors. First,
Lennar has retained an independent firm, The Network, to receive
complaints anonymously and report those complaints directly to the
Audit Committee of the Board of Directors, in addition to
management. The Audit Committee receives a report of the
investigation of each communication submitted.
In addition, Lennar provides an email address which can be used to
communicate directly with the independent members of the Board of
Directors. Lennar's Lead Director, who is also the chairperson of
the Independent Directors Committee, receives all messages sent to
this email address. Both of these reporting systems are described
in the company's annual proxy statement, and are regularly
communicated to Lennar's associates. These reporting systems have
been in place for more than four years as required by law and by
the rules of the New York Stock Exchange.
For more information, contact Glenn Bunting
(glenn_bunting@sitrick.com) or Maya Pogoda
(maya_pogoda@sitrick.com) at 310-788-2850.
About Lennar Corp.
Based in Miami, Fla., Lennar Corporation (NYSE: LEN and LEN.B) --
http://www.lennar.com/-- builds affordable, move-up and
retirement homes primarily under the Lennar brand name. Lennar's
Financial Services segment provides primarily mortgage financing,
title insurance and closing services for both buyers of the
company's homes and others.
* * *
As reported by the Troubled Company Reporter on June 11, 2008,
Moody's Investors Service lowered all of the ratings of Lennar
Corporation, including its corporate family rating to Ba3 from Ba1
and the ratings on its various issues of senior unsecured notes to
Ba3 from Ba1. At the same time, a speculative grade liquidity
rating of SGL-2 was assigned. The ratings outlook remains
negative.
As reported by the TCR on Dec. 16, 2008, Fitch Ratings downgraded
Lennar Corp.'s Issuer Default Ratings and outstanding debt
ratings:
-- IDR to 'BB+' from 'BBB-';
-- Senior unsecured to 'BB+' from 'BBB-';
-- Unsecured bank credit facility to 'BB+' from 'BBB-';
-- Short Term IDR from 'F3' to 'B';
-- Commercial Paper from 'F3' to 'B'.
Fitch said the rating outlook remains negative.
LIZ CLAIBORNE: Loan Facility Reduced, Financial Covenants Relaxed
-----------------------------------------------------------------
Liz Claiborne Inc. said yesterday it has completed an amendment
and extension of its existing bank revolving credit facility.
J.P. Morgan Securities Inc. and Banc of America Securities LLC
were Joint Lead Arrangers for this amendment and extension.
The amended terms and conditions provide for a reduction in the
facility size to $600 million from $750 million which is
appropriate for the Company's projected needs following its recent
divestitures, an extension of the maturity date to May 31, 2011, a
secured asset-based structure, the elimination of the leverage
covenant and asset coverage covenant and an increase in fees and
interest rates. The facility may continue to be used for working
capital and general corporate purposes and will back both trade
and standby letters of credit in addition to the Company's
synthetic lease.
The amendment and extension revises the calculation and required
coverage levels of the fixed charge financial covenant which will
be calculated on a rolling twelve month basis and must exceed 1.25
times the ratio of consolidated EBITDA less capital expenditures
divided by fixed charges (all as defined in the agreement) through
November 2009, stepping up to a minimum coverage of 1.50 times
from December 2009 through the maturity of the facility.
William L. McComb, Chief Executive Officer of Liz Claiborne Inc.,
said, "We are extremely pleased to announce the successful
completion of this amendment and extension of our bank credit
facility which extends the maturity date of the facility to May
2011 from October 2009. We know that the financial community has
been closely monitoring this transaction in light of very
challenging credit market conditions. While we continue to
aggressively manage our balance sheet and preserve liquidity, this
amendment and extension affords us stability in the face of a most
uncertain 2009."
Mr. McComb continued: "During the fourth quarter, we demonstrated
exceptional balance sheet and cash flow management as we paid down
$175 million in bank debt, primarily driven by aggressive
inventory management, resulting in year end bank debt of
approximately $234 million. We also ended the year with total debt
of approximately $745 million which is below the $750 to $775
million range we guided on our November 13th earnings call."
Mr. McComb concluded, "Needless to say, the operating environment
in the fourth quarter was the most challenging we have experienced
in decades. Despite a pickup in comp store sales in the last few
weeks of the quarter, our comps for Juicy Couture, Lucky Brand and
Kate Spade were each in the negative mid-teens while Mexx's comps
were negative 12%. The highly promotional retail environment also
negatively impacted margins in both our retail and wholesale
businesses, causing us to project adjusted EPS from continuing
operations in the range of $0.00 to ($0.15) for the quarter
compared to our previously guided range of $0.19 to $0.24. We
will provide more details on the quarter during our earnings call
in early March."
The adjusted projected results exclude the impact of expenses
incurred in connection with the company's streamlining and brand-
exiting activities and non-cash trademark impairment charges.
The company believes that the adjusted projected results represent
a more meaningful presentation of its operations and financial
performance since these results provide period to period
comparisons that are consistent and more easily understood.
About Liz Claiborne
Liz Claiborne Inc. -- http://www.lizclaiborneinc.com/-- designs
and markets a global portfolio of retail-based premium brands
including Kate Spade, Juicy Couture, Lucky Brand and Mexx. The
Company also has a refined group of department store-based brands
with strong consumer franchises including the Liz Claiborne and
Monet families of brands, Kensie, Kensiegirl, Mac & Jac, and the
licensed DKNY Jeans Group.
* * *
As reported by the Troubled Company Reporter on November 27, 2008,
Moody's Investors Service downgraded its rating on Liz Claiborne
Inc.'s senior unsecured notes to Ba2 (LGD 5, 86%) from Baa3 and
assigned a Ba1 Corporate Family Rating and a Ba1 Probability of
Default Rating. Moody's also lowered the company's Commercial
Paper Rating to Not Prime from Prime-3. The rating outlook is
negative. The rating actions conclude the review for possible
downgrade which commenced on Oct. 24, 2008. The rating downgrade
results from expectations that Liz's earnings and operating
margins will remain under pressure in 2008 and financial metrics
necessary to maintain its previous ratings will not be achieved.
The company is taking actions within its control to improve its
financial position, such as an announced 50% reduction in capital
spending in fiscal 2009. However, Moody's expects Liz will be
challenged to significantly improve its financial metrics given
the weak outlook for discretionary consumer spending which Moody's
anticipate will persist well into 2009.
LYONDELL CHEMICAL: Royal Bank of Scotland Has $3.5BB Exposure
-------------------------------------------------------------
The Royal Bank of Scotland Plc has a $3.5 billion exposure to
LyondellBasell Chemical Company, Lyondell Bankruptcy News reports,
citing Reuters.
"We have a banking relationship with LyondellBasell Industries
and we will continue to work with the company to reach a
successful outcome," a spokesman for RBS had told The
Herald. "It's very early in the process, and we don't want to
speculate on any potential impact," the Spokesman added. Whether
or not RBS has already written down the debt, the Spokesman did
not disclose.
Jill Treanor of guardian.co.uk said RBS' new chief executive,
Stephen Hester, is selling off its $2.4 billion stake in Bank of
China. RBS is selling around $2.4 billion of shares, which
represents the bank's entire 10.8 billion shares in Bank of
China. The shares are being sold at between HK$1.68 and HK$1.71,
a discount of up to 9% of the prevailing market price, says the
report.
Morgan Stanley and RBS' ABN Amro unit are managing the sale,
notes Bloomberg News.
RBS is the biggest lender to Lyondell Chemical and may face
losses on its $3.5 billion of loans to Lyondell, Bloomberg says.
RBS inherited the loans after its purchase last year of ABN Amro
Holding NV's investment bank, which extended a $1.6 billion
portion of the Lyondell credit that may lose all its value,
according to Andrew Brady, an analyst at CreditSights
Inc. in New York.
Meanwhile, Petroleos de Venezuela S.A. may lose about US$233.6
million as the third largest unsecured creditor of Lyondell, El
Universal News reports. According to Bloomberg News, citing US
Energy Department data, the unit of the Lyondell refinery in
Houston imported an average of 198,000 barrels of crude oil per
day from Venezuela in the first nine months of 2008. The refinery
has a contract to buy 230,000 barrels per day from Pdvsa, El
Universal says.
The Troubled Company Reporter also related on January 9, 2009,
that Citi indicated that as of December 31, 2008, its direct gross
exposure to LyondellBasell was approximately $2.0 billion. Citi
currently holds this exposure primarily in its Institutional
Clients Group. The fourth quarter pre-tax impact related to
LyondellBasell is estimated to be approximately $1.4 billion
recorded primarily as a loan loss reserve build. The final impact
on Citi's fourth quarter financial results could differ from the
impact disclosed above due to closing and other adjustments.
About LyondellBasell
Basell AF and Lyondell Chemical Company merged operations
in 2007 to form LyondellBasell Industries --
http://www.lyondellbasell.com/-- the world's third largest
independent chemical company. Lyondellbasell produces
polypropylene and advanced polyolefins products, is a leading
supplier of polyethylene, and a global leader in the development
and licensing of polypropylene and polyethylene processes and
related catalyst sales.
LyondellBasell became saddled with debt as part of the
$12.7 billion merger. About a year after completing the merger,
LyondellBasell Industries' U.S. operations and one of its European
holding companies -- Basell Germany Holdings GmbH -- filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code on January 6, 2009, to facilitate a restructuring
of the company's debts. The case is In re Lyondell Chemical
Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023).
Seventy-nine Lyondell entities, including Equistar Chemicals, LP,
Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt
Industries, Inc., filed for Chapter 11. LyondellBasell is not
part of the bankruptcy filing. LyondellBasell's non-U.S.
operating entities are also not included in the Chapter 11 filing.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities.
Lyondell Chemicals estimated that consolidated assets total
$27.12 billion and debts total $19.34 billion as of the bankruptcy
filing date. (Lyondell Bankruptcy News; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
LYONDELL CHEMICAL: Mid-America Seeks Adequate Protection
--------------------------------------------------------
Pursuant to applicable carrier and warehouseman's lien law and
certain agreements entered between Mid-America Pipeline Company
LLC and Debtor Equistar Chemical, L.P., Mid-America holds
perfected security interests and rights of set-off and recoupment
in petroleum products placed by the Debtor in Mid-America
Pipeline's pipeline, storage and terminalling assets. Mid-
America Pipeline has claims under the agreements and tariffs for
unpaid prepetition charges and Mid-America expects that it will
have substantial contract rejection damage claims should the
Debtor reject one or more of the Agreements.
Since the filing of the bankruptcy, the Debtor has been
withdrawing Product from Mid-America Pipeline System at a rapid
pace. Mid-America Pipeline's collateral position has been
reduced and could be eliminated if the Debtor continues to
withdraw Product currently in Mid-America Pipeline's possession.
Accordingly, Mid-America Pipeline asks the U.S. Bankruptcy Court
for the Southern District of New York to grant it adequate
protection pursuant to Section 361 of the Bankruptcy Code for the
diminution in value of its interest in the Collateral.
Mid-America Pipeline is seeking adequate protection for the
actual diminution in the value of its security interest as
opposed to the decline in market value. The diminution in value
can be readily calculated because every dollar's worth of Product
that would be withdrawn from the Mid-America Pipeline System
reduces the value of its security interest by a dollar, Mid-
America Pipeline explains.
Mid-America Pipeline further clarifies that it has not and is not
violating the automatic stay. Mid-America Pipeline says that it
must obtain Court approval to effect any set-off or foreclose on
its security interests, and will do so once Mid-America
Pipeline's claims against the Debtors are liquidated. Thus, in
the alternative, Mid-America Pipeline asks the Court to lift the
automatic stay to permit it to sell an amount of Product at
current market prices to satisfy its prepetition claim.
Mid-America reasons that "cause" exists for the Court to grant it
relief from the automatic stay. Mid-America Pipeline insists
that without automatic stay, it would be able to sell Product in
its Pipeline System at public auction to satisfy the prepetition
amounts owing by the Debtor. If it is not provided replacement
liens or cash for the depletion of its Collateral, then Mid-
America Pipeline lacks adequate protection, and relief from the
automatic stay is warranted, Mid-America Pipeline concludes.
About LyondellBasell
Basell AF and Lyondell Chemical Company merged operations
in 2007 to form LyondellBasell Industries --
http://www.lyondellbasell.com/-- the world's third largest
independent chemical company. Lyondellbasell produces
polypropylene and advanced polyolefins products, is a leading
supplier of polyethylene, and a global leader in the development
and licensing of polypropylene and polyethylene processes and
related catalyst sales.
LyondellBasell became saddled with debt as part of the
$12.7 billion merger. About a year after completing the merger,
LyondellBasell Industries' U.S. operations and one of its European
holding companies -- Basell Germany Holdings GmbH -- filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code on January 6, 2009, to facilitate a restructuring
of the company's debts. The case is In re Lyondell Chemical
Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023).
Seventy-nine Lyondell entities, including Equistar Chemicals, LP,
Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt
Industries, Inc., filed for Chapter 11. LyondellBasell is not
part of the bankruptcy filing. LyondellBasell's non-U.S.
operating entities are also not included in the Chapter 11 filing.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities.
Lyondell Chemicals estimated that consolidated assets total
$27.12 billion and debts total $19.34 billion as of the bankruptcy
filing date. (Lyondell Bankruptcy News; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
MARK IV: Dropping Auto Sales Cues S&P to Junk Corp. Credit Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services said it has lowered its
corporate credit rating on Mark IV Industries Inc. to 'CCC+' from
'B-' and removed all the ratings from CreditWatch, where they had
been placed with negative implications on Dec. 15, 2008. The
outlook is negative. At the same time, S&P also lowered its
issue-level ratings on the company's debt and revised certain
recovery ratings.
"The downgrades reflect our view that declining auto sales and
production in North America and Europe during 2009 will lead to
diminished liquidity as Mark IV struggles to generate positive
free operating cash flow over the next several quarters," said
Standard & Poor's credit analyst Gregg Lemos Stein. In S&P's
view, the company may need to seek an amendment to loosen these
covenants sometime this year, perhaps as early as the quarter
ending Feb. 28, 2009, depending on the severity of auto sales
declines and the success of Mark IV's cost-cutting actions.
S&P expects U.S. light-vehicle sales in 2009 to be 10.0 million
units, a 24% decline from 2008 levels, which would lead to a
similar drop in North American production. European sales and
production could be down by a similar amount. The actual effect
on Mark IV's sales could be amplified by a negative effect of
foreign exchange caused by the weaker euro. Most of Mark IV's
debt is dollar-denominated.
Mark IV's products include power transmission, air admission and
cooling, information display and lighting, and electronic toll
equipment. About half of Mark IV's sales comes from automotive
manufacturers, while 35% comes from the aftermarket, heavy-duty
truck, and off-highway segments. Electronic toll equipment and
information displays account for the remaining 15%.
The company has relatively little exposure to the North American
production of the struggling Michigan-based automakers, which
represents just 5% of sales. However, it has substantial exposure
to automotive production in Europe, which declined dramatically in
the last half of 2008 and will likely remain weak for most of
2009. Production declines have been particularly severe in Italy,
France, and Spain.
Results in Mark IV's electronic toll equipment business have been
sluggish as well because of deferred orders by government
agencies, many of which are facing budget concerns and lower
revenues from highway traffic. Mark IV is seeking to extend its
exclusive contract for the E-Z Pass transponder business with more
than 20 toll agencies in the Eastern U.S. beyond the current 2010
expiration.
Liquidity is constrained, and S&P expects it to remain so for most
of 2009, given weak industry conditions and tight financial
covenants. The company typically generates cash in its fiscal
fourth quarter because of seasonal factors, but the sharp decline
in auto demand in Mark IV's key markets could overwhelm this
seasonal pattern. As of Aug. 31, 2008 (latest available), Mark
IV had $44.5 million in cash and about $72 million available under
its revolving credit facility due in June 2010. S&P expects the
company to report lower liquidity for the quarter ended Nov. 30,
2008. For the current rating, S&P expects the company to maintain
at least $50 million of total liquidity and to remain in
compliance with its financial covenants.
The negative outlook reflects S&P's expectation that Mark IV's
free operating cash flow will remain negative, leading to reduced
liquidity throughout 2009. S&P could lower the ratings if total
liquidity, including cash and revolving credit facility
availability, diminishes below $50 million or if the company fails
to remain in compliance with its financial maintenance covenants.
In S&P's view, this could occur if auto production declines even
more significantly in 2009 than S&P's current expectation of 15%
to 20% in Europe and North America, or if Mark IV's other end
markets decline more severely.
A rating upgrade is highly unlikely given the difficult operating
conditions in the automotive industry and Mark IV's other end
markets, but would have to be precipitated by a consistent pattern
of free operating cash flow, leading to a decline in leverage to
about 6x or better, and adequate room under bank covenants.
MARK WORLEY: Case Summary & 11 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Mark A. Worley
Cynthia E. Worley
14008 S. 31st Street
Phoenix, AZ 85048
Bankruptcy Case No.: 09-00473
Chapter 11 Petition Date: January 12, 2009
Court: District of Arizona (Phoenix)
Judge: James M. Marlar
Debtor's Counsel: Brian N. Spector
Jennings Strouss & Salmon, PLC
The Collier Center, 11th Floor
201 E. Washington St.
Phoenix, AZ 85004-2385
Tel: (602) 262-5977
Fax: (602) 495-2654
Estimated Assets: $1 million to $10 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Meridian Bank Personal Guaranty $6,899,000
Kierland Office - Construction of loan to Tuscany
Division Acquisition LLC
7077 E. Mariilyn Rd., Ste. 150
Scottsdale, AZ 85254
Pecos Professional Plaza, LLC Guaranty of office $818,800
c/o Ernest Collins, The lease
Collins Law Firm
2733 N. Power Rd., Suite 102
Mesa, AZ 85215
UMB Bank North America partial guaranty $800,000
2231 E. Camelback Road of loan to Pecos
Phoenix, AZ 85016 Professional Plaza
LLC
Wells Fargo Bank $646,827
P.O. Box 10335
Des Moines, IA 50306
Silver State Bank/FDIC loan $311,565
Receiver
Integra Telecom Telephone and $5,950
Internet services
Chase Mastercard $4,886
HSBC Bank GM Mastercard $4,486
Bryan Cave, LLP Legal services $2,373
Kohl's Payment Center $245
Town of Gilbert $220
Utility Dept
MERRILL LYNCH: BofA Will Keep Merrill Logo, Faces Labor Lawsuit
---------------------------------------------------------------
Dan Fitzpatrick at The Wall Street Journal reports that Bank of
America Corp. said it will keep Merrill Lynch & Co.'s logo since
1974.
According to WSJ, BofA will use the logo to represent the combined
firms' financial advisory business, called Merrill Lynch Wealth
Management. Keeping Merrill Lynch's bull trademark is "not
intended as a salve" for the transition, "but rather a deep belief
that this is a terrific offering for our customers and a great
partnership" and the bank wants to keep the Merrill Lynch name for
"the longer term," the report quoted BofA Chief Marketing Officer
Anne Finucane.
WSJ relates that the corporate, commercial, investment banking and
capital markets businesses will be housed under the title "Bank of
America Merrill Lynch" alongside Bank of America's "flagscape"
logo, which has been in use since 1999.
BofA, says WSJ, won't change the names of U.S. Trust, a wealth
management unit for high net worth customers, and mutual fund unit
Columbia Management.
Labor Lawsuit
A new lawsuit alleges that Merrill Lynch and BofA violated the
federal Fair Labor Standards Act (FLSA) by failing to pay overtime
to back office employees who facilitate transactions of the
company's derivatives products, according to Fitapelli & Schaffer,
LLP.
Andrea Levine, of Staten Island, N.Y., and Ivey Moore, of Mount
Vernon, N.Y., both of whom are employed as Derivatives Settlement
Specialists, filed suit Monday in New York federal court.
The lawsuit alleges that the plaintiffs and other Merrill Lynch
Derivatives Settlement Specialists have been "blatantly
misclassified as 'exempt'" and "regularly worked in excess of 40
hours per week and were not paid time and one half for any and all
hours over 40 in a given week."
Attorney Brian Schaffer, who represents the workers, said he will
seek to have the lawsuit certified as a collective action in order
to recover unpaid wages, liquidated damages, attorneys' fees,
costs and interest for current and former Merrill Lynch
Derivatives Settlement Specialists who elect to opt-in to the
legal action and who have been employed by Merrill Lynch at any
time within the past three years.
"We allege that Merrill Lynch egregiously violated federal wage
and overtime laws," Mr. Schaffer said. "Many salaried employees
work over 40 hours in a week, but are unaware they are entitled to
premium overtime pay. Companies must be held accountable for
taking advantage of these salaried employees."
About Merrill Lynch
Merrill Lynch & Co. Inc. -- http://www.ml.com/-- is a wealth
management, capital markets and advisory companies with offices in
40 countries and territories. As an investment bank, it is a
leading global trader and underwriter of securities and
derivatives across a broad range of asset classes and serves as a
strategic advisor to corporations, governments, institutions and
individuals worldwide. Merrill Lynch owns approximately half of
BlackRock, one of the world's largest publicly traded investment
management companies with more than $1 trillion in assets under
management. Merrill Lynch's operations are organized into two
business segments: Global Markets and Investment Banking (GMI) and
Global Wealth Management (GWM). GMI provides service global
markets and origination products and services to corporate,
institutional, and government clients around the world. GWM
creates and distributes investment products and services for
individuals, small- and mid-size businesses, and employee benefit
plans.
As reported by the Troubled Company Reporter on September 15,
2008, Merrill has had tens of billions of dollars worth of risky,
illiquid assets carried on balance sheets that were leveraged at a
debt-to-equity ratio of more than 20 to one in the past 15 months.
The Wall Street Journal said that when the crisis started, the
assets kept deteriorating in value and couldn't easily be sold,
eating into the firm's capital cushion. Merrill's balance sheet
topped $900 billion recently, WSJ added. As reported by the TCR
on October 21, 2008, Merrill disclosed a
net loss from continuing operations for the third quarter of 2008
of $5.1 billion, compared with a net loss from continuing
operations of $2.4 billion for the third quarter of 2007.
Merrill's net loss for the third quarter of 2008 was
$5.2 billion, compared with a net loss of $2.2 billion, for the
year-ago quarter.
MILTON PETRO: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Milton Petro Properties, Inc.
1140 Avenue of the Americas, Suite 1800
New York, NY 10036
Bankruptcy Case No.: 09-10134
Chapter 11 Petition Date: January 9, 2009
Court: Southern District of New York (Manhattan)
Judge: Allan L. Gropper
Debtor's Counsel: Jonathan S. Pasternak, Esq.
jsp@rattetlaw.com
Rattet, Pasternak & Gordon Oliver, LLP
550 Mamaroneck Avenue, Suite 510
Harrison, NY 10528
Tel: (914) 381-7400
Fax: (914) 381-7406
Estimated Assets: $1 million to $10 million
Estimated Debts: $10 million to $50 million
The Debtor did not file a list of 20 largest unsecured creditors.
The petition was signed by president Frank Nocito.
MOUNT VERNON: Moody's Affirms 'Ba3' Rating on Revenue Bonds
-----------------------------------------------------------
Moody's Investors Service has affirmed the Ba3 rating for Mount
Vernon Elderly Housing Corporation's (Illinois) First Lien Revenue
Bonds (Section 8 Assisted Elderly Housing Project), Series 1979.
The affirmation is based on the property's considerable reserve
balances and short life remaining on the bonds. The outlook
remains stable.
Per the indenture for this bond series, "revenue" is defined as
HAP payments plus tenant rentals at Mount Vernon Elderly as well
as other funds associated with the project. Any outside sources
of income should not be regarded as a pledge to bondholders, and
were not included as income in Moody's analysis. According to the
audited FY2007 financial statements, the project has achieved a
debt service coverage ratio of 0.74x. Thus, based on rental
revenue from Mount Vernon Elderly alone, the project does not
generate enough income to support operating expenses. However, as
of December 2008, the project's maintenance and repair fund
carried a balance of approximately $1.048 million (172% of debt
outstanding), and the surplus fund carried a balance of
approximately $1.467 million (240% of debt outstanding). Moody's
considers the strong maintenance and surplus reserve balances, as
well as near-term maturity of the bonds a strength of this
program. The last REAC score reported is from 2002. As of
December 2008, the project is 97% occupied.
Outlook
The outlook remains stable. Given the near-term maturity of the
bonds, and ample balances in the reserve funds, Moody's believes
that Mount Vernon Elderly Corporation will continue to fund any
operating shortfalls of the project.
What could shift the rating - UP
Improved financial management of the project, including project-
specific audited data, and evidence of the project's self-
sufficiency.
What could shift the rating - DOWN
Failure to meet expense obligations of the project.
The last rating action was on January 27, 2006 when the Ba3 rating
of Mount Vernon Elderly Housing Corporation's (Illinois) First
Lien Revenue Bonds (Section 8 Assisted Elderly Housing Project),
Series 1979 was affirmed with a stable outlook.
MUZAK HOLDINGS: Moody's Downgrades Corp. Family Rating to 'Ca'
--------------------------------------------------------------
Moody's Investors Service downgraded Muzak Holdings, LLC's
probability-of-default rating to Ca from Caa3 and the corporate
family rating to Ca from Caa2. Moody's also downgraded the
ratings of the company's $220 million senior unsecured notes to Ca
from Caa1, and the $25 million senior discount notes and $115
million senior subordinated notes to C from Ca. The downgrade of
the probability-of-default rating reflects Moody's concern over
the company's ability to satisfy $437 million of debt maturing in
the March 2009 quarter. In Moody's opinion, a refinancing is
highly unlikely given time constraints and the current state of
credit markets. These maturities increase the likelihood of a
distressed exchange or bankruptcy filing in Moody's opinion.
The downgrade of the corporate family rating also reflects Moody's
concern over the potential for protracted economic pressure on
Muzak's customer base, particularly given the discretionary nature
of the company's products as well as its very high leverage and
inadequate interest coverage. In December 2008, Muzak announced
that it hired financial advisor Moelis & Company and law firm
Kirkland & Ellis LLP to initiate discussions with secured and
unsecured debtholders regarding pending debt maturities.
The negative outlook continues to reflect the significance of the
short-term maturities, notably given the challenging credit
markets.
These ratings were downgraded:
Muzak Holdings, LLC
-- Corporate family rating to Ca from Caa2;
-- Probability-of-default rating to Ca from Caa3;
-- $25 million senior discount notes due 2010 to C (LGD6, 95%)
from Ca (LGD5, 83%).
Muzak LLC
-- $220 million guaranteed senior unsecured notes due 2009 to
Ca (LGD3, 47%) from Caa1 (LGD2, 26%);
-- $115 million guaranteed senior subordinated notes due 2009
to C (LGD5, 86%) from Ca (LGD4, 66%).
The last rating action was on July 18, 2008 when Moody's
downgraded Muzak's corporate family rating to Caa2 from Caa1 and
the probability-of-default rating to Caa3 from Caa1. The ratings
outlook was revised to negative from developing.
Headquartered in Fort Mill, South Carolina, Muzak is a leading
provider of business music programming to numerous types of
businesses. The company also sells and installs equipment such as
sound systems, noise masking, and drive-thru systems. The company
reported sales of $251 million through the twelve months ended
September 30, 2008.
NEIMAN MARCUS: Moody's Reviews Low-B Rating for Possible Cuts
-------------------------------------------------------------
Moody's Investors Service placed Neiman Marcus Group Inc.'s
ratings under review for possible downgrade, and affirmed its SGL-
2 speculative grade liquidity rating.
The review is prompted by the company's announcement of negative
comparable store sales of 27.5% for the five weeks ended
January 3, 2009. This action reflects Moody's concern with the
unexpected magnitude of the revenue decline, as well as the
potential loss of aspirational customers and the weaker spending
by Neiman's traditional upscale customers. Given the weak
economic environment, and aggressive use of markdowns, the credit
metrics could deteriorate to a level inappropriate for the current
rating. The review will focus on the company's near term ability
to sustain margins and cash flow levels that would enable it to
maintain credit metrics appropriate for the rating. It will also
focus on the company's ability to manage inventories in this
challenging economic environment.
Ratings placed under review for possible downgrade:
-- Corporate family rating at B1
-- Probability of default rating at B1
-- Senior secured bank facility at Ba3
-- Senior secured term loan at Ba3
-- Senior unsecured debt at B3
-- Senior subordinated debt at B3
Rating affirmed:
-- Speculative Grade Liquidity Rating at SGL-2
The last rating action on Neiman Marcus was a downgrade of it
senior unsecured debt to B3 from B2 and a change in outlook to
negative from stable on December 15, 2008.
Neiman Marcus Group, Inc., headquartered in Dallas, Texas,
operates 40 Neiman Marcus stores, 2 Bergdorf Goodman stores, and
21 clearance centers. The company also operates both print and
online retail businesses. Revenues for the twelve months ended
November 1, 2008, exceeded $4.4 5 billion.
NEW YORK SKYLINE: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: New York Skyline, Inc.
350 Fifth Avenue
New York, NY 10118
Bankruptcy Case No.: 09-10181
Type of Business: The Debtor offers tour attraction services at
the Empire State building.
See: http://www.skyride.com/
Chapter 11 Petition Date: January 12, 2009
Court: Southern District of New York (Manhattan)
Debtor's Counsel: Mark A. Frankel, Esq.
mfrankel@bfklaw.com
Backenroth Frankel & Krinsky, LLP
489 Fifth Avenue
New York, NY 10017
Tel: (212) 593-1100
Fax: (212) 644-0544
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Skyride Associates, LLC All of the $24,395,000
30 E 29th St Debtor's property;
New York, NY 10016 Secured:
$10,778,000
Empire State Building Co. rent $1,388,228
350 Fifth Ave
New York, NY 10118
VARIABLE Graphics LLC 12,430
256 West 38th Street
5th Floor
New York, NY 10018
New York TAB $7,500
Serendipity Publishing, LLC $6,423
NYC & COMPANY $6,346
City Guide Magazine $5,876
Travel Industry Association $5,645
Weaver $5,274
Ratco International Inc. $4,626
PEPSI COLA Bottling Co of NY $4,484
ACOC Marketing LTD $4,000
Fire Services, Inc. $3,801
Flower Publishing, Inc. $3,200
Visitor Guide Publishing, Inc. $3,100
Cornick Graber & Sandler, LLP accounting $2,700
services
CTM Media Group, Inc. $2,643
New York Steel Services $2,290
MINICARDS $2,388
MacKenzie Automatic Doors, Inc. $2,081
The petition was signed by chief executive officer Samuel
Ehrenfeld.
NTAG INTERACTIVE: Files for Chapter 7 Liquidation
-------------------------------------------------
Boston Business Journal reports that nTag Interactive Corp. has
filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for
the District of Massachusetts.
According to Boston Business, nTag Interactive had raised about
$23 million in venture capital since its inception in 2002, with
backers like Pilot House Ventures Group in Boston and Sevin Rosen
Funds in Dallas.
nTag Interactive David Goretski told Mass High Tech that it had 48
employees in 2007, but planned to increase them to 75 at the end
of 2008, Boston Business states.
nTag Interactive Corp. is a Boston-based startup that developed
name tags that were rented out at events and conferences. The
tags worked like personal digital assistants, collecting
information but also alerted wearers of shared links when they
came near each other. The company is a spinout of Massachusetts
Institute of Technology.
OCEANFREIGHT INC: Nordea Bank Relaxes Covenant Under $325MM Loan
----------------------------------------------------------------
OceanFreight Inc. has entered into an amendatory agreement to its
US$325 million senior secured credit facility with Nordea Bank
Norge ASA, as Administrative Agent, under which the lenders have
agreed to an amendment and waiver of the collateral maintenance
coverage ratio covenant contained in the agreement.
Anthony Kandylidis, Chief Executive Officer of OceanFreight,
commented, "Our proactive approach with our bankers has allowed us
to enter into this amendment to our loan agreement and achieve a
lower collateral maintenance coverage ratio in light of the recent
decline in vessel values, particularly in the dry bulk sector.
Given the challenging financial and shipping landscape, this
agreement places one uncertainty behind us and positions us to
capitalize on opportunities as they may arise in the future."
About OceanFreight Inc.
OceanFreight Inc. -- http://www.oceanfreightinc.com-- was
incorporated in 2006 to acquire high quality secondhand vessels
and deploy them on medium and long term charters. The company
began operations with the delivery of its first vessel in June
2007 and currently owns and operates a fleet of 13 vessels,
consisting of one Capesize drybulk carrier, eight Panamax drybulk
carriers, one Suezmax tanker and three Aframax tankers with a
total carrying capacity of 1,170,633 dwt. OceanFreight Inc.'s
common stock is listed on the NASDAQ Global Market where it trades
under the symbol "OCNF."
OLYMPIC ON GRANDE: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: The Olympic on Grand, LLC
633 W 5th Street 28th Fl
Los Angeles, CA 90071
Bankruptcy Case No.: 09-10549
Type of Business: The Debtors own a night club and a parking lot.
Chapter 11 Petition Date: January 12, 2009
Court: Central District Of California (Los Angeles)
Judge: Ernest M. Robles
Debtor's Counsel: Marc Weitz, Esq.
Law Office of Marc Weitz
633 W 5th St, Ste 2800
Los Angeles, CA 90071
Tel: (213) 223-2350
Fax: (213) 784-5407
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
The Estate of Joseph Cosina law suit $2,000,000
Attn: Jefrey S. Behar
One World Trade 27th Floor
Long Beach, CA 908831
Tel: (562) 983-2500
Est of Brandon Clark law suit $2,000,000
Attn: Maure Fioro, Esq.
1901 W. Pacific Ave., Ste. 260
West Covina, CA 91790
Tel: (626) 856-5856
Nathan Hochman loan $1,100,000
9150 Wilshire Blvd., Ste. 300
Beverly Hills, CA 90212
Tel: (310) 281-3290
Gary Warfel loan $1,100,000
23286 Bluebird Drive
Calabasas, CA 91302
Tel: (310) 867-4299
Top Shelf - Lewis Brisbois loan $1,100,000
221 N. Figueroa St., Ste. 1200
Los Angeles, CA 90021
Tel: (213) 236-3200
1024 Grand LLC loan $500,000
Arup N. America Ltd. loan $400,000
Philip Sample - Grubb & Ellis trade debt $300,000
Bruce & Susan Norton investment $300,000
LockeMedia-Lawrence Segal law suit $200,000
Allstate Parking law suit $175,000
Unified Parking Services law suit $165,000
CPP Inc. trade debt $113,586
Johnston Realty Funding trade debt $64,000
Van Beveren & Butelo Inc. trade debt $53,008
Citadel trade debt $49,677
Fehr & Peers Kaku Assoc. trade debt $46,672
Envicom Corporation trade debt $46,672
Wolf, Rifkin, Shapiro trade debt $42,922
The Rose Group trade debt $42,038
The petition was signed by Richardson Robertson, III, manager of
the company.
PRECISION PARTS: Asks Court to OK Protocol for Sale of All Assets
-----------------------------------------------------------------
PPI Holdings, Inc., et al., ask the U.S. Bankruptcy Court for the
District of Delaware to approve:
a) bidding procedures for the sale of substantially all of their
assets, free and clear of all liens and interests, and
b) approving the sale of the Debtors' assets to the Successful
Bidder and the assumption by the Debtors and assignment to
and assumption by the successful bidder of the assigned
contracts.
The hearing on the motion is set for Jan. 14, 2009, at 1:00 p.m.
The Debtors' postpetition financing terminates on March 2, 2009,
and the financing order provides for liquidation of the Debtors'
assets. The Debtors relate that without an immediate sale, under
current economic conditions, the Debtors will be unable to
continue to operate their business and will be forced to close,
causing economic harm to all creditors and resulting in a
significant loss of jobs.
The assets to be sold, together or separately, to one or more
bidders, are substantially all of the assets of the Debtors,
including without limitation, each of the Debtors' owned
facilities, all inventories, all of the Debtors' tangible assets
used in the business, all of the Debtors' rights in and to assumed
executed contracts and unexpired leases, all of the Debtors'
interest in intellectual property used in the business, all of the
Debtors' other intangible property, excluding, however, any causes
of action arising under Chapter 5 of the Bankruptcy Code, and all
Business Records.
An auction date of Feb. 10, 2009, is contemplated. The Debtors
will present the results of the auction at a sale hearing on Feb.
11, 2009. Closing is anticipated as soon as practicable following
Court approval of a sale.
The Debtors tell the Court that the proposed sale and proposed
bidding procedures are in the best interests of the Debtors, their
creditors and their estates.
Proposed Bidding Procedures
Bids must be submitted by Feb. 6,2009 at 4:00 pm., must provide a
purchase price for the assets that exceeds the purchase price for
such assets reflected in the Stalking Horse APA, if any, by at
least six (6) percent, and must provide that the entire purchase
price will be paid in cash at closing.
In addition, bids will not request or entitle the bidder to any
transaction or break-up fee, expense reimbursement, or similar
type of payment, shall not contain any due diligence or financing
contingencies of any kind that such bidder is not prepared to
waive prior to the Auction; and must be accompanied by a good
faith cash deposit equal to 10% of the amount offered to purchase
the assets.
If two or more qualified bids are received by the Debtors, an
auction will be held on Feb. 10, 2009 at 10:00 a.m., prevailing
eastern time, at the offices of:
Pepper Hamilton, LLP
The New York Times Building
37th Floor
620 Eight Avenue, New York
New York 10018-1405
At the auction, qualified bidders will be permitted to increase
their bids, provided that the qualified overbids will exceed the
existing bid by at least $100,000.
Stalking Horse Bidder and Bid Protections
On or before Jan. 30, 2009, the Debtors in their discretion may
execute and file with the Court, subject to Court approval
pursuant to the Sale Motion, a fully-executed Asset Purchase
Agreement for the sale of the Assets to a stalking horse bidder on
terms acceptable to the Debtors. The Stalking Horse Bidder will
be deemed to be a Qualified Bidder for purposes of participation
in the Auction, and the Stalking Horse Bid shall be deemed to be a
Qualified Bid for purposes of the Auction.
In order to induce a Stalking Horse Bidder to execute a Stalking
Horse APA, and provided that the Stalking Horse APA does not
contain any due diligence or financing contingencies of any kind,
the Debtors will be authorized to provide bid protections to the
Stalking Horse Bidder in the Stalking Horse APA in the form of an
expense reimbursement fee of up to $100,000, to be paid at closing
from the proceeds of the sale of the assets to a competing bidder
if the assets are not sold to the Stalking Horse Bidder. The
Bidding Procedures permit the Stalking Horse Bidder to credit bid
the Expense Reimbursement Fee at the Auction. Atlantic Equity
Partners III, L.P., an insider of PPI within the meaning of Sec.
101(31) of the Bankruptcy Code, has expressed an intent to
participate in the bidding process.
About Precision Parts
Headquartered in Rochester Hills, Michigan, Precision Parts
International Services Corp. -- http://www.precisionparts.com/ --
sells products to major north American automotive and non-
automotive original equipment manufacturers and Tier 1 and 2
suppliers. The Debtors operate six manufacturing facilities
throughout north America, including a facility in Mexico operated
on the Debtors' behalf by Intermex Manufactura de Chihuahua under
a shelter and logistics agreement.
The Debtors' operations consist of two distinct lines of business:
MPI, which performs fineblanking work and conventional metal
stamping, as well as a range of value-added finishing operations,
and Skill which performs conventional metal stamping, as well as a
range of assembly and value-added finishing operations.
Four of the Debtors are holding companies that have no employees
and are not involved in the Debtors' day-to-day operations: PPI
Holdings, Inc.; PPI Sub-Holdings, Inc.; MPI International
Holdings, Inc.; and Skill Tool & Die Holdings Corp.
The company and eight of its affiliates filed for Chapter 11
protection on Dec. 12, 2008 (Bankr. D. Del. Lead Case No.
08-13291). David M. Fournier, Esq., at Pepper Hamilton LLP; and
Robert S. Hertzberg, Esq., and Deborah Kovsky-Apap, Esq., at
Pepper Hamilton LLP, represent the Debtors in their restructuring
efforts. The Debtors proposed Alvarez & Marsal North America LLC
as financial advisor and Kurtzman Carson Consultants LLC as
notice, claims and balloting agent. When the Debtors filed for
protection from their creditors, they listed assets of between
$100 million to $500 million each.
According to Bloomberg News, the company is at least the 10th
auto-parts maker that sought Chapter 11 protection from its
creditors this year.
PRESERVE LLC: Court Says Debtor Not Subject to Single Asset Rule
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
has denied the motion of Point Center Financial, Inc. that The
Preserve, LLC, be subject to provisions of the Bankruptcy Code
applicable to "Single Asset Real Estate" as defined in Sec.
101(51B) of the Bankruptcy Code. PCF is the designated agent for
the various fractionalized interest holders of the Note and Deed
of Trust encumbering the Debtor's Beaumont, California Property.
In its motion, PCF stated that the Debtor's primary asset is
approximately 1300 acres of raw land and an adjacent 112 acres in
the city of Beaumont, California which is proposed as a large
master planned community. Debtor's ownership interest in the
Property and activities incidental thereto generate substantially,
if not all, of the Debtor's income (if any). The Debtor claims
that this is not a single asset case because the 112 Acres is not
part of the Property and because it allegedly bought a 7,200
square foot single family lot in Adelanto the same month as the
bankruptcy filing, as well as recorded a Memorandum of Agreement
on Sept. 18, 2008 (a week before the bankruptcy filing),
concerning its alleged claimed ownership of an office building
located at 4195 Brockton Avenue, Riverside, California.
PCF contends that these two alleged transfers do not take Debtor
out of the single asset rule. The Debtor, PCF told the Court, has
refused to execute a stipulation to that effect.
Riverside, California-based The Preserve, LLC is in the business
of acquiring and making real estate investments. The company
filed for Chapter 11 relief on Sept. 25, 2008 (Bankr. C. D. Calif.
No. 08-23006). Jeffrey W. Broker, Esq., at Broker & Associates
Professional Corporation assists the company in its restructuring
efforts. The company listed assets of $100 million to $500
million and debts of $10 million to $50 million.
RETAIL PRO: Case Summary & 35 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Retail Pro, Inc.
3252 Holiday Court, Suite 226
La Jolla, CA 92037
Bankruptcy Case No.: 09-10087
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Page Digital, Incorporated 09-10088
IP Retail Technologies International, Inc. 09-10089
Sabica Ventures, Inc. 09-10090
Type of Business: The Debtor operates a chain of retail stores.
See: http://www.retailpro.com/
Chapter 11 Petition Date: January 10, 2009
Court: District of Delaware (Delaware)
Debtor's Counsel: Bruce Grohsgal, Esq.
bgrohsgal@pszyj.com
Laura Davis Jones, Esq.
ljones@pszjlaw.com
Pachulski, Stang, Ziehl Young & Jones
919 N. Market Street, 16th Floor
Wilmington, DE 19899-8705
Tel: (302) 778-6403
Fax: (302) 652-4400
Investment Banker: View Partners Capital LLC
Notice, Claims and Solicitation Agent: Kurtzman Carson Consultants
LLC
The Debtors' financial condition as of November 30, 2008:
Total Assets: $24,652,353
Total Debts: $28,867,462
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Jeff Boone unsecured note $2,439,494
112 Woodsmoke Way
Folsom, CA 95630
Tel: (916) 984-1528
Michael Tomczak unsecured note $2,439,494
2300 E. Bidwell St., Ste. 110
Folsom, CA 95630
Tel: (916) 984-1528
CAH Investments contract $1,250,000
commitment
Key Equipment Finance trade payable $456,114
Intuit Inc. trade payable $237,581
Dorsey & Whitney LLP professional $212,693
services
The Irvine Company rent $153,726
QQQ System Pty Limited trade payable $135,320
Goldman Parks Kurlin Modidin professionals $126,347
LLP services
UNISYS de Mexico SA de CV trade payable $105,562
Oracle USA Inc. trade payable $101,486
Fujitsu Consulting professionals $101,195
services
Barker Storey Matthews professional $73,249
services
Solomon Ward Seidenwurm professional $72,648
services
Island Pacific trade payable $70,402
Julia Eakes fees $65,000
The Hard Rock Hotel San trade payable $64,974
Diego
Pancar Capital LLC unsecured note $49,416
Foundry Logic LLC trade payable $47,501
Korea Distribution Services trade payable $46,926
Co. Ltd.
Cybage Software Pvt. Ltd. trade payable $40,784
Steve Spector fees $39,167
American Express trade payable $35,776
Dell trade payable $31,212
Jorosa Int'l trade payable $25,000
Clever Computing trade payable $21,808
Fairfield Investors LP rent $21,650
Retail Professionals trade payable $20,000
Protea Lo Jolla Corporate rent $18,585
Shift 4 Corporation trade payable $17,850
Blue Rising Systems Ltd. trade payable $16,143
Spherion Corporation trade payable $14,000
Addmark trade payable $12,008
Globalview Advisors LLC professional $11,500
services
CompCraft trade payable $11,220
The petition was signed by Donald Radcliffe, chief executive
officer.
REUNION INDUSTRIES: Discloses Changes in Certifying Accountant
--------------------------------------------------------------
Reunion Industries, Inc., disclosed in a filing with the
Securities and Exchange Commission of the changes in its
certifying accountant. The company was notified that the New York
practice of Mayer Hoffman McCann P.C. now operates under the name
MHM Mahoney Cohen CPAs.
The shareholders of Mahoney Cohen & Company, CPA, P.C., became
shareholders of Mayer Hoffman McCann P.C pursuant to an asset
purchase agreement.
During the company's two fiscal years ended Dec. 31, 2006, and
2005, and through the date of this report on Form 8-K, the company
did not consult with MHM Mahoney Cohen CPAs regarding any of the
matters or reportable events set forth in Item 304 (a)(2) (i) and
(ii) of Regulation S-K.
Headquartered in Pittsburgh, Pennsylvania, Reunion Industries,
Inc. owns and operates industrial manufacturing operations that
design and manufacture engineered, high quality products for
specific customer requirements. These products include large
diameter seamless pressure vessels, manufactured by its CP
Industries division, and hydraulic and pneumatic cylinders,
manufactured by its Hanna Cylinders division. In addition,
the Debtor has a 65% interest in Shanghai Klemp Metal Products
Co., Ltd., a Chinese company located in Shanghai, China.
Shanghai Klemp manufactures metal bar grating.
Reunion Industries filed for chapter 11 protection on Nov. 26,
2007, (Bankr. D. Conn. Case No. 07-50727). Two Reunion Industries
stockholders, Charles E. Bradley, Sr. Family, L.P., and John Grier
Poole Family, L.P., filed separate Chapter 11 petitions on the
same day (Bankr. D. Conn. Case Nos. 07-50725 and 07-50726). Carol
A. Felicetta, Esq. at Reid and Riege, P.C.S. represents the
Debtors in their restructuring efforts.
RONALD LEONARD: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Ronald Kevin Leonard
3839 W Imperial Hwy
Inglewood, CA 90303
Bankruptcy Case No.: 08-18300
Chapter 11 Petition Date: December 15, 2008
Court: Central District of California (Santa Ana)
Judge: Robert N. Kwan
Debtor's Counsel: Richard T. Smith
18 S Marengo Ave
Pasadena, CA 91101
Tel: (626) 440-9603
Fax: (626) 405-9052
terrylt1@ix.netcom.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/ccb08-18300.pdf
RONALD MUNIZ: Case Summary & Four Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Ronald Muniz
2771 Kennedy Blvd.
Jersey City, NJ 07306
Bankruptcy Case No.: 09-10390
Chapter 11 Petition Date: January 8, 2009
Court: District of New Jersey (Newark)
Debtor's Counsel: Gilberto M. Garcia, Esq.
krickogarcia@aol.com
Garcia & Kricko
560 Sylvan Avenue
Englewood Cliffs, NJ 07632
Tel: (201) 894-1998
Fax: (201) 894-1942
Estimated Assets: $1 million to $100 million
Estimated Debts: $100,000 to $1 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Wanda Lemus $637,000
45 Royal Drive
Brick, NJ 08823
GMAC secured value: $8,000
PO Box 105677 $22,500
Atlanta, GA 30348
Cowan, Guntenski and Co. $4,202
c/o Brian J. Di Stefano, Esq.
367 U.S. Highway 9
Bayville, New Jersey 08721
Griselle Camacho, Esq. $2,500
SBARRO INC: Moody's Downgrades Corporate Family Rating to 'Caa2'
----------------------------------------------------------------
Moody's Investors Service downgraded the probability of default
rating as well as the corporate family rating of Sbarro, Inc. to
Caa2 from Caa1. Moody's also lowered the company's speculative
grade liquidity rating to SGL-4 from SGL-3. The outlook is
negative.
The ratings downgrade reflects Sbarro's weaker than expected
operating performance which continues to pressure margins and cash
flows. The downgrade also reflects Moody's view that -- given the
company's weak operating performance -- Sbarro may have difficulty
meeting financial covenants in its bank credit facility, which
tighten over the next several quarters.
The downgrade of Sbarro's speculative grade liquidity rating to
SGL-4 (weak liquidity) reflects Moody's view that the company may
need to seek covenant relief from its banks within the next few
quarters and that internal cash flow and cash balances will likely
be modest.
The Caa2 corporate family rating reflects the company's
persistently high leverage, weak liquidity, high seasonality of
cash flows, and significant competition in the pizza segment of
the restaurant industry. The ratings are supported by Sbarro's
well recognized brand name, reasonable scale, and predictability
of royalty stream from franchisees.
Ratings downgraded are:
-- Corporate family rating to Caa2 from Caa1;
-- Probability of default rating to Caa2 from Caa1;
-- $25 million senior secured revolver to B2 (LGD 2, 21%) from
B1 (LGD 2, 21%);
-- $183 million senior secured term loan to B2 (LGD 2, 21%)
from B1 (LGD 2, 21%);
-- $150 million senior unsecured notes to Caa3 (LGD 5, 77%)
from Caa2 (LGD 5, 77%);
-- Speculative Grade Liquidity rating lowered to SGL-4 from
SGL-3
The rating outlook is negative.
The negative outlook reflects Moody's view that Sbarro's operating
performance will continue to be negatively impacted by weak
consumer spending, competitive pressures and high operating costs
over the intermediate term. The outlook also reflects Moody's
concern regarding a possible covenant violation as covenants
tighten and operating performance remains weak. Should Sbarro's
have difficulty meeting its bank financial covenants, it could
cause it to seek an amendment or waiver from its banks. Given the
very difficult macro-economic and banking environment, this could
result in Sbarro's obtaining more stringent and expensive terms
from its banks than currently exist.
Moody's last rating action for Sbarro occurred on August 22, 2008,
when the company's corporate family rating was downgraded to Caa1
from B3. At the same time the company's speculative grade
liquidity rating was affirmed at SGL-3.
Sbarro, Inc. headquartered in Melville, New York, is a leading
quick service restaurant concept that serves Italian specialty
foods. As of September 28, 2008, the company owned and operated
approximately 510 and franchised about 550 restaurants worldwide
under brand names such as "Sbarro,", "Mama Sbarro" and "Carmela's
Pizzeria". Total revenues for twelve months ending September 28,
2008 were approximately $365 million.
SCO GROUP: Court to Review Reorganization Plan on February 25
-------------------------------------------------------------
Jennifer Pittman at Santa Cruz Sentinel reports that the United
States Bankruptcy Court for the District of Delaware will review
SCO Group Inc.'s reorganization plan on Feb. 25, 2009.
As reported by the Troubled Company Reporter on Jan. 12, 2009, SCO
Group and its debtor-affiliates asked the Court to further extend
their exclusive periods to:
a) file a Chapter 11 plan of reorganization until Jan. 16,
2009; and
b) solicit acceptances of that plan until March 18, 2009.
SCO Group, according to Santa Cruz Sentinel, wants to auction off
its core UNIX products and continue pursuing controversial
litigation over intellectual property rights. Citing SCO Group,
Santa Cruz Sentinel relates that several investment groups are
interested in acquiring SCO Group's assets through the public
auction.
Santa Cruz Sentinel states that SCO Group has been involved in
litigation for almost five years, suing IBM, AutoZone, and Novell.
The company has also been sued by Red Hat, the report says. SCO
Group lost its case against Novell in August 2008 and faced a
potentially $40 million summary judgment, which it appealed,
according to the report. SCO Group has cut down on the amount
owed to Novell since filing for bankruptcy protection, and claims
it will win on appeal, the report states.
According to Santa Cruz Sentinel, SCO Group will have to cut costs
if assets aren't sold, to continue to support its UNIX and mobile
products and services.
About The SCO Group
Headquartered in Lindon, Utah, The SCO Group Inc. (Nasdaq:SCOX)
fka Caldera International Inc. -- http://www.sco.com/--
provides software technology for distributed, embedded and
network-based systems, offering SCO OpenServer for small to
medium business and UnixWare for enterprise applications and
digital network services.
The company has office locations in Australia, Austria,
Argentina, Brazil, China, Japan, Poland, Russia, the United
Kingdom, among others.
The company and its affiliate, SCO Operations Inc., filed for
Chapter 11 protection on Sept. 14, 2007, (Bankr. D. Del. Lead
Case No. 07-11337). Paul Steven Singerman, Esq., and Arthur
Spector, Esq., at Berger Singerman P.A., represent the Debtors in
their restructuring efforts. James O'Neill, Esq., and Laura Davis
Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, are the
Debtors' Delaware and conflicts counsels. Epiq Bankruptcy
Solutions LLC, acts as the Debtors' claims and noticing agent.
The United States Trustee failed to form an Official Committee of
Unsecured Creditors in these cases due to insufficient response
from creditors. The Debtors' schedules showed total assets of
$9,549,519 and total liabilities of $3,018,489.
SEAGATE TECHNOLOGY: Stephen Luczo Replaces William Watkins
----------------------------------------------------------
Don Clark at The Wall Street Journal reports that Seagate
Technology Inc. has appointed Chairperson Stephen Luczo to replace
CEO William Watkins.
"The board just felt that at this time Steve Luczo was the right
guy to take the company forward," WSJ quoted a Seagate Technology
spokesperson as saying.
Citing Seagate Technology, WSJ relates that David Wickersham had
also resigned as chief operating officer, effective immediately.
According to WSJ, Seagate Technology said on Monday that it would
reduce its work force by 10%. Mr. Watkins and another Seagate
Technology executive had discussed the plan at the Consumer
Electronics Show last week, says WSJ.
WSJ states that Mr. Luczo first became Seagate Technology's CEO
after CEO Alan Shugart was laid off in 1998. Mr. Luczo, who had
been Seagate president and CEO, helped take Seagate Technology
private in a leveraged buyout, and then the company went public
again, WSJ reports.
According to WSJ, Mr. Watkins succeeded Mr. Luczo as CEO in 2004.
John Monroe, an analyst at Gartner, said that Mr. Luczo had
previously helped supervise a restructuring that took Seagate
Technology's work force from 111,000 people to 35,000, and made
the company's factories much more flexible and efficient, WSJ
states.
Headquartered in California, USA, Seagate Technology, Inc.,
designs, manufactures, and markets products for storage, retrieval
and management of data on computer and data communications
systems. These products include rigid disc drives, tape drives
and software. Seagate's rigid disc drive products currently
include rigid disc drive models in the 3.5-inch form factor with
capacities ranging from 4.3 gigabytes (GB) to 73 GB. Seagate
sells its products to original equipment manufacturers for
inclusion in their computer systems or subsystems, and to or
through distributors, resellers, dealers, system integrators and
retailers.
As reported by the Troubled Company Reporter on Dec. 19, 2008,
Fitch Ratings downgraded the ratings of Seagate Technology and its
wholly owned subsidiaries, Seagate Technology HDD Holdings and
Maxtor Corporation, the debt of which is irrevocably fully and
unconditionally guaranteed by Seagate:
Seagate
-- Issuer Default Rating to 'BB+' from 'BBB-';
-- Unsecured credit facility to 'BB+' from 'BBB-'.
Seagate HDD
-- IDR to 'BB+' from 'BBB-';
-- Senior unsecured debt to 'BB+' from 'BBB-';
-- Unsecured credit facility to 'BB+' from 'BBB-'.
Maxtor
-- IDR to 'BB+' from 'BBB-';
-- Senior unsecured debt to 'BB+' from 'BBB-';
-- Subordinated debentures to 'BB-' from 'BB'.
Fitch Ratings said that the rating outlook remains negative.
SHANE CO: Blames Chapter 11 on Recession, SAP Systems Delays
------------------------------------------------------------
Closely held Shane Co. filed for Chapter 11 after a precipitous
decline in retail sales, particularly in luxury goods, driven by
the overall economic recession, says Kevin Regan, interim chief
restructuring officer of the company.
According to Mr. Regan, as with many jewelry retailers, the period
from Thanksgiving through Christmas historically represents
approximately 30 to 33% of the company's overall sales. In 2008,
the company's sales during this period were off 32% from 2007's
numbers, itself a slow holiday season, with recession looming.
In 2004, Shane Co., which has stock all owned by Tom Shane --
its President and CEO, -- and his family trusts, first reached
$150 million in annual sales. By 2006, its total sales were $265
million. In 2007, sales were $275 million. In contrast, in 2008,
the company projects total sales of only $207 to 210 million.
Other events, however, have contributed to the Company's economic
decline:
-- In 2005, the Company contracted with Germany-based SAP to
develop a "point of sale" and inventory management system.
The original cost of the SAP system was to have been
$8 to 10 million, with a twelve-month implementation
schedule. That cost ballooned to $36 million, with a 32-
month implementation schedule. The Company went live with the
SAP system in September of 2007,but discovered many of the
key features did not work properly. As a result, the
company went into the 2007 holiday season, with impaired
visibility as to the company's financial performance. The
SAP system became stable and functional only in the fall of
2008. The SAP system though is still not fully functional.
-- Due to the delay in completion of the of the SAP system, and
the discovery in the fall of 2007 that the system did not yet
provide accurate inventory count numbers, the company
was substantially overstocked with inventory, and with the
wrong mix of inventory, which added to the company's cost of
capital and also adversely affected sales through year-end
and the first 9 months of 2008.
-- Beginning in 2006, the Company pursued expansion
opportunities to open five new stores in four new markets.
The market downturn and other factors, however, made opening
stores in certain of these locations illadvised.
In 2006, the Company created Shane Co. (Thailand) Ltd. to serve as
a sourcing, manufacturing, and quality control facility in
Bangkok, in order to take advantage of the lower cost of labor,
and reap the rewards of the mastery of certain jewelry techniques
of Thai craftspeople. The Company believes that the formation of
Shane Co. (Thailand) remains a prudent investment in the Company's
future. The costs of construction of the facility and other
start-up costs, totaling approximately $3.8 million over the past
two years, has been a further drain on capital, Mr. Regan says.
Aside from its obligations for inventory purchased on trade
credit, company arranged loan facilities with Crystal and SunTrust
in 2006, to facilitate inventory purchases:
-- Suntrust Facility: A revolving credit facility with SunTrust
Bank in the original principal amount of $25,000,000,
pursuant to the Amended and Restated Loan and Security
Agreement dated as of September 5, 2008. The Facility is
secured by a first lien interest in essentially all assets
of the company.
-- Crystal Capital Facility. A term loan facility with Crystal
Capital Fund, L.P., as Agent, in the original principal
amount of $15,000,000, pursuant to the Amended and Restated
Loan and Security Agreement dated as of September 5, 2008.
The Crystal Capital Facility is secured by a second lien and
security interest in essentially all assets of the company.
Mr. Shane provided a limited personal guaranty in favor of
Crystal Capital, in the amount of $1,000,000, together with
a "springing guaranty" in the amount of an additional
$2,000,000, in the event of certain defined "bad acts."
The cost of the financing facilities, both interest and compliance
obligations thereunder, has added to the cash drain on the
Company.
Restructuring Actions
To address financial concerns, the company, which currently has
550 employees, first "rightsized" the central office and store
operations, eliminating over 38 positions in the central office,
and 68 positions at the store level, in September and December
2007. Immediately prepetition, the Company terminated an
additional 71 employees in the central office and retail
locations.
In 2004, the Company first retained SunTrust Robinson Humphrey, an
investment banking firm, to consider sale, merger, and capital
options for the company. The company also brought in turnaround
specialists Cloyses Partners and FTI Consulting, to assist in
analyzing and restructuring the company's financial and business
operations.
According to Mr. Regan, while the company was able to restructure
its corporate operations and reduce its operating overhead, it was
unable to secure a new investor or lender willing to refinance its
existing obligations.
During the spring and summer of 2008, Mr. Shane reached out to the
company's critical vendors and sought extended payment terms and
extended credit lines, which were generally granted, thereby
obtaining significant payment and credit relief. As a result,
SunTrust and Crystal provided a one year refinancing under their
newly negotiated term debt and revolver debt during difficult
financing times.
Mr. Shane has been approached on occasion to explore possible
business options including mergers, recapitalizations, and new
equity investors in the company. While Mr. Shane has been open to
these opportunities, no firm offers have been presented.
Immediately prior to the bankruptcy filing, Mr. Shane contacted
11 key suppliers to line up a consortium of supportive creditors
to purchase the Crystal Capital Facility, or make a loan to the
Company, funded as a DIP facility through a Chapter 11
reorganization, with the proceeds to be used to retire the
obligations to Crystal Capital. While several vendors expressed
some interest in participating in such a facility, it became
apparent, through those discussions, that it was unlikely that the
company would be able to come to terms regarding such a loan
within the time-frame required by Crystal Capital to the company.
Accordingly, the company filed for Chapter 11 on Jan. 12, 2009.
About Shane Co.
Headquartered in Centennial, Colorado, Shane Co. --
http://www.shaneco.com/-- sells jewelry. The company filed for
Chapter 11 protection on January 12, 2009 (Bankr. D. Col. Case No.
09-10367). Gregg M. Galardi, Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, serves as the Debtor's counsel, and Caroline
C. Fuller, Esq., at Fairfield and Woods, P.C., serves as the
Debtor's local counsel. The Debtor proposed Kurtzman Carson
Consultants LLC as its claims agent. When the Debtor filed for
protection from its creditor, it listed assets and debts between
$100 million and $500 million each.
SHANE CO: Seeks Debtor-in-Possession Financing from Owner
---------------------------------------------------------
Privately held Shane Co, seeks permission from the U.S. Bankruptcy
Court for the U.S. Bankruptcy Court for the District of Colorado
to access debtor-in-possession financing from an entity formed by
Tom Shane, the company's owner, president and CEO.
Aside from its obligations for inventory purchased on trade
credit, company arranged loan facilities with Crystal and SunTrust
in 2006, to facilitate inventory purchases:
-- Suntrust Facility: A revolving credit facility with SunTrust
Bank in the original principal amount of $25,000,000,
pursuant to the Amended and Restated Loan and Security
Agreement dated as of September 5, 2008. The Facility is
secured by a first lien interest in essentially all assets
of the company.
-- Crystal Capital Facility. A term loan facility with Crystal
Capital Fund, L.P., as Agent, in the original principal
amount of $15,000,000, pursuant to the Amended and Restated
Loan and Security Agreement dated as of September 5, 2008.
The Crystal Capital Facility is secured by a second lien and
security interest in essentially all assets of the company.
Mr. Shane provided a limited personal guaranty in favor of
Crystal Capital, in the amount of $1,000,000, together with
a "springing guaranty" in the amount of an additional
$2,000,000, in the event of certain defined "bad acts."
As of Jan. 12, 2009, the loan balance on the SunTrust Facility was
approximately $300,000, representing only outstanding fees,
interest, and miscellaneous costs. About $15,000,000 of principal
remains outstanding on the Crystal Capital Facility.
The Crystal Capital Facility was refinanced in September 2008. By
December, the Company recognized that the general economic
recession threatened placing the Company into covenant default
under the Crystal Capital Facility. The company then renewed its
efforts to secure alternative sources of financing in order to
retire the Crystal Capital Facility.
On the eve of the bankruptcy filing, the company secured a DIP
Facility from a company owned by Mr. Shane and majority
shareholder of the Company, and certain Shane family trusts. Mr.
Regan says the terms of the DIP financing is favorable to the
company. First, they will allow the company to immediately retire
the Crystal Capital Facility, in combination with funds on hand
with the Company. Repayment of that Crystal Capital Facility will
eliminate on-going disputes with Crystal Capital on the operating
budget of the Company and will put the Company on a strong course
for reorganization.
The DIP Facility, Mr. Regan adds, is materially better to the
company that the Crystal Capital Facility in at least these
points:
* The interest rate under the DIP Facility is lower (11%
compared to the greater of 15% or LIBOR plus 2%);
* There are no fees associated with the DIP Facility;
* The maturity date is extended by 2.5 years;
* The DIP Facility does not require cash dominion and has
greatly reduced reporting requirements, reducing the
financial burden on the company;
* Because the DIP Facility is offered by insiders of the
company, who are committed to its successful reorganization,
the risk that the company is forced into liquidation by the
hostile actions of a secured lender are greatly reduced.
Mr. Regan avers that the immediate approval of the DIP Facility is
essential to the successful reorganization of the company, as it
will provide funds to retire the Crystal Capital Facility.
Immediate approval will eliminate a fee of $150,000 which Crystal
Capital otherwise seeks to assess the company for the use of its
Cash Collateral. It also eliminates the risk that Crystal Capital
will declare an event of default if the Crystal Capital Facility
is not fully repaid by January 16, 2009. Finally, it eliminates
the pressure placed on the Company by Crystal Capital to
immediately begin the process of marketing the company to the
highest bidder, Mr. Regan avers.
About Shane Co.
Headquartered in Centennial, Colorado, Shane Co. --
http://www.shaneco.com/-- sells jewelry. The company filed for
Chapter 11 protection on January 12, 2009 (Bankr. D. Col. Case No.
09-10367). Gregg M. Galardi, Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, serves as the Debtor's counsel, and Caroline
C. Fuller, Esq., at Fairfield and Woods, P.C., serves as the
Debtor's local counsel. The Debtor proposed Kurtzman Carson
Consultants LLC as its claims agent. When the Debtor filed for
protection from its creditor, it listed assets and debts between
$100 million and $500 million each.
SHANE CO: Wants Court Approval to Use Lenders' Cash Collateral
--------------------------------------------------------------
Shane Co. asks the United States Bankruptcy Court for the District
of Colorado for authority to use cash collateral securing
repayment of secured loan to its prepetition agent, lenders and
vendor until Feb. 5, 2009.
The proceeds of the cash collateral will be used to provide
working capital for the Debtor's assets. The Debtor wants to use
$5 million of the cash collateral to retire the Crystal Capital
Facility. Crystal Capital will waive fees it intends to charge
against the Debtor in connection with the use of cash collateral,
if that payment is made by Jan. 16, 2009.
The Debtor has an urgent need to use of the cash collateral to
operate its business and prevent the diminution in value of the
assets of the estate to fund its postpetition operations which
include:
a) costs of operation of the Debtor's retail locations and
corporate headquarters;
b) costs of inventory, goods and services purchased by the
Debtor in the ordinary course of business;
c) payment of the Debtor's postpetition obligations under its
prepetition executory contracts and leases;
d) those costs reasonably necessary to (i) implement the
process to recapitalize the Debtor, in accordance with the
pending motions related thereto, and (ii) to consummate and
implement any approved recapitalization as a result thereof;
and
e) professional fees and expenses as may be permitted
by the Bankruptcy Code.
The secured lenders will be granted superpriority liens on the
assets of the Debtor, and superpriority administrative claims
against its estate, as adequate protection.
According to the Debtor, absent to use the cash collateral will be
unable the Debtor to maintain and continue its operations. The
Debtor will be unable to proceed with the reorganization of its
operations which could result in a significantly reduced recovery
for its bankruptcy estate.
The Debtor's vendor includes SunTrust Bank; Crystal Capital Fund
L.P.; and M. Suresh Company PVT Ltd.; M. Suresh Jewellery PVT
Ltd.; Twinklediam, Inc.; SDC Designs, LLC; and Weindling
International, LLC, each claim an interest in cash collateral.
About Shane Co.
Headquartered in Centennial, Colorado, Shane Co. --
http://www.shaneco.com/-- sells jewelry. The company filed for
Chapter 11 protection on January 12, 2009 (Bankr. D. Col. Case No.
09-10367). Gregg M. Galardi, Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represents as the Debtor's counsel, and
Caroline C. Fuller, Esq., at Fairfield and Woods, P.C., represents
as the Debtor's local counsel. The Debtor proposed Kurtzman
Carson Consultants LLC as its claims agent. When the Debtor filed
for protection from its creditor, it listed assets and debts
between $100 million and $500 million each.
SHEARSON FINANCIAL: Completes $500,00 DIP Funding From AJW
----------------------------------------------------------
Shearson Financial Network, Inc., entered into and closed the
Security Agreement with AJW Partners, LLC, AJW Partners II, LLC,
AJW Master Fund, Ltd., AJW Master Fund II, Ltd., and New
Millennium Capital Partners, LLC as approved by the United States
Bankruptcy Court for the District of Nevada.
Pursuant to the Order and the DIP Security Agreement, the Funders
have agreed to provide the company with financing in the amount up
to $500,000 and the company agreed to issue Senior Secured
Superpriority Debtor-In-Possession Callable Secured Convertible
Notes in an aggregate amount up to $500,000. In order to induce
the DIP Funders to purchase the DIP Notes, the company has agreed
to grant to the DIP Funders a first priority security interest in
certain property of the company to secure the prompt payment,
performance and discharge in full of all of the company's
obligations under the DIP Notes. In accordance with the DIP
Security Agreement, the company received $175,000 on Aug. 12,
2008, an additional $150,000 on Oct. 17, 2008, and an additional
$175,000 on Dec. 5, 2008.
The DIP Notes mature on the earlier of Nov. 15, 2008, the date
that the reorganization plan becomes effective or the upon an
event of default and interest associated with the DIP Notes is 8%
per annum, which is payable upon maturity.
The company may prepay the DIP Notes in the event that no event of
default exists, there are a sufficient number of shares available
for conversion of the DIP Notes and the market price is at or
below $0.05 per share. The full principal amount of the DIP Notes
is due upon default under the terms of the DIP Notes.
The DIP Notes are convertible into its common stock, at the DIP
Funders' option, at a conversion price, equal to 50% of the
average of the three lowest intraday trading prices for its common
stock during the 20 trading days before, but not including, the
conversion date. As of Dec. 11, 2008, the average of the three
lowest intraday trading prices for its common stock during the
preceding 20 trading days as reported on the Pinksheets was $.0004
and, therefore, the Variable Conversion Price for the DIP Notes
was $.0002. Based on this conversion price, the DIP Notes in the
amount of $500,000, excluding interest, are convertible into
2,500,000,000 shares of its common stock.
The company's Articles of Incorporation allow for issuance of a
maximum of 500,000,000 shares of common stock. Currently, the
company has approximately 4,689,988 shares outstanding, leaving an
unissued balance of authorized shares that is not sufficient to
service the maximum requirements of the DIP Notes. In the event
the company is unable to obtain an increase in its authorized
common stock, the company will be required to repay the DIP Notes
and it will be subject to penalties associated with failure to
deliver shares of common stock upon conversion of the DIP Notes
well as prepayment penalties.
The DIP Funders have contractually agreed to restrict their
ability to convert the DIP Notes and receive shares of its common
stock that the number of shares of the company's common stock held
by the DIP Funders after such conversion does not exceed 4.9% of
the company's then issued and outstanding shares of common stock.
The company claims an exemption from the registration requirements
of the Act for the private placement of these securities pursuant
to Section 4(2) of the Act and Regulation D promulgated thereunder
since, among other things, the transaction did not involve a
public offering, the DIP Funders is an accredited investor, the
DIP Funders have access to information about the company and its
investment, the DIP Funders took the securities for investment and
not resale, and the company took appropriate measures to restrict
the transfer of the securities.
About Shearson Financial Network Inc.
Based in San Francisco, California, Shearson Financial Network
Inc. (PINKSHEETS: SHSN) --
http://www.shearsonfinancialnetwork.com/-- fka Blue Star Coffee,
Inc. and Consumer Direct of America, is a direct-to-consumer
mortgage broker and banker with revenues derived primarily from
origination commissions earned on the closing of first and second
mortgages on single-family residences. It was engaged in selling
specialty coffee beans, brewed coffee and espresso-based beverages
through company-owned and franchised retail locations. Its wholly
owned subsidiary, Shearson Home Loans, formerly known as Consumer
Direct Lending Inc. was formed to originate retail mortgages and
to provide mortgage banking services. It sells its loan servicing
through correspondent relationships with BNC, Countrywide, Impac
and Aegis.
The Debtor filed for Chapter 11 protection on June 6, 2008,
(Bankr. D. Utah Case No.: 08-16350) Gregory E. Garman, Esq.
represents the Debtor in its restructuring efforts. When it filed
for protection from its creditors, it listed total assets of
$3,000 and total debts of $29,932,466. The Debtor did not file a
list of its largest unsecured creditors.
SMITTY'S BUILDING: Gets Initial Okay to Use $16MM BofA Facility
---------------------------------------------------------------
The Hon. Stephen S. Mitchell of the United States Bankruptcy Court
for the Eastern District of Virginia authorized Smitty's Building
Supply Inc. and its debtor-affiliates to obtain, on an interim
basis, $16.0 million in debtor-in-possession financing under the
postpetition credit and security agreement with Bank of America,
N.A., as lender.
The Debtors owe $12.3 million in loans plus interests, cost and
interest to the lender as of their bankruptcy filing.
The Debtors said the proposed postpetition financing is comprised
of (i) a $10.5 million revolving loan note; and (ii) $5.5 million
senior term loan note. The DIP facilities will mature by Aug. 15,
2009.
Proceeds of the facilities will be used to (i) repay in full all
prepetition obligations as of the Debtors' bankruptcy filing, and
(ii) provide working capital, costs and professionals fees.
Under the agreement, the DIP loans incur interest at BBA 1-month
LIBOR + 450 basis points.
To secure their DIP obligations, the lender will be granted
superiority claims status on account of the obligations under the
credit agreements. There is a $250,000 carve-out for payment of
fees and expenses incurred by professionals retained by the
Debtors.
A hearing is set for Feb. 28, 2009, at 9:30 a.m., to consider
final approval of the Debtors' request.
A full-text copy of the revolving loan note is available for free
at http://ResearchArchives.com/t/s?379a
A full-text copy of the term loan note is available for free
at http://ResearchArchives.com/t/s?379b
A full-text copy of the postpetition credit and security agreement
is available for free at http://ResearchArchives.com/t/s?379d
A full-text copy of the 13-week cash flow budget is available for
free at http://ResearchArchives.com/t/s?379d
About Smitty's Building
Headquartered in Alexandria, Virginia, Smitty's Building Supply
Inc. supplies building materials in Washington, D.C. The company
and three of its affiliates filed for Chapter 11 protection on
Jan. 5, 2009 (Bankr. D. Del. Lead Case No. 09-10040). Kristen E.
Burgers, Esq., and Lawrence Allen Katz, Esq., at Venable LLP,
represent the Debtors in their restructuring efforts. Epiq
Bankruptcy Solutions LLC serves as the Debtors' claims agent.
When the company filed for protection from their creditors, they
listed assets and debts between $10 million and $50 million in
their filing.
SUPERIOR AIR: Expects Court OK on Bidding Process by January 15
---------------------------------------------------------------
Glenn Pew at Avweb.com reports that Superior Air Parts expects the
U.S. Bankruptcy Court for the Northern District of Texas to
approve the bidding process by Jan. 15.
According to Avweb.com, Avco -- a subsidiary of Textron -- has
presented a $11.5 million bid for "substantially all of Superior's
assets." Avweb.com that Avco's bid is free of all liens and other
claims.
Avweb.com states that Superior Air's sale or dissolution could
affect a wide swath of aviation interests from overhaul shops to
individual pilot/owners. Superior Air, according to the report,
had said that it is maintaining enough staff to accept and fill
orders.
Superior Air's XP experimental engine program will continue, while
the company's popular owner-build program for homebuilders has
been temporarily suspended, Avweb.com says.
About Superior Air
Superior Air Parts, Inc. is a Texas corporation with its offices
and operating facilities located in Coppell, Dallas County, Texas.
It was founded in 1967 in order to supply the United States Air
Force and commercial customers with replacement parts for piston
powered aircraft engines. Superior is one of the largest
suppliers of parts under Federal Aviation Administration's Parts
Manufacturer Approval regulations for piston engines. It provides
Superior-brand parts for engines created by two primary original
equipment manufacturers, the Continental division of Teledyne,
Inc., and the Lycoming division of Textron Inc. Its customers are
companies that perform maintenance and overhaul work in the
general aviation industry. Superior is also an OEM for the 180-
horsepower Vantage Engine and owner-built XM-360 engines for
various aircraft companies.
In 2006, 100% of the ownership interests of Superior was acquired
by Thielert, AG, a German corporation based out of Hamburg,
Germany. Also in 2006, Thielert purchased the debt of Superior's
senior secured lender and subordinated lenders secured by
substantially all of the Debtor's assets.
Superior Air Parts filed for Chapter 11 on Dec. 31, 2008 (Bankr.
N.D. Tex., Case No. 08-36705). Judge Barbara J. Houser handles
the case. The Debtor's counsel is Stephen A. Roberts, Esq., at
Strasburger & Price, LLP, in Austin Texas. In its bankruptcy
petition, the Debtor estimated assets and debts of $10 million to
$50 million each.
TALGOOD TRAVEL: Files for Chapter 7 Liquidation
-----------------------------------------------
Talgood Travel has filed for Chapter 7 liquidation, Gigi Verna at
Business Courier of Cincinnati reports, citing parent company
Talgood Enterprises.
According to Business Courier, Talgood Enterprises said that
Talgood Travel shut down in the middle of December 2008.
Talgood Travel chief Wayne Taleff told Business Courier in a phone
interview that the airlines' decision to cut commissions to travel
agents started problems at the company. Business Courier relates
that commission cuts started 10 years ago.
Court documents say that Talgood Travel's parent Talgood
Enterprises listed assets of $1,678 and debts of $340,754, with
U.S. Bank as the major creditor.
Talgood Travel is a downtown travel agency.
TRANSMERIDIAN EXPLORATION: $8.7MM Interest Payment Due Jan. 15
--------------------------------------------------------------
Transmeridian Exploration Incorporated on December 15, 2008,
failed to make its regularly scheduled interest payment on account
of its 12% Senior Secured Notes due 2010 in the amount of
approximately $8.7 million. The 30-day grace period to make the
payment expires on January 15, 2009. If Transmeridian fails to
make the payment prior to expiration of the grace period, holders
of the Senior Notes will have the right to exercise various
remedies against Transmeridian and its subsidiaries. In light of
Transmeridian's current circumstances, it is not likely that the
holders of any Transmeridian equity securities would receive any
recovery on their investment.
The company also said Lorrie T. Olivier has resigned his position
as Chief Executive Officer and has stepped down as Chairman of
Transmeridian's Board of Directors, although he retains his
membership on the Board. In addition, Gary Neus and Fred Zeidman,
current members of the Transmeridian Board, have agreed to accept
positions as Co-Chief Restructuring Officers and Mr. Zeidman will
assume Chairmanship of the Board. In their capacities as Co-Chief
Restructuring Officers, Messrs. Neus and Zeidman will exercise the
entire executive management function over all of Transmeridian's
operations and assets, including the on-going efforts to effect a
sale or other transaction involving Transmeridian, its indirect
wholly owned subsidiary, JSC Caspi Neft TME, or its major asset,
the South Alibek field in Kazakhstan.
Further Transmeridian announced that Caspi Neft entered into a
loan agreement with OJSK Zere, providing for multiple draw downs
of up to $2,000,000 in the aggregate. Borrowings under the term
loan facility will bear interest at the rate of 25% per annum and
all principal and interest are due 120 days following the final
draw down under the facility. The facility is secured by a pledge
of Caspi Neft's tangible personal property, including oil in
storage at Caspi Neft's South Alibek field in Kazakhstan, and
certain other collateral. Term loan advances will be made
available to Caspi Neft and Transmeridian pursuant to a budget
agreed to with the Lender and receipt of certain required waivers
from holders of the Senior Notes.
As required by the loan agreement with the Lender, Transmeridian
and Caspi Neft have entered into a consulting agreement with Erlan
Sagadiev, the purpose of which is to secure Sagadiev's assistance
in stabilizing field operations, preserving the associated asset
value and working with Transmeridian's management to effect a sale
of Caspi Neft.
About Transmeridian Exploration Incorporated
Based in Houston, Texas, Transmeridian Exploration Incorporated
(Pink Sheets:TMYE) -- http://www.tmei.com-- is an independent
energy company established to acquire and develop oil reserves in
the Caspian Sea region of the former Soviet Union. Transmeridian
primarily targets fields with proved or probable reserves and
significant upside reserve potential. Transmeridian's main asset
is a 100% interest in the South Alibek field in western
Kazakhstan.
TRONOX INC: Bankruptcy Filing Does Not Affect Joint Venture
-----------------------------------------------------------
Johannesburg, South Africa-based Exxaro Resources Ltd. (EXX.JO)
said the activities of its Tiwest titanium minerals joint venture
aren't expected to be affected by the Chapter 11 filing of venture
partner Tronox Inc. (TROXB).
The South African diversified resources company said the expansion
of the Tiwest venture's titanium dioxide plant at Kwinana, Western
Australia, also won't be impacted.
"The expansion remains on track for wet commissioning in the first
half of 2010," Exxaro said.
Tronox Western Australia, which holds Tronox's 50% interest in
Tiwest, and Tronox Pigments, which is responsible for marketing
the joint venture partners' share of pigment production, is not
part of the Chapter 11 filing.
"Exxaro has monitored recent events closely and we remain
committed to Tiwest, which forms an important part of our mineral
sands business," Chief Executive Sipho Nkosi said.
Tiwest's facilities include the Cooljarloo mineral sands mine, the
Chandala synthetic rutile plant and the Kwinana titanium dioxide
pigment plant in Western Australia. On the Net:
http/www.exxaro.com/
About Tronox
Headquartered in Oklahoma City, Tronox Incorporated (NYSE:TRX) --
http://www.tronox.com/-- is a producer and marketer of titanium
dioxide pigment, an inorganic white pigment used in paint,
coatings, plastics, paper and many other everyday products. The
company's five pigment plants, which are located in the United
States, Australia, Germany and the Netherlands, supply performance
products to approximately 1,100 customers in 100 countries. In
addition, Tronox produces electrolytic products, including sodium
chlorate, electrolytic manganese dioxide, boron trichloride,
elemental boron and lithium manganese oxide.
The company is the world's third largest maker of titanium dioxide
behind DuPont Co. and Saudi-owned National Titanium Dioxide Co.,
known a Cristal, according to Bloomberg.
Tronox has $1.6 billion in total assets, including $646.9 million
in current assets, as at September 30, 2008. The company has
$881.6 million in current debts and $355.9 million in total
noncurrent debts.
Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D.
N.Y. Case No. 09-10156). The case is before Hon. Allan L.
Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and
Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York,
represent the Debtors. The Debtors also tapped Togut, Segal &
Segal LLP as conflicts counsel; Rothschild Inc. as investment
bankers; Alvarez & Marsal North America LLC, as restructuring
consultants; and Kurtzman Carson Consultants LLC as claims agent.
Until September 30, 2008, Tronox Inc. was publicly traded on the
New York Stock Exchange under the symbols TRX and TRX.B. Since
then, Tronox Inc. has traded on the Over the Counter Bulletin
Board under the symbols TROX.A.PK and TROX.B.PK. As of
December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares
of class A common stock and 22,889,431 outstanding shares of class
B common stock.
(Tronox Bankruptcy News, Issue No. 1; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
TRONOX INC: Hires Kurtzman Carson as Claims & Notice Agent
----------------------------------------------------------
Tronox Incorporated and its debtor-affiliates seek permission from
the U.S. Bankruptcy Court for the Southern District of New York to
hire Kurtzman Carson Consultants LLC as notice and claims agent in
their Chapter 11 cases.
The Debtors submit that Kurtzman has an extensive experience in
noticing, claims administration, solicitation, balloting and
other administrative aspects of Chapter 11 cases. Hence,
Kurtzman is fully equipped to handle the volume of mailing
involved in properly sending required notices to, and processing
the claims of, creditors and other parties-in-interest, while
conforming with the guidelines promulgated by the Clerk of the
Court and the Judicial Conference.
In this regard, the Debtors maintain that the retention of
Kurtzman will relieve the Court and the Clerk's Office of heavy
administrative burdens of compiling documents with respect to
thousands of creditors, equity security holders and other
parties-in-interest involved in the Debtors' cases.
As the Debtors' notice and claims agent, Kurtzman will:
(a) prepare and serve Chapter 11 notices, as may be required,
including:
-- a notice of commencement of the Chapter 11 cases and
the initial meeting of creditors under Section 341(a)
of the Bankruptcy Code;
-- notices of objections to claims, if necessary;
-- notices of hearings on an disclosure statement and
confirmation of a plan of reorganization; and
-- other miscellaneous notices;
(b) prepare for filing with the Clerk's Office a certificate
of affidavit of services that includes a list of persons
to whom the Notices were served and the date of service;
(c) maintain copies of all proofs of claim and proofs of
interest;
(d) maintain official claims registers, if necessary, by
docketing asserted claims and interests in a database,
which contains (i) the name of claimant, (ii) the date of
the Court's or Kurtzman's receipt of the claim or
interest, (iii) the claim number, and (iv) the asserted
amount and classification of the claim;
(e) implement necessary security measures to ensure the
completeness and integrity of the claims registers;
(f) transmit to the Clerk's Office a copy of the claims;
(g) maintain an up-to-date mailing list for all claimants, and
make the list available to any party-in-interest;
(h) provide access to the public for examination of copies of
the claims and interests;
(i) record all transfers of claims pursuant to Rule 3001(e) of
the Federal Rules of Bankruptcy Procedure;
(j) comply with the federal, state, municipal and local
statutes; ordinances; rules; regulations; orders and other
requirements;
(k) provide temporary employees to process claims, as
necessary;
(l) promptly comply with other conditions and requirements by
the Clerk's Office;
(m) provide other claims processing, noticing, balloting and
related administrative services, as the Debtors may
request;
(n) assist with, among other things, solicitation and
calculation of votes and distribution as required by a
confirmation of a plan;
(o) file with the Curt the final version of the claim register
immediately before the closing of the Chapter 11 cases;
(p) provide the Court with all original documents in proper
format, as specified by the Clerk's Office, to the Federal
Records Center.
Additionally, Kurtzman will assist the Debtors with, among other
things:
* maintaining and updating the creditors' master mailing list;
* gathering data in the preparation of the Debtors' schedules
of assets and liabilities;
* tracking the administration of claims; and
* performing other administrative tasks pertaining to the
administration of the Chapter 11 cases.
The Debtors will pay Kurtzman for its services in accordance with
these hourly rates:
Clerical $45 - $65
Project Specialist $80 - $140
Consultant $165 - $245
Senior Consultant $225 - $275
Senior Managing Consultant $295 - $325
Technology/Programming Consultant $145 - $195
Michael J. Frishberg, director of Restructuring Services of
Kurtzman, certified to the Court that his firm is a
"disinterested person" under Section 101(14) of the Bankruptcy
Code.
About Tronox
Headquartered in Oklahoma City, Tronox Incorporated (NYSE:TRX) --
http://www.tronox.com/-- is a producer and marketer of titanium
dioxide pigment, an inorganic white pigment used in paint,
coatings, plastics, paper and many other everyday products. The
company's five pigment plants, which are located in the United
States, Australia, Germany and the Netherlands, supply performance
products to approximately 1,100 customers in 100 countries. In
addition, Tronox produces electrolytic products, including sodium
chlorate, electrolytic manganese dioxide, boron trichloride,
elemental boron and lithium manganese oxide.
The company is the world's third largest maker of titanium dioxide
behind DuPont Co. and Saudi-owned National Titanium Dioxide Co.,
known a Cristal, according to Bloomberg.
Tronox has $1.6 billion in total assets, including $646.9 million
in current assets, as at September 30, 2008. The company has
$881.6 million in current debts and $355.9 million in total
noncurrent debts.
Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D.
N.Y. Case No. 09-10156). The case is before Hon. Allan L.
Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and
Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York,
represent the Debtors. The Debtors also tapped Togut, Segal &
Segal LLP as conflicts counsel; Rothschild Inc. as investment
bankers; and Alvarez & Marsal North America LLC, as restructuring
consultants.
Until September 30, 2008, Tronox Inc. was publicly traded on the
New York Stock Exchange under the symbols TRX and TRX.B. Since
then, Tronox Inc. has traded on the Over the Counter Bulletin
Board under the symbols TROX.A.PK and TROX.B.PK. As of
December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares
of class A common stock and 22,889,431 outstanding shares of class
B common stock.
(Tronox Bankruptcy News, Issue No. 1; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
TRONOX INC: Seeks Feb. 27 Extension of Schedules Filing Deadline
----------------------------------------------------------------
Tronox Incorporated and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York to grant
them a 30-day extension of time, or until February 27, 2009, to
file their schedules and statements, in accordance with Rules 1007
and 9006(b) of the Federal Rules of Bankruptcy Procedure.
Pursuant to Bankruptcy Rule 1007, the Debtors are required to
file, within 15 days after the Petition Date:
-- statements of financial affairs, and schedules of assets
and liabilities;
-- schedules of current income and expenditures;
-- statements of executory contracts and unexpired leases; and
-- lists of equity security holders.
Hence, the Debtors are currently required to file their
Schedules and Statements by January 27, 2008.
Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York,
proposed counsel to the Debtors, relates that the Debtors are
focusing the attention of their key accounting and legal
personnel on vital operational and restructuring issues during
the critical week after the Petition Date to effect a smooth
transition into Chapter 11 and maximize the value of the Debtors'
estates.
In this regard, the Debtors anticipate that they will be unable
to complete their Schedules and Statements within 15 days because
of the numerous critical operational matters that the Debtors'
accounting and legal personnel must address in the early days of
their Chapter 11 cases, and the volume of information that must
be included in the Schedules and Statements.
While the Debtors have begun compiling information to complete
the Schedules and Statements, they have not yet finished the
process due to the size and complexity of their business
operations, the number of creditors and the geographical spread
of their operations, Mr. Henes says.
According to Mr. Henes, preparing and finalizing the Schedules
and Statements within the next two weeks "would unnecessarily
distract management's and professionals' attention from the
Debtors' business operations at a sensitive time."
The Debtors will work with the Office of the U.S. Trustee for the
Southern District of New York and any official committee
appointed in their Chapter 11 Cases to make sufficient financial
data and creditor information available to permit at least an
initial Section 341 meeting to be timely held.
The Debtors assure the Court that creditors and other parties-in-
interest will not be prejudiced by the proposed Schedules Filing
Extension because under the Extended Deadline, the Schedules and
Statements would be filed in advance of any planned claims bar
date.
About Tronox
Headquartered in Oklahoma City, Tronox Incorporated (NYSE:TRX) --
http://www.tronox.com/-- is a producer and marketer of titanium
dioxide pigment, an inorganic white pigment used in paint,
coatings, plastics, paper and many other everyday products. The
company's five pigment plants, which are located in the United
States, Australia, Germany and the Netherlands, supply performance
products to approximately 1,100 customers in 100 countries. In
addition, Tronox produces electrolytic products, including sodium
chlorate, electrolytic manganese dioxide, boron trichloride,
elemental boron and lithium manganese oxide.
The company is the world's third largest maker of titanium dioxide
behind DuPont Co. and Saudi-owned National Titanium Dioxide Co.,
known a Cristal, according to Bloomberg.
Tronox has $1.6 billion in total assets, including $646.9 million
in current assets, as at September 30, 2008. The company has
$881.6 million in current debts and $355.9 million in total
noncurrent debts.
Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D.
N.Y. Case No. 09-10156). The case is before Hon. Allan L.
Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and
Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York,
represent the Debtors. The Debtors also tapped Togut, Segal &
Segal LLP as conflicts counsel; Rothschild Inc. as investment
bankers; Alvarez & Marsal North America LLC, as restructuring
consultants; and Kurtzman Carson Consultants LLC as claims agent.
Until September 30, 2008, Tronox Inc. was publicly traded on the
New York Stock Exchange under the symbols TRX and TRX.B. Since
then, Tronox Inc. has traded on the Over the Counter Bulletin
Board under the symbols TROX.A.PK and TROX.B.PK. As of
December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares
of class A common stock and 22,889,431 outstanding shares of class
B common stock.
(Tronox Bankruptcy News, Issue No. 1; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
TRONOX INC: To Hire Kirkland as Bankruptcy Counsel
--------------------------------------------------
Tronox Incorporated and its debtor-affiliates seek permission from
the U.S. Bankruptcy Court for the Southern District of New York to
employ Kirkland & Ellis LLP as lead counsel in their Chapter 11
cases, nunc pro tunc to the Petition Date.
The Debtors state that, having represented debtors in major
Chapter 11 cases, Kirkland is recognized expertise and extensive
experience and knowledge in the field of debtors' protections,
creditors' rights and business reorganizations, and is therefore
well-suited to act as their lead attorneys.
In accordance with the terms and conditions of an engagement
letter dated June 13, 2008, with the Debtors, Kirkland and Ellis
will:
(a) advise the Debtors with respect to their powers and duties
in the continued management and operation of their
business and properties;
(b) advise and consult on the conduct of the Chapter 11 cases,
including all of the legal and administrative
requirements;
(c) attend meetings and negotiate with creditors'
representatives and other parties in interest;
(d) protect and preserve the Debtors' estates, by prosecuting
actions on the Debtors' behalf, defending any action
commenced against the Debtors, and representing the
Debtors' interests in negotiations concerning all
litigation, including objections to claims filed against
the Debtors' estates;
(e) prepare all pleadings necessary or beneficial to the
administration of the Debtors' estates;
(f) represent the Debtors in connection with obtaining
postpetition financing;
(g) advise the Debtors in connection with any potential sale
of assets;
(h) appear before the Court and any appellate courts to
represent the Debtors' interests;
(i) consult with the Debtors regarding tax matters;
(j) negotiate and prepare on behalf of the Debtors, and obtain
approval of, a Chapter 11 plan of reorganization and all
related documents; and
(k) perform all necessary and legal services for the Debtors,
including (i) analyzing the Debtors' leases and contracts,
and their assumptions, rejections or assignments, (ii)
analyzing the validity of liens against the Debtors, and
(iii) advising the Debtors on corporate litigation
matters.
Presently, five professionals from Kirkland are expected to have
primary responsibility for providing services to the Debtors:
* Richard M. Cieri, Esq.
* Jonathan S. Henes, Esq.
* David J. Zott, P.C., Esq.
* Jeffrey J. Zeiger, Esq.
* Colin M. Adams, Esq.
The Debtors will pay Kirkland in accordance with these hourly
rates:
Partners $550 - $1,110
Of Counsel $390 - $965
Associates $320 - $705
Paraprofessionals $130 - $290
The Debtors will also reimburse Kirkland for necessary out-of-
pocket expenses.
Pursuant to the Engagement Letter, the Debtors disclose that they
have paid Kirkland $500,000 as classic retainer on June 18, 2008,
and an additional $250,000 on November 14. As of the Petition
Date, the Debtors do not owe the firm any amount.
Jonathan S. Henes, Esq., a partner at Kirkland, declares that his
firm does not hold or represent an interest adverse to the
Debtors' estates, making it a "disinterested person" within the
meaning of Section 101(14) of the Bankruptcy Code.
About Tronox
Headquartered in Oklahoma City, Tronox Incorporated (NYSE:TRX) --
http://www.tronox.com/-- is a producer and marketer of titanium
dioxide pigment, an inorganic white pigment used in paint,
coatings, plastics, paper and many other everyday products. The
company's five pigment plants, which are located in the United
States, Australia, Germany and the Netherlands, supply performance
products to approximately 1,100 customers in 100 countries. In
addition, Tronox produces electrolytic products, including sodium
chlorate, electrolytic manganese dioxide, boron trichloride,
elemental boron and lithium manganese oxide.
The company is the world's third largest maker of titanium dioxide
behind DuPont Co. and Saudi-owned National Titanium Dioxide Co.,
known a Cristal, according to Bloomberg.
Tronox has $1.6 billion in total assets, including $646.9 million
in current assets, as at September 30, 2008. The company has
$881.6 million in current debts and $355.9 million in total
noncurrent debts.
Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D.
N.Y. Case No. 09-10156). The case is before Hon. Allan L.
Gropper. The Debtors have tapped Togut, Segal & Segal LLP as
conflicts counsel; Rothschild Inc. as investment bankers; Alvarez
& Marsal North America LLC, as restructuring consultants; and
Kurtzman Carson Consultants LLC as claims agent.
Until September 30, 2008, Tronox Inc. was publicly traded on the
New York Stock Exchange under the symbols TRX and TRX.B. Since
then, Tronox Inc. has traded on the Over the Counter Bulletin
Board under the symbols TROX.A.PK and TROX.B.PK. As of
December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares
of class A common stock and 22,889,431 outstanding shares of class
B common stock.
(Tronox Bankruptcy News, Issue No. 1; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
TRONOX INC: Wins Interim Approval to Borrow $100-Mil.
-----------------------------------------------------
Judge Allan L. Gropper of the U.S. Bankruptcy Court for the
Southern District of New York granted Tronox Inc., and its
affiliated debtors interim approval to access $100 million of the
proposed $125 million of debtor-in-possession financing offered by
a group of prepetition lenders led by Credit Suisse as
administrative agent.
According to Bloomberg News, Judge Gropper provisionally approved
the DIP loan after lawyers for Tronox scaled back an initial
request of $125 million. The Court gave interim approval to a
$100 million DIP financing, but said that the Debtors may
eventually borrow as much as $125 million, according to the
report.
In connection with the financing, the Debtors have stipulated that
as of Jan. 12, 2008, they were indebted and liable to the
prepetition lenders, without defense, counterclaim or offset of
any kind, in the aggregate principal amount of not less than
$212,000,000 in respect of loans made and in the aggregate face
amount of not less than $79,500,000 in respect of letters of
credit issued.
The DIP financing agreement provides for the "rollup" and
conversion of approximately $79,500,000 of face amount in respect
of prepetition letters of credit issued and outstanding.
About $35,000,000 would be deemed rolled up and converted as of
the date of the closing of the financing, with the remaining
letters of credit to be rolled up as postpetition obligations upon
final approval of the DIP financing.
Existing L/Cs Subject to Conversion as of Closing
Account Party Beneficiary Face Amount
------------- ----------- -----------
Cimarron US Nuclear Regulatory Commission $3,600,000
Tronox Worldwide US EPA (Lakeview) $500,000
Tronox Inc. ACE $2,785,000
Tronox Inc. Safeco Insurance Company $24,500,000
Tronox Inc. American Home Assurance $1,975,000
Tronox LLC Oxbow $1,500,000
Tronox Pigments
(Savannah), Inc. Citicorp Leasing $50,000
The Court authorized to enter into a termination and release
agreement in connection with the sale of Tronox Funding LLC of
certain accounts receivable and other related rights to certain
parties. Amro Bank, N.V., as agent under a Receivables Sale
Agreement, dated as of September 26, 2007, has agreed to sell to
Tronox, and Tronox has agreed to repurchase, those receivables.
As reported in yesterday's Troubled Company Reporter, pursuant to
the DIP credit agreement, Credit Suisse Securities (USA) LLC, as
sole lead arranger and sole bookrunner, Credit Suisse as
administrative agent, JPMorgan Chase Bank, N.A. as collateral
agent, and the banks, financial institutions and other lenders
parties thereto, have agreed to provide a $125 million
superpriority priming senior secured credit facility to Tronox.
As consideration for the DIP Agent's agreements under the DIP
Credit Agreement, the Debtors have agreed to pay the fees set
forth in a Fee Letter signed by the parties.
According to Jonathan S. Henes, Esq., at Kirkland & Ellis LLP,
proposed counsel to Tronox, the Fee Letter contains sensitive,
confidential commercial information regarding, inter alia, the
structure and amount of the fees relating to the DIP Facility.
Because the disclosure of this information could harm Credit
Suisse, the Debtors have agreed to seek authority to file the Fee
Letter under seal and to provide for the limited disclosure of the
Fee Letter. Tronox has asked the Court for permission to file Fee
Letter under seal.
About Tronox
Headquartered in Oklahoma City, Tronox Incorporated (NYSE:TRX) --
http://www.tronox.com/-- is a producer and marketer of titanium
dioxide pigment, an inorganic white pigment used in paint,
coatings, plastics, paper and many other everyday products. The
company's five pigment plants, which are located in the United
States, Australia, Germany and the Netherlands, supply performance
products to approximately 1,100 customers in 100 countries. In
addition, Tronox produces electrolytic products, including sodium
chlorate, electrolytic manganese dioxide, boron trichloride,
elemental boron and lithium manganese oxide.
The company is the world's third largest maker of titanium dioxide
behind DuPont Co. and Saudi-owned National Titanium Dioxide Co.,
known a Cristal, according to Bloomberg.
Tronox Incorporated and 14 affiliates filed for Chapter 11
protection (Bankr. S. D. N.Y. Lead Case No. 09-10156) on Jan. 12,
2009. The case has been assigned to Judge Allan L. Gropper.
Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M.
Adams, Esq., at Kirkland & Ellis LLP have been tapped as Tronox's
bankruptcy counsel. Togut, Segal & Segal LLP has also been
retained as conflicts counsel. Rothschild Inc. is Tronox's
investment banker and Alvarez & Marsal North America as
restructuring consultants. Kurtzman Carson Consultants LLC is the
Debtor's claims agent. In its bankruptcy petition, the Debtor
disclosed total assets of $1,557,000,000 and total debts of
$1,221,600,000 as of Nov. 30, 2008.
(Tronox Bankruptcy News; Bankruptcy Creditors' Services Inc.
http://bankrupt.com/newsstand/or 215/945-7000).
TRONOX WORLDWIDE: US Units' Bankruptcy Cues Fitch's Default Rating
------------------------------------------------------------------
Fitch Ratings has downgraded Tronox Worldwide LLC's (Tronox)
ratings:
-- Issuer Default Rating (IDR) to 'D' from 'C';
-- $250 million senior secured bank revolver to 'D/RR4' from
'CC/RR3'
-- $103 million (at Sept. 30, 2008) senior secured term loan
to 'D/RR4' from'CC/RR3';
-- $350 million Senior Unsecured notes at 'D/RR6' from
'C/ RR6'.
Tronox Worldwide LLC and Tronox Finance Corp. are co-issuers of
the senior unsecured notes.
Tronox Inc.'s U.S. operations have filed for Chapter 11 bankruptcy
protection to address environmental remediation and litigation
costs. The filing did not include non-U.S. operations, which are
based in Australia, Germany and the Netherlands.
The producer of titanium dioxide pigment used in paint, plastics
and paper has assets of about $1.56 billion and liabilities of
about $1.22 billion, as stated in its filing with the U.S.
Bankruptcy Court in Manhattan.
The company stated it had a commitment for up to $125 million in
new debtor-in-possession financing from its existing lending group
led by Credit Suisse.
Tronox is one of the leading global producers and marketers of
titanium dioxide. In addition, Tronox produces electrolytic
manganese dioxide, sodium chlorate, and boron-based and other
specialty chemicals.
TRONOX WORLDWIDE: Chapter 11 Filing Cues S&P's Rating Cut to 'D'
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its issue-level ratings
on Tronox Worldwide LLC's $250 million revolving credit facility
and $200 million term loan to 'D' from 'CC' and removed the
ratings from CreditWatch, where they were placed July 2008. The
recovery ratings on the company's revolving credit facility and
term loan are '2', indicating the expectation for substantial (70%
to 90%) recovery in the event of a payment default.
The downgrade follows Tronox Inc.'s announcement that it has filed
for Chapter 11 in the U.S. Bankruptcy Court for the Southern
District of New York, listing assets of $1.56 billion and
liabilities of $1.22 billion. The court filing indicates that
Tronox did not make a recent scheduled amortization payment or
interest payment due on the credit facilities.
On Dec. 3, 2008, S&P lowered the corporate credit rating on Tronox
Inc. to 'D' from 'CCC-'. S&P also lowered the rating on the
company's $350 million senior unsecured notes to 'D' from 'CC'.
The Dec. 3, 2008, downgrades followed the company's announcement
that it did not make a Dec. 1, 2008, interest payment on its $350
million senior unsecured notes due 2012.
Oklahoma-based Tronox, with about $1.4 billion in annual sales, is
the third-largest global producer of titanium dioxide, behind
industry leader E.I. DuPont de Nemours & Co. and Millennium
Inorganic Chemicals. Tronox also produces electrolytic manganese
dioxide, sodium chlorate, and boron-based and other specialty
chemicals, which together account for about 7% of total sales.
Weaknesses in the current operating environment, which include raw
material price increases, a slowdown in North American demand, and
temporary production problems at some plants, have contributed to
a significant decline in recent earnings, cash flow, and
liquidity. The earnings decline has in turn contributed to a very
challenging financial covenant compliance situation at Tronox
within the past few years.
TRONOX WORLDWIDE: Moody's Downgrades Corp. Family Rating to 'Ca'
----------------------------------------------------------------
Moody's Investors Service downgraded Tronox Worldwide LLC's
Corporate Family Rating to Ca from Caa3, and the Probability of
Default Rating was lowered to D from Ca following the company's
announcement that it has filed voluntary petitions under Chapter
11 of the United States Bankruptcy Code with the United States
Bankruptcy Court for the Southern District of New York. The
ratings on the company's debt issues were also downgraded (see
below). The ratings will be withdrawn in the near future due to
the bankruptcy. These summarize the ratings changes:
Tronox Worldwide LLC
* Corporate family rating -- Ca from Caa3
* Probability of default rating -- D from Ca
* Senior Secured Bank Credit Facility, Downgraded to Caa1 from
B2, 20% - LGD2
* Senior Unsecured Regular Bond/Debenture, Downgraded to C from
Ca, 74% - LGD5
* Speculative Grade Liquidity Rating, Affirmed at SGL-4
Moody's most recent announcement concerning the ratings for Tronox
was on August 25, 2008. The ratings were downgraded in August
2008 and remained under review with negative implications in
reaction to: 1) management changes replacing the former CEO; 2)
the presence of "going concern" language in the second quarter
10Q; 3) the discussion of possibility of filing Chapter 11
appearing for the first time in the second quarter 10Q; and 4) the
possibility of a delisting of Tronox's equity on the NYSE due to
the rapid decline of Tronox's market capital.
Tronox Worldwide LLC is the third-largest global producer of TiO2,
a white pigment used in a wide range of products for its ability
to impart whiteness, brightness and opacity. TiO2 is used in a
variety of products including paints and coatings, plastics, paper
and consumer products. The company commands a 12% global market
share in TiO2, reporting sales of $1.5 billion for the twelve
months ended September 30, 2008.
US AIRWAYS: Court Issues Ruling on World Trade Lessee's Damages
---------------------------------------------------------------
U.S. District Judge Alvin K. Hellerstein issued a ruling in
December holding that World Trade Center lessee Larry Silverstein
can only recover from US Airways and other airlines the "fair
market value" of four towers it leased that were destroyed in the
September 11, 2001, terrorist attacks.
"If [World Trade Center Properties LLC] is entitled to recover,
recovery of the properties' market value would fully compensate
it. WTCP is not entitled to recover the larger value of
replacement cost," Judge Hellerstein said in this ruling.
The report said Mr. Silverstein recovered more than $4 billion in
insurance proceeds, which is well below what it will actually
cost to replace the lost office and retail space. In his
lawsuit, Mr. Silverstein is seeking as much as $16.2 billion.
About US Airways Group Inc.
Based in Tempe, Arizona, US Airways Group Inc.'s (NYSE: LCC) -
http://www.usairways.com/-- primary business activity is the
ownership of the common stock of US Airways, Inc., Allegheny
Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc.,
MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc.,
Material Services company, Inc., and Airways Assurance Limited,
LLC.
Under a Chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P.
Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq.,
at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas
M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in
their restructuring efforts. In the company's second bankruptcy
filing, it lists $8,805,972,000 in total assets and $8,702,437,000
in total debts.
The Debtors' Chapter 11 plan for its second bankruptcy filing
became effective on Sept. 27, 2005. The Debtors completed their
merger with America West on the same date.
(US Airways Bankruptcy News, Issue No. 169; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported in the Troubled Company Reporter on July 24, 2008,
Moody's Investors Service downgraded the Corporate Family and
Probability of Default Ratings of US Airways Group Inc. to Caa1
from B3 and lowered the ratings of its outstanding corporate debt
instruments and certain Enhanced Equipment Trust Certificates
(EETC). Moody's lowered the Speculative Grade Liquidity
Assessment to SGL-4 from SGL-3. The rating outlook is negative.
US AIRWAYS: Prepays $100,000,000 Under GECC Loan Agreement
----------------------------------------------------------
In a regulatory filing with the U.S. Securities and Exchange
Commission dated December 10, 2008, US Airways disclosed that on
December 5, 2008, the airline, in accordance with the Spare Parts
Loan Agreement dated as of October 20, 2008 among US Airways, the
lenders, and General Electric Capital Corporation, as
administrative agent and collateral agent, prepaid $100 million
aggregate principal amount of loans outstanding under the Loan
Agreement.
In connection with the prepayment and pursuant to an amendment of
the Original Loan Agreement, US Airways obtained the right to
incur, subject to certain conditions, up to $100 million in new
loans. The right to incur New Loans expires on April 1, 2009.
In addition, the Amendment also defers, subject to certain
conditions, a shortening of the maturity of the loans from six to
five years that would have occurred automatically under the Loan
Agreement upon the prepayment. The maturity date will now only be
shortened to 5 years as originally contemplated if (i) no New
Loans have been incurred and (ii) certain expendable spare parts
are released from the collateral securing the loans.
About US Airways Group Inc.
Based in Tempe, Arizona, US Airways Group Inc.'s (NYSE: LCC) -
http://www.usairways.com/-- primary business activity is the
ownership of the common stock of US Airways, Inc., Allegheny
Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc.,
MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc.,
Material Services company, Inc., and Airways Assurance Limited,
LLC.
Under a Chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P.
Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq.,
at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas
M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in
their restructuring efforts. In the company's second bankruptcy
filing, it lists $8,805,972,000 in total assets and $8,702,437,000
in total debts.
The Debtors' Chapter 11 plan for its second bankruptcy filing
became effective on Sept. 27, 2005. The Debtors completed their
merger with America West on the same date.
(US Airways Bankruptcy News, Issue No. 169; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported in the Troubled Company Reporter on July 24, 2008,
Moody's Investors Service downgraded the Corporate Family and
Probability of Default Ratings of US Airways Group Inc. to Caa1
from B3 and lowered the ratings of its outstanding corporate debt
instruments and certain Enhanced Equipment Trust Certificates
(EETC). Moody's lowered the Speculative Grade Liquidity
Assessment to SGL-4 from SGL-3. The rating outlook is negative.
USG CORP: $500,000,000 JPMorgan Unsecured Loan Now Secured
----------------------------------------------------------
USG Corporation entered into a Second Amendment and Restatement
Agreement, dated as of January 7, 2009, with JPMorgan Chase Bank,
N.A., as administrative agent, and the lenders party thereto
pursuant to which the Company's unsecured Amended and Restated
Credit Agreement, dated as of July 31, 2007, as amended, was
amended and restated. The Credit Agreement is now secured by
trade receivables and inventory of the Company and the Company's
material domestic subsidiaries. The Credit Agreement allows for
revolving loans and letters of credit (up to $250 million, in
aggregate) in an aggregate principal amount not to exceed the
lesser of:
(i) $500 million, and
(ii) a borrowing base determined by reference to the trade
receivables and inventory of the Company and the
Guarantors.
The maximum allowable borrowings may be increased at the request
of the Company and with the agreement of the lenders, provided
that the maximum allowable borrowings after giving effect to the
increase may not exceed $600 million.
The Revolving Loans bear interest at a floating rate based upon
the Alternate Base Rate or, at the option of the Company, the
Adjusted LIBO rate plus 3.00%. The company may prepay the
Revolving Loans under the Credit Agreement in its discretion
without premium or penalty. The Credit Agreement terminates on
August 2, 2012, unless terminated earlier in accordance with its
terms.
The Credit Agreement also provides for Revolving Loans that, at
the request of the company and in the Administrative Agent's
discretion, result in borrowings that exceed the maximum allowable
borrowings under the Credit Agreement. Overadvances may not
exceed $25 million, may not remain outstanding for more than 30
days and bear interest at a floating rate based upon the Alternate
Base Rate plus 5.00%.
The restrictive financial covenants in the unsecured credit
facility have been replaced with a single financial covenant. The
Credit Agreement contains a covenant that would require the
company to maintain a minimum fixed charge coverage ratio of 1.1
to 1.0 if and for so long as Excess Availability is less than the
greater of (i) $50 million and (ii) 15% of the aggregate revolving
commitments at such time.
The Credit Agreement also contains customary representations and
warranties and usual and customary affirmative and negative
covenants that, among other things, restrict the company's and
certain of its subsidiaries' ability, in certain circumstances,
to:
(1) incur indebtedness,
(2) create liens
(3) merge or consolidate with certain entities
(4) engage in any business other than business of the type or
reasonably related to the type conducted on the date of
the Credit Agreement
(5) sell, transfer, lease or otherwise dispose of all or
substantially all of their assets
(6) issue or sell equity interests of certain of the
Company's subsidiaries
(7) make certain investments, loans or advances
(8) engage in sale-leaseback transactions
(9) enter into certain swap or similar agreements
(10) make certain dividends, distributions, repurchases and
other restricted payments and
(11) engage in certain affiliate transactions.
The Credit Agreement also contains certain customary events of
default, including, but not limited to, the failure to make
required payments, material breaches of representations or
warranties, the failure to observe certain covenants or
agreements, the failure to pay or default of certain other
indebtedness, the failure to maintain the guarantee pursuant to
the Guarantee Agreement, certain adverse material monetary
judgments, bankruptcy, insolvency and a change of control.
Borrowings under the Credit Agreement are subject to acceleration
upon the occurrence of events of default.
In connection with the Credit Agreement, the company entered into
the Guarantee Agreement, dated as of January 7, 2009, among the
company, the Guarantors and the Administrative Agent, pursuant to
which the company and the Guarantors guarantee the obligations of
the company under the Credit Agreement and the Guarantors under
the Guarantee Agreement.
In connection with the Credit Agreement, the company also entered
into the Pledge and Security Agreement, dated as of January 7,
2009, among the company, the Guarantors and the Administrative
Agent, pursuant to which the company and Guarantors granted a
security interest in all trade receivables and inventory, and
proceeds in respect thereof, and all related deposit accounts to
the Administrative Agent as collateral for borrowings under the
Credit Agreement and the obligations under the Guarantee
Agreement.
"The amendment of our bank agreement to minimize financial
covenant restrictions is the third step in our program to increase
USG's financial flexibility," said USG Corporation Chairman and
CEO William C. Foote. "Two months ago, in early November, we
announced restructuring initiatives that will result in more than
$125 million in annualized cost savings, before severance costs,
and plans to reduce capital expenditures by approximately $190
million in 2009 compared to 2008. Later that month, we raised
$400 million through the sale of contingent convertible senior
notes. Those actions, together with the amendment to the credit
agreement, greatly improve our financial flexibility as we enter
2009, which we expect will be another challenging year."
As a result of the amendment to the credit facility and the
issuance of the $400 million of contingent convertible senior
notes in November 2008, the company currently has liquidity in the
form of cash and available borrowings of approximately
$550 million, and there are no borrowings outstanding under the
credit facility. Initial availability under the credit facility
is more than $250 million, taking into account the accounts
receivable and inventory borrowing base, outstanding letters of
credit and the $75 million availability requirement for the
minimum fixed charge coverage ratio not to apply. This represents
an increase of approximately $165 million over the liquidity that
would have been available to the company if it had retained its
$170 million receivables-based credit facility but been unable to
borrow under the unsecured facility because it was unable to
comply with one or more of the financial covenants in that
agreement. In October of 2008, the company announced that it
might have difficulty meeting the minimum EBITDA covenant in the
unsecured facility possibly as early as the end of the fourth
quarter of 2008.
A full-text copy of the Second Amendment and Restatement
Agreement, dated as of January 7, 2009, among USG Corporation, as
borrower, JPMorgan Chase Bank, N.A., as administrative agent, and
the lenders party thereto, is available at no charge at:
http://ResearchArchives.com/t/s?37ed
A full-text copy of the Second Amended and Restated Credit
Agreement, dated as of January 7, 2009, among USG Corporation, as
borrower, JPMorgan Chase Bank, N.A., as administrative agent, and
the lenders party thereto, is available at no charge at:
http://ResearchArchives.com/t/s?37ee
A full-text copy of the Guarantee Agreement, dated as of
January 7, 2009, among USG Corporation, the subsidiary guarantors
party thereto and JPMorgan Chase Bank, N.A., as administrative
agent, is available at no charge at:
http://ResearchArchives.com/t/s?37ef
A full-text copy of the Pledge and Security Agreement, dated as of
January 7, 2009, among USG Corporation, the subsidiary guarantors
party thereto and JPMorgan Chase Bank, N.A., as administrative
agent, is available at no charge at:
http://ResearchArchives.com/t/s?37f0
About USG Corporation
Based in Chicago, Ill., USG Corporation -- http://www.usg.com/--
through its subsidiaries, manufactures and distributes building
materials producing a wide range of products for use in new
residential, new nonresidential and repair and remodel
construction, as well as products used in certain industrial
processes.
The company filed for chapter 11 protection on June 25, 2001
(Bankr. Del. Case No. 01-02094). When the Debtors filed for
protection from their creditors, they listed $3,252,000,000 in
assets and $2,739,000,000 in debts. The Debtors emerged from
bankruptcy protection on June 20, 2006.
* * *
As reported by the Troubled Company Reporter on Oct. 31, 2008,
Standard & Poor's Ratings Services lowered its ratings on USG
Corp., including its corporate credit rating to 'BB-' from 'BB+',
and placed the ratings on CreditWatch with negative implications.
The downgrade and CreditWatch listing follow weaker-than-expected
third operating results resulting from the continued housing slump
and recent weakness in commercial construction, a trend S&P
expects to continue in the near term. In addition, the company
disclosed that absent significant cost cuts, other financing
arrangements or modifications to its credit agreement, the company
will have difficulty meeting the minimum EBITDA covenant at the
end of the first quarter of 2009 and possibly as early as the end
of the fourth quarter of 2008.
USG Corporation reported third quarter 2008 net sales of
$1.2 billion and a net loss of $40 million. For the same period
a year ago, the corporation reported net sales of $1.3 billion
and net earnings of $7 million. For nine months of 2008, the
corporation reported net sales of $3.6 billion and a net loss of
$125 million. For the first nine months of 2007, net sales were
$4.0 billion and net earnings were $104 million.
(USG Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
USG CORP: Cancels $170,000,000 JPMorgan Credit Facility
-------------------------------------------------------
USG Corporation terminated its Credit Agreement, dated as of
September 9, 2008, among the company, as parent borrower and loan
party representative, the subsidiary borrowers party thereto and
JPMorgan Chase Bank, N.A., as administrative agent. The 2008
Credit Agreement provided for revolving loans in an aggregate
principal amount not to exceed the lesser of (i) $170 million and
(ii) a borrowing base determined by reference to the trade
receivables of the Company and the subsidiary borrowers. The 2008
Credit Agreement was to mature on September 9, 2013, and the
company paid no fees or penalties in connection with its early
termination.
As reported in today's Troubled Company Reporter, USG Corp.
amended its unsecured revolving credit facility to provide the
company with additional financial flexibility. The amended
facility, which is now secured, matures in 2012 and provides for
revolving loans of up to $500 million based on a borrowing base
determined by levels of the accounts receivable and inventory of
the company and its significant domestic subsidiaries. The
restrictive financial covenants in the unsecured credit facility
have been replaced with a single financial covenant. That
covenant, a minimum fixed charge coverage ratio, will only apply
when borrowing availability under the amended facility is less
than $75 million. The company's obligations under the amended
facility are guaranteed by the company's significant domestic
subsidiaries and secured by the company's and those subsidiaries'
accounts receivable and inventory.
About USG Corporation
Based in Chicago, Ill., USG Corporation -- http://www.usg.com/--
through its subsidiaries, manufactures and distributes building
materials producing a wide range of products for use in new
residential, new nonresidential and repair and remodel
construction, as well as products used in certain industrial
processes.
The company filed for chapter 11 protection on June 25, 2001
(Bankr. Del. Case No. 01-02094). When the Debtors filed for
protection from their creditors, they listed $3,252,000,000 in
assets and $2,739,000,000 in debts. The Debtors emerged from
bankruptcy protection on June 20, 2006.
* * *
As reported by the Troubled Company Reporter on Oct. 31, 2008,
Standard & Poor's Ratings Services lowered its ratings on USG
Corp., including its corporate credit rating to 'BB-' from 'BB+',
and placed the ratings on CreditWatch with negative implications.
The downgrade and CreditWatch listing follow weaker-than-expected
third operating results resulting from the continued housing slump
and recent weakness in commercial construction, a trend S&P
expects to continue in the near term. In addition, the company
disclosed that absent significant cost cuts, other financing
arrangements or modifications to its credit agreement, the company
will have difficulty meeting the minimum EBITDA covenant at the
end of the first quarter of 2009 and possibly as early as the end
of the fourth quarter of 2008.
USG Corporation reported third quarter 2008 net sales of
$1.2 billion and a net loss of $40 million. For the same period
a year ago, the corporation reported net sales of $1.3 billion
and net earnings of $7 million. For nine months of 2008, the
corporation reported net sales of $3.6 billion and a net loss of
$125 million. For the first nine months of 2007, net sales were
$4.0 billion and net earnings were $104 million.
(USG Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
VISTEON CORP: To Post Q4 Results Feb. 2 Amid Low Auto Demand
------------------------------------------------------------
Automotive supplier Visteon Corp., a former unit of Ford Motor
Company, is scheduled to release its fourth quarter and full year
2008 results on Feb. 2, 2009, amid concerns of further losses on
continued decline in automotive production in 2009.
"We expect U.S. light-vehicle sales to decline about 24 percent in
2009 to 10 million units, and that Visteon could use more than
$400 million in cash during 2009 under this scenario," Standard &
Poor's said Jan. 12. S&P slashed Visteon's corporate credit
rating two notches to "CCC," eight steps below investment grade,
from "B-minus." The company has previously said that its business
is highly dependent upon the ability to access the credit and
capital markets, and that any further downgrade in its credit
ratings could reduce its access to capital, and increase the costs
of future borrowings.
On Oct. 30, 2008, the company said that it incurred a net loss of
$188 million, or $1.45 per share, on sales of $2.11 billion for
the quarter ended Sept. 30, 2008. For third quarter 2007, Visteon
reported a net loss of $109 million, or $0.84 per share, on sales
of $2.55 billion. Third quarter 2008 product sales declined by
$400 million from the same period a year ago, primarily reflecting
the impact of lower customer production volumes and plant closures
and divestitures. EBIT-R -- net income before net interest
expense and provision for income taxes -- for third quarter 2008
was negative $97 million, compared with negative $33 million in
third quarter 2007.
"Visteon has taken aggressive actions designed to reduce spending
and control costs, and we have addressed 28 of the 30 original
planned facilities under our three-year plan," said Donald J.
Stebbins, president and chief executive officer. "However,
extremely difficult market conditions continue to impact the
automotive industry, particularly in North America. With the
current state of the credit markets and related consumer concerns,
we are also seeing slowing production volumes in both Western
Europe and the Asia Pacific region. As a result, we will continue
to aggressively align our resources with market demand."
Visteon said on Oct. 30 that it is adjusting its full year 2008
product sales outlook from $10.0 billion to $9.4 billion,
reflecting lower production volumes in both North America and
Europe for its key customers, as well as the impact of a
strengthening U.S. dollar. "Full-year 2008 EBIT-R is now expected
to be approximately $(25) million and free cash flow is expected
to be a use of $375 million to $425 million," Visteon said.
"We expect the fourth quarter to continue to be pressured as the
difficulties in the global financial markets have impacted
consumer demand for vehicles and led to significantly lower OEM
production volumes," Mr. Stebbins said. "Given the continued
uncertainty surrounding the global production environment, the
company is no longer providing financial guidance for 2009.
Visteon will continue to take significant actions in this
difficult environment."
Visteon said Dec. 19, when talks of a potential collapse by the
Big 3 automakers surfaced, that it is withdrawing its full-year
2008 financial guidance in light of the larger than anticipated
declines in global vehicle production and overall industry
uncertainty.
"Given that ongoing economic pressures have continued to
significantly reduce our customers' production schedules across
the globe, Visteon is withdrawing its previously issued 2008
financial guidance," said Mr. Stebbins, said in the Dec. 19
statement. "We have taken aggressive actions over the past three
years to restructure and improve our business," Mr. Stebbins said,
"and we continue to take the actions necessary to align our
manufacturing capacity and cost structure with the rapidly
changing economic and market environment."
The New York Stock Exchange served notice to Visteon on Dec. 11
that it had fallen below a continued listing standard that
requires the company's average total market capitalization over a
consecutive 30 trading-day period to equal or exceed $75 million
and, at the same time, total reported stockholders' equity to
equal or exceed $75 million. Under NYSE rules, Visteon has 45
days to achieve compliance. Visteon said it intends to submit a
plan of compliance.
Restructuring Efforts
In October, Visteon said that it had launched restructuring
actions aimed at cutting costs and boosting liquidity included:
-- In August, Visteon completed the sale of its interiors
operations conducted at its Halewood, England, facility to
International Automotive Components Group Limited Europe
(IAC Europe). The Halewood facility is dedicated to the
assembly and sequencing of cockpit systems and consoles to
Jaguar Land Rover's Halewood operation. Visteon's Halewood
facility had 2007 sales of approximately $150 million and
operated on close to a break-even basis. The nearly 150
employees at the facility were also transferred to IAC
Europe.
-- Visteon reduced hourly and salaried headcount at its
facilities in Mexico. These reductions resulted from
operating efficiencies and aligning headcount with lower
North American production levels. Approximately 880
employees have been separated and Visteon has recorded $8
million of restructuring charges, all of which are eligible
for reimbursement from the restructuring escrow account.
-- In addition, Visteon reduced its global hourly workforce by
approximately 1,200 during the third quarter.
-- Visteon recently implemented a number of programs to reduce
its global salaried workforce by more than 800 positions.
During the third quarter, about 150 employees were
separated from the company, and nearly all of the remaining
affected employees are expected to depart the company by
the end of the first quarter 2009. Visteon expects to
realize more than $60 million of total annual savings from
these actions.
-- In October, the company amended its other post-retirement
employee benefits for certain former employees at two U.S.
facilities that were closed in the past year. Visteon
eliminated company-sponsored prescription drug benefits for
the plants' Medicare-eligible retirees, spouses and
dependents effective Jan. 1, 2009. This revision, combined
with the contract that was ratified by the union
representing hourly workers at Visteon's Pennsylvania
facility, is expected to reduce OPEB liabilities by nearly
$100 million. Additionally, the company expects to
recognize a gain of $15 million in fourth quarter 2008
related to the curtailment of future benefit eligibility.
According to a Jan. 2 report by Bloomberg News, Visteon said that
it would cut pay by 20% for about 2,050 U.S. salaried workers and
reduce their workweek to four days because of carmakers' lower
production. The company has about 35,000 employees, including a
salaried workforce of 3,100 in North America. "This is a way we
can make necessary reductions in operating costs while minimizing
layoffs," Spokesman Jim Fisher said.
Visteon and other suppliers are reacting to automaker production
cuts as 2008 U.S. sales of cars and light trucks have tumbled 16%
through November.
Suppliers' Exposure to Big 3
Suppliers to the Big 3 automakers Ford Motor Company, General
Motors Corp., and Chrysler LLC have said that they expect lower
earnings or higher losses due to declining demand for automobiles
in the U.S. Sales to Ford account for 35% of Visteon's revenues.
On October 23, 2008, Johnson Controls Inc., which has 10% of U.S.
revenues tied to the Big 3 and Toyota, said it expects earnings of
$0.22 to $0.24 per diluted share for the quarter ended Dec. 31,
2008, already down from $0.39 during the same period in 2007.
However, JCI subsequently dropped the guidance, citing that it was
based on assumptions that include North American auto production
of 12.3 million vehicles and European production of 21.2 million
vehicles. In Dec. 16, 2008, JCI said that it is expected to
report a loss in its 2009 first quarter, based on the revised
estimates that production for 2009 are 9.3 million units in North
America and 16.2 million units in Europe. JCI said Dec. 16 that
it will post a loss primarily as a result from the impact of the
dramatically lower automotive production levels on the company's
Automotive Experience business. JCI is expected to report its
fiscal first quarter results on Jan. 16.
Another autoparts supplier, ArvinMeritor, Inc. (NYSE: ARM) said
Dec. 8, 2008 that it expects to generate $50 million to $58
million of EBITDA on slightly more than $1 billion in sales,
before special items, for the quarter ended Dec. 27, 2008. The
company, however, said Jan. 9 that it is withdrawing the guidance.
The company also said that it might sell its light vehicle systems
business, in parts, instead of selling the unit as a whole or
pursuing a spin-off, which was previously announced May 2008. "As
previously announced, we were in negotiations to sell the LVS
business group in its entirety," said Chip McClure, chairman, CEO
and president of ArvinMeritor. "However, in light of the
unprecedented challenges in the credit markets and the volume
weakness in our industry, we have determined that in this
financial environment we cannot capture the appropriate value for
LVS by selling the business as a whole. We are confident that
this decision will ultimately generate the best returns for our
shareholders."
Aside from Visteon and ArvinMeritor, other autosuppliers affected
by recent ratings cuts by S&P are American Axle & Manufacturing
Holdings Inc., Hayes Lemmerz International Inc., BorgWarner Inc.
and Magna International Inc. BorgWarner and Magna's ratings,
however, remain investment grade.
GM, Chrysler Viability Still In Question
As reported by the Troubled Company Reporter on Dec. 15, 2008,
Fitch Ratings, said that bankruptcies by the Big 3 could result
from either the failure of the auto legislation currently under
consideration in the U.S. Congress, or the failure of the Detroit
Three to develop viable restructuring plans in the several months
prior to the expiration of the bridge loans included in the
current legislation.
Chrysler and General Motors have been able to obtain federal aid
that have enabled them, so far, to avert bankruptcy. On Dec. 31,
2008, the U.S. Treasury completed a transaction with General
Motors Corp., under which the Treasury will provide GM with up to
a total of $13.4 billion in a three-year loan from the Troubled
Assets Relief Program, secured by various collateral. On
January 2, 2009, the Treasury provided a three-year $4 billion
loan to Chrysler Holding LLC.
The Treasury has required Chrysler and GM to each submit a plan
that would show the firm's long-term viability. The loan
agreement provides for acceleration of the loan if those goals
under the plan, which are subject to review by a designee of the
U.S. President, are not met.
About Visteon Corp.
Headquartered in Van Buren Township, Michigan, Visteon Corporation
(NYSE: VC) -- http://www.visteon.com/-- is an automotive supplier
that designs, engineers and manufactures innovative climate,
interior, electronic and lighting products for vehicle
manufacturers, and also provides a range of products and services
to aftermarket customers. The company also has corporate offices
in Shanghai, China; and Kerpen, Germany; the company has
facilities in 26 countries and employs approximately 38,500
people.
As reported in the Troubled Company Reporter on Nov. 4, 2008,
Visteon Corporation's balance sheet at Sept. 30, 2008, showed
total assets of US$5.9 billion and total liabilities of
US$6.4 billion, resulting in shareholders' deficit of roughly
US$530 million.
The company reported a net loss of US$188 million on total sales
of US$2.11 billion. For third quarter 2007, Visteon reported a
net loss of US$109 million on sales of US$2.55 billion.
Visteon reported a net loss of US$335 million for the first nine
months of 2008, compared with a net loss of US$329 million for the
same period a year ago.
* * *
TCR reported on Nov. 27, 2008, that Moody's Investors Service
lowered Visteon Corporation's corporate family and probability of
default ratings to Caa2, and Caa1, respectively. In a related
action, Moody's also lowered the ratings of Visteon's senior
secured term loan to B3 from Ba3, unguaranteed senior unsecured
notes to Caa3 from Caa2, and guaranteed senior unsecured notes to
Caa2 from Caa1. Visteon's Speculative Grade Liquidity remains
SGL-3. The outlook is negative.
VISTEON CORP: S&P Junks Corp. Credit Rating on Weak Auto Sales
--------------------------------------------------------------
Standard & Poor's Ratings Services said it has lowered its
corporate credit rating on Visteon Corp. to 'CCC' from 'B-' and
removed all the ratings from CreditWatch, where they had been
placed on Nov. 13, 2008, with negative implications. The outlook
is negative. At the same time, S&P also lowered its issue-level
ratings on the company's debt.
"The downgrade reflects our view that weak auto sales and
production in North America and Europe during 2009 will cut
Visteon's cash balances significantly and hinder the company's
ability to reduce its cash use more than S&P previously expected,"
said Standard & Poor's credit analyst Robert Schulz. For the last
three months of 2008, the seasonally adjusted annual rate of
light-vehicle sales in the U.S. was below 11 million units. S&P
expects U.S. light-vehicle sales to decline about 24% in 2009 to
10.0 million units, and that Visteon could use more than $400
million in cash during 2009 under this scenario.
"Although liquidity appears adequate for at least the early months
of 2009, S&P could lower the rating further within the next year
if the effect of reduced automaker production in North America and
Europe or restructuring delays cause Visteon's global cash
balances to drop below $700 million (compared to $1.1 billion at
Sept. 30, 2008), or if Visteon seeks to restructure its debt," he
continued.
The ratings on Visteon reflect the company's growing negative cash
flow resulting from steep vehicle production cuts and a costly,
wide-ranging operational restructuring. S&P expects the company's
liquidity to decline during 2009, potentially to levels that could
cause the company to consider a financial restructuring, unless
industry volumes recover during the later part of the year or
Visteon can speed up its restructuring efforts. Visteon is
selling a number of loss-making operations, but S&P believes even
the remaining operations will struggle with lower auto production
levels in 2009.
Visteon's dependence in North America on Ford Motor Co. (about 12%
of sales in the first half of 2008) has been greatly reduced in
recent years, but Ford remains an important customer for Visteon
in the rest of the world, where production is also coming under
pressure. About 42% of Visteon's consolidated sales in the third
quarter were in Europe, where declining auto production is an
increasing concern.
Visteon has completed 28 of its 30 announced restructuring
actions, which include improving some plants and closing or
selling others. The company is restructuring its operations in
interior, climate control, electronics, and other auto components.
A Ford-funded escrow account is paying for part of the
restructuring actions, and Ford recently contributed another
$50 million. These efforts would have allowed Visteon to improve
profitability, but with industry conditions deteriorating,
progress will be greatly slowed. Even after the 2005 transfer of
certain operations to Ford, a number of the company's businesses
are still underperforming, but any operating losses from the
company's three remaining U.K. plants are being recovered from
Ford.
Visteon will be under pressure to maintain its cash balances at
the currently high levels for all of 2009 because of lower
automaker production. Visteon had $1.1 billion in cash on
Sept. 30, 2008, of which $670 million is in the U.S. The company
has stated that it needs about $550 million in cash and available
liquidity globally to comfortably operate the business. Other
sources of liquidity include about $117 million remaining in the
Ford-funded escrow account as of Sept 30. S&P expects the
company's free cash flow to remain negative until industry volumes
have at least stabilized.
The outlook on Visteon is negative. S&P believes the company's
substantial liquidity could decline sufficiently during 2009 to
cause the company to consider a financial restructuring. This
choice would be caused by its customers' sharply lower auto
production levels. If production falls about 15% in 2009, S&P
estimate Visteon could use about $400 million in cash, and cash
levels could drop below $700 million--or lower in North America.
Still, S&P currently expect the company to move through at least
the early quarters of 2009 with adequate liquidity. S&P would
revisit this assumption and lower S&P's ratings if the company's
cash use in the fourth quarter of 2008 fails to support S&P's
expectation of year-end cash of more than $900 million.
S&P could also lower the ratings in the next year or sooner if
industry challenges, restructuring delays, or reduced customer
demand in North America and Europe seem likely to cause Visteon's
global cash balances to drop below $700 million, or if Visteon
undertakes a financial restructuring of its debt.
VERASUN ENERGY: Can Hire Rothschild as Investment Bankers
---------------------------------------------------------
Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the
District of Delaware permitted VeraSun Energy Corp. and its
affiliates to employ Rothschild, Inc., as their financial advisors
and investment banker, over the objections raised by AgStar
Financial Services PCA, the DIP Lender for several Debtors.
AgStar asserted that the Debtors have not met the burden of
proving the reasonableness of the terms and conditions of
Rothschild's retention as financial advisors and investment
banker.
However, AgStar stated that it generally supports approval of
Rothschild's retention and will withdraw its objection upon the
resolution of any outstanding issues relating to the final terms
and conditions of the Retention and compensation.
AgStar asked the Court to make necessary modifications to be
reflected in its order approving the Retention. Subsequently,
the Debtors submitted to the Court a proposed order containing
the revisions asked by AgStar.
In line with the revisions sought by AgStar, Judge Shannon ruled
that Rothschild and its professionals will be excused from
maintaining time records as set in Rule 2016-2 of the Local Rules
of Bankruptcy Procedure for the District of Delaware. However,
Rothschild will instead present reasonably detailed descriptions
of the services provided on behalf of the Debtors, the
approximate time expended in providing the services in half-hour
increments and the individuals who provided professional
services.
The first section of the engagement letter was amended by adding
the definition of M&A transaction:
"For the avoidance of doubt, transactions of the type
described in this paragraph involving one or more plants
within a Division or a material portion of the equity of a
Division shall constitute an "M&A Transaction."
In addition, certain sections of the engagement letter were
amended and restated in their entirety:
* Section 3(d) -- "A fee equal to 0.85% of the Aggregate
Consideration involved in an M&A Transaction until the
Aggregate Consideration involved in all M&A Transactions
since the Petition Date totals $1,200,000,000 in the
aggregate and, thereafter, 1.25% of the Aggregate
Consideration involved in an M&A Transaction. Each M&A
Fee shall be payable at the closing of the applicable
M&A Transaction."
* The third to last paragraph of Section 3 -- "In the event
a Restructuring Transaction would also constitute an M&A
Transaction, Rothschild shall only be entitled to the M&A
Fee for such transaction.'
* Section 4 -- "Credit. Rothschild shall credit, without
duplication, 50% of the Monthly Fees paid under Section
3(a) hereof in excess of $1,350,000 against the
Restructuring Fee or any M&A Fee or New Capital Fee
payable hereunder; provided, that the Monthly Fee Credit
shall not exceed the Restructuring Fee or any M&A Fee or
New Capital Fee, as applicable. In addition, Rothschild
shall credit, without duplication, 50% of the New Capital
Fees paid under Section 3(b) hereof against the
Restructuring Fee or any M&A Fee payable hereunder;
provided, that the New Capital Fee Credit shall not
exceed the Restructuring Fee or any M&A Fee, as
applicable."
Furthermore, the Court ruled that:
(a) fees payable to Rothschild under the Engagement Letter
from the Petition Date through October 31, 2009 will not
exceed $13,000,000. The cap will increase by $112,500
each month after October 2009;
(b) Rothschild will not be entitled to a new capital fee for
the portion of the DIP financings provided by WestLB AG,
New York Branch and AgStar Financial Services unless
WestLB's and AgStar's prepetition and postpetition claims
are satisfied in full or WestLB and AgStar otherwise
consents.
(c) Rothschild will not be entitled to a New Capital Fee for
the portion of the DIP financing provided by the holders
the 9.875% senior secured notes issued by VeraSun used to
repay the prepetition secured indebtedness provided by the
VSE Noteholders or if applicable, the portion of any exit
financing provided by the VSE Noteholders used to repay
the Rolled-up DIP Financing;
(d) the Debtors will not be required to remit payment for the
Fee until the earliest of:
* the repayment in full of amounts outstanding under
the VSE DIP Agreement;
* the confirmation of a Chapter 11 or Chapter 7 plan or
other Restructuring Transaction with respect to the
VeraSun Division;
* an M&A Transaction with respect to the VeraSun
Division;
* delivery of a Carve-Out Trigger Notice; and
* consent of the VSE Noteholders.
(e) any new capital fee, restructuring fee, M&A fee or other
fee earned by Rothschild in the Chapter 11 Cases will be
funded only from the Debtor divisions to which Rothschild
provided the applicable services.
About VeraSun Energy
Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp.
-- http://www.verasun.comor http://www.VE85.com/-- produces and
markets ethanol and distillers grains. Founded in 2001, the
company has a fleet of 16 production facilities in eight states,
with 14 in operation.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 31, 2008, (Bankr. D. Del. Case No. 08-12606)
Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP
represents the Debtors in their restructuring efforts.
AlixPartners LLP serves as their restructuring advisor. Rothschild
Inc. is their investment banker and Sitrick & Company is their
communication agent. The Debtors' claims noticing and balloting
agent is Kurtzman Carson Consultants LLC. The Debtors'
total assets as of June 30, 2008, was $3,452,985,000 and their
total debts as of June 30, 2008, was $1,913,214,000.
VeraSun Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000).
VERASUN ENERGY: Cash Collateral Order Revised on AgStar-UBS Rift
----------------------------------------------------------------
AgStar Financial Services, PCA, filed a complaint under which
AgStar challenged UBS Ag Stamford Branch's lien upon certain of
VeraSun Energy Corp. and its affiliates' assets. The filing of
the Complaint constitutes an Event of Default under the final
order issued by Judge Brendan Linehan Shannon of the U.S.
Bankruptcy Court for the District of Delaware authorizing the
Debtors to use the collateral securing their obligations to UBS.
In the "Cash in Bank" line item in borrowing base certificates,
dated December 17, 18, and 19, 2008, the VeraSun Debtors, in
violation of the Final Cash Collateral Order, included funded,
undisbursed proceeds of the VeraSun DIP Financing. UBS notified
the VeraSun Debtors of the existence and occurrence of the
Existing Events of Default by letter dated December 29, 2008.
On December 31, the Debtors filed the motion seeking allowance of
certain intercompany administrative expense claims. At the
January 8, 2009, hearing counsel for the VeraSun Debtors
confirmed, and counsel for AgStar stated on the record that
AgStar does not, at this time, dispute that $17,517,000 is the
maximum amount of all claims for ethanol sold after the Petition
Date by the US BioEnergy Debtors to the VeraSun Debtors that are
held or that could be held by the US BioEnergy Debtors or AgStar.
At the January 8 Hearing, counsel for the VeraSun Debtors and
counsel for UBS advised the Court that UBS will waive the
Existing Events of Default subject to (i) the entry of an amended
Final Cash Collateral and (ii) finalized arrangements for a
collateral audit by UBS and a site visit by designees of UBS on
terms and conditions consistent with the UBS Prepetition Credit
Documents.
Also, at the January 8 Hearing, counsel for the VeraSun DIP
Lenders and counsel for the indenture trustee for the Secured
Bondholders advised the Court that their clients consent to the
entry of an amended Final Cash Collateral Order.
Accordingly, the Court entered into an amended Final Cash
Collateral Order and rules, among other things, that:
(a) pursuant to the UBS Prepetition Credit Documents, the
VeraSun Debtors were truly and justly indebted and liable
to the Secured Parties without defense, counterclaim, or
offset of any kind, in the aggregate amount of $94,968,266
in respect of loans made by the Secured Parties and
letters of credit issued by the Secured Parties;
(b) the Prepetition Debt is subject to subordination or
recharacterization for any reason; and
(c) the liens and security interests granted to the Secured
Parties pursuant to the UBS Prepetition Credit Documents
are valid, duly authorized, perfected, enforceable,
non-voidable, first-priority liens and security interests
in the UBS Prepetition Collateral.
A full-text copy of the Amended Final Order is available for free
at http://bankrupt.com/misc/VeraSun_AmendedCashCoFinalORD.pdf
The Court holds that a need exists for the VeraSun Debtors to be
permitted access to funds to continue to operate their
businesses. Without those funds, the VeraSun Debtors will not be
able to pay their direct operating expenses. As a result, there
is a risk that the going concern value of the VeraSun Debtors'
businesses will decline if they cannot simultaneously make use of
the UBS Cash Collateral and access the VeraSun DIP Financing.
Prior to the hearing, the Debtors submitted a proposed amended
final order, which incorporates revisions to address certain
events of default, including the filing of a complaint for
declaratory judgment by AgStar. A blacklined version comparing
the Amended Final Order to the Final Order entered by the Court
is available for free at:
http://bankrupt.com/misc/VeraSunAmendedCashCoORDBlack.pdf
About VeraSun Energy
Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp.
-- http://www.verasun.comor http://www.VE85.com/-- produces and
markets ethanol and distillers grains. Founded in 2001, the
company has a fleet of 16 production facilities in eight states,
with 14 in operation.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 31, 2008, (Bankr. D. Del. Case No. 08-12606)
Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP
represents the Debtors in their restructuring efforts.
AlixPartners LLP serves as their restructuring advisor. Rothschild
Inc. is their investment banker and Sitrick & Company is their
communication agent. The Debtors' claims noticing and balloting
agent is Kurtzman Carson Consultants LLC. The Debtors'
total assets as of June 30, 2008, was $3,452,985,000 and their
total debts as of June 30, 2008, was $1,913,214,000.
VeraSun Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000).
VERASUN ENERGY: CHS Reports $70,00,000 Impairment on Bankruptcy
---------------------------------------------------------------
CHS Inc. reports that during the first quarter of fiscal 2009, it
recorded within its Processing segment a $70.7 million --
$64.4 million net of taxes -- impairment on the value of its
ownership of VeraSun Energy Corp., which filed for Chapter 11
bankruptcy protection in October 2008. CHS previously recorded an
impairment of $71.7 million -- $55.3 million net of taxes -- in
the fourth quarter of fiscal 2008.
CHS reported earnings of $137.3 million for first quarter of 2009.
Based in St. Paul, Minnesota, CHS Inc. -- http://www.chsinc.com--
is a diversified energy, grains and foods company committed to
providing the essential resources that enrich lives around the
world. A Fortune 200 company, CHS is owned by farmers, ranchers
and cooperatives, along with thousands of preferred stockholders,
across the United States. CHS supplies energy, crop nutrients,
grain, livestock feed, food and food ingredients, along with
business solutions including insurance, financial and risk
management services. The company operates petroleum
refineries/pipelines and manufactures, markets and distributes
Cenex(R) brand refined fuels, lubricants, propane and renewable
energy products. CHS is listed on the NASDAQ at CHSCP.
VERASUN ENERGY: Janesville Unit Can Access $500,000 AgStar Loan
---------------------------------------------------------------
Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the
District of Delaware permitted Debtor VeraSun Janesville, LLC, to
borrow, on a final basis, not more than $500,000 from AgStar
Financial Services PCA.
Debtor US BioEnergy Corporation, as guarantor, is authorized to
enter into the DIP Financing Term Sheet and other postpetition
financing documents. The Guarantor is deemed to have irrevocably
guaranteed the payment and performance of the Borrower's
postpetition obligations.
When using the cash collateral securing the Debtors' prepetition
indebtedness to AgStar, the Borrower is limited from using it to
object to the Debtors' prepetition liens, or to prosecute any
actions, claims or causes of action against any prepetition agent
or prepetition lenders without the consent of the applicable
prepetition agent and lenders. Similarly, the Debtors are
prohibited by the Court from using the Lender Funds to prosecute
any actions.
In addition, the Lender Funds are not allowed by the Court to be
used to pay expenses of the Borrower or any of the other Debtors
except for (i) expenses that are expressly permitted under the
DIP Financing Terms Sheet, other postpetition financing documents
and any DIP budget approved by AgStar; and (ii) for compensation
and payment of the reasonable fees and expenses owed to AgStar.
All Postpetition Obligations are allowed superpriority
administrative expense claims against the Borrower and the
Guarantor having priority over all administrative expenses.
As security for the Postpetition Obligations, the AgStar is
granted valid binding, enforceable, first priority and perfected
liens in the Postpetition and Prepetition Collaterals.
The Postpetition Liens will not be subject to any lien that is
avoided and preserved for the benefit of the Debtors' estates
under Section 551 of the Bankruptcy Code or otherwise.
The Borrower's and Guarantor's obligations in respect of the
Postpetition Obligations will not be discharged by the entry of
an order confirming a Chapter 11 plan or the conversion of any of
the Chapter 11 cases to cases under Chapter 7 of the Bankruptcy
Code.
The maturity date of the DIP Financing will be the earliest of
January 15, 2009.
Prior to the hearing of the DIP Financing, the Debtors submitted
a proposed order, which incorporates certain revisions and
modifications necessary to provide for final approval of their
request. Among others, the revised proposed final order provides
that as of the Petition Date, the Borrower owed $96,238,143 of
prepetition debt to the AgStar, instead of $95,300,000.
The Debtors also submitted a copy of the interim order the Court
entered on December 15, 2008, blacklined against the proposed
form of interim order originally filed with the Court on
December 11, 2008.
Copies of the Proposed Final Order and the Blacklined Interim
Order are available for free at:
http://bankrupt.com/misc/VeraSunPropFinalORDDIPJane.pdf
http://bankrupt.com/misc/VeraSunBlacklineORDDIPJane.pdf
About VeraSun Energy
Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp.
-- http://www.verasun.comor http://www.VE85.com/-- produces and
markets ethanol and distillers grains. Founded in 2001, the
company has a fleet of 16 production facilities in eight states,
with 14 in operation.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 31, 2008, (Bankr. D. Del. Case No. 08-12606)
Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP
represents the Debtors in their restructuring efforts.
AlixPartners LLP serves as their restructuring advisor. Rothschild
Inc. is their investment banker and Sitrick & Company is their
communication agent. The Debtors' claims noticing and balloting
agent is Kurtzman Carson Consultants LLC. The Debtors'
total assets as of June 30, 2008, was $3,452,985,000 and their
total debts as of June 30, 2008, was $1,913,214,000.
VeraSun Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000).
VERASUN ENERGY: Secures $110,000,000 AgStar DIP Loan for 7 Plants
-----------------------------------------------------------------
VeraSun Energy Corporation and its debtor-affiliates seek
permission from the U.S. Bankruptcy Court for the District of
Delaware to access debtor-in-
possession loans up to $81,700,000 on an interim basis, and up to
$110,600,000 on a final basis from AgStar Financial Services PCA
for the US BioEnergy Facilities located in:
-- Albert City, Iowa;
-- Dyersville, Iowa;
-- Ord, Nebraska;
-- Central City, Nebraska;
-- Woodbury, Michigan;
-- Janesville, Minnesota; and
-- Hankinson, North Dakota.
According to Mark S. Chehi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, in Wilmington, Delaware, approximately $30,300,000 will
be incremental financing for the US BioEnergy Debtors.
Proceeds of the DIP Facilities will be used to:
-- payoff the approximately $25 million of debt under the
existing AgStar DIP credit facilities;
-- "roll-up" approximately $55.3 million of the debt under the
AgStar Prepetition Lenders' prepetition credit facilities;
-- make adequate assurance payments;
-- finance the US BioEnergy Debtors' working capital and
general corporate needs in accordance with a budget;
-- pay certain fees and expenses of the DIP Lender;
-- finance the US BioEnergy Debtors' pro rata share of the
general, administrative, and overhead expenses of all of
the Debtors other than VeraSun Marketing, LLC; and
-- finance the US BioEnergy Debtors' allocation of
professional fees.
The AgStar DIP Financings, according to Mr. Chehi, are
specifically tied to the Debtors' pursuit of a sale process with
respect to the US BioEnergy Debtors, with covenants and certain
events of default tied to certain milestones. The Borrower,
Debtor VeraSun Marketing Hankinson, LLC, will:
Jan. 27, 2009 -- file with the Court a motion for approval of
a sale of substantially all of the assets of
the Borrower and the other Affiliated
Borrowers
[Feb. 9], 2009 -- obtain an order of the Court approving
bidding procedures for a sale of
substantially all of the assets of the
Borrower and the Affiliated Borrowers, which
order will authorize (A) credit bids and (B)
the solicitation of bids for substantially
all of the assets of each of the Borrower
and the Affiliated Borrowers separately and
for substantially all of the assets of the
Borrower and the Affiliated Borrowers
collectively
March 16, 2009 -- conduct an auction in accordance with the
bidding procedures
March 17, 2009 -- obtain an order of the Court approving the
sale or sales of substantially all of the
assets of the Borrower and the Affiliated
Borrowers
March 31, 2009 -- close the sale or sales of substantially all
of the assets of the Borrower and the
Affiliated Borrowers
The AgStar DIP Financings will enable the Debtors to operate the
US BioEnergy Facilities in "hot idle" status as they pursue a
sale of substantially all the assets of the US BioEnergy
Facilities, Mr. Chehi says.
The terms of the AgStar DIP Financings are set in draft credit
agreements available for free at:
http://bankrupt.com/misc/VeraSunAgStar7FacilitesCreditAgrmt.pdf
Other salient terms of the Credit Agreements are:
(a) The Advances will bear interest at a rate equal to 12%
plus the greater of (x) the LIBOR Rate or (y) 3.0%. The
default interest rate will be 2% in excess of the rate
that would otherwise be applicable to the Postpetition
Obligation.
(b) The DIP Financings will mature on the earliest of (i)
April 30, 2009, (ii) the occurrence of an Event of
Default, (iii) the date on which the Borrower or the
Guarantor closes a sale of the membership interests in the
Borrower or all or substantially all of the assets of the
Borrower, and (iv) the effective date of any Chapter 11
plan of reorganization of the Borrower or the Guarantor.
(c) The DIP Obligations will have priority over all
administrative expenses of the respective US BioEnergy
Debtors of the kind specified in Sections 503(b) and
507(b) of the Bankruptcy Code, subject to carve-outs for
professional fees and expenses.
(d) The DIP Obligations will be secured by perfected priority
security interests in and liens upon all assets of the
individual Debtor-borrower that are not subject to valid,
perfected and non-avoidable liens on existence as of the
Petition Date, subject to the Carve-Out.
(e) The DIP Obligations will be secured by perfected first
priority senior priming security interests in and liens on
all assets of the individual Debtor-borrower, subject to
the Carve-Out.
The Borrowers will grant adequate protection to the AgStar
Prepetition Lenders by:
(x) making payment of all regularly scheduled interest
payments under the AgStar Prepetition Lenders' prepetition
credit agreements at the non-default contract rate of
interest from and after entry of the Final Orders;
(y) reimbursing pre- and postpetition reasonable fees, costs,
and expenses that are reimbursable pursuant to the AgStar
Prepetition Lenders' prepetition credit agreements,
subject to the right of the U.S. Trustee and the
Creditors' Committee to object to those fees, costs, and
expenses; and
(z) providing replacement liens on all existing and after
acquired real and personal property of the US BioEnergy
Debtor that was the borrower under the specific
prepetition credit agreement.
Carve-Out means the sum of (a) all fees required to be paid to
the Clerk of the Bankruptcy Court and to the Office of the United
States Trustee pursuant to Section 1930 of Title 28 of the U.S.
Code in the Borrower's Chapter 11 Case, plus (b) $167,000.00,
plus (c) the aggregate amount of the Borrower's Allocated Share
of any budgeted, accrued, but unpaid, Professional Fees existing
as of the Carve-Out Date to the extent previously or subsequently
approved by the Bankruptcy Court; provided that the Carve-Out may
only be used for the payment of the Borrower's Allocated Share of
Professional Fees.
Mr. Chehi tells the Court that the Debtors are negotiating
towards finalization of a Credit Agreement in advance of the
interim hearing with terms similar to those proposed herein.
However, he adds that the Debtors continue to negotiate, among
other things, the mechanics of the DIP Budget, and will only be
seeking approval of the Interim Order to the extent that the DIP
Budget will enable the US BioEnergy Debtors to pay their
administrative expenses when they become due through the closing
of a proposed sale of the US BioEnergy Facilities.
The Debtors, in a separate motion, ask the Court to conduct a
hearing on their Request on January 14, 2009, with any parties
wishing to assert objections to do so before the hearing.
Mr. Chehi notes that the AgStar DIP financing expires on
January 15, 2009, and without approval of the Debtors' Request,
the Debtors will not have the necessary financing available to
operate the seven US BioEnergy Facilities past January 15 and
will be forced to shut down the Facilities.
About VeraSun Energy
Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp.
-- http://www.verasun.comor http://www.VE85.com/-- produces and
markets ethanol and distillers grains. Founded in 2001, the
company has a fleet of 16 production facilities in eight states,
with 14 in operation.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 31, 2008, (Bankr. D. Del. Case No. 08-12606)
Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP
represents the Debtors in their restructuring efforts.
AlixPartners LLP serves as their restructuring advisor. Rothschild
Inc. is their investment banker and Sitrick & Company is their
communication agent. The Debtors' claims noticing and balloting
agent is Kurtzman Carson Consultants LLC. The Debtors'
total assets as of June 30, 2008, was $3,452,985,000 and their
total debts as of June 30, 2008, was $1,913,214,000.
VeraSun Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000).
WASHINGTON MUTUAL: Can't Abandon Shareholder Actions, Court Says
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delawera denied,
with prejudice, the request of seven shareholders of Washington
Mutual, Inc., to require Washington Mutual Inc. to abandon the
consolidated shareholder derivative actions in the U.S. District
Court for the Western District of Washington as property of the
estate to allow the Shareholders to maintain standing to pursue
their claims with respect to the Derivative Action.
The Derivative Action -- commenced by Tom Sneva, Lynne Harrison,
Kenneth Slater, Walter E. Ryan, Jr., Joseph Procida, Alan Henry,
as trustee of the Alan Henry Family Trust, and Chana Scheller --
is based on allegations that certain officers and directors of
WaMu breached their fiduciary duties in connection with WaMu's
"improper subprime lending practices and knowingly reporting
inaccurate financial conditions in public regulatory filings."
The Court agreed with the Debtors at a December 30, 2008 hearing
that the Derivative Claims "represent potential assets of the
estate," and that the Derivative Plaintiffs do not have current
standing to pursue those claims given the Chapter 11 cases.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Inc. Bankruptcy News; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
WASHINGTON MUTUAL: IRS Wants to Set Off $55,000,000 Debt
--------------------------------------------------------
The United States, through the Internal Revenue Service, asks the
U.S. Bankruptcy Court for the District of Delaware to lift the
automatic stay imposed under Section 362(d) of the Bankruptcy Code
to allow it to set off a $55,028,000 payment to Washington Mutual,
Inc., against the debt owed to the United States by WaMu.
The $55 million payment was authorized by Senior Judge Loren A.
Smith of the U.S. Court of Federal Claims on December 19, 2008,
in the federal action captioned American Savings Bank, F.A., et
al. v. United States, No. 98-872 C.
Jan M. Geht, Esq., trial attorney for the Tax Division of the
U.S. Department of Justice, relates that the IRS filed a claim
amounting to $2,326,616,411 in the Debtors' Chapter 11 cases.
Senior Judge Smith ordered "that, to the extent that any party
asserts a claim to the proceeds of the [Federal Court's]
Judgment, the claim must be brought in the Chapter 11 Case,
designating the Bankruptcy Court for the District of Delaware as
the sole and exclusive forum for the resolution of the Claim."
He noted that "[t]he Federal Court will not retain jurisdiction
to resolve any competing claim . . . ."
While allowed under Section 553(a) of the Bankruptcy Code, the
Right of Setoff is not an independent right, but is rather a
preservation of a right that may otherwise exist outside of
bankruptcy, Mr. Geht says, citing Citizens Bank of Maryland v.
Strumpf, 516 U.S. 16, 18 (1995). According to Mr. Geht, the IRS'
Right of Setoff with respect to the Federal Court Judgment is
based on Section 3728 of the Money and Finance Code, which
provides that "[t]he Secretary of the Treasury [will] withhold
paying that part of a judgment against the United States
Government presented to the Secretary that is equal to a debt the
plaintiff owes the Government."
Mr. Geht maintains that the Right of Setoff is subject to a
mutuality requirement, which has been satisfied because the IRS
is a unitary creditor in WaMu's bankruptcy proceeding. The IRS
is entitled to off set any mutual debts it has involving multiple
agencies, Mr. Geht says. Similarly, the mutuality requirement is
also satisfied with respect to the Debtors since the IRS has been
required by the Federal Court to pay more than $55 million to
WaMu, and the IRS asserted a $2.3 billion Claim against WaMu in
the Chapter 11 cases.
Against this backdrop, the IRS asks the Court to lift the
automatic stay to allow it enforce its right to setoff in
accordance with the Federal Court Judgment.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Inc. Bankruptcy News; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
WASHINGTON MUTUAL: May Sell Investments in Strategic Capital Fund
-----------------------------------------------------------------
Judge Mary Walrath of the U.S. Bankruptcy Court for the District
of Delawareyup authorized Washington Mutual, Inc., to liquidate
and sell:
(i) certain investments held by its "Strategic Capital Fund,"
which comprised of certain equity interests, including
Series A and Series B preferred stock of WaveLink
Corporation in the face amount of $1 million and $4.35
million; Series E preferred stock of Financial Engines,
Inc., in the face amount of $5 million; and Common Stock
of Isilon Systems, Inc.; and
(ii) its interest, as a limited partner in these venture
capital funds:
* ARCH Venture Fund V, L.P.
* Arrowpath eCommerce Fund II, L.P.
* Digital Partners III, L.P.
* Financial Technology Ventures (Q), L.P.
* Financial Technology Ventures II (Q), L.P.
* Financial Technology Ventures III
* Madrona Venture Fund 1-A, L.P.
* Madrone Venture Fund III, L.P.
* Maveron Equity Partners 2000, L.P.
* Northwest Venture Partners III, L.P.
Judge Walrath, however, prohibits the Debtors from filing with
the Court "a redacted version" of any notice of any proposed
Investment Sale, under which certain economic terms will be kept
confidential, especially the purchase price.
The Debtors proposed that contemporaneously with the provision of
the Sale Notice to the U.S. Trustee, the Official Committee of
Unsecured Creditors, the WaMu Noteholders Group and other
noteholders, the Redacted Sale Notice will be filed with the
Court, specifying (i) the Investments to be sold, and (ii)
the identity of the purchaser and any of its relationships with
the Debtors.
Judge Walrath said during the December 30, 2008, hearing that
"[she] could not approve the Investment Sales without knowing the
purchase price."
A full-text copy of the approved Sale Notice is available for
free at http://bankrupt.com/misc/WaMu_InvestmentSaleNotice.pdf
The Court further ruled that except as otherwise provided with
respect to the Wavelink Stock, all Sales will be free and clear
of all liens, if any. All valid and perfected Liens will attach
to the proceeds of the Sales with the same validity, force and
effect as they had prior to the Sales. Purchasers of the
Investments will be entitled to protections afforded by Section
363(m) of the Bankruptcy Code, the Court added.
Each Investment activity is directed by the Fund's general
partner, which identifies and determines favorable investment
opportunities. The General Partner seek that limited partners,
including WaMu, contribute capital to the partnership to finance
the Investment. In this regard, the Debtors will provide the
Creditors Committee five days written notice of their intent to
satisfy any capital calls or make the contributions.
Judge Walrath requires the Debtors to provide a Sale Notice to
the counsel of Wavelink and CapitalSource with respect to any
proposed sale of the Debtors' interests in the Wavelink Stock.
The Wavelink Transaction will be subject (i) to any security
interest in the Wavelink Stock that CapitalSource may hold, (ii)
CapitalSource's consent, and (iii) the Court's permission to
pursue with the Sale.
Furthermore, any proposed Wavelink Transaction will be subject to
the terms of the Fourth Amended and Restated Stockholders'
Agreement and the Fourth Amended and Restated Registration and
Investors' Rights Agreement dated August 25, 2004.
The Investment Sale Procedures Order will not be construed to
prevent WaMu from seeking the Court's approval of any Sale, Judge
Walrath ruled.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Inc. Bankruptcy News; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
WASHINGTON MUTUAL: Sec. 341 Meeting to Resume January 28
--------------------------------------------------------
Roberta A. DeAngelis, the Acting United States Trustee for
Region 3, will resume the meeting of creditors of Washington
Mutual, Inc., and WMI Investment Corp., at 10:00 a.m., on
January 28, 2009, at Room 5209, J. Caleb Boggs Federal Building,
at 844 King Street, in Wilmington, Delaware.
The Resumption Notice notes that the creditors meeting required
under Section 341(a) of the Bankruptcy Code in the Debtors'
bankruptcy cases was initially convened on May 8, 2007.
Postpetition, the Section 341(a) meeting was last scheduled on
October 30, 2008. It was, however, to be continued to a later
date.
Attendance by the Debtors' creditors at the meeting is welcome,
but not required. The Sec. 341(a) meeting offers the creditors a
one-time opportunity to examine the Debtors' representative under
oath about the Debtors' financial affairs and operations that
would be of interest to the general body of creditors.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Inc. Bankruptcy News; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
WASHINGTON MUTUAL: Sets March 31, 2009 as Claims Bar Date
---------------------------------------------------------
Rule 3003(c)(2) of the Federal Rules of Bankruptcy Procedure
requires that any claimant who asserts a claim against a debtor
prior to the Petition Date that is not scheduled, or whose claim
is scheduled as disputed, contingent or unliquidated, must file a
proof of claim.
Section 502(b)(9) of the Bankruptcy Code specifies that a proof
of claim filed by a "government unit will be timely filed if it
is filed before 180 days after [the Petition Date]." Under
Section 101(27), a Governmental Unit essentially pertains to "the
United States; State; Commonwealth; District; Territory;
municipality; foreign state; department, agency, or
instrumentality of the United States."
In this regard, Washington Mutual, Inc. and WMI Investment Corp.
ask the U.S. Bankruptcy Court for the District of Delaware to
establish March 31, 2009, as the deadline for all persons or
entities, including Governmental Units, to file prepetition proofs
of claim against them in their Chapter 11 cases.
The Debtors also ask Judge Mary Walrath to approve their proposed
(i) form of proof of claim, (ii) notice of the Bar Date; (iii)
publication notice of the Bar Date, and (iv) notice procedures.
Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, relates that the Debtors seek a Claims Bar
Date to ensure that potential claimants receive at least 60 days'
notice of the Bar Date. Fixing the proposed Claims Bar Date, he
avers, will enable the Debtors to receive process and begin their
analysis of creditors' claims in a timely and efficient manner
and expedite the administration of their Chapter 11 cases.
In addition, Mr. Collins says, the Proposed Claims Bar Date will
permit the Court to grant the Debtors' request without further
notice and hearing, pursuant to Rule 2002-1(e) of the Local
Bankruptcy Rules for the U.S. Bankruptcy Court for the District
of Delaware.
The Debtors clarify that they do not seek to set a bar date for
the filing of proofs of equity interests. They reserve their
rights to seek the Court's permission to set a bar date for
proofs of interest in the future.
With respect to the filing of proofs of claim, the Debtors
propose these procedures:
(1) All Entities that assert a claim against the Debtors which
arose on or before the Petition Date must file a proof of
claim on or before March 31, 2009.
(2) Any person or entity that asserts a claim arising from the
rejection of an executory contract or unexpired lease must
file the Claim on or before the later of (i) March 31,
2009, or (ii) 20 days after the effective date of the
Rejection.
(3) A Proof of Claim that incorrectly identifies the Debtors
as obligors will be subject to reclassification, upon
which the Mis-identifying Claim will be disallowed and
expunged, and the Reclassified Claims will be subject to
all rights, defenses, counterclaims and objections. Any
Claimant asserting a Mis-identifying Claim will be given
15 days' notice of the Proposed Reclassification.
(4) All proofs of claim must substantially conform to the
Official Bankruptcy Form No. 10, a copy of which can be
obtained at http://www.uscourts.gov/bkforms.index.html
The Debtors propose to send the Proof of Claim Form to
each person or entity listed in the Debtors' Schedules,
and customized to specify (i) the Debtors, (ii) the Claim
amount, (iii) the nature of the Claim, and (iii) whether
the Claim is disputed, contingent or unliquidated.
(5) All Proofs of Claim must be actually and timely received
by Kurtzman Consultants, LLC, as the official claims agent
in the Debtors' Chapter 11 cases, at:
Washington Mutual Claims Processing
c/o Kurtzman Carson Consultants LC
2335 Alaska Ave.
El Segundo, California 90245
The Proofs of Claim must not be sent by facsimile,
telecopy or electronic mail transmission.
(6) Proofs of claim must (i) be signed by the claimant or an
authorized agent, (ii) include supporting documentation,
(iii) be filed in the English language, and (iv) be
denominated in the U.S. currency. It must be filed
separately against each Debtor, if applicable.
Any claimholder that fails to timely file a Proof of Claim will
be forever barred, estopped and enjoined from asserting the Claim
against the Debtors, and will not be permitted to vote to accept
or reject any Chapter 11 plan of reorganization. The Debtors
will be forever discharged from any and all indebtedness with
respect to the Claim.
Parties Not Required to File Proofs of Claim
The Debtors propose that a party will not be required to file
Proofs of Claim if it:
-- has already properly filed a Proof of Claim with the Clerk
of the Bankruptcy Court or with Kurtzman in a form
substantially similar to Form No. 10;
-- asserts a claim (i) that is not described as disputed,
contingent or unliquidated, (ii) listed by the Debtors in
an amount, nature and priority agreed upon by the claimant,
and (iii) which specific obligor is agreed upon by the
claimant;
-- has been allowed by the Court on or before the Claims Bar
Date;
-- has been satisfied in full prior to the Claims Bar Date;
-- is a Debtor holding a claim against another Debtor;
-- involves any officer, director or employee for a claim for
indemnification, contribution or reimbursement;
-- holds a claim that is allowable under Sections 503(b) or
507(a) of the Bankruptcy Code as an administrative expense
of the Debtors' cases;
-- holds an interest in any of the Debtors, based exclusively
upon the ownership of common or preferred stock, membership
interests, partnership interests, or warrants or rights to
purchase, sell or subscribe to the Security or Interest;
-- holds a claim for which the Court has already fixed a
specific deadline; and
-- holds a claim for repayment of outstanding principal or
interest arising under, or with respect to, the Debtors'
unsecured notes, consisting of:
Principal Amt.
as of Date Description Due
of Issuance CUSIP of Notes Date
-------------- ----- ----------- ----
$1,000,000,000 939322AL7 4.00% Fixed Rate 2009
500,000,000 939322AW3 Floating Rate 2009
600,000,000 939322AP8 4.2% Fixed Rate 2010
250,000,000 939322AQ6 Floating Rate 2010
500,000,000 939322AE3 8.250% Subordinated 2010
400,000,000 939322AX1 5.50% Fixed Rate 2011
400,000,000 939322AT0 5.0 Fixed Rate Notes 2012
450,000,000 939322AS2 Floating Rate 2012
500,000,000 939322AU7 Floating Rate 2012
750,000,000 939322AN3 4.625% Subordinated 2014
750,000,000 939322AV5 5.25% Fixed Rate 2017
500,000,000 939322AY9 7.250% Subordinated 2017
N/A N/A Trust PIERS 2041
Trust PIERS refers to Trust Preferred Income Equity
Redeemable Securities Units issued by Washington Mutual
Capital Trust 2001.
Proposed Bar Notice & Publication Notice Procedures
Pursuant to Rule 2002(a)(7) of the Federal Rules of Bankruptcy
Procedure, the Debtors propose to provide sufficient notice of
the Claims Bar Date to these parties-in-interest:
* The U.S. Trustee
* Counsel to the Official Committee of Unsecured Creditors
* The Office of Thrift Supervision
* The Federal Deposit Insurance Corporation
* Counsel to JPMorgan Chase & Co.
* Parties that have requested notice in the Debtors' cases
* Entities that have previously filed proofs of claim
* Known creditors as of the Petition Date
* Parties to executory contracts or unexpired leases
* Parties to litigation with the Debtors;
* All Governmental Units
* The U.S. District Attorney's Office for the Western District
of Washington
The Bar Date Notice will notify parties of the Bar Date, and will
contain information regarding claimants who must file the proofs
of claims, the claim filing procedures and the consequences of
failing to timely file a Proof of Claim.
The Debtors intend to publish the Publication Notice of the
Claims Bar Date in the national edition of The New York Times,
the Wall Street Journal and The Seattle Times at least 45 days
prior to the Bar Date. The Publication Notice will provide
adequate notice to certain creditors to whom no other notice was
sent and who are unknown or not reasonably ascertainable, and
known creditors with unknown addresses, Mr. Collins avers.
Objections, if any, to the Debtors' request must be filed no
later than January 20, 2009. The Court is set to convene a
hearing on January 29 to consider the Debtors' request. Absent
any objections, the Court may enter an order approving the
Debtors' request.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Inc. Bankruptcy News; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
WORLDSPACE INC: WorldSpace Systems Files Amended Schedules
----------------------------------------------------------
WorldSpace Systems Corp., Inc., a debtor-affiliate of WorldSpace,
Inc., filed with the U.S. Bankruptcy Court for the District of
Delaware, an amended schedule of its assets and liabilities,
disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -------------
A. Real Property
B. Personal Property $25,148,520
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims
E. Creditors Holding $73,020,761
Unsecured Priority
Claims $2,105,517
F. Creditors Holding
Unsecured Non-priority
Claims $487,624,773
----------- ------------
TOTAL $25,148,520 $562,751,052
About WorldSpace
WorldSpace, Inc. (WSI) -- http://www.1worldspace.com/-- and its
debtor- and non-debtor affiliates provide satellite-based radio
and data broadcasting services to paying subscribers in ten
countries throughout Europe, India, the Middle East, and Africa.
The Debtors and their affiliates operate two geostationary
satellites, AfriStar and Asia Star, which are in orbit over Africa
and Asia. The Debtor and two of its affiliates filed for Chapter
11 bankruptcy protection on Oct. 17, 2008 (Bankr. D. Del., Case
No. 08-12412 - 08-12414). James E. O'Neill, Esq., Laura Davis
Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl
& Jones, LLP, represent the Debtors as counsel.
The U.S. Trustee for Region 3 appointed creditors to serve on an
Official Committee of Unsecured Creditors. Neil Raymond Lapinski,
Esq., and Rafael Xavier Zahralddin-Aravena, Esq., at Elliot
Greenleaf represent the Committee as counsel.
WP HICKMAN: Seeks to Pay Soprema's Claims to Maintain Supplies
--------------------------------------------------------------
W.P. Hickman Systems, Inc., and its debtor affiliates ask the U.S.
Bankruptcy Court for the Western District of Pennsylvania, on an
expedited basis, for authority to:
(i) enter into Letter Agreement with Soprema, Inc., which will,
among others, satisfy Soprema's prepetition claim against
the Debtors.
(ii) pay the prepetition trade claim of Soprema, Inc.
The Debtors seek approval of its request on an expedited basis,
because Soprema, Inc., has agreed to recommence supplying
indispensable roofing materials (Critical Materials) to the
Debtors. Soprema informed the Debtors that it will only continue
to supply the Critical Materials if the Debtors agree to pay its
prepetition trade claim of $636,809 in accordance with a certain
letter agreement dated Dec. 12, 2008.
The Letter Agreement contains these terms:
A. The Debtors will pay Soprema 110% of Soprema's invoices for
new orders placed by the Debtors after the Petition Date, with
100% of such payments to be applied to the post-petition
invoices and the remaining 10% applied to the Prepetition
Trade Claim.
B. The Debtors agree that the minimum quarterly payments applied
against the Prepetition Trade Claim shall be as follows:
i. December 31, 2008 - $60,900;
ii. March 31, 2009 - $91,350;
iii. June 30, 2009 - $152,250; and
iv. September 30, 2009 - $332,309.38, or such other amount
equal to the then outstanding balance of the
Prepetition Trade Claim.
C. If the 10% payment applications falls short of the minimum
quarterly scheduled payments in any such quarter, the Debtors
will pay the difference to Soprema within five business days
following the end of the quarter.
D. The Debtors, on behalf of themselves, their estates, and their
legal representatives, successors and assigns, irrevocably and
unconditionally waive any and all avoidance actions which the
Debtors have and/or may have against Soprema, its affiliates,
legal representatives, successors and assigns, which waiver
shall survive the termination of the Letter Agreement.
The Debtors tell the Court that without the resumption of the flow
of the critical materials, the Debtors will be forced to close
their doors and cease operations, as the Critical Materials are
incorporated into most of the Debtors' roofing systems. In
addition, the Debtor tells the Court, Soprema holds all of the
codes and approvals necessary to manufacture the Critical
Materials and the Debtors estimate that it would take at least six
(6) months for an alternative vendor to obtain the necessary codes
and approvals. The codes and approvals relate to several of the
Debtors' roof systems that require approvals and/or must meet the
standards of certain customers or governmental bodies such as
Factory Mutual, Underwriters Laboratories, Miami (Florida) Dade
County and FBC (Florida Building Code).
Finally, the Debtors note that Soprema may already be entitled to
receive a significant of the Prepetition Trade Claim pursuant to
its reclamation and administrative claim rights. On October 20,
2008, counsel for Soprema sent a reclamation demand to the Debtors
and their undersigned counsel, pursuant to section 546(c)3 of the
Bankruptcy Code, demanding the return or reclamation in kind of
all goods received by the Debtors from Soprema during the 45-day
period preceding the Petition Date. The value of the materials
Soprema is seeking to reclaim is $335,193.90. Of that amount,
$285,777 is entitled to administrative claim priority pursuant to
section 503(b)(9)4 of the Bankruptcy Code.
Solon, Ohio-based W.P. Hickman Systems, Inc. --
http://www.wphickman.com/-- offers commercial roofing products.
The Debtors engage in providing services to the federal government
through its GSA certification and are involved in major buying
groups including Sodexho-USA, Horizon Resource Group and U.S
Community Services. The company and its affiliates filed for
Chapter 11 protection on Oct. 2, 2008 (Bankr. W.D. Pa. Lead Case
No. 08-26591). Paul J. Cordaro, Esq., and Aurelius P. Robleto,
Esq., at Campbell & Levine LLC represent the Debtors in their
restructuring efforts. James E. Van Horn, Esq., at McGuireWoods
LLP represent the Official Committee of Unsecured Creditors as
counsel. W.P. Hickman listed assets of $10 million to $50 million
and debts of $10 million to $50 million.
WP HICKMAN: Panel Objects to Payment of Soprema Prepetition Claim
-----------------------------------------------------------------
The official committee of unsecured creditors of W.P. Hickman
Systems, Inc., and its affiliated debtors, opposes the expedited
motion of the Debtors for an order authorizing them to:
(i) enter into a Letter Agreement with Soprema, Inc., which
contains terms which will, among others, satisfy Soprema's
prepetition claim against the Debtors, and
(ii) pay prepetition claim of Soprema, Inc.
Soprema, Inc. has agreed to recommence supplying indispensable
roofing materials (Critical Materials) to the Debtors. The
Debtors are seeking approval of its request on an expedited basis,
because Soprema said it will only continue to supply the Critical
Materials if the Debtors agree to pay its prepetition trade claim
of $636,809 in accordance with a certain letter agreement dated
Dec. 12, 2008.
The Committee raises these objections:
A. The Debtors and Soprema are subject to an executory contract
that the Debtors can and should compel Soprema to
immediately perform until the Debtors determine to assume or
reject the contract pursuant Sec. 365(d)(2) of the
Bankruptcy Code.
The Private Label Agreement between the Debtors clearly
provides for Soprema to manufacture goods in quantities set
forth by the Debtors and at prices specified on the price
list set forth to the Private Label Agreement. In the
instant case, there were four (4) purchase orders
outstanding at the Petition Date and therefore the Private
Label Agreement is executory even if it is deemed to be a
blanket purchase order agreement.
B. The automatic stay applies to Soprema and precludes Soprema
from ceasing to perform under a cerain Private Label
Agreement between the Debtors and Soprema.
Absent the rule set forth in the Bankruptcy Code that a non-
debtor party to an executory contract may not cease to
perform under a contract post-petition, a non-debtor party
would have the unfettered power to frustrate the stated
purpose of section 365(d) of the Bankruptcy Code, and would
deprive the debtor-in-possession of its right to determine
whether adoption or rejection of an executory contract would
be beneficial to a successful reorganization.
Solon, Ohio-based W.P. Hickman Systems, Inc. --
http://www.wphickman.com/-- offers commercial roofing products.
The Debtors engage in providing services to the federal government
through its GSA certification and are involved in major buying
groups including Sodexho-USA, Horizon Resource Group and U.S
Community Services. The company and its affiliates filed for
Chapter 11 protection on Oct. 2, 2008 (Bankr. W.D. Pa. Lead Case
No. 08-26591). Paul J. Cordaro, Esq., and Aurelius P. Robleto,
Esq., at Campbell & Levine LLC represent the Debtors in their
restructuring efforts. James E. Van Horn, Esq., at McGuireWoods
LLP represent the Official Committee of Unsecured Creditors as
counsel. W.P. Hickman listed assets of $10 million to $50 million
and debts of $10 million to $50 million.
X-RITE INC: Quarter Revenue Results Won't Affect S&P's 'B' Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings on Grand
Rapids, Michigan-based X-Rite Inc. (B/Stable/--) would not
currently be affected by the company's Jan. 8, 2009, announcement
that December-2008 quarter revenues and profitability would be
significantly below earlier expectations. December-quarter
revenues likely will be in the $60 million-$61 million area, flat
with the September quarter but below earlier estimates. Full-year
revenues are expected to be down 8%, pro forma for acquisitions.
Covenant EBITDA for 2008 is expected to be in the $57 million to
$60 million range, well above the covenant requirements. EBITDA
for the December quarter likely will be about $13 million to $16
million.
In response to marketplace challenges, the company has instituted
a planned $20 million cost reduction program for 2009, including
manufacturing cost reductions, headcount reductions, and reduced
executive compensation. While business visibility is limited, and
profitability beyond the near term is uncertain, the cost
reduction plan is expected to sustain interest coverage and
leverage metrics within the senior debt covenants. X-Rite
supplies color management systems and reference standards for
color matching to a range of industrial markets.
* Michael Sage Joins Dechert LLP From O'Melveny
-----------------------------------------------
Michael J. Sage has joined Dechert LLP as a partner in the
business restructuring and reorganization practice group. Mr.
Sage, who is resident in the firm's New York office, was most
recently a partner at O'Melveny & Myers LLP and co-head of its
financial restructuring group.
"We are delighted to have Michael Sage join our team," said H.
Jeffrey Schwartz, co-chair of Dechert's business restructuring and
reorganization practice group. "We are confident he will make a
material contribution to the growth of our practice, which we
intend to continue to expand, and his arrival is a significant
milestone in our expansion efforts."
Mr. Sage, 45, has represented ad hoc committees of bondholders,
noteholders, term lenders and other creditors, official creditors'
committees, individual creditors, acquirers, and debtors in
bankruptcy proceedings and out-of-court restructurings. He also
has significant experience in the representation of financial
institutions that have acquired substantial strategic positions in
debt issued by troubled companies as well as the bankruptcies,
out-of-court restructurings, and divestitures relating to such
acquisitions.
"I am very excited about the opportunity to join Dechert," said
Mr. Sage. "I feel the combination of the firm's practice and my
practice will yield great results. I feel my clients will benefit
from my joining Dechert."
Mr. Sage has been recognized as a "leading bondholder
practitioner" in the 2006, 2007, and 2008 editions of Chambers
USA, a referral guide to leading lawyers in the United States
based on the opinions of peers and clients. He has also been
listed in the 2006, 2007, and 2008 editions of the K&A
Restructuring Register: America's Top 100 Restructuring
Professionals.
A graduate of the University of Vermont (B.A., 1985) and Emory
University (J.D., 1988), Mr. Sage is member of the bars in
Connecticut and New York and is admitted to practice before the
U.S. District Courts for the Eastern and Southern Districts of New
York.
With more than 1,000 lawyers in 18 cities in the United States,
Europe, and Asia, Dechert LLP advises corporations and financial
institutions on litigation, transactional, and corporate and
regulatory matters. Dechert's business restructuring and
reorganization group has extensive experience in insolvency
matters and guides clients through the challenges and
opportunities posed by financially distressed enterprises. The
group has earned a distinguished national reputation for providing
sophisticated legal advice to all significant parties and
interests confronting insolvency matters and opportunities. On
the Net: http://www.dechert.com/
* Willkie Farr's Callari to Join Venable LLP in New York
--------------------------------------------------------
Venable LLP has added veteran restructuring attorney Carollynn
Callari as a partner in its New York office. The move further
bolsters the firm's bankruptcy and restructuring practice, the
firm said in a news statement.
Ms. Callari joins Venable from Willkie Farr & Gallagher LLP, where
she was a member of the firm's business reorganization and
restructuring department for 14 years, working across the entire
spectrum of Chapter 11 cases as well as counseling parties outside
of judicial settings regarding business restructurings.
Ms. Callari has particular experience representing major debtors
in bankruptcy matters. She was part of a team engaged in creditor
and purchaser negotiations in the $800 million Chapter 11 filing
of telecommunications provider XO Communications. She also played
a similar role in managing the bankruptcy of manufacturer Werner
Holding, helping manage a $275 million sale of assets to
investors.
Other large-scale bankruptcies in which she has been engaged
included retailers The Hechinger Company, Frank's Nursery & Crafts
and Petrie Retail, Inc., as well as energy provider PG&E National
Energy Group, for whom she helped direct prepetition negotiations
with creditors representing more than $2 billion in debt to
facilitate the debtor filing bankruptcy with a prenegotiated plan.
In the Petrie case, she handled numerous auctions involving the
disposition of more than 500 real property leases.
Ms. Callari also has represented various creditors in a number of
high-profile Chapter 11 filings, including former investors,
suppliers and other parties in the bankruptcies of Global Crossing
Ltd., Teleglobe Communications Corporations, Worldwide Direct,
Inc., Alliant Protection Services, Inc., and Access Cardiosystems,
Inc.
"Carollynn has years of experience picking up the pieces after
retailers enter bankruptcy," said Greg Cross, Chair of Venable's
Bankruptcy and Creditors' Rights Practice Group. "Whether on the
creditor or debtor side of a matter, she will be a critical asset
for our firm and clients as we work through the coming wave of
retail and shopping center bankruptcies."
At Venable, Ms. Callari joins an active national bankruptcy and
restructuring practice that represents both debtors and creditors
in complex matters. Among the firm's noteworthy assignments in
the past several years has been its role as special litigation
counsel to Enron Corp. in recovering more than $1 billion of
assets tied to the firm's bankruptcy. The firm has also handled
commercial real estate workouts for a client in connection with
securitized trusts in 18 states with a total value in excess of
$300 million. During 2008 Venable completed the disposition of
assets in the largest real estate bankruptcy in the history of New
York City. The debtors, who were involved in a large mortgage
fraud scheme, owned a partially completed condominium building and
more than 20 apartment buildings in Upper Manhattan.
"This is obviously a busy period for bankruptcy work, and we're
pleased to gain the skills of Carollynn Callari, who brings a
depth of knowledge as well as an impressive range of experience
across the landscape for business bankruptcy and restructuring,"
said Edmund O'Toole, partner-in-charge of Venable's New York
office.
"Carollynn has negotiated virtually every type of claim and
managed multi-party auctions of assets," Mr. O'Toole added.
"She's also directed large-scale cases from filing through
confirmation of reorganization plan. Our national practice gains
significantly with her presence, as does our New York office,
where we expect to be in the middle of a growing number of
bankruptcy-related matters."
Ms. Callari is the latest addition to Venable's growing New York
presence. Since opening in 2005, the office has grown to more than
35 attorneys. In recent months, the firm has brought aboard
partners in a number of practice areas, including hedge fund and
asset management, nonprofit, FTC enforcement, and litigation.
"Venable has an excellent reputation as a high quality litigation
and bankruptcy practice," Ms. Callari said, noting that she got to
know the firm after working with several attorneys engaged in the
Enron matter. "The firm faced some serious obstacles in that case
and managed to secure a much greater recovery than many observers
would have thought possible. The firm has a broad practice
platform and a true collaborative approach, which very much
attracted me."
In addition to her legal work, Ms. Callari also serves as an
adjunct instructor at New York University's School of Continuing
and Professional Studies, teaching a course on workouts,
restructurings and bankruptcy.
Ms. Callari received her J.D. from St. John's University School of
Law and her B.S. from Brooklyn College.
One of the American Lawyer's top 100 law firms, Venable LLP has
attorneys practicing in all areas of corporate and business law,
complex litigation, intellectual property and government affairs.
Venable serves corporate, institutional, governmental, nonprofit
and individual clients throughout the U.S. and around the world
from its headquarters in Washington, D.C. and offices in
California, Maryland, New York and Virginia. On the Net:
http://www.Venable.com/
* Proskauer Rose Unveils Supplement to Int'l Legal Practice Guide
-----------------------------------------------------------------
Proskauer Rose LLP released its International Practice Group of
"2009 Trends and Developments in International Legal Practice."
The 2009 Trends Report is the latest annual supplement to the
firm's hugely popular e-Guide, "Proskauer on International
Litigation and Dispute Resolution", which is publicly available at
http://www.proskauerguide.com/welcome
Since its launch in 2007, the e-Guide has become among the most
visited Web sites on international practice, serving clients and
readers in more than 100 countries. Available for free viewing
and download at www.proskauerguide.com, the Guide explores best
practices and creative-yet-practical approaches to managing,
resolving, and avoiding international practice controversies as
well as reviews the implications of the pivotal legal and
strategic issues in international practice and dispute resolution.
The just-published 2009 Trends Report can be accessed and
downloaded from the e-Guide's Web site. The Report analyzes the
significant legal issues currently facing businesses operating
globally today; forecasts the potential impact and future
direction of these trends; and focuses on the practical
implications of these trends.
There has been significant activity in each of the areas that
Proskauer reviewed in its earlier trends reports. Following last
year's analysis and the firm's Spring 2008 "Major Trends
Conference" in Paris, Proskauer's International Practice Group has
once again identified the most significant legal and practical
trends in international practice as evidenced by judicial,
legislative, and commercial developments in the past year. The
general topics include:
-- Litigation of International Controversies in the US:
Toward a Balanced Approach to Expanding/Contracting
Jurisdiction and Enforcement
-- American-Style Litigation Reforms in Europe: To Be or Not
To Be
-- Sovereign Entities in US Commercial Litigation: New
Challenges and Opportunities
-- Increased Use of Alternative Dispute Resolution Techniques
-- Increased Risk of Coordinated Regulatory/Enforcement
Proceedings in Multiple Countries
-- Vigorous, Expanded Enforcement of the US Foreign Corrupt
Practices Act
-- Trends in US M&A: Lessons from a Difficult Year
More generally, the e-Guide provides practical advice on topics
that include: drafting international agreements; securing/avoiding
jurisdiction; judgment enforcement/avoidance; multi-jurisdictional
regulatory proceedings and investigations; protecting witnesses,
documents, privacy and privileges; trial practice involving
international controversies; and a number of additional
substantive areas.
"In the wake of a pivotal year that is bound to result in new
litigation as well as strategic structural and transactional
challenges for companies around the world, the release of our
resolutely practical e-guide supplement could not be more timely,"
said Louis M. Solomon, Co-Chair of Proskauer's Litigation and
Dispute Resolution Department and Editor-in-Chief of the e-Guide
and Trends Report. "The overwhelmingly positive response to the
e-Guide and to our Trends Report of last year confirmed the need
for a comprehensive "refresh" of the issues arising in cross-
border disputes and where courts and arbitral forums are headed in
these increasingly uncertain -- and litigious -- times."
Proskauer's Litigation & Dispute Resolution Department is
comprised of 275 lawyers practicing around the world in a wide
range of forums, including federal and state courts,
administrative and regulatory agencies, and national and
international arbitral tribunals. In addition to such mainstays
of a complex practice as securities, contract and antitrust
matters, the firm's litigators have extensive experience in:
bankruptcy litigation; intellectual property litigation, including
copyright, trademark, patent and Internet law; insurance coverage
counseling and litigation; criminal and regulatory investigations
and prosecutions; civil forfeiture proceedings; sports law;
entertainment law; defamation and other publishing matters;
employee movement, trade secrets and unfair competition matters;
ERISA; franchising; health care; lender liability; family and
partnership disputes; real estate litigation; and tax controversy.
For upcoming programs and events of Proskauer's International
Practice Group, which are open to clients, practitioners, and
interested persons alike, please visit:
http://www.proskauerguide.com/
About Proskauer Rose
Proskauer Rose, founded in 1875, is an international law firm
providing a wide variety of legal services to clients worldwide
from offices in Boca Raton, Boston, Chicago, Hong Kong, London,
Los Angeles, New Orleans, New York, Newark, Paris, Sao Paulo, and
Washington, D.C. The firm has wide experience in all areas of
practice important to businesses and individuals including
corporate finance, mergers and acquisitions, general commercial
litigation, corporate governance matters, conducting internal
corporate investigations, white collar criminal defense, private
equity and fund formation, patent and intellectual property
litigation and prosecution, labor and employment law, real estate
transactions, bankruptcy and reorganizations, trusts and estates,
and taxation. Its clients span industries including chemicals,
entertainment, financial services, health care, information
technology, insurance, Internet, lodging and gaming,
manufacturing, media and communications, pharmaceuticals, real
estate investment, sports, and transportation. On the Net:
http://www.proskauer.com/
* U.S. Auto Production in 2009 to Impact Fate of Suppliers
----------------------------------------------------------
Suppliers to the Big 3 automakers Ford Motor Company, General
Motors Corp., and Chrysler LLC, have faced ratings cuts and have
issued gloomy forecasts amid a projected continued slowdown of
vehicle production and demand in 2009.
Chrysler CEO Bob Nardelli, in an interview with Bloomberg News,
said that they have pegged total 2009 production by U.S to
11.1 million units. Ford Motor Chief Financial Officer Lewis
Booth said Ford has lowered its prediction from a range of 12.2
million to 12.5 million, to 12 million to 12.5 million.
Other firms, however, have given lower forecasts. "The market
will not reach 12.2 million units this year, no way, no how," said
John Wolkonowicz, an IHS Global Insight analyst. IHS, according
to Bloomberg, has trimmed its 2009 sales estimate last week to
between 10 million and 10.5 million.
"We expect U.S. light-vehicle sales to fall about 24% in 2009, to
about 10.0 million units," said Standard & Poor's credit analyst
Lawrence Orlowski, yesterday. GM's production in the first quarter
of 2009 is expected to be down more than 50% year over year. S&P
expects production to also be down for other customers in North
America and for Europe as well in 2009.
According to data from the International Organization of Motor
Vehicle Manufacturers, production of cars and commercial vehicles
in the U.S. in 2007 was 10,780,729, down 4.5% from the previous
year. Bloomberg has said 2008 U.S. sales of cars and light trucks
have tumbled 16% through November.
Ratings Downgrades
On Jan. 12, Standard & Poor's cut the ratings of Visteon Corp.
ArvinMeritor Inc., American Axle & Manufacturing Holdings Inc.,
Hayes Lemmerz International Inc., BorgWarner Inc. and Magna
International Inc., due to lower sales forecasts in 2009.
"We expect U.S. light-vehicle sales to decline about 24 percent in
2009 to 10 million units, and that Visteon could use more than
$400 million in cash during 2009 under this scenario," Standard &
Poor's said Jan. 12. Visteon, ArvinMeritor, American Axle and
Hayes Lemmers dropped into junk status.
In mid-December 2008, Fitch Ratings placed the Issuer Default
Ratings of 11 U.S. auto suppliers on Rating Watch Negative, based
on the impact of a potential bankruptcy filing by General Motors.
According to Fitch, the companies' current IDR/prospective IDR
are:
-- American Axle 'B'/'CC';
-- ArvinMeritor 'B'/CCC';
-- Hayes-Lemmerz 'B'/CCC';
-- Johnson Controls 'A-'/'BBB+';
-- Tenneco 'BB-/B-';
-- TRW 'BB'/'B-';
-- Visteon 'CCC'/'CC'
Fitch said that in 2009, auto suppliers are already facing a steep
global downturn in auto production, including a deeply depressed
production forecast in the U.S. and Europe.
Forecast Withdrawals
Various automotive suppliers have also withdrawn their guidance or
forecasts for the fourth quarter of 2008 or for the year 2009 due
to lower-than-expected vehicle demand and sales.
On October 23, 2008, Johnson Controls Inc., which has 10% of U.S.
revenues tied to the Big 3 and Toyota, said it expects earnings of
$0.22 to $0.24 per diluted share for the quarter ended Dec. 31,
2008. However, JCI subsequently dropped the guidance, citing that
it was based on assumptions that include North American auto
production of 12.3 million vehicles and European production of
21.2 million vehicles. In Dec. 16, 2008, JCI said that due to the
"rapid decline in global automotive production and uncertain
industry conditions," it is expected to report a loss in its 2009
first quarter. JCI said that it is projected to incur losses
based on the revised estimates that production for 2009 are 9.3
million units in North America and 16.2 million units in Europe.
JCI has been on a "quiet period" since and is expected to report
its fiscal first quarter results on Jan. 16.
Another to supplier, ArvinMeritor (NYSE: ARM) said Dec. 8, 2008
that it expects to generate $50 million to $58 million of EBITDA
on slightly more than $1 billion in sales, before special items,
for the quarter ended Dec. 27, 2008. The company, however, said
Jan. 9 that it is withdrawing the guidance. The company also said
that it might sell its light vehicle systems business, in parts,
instead of selling the unit as a whole or pursuing a spin-off,
which was previously announced May 2008. "As previously
announced, we were in negotiations to sell the LVS business group
in its entirety," said Chip McClure, chairman, CEO and president
of ArvinMeritor. "However, in light of the unprecedented
challenges in the credit markets and the volume weakness in our
industry, we have determined that in this financial environment we
cannot capture the appropriate value for LVS by selling the
business as a whole. We are confident that this decision will
ultimately generate the best returns for our shareholders."
In early December, TRW Automotive Holdings Corp. (NYSE: TRW)
announced the withdrawal of its full-year 2008 sales and earnings
guidance, which was last provided on Oct. 30, 2008. The company
had announced that it expects its full year sales to be
approximately $15.3 billion, and full year net earnings per share
in the range of $0.90 to $1.10. However, TRW said that in recent
weeks, both actual and forecasted levels of vehicle production in
global automotive markets have declined beyond previously
forecasted levels. "The second half of 2008 continues to be an
unprecedented period for the automotive industry. Since issuing
our guidance on October 30, major markets have experienced
significant declines in production well beyond our forecasts in
late October," said John Plant, TRW's President and CEO. TRW is
expected to release its 2008 results on Feb. 16.
Viable Plan By Chrysler and GM Needed
To Meet Federal Loan Covenants
Since a potential collapse by the Big 3 were reported in early
December, General Motors and Chrysler have been able to obtain
federal aid that have enabled them, so far, to avert bankruptcy.
On Dec. 31, 2008, the U.S. Treasury completed a transaction with
General Motors, under which the Treasury will provide GM with up
to a total of $13.4 billion in a three-year loan from the Troubled
Assets Relief Program. On January 2, 2009, the Treasury provided
a three-year $4 billion loan to Chrysler Holding LLC.
The Treasury, however, has required each of the two to submit a
plan that would prove long-term viability. The loan agreement
provides for acceleration of the loan if those goals under the
plan, which are subject to review by a designee of the U.S.
President, are not met.
* Upcoming Meetings, Conferences and Seminars
---------------------------------------------
Jan. 21-22, 2009
TURNAROUND MANAGEMENT ASSOCIATION
Corporate Governance Meetings
Bellagio, Las Vegas, Nevada
Contact: www.turnaround.org
Jan. 22-23, 2009
TURNAROUND MANAGEMENT ASSOCIATION
Distressed Investing Conference
Bellagio, Las Vegas, Nevada
Contact: www.turnaround.org
Jan. 22-24, 2009
AMERICAN BANKRUPTCY INSTITUTE
Rocky Mountain Bankruptcy Conference
Westin Tabor Center, Denver, Colorado
Contact: 1-703-739-0800; http://www.abiworld.org/
Feb. 5-7, 2009
AMERICAN BANKRUPTCY INSTITUTE
Caribbean Insolvency Symposium
Westin Casurina, Grand Cayman Island, AL
Contact: 1-703-739-0800; http://www.abiworld.org/
Feb. 25-27, 2009
AMERICAN BANKRUPTCY INSTITUTE
Valcon
Four Seasons, Las Vegas, Nevada
Contact: 1-703-739-0800; http://www.abiworld.org/
Mar. 13, 2009
AMERICAN BANKRUPTCY INSTITUTE
Bankruptcy Battleground West
Beverly Wilshire, Beverly Hills, California
Contact: 1-703-739-0800; http://www.abiworld.org/
Mar. 14-16, 2009
AMERICAN BANKRUPTCY INSTITUTE
Conrad Duberstein Moot Court Competition
St. John's University School of Law, New York City
Contact: 1-703-739-0800; http://www.abiworld.org/
Apr. 1-4, 2009
AMERICAN BANKRUPTCY INSTITUTE
27th Annual Spring Meeting
Gaylord National Resort & Convention Center,
National Harbor, Md.
Contact: 1-703-739-0800; http://www.abiworld.org/
Apr. 16-19, 2009
COMMERICAL LAW LEAGUE OF AMERICA
2009 Chicago/Spring Meeting
Westin Hotel on Michigan Ave., Chicago, Ill.
Contact: (312) 781-2000; http://www.clla.org/
Apr. 17-18, 2009
NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES
NABT Spring Seminar
The Peabody, Orlando, Florida
Contact: http://www.nabt.com/
Apr. 20, 2009
AMERICAN BANKRUPTCY INSTITUTE
Consumer Bankruptcy Conference
John Adams Courthouse, Boston, Massachusetts
Contact: 1-703-739-0800; http://www.abiworld.org/
Apr. 27-28, 2009
TURNAROUND MANAGEMENT ASSOCIATION
Corporate Governance Meetings
Intercontinental Hotel, Chicago, Illinois
Contact: www.turnaround.org
Apr. 28-30, 2009
TURNAROUND MANAGEMENT ASSOCIATION
TMA Spring Conference
Intercontinental Hotel, Chicago, Illinois
Contact: www.turnaround.org
May 1, 2009
AMERICAN BANKRUPTCY INSTITUTE
Nuts and Bolts for Young Practitioners
Alexander Hamilton Custom House, New York City
Contact: 1-703-739-0800; http://www.abiworld.org/
May 4, 2009
AMERICAN BANKRUPTCY INSTITUTE
New York City Bankruptcy Conference
New York Marriott Marquis, New York City
Contact: 1-703-739-0800; http://www.abiworld.org/
May 7-8, 2009
RENASSANCE AMERICAN MANAGEMENT, INC.
6th Annual Conference on
Distressted Investing - Europe
The Le Meridien Piccadilly Hotel, London, U.K.
Contact: 1-903-595-3800 or
http://www.renaissanceamerican.com/
May 7-10, 2009
AMERICAN BANKRUPTCY INSTITUTE
27th Annual Spring Meeting
Gaylord National Resort & Convention Center
National Harbor, Maryland
Contact: http://www.abiworld.org/
May 12-15, 2009
AMERICAN BANKRUPTCY INSTITUTE
Litigation Skills Symposium
Tulane University, New Orleans, La.
Contact: http://www.abiworld.org/
May 14-16, 2009
ALI-ABA
Chapter 11 Business Reorganizations
Langham Hotel, Boston, Massachusetts
Contact: http://www.ali-aba.org
June 11-14, 2009
AMERICAN BANKRUPTCY INSTITUTE
Central States Bankruptcy Workshop
Grand Traverse Resort and Spa
Traverse City, Michigan
Contact: http://www.abiworld.org/
June 21-24, 2009
INTERNATIONAL ASSOCIATION OF RESTRUCTURING, INSOLVENCY &
BANKRUPTCY PROFESSIONALS
8th International World Congress
TBA
Contact: http://www.insol.org/
July 16-19, 2009
AMERICAN BANKRUPTCY INSTITUTE
Northeast Bankruptcy Conference
Mt. Washington Inn
Bretton Woods, New Hampshire
Contact: http://www.abiworld.org/
July 29-Aug. 1, 2009
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Conference
The Westin Hilton Head Island Resort & Spa,
Hilton Head Island, S.C.
Contact: http://www.abiworld.org/
Aug. 6-8, 2009
AMERICAN BANKRUPTCY INSTITUTE
Mid-Atlantic Bankruptcy Conference
Hotel Hershey, Hershey, Pa.
Contact: http://www.abiworld.org/
Sept. 10-11, 2009
AMERICAN BANKRUPTCY INSTITUTE
Complex Financial Restructuring Program
Hyatt Regency Lake Tahoe, Incline Village, Nevada
Contact: http://www.abiworld.org/
Sept. 10-12, 2009
AMERICAN BANKRUPTCY INSTITUTE
17th Annual Southwest Bankruptcy Conference
Hyatt Regency Lake Tahoe, Incline Village, Nevada
Contact: http://www.abiworld.org/
Oct. 2, 2009
AMERICAN BANKRUPTCY INSTITUTE
ABI/GULC "Views from the Bench"
Georgetown University Law Center, Washington, D.C.
Contact: http://www.abiworld.org/
Oct. 5-9, 2009
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
Marriott Desert Ridge, Phoenix, Arizona
Contact: 312-578-6900; http://www.turnaround.org/
Oct. 20, 2009
AMERICAN BANKRUPTCY INSTITUTE
NCBJ/ABI Educational Program
Paris Las Vegas, Las Vegas, Nev.
Contact: http://www.abiworld.org/
Dec. 3-5, 2009
AMERICAN BANKRUPTCY INSTITUTE
21st Annual Winter Leadership Conference
La Quinta Resort & Spa, La Quinta, California
Contact: 1-703-739-0800; http://www.abiworld.org/
Apr. 29-May 2, 2010
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
Gaylord National Resort & Convention Center, Maryland
Contact: 1-703-739-0800; http://www.abiworld.org/
June 17-20, 2010
AMERICAN BANKRUPTCY INSTITUTE
Central States Bankruptcy Workshop
Grand Traverse Resort and Spa, Traverse City, Michigan
Contact: 1-703-739-0800; http://www.abiworld.org/
July 7-10, 2010
AMERICAN BANKRUPTCY INSTITUTE
Northeast Bankruptcy Conference
Ocean Edge Resort, Brewster, Massachusetts
Contact: 1-703-739-0800; http://www.abiworld.org/
July 14-17, 2010
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Conference
The Ritz-Carlton Amelia Island, Amelia, Fla.
Contact: http://www.abiworld.org/
Aug. 5-7, 2010
AMERICAN BANKRUPTCY INSTITUTE
Mid-Atlantic Bankruptcy Workshop
Hyatt Regency Chesapeake Bay, Cambridge, Maryland
Contact: 1-703-739-0800; http://www.abiworld.org/
Oct. 4-8, 2010
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
JW Marriott Grande Lakes, Orlando, Florida
Contact: http://www.turnaround.org/
Dec. 2-4, 2010
AMERICAN BANKRUPTCY INSTITUTE
22nd Annual Winter Leadership Conference
Camelback Inn, Scottsdale, Arizona
Contact: 1-703-739-0800; http://www.abiworld.org/
Mar. 31-Apr. 3, 2011
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
Gaylord National Resort & Convention Center, Maryland
Contact: 1-703-739-0800; http://www.abiworld.org/
June 9-12, 2011
AMERICAN BANKRUPTCY INSTITUTE
Central States Bankruptcy Workshop
Grand Traverse Resort and Spa
Traverse City, Michigan
Contact: http://www.abiworld.org/
Dec. 1-3, 2011
AMERICAN BANKRUPTCY INSTITUTE
23rd Annual Winter Leadership Conference
La Quinta Resort & Spa, La Quinta, California
Contact: 1-703-739-0800; http://www.abiworld.org/
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via
e-mail to conferences@bankrupt.com are encouraged.
*********
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.
The Sunday TCR delivers securitization rating news from the week
then-ending.
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 2009. 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.
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