/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090220.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, February 20, 2009, Vol. 13, No. 50 Headlines 110 GREEN: NY Real Estate Market Drop Leads to Firm's Bankruptcy 1106 KING: Voluntary Chapter 11 Case Summary ALCATEL-LUCENT: Moody's Downgrades Corp. Family Rating to 'B1' ANN HARRIS: Voluntary Chapter 11 Case Summary ASPEN EXPLORATION: Reports Non-Compliance Under Wells Fargo Note ASPEN EXPLORATION: Royale Energy Suspends Effort to Pursue Co. AXCAN INTERMEDIATE: S&P Hikes to 'BB-' On Improved Results BAREFOOT COTTAGES: Voluntary Chapter 11 Case Summary BCBG MAX: Weak Operating Performance Cues S&P's Junk Rating BEARINGPOINT INC: Salient Terms of Pre-Packaged Chapter 11 Plan BEARINGPOINT INC: Moody's Cuts Rating to 'Caa3' on Ch. 11 Filing BERNARD L. MADOFF: Trustee Can Hire Counsel for U.K. Proceedings BERNARD L. MADOFF: Nine Law Firms, Accountants & Cos. Subpoenaed BH S&B: Glimcher Reports Impact of Retailer's Liquidation BOB MARSHALL: Voluntary Chapter 11 Case Summary BOULDER CROSSROADS: Case Summary & 20 Largest Unsecured Creditors BROWNSVILLE HEALTH: Voluntary Chapter 11 Case Summary BRUNO'S SUPERMARKETS: To Close 15% of Stores, Cut 30 Corp. Posts CAPITALSOURCE INC: Fitch Downgrades Issuer Default Rating to BB+ CARDINAL COMMUNICATIONS: 341(a) Meeting Set for February 25, 2009 CHRYSLER LLC: Cost-Cutting Plan Won't Affect S&P's 'CC' Rating CIRCUIT CITY: May Liquidate Assets After Amended DIP Loan Approval CIRCUIT CITY: Seeks July 8 Extension of Plan Filing Period CIRCUIT CITY: Seeks June 8 Extension of Deadline to Remove Actions CIRCUIT CITY: Seeks to Pay Up to $4,600,000 in Employee Incentives CITIGROUP INC: Roberto Hernandez Ramirez to Leave Board CLARK-O'NEAL FUNERAL: Case Summary & 5 Largest Unsec. Creditors CLOVER PROPERTIES: Voluntary Chapter 11 Case Summary CONNACHER OIL: Moody's Cuts Rating to 'B3' on Low Oil Prices COUNTRYWIDE FINANCIAL: To be Rebranded Bank of America Home Loans DOLLAR THRIFTY: Posts $72.2 Mln. Net Loss in Fourth Quarter 2008 ECLIPSE AVIATION: Albany Int'l Incurs $10.6MM on Bankruptcy EL EMBARCADERO: Case Summary & Four Largest Unsecured Creditors ENRIQUE FERNANDEZ: Voluntary Chapter 11 Case Summary EXPRESS ENERGY: Debt Service Burden Cues S&P's Junk Rating FANNIE MAE: Treasury to Hike Funding to Support Mortgage Market FLAGSHIP NATIONAL: Weiss Ratings Assigns "Very Weak" E- Rating FONAR CORP: Reports $3.7MM Stockholders' Deficit at Dec. 31 FORD MOTOR: Benefiting From Woes of General Motors & Chrysler FREDDIE MAC: Treasury to Hike Funding to Support Mortgage Market GATEWAY ETHANOL: Court OKs Increase of Loan Amount to $5,625,761 GATEWAY ETHANOL: Wants Plan Filing Period Extended to April 3 GENERAL MOTORS: Opinions Differ on Firm's Possible Bankruptcy GENERAL MOTORS: S&P's 'CC' Rating Unaffected by Cost-Cutting Plan GENERAL MOTORS: Will Drop Saturn, Pontiac, Saab & Hummer Brands GOOD SAMARITAN: Files for Chapter 11 Bankruptcy Protection GOODYEAR TIRE: Posts $330MM 4th Quarter Net Loss; Plans Job Cuts GOTTSCHALKS INC: Court Okays DJM Asset as Real Estate Consultant GOTTSCHALKS INC: Court Approves FD U.S. as Communications Advisors GOTTSCHALKS INC: Court Approves Financo Inc. as Investment Banker GSC ACQUISITION: Receives Non-Compliance Notice From NYSE HERMANOS DE LA TORRE: Voluntary Chapter 11 Case Summary HPG INTERNATIONAL: U.S. Trustee Appoints 4-Member Creditors Panel INTERNET FLOORS: Voluntary Chapter 11 Case Summary JOHNSON BROADCASTING: May Use MLCFC Cash Collateral Until July 30 JOHNSON BROADCASTING: MLCFC Asks Court to Appoint Ch. 11 Trustee JOHNSON BROADCASTING: Plan Filing Period Extended to May 11, 2009 JUST WINGIN: Voluntary Chapter 11 Case Summary LEE ENTERPRISES: Refinances Notes to 2012, Amends Bank Payments LIBERTY MEDIA: Moody's Expects to Lower Corp. Rating on Spin-Off LINENS 'N THINGS: CVS Sees $132MM in Lease Costs as Guaranty LVNV FUNDING: Moody's Downgrades Ratings on Class B Notes to 'B2' LYONDELLBASELL: Fails to Pay Interest Payments on Two Bonds MARCUS LEE: Voluntary Chapter 11 Case Summary MBIA INC: S&P Cuts Counterparty Credit Rating to 'BB+' MBIA INSURANCE: Moody's Cuts Insurance Strength Rating to 'B3' MBIA INSURANCE: S&P Downgrades Counterparty Rating to 'BB+' MEDIA & ENTERTAINMENT: Receives Delisting Notice from NYSE MEDIA GENERAL: Will Implement Employee Furlough Program MEG ENERGY: Moody's Downgrades Corporate Family Rating to 'B1' MIDWAY GAMES: Signs Deal With Ubisoft to Publish Wheelman MONEYGRAM INTERNATIONAL: Board OKs 2005 Incentive Plan Amendment MONEYGRAM INTERNATIONAL: Board Sets March 16 as Record Date MUZAK HOLDINGS: Section 341(a) Meeting Slated for March 12 NEENAH FOUNDRY: Liquidity Concerns Prompt S&P's Junk Rating NESTOR INC: Terminates Employment of Vice President and CFO NEW YORK TIMES: Board of Directors Suspends Dividend NEXHORIZON OF CO: Files for Chapter 11 Bankruptcy Protection NOVA BIOSOURCE: Receives Delisting Notice From NYSE Alternext OCWEN LOAN: Moody's Affirms Ratings As Servicer of Subprime Loans OMNIPOTENT INVESTMENT: Voluntary Chapter 11 Case Summary OMNIPOTENT PROPERTIES: Voluntary Chapter 11 Case Summary OSI RESTAURANT: Tender Offer Won't Affect S&P's 'B-' Rating PACIFIC SHORES: Fitch Junks Ratings on Three Classes of Notes PACIFICA OF THE VALLEY: Case Summ. & 20 Largest Unsec. Creditors PASADENA CDO: Fitch Junks Ratings on $26.5 Mil. Class C Notes PATTERSON PARK: Files for Chapter 11 Bankruptcy Protection PATTERSON PARK: Case Summary & 20 Largest Unsecured Creditors PLIANT CORPORATION: Section 341(a) Meeting Slated for March 12 POLAROID CORP: Panel Can Hire Faegre & Benson Local Counsel POLAROID CORP: Can Hire Houlihan Lokey as Financial Advisor POLAROID CORPORATION: Court OKs Paul Hastings as Panel's Counsel PPA HOTELS: Voluntary Chapter 11 Case Summary PROPEX INC: Court Approves $65-Mil. Wayzata Loan on Final Basis PROPEX INC: To Sell All Assets to Wayzata Unit for $61 Million REAL ESTATE VII: Aimco Names General Partners' President as CIO REALTY MORTGAGE: Voluntary Chaeter 11 Case Summary RECYCLED PAPER: Court Confirms Plan of Reorganization RML CAPITAL: Voluntary Chapter 11 Case Summary ROBERT BEERNTSEN: Voluntary Chapter 11 Case Summary RODNEY FARMS: Voluntary Chapter 11 Case Summary REICHHOLD INDUSTRIES: Moody's Cuts CFR to B2 on Likely Low Sales ROSEMENT CLO: Fitch Junks Ratings on $12 Mil. Class D Notes SCFR LIMITED: Involuntary Chapter 11 Case Summary SEMGROUP LP: Creditors Committee Sues for CEO Kivisto SOCIETY OF JESUS: Case Summary & 20 Largest Unsecured Creditors SOUTHLAND CHRYSLER: Voluntary Chapter 11 Case Summary SPECTRUM BRANDS: Sec. 341 Meeting of Creditors Slated for March 4 SPECTRUM BRANDS: Final DIP Financing Hearing Slated for March 4 SPECTRUM BRANDS: Seeks Permission to Hire Skadden Arps as Counsel SPECTRUM BRANDS: Seeks Court OK to Engage W. Kingman as Co-Counsel SPRINT NEXTEL: Implements Discounts to Keep Subscribers STANLEY BUDRYK: Voluntary Chapter 11 Case Summary STEVE & BARRY'S: Glimcher Reports Impact of Co.'s Liquidation TENNECO INC: Moody's Cuts Rating to 'B3' on Low Auto Demand TRUMP ENTERTAINMENT: To Promptly Seek Approval of Marina Sale TRUMP ENTERTAINMENT: Seeks to Use Lenders' Cash Collateral TWIN VEE: Files for Chapter 11 Bankruptcy Protection UNITED SUBCONTRACTORS: S&P Cuts Corp. Credit Rating to 'CCC-' VALHI INC: S&P Downgrades Corporate Credit Rating to 'B-' W.R. GRACE: Trial on Libby Criminal Case Began Yesterday W.R. GRACE: Seeks to Employ Janet Baer as Bankruptcy Co-Counsel W.R. GRACE: Hartford, Other Insurers Object to Amended Plan WERECYCLE! INC: Files for Chapter 11 Bankruptcy Protection WERECYCLE! INC: Voluntary Chapter 11 Case Summary WHITEHALL JEWELERS: Panel Taps CBIZ as Financial Advisor WL HOMES LLC: Case Summary & 35 Largest Unsecured Creditors WP EVENFLO: S&P Downgrades Corporate Credit Rating to 'CCC' YRC WORLDWIDE: Fitch Downgrades Issuer Default Rating to 'CC' ZIM CORPORATION: Earns $203,620 in Quarter ended December 31 * BOOK REVIEW: Corporate Recovery - Managing Cos. in Distress ********* 110 GREEN: NY Real Estate Market Drop Leads to Firm's Bankruptcy ---------------------------------------------------------------- Phil Wahba at Reuters reports that 110 Green St. Development LLC has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Eastern District of New York due to a decline in New York's real estate market. According to Reuters, 110 Green is seeking Chapter 11 bankruptcy protection while it tries to convert the condos in an unoccupied New York City luxury condo building partly funded by retired basketball star Earvin "Magic" Johnson into rental apartments. 110 Green said in court documents that the "unprecedented decline in the real estate market generally, and Williamsburg/Greenpoint specifically" led it to conclude condos were not the best use of the property. Reuters relates that private real estate fund Canyon-Johnson Urban Fund has provided the development with $12.3 million in mezzanine financing, which are backed by an interest in a property's operating company. Reuters notes that 110 Green has a $35.75 million loan of from the Bank of New York in addition to the Canyon-Johnson Urban Fund loan. 110 Green, according to court documents, said that it has negotiated with leasing company Citi-Spaces Real Estate Services about marketing the apartments as rental units. Court documents state that Fannie Mae showed "strong interest" in providing replacement financing once Viridian is rented. Court documents say that 110 Green St. listed $10 million to $50 million in assets and $10 million to $50 million in liabilities. About 110 Green Brooklyn, New York-based 110 Green St. Development LLC is the developer of the 130-unit development called The Viridian in Brooklyn's trendy Greenpoint district. It is also the developer behind a New York City luxury condo building partly funded by retired basketball star Earvin "Magic" Johnson. The company and its debtor-affiliate, Green Managers LLC, filed for Chapter 11 bankruptcy protection on February 5, 2009 (Bankr. E.D. N.Y. Case No. 09-40860). Kevin J. Nash, Esq., at Goldberg Weprin Finkel Goldstein LLP assist the Company in its restructuring effort. The company listed $10 million to $50 million in assets and $10 million to $50 million in debts. 1106 KING: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: 1106 King Street LLC c/o Joerg-Uwe Szipl 2300 Ninth Street South Suite PH-1 Arlington, VA 22204 Bankruptcy Case No.: 09-11134 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- 1106 King Restaurant, LLC dba Le Gaulois 09-11135 Chapter 11 Petition Date: February 17, 2009 Court: United States Bankruptcy Court Eastern District of Virginia (Alexandria) Debtor's Counsel:Madeline A. Trainor, Esq. Cyron & Miller, LLP 100 N. Pitt Street, Suite 200 Alexandria, VA 22314 Tel: (703) 299-0600 Fax: (703) 299-0603 Email: mtrainor@cyronmiller.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of 20 largest unsecured creditors together with its petition. The petition was signed by Joerg-Uwe Szipl, member of the Company. ALCATEL-LUCENT: Moody's Downgrades Corp. Family Rating to 'B1' -------------------------------------------------------------- Moody's Investors Service has downgraded to B1 from Ba3 the Corporate Family Rating of Alcatel-Lucent. The ratings for senior debt of the group were equally lowered to B1 from Ba3 and the trust preferred notes of Lucent Technologies Capital Trust I have been downgraded to B3 from B2. At the same time, Moody's affirmed its Not-Prime rating for short term debt of Alcatel-Lucent. The outlook for the ratings stays negative in view of the near term challenges to business volumes and execution of restructuring aimed at bringing the company to operating profit break-even in 2009 and towards cash generation in these year. Wolfgang Draack, Senior Vice President and lead analyst for Alcatel-Lucent, summarized: "The rating downgrade reflects the fact that the company's profitability and cash generation has not shown the improvement that Moody's expected to accrue from the merger of Alcatel and Lucent and the subsequent integration and cost saving measures. In addition, its revenue decline, particularly in the core carrier segment, is accelerating in year on year comparison and cash consumption continues at a high level. While the company still has substantial cash liquidity, at the level of EUR3.5 billion net of short term debt, and has agreed to sell its stake in Thales for about EUR1.6 billion, this compares to about EUR700 million cash consumption over the last 4 quarters. Continuing high net cash outflows and possibly further cash cost of restructuring would increasingly absorb the company's financial flexibility." Contrary to Moody's expectation of operating profitability improving materially in 2008 and cash consumption trending towards a positive amount, but not exceeding EUR600 million in 2008, Alcatel-Lucent's performance and credit metrics have not shown material signs of a turnaround in the past year. In addition, the outlook for business and revenues is very subdued at least for the first half 2009, while low visibility in the economic environment does not allow a reliable forecast for the duration of this demand weakness. Alcatel-Lucent, after the recent change in top management levels, anticipates an 8-12% decline in the market 2009, which is actually the most conservative view among the large communication equipment providers, and targets a break-even operating profit. This is to be achieved after implementing further cost reductions, resulting in EUR750 million run rate savings expected by end 2009. Given the fact that the largest segment, the carrier business, has been performing just below break-even for the past two years in spite of more than EUR2.0 billion synergy benefits originally targeted and largely achieved, and the prospect for a double-digit decline in revenues, Moody's is concerned that the planned restructuring measures may prove insufficient to return Alcatel- Lucent to robust profitability near term. Continued performance at the credit metrics for 2008, including EBIT interest coverage of about 0.8 times and debt/EBITDA of 8.5 times, both including Moody's adjustments, is not commensurate with a Ba rating and will actually have to improve considerably to support the current B1 corporate family rating for Alcatel-Lucent. The negative outlook for the ratings reflects the risks to management's business plan given (i) the low visibility of near term revenues, (ii) the challenges to retain cost savings in a price competitive industry, and ongoing large restructuring cost leading to continued high cash consumption with finite liquid resources. The rating incorporates the expectation that continued restructuring measures will serve over time to mitigate the impact of pressures on demand and price levels, and that cumulative cash consumption, excluding debt repayments, from 1 January 2009 will be contained within one quarter of cash liquidity minus short term debt (EUR3.5 billion at FYE 2008). Downgrades: Issuer: Alcatel-Lucent -- Probability of Default Rating, Downgraded to B1 from Ba3 -- Corporate Family Rating, Downgraded to B1 from Ba3 -- Senior Unsecured Bank Credit Facility, Downgraded to B1, LGD3, 47% from Ba3, LGD3, 46% -- Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to B1, LGD3, 47% from Ba3, LGD3, 46% -- Senior Unsecured Medium-Term Note Program, Downgraded to B1, LGD3, 47% from Ba3, LGD3, 46% -- Senior Unsecured Regular Bond/Debenture, Downgraded to B1, LGD3, 47% from Ba3, LGD3, 46% Issuer: Lucent Technologies Capital Trust I -- Preferred Stock Preferred Stock, Downgraded to B3 from B2 Issuer: Lucent Technologies, Inc. -- Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to B1, LGD3, 47% from Ba3, LGD3, 46% -- Senior Unsecured Regular Bond/Debenture, Downgraded to B1, LGD3, 47% from Ba3, LGD3, 46% Moody's last rating action for Alcatel-Lucent was the change in rating outlook to negative on 3 April 2008. Headquartered in Paris, France, Alcatel-Lucent is one of the world leaders in providing advanced solutions for telecommunications systems and equipment to service providers, enterprises and governments with sales of EUR17.0 billion in fiscal year 2008. ANN HARRIS: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Ann B. Harris dba Palm Springs Condos 3431 Savanna Way Palm Springs, CA 92262 Bankruptcy Case No.: 09-12766 Chapter 11 Petition Date: February 17, 2009 Court: United States Bankruptcy Court Central District of California (Riverside) Judge: Richard M. Neiter Debtor's Counsel: Daniel G Brown, Esq. Law Offices of Daniel G. Brown 515 Calle De Soto San Clemente, CA 92672 Tel: (949) 892-1100 Fax: (949) 892-1150 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 incorporated in its petition filing, a full-text copy of which is available for free at: http://bankrupt.com/misc/cacb09-12766.pdf The petition was signed by Ann B. Harris, principal of the Company. ASPEN EXPLORATION: Reports Non-Compliance Under Wells Fargo Note ---------------------------------------------------------------- Aspen Exploration Corporation said in a regulatory filing that it is currently not in compliance with its covenants to Wells Fargo Bank, NA, due to the Company's net loss for the quarterly period ended December 31, 2008, and has reclassified $16,667 in payment obligations as current. In January 2007, Aspen borrowed $600,000 from Wells Fargo pursuant to a promissory note payable over 36 months to partially finance the acquisition of the Poplar Field. Principal of $16,667 plus interest payments are due monthly beginning February 15, 2007, and continuing to January 15, 2010. Collateral consists of a blanket filing on Aspen's Accounts Receivables. At December 31, 2008 the outstanding balance on the note was $216,667. The Wells Fargo note contains restrictive covenants which, among other things, require Aspen to maintain a certain "Net Worth" defined as total stockholder's equity of not less than $9,000,000 at any time, net income after taxes not less than $1,000 on an annual basis and an EBITDA ratio, as defined. As of December 31, 2008, Aspen had $14,118,442 in total assets, $1,999,719 in total current liabilities, $1,932,300 in total long- term liabilities, and $10,186,423 in shareholders' equity. In February 2007, as part of the Poplar acquisition, Aspen agreed to be responsible for 12.5% of a $3,000,000 loan obtained by Nautilus in connection with the purchase of the Poplar Field assets. Nautilus Poplar, LLC obtained the loan from the Jonah Bank of Wyoming, as lender. Aspen's share of this loan was, at the time of acquisition of the property, $375,000 plus interest at a rate of 9.0%, and Aspen is subject to the repayment schedule that Nautilus Poplar negotiated and to the other terms and conditions of the loan agreement as fully as if Aspen were a party to the loan agreement. Aspen's share of principal payments of $6,250 plus interest is due monthly through February 25, 2009. At December 31, 2008, the outstanding balance was $230,103, all of which is classified as current. Aspen announced on November 24, 2008, that it was evaluating several offers for the acquisition of a substantial portion of its assets. Aspen is continuing to negotiate with one of the offerors to define a transaction for the sale of those assets. Based in Denver, Colorado, Aspen Exploration Corporation was organized in 1980 for the purpose of acquiring, exploring and developing oil and gas properties. Since 1996, Aspen has focused its efforts on the exploration, development and operation of natural gas properties in the Sacramento Valley of northern California, and in 2007, Aspen acquired interests in oil properties in Montana. Aspen's business activities are primarily focused in two separate aspects of the oil and gas industry: -- holding and acquiring operating interests in oil and gas properties where we act as the operator of oil and gas wells and properties; and -- holding non-operating interests in oil and gas properties. Aspen is currently the operator of 67 gas wells in the Sacramento Valley of northern California. Additionally, Aspen has a non- operated interest in 26 gas wells in the Sacramento Valley of northern California and (at December 31, 2008) non-operating working interest in roughly 37 oil wells in Montana. ASPEN EXPLORATION: Royale Energy Suspends Effort to Pursue Co. -------------------------------------------------------------- Royale Energy Inc. said it has suspended its effort to tender its shares for the shares of Aspen Exploration following Aspen's disclosure that it had breached a covenant of its credit agreement with Wells Fargo. Royale Energy said it will not offer its shares pursuant to the S4 registration as it is currently filed. Stephen Hosmer said, "We have suspended our effort in order to evaluate whether or at what rate to pursue an offer for Aspen. The significant deterioration in their financial condition, and their inability or unwillingness to use their "Cash & Cash Equivalents" to prevent a breach of their credit agreement significantly raises the risk Royale would assume in the transaction." Royale will leave its registration statement on file while evaluating the Aspen filings. About Royale Energy Headquartered in San Diego, Royale Energy, Inc. -- http://www.royl.com/-- is focused on development, acquisition, exploration, and production of natural gas and oil in California, Texas and the Rocky Mountains. It has been an independent producer of oil and natural gas for over 20 years. Aspen announced on November 24, 2008, that it was evaluating several offers for the acquisition of a substantial portion of its assets. Aspen is continuing to negotiate with one of the offerors to define a transaction for the sale of those assets. About Aspen Exploration Based in Denver, Colorado, Aspen Exploration Corporation was organized in 1980 for the purpose of acquiring, exploring and developing oil and gas properties. Since 1996, Aspen has focused its efforts on the exploration, development and operation of natural gas properties in the Sacramento Valley of northern California, and in 2007, Aspen acquired interests in oil properties in Montana. Aspen's business activities are primarily focused in two separate aspects of the oil and gas industry: -- holding and acquiring operating interests in oil and gas properties where we act as the operator of oil and gas wells and properties; and -- holding non-operating interests in oil and gas properties. Aspen is currently the operator of 67 gas wells in the Sacramento Valley of northern California. Additionally, Aspen has a non- operated interest in 26 gas wells in the Sacramento Valley of northern California and (at December 31, 2008) non-operating working interest in roughly 37 oil wells in Montana. AXCAN INTERMEDIATE: S&P Hikes to 'BB-' On Improved Results ---------------------------------------------------------- Standard & Poor's Ratings Services said it raised its ratings on Delaware-based specialty pharmaceutical company Axcan Intermediate Holdings Inc., including the long-term corporate credit rating on the company to 'BB-' from 'B+'. The outlook is stable. At the same time, S&P raised the debt rating on Axcan's senior secured debt to 'BB+' from 'BB-' (two notches higher than the corporate credit rating), and revised the recovery rating to '1' from '2'. A '1' recovery rating reflects an expectation of very high (90%-100%) recovery in the event of default (a '2' recovery rating reflects a substantial [70%-90%] recovery in a default scenario). S&P also raised the debt rating on the senior unsecured debt to 'B' from 'B-' (two notches lower than the corporate credit rating). The recovery rating is unchanged at '6', reflecting S&P's expectation of negligible (0%-10%) recovery in a default scenario. "The upgrade on the company predominantly reflects S&P's view of Axcan's improved financial risk profile following the better-than- expected operating performance in recent quarters," said Standard & Poor's credit analyst Maude Tremblay. "We revised the recovery rating on Axcan's senior secured debts based on S&P's expectation of a higher emergence multiple, in light of recent market transactions, a slightly longer period to default given the improved prospects of the company, and lower senior debt outstanding at default, given the amortization schedule of the senior secured term loan A," Ms. Tremblay added. Axcan specializes in the treatment of gastrointestinal diseases and disorders, including pancreatic enzyme deficiencies, cholestatic liver diseases, and inflammatory bowel disease. The ratings on the company reflect what Standard & Poor's sees as the company's susceptibility to generic competition for most products in its drug portfolio and its aggressive debt leverage. The company's niche position in gastroenterology, relatively diverse product portfolio, and high operating cash flow generation partially offset these concerns in S&P's view. The stable outlook reflects Standard & Poor's expectation that Axcan's operating performance will remain solid in fiscal 2009, with moderate revenue and EBITDA growth. S&P expects the excess cash generated in the coming year will be used either to repay debt or make tuck-in acquisitions to expand the company's drug portfolio, which S&P believes would strengthen the company's credit profile. Meaningful deterioration in Axcan's cash flows, due for example to the unexpected entry of a generic competitor to one of the company's key products, could lead us to revise the outlook to negative. Alternatively, a shift to a more aggressive financial policy, such as meaningful dividend payments or recapitalization, might threaten the current ratings. Standard & Poor's believes the prospect of a higher rating is beyond the outlook period, and will depend upon Axcan's successful growth and diversification of its drug portfolio as well as continued strong operating performance leading to further deleveraging. BAREFOOT COTTAGES: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Barefoot Cottages Development Company, LLC Suite 10101, 36468 Emerald Coast Parkway Destin, FL 32541 Bankruptcy Case No.: Not yet assigned Type of Business: The Debtor operates a real estate business. Chapter 11 Petition Date: February 19, 2009 Court: Northern District of Florida (Pensacola) Debtor's Counsel: C. Edwin Rude, Jr. edrudelaw@earthlink.net 211 E. Call Street Tallahassee, FL 32301-7607 Tel: (850) 222-2311 Fax: (850) 222-2120 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor did not file a list of its Largest Unsecured Creditors. The petition was signed by Curtis Gwin & Ray Shoults, Manager. BCBG MAX: Weak Operating Performance Cues S&P's Junk Rating ----------------------------------------------------------- Standard & Poor's Ratings Services said it lowered the corporate credit rating on Los Angeles-based BCBG Max Azria Group Inc. to 'CCC+' from 'B-'. The outlook is negative. "The downgrade is due to our expectation that continued weak operating performance in the fourth quarter will lead to very limited EBITDA cushion over BCBG's financial covenant," said Standard & Poor's credit analyst Jackie E. Oberoi, "and that these problems may continue throughout 2009." Furthermore, S&P remains concerned that the company will fail to meet its minimum EBITDA covenant for Max Rave; however, this does not constitute an immediate event of default but could prove distracting for management. BEARINGPOINT INC: Salient Terms of Pre-Packaged Chapter 11 Plan --------------------------------------------------------------- In the last several years, BearingPoint has faced a number of challenges, which, taken together, have had a negative impact on BearingPoint's overall financial performance. Commencing December 1999, BearingPoint tried began acquisitions to develop a global business platform, and through the end of 2002, completed approximately 30 acquisitions, group hires or other similar transactions. In order to make these acquisitions, BearingPoint assumed a significant debt load. As of their bankruptcy filing, the Debtors' significant indebtedness are: Type of Debt Principal Value Liens First Put Right ----------- --------------- ----- --------------- Secured Credit Facility - Term Loan $294,750,000 First Lien on Not Applicable All Assets of Certain of the Debtors Secured Credit $171,500,000 First Priority N/A Facility - Lien on All Synthetic Letter Assets of Credit (Letters of Credit Outstanding) ($84,388,501) Priority Subordinated (Series C) $200,000,000 Unsecured April 15, 2009 Priority Subordinated (FFL SPA) $40,000,000 Unsecured July 15, 2010 (Maturity Date) Junior Subordinated (Series A) $250,000,000 Unsecured Dec. 15, 2011 Junior Subordinated (Series B) $200,000,000 Unsecured Dec. 15, 2014 John DeGroote, executive vice president and chief legal officer of BearingPoint, recounts that in 2004, as part of its separation from KPMG, BearingPoint transitioned to new financial and accounting systems. Difficulties in implementation of these systems contributed to BE's inability to timely file its SEC periodic reports, a substantial increase in BE's expenses, including finance, accounting and audit costs, and to the material weaknesses identified in BE's fiscal years 2004 through 2007 audits. In September 2006, a New York State court held that BearingPoint's failure to file its financial statements was a default under the indenture relating to the Series B Debentures. To resolve the uncertainties created by the court's ruling, BE amended the various indentures, which included an increase in the interest rate paid to the holders of the Junior Subordinated Debentures. On April 15, 2009, the holders of the Series C Debentures can exercise the April 2009 Put Right, which would obligate BE to redeem the notes on that date. BearingPoint's current cash resources are not sufficient to meet these obligations, and a failure by BearingPoint to meet these obligations would result in a default under the Series C Debentures. Such a default would also cause a cross-default under the Secured Credit Facility, the FFL SPA, and the Junior Subordinated Debentures, Mr. DeGroote avers. Mr. DeGroote adds that due to concerns on the Debtor's woes, the value of BearingPoint stock dropped dramatically. On July 16, 2008, NYSE notified that the average per share price of BearingPoint's common stock was below the minimum average closing price of $1.00 over a consecutive 30 trading-day period. BearingPoint also sought to address the suspension in trading by splitting its stock, thereby raising its price. The NYSE, however, said that regardless of the stock split, BearingPoint's average market capitalization was still below $25 million, which is an incurable default with respect to continued listing on the NYSE. The delisting of BE's stock is pending the outcome of the Appeal, scheduled for hearing on March 31, 2009. If BearingPoint were to lose the Appeal, and BE's stock were to be delisted, it would qualify as a "designated event" under certain of BearingPoint's indentures. Moreover, as a result of liquidity concerns in connection with the April 2009 Put Right and uncertainties regarding pending NYSE delisting, BearingPoint's annual audit from Ernst & Young LLP may contain a going concern qualification. The failure by BearingPoint to obtain an unqualified annual audit would result in a default under the Secured Credit Facility. Lastly, BearingPoint provides services to a number of United States governmental agencies. In connection therewith, the U.S. Defense Contract Audit Agency performs periodic audits of BearingPoint's financial capability to determine whether BearingPoint's financial condition is acceptable for performing government contracts. The delisting of BE's common stock from the NYSE, the failure to make the April 2009 Put Right, or a going concern qualification contained in E&Y's audit opinion could each result in the DCAA issuing an adverse audit opinion. In such a case, it would be difficult for U.S. government contracting officers to determine that BearingPoint is a "responsible contractor," which is a requirement to be awarded new contracts and task orders with U.S. Government agencies. Pre-Packaged Plan BearingPoint, Inc., before filing for bankruptcy protection, was able to an reach agreement in principle with its secured lenders regarding the terms of a comprehensive debt restructuring. Accordingly, BearingPoint and its affiliates filed a Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code together with their bankruptcy petitions. The Pre-Arranged Plan, which is described in detail in the Disclosure Statement, is a classic waterfall plan, providing for these recoveries: Creditor Group Recovery -------------- -------- Secured Lenders under Term Loan A term loan in the amount of (A) $272,000,000 plus (B) the sum of any letters of credit issued prepetition that have been drawn prior to the effective date of the Pre-Arranged Plan and that have not been funded by the Debtors prior to the Effective Date plus (C) accrued interest outstanding under the Secured Credit Facility as of the Effective Date Convertible Preferred Stock with the issue price of $50,000,000 Secured Lenders under L/C Facility A synthetic letter of credit facility in the amount of a synthetic letter of credit facility of $130,000,000, which shall consist of (A) $84,053,079 of letters of credit issued and outstanding, including any letters of credit which have been drawn during the chapter 11 cases and have not been reimbursed by the Debtors prior to the Commencement Date, (B) letters of credit issued during the chapter 11 cases (up to $20 million) and (C) letters of credit to be issued after the Effective Date. Series C Debentures / FFL SPA [X] shares of new class 1 common stock (the "Class 1 Common Stock") for each dollar of its allowed claim Series A Debentures / Series B Debentures [X] shares of new class 2 common stock (the "Class 2 Common Stock") for each dollar of its allowed claim General Unsecured Claims [X] shares of new class 3 common stock (the "Class 3 Common Stock") for each dollar of its allowed claim, subject to dilution for employee and management incentives Convenience Claims Cash equal to [B]% of the allowed amount of such claim. Equity Interests in BE No Recovery The Class 1 Common Stock is senior to the Class 2 Common Stock in that, among other things, the holders of the Class 1 Common Stock are entitled to receive all dividends and distributions that would otherwise go to the holders of Class 2 Common Stock until the holders of Class 1 Common Stock receive $240 million in the aggregate of dividends and distributions. This distribution roughly matches the seniority the Series C Debentures and FFL SPA have over the Series A Debentures and Series B Debentures. The Debtors are continuing to negotiate with the Series C Committee and the Series A/B Committee in an attempt to obtain their support for the Pre-Arranged Plan. However, because the Pre-Arranged Plan follows the absolute priority rule under the Bankruptcy Code, the Debtors believe that it is confirmable with the Secured Lenders' support, even if the Debtors do not obtain the support of other creditor groups for the Pre-Arranged Plan. Following careful consideration of all alternatives, the Debtors determined that the commencement of the pre-arranged chapter 11 cases, including the filing of the Pre- Arranged Plan, was a prudent and necessary step to maximize the going concern value of the Debtors' business. Because they already have a deal negotiated with their Secured Lenders, the Debtors expect the chapter 11 cases to be relatively short, which should reduce the impact on their businesses. Importantly, the proposed debt restructuring will enhance BearingPoint's prospects and its operating performance. By doing so, BearingPoint will improve its ability to both retain existing clients, as well as attract new clients. Furthermore, through the restructuring BearingPoint should slow its staff, employee and managing director attrition, thereby preserving its most important assets. By deleveraging through a chapter 11 filing, BearingPoint intends to quickly emerge a stronger, healthier company, and be better situated to compete in the global economy. A copy of the Chapter 11 Plan is available at: http://bankrupt.com/misc/BearingPoint_Plan.pdf A copy of the Disclosure Statement is available at: http://bankrupt.com/misc/BearingPoint_DS.pdf About BearingPoint, Inc. BearingPoint, Inc. -- http://www.BearingPoint.com-- is currently one of the world's largest providers of management and technology consulting services to Global 2000 companies and government organizations in more than 60 countries worldwide. Based in McLean, Va., BearingPoint -- a former consulting arm of KPMG LLP - - has approximately 15,000 employees focusing on the Public Services, Commercial Services and Financial Services industries. BearingPoint professionals have built a reputation for knowing what it takes to help clients achieve their goals, and working closely with them to get the job done. The Company's service offerings are designed to help clients generate revenue, increase cost-effectiveness, manage regulatory compliance, integrate information and transition to "next-generation" technology. BearingPoint, Inc. fka KPMG Consulting, Inc., together with its units, filed for Chapter 11 on February 18, 2009 (Bankr. S.D. N.Y., Case No. 09-10691). Alfredo R. Perez, Esq. at Weil Gotshal & Manges LLP, has been tapped as counsel. Greenhill & Co., LLC, and AP Services LLC, have also been tapped as advisors. Davis Polk & Wardell is special corporate counsel. BearingPoint disclosed total assets of $1,762,689,000, and debts of $2,231,839,000 as of Sept. 30, 2008. BEARINGPOINT INC: Moody's Cuts Rating to 'Caa3' on Ch. 11 Filing ---------------------------------------------------------------- Moody's Investors Service downgraded BearingPoint's corporate family rating to Caa3 from Caa2 and its probability-of-default rating to D from Caa3. The Ca ratings for the unsecured subordinated convertible notes ratings remain unchanged. All rating actions are in response to the announcement that the company has applied for relief under Chapter 11 of the U.S. Bankruptcy Code. Following these rating actions, Moody's will withdraw all ratings. Rating actions: -- Corporate Family Rating downgraded to Caa3 from Caa2 -- Probability-of-Default Rating downgraded to D from Caa3 -- $250 million Series A Subordinated Convertible Notes unchanged from Ca (LGD4, 69%) -- $200 million Series B Subordinated Convertible Notes unchanged from Ca (LGD4, 69%) BearingPoint's Caa3 CFR incorporates a mean recovery expectation of 65% (enterprise value-to-liabilities) on approximately $1.3 billion of total liabilities for the firm, mainly attributable to the stable performance of the Public Services business and Moody's estimated value of the company's tangible assets. Moody's most recent rating action concerning BearingPoint was taken on November 11, 2008. The principal rating actions involved the downgrade of the company's CFR, PDR, and its unsecured subordinated convertible notes ratings. All ratings were kept under review for further possible downgrade. Headquartered in McLean, Virginia, BearingPoint, Inc. provides information technology consulting and managed services to commercial and governmental entities worldwide. BERNARD L. MADOFF: Trustee Can Hire Counsel for U.K. Proceedings --------------------------------------------------------------- Irving H. Picard, the trustee for the liquidation of Bernard L. Madoff Investment Securities Inc., obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to hire U.K.-based law firm Lovells LLP to give advice and recover assets in Europe, effective January 15, 2009. Mr. Picard told the Court it will be necessary to engage counsel to represent him in the foreign proceedings of MSIL. He says he seeks to retain Lovells as special counsel because of its knowledge, expertise and experience in liquidation proceedings in the United Kingdom and other European foreign jurisdictions, including France, Germany, Italy, and Spain. "Lovells' employment and retention is necessary and in the best interests of the Debtor's estate and its customers and creditors," he said. Foreign Proceedings The directors of Madoff's London entity, Madoff Securities International Ltd., filed an application with the High Court of Justice, Chancery Division, Companies Court, for the appointment of joint provisional liquidators. After a hearing on December 19, 2008 at which counsel for the Receiver, counsel for the MSIL Directors, counsel for the Financial Services Authority, and counsel for the Joint Provisional Liquidators were heard, the High Court ordered, among other things, that: (1) MSIL be placed into a provisional liquidation, (2) Mark Richard Byers, Andrew Laurence Hosking, and Stephen John Akers of Grant Thornton be appointed joint provisional liquidators, (3) the affairs, business, and property of MSIL will be managed by the joint provisional liquidators, (4) the joint provisional liquidators will cooperate with the Receiver, the Trustee, and the Financial Services Authority, and (5) to use their best efforts to provide to the United States Department of Justice and SEC the same information provided to the Receiver, Trustee, and FSA. According to Mr. Picard, issues have arisen in other foreign jurisdictions in Europe such that there may be a need for representation by counsel in other foreign proceedings in Europe as he pursues the recovery of customer property. Lovells' Fees Lovells will be compensated at its normal hourly rates, less a 10% discount. Lovells normal hourly rates are: Hourly Rates ---------------------------------- Level of Experience London (GBP) Cont. European (EUR) ------------------ ------------ ------------------- Partner 610 520 Consultants and Senior Lawyers 560 435 Assistant 6-8 years 525 415 Assistant 5-6 years 490 370 Assistant 4-5 years 450 335 Assistant 3-4 years 415 335 Assistant 2-3 years 380 315 Assistant 1-2 years 340 295 Assistant 0-1 years 300 275 Trainee 230 235 The Securities Investor Protection Corporation, the entity that applied for the liquidation of BLMIS under the Securities Investor Protection Act, has no objections to the retention of the firm. Lovells' Disinterestedness Mr. Picard says that he believes members, counsel and associates of Lovells are disinterested pursuant to section 78eee(b)(3) of SIPA and do not hold or represent any interest adverse to the Debtor's estate in respect of the matter for which Lovells is to be retained. Christopher Kennet Grierson, a member of the firm, disclosed that Lovells represents many customers or creditors of Madoff. However, he said the firm will not represent those persons or entities adverse to the interest of the Debtor. The Court, in its order, said that Lovells is "deemed disinterested" pursuant to section 78eee(b)(3) of SIPA. 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. BERNARD L. MADOFF: Nine Law Firms, Accountants & Cos. Subpoenaed ---------------------------------------------------------------- Amir Efrati at The Wall Street Journal reports that Irving Picard, the bankruptcy trustee trying to locate Bernard L. Madoff Investment Securities LLC's assets, sent subpoenas to nine law firms, accountants, and other businesses, seeking information about services or products they provided to the investment firm. According to WSJ, Mr. Picard also requests contracts or correspondence that the recipients had with Bernard L. Madoff Investment and any material they generated by doing work for Mr. Madoff's clients. Blow Styling Salon, located within blocks of Mr. Madoff's Upper East Side apartment, posted on its Web site that it received a subpoena from Mr. Picard. Herbert Guston, an attorney in Glen Rock, New Jersey, whose firm received a subpoena, denied any connection the firm has to Bernard L. Madoff Investment, WSJ relates. Mr. Guston, according to the report, said that none of his clients have identified themselves as Madoff investors and that he has no documents indicating any of his clients were Madoff investors. WSJ reports that J.H. Cohn LLP an accounting firm in Roseland, New Jersey, also received a subpoena from Mr. Picard. J.H. Cohn said that it would start reviewing its records to see whether it did any work for Madoff investors, WSJ says, citing Patrick O'Keefe, the firm's director of economic research. Mr. Picard would have "to go to third parties to get a document trail," WSJ states, citing Howard Kleinhendler, a lawyer suing Mr. Picard on behalf of an investor who wants to get back $10 million in investment from Bernard L. Madoff. According to a February 17 report by Linda Sandler, David Voreacos, and Edgar Ortega at Bloomberg News, Mr. Picard subpoenaed the Chicago Board of Trade and other exchanges and clearinghouses that include CME Clearing House, LaBranche & Co., Bats Trading Inc., and Clearing Corp. Court documents say that about 13 subpoenas were issued. The demands for information also went to the CME Clearing House, LaBranche & Co., Bats Trading Inc. and Clearing Corp. Bloomberg quoted Stephen Harbeck -- president of the Securities Investors Protection Corp., which hired Mr. Picard -- as saying, "I'm certain he's just trying to trace assets, but I really don't know the specifics." About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. 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. BH S&B: Glimcher Reports Impact of Retailer's Liquidation --------------------------------------------------------- Glimcher Realty Trust reported total revenues of $82.0 million in the fourth quarter of 2008 compared to revenues of $84.6 million for the fourth quarter of 2007. Glimcher said Wednesday that the $2.6 million decrease in revenue relates primarily to a $1.5 million decline in outparcel sales, $746,000 decrease in base rents and $231,000 decrease in straight-line rents. It said the decrease in base rents relates primarily to the write off of non- cash inducements and lost rents related to the closing of some Steve & Barry's stores. These decreases were partially offset by a $286,000 increase in lease termination income. Glimcher also said net operating income for comparable wholly owned mall properties -- Comp Malls -- decreased 2.0% in the fourth quarter of 2008 over the fourth quarter of 2007 when excluding the impact of the Steve & Barry's bankruptcy and liquidation -- decrease of 2.6% when including the impact of Steve & Barry's. It said net operating income was up nearly 0.5% for the fiscal year 2008 compared to the fiscal year 2007 when excluding the impact of the Steve & Barry's bankruptcy and liquidation and flat when including the impact of Steve & Barry's. Glimcher reported that net income available to common shareholders during the fourth quarter of 2008 was $1.7 million as compared to a loss of $21.3 million in the fourth quarter of 2007. For the year ended December 31, 2008, it disclosed net loss to common shareholders of $700,000, compared to net income of $20.9 million for the year ended December 31, 2007. Based in Columbus, Ohio, Glimcher Realty Trust is a real estate investment trust that owns, manages, acquires and develops regional and super-regional malls. At December 31, 2008, the Company's mall portfolio, including assets held through one of the Company's strategic joint ventures, consisted of 23 properties located in 14 states with gross leasable area totaling approximately 20.9 million square feet. The community center portfolio is comprised of four properties representing approximately 769,000 square feet. BH S&B Holdings LLC filed for bankruptcy protection together with seven other affiliates on Nov. 19, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-14604). The seven debtor-affiliates are BH S&B Distribution LLC, BH S&B Lico LLC, BH S&B Retail LLC, BHY S&B Intermediate Holdco LLC, Cubicle Licensing LLC, Fashion Plate Licensing LLC, and Heritage Licensing LLC. BH S&B was formed by investment firms Bay Harbour Management and York Capital Management in August 2008 to acquire the business operations and assets of bankrupt retailer Steve & Barry's for $163 million in August 2008. Steve and Barry's, based in Port Washington, New York, was a specialty retailer of apparel and accessories, selling, among other things, university apparel and lifestyle brands, private-label casual clothing, and exclusive celebrity endorsed apparel. Steve & Barry's had 240 locations when it was bought and the new owners had planned to cut that down to 173 stores. BH S&B had intended to operate certain Steve & Barry's stores as going concerns and to liquidate inventory at other locations. Since the sale closing, however, for various reasons, including the general health of the American economy and the state of the retail market in particular, sales at all stores have been disappointing, and BH S&B's revenue has suffered. As a result, BH S&B was not in compliance with certain covenants under their senior secured credit facility and had no prospects for continued financing of their business as a going concern. In consultation with its lenders, BH S&B decided the appropriate course of action to maximize value for the benefit of all of its stakeholders was an orderly liquidation in Chapter 11. Bay Harbour Management is an SEC registered investment advisor with significant experience in purchasing distressed companies and effectuating their turnaround. The firm's holdings have included the retailer Barneys New York, the facilities based CLEC Telcove, and the former Aladdin Casino, now operating on the Las Vegas strip as the Planet Hollywood Resort and Casino following its rebranding and turnaround. York Capital Management is an SEC registered investment advisor with offices in New York, London, and Hong Kong with more than $15 billion in assets under management. York Capital was founded in 1991 and specializes in value oriented and event driven equity and credit investments. BH S&B is 100% owned by BHY S&B Intermediate Holdco LLC. BH S&B and its affiliates' chapter 11 cases are presided over by the Honorable Martin Glenn. Joel H. Levitin, Esq., and Richard A. Stieglitz, Jr., Esq., at Cahill Gordon & Reindel LLP, in New York, serve as bankruptcy counsel to BH S&B and its affiliates. RAS Management Advisors LLC acts as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and notice agent. BOB MARSHALL: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Bob Marshall Denison 598 Overlook Mtn W Buda, TX 78610 Bankruptcy Case No.: 09-10380 Chapter 11 Petition Date: February 17, 2009 Court: United States Bankruptcy Court Western District of Texas (Austin) Debtor's Counsel: Arthur Ungerman, Esq. 8140 Walnut Hill Lane Suite 301 Dallas, TX 75231 Tel: (972) 239-9055 Fax: (972) 239-9886 Email: arthur@arthurungerman.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of 20 largest unsecured creditors together with its petition. The petition was signed by Bob Marshall Denison. BOULDER CROSSROADS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Boulder Crossroads, LLC PO Box 5938 Austin, TX 78763 Bankruptcy Case No.: 09-10381 Type of Business: The Debtor operates a supermarket. See: http://bouldercrossroads.net Chapter 11 Petition Date: February 17, 2009 Court: Western District of Texas (Austin) Judge: Craig A. Gargotta Debtor's Counsel: Barbara M. Barron, Esq. bbarron@bnpclaw.com Barron & Newburger, P.C. 1212 Guadalupe, #104 Austin, TX 78701 Tel: (512) 476-9103 Fax: (512) 476-9253 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 ------ --------------- ------------ 3711 Nottingham Note Holder $300,000 Houston, TX 77005 Stanliegh, Lyle Note Holder $280,000 9535 Taomina St. Lake Worth, FL 33467 Snell, Cynthia S. Note Holder $200,000 6207 Holy Springs Houston, TX 77057 Perkins, Chuck Consulting $200,000 Services Leasing Zimmerman, Alvin Note Holder $100,000 Papas, Greg Note Holder $100,000 Axelrad, Robert Note Holder $100,000 Ponce Tender Dental PC Tenant Allowance $88,776 Lionel Sawyer Collins Attorney Fees $87,896 Nadel Architects Architectural $73,000 Design Services Papermaster, Gale Note Holder $50,000 Mccraven, Nan Note Holder $50,000 EN Engineering formerly EKN Services $50,000 Engineering EK Communications Consulting $18,000 Services Arizona Construction Services $15,000 Mikki's Hawaiian Smoke Shop Deposit $9,800 Great American Insurance Liability $9,006 Company Ponce Tender Dental PC/Ponce Deposit $8,340 Dental PC Converse Consultants Testing Services $5,794 Las Vegas Valley Water Utilities $4,590 District The petition was signed by Eric Rosenberg. BROWNSVILLE HEALTH: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Brownsville Health Solutions, Inc. dba Brownsville Tri-County Hospital 125 Simpson Road Brownsville, PA 15417 Bankruptcy Case No.: 09-20998 Chapter 11 Petition Date: February 18, 2009 Court: Western District of Pennsylvania (Pittsburgh) Debtor's Counsel: Robert O. Lampl, Esq. rol@lampllaw.com 960 Penn Avenue, Suite 1200 Pittsburgh, PA 15222 Tel: (412) 392-0330 Fax: (412) 392-0335 Estimated Assets: $10 million to $50 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 Frank Ricco, chairman of the board. BRUNO'S SUPERMARKETS: To Close 15% of Stores, Cut 30 Corp. Posts ---------------------------------------------------------------- Reuters reports that Bruno's Supermarkets LLC said on Wednesday that it would shut down about 15% of its stores and lay off about 30 executives as part of its restructuring. According to Bruno's Supermarkets' statement, four of the company's stores and six Food World stores would be closed due to continued under-performance and that it planned to keep Hilco Merchant Resources to assist in the liquidation sales of inventory at the closing stores. Bruno's Supermarkets said in a statement, "Stores that are targeted to close will continue to operate over the next 30 to 60 days as going-out-of-business sales are conducted." The reduction in corporate positions would be "through attrition and position elimination" across areas including finance, human resources, information technology, and store operations, Reuters relates, citing Bruno's Supermarkets. About Bruno's Supermarkets, LLC Bruno's Supermarkets, LLC, is the parent company of Bruno's and FOOD WORLD grocery stores, which includes 23 Bruno's locations and 43 FOOD WORLD in Alabama and the Florida Panhandle. Founded in 1933, Bruno's has operated as an independent company since 2007 after undergoing several transitions and changes in ownership starting in 1995. Bruno's filed voluntary Chapter 11 petitions on Feb. 5, 2009. Bruno's has retained Alvarez & Marsal, a restructuring and corporate advisory firm, to assist the company throughout the restructuring process. Burr & Forman LLP is the Debtor's lead counsel. Najjar Denaburg, P.C. is its conflicts counsel. CAPITALSOURCE INC: Fitch Downgrades Issuer Default Rating to BB+ ---------------------------------------------------------------- Fitch Ratings has downgraded CapitalSource Inc.'s long-term Issuer Default Rating to 'BB+' from 'BBB-' and has placed all ratings on Rating Watch Negative. This action affects approximately $2.7 billion of debt. The ratings downgrade reflects Fitch's concern that weakening financial performance will persist in 2009, reflecting mainly deteriorating asset quality, and this will further challenge CSE's ability to comply with financial covenants under its bank line of credit. CSE recently announced that it had obtained a one-time waiver to prevent an event of default under the company's $1.07 billion revolving credit facility. The waiver addressed CSE's compliance with an interest coverage requirement (EBITDA to interest expense) and does not apply to subsequent reporting periods. While the waiver provides interim relief on this covenant, Fitch is concerned that CSE could breach other financial covenants in 2009 if not amended, given the rapidly deteriorating operating environment. Resolution of the Rating Watch will be contingent upon the company's ability to amend the interest coverage covenant and other financial covenants as well as any structural or pricing changes in the facility to be more reflective of the current operating environment. As part of the resolution of the Negative Watch status, Fitch will evaluate collateral coverage of the secured facilities. Based on preliminary analysis, Fitch believes that collateral coverage of current non-bank-related debt provides coverage to support a notch above the long-term IDR of CSE for the senior secured debt. Notching of the subordinated unsecured debt reflects junior position relative to senior secured debt and adequacy of assets available to support repayment. Fitch will also evaluate CapitalSource Bank and its credit profile relative to CSE in the context of a holding company and bank subsidiary relationship. CSE has applied to the Federal Reserve to become a bank holding company. Fitch's rating is not contingent on the outcome of its bank holding company application. Fitch does recognize that the financial strength of CapitalSource Bank as marginally better than the parent company, due to solid regulatory capital levels and ability to fund itself with federally insured deposits. Fitch has downgraded these CapitalSource Inc. ratings: -- IDR to 'BB+' from 'BBB-'; -- Senior subordinated to 'BB-' from 'BB+'. Fitch has also issued this rating: -- Senior Secured 'BBB-'. All of the above ratings were placed on Rating Watch Negative. Fitch has downgraded and withdrawn this rating: -- Senior unsecured to 'BB+' from 'BBB-'. The withdrawal of the senior unsecured rating reflects the recent amendment of the previously unsecured $1.07 billion bank facility to provide a first-priority lien on all unencumbered assets of the company, including a pledge of the equity interest in CapitalSource Bank, and thus there is a minimal amount of senior unsecured debt outstanding. CARDINAL COMMUNICATIONS: 341(a) Meeting Set for February 25, 2009 ----------------------------------------------------------------- A proposed plan and disclosure statement were filed on Jan. 19, 2009, in the Chapter 11 case of Cardinal Communications, Inc., formerly known as Usurf America, Inc. A hearing on the disclosure statement, if necessary, will be held today, at 2:00 p.m. The first meeting of creditors will be held on Feb. 25, 2009, at 624 S. Polk, Suite 100, Amarillo, Texas (Amarillo Division) at 10:00 a.m. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Broomfield, Colorado, Cardinal Communications, Inc. provides voice, video, and data broadband networks for residential and business applications in the United States. It operates through two segments, Communications Services and Real Estate. The company was incorporated in 1996 under the name Media Entertainment, Inc. and changed it name to USURF America, Inc. in 1999. Subsequently, it changed its name to Cardinal Communications, Inc. in 2005. On December 31, 2008, Cardinal Communications Inc filed a voluntary petition for reorganization under Chapter 11 (Bankr. N.D. Tex. Case No. 08-20693). Roger S. Cox, Esq., at Sanders Baker PC, in Amarillo, Texas, represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of between $100,000 and $1,000,000, and debtors of between $1,000,000 and $100,000,000. The Debtor did not file a list of it 20 largest unsecured creditors. CHRYSLER LLC: Cost-Cutting Plan Won't Affect S&P's 'CC' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said its ratings on Chrysler LLC (CC/Negative/--) are not affected by details of the company's viability plan submitted yesterday to the U.S. Treasury, which included a request for $5 billion in additional U.S. government funding. S&P lowered S&P's corporate credit rating on Chrysler to 'CC' in December 2008, reflecting S&P's expectation that Chrysler would approach its lenders for a reduction in debt at a substantial discount to par. In its viability plan, Chrysler described a range of strategic and cost-cutting moves, said it will seek to convert its second-lien debt to equity, and outlined four alternatives for potentially reducing its first-lien debt. S&P view all of these alternatives as distressed exchanges under S&P's criteria and, therefore, akin to a default. The request for additional U.S. government funding -- on top of the $4 billion already extended to Chrysler -- underscores the depressed state of U.S. auto demand, which has weakened further in the two months since Chrysler and General Motors Corp. received their first installments of loans. S&P now expects U.S. light- vehicle sales to be 10.3 million units in 2009, down 22% from 2008 and 36% from 2007. As expected, Chrysler's plan includes additional capacity and job reductions, including a target to reduce fixed costs by an additional $700 million in 2009. Chrysler also said it has preliminary agreements with the United Auto Workers union that would reduce labor costs and convert 50% of future Voluntary Employees' Beneficiary Association-related cash payments to equity. However, final agreements are still required from the union, and the VEBA cash payment reduction is contingent on a significant restructuring of secured debt, which has yet to be approved by secured lenders. S&P continues to believe that government support is not open- ended. Accordingly, in S&P's opinion, even if Chrysler's viability plan is approved by a government oversight panel on or around March 31, 2009, and additional funding is provided, bankruptcy risk will remain high for the remainder of 2009, and even in 2010, because of highly uncertain consumer demand and other serious risks, including persistently weak credit markets and potential supplier failures. CIRCUIT CITY: May Liquidate Assets After Amended DIP Loan Approval ------------------------------------------------------------------ Judge Kevin R. Huennekens of the U.S. Bankruptcy Court for the Eastern District of Virginia approved an amendment to Circuit City Stores Inc.'s $900 million debtor-in-possession facility with Bank of America NA. The Court authorized the Debtors on January 16, 2009, to conduct going out of business sales at their remaining 567 stores pursuant to an agency agreement. As a result, the conditions necessary for the Debtors to borrow under the DIP Credit Agreement cannot be met. For the Debtors to have access to the DIP Facility, the DIP Lenders are requiring the Debtors to enter into a third amendment of the Debtors' $1.1BB DIP Financing. In his ruling, Judge Huennekens held that the Debtors' DIP Agreements, as modified by the Third Amendment and the order, are approved on a final basis. The Court authorized, empowered and directed the Debtors to execute and deliver the Third Amendment, and on a final basis, to incur and to perform DIP obligations. A copy of the DIP Final Order with the Third Amendment can be obtained without charges at: http://bankrupt.com/misc/CC_FinalOrder_3rdDIPAmendment.pdf The Third Amendment to the Debtors' Debtor-In-Possession Credit Agreement provides for an amended maturity date and termination date, and the implementation of a wind down budget consistent with the Debtors' ongoing liquidation. A copy of the Third Amendment is available without additional charges at: http://bankrupt.com/misc/CC_3rdAmendment_DIPAgreement.pdf Under the Third Amendment, the DIP Facility's: -- Maturity Date will be the earlier of: * termination or completion of GOB Sale; or * April 30, 2009; -- Termination Date will be the earlier of: * the Maturity Date; * the date on which the maturity of the DIP loans are accelerated and commitments are terminated; or * the DIP's consummation date; and -- wind down budget will be the six week cash flow projections for the loan parties, other than the Canadian loan parties, which currently ends on February 28, 2009. Any further borrowing under the DIP Facility is contingent upon subsequent cash flow projections being approved by 60% of the Lenders or Court order. The Third Amendment also provides that the Lenders' commitment is the aggregate outstanding amount of credit extensions not to exceed the lower of: (a) * prior to February 16, 2009, $900,000,000, of which $850,000,000 will be domestic commitments; * from February 16, 2009 through February 27, 2009, $265,000,000, of which $225,000,000 will be domestic commitments; and * thereafter, $140,000,000, of which $100,000,000 will be domestic commitments; and (b) the lesser amount to which total commitments have then been decreased by the DIP Borrowers pursuant to Section 2.17 of the DIP Credit Agreement. In the absence of the proposed amendment, the Debtors' liquidation would be a default under the DIP Credit Agreement, Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Wilmington, Delaware, told the Court. Consistent with the Debtors' reduced operations as they continue the inventory liquidation, the Third Amendment provides for a wind down budget of the Debtors' operations and termination of the DIP Facility on the earlier to occur of the completion of the liquidation sales or April 30, 2009, Mr. Galardi said. He added that the Debtors and the DIP Lenders have negotiated the terms of the terms of the Third Amendment. 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 (Bankr. E.D. Va. 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. Bankruptcy Creditors' Service, Inc., publishes Circuit City Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Circuit City Stores Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CIRCUIT CITY: Seeks July 8 Extension of Plan Filing Period ---------------------------------------------------------- Pursuant to Section 1121(b) of the Bankruptcy Code, a Chapter 11 debtor has the exclusive right to file a plan of reorganization during the first 120 days following the filing of its Chapter 11 petition, and thereafter to solicit acceptances to any plan so filed for a period of an additional 60 days. Moreover, Section 1121(d) provides that a court may, for cause, extend or reduce a debtor's exclusive plan period up to 18 months, and the exclusive solicitation period up to 20 months, after the Petition Date. Circuit City Stores, Inc., and its debtor-subsidiaries ask the United States Bankruptcy Court for the Eastern District of Virginia to extend: (i) their exclusive Plan Filing Period, through and including July 8, 2009; and (ii) their exclusive Solicitation Period, through and including September 6, 2009. At this point in their bankruptcy cases, the Debtors are continuing to seek to maximize returns from the Court-approved liquidation of substantially all of their assets for their bankruptcy estates and creditors, and to reconcile and evaluate the various claims of creditors, relates Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Wilmington, Delaware. Given the Debtors' substantial efforts since the Petition Date and the short time that has elapsed since the Court's approval of the liquidation and agency agreement, the Debtors believe that they should be granted additional time to undertake the asset liquidation and claims reconciliation efforts, and to develop an appropriate plan of liquidation without the distraction of competing plans filed by other parties-in-interest. The Debtors, along with their advisors, are currently analyzing their alternatives in connection with any plan of liquidation, including evaluating their claims and assets, Mr. Galardi says. He contends that the extension sought will provide the Debtors and their advisors the opportunity to analyze the Debtors' post- liquidation financial circumstances, and develop a liquidating plan that maximizes returns to parties-in-interest. Mr. Galardi argues that the 120-day sought extension of the Exclusive Periods is warranted because, among other things: (a) The Debtors' Chapter 11 cases are large and complex, and certain substantial issues remain unresolved, including the validity, amount, and priority of claims and the measure of the Debtors' assets; (b) The Debtors have made significant, good-faith progress in resolving many of the issues facing their estates, including the ultimate disposition of their assets through a liquidation of substantially all of their assets and the reconciliation of claims; and (c) An extension of the Exclusive Periods will give the Debtors a reasonable opportunity to develop, negotiate, and ultimately confirm a consensual plan, without prejudicing any party-in-interest. 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 (Bankr. E.D. Va. 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. Bankruptcy Creditors' Service, Inc., publishes Circuit City Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Circuit City Stores Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CIRCUIT CITY: Seeks June 8 Extension of Deadline to Remove Actions ------------------------------------------------------------------ Section 1452 of the Judiciary and Judicial Procedures Code provides that a party may remove any claim or cause of action in a civil action to the district court where that civil action is pending, if that district court has jurisdiction of that claim or cause of action. Rule 9027(a)(2) of the Federal Rules of Bankruptcy Procedure provides that if the claim or cause of action in a civil action is pending when a case under the Bankruptcy Code is commenced, a notice of removal may be filed only within the longest of: (a) 90 days after the order for relief in the case under the Bankruptcy Code, (b) 30 days after entry of an order terminating a stay, if the claim or cause of action in a civil action has been stayed under Section 362 of the Bankruptcy Code, or (c) 30 days after a trustee qualifies in a Chapter 11 reorganization case but not later than 180 days after the order for relief. At the behest of Circuit City Stores, Inc., and its debtor- subsidiaries, the U.S. Bankruptcy Court for the Eastern District of Virginia extended the period during which they may remove actions pending on the Petition Date through the later of: (a) June 8, 2009; or (b) 30 days after entry of an order terminating the automatic stay with respect to any particular action sought to be removed. The Debtors are parties to numerous judicial and administrative proceedings currently pending in various courts and administrative agencies. The Actions involve a variety of claims, some of which are complex. Specifically, the Actions include, among others, discrimination, workers' compensation, and product liability claims. Because of the number of Actions involved and the variety of claims, the Debtors require additional time to determine which, if any, of the Actions should be removed and, if appropriate, transferred, said Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Wilmington, Delaware. Since the Petition Date, the Debtors have been focused on, among other matters, maximizing value for their creditors through a marketing and sale process that concluded only recently, Mr. Galardi said. He noted that the liquidation presented the Debtors with various new issues, many of which required immediate attention. Hence, the Debtors believe the requested extension is in the best interests of their bankruptcy estates and creditors because it will afford the Debtors a sufficient opportunity to make fully informed decisions concerning whether the Actions may and should be removed, thereby protecting the Debtors' valuable right to adjudicate lawsuits. The Debtors' adversaries will not be prejudiced by an extension because the adversaries may not prosecute the Actions absent relief from the automatic stay, Mr. Galardi contends. He further adds that nothing in the request will prejudice any party from pursuing remand pursuant to Section 1452(b) of the Judiciary and Judicial Procedures Code. P. Allen Objects Philip S. Allen held a judgment issued by the Superior Court of California for $2,512 granted on November 6, 2008, against Circuit City Stores, Inc. Mr. Allen said he objects to the extension of the Debtors' removal period but did not elaborate on his reasons for objecting. In his ruling, Judge Kevin R. Huennekens noted that the Extension Order will not apply to any litigation filed by Mr. Allen against the Debtors prior to the Petition Date. Prior to this, the Court issued a bridge order extending the Removal Period until a final ruling on the request has been issued. 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 (Bankr. E.D. Va. 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. Bankruptcy Creditors' Service, Inc., publishes Circuit City Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Circuit City Stores Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CIRCUIT CITY: Seeks to Pay Up to $4,600,000 in Employee Incentives ------------------------------------------------------------------ In January 2009, Circuit City Stores, Inc., and its affiliates commenced liquidation of their assets by selling their inventory through going out of business sales at their remaining stores. Against this backdrop, the Debtors formulated and have begun implementing a thorough wind down plan. The Wind Down Plan contemplates, among other things, liquidating the Debtors remaining assets, winding up their remaining businesses, minimizing administrative expenses, investigating causes of action for the benefit of their bankruptcy estates, and reconciling claims. Because the Debtors will no longer operate as a going concern, however, they have experienced a noticeable increase in employee turnover, which threatens their ability to implement the Wind Down Plan and maximize value for their estates and stakeholders, Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Wilmington, Delaware, tells the U.S. Bankruptcy Court for the Eastern District of Virginia. To successfully complete the wind down of their remaining operations effectively and efficiently, the Debtors have worked with their restructuring professionals to develop an appropriate but limited wind down incentive and retention plan, Mr. Galardi says. He explains that the Incentive Plan would help ensure that employees, who are essential to the wind down process, are retained and appropriately motivated to maximize value. Accordingly, the Debtors ask the Court to: (a) approve the Incentive Plan; (b) authorize them to implement the Incentive Plan for the Plan Participants; and (c) allow all payments as administrative expenses of the bankruptcy estates. The Debtors believe that 154 employees, including certain members of their management should receive additional compensation in connection with their much needed and continued exceptional efforts. Incentive Plan The efforts of the Plan Participants have been and will continue to be instrumental to the Debtors' efforts to effectively wind down their estates, Mr. Galardi avers. In light of this, he discloses that on February 3, 2009, the Debtors' Compensation Committee approved the Debtors plan to seek the Court's approval of the Incentive Plan. The Compensation Committee is delegated with the responsibility of approving compensation plans by the Debtors' Board of Directors. The Incentive Plan consists of two types of compensation, retention payments and incentive bonus payments. The maximum aggregate amount of the payments to be made under the Plan could be $4,630,000, but that maximum amount would be paid only if all participants in the incentive portion of the Plan earn 100% of their incentive bonuses, which in turn would realize the Debtors' estates approximately $250,000,000 of additional value. Plan Participants and payments are divided into two tiers. Tier I consists of management level employees that may be considered "insiders", as defined in Section 101(31) of the Bankruptcy Code, and who would be entitled to earn incentive bonuses based upon their performance with respect to various identified tasks. Tier I contemplates payments of not more than $2,300,000, and depending on achievement, the Plan Participant may receive 0, 50%, 75% or 100% of the incentive bonus. Tier II consists of non-insider key employees that would earn retention payments based upon their continued service to the Debtors for a specified period of time, and contemplates payments of not more than $1,620,000 in retention bonuses. The Debtors propose payments to Tier II Plan Participants based in part on the length of service the Debtors are requiring, and in part on the services the Tier II Participants perform. In addition, the Incentive Plan includes a $750,000 discretionary bonus pool. No Tier I Plan Participant will be eligible receive any payment from the discretionary Bonus Pool. Tier II Plan Participants and other employees, who are neither Tier I nor Tier II Plan Participants will, however, be eligible to receive payments from the Bonus Pool, which is designed to ensure the retention of critical employees through the conclusion of the wind down process. The Debtors believe that valid business reasons exist for the implementation of the Incentive Plan and that it should be approved. The Debtors do not believe that the Incentive Plan implicates Section 503(c) of the Bankruptcy Code; however, to the extent that Section 503(c) is applicable, they believe that the payments are justified by the facts and circumstances of their fast-moving and complex bankruptcy cases. Request to Seal In a separate request, the Debtors seek the Court's permission to file under seal the names, personal identifiable and confidential information, and the amounts sought to be paid to certain Plan Participants under the Incentive Plan. Mr. Galardi contends that good cause exists for sealing the information because of their confidential, personal, and sensitive nature. He assures the Court that the Confidential Material will be provided to chambers for in camera review by the Court, the United States Trustee, counsel to the Debtors' postpetition lenders, and counsel to the Official Committee of Unsecured Creditors. The Debtors further ask the Court for an order shortening the notice period of the request to approve their Incentive Plan by one day so that it can be heard, considered and ruled upon by the Court at the omnibus hearing on February 25, 2009. 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 (Bankr. E.D. Va. 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. Bankruptcy Creditors' Service, Inc., publishes Circuit City Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Circuit City Stores Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CITIGROUP INC: Roberto Hernandez Ramirez to Leave Board ------------------------------------------------------- David Enrich at The Wall Street Journal reports that Citigroup Inc. said that Roberto Hernandez Ramirez, chairperson of the firm's Mexican banking operation Banamex, will leave the Company's board of directors. According to WSJ, Mr. Ramirez sent on Tuesday letters to Citigroup CEO Vikram Pandit and Richard Parsons, the Citigroup director slated to become chairperson on February 23, that he had been considering leaving the board for "a couple of years." WSJ relates that Mr. Ramirez joined the board in 2001 after Citigroup acquired Banamex for $12.5 billion. WSJ says that Mr. Ramirez is the third Citigroup director to disclose plans to leave the firm before its annual meeting in April 2009. WSJ states that former Treasury Secretary Robert Rubin and Chairperson Sir Win Bischoff already disclosed said in January that they would leave the firm, while others are expected to hand in their resignations. Citing people familiar with the matter, WSJ reports that Mr. Ramirez has expressed frustration with Mr. Pandit's leadership since last year. The sources said that Mr. Hernandez told associates that Banamex would be better off if it weren't part of Citigroup, according to WSJ. WSJ relates that Mr. Ramirez said in his letters that he is confident that "Citi will face the difficult challenges ahead, as demonstrated by the important actions that have already been taken to face this global crisis" and that he "will gladly maintain my responsibilities" as Banamex's chairperson. About Citigroup Based in New York, Citigroup (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 US$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 US$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. CLARK-O'NEAL FUNERAL: Case Summary & 5 Largest Unsec. Creditors --------------------------------------------------------------- Debtor: Clark-O'Neal Funeral Home, Inc. 2702 Lincolnway West South Bend, IN 46601 Bankruptcy Case No.: 09-30450 Type of Business: The Debtor operates a funeral home. Chapter 11 Petition Date: February 18, 2009 Court: Northern District of Indiana (South Bend Division) Judge: Harry C. Dees, Jr. Debtor's Counsel: Benedict F. Marnocha, Esq. bfmarnocha@hotmail.com Jefferson Center 105 East Jefferson Blvd., Suite 800 South Bend, IN 46601 Tel: (574) 255-1147 Fax: (574) 254-1296 Estimated Assets: unstated Estimated Debts: unstated The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ge Capital Corp Services Provided $12,939 c/o AR Systems P.O. Box 80766 Valley Forge, PA 19484 Matthews International Services Provided $7,385 Corporation 2 Northshore Center, Suite 100 Pittsburgh, PA 15212 Williams Casket Services Provided $6,500 Company 4401 West Ridge Road Gary, IN 46408 Ge Capital Services Provided $3,118 City of South Bend Services Provided $1,000 The petition was signed by Julius O'Neal, III, president and owner. CLOVER PROPERTIES: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Clover Properties LLC 81 Carman Avenue Cedarhurst, NY 11516 Bankruptcy Case No.: 09-70896 Chapter 11 Petition Date: February 17, 2009 Court: United States Bankruptcy Court Eastern District of New York (Central Islip) Judge: Dorothy Eisenberg Debtor's Counsel: Fred S. Kantrow, Esq. The Law Offices of Avrum J. Rosen, PLLC 38 New Street Huntington, NY 11743 Tel: (631) 423-8527 Fax: (631) 423-4536 Email: fkantrow@avrumrosenlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor does not have any creditors who are not insiders. The petition was signed by Esther Hershko, managing member of the company. CONNACHER OIL: Moody's Cuts Rating to 'B3' on Low Oil Prices ------------------------------------------------------------ Moody's Investors Service downgraded Connacher Oil & Gas Limited's Corporate Family Rating to B3 from B2, Probability of Default Rating to B3 from B2, and US$600 million of second lien senior secured notes to B3 (LGD 4; 51%) from B2 (LGD 4; 53%). The note ratings are assigned under Moody's Loss Given Default rating methodology. Moody's does not rate Connacher's C$100,050,000 of senior subordinated unsecured notes. The rating outlook remains negative. The speculative grade liquidity rating is moved down to SGL-4 from SGL-3. While Connacher currently holds a comparatively large cash balance, capital spending and other cash needs appear likely to consume it over the first three quarters of 2009, unless oil prices rise sufficiently to move margins and cash flow firmly into positive territory. The downgrades principally reflect that (i) current down-cycle oil prices and resulting weak cash flow would not support project economics and proportionately high debt levels and (ii) that Connacher has yet to arrange funding to adequately supplement its liquidity in the meantime. Given that world oil demand is still falling and that oil overproduction will continue to overshoot demand of oil until OPEC cuts begin to reduce inventories, it is premature to build an oil market recovery into Connacher's ratings. The B3 CFR rating is supported by Connacher's approximately C$224 million of year-end 2008 balance sheet cash; proportionally large proven and probable reserve base relative to leverage; good progress in 2008 and first quarter 2009 in ramping up, and then re-ramping up, Phase 1 (Pod One) steam-assisted gravity drainage bitumen production; the achievement to-date of a strong steam-oil ratio; and important improvements in key market determinants of cash flow during first quarter 2009. The ratings are also supported by substantial asset coverage. After beginning this year with approximately C$224 million in cash, Connacher forecasts approximately C$185 million to C$200 million in 2009 cash outflow including a decline in payables, operating expenses, pending Pod Two construction expenses, $88 million in gross cash interest expense, and C$92 million in capital spending. Connacher's Great Divide Pod One production came on strong during 2008 and was producing near design capacity of 10,000 barrels per day. It reached commercial operations close to its target date and within 20% of its original budget. However, in December 2008, due to sharply lower oil prices, particularly deep price discounts on heavy oil, and high diluent costs, Connacher cut Pod One steam injection by up to 50% and suspended the Great Divide Pod Two (Algar) development. These factors have since adjusted sufficiently for Connacher to recommence full steam injection, with production expected to return to prior levels during the next few quarters. In addition, energy costs are now much lower and the steep contango forward curve in the oil market enabled Connacher to favorably hedge 25% of its production. Connacher's third party engineer estimated that proven reserves grew by over 190% during 2008 to 175.5 million barrels of bitumen. It also estimated 370 million net barrels of proven and probable bitumen reserves and 443 million net barrels of proven, probable, and possible reserves. Pro-forma for the note offering, Connacher would carry approximately C$940 million in straight debt and C$100.050 million in subordinated convertible debt. It generated approximately C$69 million in 2007 EBITDA and an estimated C$90 million in 2008 EBITDA. During the second half of 2008, bitumen production was rising strongly but bitumen pricing was falling, conventional oil and natural gas prices on its conventional production were falling, and refining margins were weakening. Connacher's ratings have been assigned by evaluating factors that Moody's believes are relevant to the company's risk profile, such as the company's (i) business risk and competitive position compared with others within the industry; (ii) capital structure and financial risk; (iii) projected performance 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 Connacher's core industry; Connacher's ratings are believed to be comparable to those of other issuers with similar credit risk. The last rating action was December 19, 2008, when Moody's downgraded Connacher's Corporate Family Rating and Probability of Default Rating from B1 to B2 and its senior second lien note rating to B2 (LGD 4, 53%) from B1 (LGD 4, 55%). Moody's affirmed Connacher's SGL-3 Speculative Grade Liquidity rating. The rating outlook was negative. Connacher Oil and Gas Limited is headquartered in Calgary, Alberta, Canada. COUNTRYWIDE FINANCIAL: To be Rebranded Bank of America Home Loans ----------------------------------------------------------------- Bank of America Corp. will rebrand its mortgage unit, Countrywide Financial Corporation, as Bank of America Home Loans starting April 27, Dan Fitzpatrick at The Wall Street Journal reports, citing Barbara Desoer, the executive in charge of the business. According to WSJ, Bank of America hopes to put some distance between itself and the tarnished reputation of Countrywide Financial. Ms. Desoer said that Bank of America hopes that the new brand will simplify its relationship with clients while also emphasizing that Bank of America is a "responsible lender" and "accountable" for sustained homeownership, WSJ states. Citing Ms. Desoer, WSJ relates that Bank of America will hire about 1,000 people in its mortgage unit and move about 500 workers to mortgage processing from home-equity processing, to take advantage of demand for new mortgage applications. The report says that lower interest rates have spurred refinancings and purchases. Ms. Desoer, according to WSJ, said that 7,500 job cuts relating to the integration of the Bank of America and Countrywide Financial are ongoing. Bank of America has taken write-downs on Countrywide Financial's assets, WSJ reports, citing Ms. Desoer. Friedman, Billings, Ramsey Group Inc. analyst Paul Miller said on Wednesday that Bank of America still may have to absorb $30 billion in additional losses related to Countrywide Financial, WSJ says. Bank of America, WSJ relates, is struggling due to its exposure to consumer problems and a merger with Merrill Lynch & Co., which lost about $15.3 billion in the fourth quarter of 2008. About Countrywide Financial Based in Calabasas, California, Countrywide Financial Corporation (NYSE: CFC) -- http://www.countrywide.com/-- is a diversified financial services provider and a member of the S&P 500, Forbes 2000 and Fortune 500. Through its family of companies, Countrywide originates, purchases, securitizes, sells, and services residential and commercial loans; provides loan closing services such as credit reports, appraisals and flood determinations; offers banking services which include depository and home loan products; conducts fixed income securities underwriting and trading activities; provides property, life and casualty insurance; and manages a captive mortgage reinsurance company. As reported by the Troubled Company Reporter, Bank of America closed its purchase of Countrywide for $2.5 billion on July 1, 2008. The mortgage lender was originally priced at $4 billion, but the purchase price eventually was whittled down to $2.5 billion based on BofA's stock prices that fell over 40% since the time it agreed to buy the ailing lender. DOLLAR THRIFTY: Posts $72.2 Mln. Net Loss in Fourth Quarter 2008 ---------------------------------------------------------------- Dollar Thrifty Automotive Group, Inc. reported results for the fourth quarter and year ended December 31, 2008. The net loss for the 2008 fourth quarter was $72.2 million compared to a net loss of $30.6 million for the comparable 2007 quarter. "In our third quarter press release dated November 5, 2008 we disclosed that the Company expected a significant loss during the fourth quarter. As expected, the new management team found the operating environment extremely difficult as the overall deterioration in the economy resulted in a significant decline in consumer demand, while industry-wide de-fleeting issues negatively impacted revenue per day. The combination resulted in a nine percent revenue decline on a year over year basis. On the cost side, the lack of liquidity in the retail credit market depressed demand levels at used vehicle auctions, resulting in further deterioration of vehicle residual values, driving our fleet depreciation costs above expectations and historical levels," said Scott L. Thompson, President and Chief Executive Officer. For the quarter ended December 31, 2008, the Company's total revenue was $355.1 million, as compared to $389.2 million for the comparable 2007 period. Rental revenue for the quarter was $336.7 million, a decrease of 9.8%, as compared to the same period in 2007. The decline was driven by a 6.8% decrease in revenue per day and a 3.2% deterioration in rental days. Per vehicle depreciation costs increased roughly 16.0% in the fourth quarter of 2008 compared to the fourth quarter of 2007 due to the decline in residual values resulting from the deterioration of the used vehicle market. The fourth quarter average fleet was down approximately 3% compared with last year's fourth quarter. Vehicle utilization, a measure of fleet efficiency, was 80.3 percent, consistent with last year's fourth quarter. Full Year Results For the year ended December 31, 2008, the Company said net loss was $340.4 million. For the year ended December 31, 2007, net income was $1.2 million. Total revenue for the period was $1.7 billion, a decrease of 3.6 percent over the comparable period in 2007. Liquidity and Capital Resources As of December 31, 2008, the Company had $230 million of unrestricted cash and was in full compliance with all of the financial covenants under its various financing arrangements with lenders. The Company is continuing to work with its senior secured credit facility lenders to modify certain terms of that facility, and based on current facts and circumstances, expects to complete that amendment prior to the February 28, 2009 expiration date of the current amendment. Based on the Company's unrestricted cash available at December 31, 2008 and its current operating forecast, the Company believes it has sufficient liquidity to reduce its term debt if needed to ensure continued compliance with the leverage ratio test under the senior secured credit facility. As part of the Company's de-leveraging of its balance sheet, the Company repaid in full both the Conduit and Liquidity vehicle financing facilities in February 2009, reducing its vehicle- related debt and restricted cash by $490 million. The Company's next scheduled debt maturity under its medium term note program will occur in the first quarter of 2010 when $400 million of those facilities begin amortizing over a six-month period. Outlook The Company expects 2009 will continue to be a difficult operating environment as uncertainty surrounding the timing of the U.S. economic recovery will continue to weigh on consumer confidence. At the same time, challenges with credit markets and used vehicle residuals are expected to continue to impact fleet capacity and possibly fleet costs. Vehicle rental revenues are estimated to be down 6 to 12 percent for the full year of 2009 compared to 2008. "The rental car industry is facing a multiple of external factors that have combined to put pressure on major aspects of our business. As we move forward in 2009, our primary objective is preservation of liquidity and enhancement of operating cash flow to ensure that we maintain maximum flexibility to address the uncertainties ahead," according to Mr. Thompson. Mr. Thompson said the new management team took a number of critical steps during its first 100 days to position the Company to meet this objective, including: * instituting new revenue management initiatives to enhance revenue; * completing significant personnel reductions to lower future operating costs; * reducing overall fleet size to right-size the business to expected demand levels; * extending fleet holding periods to lower finance costs and mitigate declines in residual values; * entering into a multi-year secondary supply agreement with Ford Motor Company to provide an alternative source of vehicles to meet customer needs; * closing certain marginal and non-profitable locations; * obtaining approval from financing sources to operate a fleet of 100% risk vehicles, thus reducing credit exposure to automobile manufacturers for residual value guarantees. "Reacting and adapting quickly to volatile changes in the marketplace will be key to our 2009 success. By streamlining our organization and management structure, we believe we are positioned to react effectively as conditions change," said Mr. Thompson. The Company noted that its January 2009 revenues were consistent on a year-over-year basis due to an increase in rate per day that offset a single digit decline in rental days. About Dollar Thrifty Automotive Group Dollar Thrifty Automotive Group, Inc. -- http://www.dtag.com-- is a Fortune 1000 Company headquartered in Tulsa, Oklahoma. Driven by the mission "Value Every Time," the Company's brands, Dollar Rent A Car and Thrifty Car Rental, serve travelers in approximately 70 countries. Dollar and Thrifty have over 800 corporate and franchised locations in the United States and Canada, operating in virtually all of the top U.S. and Canadian airport markets. The Company's approximately 7,000 employees are located mainly in North America, but global service capabilities exist through an expanding international franchise network. * * * As reported by the Troubled Company Reporter on December 29, 2008, Moody's Investors Service lowered Dollar Thrifty Automotive Group, Inc.'s Corporate Family Rating to Caa3 from B3 and Probability of Default Rating to Caa2 from B3. The outlook is negative and the Speculative Grade Liquidity rating remains SGL-4. The downgrade, Moody's said, reflects the severe downturn in the on-airport car rental sector, and the very challenged financial and operating position of Dollar's principal vehicle supplier, Chrysler Automotive LLC. Dollar sources over 80% of its vehicles from Chrysler. ECLIPSE AVIATION: Albany Int'l Incurs $10.6MM on Bankruptcy ----------------------------------------------------------- Albany International reports that, excluding the effects of goodwill impairment, the Company's earnings before interest, taxes, depreciation, and amortization were ($2.2) million in the fourth quarter of 2008, and included expenses related to restructuring and performance-improvement initiatives totaling $35.0 million and a gain of $2.2 million related to the sale of a building. The Q4 2008 EBITDA also includes a charge of $10.6 million related to the Eclipse Aviation bankruptcy. The Q4 2007 EBITDA was $29.1 million and included expenses related to restructuring and performance-improvement initiatives totaling $10.1 million. Albany International's Albany Engineered Composites segment includes sales of specialty materials and composite structures for aircraft and other applications. Net sales increased 10.4% compared to the fourth quarter of 2007. AEC reported an operating loss of $14.6 million during the quarter, compared to a loss of $2.7 million in the fourth quarter of 2007. The Q4 2008 operating loss was primarily due to the $10.6 million charge -- $7.4 million for accounts receivable and $3.2 million for inventory and equipment -- caused by the Eclipse Aviation bankruptcy filing and the associated loss of revenue. Excluding the effects of the goodwill impairment, the Company said net loss per share was $0.53, after reductions of $0.98 from net restructuring charges, related idle-capacity costs, and costs related to continuing performance-improvement initiatives. The Q4 2008 loss also includes a charge of $0.22 per share related to the previously announced bankruptcy filing by Eclipse Aviation and a gain of $0.04 per share relating to the sale of a building. Income tax adjustments increased earnings by $0.14 per share. Albany International -- http://www.albint.com/-- is a global advanced textiles and materials processing company. Its core business is the world's leading producer of custom-designed fabrics and belts essential to the production of paper and paperboard. Albany's family of emerging businesses extends its advanced textiles and materials capabilities into a variety of other industries, most notably aerospace composites, nonwovens, building products, and high-performance industrial doors. About Eclipse Aviation Albuquerque, New Mexico-based Eclipse Aviation Corporation -- http://www.eclipseaviation.com/-- makes six-passenger planes powered by two Pratt & Whitney turbofan engines. The company and Eclipse IRB Sunport, LLC filed separate petitions for Chapter 11 relief on Nov. 25, 2008 (Bankr. D. Delaware Lead Case No. 08-13031). Daniel Guyder, Esq., John Kibler, Esq., and David C. Frauman, Esq., at Allen & Overy LLP, represent the Debtors as counsel. Joseph M. Barry, Esq., and Donald J. Bowman, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors as Delaware counsel. Eclipse Aviation Corporation listed assets of between $100 million and $500 million and debts of more than $1 billion. EL EMBARCADERO: Case Summary & Four Largest Unsecured Creditors --------------------------------------------------------------- Debtor: El Embarcadero Inc. 420 Ponce de Leon Avenue, Suite 101 San Juan, PR 00918-3416 Bankruptcy Case No.: 09-01113 Chapter 11 Petition Date: February 18, 2009 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Charles Alfred Cuprill, Esq. Charles A. Curpill PSC Law Office 256 Calle Fortaleza, 2nd Floor San Juan, PR 00901 Tel: (787) 977-0515 Total Assets: $13,579,600 Total Debts: $8,381,209 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Nanas Food Services Corp $75,600 PO Box 474 Trujillo Alto, PR 00976 Palmas Del Mar Homeowners $32,175 PO Box 9027 Humacao, PR 00792-9027 Ernesto Rodriguez Suris, Esq. legal services $4,779 Edif. Tres Rios, Office 300 27 Avenue, Gonzalez Guiste Guayando, PR 00969 Korma Advertising Inc. $22 The petition was signed by Juan R. Zalduondo Viera, president. ENRIQUE FERNANDEZ: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Enrique Fernandez 6365 Collins Ave # 4404 Miami Beach, FL Bankruptcy Case No.: 09-12584 Chapter 11 Petition Date: February 16, 2009 Court: United States Bankruptcy Court Southern District of Florida Judge: Robert A. Mark Debtor's Counsel: Zach B. Shelomith, Esq. Leiderman Shelomith, P.A. 2699 Stirling Rd # C401 Ft. Lauderdale, FL 33312 Tel: (954) 920-5355 Fax: (954) 920-5371 Email: zshelomith@lslawfirm.net 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 incorporated in its petition filing, a full-text copy of which is available for free at: http://bankrupt.com/misc/flsb09-12584.pdf EXPRESS ENERGY: Debt Service Burden Cues S&P's Junk Rating ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Express Energy Services Operating LP to 'CCC+' from 'B-'. The outlook is negative. At the same time, S&P lowered the issue-level rating on the company's senior secured debt to 'CCC+' from 'B' (the same as the corporate credit rating), and revised the recovery rating to '3', indicating meaningful (50% to 70%) recovery in the event of a payment default, from a '2'. The downgrade primarily reflects the company's significant debt service burden and rapidly deteriorating industry conditions. Required debt service is slightly above $50 million in 2009, including $24 million in principal payments and the remainder in interest expense. S&P expects Express's cash flow metrics could fall precipitously due to the sharp decline in North American drilling activity. Furthermore, the decline in demand for oilfield services will affect the company's covenants, particularly its maximum total debt to EBITDA covenant and minimum interest coverage covenant. S&P expects Express to be in compliance with both covenants for the period ended Dec. 31, 2008. However, the covenant cushion at March 31, 2009, could be extremely limited. FANNIE MAE: Treasury to Hike Funding to Support Mortgage Market --------------------------------------------------------------- The U.S. Treasury Department said it is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market, to help maintain mortgage affordability, and to help keep interest rates low. Fannie Mae and Freddie Mac are critical to the functioning of the housing finance system in this country and play a key role in making mortgage rates affordable and maintaining the stability and liquidity of our mortgage market. In 2008, almost three-quarters of new home loans were financed or guaranteed by Fannie Mae and Freddie Mac. Using funds already authorized by Congress for this purpose, Treasury is amending the Preferred Stock Purchase Agreements, contractual agreements between the Treasury and the conserved entities designed to ensure that each company maintains a positive net worth, to $200 billion each from their original level of $100 billion each. The increased funding will provide forward-looking confidence in the mortgage market and enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners. In addition, the Treasury Department will continue to purchase Fannie Mae and Freddie Mac mortgage-backed securities to promote stability and liquidity in the marketplace. Treasury will also increase the size of the GSEs' retained mortgage portfolios allowed under the agreements -- by $50 billion to $900 billion -- along with corresponding increases in the allowable debt outstanding. The increase is not intended to indicate any estimate of possible losses with respect to the companies, but to provide assurance to market participants that Congress gave these companies a special purpose to support housing finance. Given the difficulties in the housing market today, we stand firmly behind their ability to provide that support. Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) that were created to provide stability in the secondary mortgage market and promote access to mortgage credit throughout the United States. In 2008, Fannie Mae and Freddie Mac purchased or guaranteed almost three-quarters of all mortgages being originated in the United States. By purchasing some mortgages and guaranteeing others, Fannie Mae and Freddie Mac help bring the liquidity of global capital markets to local banks and other financial institutions, which lowers mortgage costs for borrowers in communities across the United States. These savings can be achieved because Fannie Mae and Freddie Mac are able to access a broader array of investors resulting in lower cost of funds than typical local banks. Last July, Congress granted Treasury new authorities to provide financial support to Fannie Mae and Freddie Mac in order to provide stability to financial markets, support the availability of mortgage finance, and protect taxpayers. Even though neither institution is near its current $100 billion limit for funding from Treasury under the Preferred Stock Purchase Agreements -- based on preliminary disclosures from the last quarter of 2008, total funding provided to Freddie Mac could approach $50 billion and total funding for Fannie Mae could approach $16 billion -- it is crucial to maintain confidence in both of these institutions even under worse-than-expected economic conditions. Finally, it is important to note that these funding commitments are made under authority provided by the Housing and Economic Recovery Act and do not use any money allocated under the Emergency Economic Stabilization Act (EESA) or the Financial Stability Plan. About Fannie Mae The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) -- commonly known as Fannie Mae, is a shareholder-owned U.S. government-sponsored enterprise. Fannie Mae has a federal charter and operates in America's secondary mortgage market, providing mortgage bankers and other lenders funds to lend to home buyers at low rates. Fannie Mae was created in 1938, under President Franklin D. Roosevelt, at a time when millions of families could not become homeowners, or risked losing their homes, for lack of a consistent supply of mortgage funds across America. The government established Fannie Mae to expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home. In 1968, Fannie Mae was re-chartered by the U.S. Congress as a shareholder-owned company, funded solely with private capital raised from investors on Wall Street and around the world. Fannie Mae is the U.S. largest mortgage buyer, according to The New York Times. Conservatorship As reported by the Troubled Company Reporter, the U.S. government took direct responsibility for Fannie Mae and Freddie Mac, placing the government sponsored enterprises under conservatorship on September 7, 2008. James B. Lockhart, director of Federal Housing Finance Agency, said that Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Among the key components of the conservatorship, the FHFA, as conservator, assumed the power of the Board and management. FLAGSHIP NATIONAL: Weiss Ratings Assigns "Very Weak" E- Rating -------------------------------------------------------------- Weiss Ratings has assigned its E- rating to Bradenton, Florida- based Flagship National Bank. Weiss says that the institution currently demonstrates what it considers to be significant weaknesses and has also failed some of the basic tests Weiss uses to identify fiscal stability. "Even in a favorable economic environment," Weiss says, "it is our opinion that depositors or creditors could incur significant risks." Flagship National Bank is chartered as a national bank and is primarily regulated by the Office of the Comptroller of the Currency. Deposits have been insured by the Federal Deposit Insurance Corporation since May 18, 1999. Flagship National Bank maintains a Web site at http://www.flagshipnationalbank.com/and has four branches in Florida. At Dec. 31, 2008, Flagship National Bank disclosed $211 million in assets and $194 million in liabilities in its regulatory filings. FONAR CORP: Reports $3.7MM Stockholders' Deficit at Dec. 31 ----------------------------------------------------------- FONAR Corporation unveiled financial results for the second quarter of fiscal 2009 which ended December 31, 2008. The Company reported a net income of $781,000 as compared to one year earlier when it had a loss of $3.8 million. Also, the net income for the six months period ending December 31, 2008 was $331,000 as compared to the six month period one year earlier when it had a loss of $4.0 million. Raymond Damadian, M.D., president and chairman of FONAR said, "In this era of jobs being exported to other countries, 82% of the components that create The FONAR UPRIGHT(R) Multi-Position(TM) MRI are purchased from 26 American States. So FONAR can truly say, 'Made in America.' "We understand that American innovation is an important answer to America's financial woes and FONAR hopes to provide that technical innovation with several new MRI products that we are working on," continued Dr. Damadian. Total revenues for the three months ended December 31, 2008, showed an increase of 6% to $11.3 million as compared to $10.7 million for the same period one year earlier. For the six months ended December 31, 2008 total revenues were $18.1 million versus $19.4 million one year earlier. Stockholders' Deficit As of December 31, 2008, there were 131 FONAR UPRIGHT(R) Multi- Position(TM) MRI units installed worldwide. During the second quarter of fiscal 2009 total product sales were at $4.4 million, a 10% gain over the corresponding quarter one year earlier. At the end of the second fiscal quarter of fiscal 2009, total current assets were $20.5 million, total assets were $32.9 million, total current liabilities were $35.3 million and total long-term liabilities were $1.3 million, resulting in $3.7 million in stockholders' deficiency. Total cash and cash equivalents, and marketable securities were $2.6 million on December 31, 2008, a modest increase as compared to $2.4 million on June 30, 2008. On November 17, 2008, the Company held its annual shareholder meeting for the combined fiscal years ending June 30, 2009 and 2008. All votes before shareholders passed. The Company had previously been non-compliant with NASDAQ's proxy solicitation and annual meeting requirements, as set forth in Marketplace Rules 4350(g) and 4350(e), respectively, and this annual shareholder meeting satisfied those requirements. Nasdaq Listing Conditions On October 9, 2008, the Company received a notice of non- compliance from The NASDAQ Stock Market based upon the Company's non-compliance with the minimum stockholders' equity requirement of $2.5 million at June 30, 2008, for continued listing on The NASDAQ Capital Market, as set forth in NASDAQ Marketplace Rule 4310(c)(3). They said it could serve as a basis for delisting of the Company's securities from The NASDAQ Capital Market. On February 3, 2009, the Company announced that the NASDAQ Listing Qualifications Panel has granted the Company's request for continued listing on The NASDAQ Capital Market, subject to the condition that, on or before April 6, 2009, the Company file a Current Report on Form 8-K with the Securities and Exchange Commission, evidencing the Company's compliance with the NASDAQ shareholders' equity requirement of $2.5 million, or demonstrating its compliance with one of the alternative listing criteria. While the Company is taking steps to comply with the terms of the NASDAQ Panel decision, there can be no assurance that the Company will be able to do so. A Company spokesman said, "The NASDAQ Capital Market Continued Listing Requirements require one of three standards for a company to meet, one being a shareholders' equity requirement of $2.5 million. One alternative standard would be a $35 million market cap and curiously the Company had easily topped that level during most of its nearly 30-year history as a public company. Recent times are the exception. ( www.fonar.com/market_cap.htm)." "Another alternative standard," continued The Company spokesman, "would be to have a minimum of $500,000 net income for a fiscal year. Since our net income at six months is $331,000, we are two- thirds of the way there. In normal times, this would probably not be significant enough to persuade the NASDAQ Panel to grant FONAR's continued listing in the Capital Market. However, given the present state of the economy, these are not normal times and we are hopeful." Dr. Damadian said, "FONAR has achieved its goal of becoming profitable again. The current quarter results were the result of careful cost-cutting of R&D, and selling, general and administrative costs (S, G & A). Subsequently, we have decreased S, G & A, the bulk of FONAR's overhead, by 40% for the six month period ending December 31, 2008, as compared to the same six month period one year earlier, from $11.2 million to $6.7 million." Based in Melville, New York, Fonar Corporation (FONR) develops and manufactures MRI scanners. FORD MOTOR: Benefiting From Woes of General Motors & Chrysler ------------------------------------------------------------- Matthew Dolan at The Wall Street Journal reports that Ford Motor Co. is benefiting from the troubles of General Motors Corp. and Chrysler LLC. WSJ relates that GM and Chrysler are required to seek cost concessions from the United Auto Workers union under the terms of their federal loans, allowing Ford to open parallel talks with the UAW. The report says that UAW has been working out the same conditions at each firm. WSJ states that Ford has reached an agreement with the UAW to reduce pay for laid-off workers, ease work rules, and eliminate wage increases tied to the cost of living, two days before GM and Chrysler reached the same deal. Ford, says WSJ, has been luring away the clients of GM and Chrysler, amidst talks of bankruptcy filings by the two competitors. WSJ quoted Grassi of Warren, who recently turned in his leased Dodge Grand Caravan minivan and replaced it with a Ford Fusion, as saying, "Ford seems to be the most sound in terms of staying solvent. I mean, you look at your warranty and you want that warranty to be good." Auto-shopping Web site Edmunds.com reports that about 45% of Ford buyers turned in cars or trucks of other manufacturers in January, up from 38% in August. "That's a sign that there is something definitely going on for Ford," WSJ quoted Edmunds Inc. analyst Jesse Toprak. Ford is "weighed down" by the perception of many consumers that it is in the same boat as GM and Chrysler, WSJ relates, citing Mr. Toprak. WSJ states that automakers are suffering from the recession and credit crunch, which have driven sales down. Ford's sales in January 2009 dropped 40%, and the firm continues to post huge losses, including $5.5 billion in the fourth quarter, WSJ says. Tax Credits for Electric Vehicles, Battery Development Ford received a $55 million incentive from the Michigan Economic Development Corporation (MEDC) for its work in advanced battery and electrical vehicle development. Ford will receive refundable tax credits through the new Michigan Advanced Battery Credits initiative, announced today by Governor Jennifer Granholm. The first of its kind in the country, the law provides refundable tax credits to encourage companies to invest in electric vehicle engineering and advanced automotive battery research in Michigan. "Ford appreciates Michigan's proactive positioning in support of these advanced technologies, which we believe are at the heart of a new generation of vehicles," said Curt Magleby, director, Government Affairs. "Incentives to help concentrate research and engineering related to electric vehicles in Michigan will help position the state to become a leader in this emerging technology." Approved by the Michigan Economic Growth Authority, the incentive will be used to accelerate Ford's plans to produce next-generation hybrids, plug-in hybrid electric vehicles and battery electric vehicles. "These promising technologies give us the opportunity to transform our transportation and energy future," said Nancy Gioia, director, Sustainable Mobility Technologies and Hybrid Vehicle Programs. "Government support is essential to achieving the potential for electrified vehicles in the future. Michigan's groundbreaking program accelerates our ability to expand and focus our engineering and research efforts here." Ford's southeast Michigan operations already are home to some of the most advanced automotive research, technology and engineering development facilities in the world. This incentive will help ensure that research and development at Ford facilities in Michigan will play a key role in further enhancing this new technology. Ford recently announced an aggressive electrification strategy to bring four new vehicles to market. Ford's electrification strategy involves three types of electrified vehicles -- battery electric vehicles, hybrid electric vehicles and plug-in hybrid electric vehicles -- to provide consumers with significant fuel economy improvements and reduced CO2 emissions without compromising their driving experience. Ford's new electrification strategy will deliver a suite of electrified vehicles to market by 2012, including: -- A full battery commercial Transit Connect van-type commercial vehicle in 2010. -- A full battery electric passenger car in 2011. -- Next-generation hybrid vehicles, including a plug-in version by 2012. The electrification strategy builds on Ford's vision for bringing affordable technology to millions. It is designed to take advantage of rapid advancements in electrified vehicle technology -- particularly Lithium-ion batteries -- while leveraging the scale of global vehicle platforms to bring the cost of new technology down. About Ford Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin-American regions, including Argentina and Brazil. * * * Moody's Investors Service in December 2008 lowered the Corporate Family Rating and Probability of Default Rating of Ford Motor Company to Caa3 from Caa1 and lowered the company's Speculative Grade Liquidity rating to SGL-4 from SGL-3. The outlook is negative. The downgrade reflects the increased risk that Ford will have to undertake some form of balance sheet restructuring in order to achieve the same UAW concessions that General Motors and Chrysler are likely to achieve as a result of the recently- approved government bailout loans. Such a balance sheet restructuring would likely entail a loss for bond holders and would be viewed by Moody's as a distressed exchange and consequently treated as a default for analytic purposes. FREDDIE MAC: Treasury to Hike Funding to Support Mortgage Market ---------------------------------------------------------------- The U.S. Treasury Department said it is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market, to help maintain mortgage affordability, and to help keep interest rates low. Fannie Mae and Freddie Mac are critical to the functioning of the housing finance system in this country and play a key role in making mortgage rates affordable and maintaining the stability and liquidity of our mortgage market. In 2008, almost three-quarters of new home loans were financed or guaranteed by Fannie Mae and Freddie Mac. Using funds already authorized by Congress for this purpose, Treasury is amending the Preferred Stock Purchase Agreements, contractual agreements between the Treasury and the conserved entities designed to ensure that each company maintains a positive net worth, to $200 billion each from their original level of $100 billion each. The increased funding will provide forward-looking confidence in the mortgage market and enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners. In addition, the Treasury Department will continue to purchase Fannie Mae and Freddie Mac mortgage-backed securities to promote stability and liquidity in the marketplace. Treasury will also increase the size of the GSEs' retained mortgage portfolios allowed under the agreements -- by $50 billion to $900 billion -- along with corresponding increases in the allowable debt outstanding. The increase is not intended to indicate any estimate of possible losses with respect to the companies, but to provide assurance to market participants that Congress gave these companies a special purpose to support housing finance. Given the difficulties in the housing market today, we stand firmly behind their ability to provide that support. Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) that were created to provide stability in the secondary mortgage market and promote access to mortgage credit throughout the United States. In 2008, Fannie Mae and Freddie Mac purchased or guaranteed almost three-quarters of all mortgages being originated in the United States. By purchasing some mortgages and guaranteeing others, Fannie Mae and Freddie Mac help bring the liquidity of global capital markets to local banks and other financial institutions, which lowers mortgage costs for borrowers in communities across the United States. These savings can be achieved because Fannie Mae and Freddie Mac are able to access a broader array of investors resulting in lower cost of funds than typical local banks. Last July, Congress granted Treasury new authorities to provide financial support to Fannie Mae and Freddie Mac in order to provide stability to financial markets, support the availability of mortgage finance, and protect taxpayers. Even though neither institution is near its current $100 billion limit for funding from Treasury under the Preferred Stock Purchase Agreements -- based on preliminary disclosures from the last quarter of 2008, total funding provided to Freddie Mac could approach $50 billion and total funding for Fannie Mae could approach $16 billion -- it is crucial to maintain confidence in both of these institutions even under worse-than-expected economic conditions. Finally, it is important to note that these funding commitments are made under authority provided by the Housing and Economic Recovery Act and do not use any money allocated under the Emergency Economic Stabilization Act (EESA) or the Financial Stability Plan. About Freddie Mac The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE -- commonly known as Freddie Mac, is a stockholder-owned government- sponsored enterprise authorized to make loans and loan guarantees. Freddie Mac was created in 1970 to provide a continuous and low cost source of credit to finance America's housing. Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the securities -- guaranteed by Freddie Mac -- to investors. Mortgage lenders use the proceeds from selling loans to Freddie Mac to fund new mortgages, constantly replenishing the pool of funds available for lending to homebuyers and apartment owners. At Sept. 30, 2008, the company's balance sheet showed total assets of $804,390 billion and total liabilities of $818,185 billion, resulting in a stockholders' deficit of $13,795 billion. Conservatorship As reported by the Troubled Company Reporter, the U.S. government took direct responsibility for Fannie Mae and Freddie Mac, placing the government sponsored enterprises under conservatorship on September 7, 2008. James B. Lockhart, director of Federal Housing Finance Agency, said that Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Among the key components of the conservatorship, the FHFA, as conservator, assumed the power of the Board and management. GATEWAY ETHANOL: Court OKs Increase of Loan Amount to $5,625,761 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Kansas approved on Jan. 30, 2009, amendments to its stipulated final order granting Gateway Ethanol, L.L.C. authority to obtain secured postpetition financing from Dougherty Funding LLC/ The amendments include an increase in the maximum principal amount from $5,242,803 to $5,625,761, and postponement to February 26 of the deadline to close the assets sale. A full-text copy of the Court's amended order, dated Jan. 30, 2009, including a revised "Approved Budget" is available at: http://bankrupt.com/misc/GatewayEthanolAmendmentFinalOrder.pdf A full-text copy of the Court's Stipulated Final Order, dated Oct. 30, 2008, is available at: http://bankrupt.com/misc/GatewayEthanolFinalOrderOct.30,2008.pdf As reported in the Troubled Company Reporter on Troubled Company Reporter on Nov 19, 2008, pursuant to the DIP Loan terms, the financing terminates on the earliest to occur of 17 conditions, including if asset sale has not closed by Dec. 31, 2008. Pursuant to the Court's amended order, the Dec. 31, 2008 deadline for the closing of the sale is extended to Feb. 26, 2009. About Gateway Ethanol Pratt, Kansas-based Gateway Ethanol, LLC, operates an ethanol plant that has a capacity of 55 million gallons a year, according to Orion Ethanol's Web site. The company filed for bankruptcy protection on October 5, 2008 (Bankr. D. Ks. Case No. 08-22579). Laurence M. Frazen, Esq., Megan J. Redmond, Esq., and Tammee E. McVey, Esq., at Bryan Cave, LLP, represent the Debtor in its restructuring efforts. In its schedules, the Debtor listed total assets of $94,545,022, and total debts of $93,353,654. GATEWAY ETHANOL: Wants Plan Filing Period Extended to April 3 ------------------------------------------------------------- Gateway Ethanol, LLC, asks the U.S. Bankruptcy Court for the District of Kansas to extend its exclusive period to file a plan by an additional 60 days, or until April 3, 2009, and its exclusive period to solicit acceptances of said plan to June 2, 2009. Gateway Ethanol told the Court that it is requesting the extension of its exclusive periods to give it sufficient time to close the sale of its assets to Dougherty Funding LLC, and develop a Plan, if necessary. Pratt, Kansas-based Gateway Ethanol, LLC, operates an ethanol plant that has a capacity of 55 million gallons a year, according to Orion Ethanol's Web site. The company filed for bankruptcy protection on October 5, 2008 (Bankr. D. Ks. Case No. 08-22579). Laurence M. Frazen, Esq., Megan J. Redmond, Esq., and Tammee E. McVey, Esq., at Bryan Cave, LLP, represent the Debtor in its restructuring efforts. In its schedules, the Debtor listed total assets of $94,545,022, and total debts of $93,353,654. GENERAL MOTORS: Opinions Differ on Firm's Possible Bankruptcy ------------------------------------------------------------- General Motors Corp.'s possible bankruptcy has spurred differing opinions from analysts, government officials, and consumers. As reported by the Troubled Company Reporter on February 18, 2009, GM said in its restructuring plan that it will need an additional $16.6 billion in financial assistance from the U.S. government. On February 19, the TCR reported that GM's restructuring plan contemplates the purchase of certain sites from Delphi Corp. that represent an important source of supply for the GM and potential incremental liquidity support. A portion of Delphi's exit funding needs would be satisfied through the proceeds from the sale of sites to GM. The automaker has proposed in its restructuring plan that the government create by March a credit insurance program, or a government sponsored factoring program, for original equipment manufacturer receivables. According to the TCR on February 19, 2009, a group of GM bondholders said that the firm's latest restructuring plan fails to address all the challenges facing the company and doesn't cut costs enough in light of the deteriorating economy. Bob Moon at Marketplace says that some leading analysts were dismissing GM's request for further funds from the government, and some commentators suggested that the company, along with Chrysler LLC, is trying to do what amounts to bankruptcy on the cheap, without actually going through the process. While GM is considering filing for Chapter 11 bankruptcy protection, it still aims to avert doing so. As reported by the TCR, GM said in its restructuring plan that, given the complexity and scope of its global business operations, there is a substantial risk that emergence from a Chapter 11 bankruptcy of the company would be impossible and liquidation pursuant to Chapter 7 of the Bankruptcy Code would result. Given GM's financial position and the state of the credit markets, any DIP financing would need to be provided by the U.S. government. Otherwise, GM wouldn't be able to operate in Chapter 11 and would very likely be compelled to liquidate. The financing requirements of GM significantly exceed those in an out of court process, irrespective of the bankruptcy route chosen. Many of the liabilities that could be impaired in a traditional bankruptcy process could have the effect of shifting those liabilities to the government. RTTNews relates that Thaddeus McCotter, chairperson of the House Republican Policy Committee and the only Republican member of Congress from Michigan serving on the House Financial Services Committee, said that "bankruptcy is not an option" for the automakers, echoing GM's sentiment that on a possible non- emergence from Chapter 11. "The choice is you can keep working people employed within these industries that have intensified their restructuring process and have the bridge loan repaid or you can take over $200 billion in social costs to the federal tax payer when they are displaced and thrown out of work," RTTNews quoted Mr. McCotter as saying. "The entire Michigan that we've grown up and known will be gone, if those companies go under," he added. St. Louis Business Journal reports that GM's bankruptcy would carry potential benefits but also possible liabilities for the company and have a ripple effect on its dealers and suppliers. Undesirable assets, according to The Wall Street Journal, would be liquidated or sold and contracts with unions, dealers, suppliers and others would be "reworked". Thomas Hartley at Business First of Buffalo relates that Brad Birmingham, a partner in Hodgson Russ, said that many dealers -- especially small single-brand, rural locations -- would have to close. A bankruptcy filing, for suppliers, could also create additional financial load piled on top of already heavy debt, Business First says. Mr. Birmingham believes that GM is headed to a Chapter 11 bankruptcy filing, Business First reports. Kevin Krolicki at Reuters relates that GM battles to survive declining auto demand, tight credit, and uncertain prospects for recovery in its biggest markets, and too much debt. Reuters relates that GM has started a second round of concession talks with creditors and its major union. According to the report, GM could end up wiping out gains by borrowing even more from the U.S. government even if it wins the deals it needs to eliminate some $28 billion in debt by issuing new shares. Bondholders, Reuters says, are worried that would leave GM vulnerable to a second and even-more wrenching restructuring. Washington Bureau Chief John Dimsdale said that if auto companies keep asking for government loans, Minnesota Republican Rep. John Kline knows sooner or later that the Congress will start meddling in the car business, according to Marketplace. Rep. Kline, says Marketplace, considers turning over a business to the Congress to decide what is a sound business practice and what is not "a poor way to run any business," and said that a Chapter 11 bankruptcy would let the firms do the serious restructuring they need to do. A bankruptcy reorganization, says Marketplace, would involve cuts in workers, dealers, and part suppliers, and sacrifices from bondholders. Marketplace quoted David Cole with the Center for Automotive Research as saying, "No haircut is possible because they're already bald. This is part of industry that is in very very weak position right now. There is nothing to give there.... It is difficult to sell cars to people if you're a bankrupt company. They're worried about warranty, they're worried about re-sale." Justin Hyde at the Detroit Free Press relates that Donald Trump, a real estate and reality television show mogul who owns 28% of Trump Entertainment Resorts stock, believe that GM would be better off in bankruptcy than asking for more government money. According to The Free Press, said on the "Late Show with David Letterman" Wednesday night, that the three Atlantic City casinos that bear his name had to file for bankruptcy this week because the gambling industry "was a disaster". Mr. Trump said that he wasn't involved in management and that the company chose bankruptcy over his offer to buy the casinos, The Free Press states. "Frankly, that's what General Motors should be doing instead of asking for money, they should go into bankruptcy. They'll make a better deal," the report quoted Mr. Trump as saying. The Associated Press reports that Buckingham Research Group analyst Joseph C. Amaturo thinks that a Chapter 11 bankruptcy filing by GM would be in the best interest of everyone, especially the American taxpayer. Mr. Amaturo, according to TheAP, affirmed his "Underperform" rating for GM and cut his price target to $0 from $1, saying that GM's equity is worthless, whether it gets additional government funding or files for bankruptcy protection. The report says that Mr. Amaturo called GM's restructuring plan "worthless", as it doesn't cut the firm's debt, eliminate its legacy costs or make its labor agreements more competitive. The report quoted Mr. Amaturo as saying, "We believe filing for bankruptcy would fix GM's uncompetitive capital structure and legacy issues. Additionally, bankruptcy will clearly better position the U.S. Treasury to get a portion or all its financial aid paid back." Mark Dolliver at Adweek.com states that many consumers that GM would survive its financial crisis. Adweek.com says that according to results in Rasmussen Reports polling this week, 50% of respondents said that GM's survival is "very likely" and 42% said that it would be "somewhat likely"; 32% said "not very likely" and 6% said "not at all likely." Adweek.com notes that 60% of male respondents and 54% of female respondents said that it's at least somewhat likely that GM or Chrysler would go under in the next few years. About 44% of respondents, according to Adweek.com, said that it would be better to let the automakers fail, 33% said it would be better to help them out with subsidies, and the rest weren't sure either way. About 12% of the respondents believe that it's very likely that "taxpayer-backed loans will eventually be repaid by the auto companies," 29% said that "it's somewhat likely", about 41% think that it's somewhat unlikely, and about 16% said that it's not at all likely. 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. GM's common stock was considered the stock market's bellwether for many years, hence the saying "What's good for GM is good for America." 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 $170.3 billion, resulting in a stockholders' deficit of $59.9 billion. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of 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. GENERAL MOTORS: S&P's 'CC' Rating Unaffected by Cost-Cutting Plan ----------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on General Motors Corp. (CC/Negative/--) are not affected by details of the company's restructuring plan submitted yesterday to the U.S. Treasury. The plan included a request under GM's Feb. 17, 2009, baseline case for $9.1 billion in additional U.S. government funding beyond the $13.4 billion approved in December 2008. The plan also describes a range of strategic decisions and cost reductions, both domestically and in many of GM's foreign operations. S&P lowered its corporate credit rating on GM to 'CC' in December 2008, reflecting S&P's expectation that GM would approach its unsecured lenders for a reduction in debt at a substantial discount to par. In its plan, GM said it will seek to convert its unsecured debt to a combination of new debt and equity. S&P continues to view such an outcome as a distressed exchange under S&P's criteria and, therefore, akin to a default. In GM's submission, advisers to an unofficial committee of many of GM's unsecured bondholders supported pursuing such an exchange in GM's plan. The request for additional U.S. government funding, on top of the $13.4 billion already extended to GM, underscores the depressed state of U.S. auto demand, which has weakened further in the two months since GM and Chrysler LLC (CC/Negative/--) received their first installments of loans. S&P now expects U.S. light-vehicle sales to be 10.3 million units in 2009, down 22% from 2008 and 36% from 2007. With auto demand down outside the U.S. as well, in some cases sharply, GM is also in discussions with some foreign governments regarding financial support. As expected, GM's plan includes additional capacity and job reductions to reduce fixed costs. GM said it has a tentative agreement with the United Auto Workers union to reduce labor costs and is discussing the conversion of 50% of future Voluntary Employees' Beneficiary Association-related obligations to equity. However, final agreements are still required from the union. GM has stated it expects a reduction in the VEBA payment obligation to be tied to the significant restructuring of unsecured debt, which has yet to be approved by lenders. S&P continues to believe that government support is not open- ended. Accordingly, in S&P's opinion, even if GM's restructuring plan is approved by a government oversight panel on or around March 31, 2009, and additional funding is provided, bankruptcy risk remains high for the remainder of 2009, and even in 2010, because of highly uncertain consumer demand globally and other serious risks, including GM's likely need to further support Delphi Corp., the persistently weak credit markets, and potential supplier failures. GENERAL MOTORS: Will Drop Saturn, Pontiac, Saab & Hummer Brands --------------------------------------------------------------- Kate Linebaugh at The Wall Street Journal reports that General Motors Corp. will turn its back on its Saturn, Pontiac, Saab, and Hummer brands. WSJ relates that by focusing on just four key brands -- Chevrolet, Buick, Cadillac, and GMC truck -- GM risks a further decline in its market share as it loses clients, who may have little interest in buying those brands. WSJ says that GM had a 19.5% market share in January 2009. The report states that without Saturn, Pontiac, Saab, and Hummer, GM's share would have been 16.9%. Saturn, Hummer, Saab, and Pontiac have struggled to attract clients, prompting GM to sell large numbers of them to car-rental concerns, corporate fleet buyers, and GM's workers, according to WSJ. GM said in its restructuring plan that Saturn, Hummer, and Saab generated an average annual pretax loss of $1.1 billion per year between 2003 and 2007, WSJ reports. According to Bankruptcy Law360, GM subsidiary Saab Automobile AB could file for bankruptcy as early as this month if the Swedish government fails to offer the automaker a deal soon, GM said in a restructuring plan presented to the U.S. Department of Treasury. The report says GM has confirmed that it had conducted a "strategic review" of the Saab business. According to WSJ, dealers of the Saturn brand hope that GM will spin it off as a separate company rather than close it. WSJ states that a team of Saturn dealers is spending 60 days working with GM to evaluate the possibility. WSJ reports that Hummer will be sold or phased out. GM said in its restructuring plan that Saab could file for bankruptcy protection within a month, WSJ says. The report states that Pontiac will be reduced to one or two models and essentially cease to exist as a full line. GM will also cut the number of individual U.S. models to 36 from 48, WSJ relates. Chevrolet Cobalt and Saab 9-5 are among those that will disappear, according to WSJ. GM Europe Open to Selling Stake or Forming Strategic Alliance GM's European division said on Wednesday that it is open to selling a stake or forming a strategic alliance with a partner, Christoph Rauwald and Ola Kinnander at WSJ states. According to the report, the European governments were cold to GM's request for financial aid. WSJ relates that GM said on Tuesday that it is counting on $6 billion in financial support from foreign governments and could potentially need billions more from the U.S. government in the coming years to cover pension obligations. GM, says the report, is aiming for $1.2 billion in savings from its European operations and has warned of the possible shutdowns or spinoff of European plants in "high-cost locations." According to WSJ, German Finance Minister Peer Steinbrueck said on Wednesday that he is a "skeptic" when it comes to the possibility of acquiring a stake in Opel. Citing Sweden's Minister for Enterprise and Energy Maud Olofsson, WSJ relates that the Swedish government isn't prepared to risk taxpayer money on a rescue attempt for GM and its Saab unit. GM said that its Saab Automobile AB arm could seek bankruptcy protection as early as this month as it seeks a buyer, the report states. The U.K. government said on Wednesday that it is seeking "urgent talks" with GM over the firms plans for its U.K. subsidiaries, according to WSJ. GM and labor representatives said in a statement, "If it makes sense for the sustainable success of GM Europe and Opel, management is also willing to negotiate partnerships and shareholdings by third parties." GM will immediately start negotiations with labor representatives over a restructuring program aimed at shaping a sustainable financial basis for the operations, WSJ says, citing GM and the labor representatives. According to the report, the two parties said that they will examine possible ways to avoid compulsory layoffs and plant closures. 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 $170.3 billion, resulting in a stockholders' deficit of $59.9 billion. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of 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. GOOD SAMARITAN: Files for Chapter 11 Bankruptcy Protection ---------------------------------------------------------- The Times Daily reports that Good Samaritan Hospice USA has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Alabama. Court documents say that Good Samaritan has more than $5.8 million in debts. The Times Daily relates that Good Samaritan's largest creditor is Palmetto Government Benefits Administrators Provider, which holds a $5 million claim. The report says that Good Samaritan has appealed that amount, saying that the debt is linked directly to reimbursements that were approved by Medicare but surpasses the federal government's $20,000 cap per patient. Good Samaritan owner Randy Gist said in court documents that the company started having reduced cash flow and profitability about two years ago, "based in large part on Medicare's reimbursement structure for hospice care providers." Good Samaritan is paying Medicare $83,666 per month toward the overpayment balance that Medicare claims is still owed, The Times Daily states, citing Mr. Gist. According to the report, Mr. Gist said that Good Samaritan will continue to have adequate financial resources to provide quality patient care, if the company's bankruptcy petition is approved. The report says that Good Samaritan lists monthly revenue of more than $210,000. According to The Times Online, Good Samaritan filed a motion asking that Medicare continue paying for patient care while the case progresses and that the monthly Medicare repayment be cut to $25,000 while the case is pending. Good Samaritan said that further "disruption in cash flow would result in the shutdown of operations, resulting in potential lapse in care to patients," court documents state. Florence, Alabama-based Good Samaritan Hospice USA operates from an office on Dr. Hicks Boulevard. The company filed for Chapter 11 bankruptcy protection on February 16, 2009 (Bankr. N.D. Ala. Case No. 09-80591). Stuart M. Maples, Esq., at Maples & Ray, PC, assists the company in its restructuring effort. The company listed $50 million to $100 million in assets and $500 million to $1 billion in debts. GOODYEAR TIRE: Posts $330MM 4th Quarter Net Loss; Plans Job Cuts ---------------------------------------------------------------- The Goodyear Tire & Rubber Company released its fourth quarter and full year 2008 results and detailed actions to address market challenges in a much weaker economy. Goodyear's fourth quarter 2008 sales were $4.1 billion, down from $5.2 billion in the 2007 quarter, despite increases in Goodyear- branded market share. The company's net loss was $330 million ($1.37 per share), compared with net income of $52 million (23 cents per share) in the 2007 quarter. All per share amounts are diluted. "Given lower industry demand, we are taking aggressive action, reducing tire production, cutting costs and adjusting investments to better match market conditions," said Robert J. Keegan, Goodyear Tire chairperson and chief executive officer. "The many positive actions we took and the results we achieved in 2008 provide a base from which we will address the market challenges we will inevitably face in 2009," he added. 2009 Actions Consistent with Goodyear's ongoing strategies, Mr. Keegan announced actions in three key areas to address the economic environment in 2009. Goodyear plans an unprecedented number of new product launches in 2009, with more than 50 new tires being introduced globally. Targeted to key segments, these include the new Assurance Fuel Max tire introduced earlier this month in North America and more recently announced as original equipment on the new Chevrolet Volt electric vehicle. Significant launches that showcase Goodyear's innovative new products will be made across all geographic regions. Goodyear plans to further reduce costs by approximately $700 million in 2009 and has therefore raised its four-point cost savings plan target to $2.5 billion. Actions include: -- Further reducing personnel levels by nearly 5,000 in addition to almost 4,000 reductions in the second half of 2008 and freezing salaries. -- Implementing new cost control policies to eliminate non- essential discretionary spending. -- Purchasing actions to lower the cost of both raw materials and indirect materials. In addition, Goodyear plans to eliminate between 15 million and 25 million units of additional manufacturing capacity worldwide over the next two years. The company plans to implement a number of cash flow actions in 2009, including: -- Cutting capital expenditures to between $700 million and $800 million. -- Reducing inventory levels by more than $500 million. -- Pursuing the sale of non-core assets. "Collectively, these actions address the new economic realities," said Mr. Keegan. "We will remain flexible and are prepared to take additional actions if market conditions warrant. Our goal is to ensure Goodyear is positioned for success when tire markets recover." Fourth Quarter Results Goodyear's fourth quarter 2008 sales were $4.1 billion, compared with $5.2 billion in the 2007 quarter. The 2008 sales reflect the $774 million negative impact resulting from a 19 percent reduction in tire volume due to a rapid deterioration in industry demand around the world during the quarter and the $375 million negative impact of foreign currency translation. Sales benefited from pricing and mix improvements, which drove revenue per tire, excluding the impact of foreign currency translation, up 9 percent over the 2007 quarter. Also impacting the change in sales was the 2007 divestiture of the company's T&WA tire mounting business, which contributed sales of $158 million in the fourth quarter of 2007. The fourth quarter segment operating loss was $159 million in 2008. This compares to segment operating income of $312 million in the 2007 period. The segment operating loss in the fourth quarter of 2008 reflected lower unit sales, which drove a negative volume impact of $154 million and under-absorbed fixed costs of $213 million. Higher raw material costs, which increased 28 percent, or approximately $350 million, more than offset improved pricing and product mix of $263 million. Sales, administrative and general expenses declined $134 million compared to the 2007 quarter, reflecting foreign currency translation, lower compensation-related expense and cost savings programs. The fourth quarter 2008 net loss was $330 million ($1.37 per share). This compares to net income of $52 million (23 cents per share) in the 2007 fourth quarter. All per share amounts are diluted. The 2008 fourth quarter included $38 million (16 cents per share) in after-tax charges for rationalizations, a $16 million (7 cents per share) after-tax loss due to the liquidation of a Jamaican subsidiary, $11 million (5 cents per share) in after-tax accelerated depreciation, a $5 million (2 cents per share) after- tax valuation allowance related to an investment, $2 million (1 cent per share) in expenses related to hurricanes in North America, an after-tax gain of $13 million (5 cents per share) related to asset sales, $9 million (4 cents per share) in various discrete net tax benefits and a $7 million (3 cents per share) after-tax gain due to settlements with certain suppliers. The 2007 fourth quarter included $20 million (8 cents per share) in after-tax rationalization charges, after-tax losses on asset sales of $19 million (8 cents per share), after-tax financing fees of $17 million (7 cents per share) related to debt conversion, $6 million (2 cents per share) in after-tax accelerated depreciation and reduced tax expense of $11 million (4 cents per share) due to a tax law change. See the table at the end of this release for a list of significant items impacting the 2008 and 2007 fourth quarters. Four-Point Cost Savings Plan Goodyear made further progress during 2008 on its four-point cost savings plan with $700 million in new savings, including $205 million during the fourth quarter. Savings achieved from 2006 through 2008 under the plan total $1.8 billion. Full-Year Results Goodyear's sales for 2008 were $19.5 billion, less than 1 percent lower than 2007's record $19.6 billion. The 2008 sales reflect the $1.3 billion negative impact resulting from an 8.5 percent reduction in tire volume. Also, impacting the change in sales was the 2007 divestiture of the company's T&WA tire mounting business, which contributed sales of $639 million in 2007. Favorable foreign currency translation positively impacted sales by $383 million. Sales benefited from pricing and mix improvements, which drove revenue per tire, excluding the impact of foreign currency translation, up 8 percent compared to 2007. Asia Pacific Tire, Latin American Tire and Europe, Middle East and Africa Tire each achieved record full-year sales. Segment operating income was $804 million, down from $1.2 billion in 2007. This reflects the lower unit sales, which resulted in a negative volume impact of $249 million and higher conversion costs of $487 million, primarily driven by under-absorbed fixed costs of $373 million. Improvements in pricing and product mix of approximately $942 million more than offset higher raw material costs, which increased 13 percent, or approximately $712 million, compared to 2007. Asia Pacific Tire and Latin American Tire achieved record full- year segment operating income. Goodyear's net loss of $77 million (32 cents per share) in 2008 compares to 2007 net income of $602 million ($2.65 per share). The 2007 results included an after-tax gain of $508 million ($2.19 per share) on the sale of the company's former Engineered Products business. All per share amounts are diluted. Business Segment Results North American Tire Fourth Quarter Twelve Months (in millions) 2008 2007 2008 2007 Tire Units 16.9 20.5 71.1 81.3 Sales $1,943 $2,284 $8,255 $8,862 Segment Operating Income (Loss) $(193) $40 $(156) $139 Segment Operating Margin (9.9)% 1.8% (1.9)% 1.6% North American Tire's fourth quarter 2008 sales decreased from 2007 largely due to tire volume declining 17 percent reflecting significantly lower industry demand. Also impacting the change in sales was the 2007 divestiture of the company's T&WA tire mounting business, which contributed sales of $158 million in the fourth quarter of 2007. Sales in the 2008 fourth quarter were positively impacted by improved pricing and product mix and market share gains for Goodyear-branded consumer replacement tires. Fourth quarter revenue per tire, excluding the impact of foreign currency translation, increased 10 percent in 2008 compared to 2007. The fourth quarter segment operating loss was significantly impacted by lower sales and production levels, which drove a negative volume impact of $41 million and under-absorbed fixed costs of $116 million. Increased raw material costs of $161 million more than offset pricing and product mix improvements of $79 million. Europe, Middle East and Africa Tire Fourth Quarter Twelve Months (in millions) 2008 2007 2008 2007 Tire Units 15.1 19.0 73.6 79.6 Sales $1,406 $1,906 $7,316 $7,217 Segment Operating Income (Loss) $(32) $141 $425 $582 Segment Operating Margin (2.3)% 7.4% 5.8% 8.1% Europe, Middle East and Africa Tire's fourth quarter 2008 sales decreased from 2007 primarily due to lower volume. Tire volume declined 21 percent reflecting significantly weaker industry demand in original equipment and replacement markets. Sales in the 2008 fourth quarter were positively impacted by improved pricing and market share gains for Goodyear- and Dunlop-branded consumer replacement tires. Fourth quarter revenue per tire, excluding the impact of foreign currency translation, increased 5 percent in 2008 compared to 2007. The fourth quarter segment operating loss was significantly impacted by lower sales and production levels, which drove a negative volume impact of $71 million and under-absorbed fixed costs of $67 million. Higher raw material costs of $99 million more than offset pricing and product mix improvements of $72 million. Latin American Tire Fourth Quarter Twelve Months (in millions) 2008 2007 2008 2007 Tire Units 4.1 5.6 20.0 21.8 Sales $405 $513 $2,088 $1,872 Segment Operating Income $49 $92 $367 $359 Segment Operating Margin 12.1% 17.9% 17.6% 19.2% Latin American Tire's fourth quarter sales decreased from 2007 primarily due to a 26 percent decline in volume reflecting significantly weaker original equipment and replacement market demand. Fourth quarter revenue per tire, excluding the impact of foreign currency translation, increased 23 percent in 2008 compared to 2007. Segment operating income reflected lower sales and production levels, which resulted in a negative volume impact of $33 million and under-absorbed fixed costs of $20 million. Pricing and product mix improvements of $78 million more than offset higher raw material costs of $52 million. Asia Pacific Tire Fourth Quarter Twelve Months (in millions) 2008 2007 2008 2007 Tire Units 4.4 4.9 19.8 19.0 Sales $381 $457 $1,829 $1,693 Segment Operating Income $17 $39 $168 $150 Segment Operating Margin 4.5% 8.5% 9.2% 8.9% Asia Pacific Tire's fourth quarter sales decreased from 2007 primarily due to an 11 percent decline in tire volume reflecting significantly weaker industry demand. Fourth quarter revenue per tire, excluding the impact of foreign currency translation, increased 13 percent in 2008 compared to 2007. Segment operating income was lower than 2007 due to lower sales and production levels, which drove a negative volume impact of $9 million and under-absorbed fixed costs of $10 million. Higher raw material costs of $38 million more than offset pricing and product mix improvements of $34 million. About Goodyear Tire Headquartered in Akron, Ohio, The Goodyear Tire & Rubber Company (NYSE: GT) -- http://www.goodyear.com/-- is the world's largest tire company. The company manufactures tires, engineered rubber products and chemicals in more than 60 facilities in 26 countries and employs 80,000 people worldwide. Goodyear has subsidiaries in New Zealand, Venezuela, Peru, Mexico, Luxembourg, Finland, Korea and Japan, among others. * * * As reported by the Troubled Company Reporter on January 14, 2009, 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. S&P said that the outlook is stable. GOTTSCHALKS INC: Court Okays DJM Asset as Real Estate Consultant ---------------------------------------------------------------- The Honorable Kevin J. Carey of the United States Bankruptcy Court for the District of Delaware authorized Gottschalks Inc. to employ DJM Asset Management LLC as its real estate consultant. The firm is expected to: a) meet with the Debtor to ascertain the its goals, objectives and financial parameters; b) negotiate the modification of certain leases, as directed by the Debtor to obtain rent reductions or other advantageous modifications; c) negotiate the potential termination, assignment of other disposition of certain of the leases as directed by the Debtor and the owned properties including assisting the Debtor at auction, if needed; d) negotiate waivers or reductions of prepetition cure amounts and claims asserted under Section 502(b)(6) of the Bankruptcy Code with respect to leases; e) assist the Debtor in the documentation of proposed transactions; and f) report periodically to the Debtor regarding the status of negotiations and disposition efforts. Andrew Graiser, co-president and chief executive officer of DJM, told the Court that the firm will be paid in accordance to the real estate consulting and advisory services agreement. A full- text copy of the agreement is available for free at: http://ResearchArchives.com/t/s?38c5 Mr. Graiser assured the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Gottschalks Headquartered in Fresno, California, Gottschalks Inc. -- http://www.gottschalks.com-- is a regional department store chain, currently operating 58 department stores and three specialty apparel stores in six western states, including California (38), Washington (7), Alaska (5), Oregon (5), Nevada (1) and Idaho (2). Gottschalks offers better to moderate brand- name fashion apparel, cosmetics, shoes, accessories and home merchandise. The company filed for Chapter 11 protection on January 14, 2009 (Bankr. D. Del. Case No. 09-10157). O'Melveny & Myers LLP represents the Debtor in its restructuring efforts. Lee E. Kaufman, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., will serve as the Debtors' co-counsel. The Debtors selected Kurtzman Carson Consultants LLC as claims agent. The U.S. Trustee for Region 3 appointed seven creditors serve on an Official Committee of Unsecured Creditors. In its bankruptcy petition, Gottschalk listed $288,438,000 in total assets and $197,072,000 in total debts as of Jan. 3, 2009. GOTTSCHALKS INC: Court Approves FD U.S. as Communications Advisors ------------------------------------------------------------------ The Honorable Kevin J. Carey of the United States Bankruptcy Court for the District of Delaware authorized Gottschalks Inc. to employ FD U.S. Communications Inc. as its communications advisors. The firm is expected to: a) develop and implement communications programs and related strategies and initiatives for communications with the Debtor's key constituencies regarding the Debtor's operations and financial performance and the Debtor's progress through the Chapter 11 process; b) develop public relations initiatives for the Debtor during this Chapter 11 case; c) prepare press release and other public statements for the Debtor including statements relating to major events in this Chapter 11 case; d) prepare other forms of communication to the Debtor's key constituencies and the media, potentially including materials to be posted on the Debtor's web site; and e) perform other communications consulting services as may be requested by the Debtor. S. Leigh Parrish, managing director of FD, told the Court that the firm's professionals and their compensation rates are: Designation Hourly Rate ----------- ----------- vice chairman $520 senior managing director $480 senior vice president $420 vice president $340 assistant vice president $300 associate $240 junior associate $200 administration $100 Ms. Parrish added that the firm received a $20,000 retainer fee. A full-text copy of the engagement letter between the Debtor and the firm is available for free at: http://ResearchArchives.com/t/s?38c5 Ms. Parrish assured the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Gottschalks Headquartered in Fresno, California, Gottschalks Inc. -- http://www.gottschalks.com-- is a regional department store chain, currently operating 58 department stores and three specialty apparel stores in six western states, including California (38), Washington (7), Alaska (5), Oregon (5), Nevada (1) and Idaho (2). Gottschalks offers better to moderate brand- name fashion apparel, cosmetics, shoes, accessories and home merchandise. The company filed for Chapter 11 protection on January 14, 2009 (Bankr. D. Del. Case No. 09-10157). O'Melveny & Myers LLP represents the Debtor in its restructuring efforts. Lee E. Kaufman, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., will serve as the Debtors' co-counsel. The Debtors selected Kurtzman Carson Consultants LLC as claims agent. The U.S. Trustee for Region 3 appointed seven creditors serve on an Official Committee of Unsecured Creditors. In its bankruptcy petition, Gottschalk listed $288,438,000 in total assets and $197,072,000 in total debts as of Jan. 3, 2009. GOTTSCHALKS INC: Court Approves Financo Inc. as Investment Banker ----------------------------------------------------------------- Gottschalks Inc. obtained authority from the United States Bankruptcy Court for the District of Delaware to employ Financo Inc. as its investment banker. The firm is expected to: a) work with the Debtor to determine the appropriate process for marketing the Debtor to potential purchasers; b) assist in the preparation of descriptive material concerning the Debtor; c) develop, update and review with the Debtor on an ongoing basis a list of parties which might be interested in acquiring the Debtor; d) conduct the overall sale process including investment banking sale, advisory and valuation services. e) consult with and advise the Debtor concerning the sale process, and participate in sale negotiations on the Debtor's behalf; and f) provide opinion to the board of directors of the Debtor as to whether, depending on the nature of the sale, the consideration to be received by the Debtor in connection with the proposed sale is fair from a financial point of view. William Susman, president of Financo, told the Court that the firm will be paid for its rendered services in accordance to the engagement letter dated Jan. 8, 2009. A full-text copy of the engagement letter is available for free at: http://ResearchArchives.com/t/s?38c6 Mr. Susman assured the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Gottschalks Headquartered in Fresno, California, Gottschalks Inc. -- http://www.gottschalks.com-- is a regional department store chain, currently operating 58 department stores and three specialty apparel stores in six western states, including California (38), Washington (7), Alaska (5), Oregon (5), Nevada (1) and Idaho (2). Gottschalks offers better to moderate brand- name fashion apparel, cosmetics, shoes, accessories and home merchandise. The company filed for Chapter 11 protection on January 14, 2009 (Bankr. D. Del. Case No. 09-10157). O'Melveny & Myers LLP represents the Debtor in its restructuring efforts. Lee E. Kaufman, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., will serve as the Debtors' co-counsel. The Debtors selected Kurtzman Carson Consultants LLC as claims agent. The U.S. Trustee for Region 3 appointed seven creditors serve on an Official Committee of Unsecured Creditors. In its bankruptcy petition, Gottschalk listed $288,438,000 in total assets and $197,072,000 in total debts as of Jan. 3, 2009. GSC ACQUISITION: Receives Non-Compliance Notice From NYSE --------------------------------------------------------- GSC Acquisition Company received notice from the staff of the NYSE Alternext US LLC (formerly the American Stock Exchange) that the Company is not in compliance with Section 704 of the Company Guide in that it did not hold an annual meeting of its stockholders during 2008. The Company has been afforded the opportunity to submit a plan of compliance to the Exchange by March 10, 2009, that demonstrates the Company's ability to regain compliance with Section 704 of the Company Guide by August 11, 2009. The Company currently intends to submit such a plan. If the Exchange accepts the plan, then the Company may be able to continue its listing during the period up to August 11, 2009, during which time the Company will be subject to periodic review to determine whether it is making progress consistent with the plan it submitted. If the Company fails to submit a plan acceptable to the Exchange, or even if accepted, if the Company is not in compliance with the continued listing standards by August 11, 2009, or the Company does not make progress consistent with the plan during such period, then the Exchange would be expected to initiate delisting proceedings. The Company's common stock continues to trade on Exchange. The Exchange has advised the Company that the Exchange is utilizing the financial status indicator fields in the Consolidated Tape Association's Consolidated Tape System and Consolidated Quote Systems Low Speed and High Speed Tapes to identify companies that are in noncompliance with the Exchange's continued listing standards. Accordingly, the Company will become subject to the trading symbol extension ".BC" to denote such noncompliance. HERMANOS DE LA TORRE: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Hermanos De La Torre, Inc. 2000 Pomona Blvd Pomona, CA 91766 Bankruptcy Case No.: 09-13427 Type of Business: Hermanos De La Torre, Inc., is a single-asset, real estate debtor. Chapter 11 Petition Date: February 17, 2009 Court: United States Bankruptcy Court Central District of California Judge: Sheri Bluebond Debtor's Counsel: Martin D. Gross, Esq. Law Offices of Martin D. Gross 2001 Wilshire Blvd Ste 300 Santa Monica, CA 90403 (310)453-8320 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of 20 largest unsecured creditors together with its petition. The petition was signed by Daniel De La Torre, a member of the company. HPG INTERNATIONAL: U.S. Trustee Appoints 4-Member Creditors Panel ----------------------------------------------------------------- Roberta A. DeAngelis, the Acting United States Trustee for Region 3, appointed 4 creditors to serve on the Official Committee of Unsecured Creditors in HPG International Inc. and VIG Holdings Ltd.'s jointly administered Chapter 11 cases. The Creditors Committee members are: a) Baerlocher Production USA LLC Attn: David Bryan Kuebel 5890 Highland Ridge Rd. Cincinnati, OH 45232 Tel: (513) 482-6328 Fax: (513) 482-6323 b) Georgia Gulf Chemicals & Vinyls, LLC Attn: Bradley Reynolds 115 Perimeter Center Pl. Suite 460, Atlanta GA 30346 Tel: (770) 395-4521 Fax: (770) 395-4514 c) Shawnee Chemical Company Attn: Philip Scopelitis 136 Main Street, Suite 300 Princeton, NJ 08540 Tel: (609) 799-3930 Fax: (609) 799-6576 d) Cornell Iron Works, Inc. Attn: Kevin Yakubowski 100 Elmwood Rd. Crestwood Industrial Park Mountaintop, PA 18707 Tel: (570) 474-6773 ex. 518 Fax: (570) 715-0518 About HPG International Headquartered in Mountaintop, Pennsylvania, HPG International Inc. -- http://www.hpg-intl.com-- designs and make plastics PV sold primarily to the fabricating industries throughout the United States, Canada and Mexico for commercial use in roofs, pool, liners, wallcoverings, label applications and shower panels. The company and its affiliate, VIG Holdings Ltd., filed for Chapter 11 protection on Jan. 23, 2009 (Bankr. D. Del. Lead Case No. 09- 10231). Jeffrey M. Carbino, Esq., Buchanan Ingersoll & Rooney PC, represents the Debtors in their restructuring efforts. The Debtors proposed Kurtzman Carson Consultants LLC as their claims agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $10 million and $50 million each. INTERNET FLOORS: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Internet Floors, Inc. 407 N CR 200 E Danville, IN 46122 County: Hendricks Bankruptcy Case No.: 09-01497 Chapter 11 Petition Date: February 17, 2009 Court: United States Bankruptcy Court Southern District of Indiana (Indianapolis) Judge: Basil H. Lorch III Debtor's Counsel: KC Cohen, Esq. KC Cohen, Lawyer, PC 151 N Delaware St Ste 1104 Indianapolis, IN 46204 Tel: (317) 715-1845 Fax: (317) 916-0406 Email: kc@esoft-legal.com Estimated Assets: $50,001 to $100,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's largest unsecured creditors is incorporated in its petition filing, a full-text copy of which is available for free at: http://bankrupt.com/misc/insb09-01497.pdf The petition was signed by Jeffrey R. Fuehrer, president of the company. JOHNSON BROADCASTING: May Use MLCFC Cash Collateral Until July 30 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas has authorized Johnson Broadcasting, Inc. (JBI) and Johnson Broadcasting of Dallas, Inc. (JBD) authority to use cash collateral of Merrill Lynch Commercial Finance Corp. (MLCFC), as assignee of Merrill Lynch Business Finance Services Inc., to meet payroll and satisfy immediate postpetition financial demands, through and until July 30, 2009, in accordance with a budget. As of the Petition Date, Johnson Broadcasting, Inc. was indebted to MLCFC in the approximate amount of not less that $4,201,377, plus accrued unpaid interest, charges and other fees. To the extent that any MLCFC cash collateral is used by or for the benefit of JBD, JBD grants to MLCFC a first and prior lien on the assets of JBD. As adequate protection for JBI's expenditures of cash collateral, MLCFC is granted security interests in all of JBI's and JBD's (solely to the extent of funds advanced by JBI for JBD) rights, titles, and interests in all of its goods, property and interests in property and all assets of JBI and JBD, with such liens against property of JBI and JBD having the same seniority and entitled to the same level of priority as among the respective lenders as the priority of their liens against JBI's property existing on the Petition Date. In addition, as adequate protection for any diminution for the use of MLCFC's cash collateral, Debtors shall pay to MLCFC not less $12,000 per month, which shall be due on the 10th day following the entry of the Court's order, and every 10th calendar day of each month thereafter. Based in Houston, Texas, Johnson Broadcasting Inc. and Johnson Broadcasting of Dallas Inc. own and operate television stations in Texas. Johnson Broadcasting Inc. and Johnson Broadcasting of Dallas Inc. filed separate petitions for Chapter 11 relief on Oct. 13, 2008 (Bankr. S.D. Texas Case No. 08-36583 and 08-36585, respectively). John James Sparacino, Esq., and Timothy Alvin Davidson, II, Esq., at Andrews and Kurth, represents the Debtors as counsel. In its schedules, Johnson Broadcasting Inc. listed total assets of $7,759,501 and total debts of $14,232,988. JOHNSON BROADCASTING: MLCFC Asks Court to Appoint Ch. 11 Trustee ---------------------------------------------------------------- Merrill Lynch Commercial Finance Corp., a secured creditor and party in interest in Johnson Broadcasting, Inc. and Johnson Broadcasting of Dallas, Inc., asks the U.S. Bankruptcy Court for the Southern District of Texas to appoint a Chapter 11 trustee in the Debtor's Chapter 11 cases. MLCFC says that the appointment of a Chapter 11 trustee to operate and ultimately sell the assets of JBI and JBD is in the best interest of the creditors of the estates. MLCFC states that Doug Johnson, the principal shareholder of the Debtors, should be removed as the general manager and president of JBI and JBD because he has placed JBI and JBD in imminent risk of losing their broadcast license. MLCFC tells the Court that JBI and JBD have been grossly mismanaged by Doug Johnson and that either through incompetence or abject disregard for the best interests of the assets and the creditors of the estaes of JBI and JBD, Doug Johnson has seriously jeopardized the ability of JBI and JBD to continue operations from and after Feb. 17, 2009, including failing to: a) pay essential licensing fees; b) prepare for and implement the digital conversion required of all licenced broadcasting stations since at least 2005; c) adequately account for and identify essential action items required to maintain FCC compliance and facilitate the digital conversion process; and d) reasonably negotiate a sale of the assets of the estates of JBI and JBD - being the only feasible exit strategy available to these Debtors. Based in Houston, Texas, Johnson Broadcasting Inc. and Johnson Broadcasting of Dallas Inc. own and operate television stations in Texas. Johnson Broadcasting Inc. and Johnson Broadcasting of Dallas Inc. filed separate petitions for Chapter 11 relief on Oct. 13, 2008 (Bankr. S.D. Texas Lead Case No. 08-36583). John James Sparacino, Esq., and Timothy Alvin Davidson, II, Esq., at Andrews and Kurth, represents the Debtors as counsel. In its schedules, Johnson Broadcasting Inc. listed total assets of $7,759,501 and total debts of $14,232,988. JOHNSON BROADCASTING: Plan Filing Period Extended to May 11, 2009 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas has approved the request of Johnson Broadcasting, Inc., and Johnson Broadcasting of Dallas Inc.'s exclusive period to file a confirmation plan for 90 days, or until May 11, 2009. The Debtor's exclusive period to file a plan expired on Feb. 10, 2009. In court papers filed with the Court, the Debtors related that although they have not yet found a buyer for their assets, they have exchanged terms sheets with at least one potential buyer and have signed non-disclosure agreements with several other potential buyers. In addition, the Debtors related that are also seeking debtor in possession financing or exit financing to fund a plan of reorganization. The extension, the Debtors add, will allow them to analyze issued related to their Plan of Distribution. Based in Houston, Texas, Johnson Broadcasting Inc. and Johnson Broadcasting of Dallas Inc. own and operate television stations in Texas. Johnson Broadcasting Inc. and Johnson Broadcasting of Dallas Inc. filed separate petitions for Chapter 11 relief on Oct. 13, 2008 (Bankr. S.D. Texas Lead Case No. 08-36583). John James Sparacino, Esq., and Timothy Alvin Davidson, II, Esq., at Andrews and Kurth, represents the Debtors as counsel. In its schedules, Johnson Broadcasting Inc. listed total assets of $7,759,501 and total debts of $14,232,988. JUST WINGIN: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Just Wingin' It, Inc. dba Wild Wings Cafe 161 Biltmore Avenue Asheville, NC 28801 Bankruptcy Case No.: 09-10169 Chapter 11 Petition Date: February 17, 2009 Court: United States Bankruptcy Court Western District of North Carolina (Asheville) Judge: George R. Hodges Debtor's Counsel: David G. Gray, Esq. Westall, Gray, Connolly & Davis, P.A. 81 Central Avenue Asheville, NC 28801 Tel: (828) 254-6315 Email: judyhj@bellsouth.net Total: $33,500.00 Total: $1,621,758.09 A list of the Debtor's largest unsecured creditors is incorporated in its petition filing, a full-text copy of which is available for free at: http://bankrupt.com/misc/ncwb09-10169.pdf The petition was signed by David McFarland, president of the company. LEE ENTERPRISES: Refinances Notes to 2012, Amends Bank Payments --------------------------------------------------------------- In a comprehensive series of steps to strengthen its financial position during the recession, Lee Enterprises, Incorporated, concluded agreements with existing lenders to refinance $306 million of debt of its subsidiary St. Louis Post-Dispatch LLC and restructure future payments under its $1.1 billion bank financing arrangements. Lee also has redeemed the 5% interest of its minority partner in St. Louis. Lee Enterprises received an extension of a waiver of covenant conditions related to the $306 million Pulitzer Notes. As reported by the Troubled Company Reporter on February 9, 2009, the waiver was extended until Feb. 13, 2009, while financing discussions continue. The Pulitzer Notes mature in April 2009. Pulitzer Notes Refinancing On Thursday, Lee said it repaid $120 million of the principal amount of its $306 million Pulitzer Notes debt due in April 2009 using a portion of its restricted cash, which totaled $129.8 million at Dec. 28, 2008. The remaining debt balance of $186 million has been refinanced by the existing lenders until April 28, 2012. Under the agreement, $9 million of restricted cash was retained to facilitate the liquidity of the operations of Pulitzer Inc., a wholly owned subsidiary of Lee, and its subsidiaries. Other key provisions of the refinancing include: -- Quarterly principal payments of $4 million beginning in June 2009 -- An additional principal payment from restricted cash of up to $4.5 million in October 2010 -- Grant of a security interest in substantially all tangible and intangible assets of Pulitzer and its subsidiaries -- Increase in the coupon from 8.05% to 9.05% until April 28, 2010, and increasing 0.50% per year thereafter -- Continuation of the guaranty by Pulitzer Inc. of the debt -- Reset of the leverage ratio (as defined) covenant to reflect the reduction in the debt balance and to take into account economic conditions and establishment of an interest expense coverage covenant. Bank Credit Agreement Key changes to the bank credit agreement include: -- Significant restructuring of the timing of mandatory principal payments under the term loan: -- Remaining payments in the fiscal year ending September 27, 2009, are reduced from $54.9 million to $22.1 million. -- Payments for the 2010 fiscal year are reduced from $166.3 million to $77.8 million. -- Payments for the 2011 fiscal year are reduced from $261.3 million to $65.0 million. -- Payments prior to the April 28, 2012, maturity for the 2012 fiscal year are reduced from $166.3 million to $70.0 million. -- Payments at maturity will increase to $502.5 million from $83.1 million. -- Changes in the leverage and interest expense coverage covenant ratios throughout the life of the agreement take into account economic conditions and the changes to amortization of debt. -- Credit spreads remain generally the same as the current pricing grid. However, the maximum cash interest rate (for a leverage level greater than 6.75:1) has been increased 50 basis points to LIBOR plus 450 basis points. At the current leverage level, Lee's debt will be priced at LIBOR plus 350 basis points. -- A contingent, reversible, non-cash payment-in-kind interest layer has been added only in the event the leverage level exceeds 7.5:1. -- Minimum LIBOR levels of 1.25% for 30-day borrowing and 2.00% for 90-day borrowing will be added. -- The final maturity date was changed from June 3, 2012, to April 28, 2012. Redemption of Minority Interest in St. Louis Related to the changes in financing, Lee also has redeemed the 5% interest in St. Louis Post-Dispatch LLC and STL Distribution Services LLC owned by The Herald Publishing Company LLC. The indemnification obligations of Herald with regard to the Pulitzer Notes have been simultaneously terminated, together with Lee's liability with regard to the right of Herald to redeem its interest in PD LLC and STLD LLC in April 2010. As a result, Lee will reverse, in the March 2009 quarter, a significant amount of the $73.5 million liability for the redemption obligation that is currently recorded on its balance sheet. The value of Herald's former interest will be settled, at a date determined by Herald between April 28, 2013, and April 28, 2015, based on a calculation of 10% of the fair market value of PD LLC and STLD LLC at the time of settlement. Improved Liquidity and Operating Flexibility In discussing the agreements, Carl Schmidt, Lee vice president, chief financial officer and treasurer, said, "Negotiations were complicated for both Lee and our lenders because of the combination of the extremely challenging credit environment and poor economic conditions. We believe the results favor all parties and are welcome news for Lee's stockholders. The agreements extend the lowered balance of Pulitzer Notes debt on reasonable terms, restructure our larger bank debt, and favorably resolve the minority interest situation in St. Louis. As a result of these actions, we have significantly improved our liquidity for the foreseeable future." Mary Junck, Lee chairman and chief executive officer, said, "These financing arrangements provide increased operating flexibility during some of the worst economic conditions in our lifetimes. Although significant economic challenges continue, we have stayed focused on protecting our long-term growth. Even in this unprecedented downturn, we remain, by far, the leading provider of local news, information and advertising in our markets. Our strength in print continues to be vast and stable, and our online reach continues to grow. While advertising revenue has decreased because of the economy, we have ramped up our efforts to provide even greater value and effectiveness for advertisers and further increase our lion's share of local advertising spending. At the same time, we have initiated a broad range of cost reductions, which are now expected to total 11 to 12% in 2009. Some have been short-term steps to help us weather this storm, but most are long- term, streamlining initiatives to provide ongoing benefit in the years ahead. All of this reinforces our confidence that Lee will emerge strong when the recession ends." does not undertake to publicly update or revise its forward- looking statements. PULITZER NOTES - INTEREST EXPENSE COVERAGE Period of 4 Consecutive Fiscal Quarters Ending in Ratio ------------------------- ----- March 2009 and June 2009 1 .90:1 September 2009 2 .20:1 December 2009 2 .25:1 March 2010 2 .50:1 June 2010 2 .60:1 September 2010 2 .70:1 December 2010 2 .80:1 March 2011 and thereafter 3 .00:1 PULITZER NOTES - LEVERAGE Fiscal Quarter Ending in Ratio ------------------------ ----- March 2009 and June 2009 4 .25:1 September 2009 through June 2010 4 .00:1 September 2010 and December 2010 3 .50:1 March 2011 3 .25:1 June 2011 and thereafter 3 .00:1 BANK CREDIT AGREEMENT - PRICING Eurodollar Total Leverage Ratio Margin -------------------- ---------- 6.75:1 or greater 4 .500% 6.25:1 to 6.75:1 4 .000 5.75:1 to 6.25:1 3 .500 5.00:1 to 5.75:1 3 .000 4.50:1 to 5.00:1 2 .875 4.00:1 to 4.50:1 2 .750 Less than 4.00:1 2 .625 BANK CREDIT AGREEMENT - INTEREST EXPENSE COVERAGE Fiscal Quarter Ending Ending Closest to Ratio --------------------- ----- March 31, 2009 2 .25:1 June 30, 2009 1 .85:1 September 30, 2009 1 .60:1 December 31, 2009 1 .40:1 March 31, 2010 1 .40:1 June 30, 2010 1 .45:1 September 30, 2010 1 .55:1 December 31, 2010 1 .60:1 March 31, 2011 1 .70:1 June 30, 2011 1 .80:1 September 30, 2011 1 .95:1 December 31, 2011 2 .10:1 March 31, 2012 2 .25:1 BANK CREDIT AGREEMENT - LEVERAGE Period Through and including the The last day of day before the last day the fiscal quarter of the fiscal quarter ending closest to ending closest to Ratio ------------------ ------------------------- ----- December 31, 2008 March 31, 2009 6:50:1 March 31, 2009 June 30, 2009 7:25:1 June 30, 2009 December 31, 2009 8.25:1 December 31, 2009 June 30, 2010 8:75:1 June 30, 2010 September 30, 2010 8:50:1 September 30, 2010 December 31, 2010 7:75:1 December 31, 2010 March 31, 2011 7.50:1 March 31, 2011 June 30, 2011 7.25:1 June 30, 2011 September 30, 2011 7.00:1 September 30, 2011 December 31, 2011 6.75:1 December 31, 2011 March 31, 2012 6.50:1 March 31, 2012 and thereafter 6.25:1 Transaction Costs Lee incurred approximately $20 million of financing costs from the actions, including professional and advisory fees. Roughly half of these costs will be capitalized and amortized over the remaining life of the debt agreements until April 2012 with the remainder charged to expense in the March 2009 quarter. About Lee Enterprises Based in Davenport, Iowa, Lee Enterprises -- http://www.lee.net/ -- is a premier provider of local news, information and advertising in primarily midsize markets, with 49 daily newspapers and a joint interest in four others, online sites and more than 300 weekly newspapers and specialty publications in 23 states. Lee's markets include St. Louis, Mo.; Lincoln, Neb.; Madison, Wis.; Davenport, Iowa; Billings, Mont.; Bloomington, Ill.; and Tucson, Ariz. Lee stock is traded on the New York Stock Exchange under the symbol LEE. LIBERTY MEDIA: Moody's Expects to Lower Corp. Rating on Spin-Off ---------------------------------------------------------------- Moody's Investors Service indicated that it expects to lower Liberty Media LLC's Corporate Family rating if the proposed spin- off of the majority of its Liberty Entertainment group assets is completed and QVC, Inc., is factored into the CFR, as is currently the case. The downgrade could be up to two notches, to B1 from Ba2, based on the anticipated significant decline in the company's ratio of after-tax asset value to debt to a mid 1x range and debt- to-EBITDA leverage remaining within a high single digit range (incorporating Moody's standard adjustments) upon completion of the spin-off. Separately, based on weaker financial performance at QVC and Liberty's recent investment in SIRIUS XM Radio Inc., Moody's downgraded Liberty's speculative-grade liquidity rating to SGL-2 from SGL-1. The SGL downgrade reflects Moody's expectation that pressure on QVC's revenue from weak consumer spending will diminish headroom under the home shopping network's financial covenants, which combined with Liberty's $500 million net investment in Sirius XM announced on February 17th, will moderately reduce overall financial flexibility. The Sirius XM investment will be completed in two phases with the second phase involving up to $250 million of senior secured loans, a preferred stock investment convertible into 40% of Sirius XM's common stock, and Sirius XM board representation proportionate to Liberty's equity ownership. The Sirius XM transaction will utilize cash and borrowing capacity for an investment in a highly levered entity. However, the potential for such investments is factored in to the CFR and the transaction does not affect Moody's existing Ba2 CFR or the ongoing review of Liberty's ratings for possible downgrade initiated on September 3, 2008 in conjunction with the Liberty Entertainment spin-off announcement. Downgrades: Issuer: Liberty Media LLC -- Speculative Grade Liquidity Rating, Downgraded to SGL-2 from SGL-1 The SGL-2 liquidity rating indicates that Liberty has good liquidity. The SGL-2 rating is based on Liberty's significant cash balance (Moody's estimates at approximately $2.3 billion pro forma 9/30/08 incorporating the Q4-08 bond repurchases and both phases of the Sirius XM investment) and meaningful projected free cash flow relative to an estimated $140 million of 2009 maturities, but is constrained by declining covenant cushion under QVC's credit facility covenants. Cash and asset transfers among the business groups underlying Liberty's three tracking stocks must be completed at fair market value, but the limited indenture restrictions on moving assets nevertheless provides Liberty with flexibility to manage its asset portfolio and liquidity position. Moody's believes that QVC's projected covenant headroom is modest and would be consistent with a lower SGL rating in the absence of this flexibility to manage the sizable cash and investment portfolio. Moody's last rating action on Liberty was on September 3, 2008, when the company's Ba2 CFR, Ba2 Probability of Default Rating, and Ba2 senior unsecured note ratings were placed on review for possible downgrade following Liberty's announcement that its board of directors had authorized management to develop a plan to spin- off the businesses and assets attributed to the Liberty Entertainment group. Liberty's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (iii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside Liberty's core industry and believes Liberty's ratings are comparable to those of other issuers with similar credit risk. Liberty, headquartered in Englewood, Colorado, is a holding company that owns and operates a broad range of electronic retailing, communications, and entertainment businesses and also owns equity and debt positions in wide variety of technology, media and telecommunications companies. LINENS 'N THINGS: CVS Sees $132MM in Lease Costs as Guaranty ------------------------------------------------------------ CVS Caremark Corporation said Thursday that in connection with certain business dispositions completed between 1991 and 1997, it continues to guarantee store lease obligations for a number of former subsidiaries, including Linens 'n Things. CVS Caremark said its loss from discontinued operations includes $132.0 million of lease-related costs -- $214.4 million, net of an $82.4 million income tax benefit -- which it believes it will likely be required to satisfy pursuant to its Linens 'n Things lease guarantees. Based in Woonsocket, Rhode Island, CVS Caremark Corp. -- http://www.cvscaremark.com-- is the largest provider of prescriptions in the United States. The Company fills or manages more than 1 billion prescriptions annually. The Company has more than 6,900 CVS/pharmacy and Longs Drugs stores; and operates Caremark Pharmacy Services division (pharmacy benefit management, mail order and specialty pharmacy); its retail-based health clinic subsidiary, MinuteClinic; and its online pharmacy, CVS.com. About Linens 'n Things, Inc. Headquartered in Clifton, New Jersey, Linens 'n Things, Inc. -- http://www.lnt.com/-- is the second largest specialty retailer of home textiles, housewares and home accessories in North America. As of Sept. 30, 2008, Linens 'n Things operated 411 stores in 47 states and seven provinces across the United States and Canada. The company is a destination retailer, offering one of the broadest and deepest selections of high quality brand-name as well as private label home furnishings merchandise in the industry. Linens 'n Things has some 585 superstores (33,000 sq. ft. and larger), emphasizing low-priced, brand-name merchandise, in more than 45 states and about seven Canadian provinces. Brands include Braun, Krups, Calphalon, Laura Ashley, Croscill, Waverly, and the company's own label. Linens 'n Things was acquired by private equity firm Apollo Management in 2006. On May 2, 2008, these Linens entities filed chapter 11 petition (Bankr. D. Del.): Linens Holding Co. (08-10832), Linens 'n Things, Inc. (08-10833), Linens 'n Things Center, Inc. (08-10834), Bloomington, MN., L.T., Inc. (08-10835), Vendor Finance, LLC (08- 10836), LNT, Inc. (08-10837), LNT Services, Inc. (08-10838), LNT Leasing II, LLC (08-10839), LNT West, Inc. (08-10840), LNT Virginia LLC (08-10841), LNT Merchandising company LLC (08-10842), LNT Leasing III, LLC (08-10843), and Citadel LNT, LLC (08-10844). Judge Christopher S. Sontchi presides over the case. Mark D. Collins, Esq., John H. Knight, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., are Linens 'n Things' bankruptcy counsel. The Debtors' special corporate counsel are Holland N. O'Neil, Esq., Ronald M. Gaswirth, Esq., Stephen A. McCaretin, Esq., Randall G. Ray, Esq., and Michael S. Haynes, Esq., at Morgan, Lewis & Bockius, LLP. The Debtors' restructuring management services provider is Conway Del Genio Gries & Co., LLC. The Debtors' CRO and Interim CEO is Michael F. Gries, co-founder of Conways Del Genio Gries & Co., LLC. The Debtors' claims agent is Kurtzman Carson Consultants, LLC. The Debtors' consultants are Asset Disposition Advisors, LLC, and Protivit, Inc. The Debtors' investment bankers are Financo, Inc., and Genuity Capital Markets. Pursuant to the court order entered on October 16, 2008, Linens Holding Co. is in the process of liquidating the entire Linens 'n Things retail chain. (Bankruptcy News About Linens 'n Things; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). LVNV FUNDING: Moody's Downgrades Ratings on Class B Notes to 'B2' ----------------------------------------------------------------- Moody's Investors Service has downgraded the Class A and Class B notes issued by LVNV Funding LLC. LVNV Funding LLC is a revolving issuance vehicle of consumer-related receivables. The rating action concludes the review that began on November 4, 2008. The primary reasons for the downgrade are the current conditions in the credit markets and the potential for significant collateral performance deterioration in light of the consumer-led contraction in the economy. The complete ratings actions are: Rating Action Issuer: LVNV Funding LLC -- Up to $784.9 Million Class A notes, downgraded to Baa2 from A2, previously on November 4, 2008 Placed Under Review for Possible Downgrade -- Up to $117.3 Million Class B notes, downgraded to B2 from Ba2, previously on November 4, 2008 Placed Under Review for Possible Downgrade Rating Methodology When rating the LVNV facility, Moody's considers the credit profile and historical performance of the collateral backing this transaction, which is mostly charged-off credit card receivables. Moody's assesses the collateral characteristics of the facility, considering such key credit metrics as the type of loans, their aging, the sellers of the receivables, the historical levels of collections, and the issuer's estimated future collections, among other factors, in order to estimate the pool's future performance over the life of the transaction. Moody's has received data on the performance of these assets extending back to 2004, thereby providing a meaningful performance history for the facility. The risk of performance deterioration is mitigated by overcollaterization, which provides credit enhancement for both classes of notes and an incentive to the issuer to maximize collections during a wind down of the facility. However, the consumer-led contraction in the economy creates a significant risk of future collateral performance deterioration under various stressed scenarios. In determining potential performance trends for this facility, Moody's analyzes different cash flow scenarios that consider scheduled interest and principal collections on the receivables, a distribution of cumulative gross default scenarios, the priority of payments due to investors, and the particular characteristics of the transaction such as its credit enhancement levels and the type of servicing arrangements under different circumstances that would benefit the certificate holders. LYONDELLBASELL: Fails to Pay Interest Payments on Two Bonds ----------------------------------------------------------- LyondellBasell Industries AF SCA failed to make scheduled bond interest payments on Sunday, Feb. 15, Tom Freke and Jane Baird at Reuters report citing a company spokesman. The spokesman told Reuters that the company has a 30-day grace period to pay the coupon before it falls into default. S&P Downgrades Ratings on Payment Default As reported in the TCR-Europe on Feb. 18, 2009, Standard & Poor's Ratings Services lowered its long-term corporate credit rating on the Netherlands-based petrochemicals producer to 'D' from 'SD'. It also lowered the subordinated debt ratings on the US$615 million and EUR500 million European bonds due 2015 issued by the company to 'D' from 'C'. "The rating action follows LyondellBasell's payment default on coupons of the two bonds on Feb. 15, 2009," said Standard & Poor's credit analyst Tobias Mock. "Although there is a grace period of 30 days, S&P do not consider it likely that the company will pay the coupons within this period." S&P said the issue rating on Basell Finance Co. B.V.'s US$300 million notes due 2027 remains at 'C' because no payment default has occurred on them. However, S&P considers it unlikely that Basell Finance will make the March 15 payment. Temporary Injunction Reuters relates that on Friday, Feb. 13, Lyondell Chemical Company, the U.S. Operations of LyondellBasell, obtained an extension from a New York court to a temporary injunction preventing U.S. creditors from making claims against its European parent. The injunction against creditors runs until Feb. 23, when the case will be reviewed, Reuters discloses. Reuters notes the company has asked for a longer-term injunction. "If they don't get the injunction extended, what's the point of making the coupon?" Reuters quoted a debt trader as saying. "There is no way I would pay the coupon before March 15 if it is not clear" whether the court will bar creditors from going after its European operations. Reuters states according to debt traders, mid-March, the end of the grace period for the payments, would be the key deadline in determining whether the European business defaults on its debt. This could also trigger payment under the European credit default swap contracts, Reuters adds citing the debt traders. In a court filing, Reuter says the company warned "A subset of the 2015 Defendants is working in concert to ... force an acceleration of the 2015 notes in part or in whole for the purpose of triggering certain credit default swaps tied to the 2015 notes." According to Reuters, LyondellBasell is keen to keep its European operations from defaulting as a bankruptcy filing in Europe is more likely to lead to a liquidation. The company, as cited by Reuters, said in its court filing "The potential loss of control to a foreign liquidator would be disastrous to the debtors' reorganization efforts." About LyondellBasell LyondellBasell Industries -- http://www.lyondellbasell.com/-- is a refiner of crude oil; a significant producer of gasoline blending components; a global manufacturer of chemicals and polymers, including polyolefins and advanced polyolefins; and the leading developer and licensor of technologies for the production of polymers. Following the acquisition of Lyondell in 2007, LyondellBasell became the world's largest independent producer of polypropylene and advanced polyolefins products, a leading supplier of polyethylene, and a global leader in the development and licensing of polypropylene and polyethylene processes and related catalyst sales. The group is estimated to generate 2007 revenues of US$44 billion and EBITDA of US$4.1 billion reflecting strong performance of Lyondell and Basell businesses at the top of the cycle. LyondellBasell is saddled with debt as part of its US$12.7 billion merger in 2007. As reported by the Troubled Company Reporter, the company has brought on board Kevin M. McShea of AlixPartners, LLP, as Chief Restructuring Officer of LyondellBasell and its subsidiaries. The company also has hired advisers, including Evercore and New York law firm Cadwalader, Wickersham & Taft LLP, to advise it on its restructuring efforts. Lyondell disclosed in its latest quarterly results that it has US$27.12 billion in assets and US$228 million stockholders' deficit as of Sept. 30, 2008. It incurred a US$232 million net loss in the three months ended Sept. 30, 2008, compared to a US$206 million net profit during the same period in 2007. Headquartered in Houston, Texas, Equistar Chemicals LP, is a wholly owned subsidiary of Lyondell Chemical Company, which produces ethylene, propylene and polyethylene in North America and ethylene oxide, ethylene glycol, high value-added specialty polymers and polymeric powder. For three months ended Sept. 30, 2008, Equistar Chemicals posted net loss of US$271 million compared to net income of US$22 million for the same period in the previous year. At Sept. 30, 2008, Equistar Chemicals' balance sheet showed total assets of US$9.0 billion and total liabilities of US$19.0 billion, resulting in a partners' deficit of US$9.9 billion. * * * As reported by the Troubled Company Reporter on Jan. 6, 2009, Moody's Investors Service has downgraded the corporate family rating of LyondellBasell Industries AF SCA to Caa2 from B3 and also downgraded ratings on the debt instruments raised by the group. As reported in the TCR-Europe, on Jan. 7, 2009, Standard & Poor's lowered its long-term corporate credit rating on the three main U.S. subsidiaries of European holding company LyondellBasell Industries AF S.C.A. (LyondellBasell) - namely Lyondell Chemical Co., Equistar Chemicals L.P., and Millennium Chemicals Inc. -- to 'D' from 'CC'. This action followed the voluntary filings for Chapter 11 bankruptcy protection by these entities, along with other U.S. subsidiaries of LyondellBasell and a related German holding company on Jan. 6, 2009. The long-term rating on LyondellBasell, meanwhile, remains at 'SD', indicating a selective default. MARCUS LEE: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Marcus Lee Associates, L.P. 1243 Easton Road, Suite 200 Warrington, PA 18976 Bankruptcy Case No.: 09-11037 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Lamplighter Village Associates, L.P. 09-11035 Chapter 11 Petition Date: February 16, 2009 Court: United States Bankruptcy Court Eastern District of Pennsylvania (Philadelphia) Debtor's Counsel: Abert A. Ciardi, III, Esq. Ciardi Ciardi & Astin, P.C. One Commerce Square 2005 Market Street, Suite 1930 Philadelphia, PA 19103 Tel: (215) 557-3550 Fax: (215) 557-3551 Email: aciardi@ciardilaw.com -- and -- Nicole Marie Nigrelli, Esq. Ciardi Ciardi & Astin, P.C. One Commerce Squire, Suite 1930 Philadelphia, PA 19103 Tel: (215) 557-3550 Email: nnigrelli@ciardilaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/paeb09-11037.pdf The petition was signed by Marvin Katz, Manager of the company. MBIA INC: S&P Cuts Counterparty Credit Rating to 'BB+' ------------------------------------------------------ On Feb. 18, 2009, Standard & Poor's Ratings Services lowered its counterparty credit, financial strength, and financial enhancement ratings on MBIA Insurance Corp. to 'BBB+' from 'AA'. The outlook on MBIA is negative. At the same time, Standard & Poor's lowered its counterparty credit and financial strength ratings on MBIA Insurance Corp. of Illinois to 'AA-' from 'AA' and placed them on CreditWatch with developing implications. Standard & Poor's also lowered its counterparty credit rating on MBIA Inc., the group holding company, to 'BB+' from 'A-'. The outlook on the holding company is negative. In addition, Standard & Poor's lowered its counterparty credit and financial strength ratings on Municipal Bond Insurance Assn. to 'AA-' from 'AA' and placed the ratings on CreditWatch developing. This rating action mirrors the action taken on MBIA Illinois. The association is supported by surety bonds totaling $340 million from MBIA Ill., which exceeds the outstanding insured par. Standard & Poor's rating actions follow MBIA Inc.'s announced restructuring, in which MBIA Illinois has become a sister company of MBIA. Management has stated that MBIA Illinois is now the public finance insurer within the group and has assumed the U.S. public finance book of business from MBIA on a reinsurance-cut- through basis. Business recently ceded to MBIA from Financial Guaranty Insurance Co. has been assigned to MBIA Illinois. MBIA retains the global structured finance and international infrastructure business. This restructuring separates the more volatile structured finance book of business from the lower-risk public finance book. Operational functions at MBIA Illinois will benefit from the stability and continuity of a staff consisting largely of individuals from MBIA who were responsible for the business, underwriting, and risk management of its solidly investment-grade public finance book of business. The downgrade of MBIA Illinois reflects S&P's view of both its uncertain business prospects and its capital, which is marginally below S&P's 'AA' standard. Management's stated goals are to raise additional capital to bolster MBIA Illinois's current resources, adopt bylaws and governance practices, and effectively ring-fence MBIA Illinois from MBIA and its more volatile book of business. To facilitate this, the company has established an intermediate holding company between MBIA Illinois and the ultimate holding company, MBIA Inc. From a future business production perspective, S&P believes that MBIA Illinois's competitive position may suffer from legacy MBIA performance. In addition, there is uncertainty regarding investors' acceptance of the restructuring and ring-fencing plan. S&P downgraded MBIA because of S&P's view that its retained insured portfolio lacks sufficient sector diversity and with time could become more concentrated. In addition, the company's 2005- 2007 vintage direct RMBS, CDO of ABS, and other structured exposures are subject to continued adverse loss development that could erode capital adequacy. Supporting the debt-service needs of the holding company might also place pressure on capital adequacy. S&P believes that there is a strong incentive for MBIA to maintain an orderly runoff of its book of business so as not to damage the franchise value of the newly launched public finance only subsidiary. To this end, from a risk-management perspective, management has indicated that it will retain sufficient experienced staff to support surveillance and remediation efforts. MBIA's retained exposure will total about $233.5 billion of global structured finance and international infrastructure insured par. Through the use of Standard & Poor's capital adequacy test, MBIA's margin of safety is 0.9x-1.0x, which S&P view as strong. Analytical adjustments made to the model included: -- No new business written. -- Stress period of model starts immediately and lasts for four years. -- No refundings. -- Expenses are held constant for all four years. In addition to Standard & Poor's normal stress assumptions for municipal and non-RMBS asset classes, S&P tested the capital adequacy of MBIA against a scenario that applies stressful default assumptions to various 2005-2007 RMBS-related transactions that the company has insured. S&P based the default rates for these transactions on stressful cumulative net loss assumptions published on Feb. 6, 2009 that vary by asset type and vintage. S&P has included the Alt-A, subprime, closed-end second, HELOC, and NIM asset types with 2005, 2006, and 2007 vintages in this analysis. Outlook The negative outlook on MBIA reflects Standard & Poor's view that adverse loss development on the structured finance book could continue. A revision of the outlook to stable will depend on, among other factors, greater certainty of ultimate potential losses as well as the orderly runoff of the book of business. S&P could raise the rating on MBIA Ill. if it successfully raises capital and credibly ring fences its operations from MBIA. However, any rating action based on these factors would most likely remain within the 'AA' category. If MBIA Illinois is not able to raise capital or if legal challenges impair management's restructuring efforts, S&P could lower the ratings. Ratings List Downgraded MBIA Insurance Corp. MBIA Assurance S.A. Capital Markets Assurance Corp. Counterparty Credit Rating To From -- ---- Local Currency BBB+/Negative/-- AA/Negative/-- MBIA Insurance Corp. MBIA U.K. Insurance Ltd. MBIA Assurance S.A. Capital Markets Assurance Corp. Financial Strength Rating To From -- ---- Local Currency BBB+/Negative/-- AA/Negative/-- MBIA Insurance Corp. MBIA U.K. Insurance Ltd. MBIA Assurance S.A. Financial Enhancement Rating To From -- ---- Local Currency BBB+/--/-- AA/--/-- MBIA Inc. Counterparty Credit Rating To From -- ---- Local Currency BB+/Negative/-- A-/Negative/-- MBIA Insurance Corp. To From -- ---- Senior Unsecured (1 issue) BBB- A Preferred Stock (8 issues) BB+ A- MBIA Global Funding LLC To From -- ---- Senior Secured (6 issues) BBB+ AA Senior Unsecured (22 issues) BBB+ AA MBIA Inc. To From -- ---- Senior Unsecured (7 issues) BB+ A- Downgraded; CreditWatch/Outlook Action MBIA Insurance Corp. of Illinois Municipal Bond Insurance Assn. Counterparty Credit Rating To From -- ---- Local Currency AA-/Watch Dev/-- AA/Negative/-- Financial Strength Rating To From -- ---- Local Currency AA-/Watch Dev/-- AA/Negative/-- MBIA INSURANCE: Moody's Cuts Insurance Strength Rating to 'B3' -------------------------------------------------------------- Moody's Investors Service has downgraded to B3 from Baa1 the insurance financial strength ratings of MBIA Insurance Corporation and its supported subsidiaries. The outlook for the ratings is developing. Moody's also placed the Baa1 rating of MBIA Insurance Corporation of Illinois on review for possible upgrade. These rating actions follow MBIA's announcement that it has segregated its municipal and non-municipal financial guaranty exposures into two separately capitalized operating companies. The rating actions have implications for the various transactions wrapped by MBIA Corp and MBIA Illinois as discussed later in this press release. Transaction Overview Earlier today, MBIA announced the restructuring of its financial guaranty insurance operations following the approval of the New York and Illinois insurance regulators. According to Moody's, MBIA's restructuring involves the segregation of its financial guaranty insurance operations into two separately capitalized sister companies, with one entity (MBIA Illinois) assuming the risk associated with its US municipal exposures, and with the other (MBIA Corp) insuring the remainder of the portfolio, including all international and structured finance exposures. Under the terms of the transaction, MBIA Illinois (which is expected to be renamed National Public Finance Guarantee Corporation) has provided cut-through reinsurance on all of MBIA Corp's existing portfolio of US municipal credits through a 100% quota-share agreement, including the municipal exposure that MBIA Corp assumed from FGIC. To support its ability to pay claims, MBIA Illinois has received a $2.1 billion capital infusion sourced through a dividend from MBIA Corp, in addition to $2.9 billion in net unearned premiums (net of ceding commissions) and loss and loss adjustment expense reserves associated with the municipal portfolio. Post transaction, MBIA Illinois has approximately $537 billion in municipal net par outstanding and $5.7 billion in hard capital, while MBIA Corp has $240 billion in net par exposure and approximately $9.8 billion in hard capital (based on 3Q08 financial results). Rating Rationale For Mbia Insurance Corporation The downgrade of MBIA Corp to B3, from Baa1, reflects two primary factors. First is the guarantor's substantial reduction in claims-paying resources relative to the remaining higher-risk exposures in its insured portfolio, given the removal of capital, and the transfer of unearned premium reserves associated with the ceding of its municipal portfolio to MBIA Illinois. Second is the continued deterioration of the firm's insured portfolio of largely structured credits, with stress reaching sectors beyond residential mortgage-related securities. Moody's recently published several Special Reports discussing the deteriorating credit profile of Alt-A mortgage-backed securities, corporate CDOs, and CMBS -- all of which are negatively affecting MBIA Corp's risk-adjusted capital adequacy. The rating agency noted that the claims-paying resources of MBIA Corp post restructuring are roughly equivalent to Moody's expected loss estimates for the entity. Moody's stated that MBIA Corp's developing outlook reflects the potential for further deterioration in the insured portfolio. It also incorporates positive developments that could occur over the near to medium term, including greater visibility about mortgage performance, the possibility of commutations or terminations of certain ABS CDO exposures, and/or successful remediation efforts on poorly performing RMBS transactions. The company's developing outlook is also based on the potential for various initiatives being pursued at the US federal level to mitigate the rising trend of mortgage loan defaults. Moody's will continue to evaluate MBIA Corp's ratings in the context of the future performance of its insured portfolio relative to expectations and resulting capital adequacy levels, as well as changes, if any, to the company's strategic and capital management plans. Rating Rationale For Mbia Insurance Corporation Of Illinois The review for upgrade of MBIA Illinois' Baa1 insurance financial strength rating reflects upward rating pressure following the group's restructuring, stemming from the company's substantial claims-paying resources relative to its insured portfolio of high- quality municipal exposures. The review also includes the possibility of improved business prospects for MBIA Illinois in light of the company's municipal-only focus and strong risk- adjusted capital adequacy. Moody's said that the potential for upward rating movement is tempered, however, by the significant challenges facing both MBIA Illinois and the financial guaranty industry in general. According to the rating agency, there continues to be a market for municipal bond insurance, but prospective opportunities in the municipal sector may be narrower than in the past given changing perceptions about municipal risk among buyers, lower confidence in the financial guaranty industry broadly and a trend toward alternative forms of execution, including the issuance of uninsured paper. For these and other reasons, Moody's noted that any upward rating revision would likely be limited to the single-A range. During its review, Moody's will evaluate the impact of MBIA's restructuring on the future business prospects of MBIA Illinois. As part of the review process, Moody's will consider the company's ability to regain market confidence, as well as the potential for and impact of any legal challenges coming from the counterparties of MBIA Corp. Rating Rationale For Mbia Inc The affirmation of MBIA Inc.'s Ba1 senior debt rating and maintenance of its developing outlook reflect the group's evolving risk profile. The corporate restructuring may strengthen MBIA Inc.'s risk profile by sheltering its investment in MBIA Illinois from the risks of MBIA Corp. The creation of a strongly capitalized and dedicated municipal insurer also increases the likelihood of regaining market traction. At the same time, continued deterioration in the group's structured finance portfolio, as well as uncertainty about the group's ability to firewall losses within MBIA Corp, could hurt MBIA Inc.'s credit profile. Treatment Of Wrapped Transactions Moody's ratings on securities that are guaranteed or "wrapped" by a financial guarantor are generally maintained at a level equal to the higher of these: a) the rating of the guarantor (if rated at the investment grade level); or b) the published underlying rating (and for structured securities, the published or unpublished underlying rating). Moody's approach to rating wrapped transactions is outlined in Moody's special comment entitled "Assignment of Wrapped Ratings When Financial Guarantor Falls Below Investment Grade" (May, 2008); and Moody's November 10, 2008 announcement entitled "Moody's Modifies Approach to Rating Structured Finance Securities Wrapped by Financial Guarantors". In light of the downgrade of MBIA Corp to below the investment grade level, Moody's will position the ratings of all structured transactions wrapped by MBIA Corp at the higher of the underlying rating of the structured security -- regardless of whether the underlying rating is published or not -- and MBIA Corp's B3 rating. With respect to municipal obligations wrapped by MBIA Corp that are reinsured by MBIA Illinois, Moody's is in the process of reviewing the Reinsurance Agreement between MBIA Illinois and MBIA Corp and other documentation to determine whether it is appropriate to assign the insurance financial strength rating of MBIA Illinois to these obligations. Moody's will issue further guidance on Moody's approach to rating these securities in the near future. For all other transactions wrapped by MBIA Corp, Moody's will withdraw the ratings for which there are no published underlying ratings in accordance with current rating agency policy. For these transactions, if the rating of MBIA Corp should subsequently move back into the investment grade range, or if the agency should subsequently publish the underlying rating, Moody's would reinstate the rating to the wrapped instruments. Because of the large volume of rating changes resulting from the actions, it may take some time for Moody's to update impacted ratings in Moody's ratings database. List Of Rating Actions These ratings have been downgraded, with a developing outlook: * MBIA Insurance Corporation -- insurance financial strength to B3, from Baa1; surplus notes to Caa2, from Baa3; and preferred stock to Caa3, from Ba2; * Capital Markets Assurance Corporation -- insurance financial strength to B3, from Baa1; * MBIA UK Insurance Limited -- insurance financial strength to B3, from Baa1; * MBIA Mexico S.A. de C.V. -- insurance financial strength to B3, from Baa1; and national scale insurance financial strength to B1.mx, from Aa1.mx; MBIA Assurance S.A. -- insurance financial strength to B3, from Baa1. The rating of MBIA Assurance S.A. will be withdrawn to reflect its absorption by MBIA UK Insurance Limited. All assets and liabilities of MBIA Assurance S.A., including all of its outstanding financial guaranty insurance policies, have been transferred to MBIA UK Insurance Limited. This rating has been placed under review for possible upgrade: * MBIA Insurance Corporation of Illinois -- Baa1 insurance financial strength. The last rating action was on December 23, 2008 when Moody's assigned Ba2 ratings to the preferred stock of MBIA Insurance Corporation. The principal methodology used in rating MBIA was Moody's Rating Methodology for the Financial Guaranty Insurance Industry, which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating MBIA can also be found in the Credit Policy & Methodologies directory. Overview Of MBIA MBIA Inc. provides financial guarantees to issuers in the municipal and structured finance markets in the United States, as well as internationally. MBIA also offers various complementary services, such as investment management and municipal investment contracts. MBIA INSURANCE: S&P Downgrades Counterparty Rating to 'BB+' ----------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its counterparty credit, financial strength, and financial enhancement ratings on MBIA Insurance Corp. to 'BBB+' from 'AA'. The outlook on MBIA is negative. Standard & Poor's also said that it lowered its counterparty credit and financial strength ratings on MBIA Insurance Corp. of Illinois to 'AA-' from 'AA' and placed them on CreditWatch with developing implications. At the same time, Standard & Poor's lowered its counterparty credit rating on MBIA Inc., the group holding company, to 'BB+' from 'A-'. The outlook on the holding company is negative. In addition, Standard & Poor's lowered its counterparty credit and financial strength ratings on Municipal Bond Insurance Assn. to 'AA-' from 'AA' and placed the ratings on CreditWatch developing. This rating action mirrors the action taken on MBIA Illinois. The association is supported by surety bonds totaling $340 million from MBIA Illinois, which exceeds the outstanding insured par. Standard & Poor's rating actions follow MBIA Inc.'s announced restructuring, in which MBIA Illinois has become a sister company of MBIA. Management has stated that MBIA Illinois is now the public finance insurer within the group and has assumed the U.S. public finance book of business from MBIA on a reinsurance-cut- through basis. Business recently ceded to MBIA from Financial Guaranty Insurance Co. has been assigned to MBIA Illinois. MBIA retains the global structured finance and international infrastructure business. This restructuring separates the more volatile structured finance book of business from the lower-risk public finance book. Operational functions at MBIA Illinois will benefit from the stability and continuity of a staff consisting largely of individuals from MBIA who were responsible for the business, underwriting, and risk management of its solidly investment-grade public finance book of business. "The downgrade of MBIA Illinois reflects S&P's view of both its uncertain business prospects and its capital, which is marginally below our 'AA' standard," explained Standard & Poor's credit analyst David Veno. Management's stated goals are to raise additional capital to bolster MBIA Illinois's current resources, adopt by-laws and governance practices, and effectively ring-fence MBIA Illinois from MBIA and its more volatile book of business. To facilitate this, the company has established an intermediate holding company between MBIA Illinois and the ultimate holding company, MBIA Inc. From a future business production perspective, S&P believes that MBIA Illinois's competitive position may suffer from legacy MBIA performance. In addition, there is uncertainty regarding investors' acceptance of the restructuring and ring-fencing plan. S&P downgraded MBIA because of its view that its retained insured portfolio lacks sufficient sector diversity and with time could become more concentrated. In addition, the company's 2005-2007 vintage direct RMBS, CDO of ABS, and other structured exposures are subject to continued adverse loss development that could erode capital adequacy. Supporting the debt-service needs of the holding company might also place pressure on capital adequacy. S&P believes that there is a strong incentive for MBIA to maintain an orderly runoff of its book of business so as not to damage the franchise value of the newly launched public finance only subsidiary. To this end, from a risk-management perspective, management has indicated that it will retain sufficient experienced staff to support surveillance and remediation efforts. The negative outlook on MBIA reflects Standard & Poor's view that adverse loss development on the structured finance book could continue. A revision of the outlook to stable will depend on, among other factors, greater certainty of ultimate potential losses as well as the orderly runoff of the book of business. "We could raise the rating on MBIA Ill. if it successfully raises capital and credibly ring fences its operations from MBIA," Mr. Veno added. "However, any rating action based on these factors would most likely remain within the 'AA' category. If MBIA Illinois is not able to raise capital or if legal challenges impair management's restructuring efforts, S&P could lower the ratings." MEDIA & ENTERTAINMENT: Receives Delisting Notice from NYSE ---------------------------------------------------------- Media & Entertainment Holdings, Inc. (NYSE Alternext US: TVH), received on February 14, 2009, notice from the NYSE Alternext US LLC, which was formerly known as the American Stock Exchange, indicating that the Company is below certain of the continued listing standards of the Exchange since the Company has not yet held its 2008 annual meeting of stockholders as set forth in Section 704 of the Exchange's Company Guide. The Company was afforded the opportunity to submit a plan of compliance to the Exchange by March 10, 2009, that demonstrates the Company's ability to regain compliance with Section 704 of the Company Guide by March 10, 2009. If the Company does not submit a plan or if the plan is not accepted by the Exchange, the Company will be subject to delisting procedures as set forth in Section 1010 and part 12 of the Company Guide. MEDIA GENERAL: Will Implement Employee Furlough Program ------------------------------------------------------- Media General, Inc., will implement an employee furlough program in the face of an economy that continues to contract, causing the advertising market to further weaken. Employees will take a mandatory 10 days off according to a schedule that requires four days by the end of March and three days each in the Company's next two fiscal quarters, ending in June and September, respectively. Unionized and other employees under contract are being asked to participate in lieu of layoffs. "The current economic outlook requires us to be even more cautious than we already have been regarding our revenue expectations," said Marshall N. Morton, Media General president and chief executive officer. "Despite aggressive sales initiatives and significant cost reductions already implemented, we need to build in additional expense savings to offset the revenue shortfalls we anticipate. "With this furlough, along with other cost reduction measures already implemented, we are being prudent and proactive as we address the impact of unprecedented economic turmoil in our country and our industry," said Mr. Morton. In January, Media General announced that it is suspending the company's matching contribution on its 401(k) plan effective April 1, 2009, through the end of the year, and the Board of Directors suspended the dividend on its common stock. These actions, together with the furlough, will provide an additional $28 million in 2009 for debt reduction. About Media General Richmond, Virginia-based Media General Inc. (NYSE: MEG) -- http://www.mediageneral.com/-- is an independent communications company with interests in newspapers, television stations and interactive media in the United States. The Company operates in three business segments: Publishing, Broadcast and Interactive Media. The Company owns 25 daily newspapers and more than 150 other publications, as well as 23 television stations. The Company also operates more than 75 online enterprises. In March 2008, the Company completed the purchase of DealTaker.com, an online social shopping portal. As reported by the Troubled Company Reporter on April 10, 2008, Media General Inc., along with its two other equal partners in SP Newsprint Company, Cox Enterprises, Inc., and The McClatchy Company, completed the sale of SP Newsprint to White Birch Paper Company. Media General received proceeds of approximately $58 million from the transaction and would use the funds to reduce debt. After clearing transaction-related items, most notably paying taxes in the latter half of 2008, the net reduction in debt should be approximately $38 million. Media General would also sell five television stations and had previously announced signed agreements for three of the stations. The company is moving forward on the sale of the remaining two stations. MEG ENERGY: Moody's Downgrades Corporate Family Rating to 'B1' -------------------------------------------------------------- Moody's Investors Service downgraded MEG Energy Corp.'s Corporate Family Rating to B1 from Ba3 and downgraded its senior first secured debt ratings to B1 from Ba3. Facility ratings downgraded include MEG's now B1 rated US$700 million delayed draw senior first secured term loan maturing March 2013 and its now B1 rated undrawn US$50 million senior first secured revolving credit facility maturing April 2009. The ratings had been under review for downgrade since December 2, 2008. The rating outlook is negative, though it will be considered for a move to stable when MEG completes the arrangement of a new bank revolver of up to US$150 million and the raising of approximately US$500 million of equity. The new ratings assume that MEG will complete these financings soon. Accordingly, the ratings would need to be revisited if these financings do not proceed. While Moody's believes MEG will have soon arranged sound liquidity for ongoing project development, and the project is heavily equity funded, the rating downgrades also reflect substantially reduced expected bitumen price realizations and the uncertain margin impact due to the extended period of time before MEG's full commercial scale SAGD operations will be up and running and steam- oil ratios and other cost and economic relationships can be observed. The ratings would have upward mobility if these uncertainties are resolved favorably. The ratings are supported by MEG's 100% ownership of a world class large base of long-lived bitumen reserves and indicated favorable unit costs at its Phase I pilot project, currently producing in the range of 3,000 barrels per day of bitumen. However, first material operating cash flow will not occur until late 2009. MEG believes cash flow will rise thereafter on growing production through first half 2010 and hit full Phase II production of 22,000 Bpd (incremental to Phase I production) by fourth quarter 2010. Due to market conditions, MEG postponed a third quarter 2008 note offering and is in the process of negotiating to expand its revolver to between US$50 million and US$150 million, extend its maturity to mid-2013, and arrange a large private equity offering in which it believes existing investors will participate. As of January 31, 2009, MEG held C$202 million in cash, which would rise substantially if MEG completes its US$500 million equity offering. At year-end 2008, MEG had approximately US$687 million (C$824 million) in term loans maturing in March 2013 and book net worth of approximately C$2.2 billion. Until new equity funding is raised, MEG has been limiting capital spending to remaining Phase II outlays and a small level of preliminary Phase IIB and other outlays. With sharply scaled back outlays, Moody's estimates that MEG has adequate funding for Phase II until roughly mid-2009. First quarter 2009 outlays are set for just over C$165 million including C$16 million capitalized interest, second quarter 2009 just over C$76 million, and second half 2009 at less than C$20 million in capital outlays. Phase II production is expected to commence by third, if not second, quarter 2009. MEG's ratings have been assigned by evaluating factors that Moody's believes are relevant to the company's risk profile, such as the company's (i) business risk and competitive position compared with others within the industry; (ii) capital structure and financial risk; (iii) projected performance 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 MEG's core industry; MEG's ratings are believed to be comparable to those of other issuers with similar credit risk. The last rating action was on December 2, 2008 when MEG's existing ratings were placed under review for possible downgrade. MEG Energy Corp. is privately held and headquartered in Calgary, Alberta, Canada. It is developing a steam-assisted-gravity- drainage oil sands project that holds approximately 350 million barrels of net proven bitumen reserves (433 million gross) and 1.532 billion of gross proven plus probable reserves. MIDWAY GAMES: Signs Deal With Ubisoft to Publish Wheelman --------------------------------------------------------- Midway Games Inc. entered into a strategic relationship with Ubisoft to publish Wheelman(TM), the highly-anticipated open-world driving game starring action-film megastar Vin Diesel as an expert driver for hire. Ubisoft will handle sales, marketing, and distribution of the title in North America, South America, Australia, New Zealand, France, Germany, Austria, Ireland and the United Kingdom. Midway will continue to direct the development of the title and retains all future rights to the franchise and will sell the title in all other European territories. Wheelman is scheduled for a March 24, 2009, ship date in North America and a March 27, 2009, street date in Europe for the Xbox 360(R) video game and entertainment system from Microsoft, the PLAYSTATION(R)3 computer entertainment system and Windows PC. A pre-launch demo is also planned for the Xbox 360 and PS3. "We are pleased to be partnering with Midway to bring Wheelman to stores worldwide," said Tony Key, senior vice president of sales and marketing, Ubisoft. "The cutting edge open-world driving technology in Wheelman should make for an experience that gamers will enjoy." "Ubisoft's decision to join Midway in a co-publishing agreement is a gratifying validation of Wheelman's potential," commented Matt Booty, president and CEO, Midway. "Ubisoft has a proven expertise at bringing new IP to market, which will allow us to reach a broader consumer segment with Wheelman, while helping Midway to balance the risk profile of our product portfolio." "The development team in Newcastle, UK, has fine-tuned and polished Wheelman, especially in these last few months, to deliver a true Hollywood blockbuster experience," said Craig Duncan, studio head, Midway Studios - Newcastle Ltd. "The demo due out for Xbox 360 and PS3 will show that Wheelman's new game design mechanics like cinematic super moves and vehicular combat will revolutionize driving games." About Tigon Studios Based in Los Angeles, California, TIGON STUDIOS was founded in 2002 by Vin Diesel with the goal of breaking new ground in interactive franchise entertainment by bringing strong story, high production value and interesting and intelligent characters which can exist in multiple mediums, simultaneously to the gaming and film & television industries. TIGON focuses on creating properties that can be launched in both mediums. About Ubisoft Ubisoft -- http://www.ubisoftgroup.com/-- is a producer, publisher and distributor of interactive entertainment products worldwide and has grown considerably through a strong and diversified line-up of products and partnerships. Ubisoft has teams in 28 countries and distributes games in more than 55 countries around the globe. For the 2007-08 fiscal year, Ubisoft generated sales of EUR928 million euros. About Midway Games Headquartered in Chicago, Illinois, Midway Games Inc. -- http://www.midway.com-- develops video games and sells them primarily in North America, Europe, Asia and Australia. The company and nine of its affiliates filed for Chapter 11 protection on Feb. 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard as their investment banker, Dewey & LeBoeuf LLP as special counsel, and Epiq Bankruptcy Solutions LLC as claims agent. The Debtors' financial condition as of Sept. 30, 2008, showed $167,523,000 in total assets and $281,033,000 in total debts. MONEYGRAM INTERNATIONAL: Board OKs 2005 Incentive Plan Amendment ---------------------------------------------------------------- The board of directors of MoneyGram International, Inc., upon recommendation of the Human Resources and Nominating Committee, approved these: -- MoneyGram International, Inc. 2005 Omnibus Incentive Plan, as amended Feb. 9, 2009, subject to approval of the stockholders of the Corporation at its next Annual Meeting of Stockholders. The Omnibus Plan was amended to: (i) increase the aggregate number of shares that may be issued under all Awards under the Omnibus Plan from 7.5 million to 47 million shares; (ii) increase the aggregate number of shares that may be granted to an Eligible Person in any calendar year under the Omnibus Plan from 500,000 to 10 million shares; (iii) revise the Omnibus Plan's definition of Fair Market Value from the average of the high and low sales prices of the shares on the NYSE on a given date to the closing sale price of the shares on the NYSE on a given date; (iv) add a definition of Change in Control; and (v) add a definition of Qualifying Termination. In addition, certain administrative changes were made to the plan. A full-text copy of the 2005 Omnibus Incentive Plan is available for free at: http://ResearchArchives.com/t/s?399f -- Form of Amended and Restated Non-Employee Director Indemnification Agreement. The Non-Employee Director Indemnification Agreement w as amended to provide flexibility with respect to indemnification of directors as allowed by Delaware law and to provide subrogation rights to any party with a right to nominate a director. In addition, certain administrative changes were made to such agreement. A full-text copy of the Amended And Restated Non-Employee Director Indemnification Agreement is available for free at: http://ResearchArchives.com/t/s?39a0 -- Form of Employee Director Indemnification Agreement. The Employee Director Indemnification Agreement provides indemnification of employee directors as allowed by Delaware law. A full-text copy of the Employee Director Indemnification Agreement is available for free at: http://ResearchArchives.com/t/s?39a1 About MoneyGram International Headquartered in Minneapolis, Minnesota, MoneyGram International Inc. (NYSE: MGI) -- http://www.moneygram.com/-- is a global payment services company. The company's major products and services include global money transfers, money orders and payment processing solutions for financial institutions and retail customers. MoneyGram is a New York Stock Exchange listed company with approximately 157,000 global money transfer agent locations in 180 countries and territories. As reported in the Troubled Company Reporter on Nov. 11, 2008, MoneyGram International, Inc.'s balance sheet at Sept. 30, 2008, showed total assets of $7,261,049, total liabilities of $8,104,313, resulting in a stockholders' deficit of $843,264. MONEYGRAM INTERNATIONAL: Board Sets March 16 as Record Date ----------------------------------------------------------- MoneyGram International's board of directors has set the close of business on March 16, 2009, as the record date for stockholders to receive notice of and to vote at the Company's 2009 Annual Meeting of Stockholders. The 2009 Annual Meeting of Stockholders of MoneyGram International, Inc. is scheduled for May 12, 2009, in Minneapolis, Minnesota. Any stockholder proposals for inclusion in MoneyGram's proxy materials for the Annual Meeting, in order to be considered timely, must be received by the Corporate Secretary at MoneyGram International at 1500 Utica Ave. S., M.S. 8010, Minneapolis, Mnnesota, no later than March 3, 2009. MoneyGram plans to file with the Securities and Exchange Commission and make its proxy statement available on its website on or about March 30, 2009, and advises its stockholders to read the proxy statement, as it will contain important information about proposals being voted on at the meeting. Those proposals will include the: 1) an increase in the total number of shares of stock which the Corporation has the authority to issue from 257,000,000 to 1,307,000,000; 2) a reverse stock split to be effected at the discretion of the board of directors; 3) provision of proportional voting of directors; 4) declassification of the board of directors; 5) amendments to the MoneyGram International, Inc. 2005 Omnibus Incentive Plan to, among other things, increase the aggregate number of shares that may be issued under all awards from 7.5 million to 47 million shares; and 6) other routine matters. About MoneyGram International Headquartered in Minneapolis, Minnesota, MoneyGram International Inc. (NYSE: MGI) -- http://www.moneygram.com/-- is a global payment services company. The company's major products and services include global money transfers, money orders and payment processing solutions for financial institutions and retail customers. MoneyGram is a New York Stock Exchange listed company with approximately 157,000 global money transfer agent locations in 180 countries and territories. As reported in the Troubled Company Reporter on Nov. 11, 2008, MoneyGram International, Inc.'s balance sheet at Sept. 30, 2008, showed total assets of $7,261,049, total liabilities of $8,104,313, resulting in a stockholders' deficit of $843,264. MUZAK HOLDINGS: Section 341(a) Meeting Slated for March 12 ---------------------------------------------------------- Roberta DeAngelis, acting U.S. Trustee for Region 3, will convene a meeting of creditors of Muzak Holdings LLC and certain of its subsidiaries on March 12, 2009, at 12:00 p.m. at J. Caleb Boggs Federal Building, 5th Floor, Room 2112, Wilmington, Delaware. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Fort Mill, South Carolina, Muzak Holdings LLC -- http://www.muzak.com-- creates a variety of music programming from a catalog of over 2.6 million songs and produces targeted custom in-store and on-hold messaging. Through its national service and support network, Muzak designs and installs professional sound systems, digital signage, drive-thru systems, commercial television and more. The Company and 14 affiliates filed for Chapter 11 protection on Feb. 10, 2009 (Bankr, D. Del., Lead Case No. 09-10422). Kirkland & Ellis LLP is serving as legal advisor and Moelis & Company is serving as financial advisor to the Company. Klehr Harrison Harvey Branzburg & Ellers has been tapped as local counsel. In its bankruptcy petition, the Company estimated assets and debts of $100 million to $500 million. NEENAH FOUNDRY: Liquidity Concerns Prompt S&P's Junk Rating ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Neenah Foundry Co., including its corporate credit rating to 'CCC+' from 'B'. The outlook is negative. "The downgrade reflects our concerns regarding the company's liquidity, increased leverage, and negative operating performance trends due to deteriorating conditions in its end markets," said Standard & Poor's credit analyst John R. Sico. The company appears likely to violate covenants if minimum available liquidity on its revolver falls below the $15 million threshold in the near term. Neenah's operating performance in key segments has continued to weaken in fiscal 2009. Availability under Neenah's revolving credit facility is just slightly more than its minimum availability requirement (which would trigger covenant issues). In S&P's view, weak earnings, capital expenditure requirements, and high cash interest costs could reduce revolving credit facility availability and potentially activate financial covenants that the company could have difficulty meeting. The ratings on Neenah, Wisconsin-based Neenah Foundry reflect the company's highly leveraged financial profile and vulnerable business profile. Neenah has niche positions in highly cyclical and competitive metal casting markets. The casting industry is fragmented, highly capital-intensive, and subject to volatile demand, customer pricing pressures, and fluctuations in raw material prices. Neenah, which had about $500 million in revenues in the 12 months ended Dec. 31, 2008, provides a broad line of cast manhole covers, sewer grates, and other cast-iron products to state and municipal customers. Neenah also provides products to makers of components used in heavy-duty trucks; agricultural equipment; and heating, ventilating, and air-conditioning products, as well as goods for other industrial end markets. Neenah's sales to state and municipal customers usually contribute relatively stable EBITDA over the business cycle. However, at this point, municipal budgets are vulnerable to issues stemming from both the housing crisis and the economic slowdown. S&P believes prospects for municipal business are uncertain in the near term despite the recent passage of the economic stimulus plan. In addition, the protracted decline in the heavy-duty truck market has affected the company's performance, and the weakening economic outlook makes prospects for any near-term recovery in the sector appear unlikely. S&P could lower the ratings if the company's liquidity becomes constrained. For instance, S&P could lower the ratings if availability under the revolving credit facility falls below the $15 million minimum availability requirement and the company violates its financial covenants. Additionally, S&P is concerned that the owners may look to sell its ownership in the company, or materially change the capital structure, or otherwise impair the debt holders. The company faces other operating issues, including a protracted decline in end markets, volatility of raw material and energy costs, and the successful operation of the new mold line and capturing new business. An outlook revision to stable or a higher rating would require positive free cash flow generation and a reduction in debt, which S&P consider unlikely in the near term. NESTOR INC: Terminates Employment of Vice President and CFO ----------------------------------------------------------- Nestor, Inc. disclosed in a filing with the Securities and Exchange Commission changes in its executive team and entry into new contracts with executives. On Feb. 6, 2009, the employment of Ted Klowan, the Company's vice president and chief financial officer, was terminated. On Feb. 12, 2009, the Company entered an employment agreement with Michael C. James, the chief executive officer. Mr. James' employment agreement provides: -- Base salary of $250,000 per year; and -- Term from its date and continuing on month-to-month basis and may be terminated by either the Company or Mr. James with 30 days notice. On Feb. 12, 2009 the Company also entered an employment and retention agreement with Brian R. Haskell, Esq., the vice president, business development and chief legal officer. Mr. Haskell's employment and retention agreement provides: -- Base salary of $165,000 per year; -- One-time payment of $50,000 paid on signing; and -- Term from its date until 90 days and continuing on a month- to-month basis thereafter, and may be terminated by either the company or Mr. Haskell with 30 days notice. The Company also entered into an employment and retention agreement with Tadas A. Eikinas, the chief technology officer. Mr. Eikinas' employment and retention agreement provides: -- Base salary of $175,000 per year; -- One-time payment of $50,000 paid on signing; and -- Term from its date until 90 days and continuing on a month- to-month basis thereafter, and may be terminated by either the company or Mr. Eikinas with 30 days notice. The Company also entered into an employment and retention agreement with Brian M. Milette, the company's chief accounting officer and controller. Mr. Milette's employment and retention agreement provides: -- Base salary of $120,000 per year; -- One-time payment of $25,000 paid on signing; and -- Term from its date until 90 days and continuing on a month- to-month basis thereafter, and may be terminated by either the company or Mr. Milette with 30 days notice. The one-time payments were made in exchange for release of any severance or other payments that the executive would have been entitled to if his employment was terminated by the company pursuant to prior employment agreements, if applicable, and are subject to a pro-rata "clawback" if the executive terminates his employment within the initial 90 day term. About Nestor Inc. Nestor Inc. (OTC BB: NEST) -- http://www.nestor.com/- provideds advanced automated traffic enforcement solutions and services to state and municipal governments. Going Concern Doubt Carlin, Charron, & Rosen LLP expressed substantial doubt about Nestor Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the fiscal year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations. NEW YORK TIMES: Board of Directors Suspends Dividend ---------------------------------------------------- The New York Times Company's Board of Directors on February 19 voted to suspend the quarterly dividend on the Company's Class A and Class B common stock. In November 2008, the Company reduced the payout level of its fourth-quarter dividend to $0.06 per from $0.23 per share in the third quarter of 2008. "[The] decision provides the Company with additional financial flexibility given the current economic environment and the uncertain business outlook," said Arthur Sulzberger, Jr., chairman of the Company. "We have taken decisive steps to reduce capital spending, lower operating costs and re-evaluate our assets. Last month we announced a private financing transaction for $250 million in senior unsecured notes and warrants. We also recently announced that we are exploring the possible sale of our ownership interest in New England Sports Ventures, LLC. We expect the suspension of the dividend, coupled with our other actions, will help us decrease debt and improve the liquidity of the Company, a difficult but prudent measure in this operating environment." "The disruptions of the global economy are affecting all businesses and industries, especially companies, such as ours, that generate a significant portion of their revenues from advertising," said Janet L. Robinson, president and CEO, in early February when NYT reported a sharp decline in the 4th quarter of 2008 to $63.3 million from $101.5 million in the 2007 fourth quarter. The Company said at that time that it was reducing dividend. According to MarketWatch, to cope with the current credit crisis, other media companies have opted to reduce or suspend their payouts to shareholders in recent months. CBS Corp. said Wednesday that it would slash its dividend to 5 cents a share from 27 cents. About New York Times The New York Times Co. operates as a diversified media company in the United States. It operates in two segments, News Media and About Group. The company was founded in 1896. As reported in the Troubled Company Reporter on Dec. 4, 2008, the NY Times cut its quarterly dividend by 74%, as part of an effort to conserve cash. The NY Times said that it took steps to lower debt and increase liquidity, including reevaluating its assets. The NY Times has laid off employees, merged sections of the NY Times and Globe to reduce printing costs, and consolidated New York area printing plants this year. * * * As reported by the Troubled Company Reporter on January 26, 2009, Moody's Investors Service downgraded The New York Times Company's senior unsecured rating to Ba3 from Baa3, the commercial paper rating to Not Prime from Prime-3, and assigned the company a Ba3 Corporate Family Rating, Ba3 Probability of Default Rating, and SGL-3 speculative-grade liquidity rating. The commercial paper rating will be withdrawn. The rating actions conclude the review for downgrade initiated on October 23, 2008. The rating outlook is negative. The TCR said January 22 that Standard & Poor's Ratings Services indicated its rating and outlook on The New York Times Co. (BB- /Negative/--) are not affected by the company's announcement of a private financing agreement with Banco Inbursa and Inmobiliaria Carso for an aggregate amount of $250 million -- $125 million each -- in senior unsecured notes due 2015 with detachable warrants. The senior unsecured notes have a coupon of 14.053%, of which the company may elect to pay 3% in kind, and will rank equally and ratably on a senior unsecured basis with all senior unsecured obligations of the company. Carlos Slim Helu and members of his family own Inmobiliaria Carso (which currently holds 6.9% of the company's class A shares) and are the main shareholders of Grupo Financiero Inbursa S.A B. de C.V., which is the parent company of Banco Inbursa. The New York Times had said proceeds would be used to pay down existing debt, including its $400 million revolver due May 2009 (under which a modest amount is currently outstanding). NEXHORIZON OF CO: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------------ Greg Avery at Denver Business Journal reports that NexHorizon of CO, Inc., has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Colorado. Court documents say that NexHorizon listed less than $10,000 in assets, $100,000 to $1 million in liabilities and 50 to 100 creditors. According to Denver Business, NexHorizon Communications purchased cable television systems in the San Diego in 2008. Denver Business relates that NexHorizon Communications said in July 2008 that it signed a letter of intent to acquire a small cable operation in McBain, Michigan. A deal NexHorizon Communications disclosed in October 2008 to buy a cable system in Tulsa, Oklahoma, was put on hold in January 2009, says the report. NexHorizon Communications, Denver Business reports, warned in its third-quarter financial results released in November 2008 that it had a working capital deficit of almost $3 million and needed to find new sources for funding to continue operations. Westminster-based NexHorizon of CO, Inc., is a cable television systems operator. Daniel Smith incorporated NexHorizon of CO in Colorado in 2006. He is also listed as CFO for NexHorizon Communications Inc. in Westminster, a publicly traded rural cable and broadband company that shares the same address with NexHorizon of CO. The company filed for Chapter 11 bankruptcy protection on February 17, 2009 (Bankr. D. Colo. Case No. 09-12193). NOVA BIOSOURCE: Receives Delisting Notice From NYSE Alternext ------------------------------------------------------------- Nova Biosource Fuels, Inc. (NBF), said on February 10, 2009, the Company received a notice from NYSE Alternext US LLC, formerly known as the American Stock Exchange, indicating that the Company was not in compliance with Section 704 of the NYSE Alternext US LLC Company Guide, formerly the American Stock Exchange Company Guide, in that it did not hold an annual meeting of its stockholders during 2008. In order to maintain its Exchange listing, the Company must submit a plan of compliance by March 10, 2009 advising the Exchange of action it has taken, or will take, that would bring it into compliance with Section 704 of the Company Guide by August 11, 2009. The Corporate Compliance Department of the Exchange will evaluate the plan and make a determination as to whether the Company has made a reasonable demonstration in the plan of an ability to regain compliance with the continued listing standards by August 11, 2009, in which case the plan will be accepted. If the plan is accepted, the Company may be able to continue its listing during the plan period up to August 11, 2009, during which time it will be subject to periodic review to determine whether it is making progress consistent with the plan. If the Company does not submit a plan, if the Company submits a plan that is not accepted or if the plan is accepted but the Company is not in compliance with the continued listing standards at the conclusion of the plan period or does not make progress consistent with the plan during the plan period, the Company may become subject to delisting proceedings in accordance with Section 1010 and Part 12 of the Company Guide. During 2008 and early 2009, the Company has been focused on commissioning its flagship biodiesel refinery in Seneca, Illinois and obtaining the working capital necessary to operate the refinery at full capacity while reducing its general and administrative expenses. The Company intends to submit a plan to the Exchange and hold an annual meeting of stockholders in the late April to May time frame to regain compliance with the Exchange's listing standards. About Nova Biosource Fuels Nova Biosource Fuels, Inc. -- http://www.novabiosource.com/-- refines and markets ASTM D6751 quality biodiesel and related co- products through the deployment of its proprietary, patented process technology, which enables the use of a broader range of lower cost feedstocks. Nova is focused on building and operating a number of Nova-owned biodiesel refineries, with a goal of attaining production capacity of between 190 to 210 million gallons of biodiesel fuel on an annual basis. Nova's business strategy includes building additional biodiesel refineries with production capacities ranging from 20 to 100 million gallons each per year. OCWEN LOAN: Moody's Affirms Ratings As Servicer of Subprime Loans ----------------------------------------------------------------- Moody's Investors Service has affirmed Ocwen Loan Servicing, LLC's ratings of SQ2- as a primary servicer of subprime residential mortgage loans and SQ2 as a special servicer. Moody's ratings reflect Ocwen's above average collection abilities, strong loss mitigation results, above average foreclosure and REO timeline management and below average servicing stability. Ocwen is a third-party servicer that specializes in the servicing of subprime and seriously delinquent loans. The company's residential servicing operations are located in West Palm Beach, Florida; Orlando, Florida; Bangalore, India; and Mumbai, India. Moody's has increased Ocwen's collections assessment to above average from average. The company has a robust technology infrastructure and solid processes in place in its collections area including interactive scripting, best-time-to-call software and weekend hours of operation. A challenge for the company going forward will be to manage its rate of abandonment calls in its collections area to ensure that delinquent borrowers have access to collections' agents. As of January 31, 2009, Ocwen's servicing portfolio totaled approximately 328,000 loans for an unpaid principal balance of approximately $41.1 billion. Ocwen Financial Corporation, the holding company of Ocwen, is publicly-traded on the New York Stock Exchange and rated B2 on negative outlook for senior unsecured debt. The previous rating actions for Ocwen's SQ ratings occurred on May 21, 2007. At that time, Ocwen's SQ2- rating as a Primary Servicer of subprime loans and SQ2 rating as a Special Servicer were affirmed. Moody's SQ ratings represent its view of a servicer's ability to prevent or mitigate asset pool losses across changing markets. The rating scale ranges from SQ1 (strong) to SQ5 (weak). Where appropriate, a "+" or "-" modifier will be appended to the relevant rating to indicate a servicer's relative servicing quality within a particular category. Moody's servicer ratings are differentiated in the marketplace by focusing on performance measurement. SQ ratings for U.S. residential mortgage servicers incorporate assessments of delinquency transition rates, foreclosure timeline management, loan cure rates, recoveries, loan resolution outcomes, and REO management - all critical indicators of a servicer's ability to maximize returns from mortgage portfolios. Moody's servicer ratings also consider the company's ability to maintain its focus on high quality servicing in an economic downturn. Servicing operations can be stressed by the increasing number of delinquent loans while at the same time increasing the need for liquidity. The SQ rating reflects Moody's expectation of the impact that the servicing will have on the on-going credit performance of the portfolio. For this reason, Moody's monitors SQ ratings based on periodic information provided by servicers and conducts a formal re-evaluation of its servicer ratings annually. Moody's analyzes and monitors Ocwen's Primary Servicer of Subprime rating using the rating methodology. Moody's analyzes and monitors Ocwen's Special Servicer rating by evaluating factors determined to be applicable to the special servicing profile of the entity, such as i) an evaluation of a servicer's default management abilities including collections, loss mitigation and foreclosure & REO timeline management, ii) an analysis of the performance of seasoned loans adjusted for collateral characteristics, iii) a servicer's financial profile, organizational structure, corporate governance, operational procedures and controls, as well as strategic goals and the ability to react to changes in the marketplace, iv) a review of the servicer's technology infrastructure, supporting systems and business continuity planning, v) an evaluation of management experience, adequacy of staffing, training policies, and staff turnover rates, and (vi) a comparison of these attributes against those of other Special Servicers. OMNIPOTENT INVESTMENT: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Omnipotent Investment Company dba Omnipotent Properties, LLC 2901 Virginia Avenue Saint Louis, MO 63118 Bankruptcy Case No.: 09-41063 Chapter 11 Petition Date: February 13, 2009 Court: United States Bankruptcy Court Eastern District of Missouri (St. Louis) Judge: Barry S. Schermer Debtor's Counsel: Rochelle D. Stanton, Esq. 745 Old Frontenac Square, Suite 202 Frontenac, MO 63131 Tel: (314) 991-1559 Email: rdenisestanton@yahoo.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/moeb09-41063.pdf The petition was signed by Claude L. Bennett, Jr., president of the Company. OMNIPOTENT PROPERTIES: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Omnipotent Properties, LLC 2901 Virginia Avenue Saint Louis, MO 63118 Bankruptcy Case No.: 09-41103 Chapter 11 Petition Date: February 17, 2009 Court: United States Bankruptcy Court Eastern District of Missouri (St. Louis) Debtor-affiliates filing separate Chapter 11 petitions on February 13, 2009: Entity Case No. ------ -------- Omnipotent Investment Company 09-41063 Judge: Barry S. Schermer Debtor's Counsel: Rochelle D. Stanton, Esq. Rochelle D. Stanton Law Offices 745 Old Frontenac Square Suite 202 Frontenac, MO 63131 Tel: (314) 991-1559 Email: rdenisestanton@yahoo.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor's Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Aspen Waste $5,500.00 13710 Green Ash Court Earth City, MO 63045 Heartland Bank $1,202,834.99 14125 Clayton Road Chesterfield, MO 63017 Internal Revenue Service $6,135.00 P.O. Box 21126 Philadelphia, PA 19116 Metropolitan Sewer District $22,100.00 Attn: Tracy Rodgers 2350 Market Street Saint Louis, MO 63103 Zions Bank $840,000.00 National Real Estate Group P.O. Box 26304 Salt Lake City, UT 84133 The petition was signed by Alonzo Jenkins, a member of the company. OSI RESTAURANT: Tender Offer Won't Affect S&P's 'B-' Rating ----------------------------------------------------------- Standard & Poor's Ratings Services said that the announcement by OSI Restaurant Partners LLC (B-/Stable/--) that it has commenced a tender offer to purchase the maximum aggregate principal amount of its $550 million 10% senior unsecured notes due 2015 for $73 million does not affect the rating or outlook on the company. The tender offer is being conducted as a modified "Dutch auction" with an acceptable bid price range of $225.00 to $275.00 per $1,000 principal amount of the notes. The total consideration payable for the notes will be based on a formula consisting of a "base price" per $1,000 principal amount of notes equal to $225.00 (including an early tender payment of $25.00, which holders may only receive if their notes are tendered prior to 5:00 p.m. Eastern Standard Time, March 3, 2009) plus a "clearing premium" not to exceed $50.00. The offer expires on March 18, 2009. S&P views this as an opportunistic (rather than a distressed) offer by the company, as challenging operating conditions in the casual-dining segment and difficult credit market conditions have contributed to the heavily discounted trading range for the unsecured notes. S&P expects the tender offer to be funded by cash on hand as well as proceeds from an anticipated equity contribution of at least $47 million by the OSI HoldCo parent company. The tender offer is contingent on OSI receiving this equity contribution, which is expected to be funded though distributions to OSI HoldCo by one of its subsidiaries that owns about 360 restaurant properties subleased to OSI. OSI had about $170 million in cash as of Sept. 30, 2008. While noteholders who accept the offer would receive a substantial discount to principal value, S&P expects that their willingness to participate in the transaction would largely relate to their own investment strategies and/or liquidity needs. The unsecured notes do not mature until 2015. Should the tender be unsuccessful, S&P expects OSI to have sufficient liquidity to fund its fixed charges over the intermediate term. However, covenant cushion under the bank facilities may narrow due to projected sales declines, partly offset by cost savings. As such, S&P may revise the outlook to negative in the event of an unsuccessful tender offer. If the tender offer is successful, S&P anticipate OSI credit measures will remain in line with the current rating, reflecting OSI's highly leveraged capital structure. PACIFIC SHORES: Fitch Junks Ratings on Three Classes of Notes ------------------------------------------------------------- Fitch Ratings has downgraded and removed from Rating Watch Negative four classes of notes issued by Pacific Shores CDO, Ltd./Corp.: -- $182,458,956 Class A to 'BBB' from 'AAA'; Outlook Negative; -- $96,000,000 Class B-1 to 'CCC' from 'AA'; -- $16,000,000 Class B-2 to 'CCC' from 'AA'; -- $23,593,037 Class C to 'C' from 'A'. The rating actions are primarily due to negative credit migration in the portfolio and incorporate Fitch's recently updated default and recovery rate assumptions for analyzing structured finance collateralized debt obligations. The class A notes are assigned a Negative Outlook due to the high concentration of residential mortgage-backed security in the portfolio which are expected to continue to face negative pressure while the housing market stabilizes. Pacific Shores CDO's portfolio consists of 63.8% RMBS, 18.4% asset backed securities, 6.7% commercial mortgage backed securities, 6.9% corporate bonds and 4.3% CDOs. The majority of the structured finance collateral, 74.3%, was originated in 2002 or prior, and 25.7% was originated between 2003 and 2005. The current Fitch derived weighted average rating of the portfolio is 'B+/B', as compared to 'BBB/BBB-' at the last review on Nov. 22, 2006. Approximately 40.6% of the current portfolio is rated below investment grade, with 26.5% considered 'CCC+' or below. As of the Dec. 29, 2008 trustee report, 6.6% of the portfolio is considered defaulted, as per the transaction's governing documents. The collateral deterioration has caused the class A/B and C overcollateralization ratios and the class C interest coverage ratio to fall below the minimum test levels. As of the Dec. 29, 2008 trustee report, the class A/B OC test was 102.86%, the class C OC test was 95.49% and the class C IC test was 107.2% versus the triggers of 105.3%, 101.8% and 108%, respectively. Failure of the A/B OC test to be greater than or equal to 100% would result in an event of default. Acceleration of the notes, as a remedy to an EOD, would result in the redirection of all proceeds to redeem the class A notes first and would have a negative impact on the class B and C notes. As a result of the OC and IC test failures, interest proceeds are being used to pay down the class A notes and will continue as long as the OC and IC tests are failing. Since closing, the class A notes have amortized 65.7% and are currently supported by investment grade collateral. Exposure to assets rated 'CCC+' or below exceeds the credit enhancement available to the class B-1 and B-2 (class B notes) notes. The class B notes are currently receiving interest distributions; however, based on the rating composition and performance expectations of the portfolio, principal distributions are less certain. The class C notes are currently not receiving interest payments and are not expected to receive any future distributions. The ratings of the class A, class B-1 and B-2 notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The rating of the class C notes addresses the likelihood that investors will receive ultimate interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The rating actions resolve the 'Under Analysis' status issued on Oct. 14, 2008 following Fitch's announcement of its proposed criteria revision for analyzing structured finance CDOs. The revised criteria report, 'Global Rating Criteria for Structured Finance CDOs' was published in its final form on Dec. 16, 2008 along with an updated version of the Fitch Portfolio Credit Model (PCM) that includes additional functionality for analyzing SF CDOs. As part of this review, Fitch makes standard adjustments for any names on Rating Watch Negative or with a Negative Outlook, downgrading such ratings for default analysis purposes by three and one notches, respectively. Fitch will continue to monitor and review this transaction for future rating adjustments. PACIFICA OF THE VALLEY: Case Summ. & 20 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Pacifica of the Valley Corporation dba Pacifica Hospital of the Valley 9449 San Fernando Rd. Sun Valley, CA 91352 Bankruptcy Case No.: 09-11678 Type of Business: The Debtor operates a hospital Chapter 11 Petition Date: February 17, 2009 Court: Central District Of California (San Fernando Valley) Judge: Kathleen Thompson Debtor's Counsel: David Gould, Esq. dgould@davidgouldlaw.com Geoffrey S. Goodman, Esq. ggoodman@foley.com 23801 Calabasas Rd., Ste. 2032 Calabasas, CA 91302 Tel: (818) 222-8092 Fax: (818) 449-4803 Estimated Assets: $10 million to $50 million Estimated Debts: $50 million to $100 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Office of Finance, City of Business Taxes $1,636,187 L.A. Attn: Brent Santos PO Box 53320 Los Angeles, CA 90053-0320 Tel: (213) 427-1871 Fax: (213) 427-1937 Los Angeles County Tax Property Taxes $1,308,256 Attn: Mark J. Saladino Collector Los Angeles PO Box 54018 Los Angeles, CA 90054-0018 Tel: (213) 974-2111 Fax: (213) 620-7948 Medline Industries Inc. Trade $1,173,821 Attn: Lisa Foreman Dept. LA 21558 Pasadena, CA 91185-1558 Tel: (847) 643-4233 Fax: (847) 643-4233 Serra Medical Clinic Trade $643,056 Attn: Arlene O'Neil 9375 San Fernando Road Sun Valley, CA 91352 Tel: (818) 768-3000 Fax: (818) 504-4690 Walden Medical Group, Inc. Trade $637,940 Attn: Mary 2515 North Vermont Avenue Los Angeles, CA 90027-1242 Tel: (818) 831-6863 Fax: (818) 252-2489 Comprehensive Pharmacy Trade $316,259 Services Health Eligibility Services Trade $265,561 Dept. of Water & Power Utilities $195,653 Newcourt Leasing Trade $157,009 Corporation US Bank Portfolio Serv Trade $139,226 Department of Health Trade $138,444 Services Novatek Medical Rental Trade $137,893 Group Inc. Angelica HeaIthcare Services Trade $126,886 American Red Cross Trade $114,371 AT&T Trade $98,481 Kovacs, Bruce MD Trade $85,000 Hospital Assn. of Southern Trade $81,723 Calif. Special Respiratory Care Trade $80,085 RX Relief Inc. Trade $78,846 On Assignment Healthcare Trade $72.654 The petition was signed by Paul R. Tuft, chairman of the board. PASADENA CDO: Fitch Junks Ratings on $26.5 Mil. Class C Notes ------------------------------------------------------------- Fitch Ratings downgrades three classes of notes issued by Pasadena CDO, Ltd. (Pasadena CDO). Two classes were assigned Stable Outlook reflecting Fitch's expectation that the ratings will remain stable over the next one to two years. Fitch does not assign Rating Outlooks to any class rated 'CC'. Two classes are removed from Rating Watch Negative. These rating actions are effective immediately: -- $164,808,339 class A notes downgraded to 'A' from 'AAA' and assigned Outlook Stable; -- $66,500,000 class B notes downgraded to 'BB-' from 'AA', assigned Outlook Stable and removed from Rating Watch Negative; -- $26,500,000 class C notes downgraded to 'CC' from 'BBB' and removed from Rating Watch Negative. The rating actions are primarily due to negative credit migration in the portfolio and incorporate Fitch's recently updated default and recovery rate assumptions for analyzing structured finance collateralized debt obligations. Pasadena CDO's portfolio consists of 56% residential mortgage backed securities, 28.9% asset backed securities, 11.4% commercial mortgage backed securities, 2.5% corporate bonds and 1.1% CDOs. The majority of the structured finance collateral, 62%, was originated in 2002 or prior and 38% was originated between 2003 and 2005. Approximately 23.8% of the current portfolio is rated below investment grade, as compared to 9.4% at the last review in January 2007, and 13.8% is considered 'CCC+' or below. As of the Dec. 31, 2008 trustee report, 9.1% of the portfolio is considered defaulted, as per the transaction's governing documents, which has increased from 1% at the last review. The collateral deterioration within the portfolio has caused the class C overcollateralization ratio to fall to 97.5%, as of the Dec. 31, 2008 trustee report, which is below the minimum test level of 101%. As a result, interest proceeds are being used to pay down the class A notes and will continue as long as the OC test is failing. The class A notes have amortized 57.4% since closing and represent 40.8% of the remaining rated notes. Currently, the class A notes are supported by investment grade collateral. The class B notes are receiving current interest payments and are expected to receive principal distributions once the class A notes are paid in full. The exposure to assets rated 'CCC+' or below exceeds the credit enhancement available to the class C notes. Due to the placement of the class C OC test, the class C notes are currently receiving interest distributions; however, based on the rating composition and performance expectations of the portfolio, principal distributions are not expected. The downgrades to the rated notes reflect Fitch's updated view of the default risk associated with each of the notes. The ratings of the class A and class B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The rating of the class C notes addresses the likelihood that investors will receive ultimate interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The rating actions resolve the 'Under Analysis' status issued on Oct. 14, 2008 following Fitch's announcement of its proposed criteria revision for analyzing structured finance CDOs. The revised criteria report, 'Global Rating Criteria for Structured Finance CDOs' was published in its final form on Dec. 16, 2008 along with an updated version of the Fitch Portfolio Credit Model that includes additional functionality for analyzing SF CDOs. As part of this review, Fitch makes standard adjustments for any names on Rating Watch Negative or with a Negative Outlook, downgrading such ratings for default analysis purposes by three and one notches, respectively. Fitch will continue to monitor and review this transaction for future rating adjustments. PATTERSON PARK: Files for Chapter 11 Bankruptcy Protection ---------------------------------------------------------- Daniel J. Sernovitz at Baltimore Business Journal reports that The Patterson Park Community Development Corp. has filed for Chapter 11 bankruptcy protection. Baltimore Business relates that The Patterson Park failed to renegotiate the terms of almost $1 million in mortgage payments for properties in Baltimore's Patterson Park neighborhood. The Patterson Park said in a statement that it "was forced to file a Chapter 11 bankruptcy case due to the continuing adverse conditions affecting the economy generally and in direct response to the actions of one of its lenders." Citing Patterson Park Chief Restructuring Officer Charles Goldstein, Baltimore Business states that The Patterson Park was no longer able to sell its renovated houses and had trouble keeping up with its debts and mortgage payments, when the residential real estate market slowed. The report quoted Mr. Goldstein as saying, "The market's downfall created this issue for the CDC." The Patterson Park retained Whiteford, Taylor, & Preston LLC as counsel, Baltimore Business reports. According to court documents, The Patterson Park listed 107 creditors, the largest of which is Baltimore city, which holds a $196.670.85 claim -- $136,728.51 in property taxes, $32,906.35 in water bills, and $27,036.09 for an undisclosed bill. Erin Sullivan and Edward Ericson Jr. at the Baltimore City Paper relates that a couple of the creditors -- Baltimore city and FIA Card Services -- appear a couple of times in the list. The City Paper states that FIA Card holds a $130,138.50 claim against The Patterson Park. The City Paper says that The Patterson Park's other creditors include: -- Home Depot Credit Services, which is owed $59,188.81; -- a Reisterstown construction company Reisterstown called NOVO Construction Inc., which is not listed with the Maryland Home Improvement Commission as a licensed home- improvement company nor with the Maryland Attorney General's home builder's list, which is owed $44,597.65; -- Walbrook Lumber of Baltimore, which is owed $41,048.06. -- Bradford Federal Savings Bank, -- Homewood Federal Savings Bank, -- M&T Bank, -- PNC Bank, -- Provident Bank, -- K Bank, -- SunTrust Bank, -- 1st Mariner Bank, -- The Patterson Park founder Ed Rutkowski, and -- City Paper. According to The City Paper, about $28,446.68 is owed to Patterson Acquisition. The Patterson Park sold to Patterson Acquisition in June 2006 about 13 homes that it purchased for a total of $299,657 for $1,706,800. The report says that Patterson Acquisition doesn't appear to have taken mortgage loans on those properties. Mr. Goldstein said that he is hoping that the company will be able to emerge from bankruptcy by working with its creditors, Baltimore Business reports. Founded in 1996, The Patterson Park Community Development Corporation is a nonprofit organization dedicated to revitalizing one of Baltimore's precious neighborhood legacies. PATTERSON PARK: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Patterson Park Community Development Corporation 2900 East Baltimore Street Baltimore, MD 21224 Bankruptcy Case No.: 09-12545 Chapter 11 Petition Date: February 17, 2009 Court: District of Maryland (Baltimore) Judge: Robert A. Gordon Debtor's Counsel: Brent C. Strickland, Esq. Seven St. Paul Street, Suite 1800 Baltimore, MD 21202-1626 Tel: (410) 347-8700 bstrickland@wtplaw.com Estimated Assets: $1 million to $10 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Baltimore City - Property Taxes $136,728 Collection Division 200 Holliday St. Baltimore, MD 21202 FIA Card Services $78,442 PO Box 15710 Wilmington, DE 19886-5710 Home Depot Credit Services $59,188 P.O. Box 6029 The Lakes, NV 88901-6029 Platinum Plus For Business $51,696 NOVO Construction, Inc. $44,597 Walbrook Lumber $41,048 Baltimore City - Water $32,906 Bureau of Treasury Management Patterson Acquisition, LLC $28,446 City of Baltimore $27,036 Friends of Patterson Park $25,000 Neighborhood Rental Services $25,000 The Hartford $23,333 Krupnik Brothers, Inc. $22,625 Baltimore Gas & Electric $20,068 Turner Roofing, Inc. $16,211 T & D Plumbing & Heating, Inc. $14,700 Reico $14,215 Cummins Appliance $13,725 Timothy Eric Jones $13,387 Eastern Stair Builders of MD $12,254 The petition was signed by Charles R. Goldstein, chief restructuring officer. PLIANT CORPORATION: Section 341(a) Meeting Slated for March 12 -------------------------------------------------------------- Roberta DeAngelis, acting U.S. Trustee for Region 3 will convene a meeting of creditors of Pliant Corporation and its affiliated debtors on March 12, 2009, at 11:00 a.m. at J. Caleb Boggs Federal Building, 2nd Floor, Room 2112, Wilmington , Delaware. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Schaumburg, Illinois, Pliant Corporation produces polymer-based films and flexible packaging products for food, beverage, personal care, medical, agricultural and industrial applications. The company has operations in Australia, New Zealand, Germany and Mexico. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represented the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. The Debtors emerged from chapter 11 protection on July 19, 2006. * * * As reported by the Troubled Company Reporter on Oct 20, 2008, Standard & Poor's Ratings Services lowered the corporate credit rating on Pliant to 'CCC' from 'B-'. At the same time, Standard & Poor's lowered the issue rating on the company's first-lien senior secured notes to 'CCC-' from 'B-' and the second-lien secured notes to 'CC' from 'CCC'. "The downgrade reflects heightened concerns regarding Pliant's ability to refinance pending debt maturities during the next few months," said Standard & Poor's credit analyst Ket Gondhan, "particularly given the company's highly leveraged financial profile and challenging credit market conditions." POLAROID CORP: Panel Can Hire Faegre & Benson Local Counsel ----------------------------------------------------------- The Official Committee of Unsecured Creditors in Polaroid Corporation and its debtor-affiliates' Chapter 11 cases obtained authority from the U.S. Bankruptcy Court for the District of Minnesota to employ Faegre & Benson LLP as its local counsel. Faegre will represent the committee and perform any legal services for the committee that are necessary or appropriate in these Chapter 11 cases. Dennis Ryan, Faegre & Benson, told the Court that the firm will be compensated timely for its services and reimbursed for any related expenses in accordance with the firms' hourly rates and disbursement policies. Mr. Ryan assured the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Polaroid Corporation -- http://www.polaroid.com-- makes and sells films, cameras, and other imaging products. The company and 20 of its affiliates first filed for bankruptcy protection on October 12, 2001 (Bankr. D. Del. Lead Case No. 01-10864). Skadden, Arps, Slate, Meagher & Flom LLP represented the Debtors in their previous restructuring efforts. At that time, the company blamed steep decline in its revenue and the resulting impact on its liquidity. On June 28, 2002, the U.S. Bankruptcy Court for the District of Dealware approved the purchase of substantially all of Polaroid's business by One Equity Partners. The bid provides for cash consideration of $255 million plus a 35% interest in the new company for unsecured creditors. Polaroid Corp., together with 11 affiliates, filed its second voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr. D. Minn., Lead Case No. 08-46617). Judge Gregory F. Kishel handles the Chapter 22 case. James A. Lodoen, Esq., at Lindquist & Vennum P.L.L.P, is the Debtors' counsel. According to the company, the financial structuring process and the second bankruptcy filing are the result of events at Petters Group Worldwide, which has owned Polaroid since 2005. The founder of Petters Group and certain associates are currently under investigation for alleged acts of fraud that have compromised the financial condition of Polaroid and other entities owned by Petters Group. The company and its leadership team are not subjects of the ongoing investigation involving Petters Group. POLAROID CORP: Can Hire Houlihan Lokey as Financial Advisor ----------------------------------------------------------- Polaroid Corporation and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the District of Minnesota to employ Houlihan Lokey Howard & Zukin Capital, Inc. as financial advisor and investment banker. Houlihan Lokey is expected to assist and advise the Debtors with the analysis, evaluation, pursuit and effectuation of a recapitalization or restructuring of the Debtors' equity and other indebtedness, obligations or liabilities, which will consist of, if appropriate and if requested by the Debtors: a. assisting the Debtors in the development, preparation and distribution of selected information, documents and other materials, including financial projections, business plan presentations, and scenario-driven financial models, in an effort to create interest in and to consummate any "Transaction"; b. soliciting and evaluating indications of interest and proposals regarding any Transaction from current and potential lenders; c. assisting the Debtors with the development, structuring, negotiation and implementation of any Transaction, including, among other things, assisting the Debtors with due diligence investigations and participating as a representative of the Debtors in negotiations with creditors, their advisors, and other parties involved in any Transaction; d. assisting the Debtors in valuing the Debtors and, as appropriate, valuing the Debtors' assets or operations, provided that any real estate or fixed asset appraisals will be undertaken by outside appraisers, separately retained and compensated by the Debtors; e. providing expert advice and testimony regarding financial matters related to any Transaction; f. advising and attending meetings of the Debtors' boards of directors, Debtors' creditor groups, official constituencies and other interested parties, as the Debtors determine to be necessary or desirable; and g. providing other financial advisory services as may be agreed upon by Houlihan Lokey and the Debtors. Stephen Spencer, director of Houlihan Lokey, told the Court that the firm will be paid for its services and reimbursed for any related expenses. Houlihan Lokey is also authorized to apply for allowance of its professional fees and expenses not more than once every 90 days. Houlihan Lokey agreed to these terms of compensation: a. Initial Fee: In addition to the other fees provided for in the Engagement Agreement, upon the execution of the Engagement Agreement, the Debtors will pay Houlihan Lokey a nonrefundable cash fee of $300,000, which will be earned upon Houlihan Lokey's receipt thereof in consideration of Houlihan Lokey accepting this engagement; b. Monthly Fees: In addition to the other fees provided for in the Engagement Agreement, upon the first monthly anniversary of the Effective Date, and on every monthly anniversary of the Effective Date during the term of this Agreement, the Debtors will pay Houlihan Lokey in advance, without notice or invoice, a nonrefundable cash fee of $150,000, subject to the limitations on monthly fees; c. Transaction Fee: In addition to the other fees provided for in the Engagement Agreement, the Debtors will pay Houlihan Lokey these transaction fee: -- Restructuring Transaction Fee. Upon the date of confirmation of a plan of reorganization under Chapter 11 of the Bankruptcy Code pursuant to an order of the applicable bankruptcy court Houlihan Lokey will earn, and the Company will promptly pay to Houlihan Lokey, a cash fee of 1.25% of the value of the Debtors determined by the bankruptcy court as stated in the Debtors' disclosure statement; -- Sale Transaction Fee. Upon the closing of a Sale Transaction, Houlihan Lokey will earn, and the Debtors will thereupon pay immediately and directly from the proceeds of the Sale Transaction, as a cost of the Sale Transaction, a cash fee of 1.25% of Aggregate Gross Consideration as defined in Section 7 of the Engagement Agreement; and -- Financing Transaction Fee. Upon the closing of each Financing Transaction, Houlihan Lokey will earn, and the Debtors will thereupon pay immediately and directly from the proceeds of the Financing Transaction, as a cost of the Financing Transaction; d. Expenses: In addition to all of the other fees and expenses described in the Engagement Agreement, and regardless of whether any Transaction is consummated, the Debtors will, upon Houlihan Lokey's request, reimburse Houlihan Lokey for its reasonable out-of-pocket expenses incurred from time to time in connection with its services hereunder. e. Post-Termination Services: If Houlihan Lokey is required to render services not described herein, but which relate directly or indirectly to the subject matter of the Engagement Agreement, the Debtors will pay Houlihan Lokey additional fees to be mutually agreed upon for the services, plus reasonable related out-of-pocket costs and expenses, including, among other things, the reasonable legal fees and expenses of Houlihan Lokey's counsel in connection therewith. Houlihan Lokey is expected to submit regular monthly invoices to the Debtors for 80% of the monthly fee and 100% of monthly costs, with copies to the committee. Mr. Spencer assured the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Polaroid Corporation Polaroid Corporation -- http://www.polaroid.com-- makes and sells films, cameras, and other imaging products. The company and 20 of its affiliates first filed for bankruptcy protection on October 12, 2001 (Bankr. D. Del. Lead Case No. 01-10864). Skadden, Arps, Slate, Meagher & Flom LLP represented the Debtors in their previous restructuring efforts. At that time, the company blamed steep decline in its revenue and the resulting impact on its liquidity. On June 28, 2002, the U.S. Bankruptcy Court for the District of Dealware approved the purchase of substantially all of Polaroid's business by One Equity Partners. The bid provides for cash consideration of $255 million plus a 35% interest in the new company for unsecured creditors. Polaroid Corp., together with 11 affiliates, filed its second voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr. D. Minn., Lead Case No. 08-46617). Judge Gregory F. Kishel handles the Chapter 22 case. James A. Lodoen, Esq., at Lindquist & Vennum P.L.L.P, is the Debtors' counsel. According to the company, the financial structuring process and the second bankruptcy filing are the result of events at Petters Group Worldwide, which has owned Polaroid since 2005. The founder of Petters Group and certain associates are currently under investigation for alleged acts of fraud that have compromised the financial condition of Polaroid and other entities owned by Petters Group. The company and its leadership team are not subjects of the ongoing investigation involving Petters Group. POLAROID CORPORATION: Court OKs Paul Hastings as Panel's Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in Polaroid Corporation and its debtor-affiliates' Chapter 11 cases obtained authority from the U.S. Bankruptcy Court for the District of Minnesota to employ Paul, Hastings, Janofsky & Walker LLP as its counsel. Paul Hastings is expected represent the committee, perform any and all legal services for the Committee that are necessary or appropriate in connection with these chapter 11 cases. Richard A. Chesley, a member of the law firm of Paul, Hastings, Janofsky & Walker LLP, told the Court that the firm will be compensated timely for its services and reimbursed for any related expenses in accordance with the firm's normal hourly rates and disbursement. Mr. Chesley assured the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Polaroid Corporation -- http://www.polaroid.com-- makes and sells films, cameras, and other imaging products. The company and 20 of its affiliates first filed for bankruptcy protection on October 12, 2001 (Bankr. D. Del. Lead Case No. 01-10864). Skadden, Arps, Slate, Meagher & Flom LLP represented the Debtors in their previous restructuring efforts. At that time, the company blamed steep decline in its revenue and the resulting impact on its liquidity. On June 28, 2002, the U.S. Bankruptcy Court for the District of Dealware approved the purchase of substantially all of Polaroid's business by One Equity Partners. The bid provides for cash consideration of $255 million plus a 35% interest in the new company for unsecured creditors. Polaroid Corp., together with 11 affiliates, filed its second voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr. D. Minn., Lead Case No. 08-46617). Judge Gregory F. Kishel handles the Chapter 22 case. James A. Lodoen, Esq., at Lindquist & Vennum P.L.L.P, is the Debtors' counsel. According to the company, the financial structuring process and the second bankruptcy filing are the result of events at Petters Group Worldwide, which has owned Polaroid since 2005. The founder of Petters Group and certain associates are currently under investigation for alleged acts of fraud that have compromised the financial condition of Polaroid and other entities owned by Petters Group. The company and its leadership team are not subjects of the ongoing investigation involving Petters Group. PPA HOTELS: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: P.P.A. Hotels, LLC 909 South 8th Street Rogers, AR 72756 Bankruptcy Case No.: 09-70633 Chapter 11 Petition Date: February 16, 2009 Court: United States Bankruptcy Court Western District of Arkansas (Fayetteville) Debtor's Counsel: J. Robin Pace, Esq. Attorney at Law 2106 S. Walton, Ste. D Bentonville, AR 72712 Tel: (479) 273-7020 Fax: (479) 273-7074 Email: robinpace@cox-internet.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/arwb09-70633.pdf The petition was signed by Christopher Talley. PROPEX INC: Court Approves $65-Mil. Wayzata Loan on Final Basis --------------------------------------------------------------- Judge John C. Cook of the U.S. Bankruptcy Court for the Eastern District of Tennessee authorized Propex, Inc., and its debtor affiliates, on a final basis, to borrow from Wayzata Investment Partners LLC, acting as sole administrative agent, and Wayzata Opportunities Fund II, L.P., and certain other lenders, up to $65,000,000 in postpetition financing. The Court opined that the Debtors have an immediate need to obtain a replacement financing facility to pay its existing DIP Facility obligations; continue the orderly operation of their business; maintain business relationship with vendors, suppliers and customers; make payroll; make capital expenditures and satisfy other working capital and operational needs. The total amount outstanding under the Debtors' 2008 Existing Facility with PNB Paribas and certain other lenders, as of January 23, 2009, was $32,774,377, plus $420,000 in cash used to cash collateralized letters of credit issued by the Existing Agent, and any reasonable professional fees of the Existing Agent for its counsel and advisors. In accordance with the Interim DIP Order, the Debtors paid their obligations under the 2008 Facility in full on January 30, 2009. By virtue of the payments, the 2008 Facility is thus terminated and is of no further force or effect. All of the DIP Obligations under the Wayzata Facility constitute allowed clams against the Debtors, with priority over any and all administrative expenses, diminution claims and all other claims, the Court ruled. The Carve-Out refers to (i) an amount of up to $4,200,000, in the aggregate, that may be sued solely to pay Court-approved fees and expenses of the retained professionals of the Debtors, the Official Committee of Unsecured Creditors, and the Debtors' Chief Restructuring Officer upon the occurrence of an event of default or the "termination date;" (ii) all quarterly fees required to be paid to the U.S. Trustee; and (iii) any Court-approved fees payable to the Clerk of the Bankruptcy Court. The Wayzata Facility will mature and the DIP Obligations will be due and payable in immediately available funds, without notice or demand, on the earlier of: (a) April 23, 2009; (b) the effective date of the plan of reorganization; (c) upon any sale of substantially all of the Debtors' assets pursuant to Section 363 of the Bankruptcy Code; or (d) at the sole discretion of the DIP Lenders, upon the occurrence and continuation of an Event of Default under the DIP Documents. Prior to the entry of the Court's final order, the Official Committee of Unsecured Creditors reiterated that in order to circumvent the negative tax consequences of Section 956 of the Internal Revenue Code, U.S. Companies rarely pledge two-thirds or more the capital stock of their foreign companies. The Committee pointed out that despite the adverse tax consequences, the Wayzata Facility requires the Debtors to pledge 100% of their foreign stock, even though that pledge may cause the Debtors to incur millions of dollars of additional tax liability. The Committee noted that a Section 506(c) waiver is specifically inappropriate where the DIP Lender is seeking to acquire the Debtors' assets by forcing a quick sale. Thus, because the DIP Lender is utilizing the Chapter 11 process solely to maintain and preserve its own collateral for its own benefit, it would be highly inequitable to make the Debtors' estates bear the administrative expenses of liquidating the DIP Lenders' collateral, where there may not be any way to pay that administrative costs absent a Section 506(c) surcharge, the Committee contended. The Committee further asserted that the Chief Restructuring Officer Success Fee should not be included in the Carve-Out because: (a) the inclusion increases the risk that the administrative claims will not be paid in full at the end of the Debtors' Chapter 11 cases; (b) the fees of the CRO are not subject to any holdback or final approval of the Court; (c) the CRO Success Fee was not included in the 2008 DIP Facility and thus, including it in 2009 DIP Facility with Wayzata is simply a wrongful grab by the Debtors to enrich their own professionals to detriment of other creditors. In reply to the Committee's objection, the Debtors noted that the waiver of Section 506(c) rights, as provided in the Wayzata Facility, are provisions customarily contained in DIP financing packages and have been approved by several courts, including courts within the Sixth Circuit. The Committee's objections were overruled by the Court at a February 9, 2009 hearing. A full-text copy of the Wayzata Final DIP Order can be accessed for free at: http://bankrupt.com/misc/Propex_FinalDIP.pdf Final Cash Collateral Order In line with the Debtors' Replacement DIP Facility with Wayzata Investment Partners LLC, Judge Cook granted the Debtors permission, on a final basis, to use the cash collateral of their Prepetition Lenders pursuant to a budget. The Prepetition Lenders are entitled to adequate protection of their interests in the Prepetition Collateral in an amount equal to the aggregate diminution in value of the Prepetition Collateral. To secure the Adequate Protection Obligations, the Prepetition Lenders are granted valid, perfected replacement security interest in and lien on all of the Collateral, subject and subordinate only to the Permitted Prepetition Liens, the liens of the DIP Lenders, and the Carve Out. The Debtors' right to use cash collateral will automatically terminate on the date that is the earlier of 10 days after an event of default under the Debtors' Replacement DIP Facility with Wayzata Investment Partners and certain other lenders, or on the maturity date of the DIP Facility. About Propex Inc. Headquartered in Chattanooga, Tennessee, Propex Inc. -- http://www.propexinc.com/-- produces geosynthetic, concrete, furnishing, and industrial fabrics and fiber. It also produces primary and secondary carpet backing. Propex operates in North America, Europe, and Brazil. The company and its debtor-affiliates filed for Chapter 11 protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No. 08-10249). The Debtors have selected Edward L. Ripley, Esq., Henry J. Kaim, Esq., and Mark W. Wege, Esq. at King & Spalding, in Houston, Texas, to represent them. The Official Committee of Unsecured Creditors have tapped Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld, LLP, in New York, to be its counsel. Propex Inc., and its affiliates delivered to the Court a Joint Plan of Reorganization and Disclosure Statement on October 29, 2008. Propex's exclusive period to solicit acceptances of the Plan expires Dec. 29, 2008. As of June 29, 2008, the Debtors' balance sheet showed total assets of US$562,700,000, and total debts of US$551,700,000. The Debtors have filed their Disclosure Statement and Plan of Reorganization on October 29, 2008. Bankruptcy Creditors' Service, Inc., publishes Propex Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by Propex Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) PROPEX INC: To Sell All Assets to Wayzata Unit for $61 Million -------------------------------------------------------------- Propex Inc. and its debtor affiliates seek permission from the U.S. Bankruptcy Court for the Eastern District of Tennessee to sell substantially all of their assets to Xerxes Operating Company, LLC and Xerxes Foreign Holdings Corp. for $61,560,000, free and clear of all liens, claims and encumbrances, and subject to higher and better bids. Xerxes Operating and Xerxes Foreign Holdings are entities majority-owned by Wayzata Opportunities Fund II LP, an affiliate of the DIP Agent, Wayzata Investment Partners LLC. The salient terms of the parties' Asset Purchase Agreement dated February 17, 2009 are: (1) The Assets to be sold by the Debtors to Xerxes include all of their cash, accounts receivable, inventory, real property, facility leases, tangible real property, equipment leases, intellectual property, rights under contracts and benefit plans, books and records, permits and licenses, tax refunds and rebates. (2) Xerxes will also acquire all equity securities of every foreign subsidiary of the Debtors, and all obligations of every foreign subsidiary to the Debtors. (3) The aggregate purchase price for the Assets to be sold is $61,560,000, subject to certain adjustments. The estimated net asset value refers to the Debtors' good faith estimate of the Net Asset Value as of the Closing Date. If the Estimated Net Asset Value is less than the Baseline Net Asset Value, the Purchase Price will be reduced by an amount equal to the amount by which the Estimated Net Asset Value is less than the Baseline Net Asset Value. If the Estimated Net Asset Value is greater than the Baseline Net Asset Value, the Purchase Price will be increased by an amount equal to the amount by which the Estimated Net Asset Value is greater than the Baseline Net Asset Value. (4) The sale of the Assets will be on an "as is, where is" basis and without representations or warranties of any kind. (5) The Debtors' assets that are excluded in the proposed sale are: -- the Carve Out Cash Amount, which refers to the $4,200,000 to be drawn by the Debtors from the DIP Facility; -- Avoidance claims or causes of action arising under the Bankruptcy Code or applicable state law; -- certain real property, facility leases, equipment leases, contracts; and -- equity securities of the Debtors (6) Xerxes will assume certain of the Debtors' contracts and all obligations under those contracts, including any cure amount on those contracts. Xerxes will also assume: -- all unpaid postpetition trade payable incurred in the ordinary course of business; -- all obligations due to the Debtors' employees, including wages, bonuses, commissions, unused vacation and sick leaves; -- all warranty claims of the Debtors' customers; and -- unpaid real property taxes of up to $2,500,000. (7) The proposed sale is subject to higher and better bids. (8) The Debtors will pay Xerxes a $1,846,800 break-up fee if they consummate a sale with a party or entity other than Xerxes. A full-text copy of the Xerxes Asset Purchase Agreement is available for free at: http://bankrupt.com/misc/Propex_APA.pdf Bidding Procedures In order to obtain the highest, best financial or otherwise superior offer for their assets, the Debtors propose to subject the sale of their assets to uniform bidding procedures. The Debtors propose that any interested party must deliver to their counsel an executed confidentiality agreement. To be eligible to participate in the auction: (1) Each Bid must be accompanied by a $5,000,000 deposit; (2) A competing bid must exceed the purchase price by the sum of the break-up fee amounting to $1,846,800 plus 1,500,000, the initial minimum overbid increment. (3) A Bid must be irrevocable until two business days after the assets have been sold pursuant to the closing of the proposed sale approved by the Court. (4) A Bid must be an all cash bid, on the terms that are substantially the same or better than the terms of the Xerxes Agreement. Only a Bid that contemplates a purchase of all of the Debtors' Assets will constitute a Qualified Bid. (5) A Bid must include executed transaction documents pursuant to which the Qualified Bidder proposes to effectuate the contemplated transaction. (6) A Bid may not be conditioned on obtaining financing or any internal approval, or on the outcome or review of due diligence, but may be subject to the accuracy in all material respects at the closing of specified representations and warranties or the satisfaction in all material respects at the closing of specified conditions, none of which will be more burdensome than those set forth in the Xerxes Agreement. (7) A Bid may not request or entitle the Qualified Bidder, other than Xerxes, any break-up fee, termination fee, expense reimbursement or similar type of payment to any Qualified Bidder. (8) A Bid must provide written evidence reasonably acceptable to the Debtors, including current financial statements and a description of equity and debt financing commitments to be used to close the transaction, that demonstrates that the Potential Bidder has necessary financial ability to close the contemplated transaction and provide adequate assurance of future performance under all contracts to be assumed in the contemplated transaction. If the Debtors, after consultation with the DIP agent, BNP Paribas Securities Corp., and the Official Committee of Unsecured Creditors, determine that a potential bidder that has satisfied the bid requirements does not constitute a qualified bidder, then the Potential Bidder's right to receive access to the due diligences materials or additional non-public information will immediately terminate. Each Potential Bidder and Qualified Bidder should comply with all reasonable requests for additional information and due diligence access by the Debtors or their advisors regarding that Bidder and its contemplated transaction and its financial capacity to contemplate that transaction. The deadline for submitting bids by a Qualified Bidder will be March 18, 2009. The Debtors will notify all Qualified Bidders of the Baseline Bid as of March 20, 2009. If more than one qualified bid is received by the Debtors, an auction will be conducted on March 23, 2009 at 10:00 a.m. Eastern Time, at the offices of King & Spalding LLC, in Atlanta, Georgia. With regards to any Bid made at the Auction subsequent to the Debtors' announcement of the Baseline Bid, a Qualified Bidder must comply with these conditions: * Any overbid after the Baseline Bid will be made in increments of at least $500,000. * An overbid must comply with the conditions for a Qualified Bid, provided that the Bid Deadline and the Initial Minimum Overbid Increment will not apply. * The Debtors will announce at the Auction the material terms of each Overbid. The Debtors will identify the highest and best offers for the Assets upon review. A full-text copy of the Bidding Procedures is available for free At: http://bankrupt.com/misc/Propex_BidProcedures.pdf Henry J. Kaim, Esq., at King & Spalding LLP, in Houston, Texas, asserts the competitive bidding process will enable the Debtors to capture value for their assets and executory contracts, all for the benefit of their estates and creditors by taking full advantage of the potential buyer pool. The Court will convene a hearing on March 4, 2009, at 9:00 a.m., to consider the Debtors' request for uniform bidding procedures. Any party who wishes to object has until March 2 to file a formal written objection. The Court has set the final sale hearing for March 24, 2009. Any objections should be filed with the Court no later than March 20. About Propex Inc. Headquartered in Chattanooga, Tennessee, Propex Inc. -- http://www.propexinc.com/-- produces geosynthetic, concrete, furnishing, and industrial fabrics and fiber. It also produces primary and secondary carpet backing. Propex operates in North America, Europe, and Brazil. The company and its debtor-affiliates filed for Chapter 11 protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No. 08-10249). The Debtors have selected Edward L. Ripley, Esq., Henry J. Kaim, Esq., and Mark W. Wege, Esq. at King & Spalding, in Houston, Texas, to represent them. The Official Committee of Unsecured Creditors have tapped Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld, LLP, in New York, to be its counsel. Propex Inc., and its affiliates delivered to the Court a Joint Plan of Reorganization and Disclosure Statement on October 29, 2008. Propex's exclusive period to solicit acceptances of the Plan expires Dec. 29, 2008. As of June 29, 2008, the Debtors' balance sheet showed total assets of US$562,700,000, and total debts of US$551,700,000. The Debtors have filed their Disclosure Statement and Plan of Reorganization on October 29, 2008. Bankruptcy Creditors' Service, Inc., publishes Propex Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by Propex Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) REAL ESTATE VII: Aimco Names General Partners' President as CIO --------------------------------------------------------------- Real Estate Associates Limited VII disclosed in a regulatory filing that Apartment Investment and Management Company promoted David Robertson to president and chief investment officer of Aimco. Mr. Robertson will become chief financial officer of Aimco on March 1, 2009. Mr. Robertson is currently president, chief executive officer and director of National Partnership Investments Corp. or the Corporate General Partner. Aimco also disclosed that Thomas M. Herzog, executive vice president and chief financial officer of aimco and chief financial officer and executive vice president of the Corporate General Partner, is resigning from those positions effective March 1, 2009, after the finalizing of Aimco's Annual Report on Form 10-K. In order to provide for an orderly transition, Mr. Herzog will continue in an advisory capacity to Aimco after his departure. About Real Estate Associates Real Estate Associates Limited VII is a limited partnership formed under the laws of the State of California on May 24, 1983. The general partners of the partnership are National Partnership Investments Corp. and National Partnership Investments Associates II. As of June 30, 2008, the company holds limited partnership interests in eleven Local Limited Partnerships. In addition, the company holds a general partner interest in REA IV, which in turn, holds limited partner interests in eleven additional Local Limited Partnerships. In total, the company holds interests, either directly or indirectly through REA IV, in twenty-two Local Limited Partnerships which own residential low income rental projects consisting of 1,579 apartment units. At Sept. 30, 2008, the company's balance sheet showed total assets of $1,801,000 and total liabilities of $20,340,000, resulting in a partner's deficit of $18,539,000. Going Concern Doubt Ernst & Young LLP, in Greenville, South Carolina, expressed substantial doubt about Real Estate Associates Limited VII's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm reported that the company continues to generate recurring operating losses. In addition, notes payable and related accrued interest totaling approximately $19,858,000 are in default due to non-payment. REALTY MORTGAGE: Voluntary Chaeter 11 Case Summary -------------------------------------------------- Debtor: Realty Mortgage Corporation 215 Katherine Drive Flowood, MS 39232 Bankruptcy Case No.: 09-00544 Chapter 11 Petition Date: February 18, 2009 Court: Southern District of Mississippi (Jackson Divisional Office) Debtor's Counsel: Craig M. Geno, Esq. cmgeno@harrisgeno.com Harris Jernigan & Geno, PLLC 587 Highland Colony Pkwy. P.O. Box 3380 Ridgeland, MS 39157 Tel: (601) 427-0048 Fax: (601) 427-0050 Estimated Assets: $10 million to $50 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 Tommy F. Taylor, Jr., president. RECYCLED PAPER: Court Confirms Plan of Reorganization ----------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has confirmed the plan of reorganization of Recycled Paper Greetings Inc. According to Bloomberg's Bill Rochelle, the plan was unanimously accepted before the Chapter 11 filing by the holders of the first- and second-lien debt. The plan provides for these terms: -- Unsecured creditors are to be paid in full. -- Holders of first-lien debt will receive $12.4 million cash and notes for $34.4 million -- Second-lien holders are to have notes for $13.15 million. The Chapter 11 plan is built around the sale of its business to American Greetings Corp., which purchased 52% of the first-lien debt in July. Recycled Paper Greetings previously rejected its management services agreement with "out-of-the-money" equity sponsor, Monitor Clipper Partners. The Plan effectuates the restructuring of the Debtors by the implementation of an Agreement, dated December 30, 2008, among RPG, RPG Holdings and American Greetings Corporation, under which the Debtors would be relieved of the debt incurred in connection with MCP's leveraged buy-out of RPG in December 2005. The Debtors believe that the Plan and the Agreement represent the best possible outcome for the Debtors' stakeholders. The Prepetition Lenders hold approximately $207 million of secured debt, incurred to effect MCP's highly leveraged majority share acquisition of RPG in the LBO. All of the Prepetition Lenders have voted in favor of the POR, which provides for recoveries to them that are substantially less than the amount of their secured claims. Thus, MCP's equity interests are worthless, RPG asserted. About Recycled Paper Headquartered in Chicago, Illinois, Recycled Paper Greetings Inc. designs, manufactures, and distributes greetings cards and social expression products throughout the U.S. and Canada. RPG is the third largest greeting card company in North America. The company and three of its affiliates filed for Chapter 11 protection on Jan. 2, 2009 (Bankr. D. Del. Lead Case No. 09-10002). Michael F. Walsh, Esq. and Rachel Ehrlich Albanese, Esq., at Weil, Gotshal & Manges LLP, represent as the Debtors' bankruptcy counsel. Mark D. Collins, Esq., Chun I. Jang, Esq., and Lee E. Kaufman, Esq., at Richards, Layton & Finger, P.A., represents as the Debtors' local counsel. The Debtor proposed Rothschild Inc. as financial and restructuring advisor and Kurtzman Carson Consultants LLC as claims and noticing agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million to $500 million each. RML CAPITAL: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: RML Capital Investment, LLC 383 W. Galena Blvd. Aurora, IL 60506 Bankruptcy Case No.: 09-04609 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- John M. Schoppe 09-04652 Premier Homes, LLC 09-04654 Highland Real Estate of Aurora, Inc. 09-04656 Chapter 11 Petition Date: February 13, 2009 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: John H. Squires Debtor's Counsel: John A. Lipinsky, Esq. Coman & Anderson, P.C. 2525 Cabot Drive, Suite 300 Lisle, IL 60532 Tel: (630) 428-2660 Email: jlipinsky@comananderson.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/ilnb09-04609.pdf The petition was signed by John M. Schoppe, Sole Member of the Company. ROBERT BEERNTSEN: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Robert W. Beerntsen and Carole A. Beerntsen 1125 Moraine Way #1 Green Bay, WI 54303 Bankruptcy Case No.: 09-21735 Chapter 11 Petition Date: February 17, 2009 Court: United States Bankruptcy Court Eastern District of Wisconsin (Milwaukee) Judge: Margaret Dee McGarity Debtor's Counsel: Jessica J. King, Esq. Steinhilber, Swanson, Mares, Marone & Mc 107 Church Avenue P.O. Box 617 Oshkosh, WI 54903-0617 Tel: (920)235-6690 Fax: (920) 426-5530 Email: Jking@oshkoshlawyers.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 incorporated in its petition filing, a full-text copy of which is available for free at: http://bankrupt.com/misc/wieb09-21735.pdf The petition was signed by Robert W. Beerntsen. RODNEY FARMS: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Rodney Farms, Inc. P.O. Box 902 Scottsville, NY 14546 Bankruptcy Case No.: 09-20341 Chapter 11 Petition Date: February 16, 2009 Court: United States Bankruptcy Court Western District of New York (Rochester) Debtor's Counsel: David H. Ealy, Esq. Trevett, Lenweaver & Salzer, P.C. 2 State Street, Suite 1000 Rochester, NY 14614 Tel: (585) 454-2181 Fax: (585) 454-4026 Email: dealy@trevettetal.com Total Assets: $1,305,990 Total Debts: $492,871 A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nywb09-20341.pdf The petition was signed by Barbara Galbraith, President of the company. REICHHOLD INDUSTRIES: Moody's Cuts CFR to B2 on Likely Low Sales ---------------------------------------------------------------- Moody's Investors Service downgraded Reichhold Industries, Inc.'s Corporate Family Rating to B2 from B1, and the rating on its $195 million senior unsecured notes due 2014 to B3 from B2. The loss given default assessment on the senior notes was moved to LGD5 from LGD4 as a result of changes to the company's liability structure. This action concludes the ratings review commenced on December 10, 2008. The outlook for the company's ratings is negative. These summarizes the ratings activity: Reichhold Industries, Inc. Ratings downgraded: * Corporate Family Rating -- B2 from B1 * Probability of Default Rating -- B2 from B1 * $195 million of senior unsecured notes due 2014 -- B3 (LGD5, 71%) from B2 (LGD4, 61%) * Outlook: negative The downgrade to a B2 CFR reflects Moody's expectations that the difficult market conditions faced by the company in many of its key end markets (e.g., residential housing, construction, marine) and the global economic slowdown will continue to result in depressed sales volumes and profitability for Reichhold throughout 2009. Lower volumes and selling prices in 2009 are expected to pressure margins and could strain the company's liquidity position despite the positive impact lower raw material and energy commodity prices have had on the cost of goods sold and working capital requirements. It is not expected that the company will produce positive free cash flow over the next twelve months, despite expected actions by the company to reduce costs and manage its liquidity through lower capital expenditures and limiting dividends. The negative outlook reflects expectations that the ratings could come under further pressure if Reichhold's margins and cash flow metrics fall below levels that would be supportive of its B2 CFR on a sustained basis, economic conditions keep the volumes materially depressed, and/or liquidity becomes overly constrained. Moody's last rating action for Reichhold was on December 10, 2008, when Moody's put Reichhold's ratings under review for a possible downgrade. Reichhold is a leading supplier of unsaturated polyester resins for composites applications and of resins and other polymers for coatings applications. It manufactures over one billion pounds of thermoset resins and gelcoats annually. Products are typically sold to a broad base of customers primarily for industrial purposes. Reichhold's sales for the LTM period ending September 30, 2008, were approximately $1.35 billion. ROSEMENT CLO: Fitch Junks Ratings on $12 Mil. Class D Notes ----------------------------------------------------------- Fitch Ratings downgrades one class and affirms four classes of notes issued by Rosemont CLO, Ltd./Corp. and assigns Rating Outlooks to four classes: --$94,780,485 class A affirmed at 'AAA'; Outlook Stable; --$18,000,000 class B-1 affirmed at 'A'; Outlook Stable; --$7,000,000 class B-2 affirmed at 'A'; Outlook Stable; --$13,200,000 class C affirmed at 'BBB+'; Outlook Negative; --$12,000,000 class D downgraded to 'CCC' from 'BBB'. Rosemont is a cash flow collateralized loan obligation that closed in January 2002 and is managed by Deerfield Capital Management LLC. Rosemont is currently in its amortization period which began in January 2007. The portfolio is comprised of 98% senior secured loans with the balance consisting of second lien loans. The three largest Fitch industry categories represented in the Rosemont portfolio are gaming, leisure & entertainment (12.1%), banking & finance (10.2%), and healthcare (9%). The average credit quality of the portfolio as of the latest trustee report dated Jan. 7, 2009 is 'BB-/B+', which is unchanged from the last review in December 2007. The issuer is currently passing the maximum weighted average Fitch rating factor test. Defaulted securities of $10.1 million represent approximately 6.3% of the portfolio balance. Roughly 7.5% of the portfolio was rated 'CCC+' or lower. In addition, assets on Rating Watch Negative or with a Negative Outlook by at least one rating agency totaled 6.2% and 23%, respectively, of the portfolio balance. In accordance with Fitch's Corporate CDO criteria, Fitch makes standard downward adjustments for any names on Rating Watch Negative by two notches or Outlook Negative by one notch. Class A notes have received $157.2 million, or 62.4%, of their initial balance since the start of the amortization period. The credit enhancement of the class A and B notes has improved as a result of this amortization. Fitch affirms and assigns a Stable Rating Outlook to the class A and B notes primarily due to the improvement in credit enhancement available to these notes. The improvement in the class C and D credit enhancement was offset by deterioration in the portfolio as noted above. At this time, the credit enhancement available to the class C note is consistent with a 'BBB+' rating. If realized Recovery Rates on current and future defaults are lower than historically observed, the class C notes may experience downward rating pressure. Therefore Fitch assigns a Negative Rating Outlook to the class C notes. Fitch downgrades the class D notes to 'CCC' to reflect the expected losses on the defaulted assets currently held in the portfolio. This rating change also considers the impact of future defaults on the portfolio given the profile of assets rated 'CCC+' and lower, on Rating Watch Negative or Negative Outlook. Fitch does not assign Rating Outlooks to structured finance bonds rated 'CCC' and below. The rating of the class A notes addresses the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class B-1, B-2, C and D notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. On April 30, 2008, Fitch released updated rating criteria for Corporate CDOs, which was used for this analysis. For more information, please refer to the reports titled 'Global Rating Criteria for Corporate CDOs' and 'Global Criteria for Cash Flow Analysis in Corporate CDOs' available on Fitch's web site at 'www.fitchratings.com'. With these rating actions, Fitch assigns Outlooks to the class A, B and C notes in accordance with its report 'Introducing Rating Outlooks for U.S. Structured Finance Bonds' dated Sept. 11, 2008. Fitch's Rating Outlooks indicates the likely direction of any rating change over a one- to two-year period and may be Positive, Negative, Stable or, occasionally, Evolving. SCFR LIMITED: Involuntary Chapter 11 Case Summary ------------------------------------------------- Alleged Debtor: SCFR Limited Canon's Court 22 Victoria Street Hamilton M12, Bermuda Case Number: 09-50273 Involuntary Petition Date: February 17, 2009 Court: District of Connecticut (Bridgeport) Judge: Alan H.W. Shiff Petitioner's Counsel: Henry P. Baer, Esq. hbaer@fdh.com Finn Dixon & Herling, LLP 177 Broad Street, 15th Floor Stamford, CT 06901-2048 Tel: (203) 325-5000 Fax: (203) 325-5001 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Windmill Management LLC fees unpaid and due $532,332 3 Pickwick Plaza Suite 400 Greenwich, CT 06830 SEMGROUP LP: Creditors Committee Sues for CEO Kivisto ----------------------------------------------------- The official committee of unsecured creditors for SemGroup L.P., has commenced a suit against former Chief Executive Thomas Kivisto. According to Bloomberg's Bill Rochele, the Creditors Committee alleged that Mr. Kivisto, who was put on administrative leave in July and fired "for cause" in October, alleging he used his control of the company to cause SemGroup to finance his personal investments. The creditors panel, according to the report, wants $362 million in restitution. About SemGroup LP SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream service company providing the energy industry means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminaling and storing energy. SemGroup serves customers in the United States, Canada, Mexico, Wales, Switzerland and Vietnam. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08- 11525). These represent the Debtors' restructuring efforts: John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq., at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq., and Sherri L. Toub, Esq., at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq., and Sylvia A. Mayer, Esq., at Weil Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. The CCAA stay expires on Nov. 21, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed $5,429,038,000 in total assets and $5,033,214,000 in total debts. In their petition, they showed more than $1,000,000,000 in estimated total assets and more than $1,000,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by SemGroup L.P. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-700) SOCIETY OF JESUS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Society of Jesus, Oregon Province P.O. Box 86010 Portland, OR 97286-0010 Type of Business: 09-30938 Chapter 11 Petition Date: February 17, 2009 Court: District of Oregon Judge: Elizabeth L Perris Debtor's Counsel: Alex I Poust, Esq. apoust@schwabe.com Howard M. Levine, Esq. howard@sussmanshank.com Thomas W. Stilley, Esq. tom@sussmanshank.com Sussman Shank LLP 1211 SW 5th Ave., #1600-1900 Portland, OR 97204 Tel: (503) 222-9981 Total Assets: $4,820,386 Total Debts: $61,775,829 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ A. A. tort claim $5,000,000 c/o Michelle Menely, Esq. 600 University St. Ste 2100 Seattle, WA 98101-4185 C. F. c/o Michelle Menely, Esq. tort claim $5,000,000 600 University St. Ste 2100 Seattle, WA 98101-4185 F. V. c/o Michelle Menely, Esq. tort claim $5,000,000 600 University St. Ste 2100 Seattle, WA 98101-4185 G. V. tort claim $5,000,000 c/o Michelle Menely, Esq. 600 University St. Ste 2100 Seattle, WA 98101-4185 Tort Claim Unliquidated J. E. c/o Michelle Menely, Esq. tort claim $5,000,000 600 University St. Ste 2100 Seattle, WA 98101-4185 Tort Claim Unliquidated Disputed J. M. tort claim $5,000,000 c/o Michelle Menely, Esq. 600 University St. Ste 2100 Seattle, WA 98101-4185 Tort Claim Unliquidated Disputed J. Mc. tort claim $5,000,000 c/o Michelle Menely, Esq. 600 University St. Ste 2100 Seattle, WA 98101-4185 J. V. tort claim $5,000,000 c/o Michelle Menely, Esq. 600 University St. Ste 2100 Seattle, WA 98101-4185 M. A. tort claim $5,000,000 c/o Michelle Menely, Esq. 600 University St. Ste 2100 Seattle, WA 98101-4185 P. K. 2 tort claim $5,000,000 c/o Michelle Menely 600 University St. Ste 2100 Seattle, WA 98101-4185 Jesuit Conference, Inc. tort claim $529,460 Attn: Rev Thomas P. Gaunt, SJ 1016 - 16th St NW, Ste 400 Washington, DC 20036 Omak Area Abuse Claimants $200,000 c/o John D. Allison, Esq. West 2208 Second Avenue Spokane, WA 99204 Brissett, Cormac tort claim $75,136 Society of Jesus, Rome vendor $75,066 CA-V tort claim $75,000 CV-R tort claim $75,000 D. P. tort claim $75,000 J. P. tort claim $75,000 L. T. tort claim $75,000 P. S. tort claim $75,000 The petition was signed by Michael A. Tyrrell, S.J., treasurer. SOUTHLAND CHRYSLER: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Southland Chrysler, Inc. P.O. Box 5709 Cordele, GA 31015 Bankruptcy Case No.: 09-10272 Chapter 11 Petition Date: February 13, 2009 Court: United States Bankruptcy Court Middle District of Georgia (Albany) Judge: James D. Walker Jr. Debtor's Counsel: James P. Smith, Esq. Stone & Baxter, LLP Fickling & Co. Building, Suite 800 577 Mulberry Street Macon, GA 31201 Tel: (478) 750-9898 Fax: (478) 750-9899 Email: jsmith@stoneandbaxter.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nysb08-15173.pdf The petition was signed by William H. Davis, Jr., President of the company. SPECTRUM BRANDS: Sec. 341 Meeting of Creditors Slated for March 4 ----------------------------------------------------------------- Nancy Ratchford, Assistant U.S. Trustee for Region 7, will convene a meeting of creditors in Spectrum Brands, Inc., and its affiliates' Chapter 11 cases on March 4, 2009, at 1:00 p.m., at Room 333, at 615 E. Houston Street, Suite 533, in San Antonio, Texas. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in the Debtor's bankruptcy cases. Attendance by the Debtor's creditors at the meeting is welcome, but not required. The Sec. 341(a) meeting offers the creditors a one-time opportunity to examine the Debtor's representative under oath about the Debtor's financial affairs and operations that would be of interest to the general body of creditors. About Spectrum Brands Based in Cibolo, Texas, Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- supplies consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products, and portable lighting. Spectrum Brands' business is operated in three reportable segments: (a) Global Batteries and Personal Car; (b) Global Pet Supplies; and (c) Home and Garden. Spectrum Brands has roughly 5,960 employees worldwide, with about 2,700 of those employees working within the United States. In addition, Spectrum Brands holds a 50% interest in a domestic entity; minority interests (less than 25% each) in a domestic entity and a foreign entity; a limited partnership interest in a foreign entity; and a 100% interest in a foreign trust. Spectrum Brands, Inc. and 13 subsidiaries filed separate Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead Case No. 09-50455). The Hon. Ronald B. King presides over the cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr., Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B. Kingman, Esq., in San Antonio, serve as the Debtors' counsel. Sutherland Asbill & Brennan LLP acts as special counsel; Perella Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as tax consultant; and Logan & Company Inc. as claims and noticing agent. As of September 30, 2008, Spectrum Brands had $2,247,479,000 in total assets and $3,274,717,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Spectrum Brands Inc. and its various subsidiaries. (http://bankrupt.com/newsstand/or 215/945-7000) SPECTRUM BRANDS: Final DIP Financing Hearing Slated for March 4 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Texas will convene a hearing March 4, 2009, to consider final approval of the request of Spectrum Brands, Inc. and its affiliates to borrow up to $235,000,000 in postpetition secured financing. The Debtors obtained interim permission to obtain up to $235,000,000 of DIP Loans from a consortium of lenders led by Wachovia Bank, National Association, as administrative agent. The DIP commitment consists of: (i) Revolving Loans in an amount up to $190 million, subject to the Borrowing Base and other terms described in the DIP Agreement, including a letter of credit facility up to a maximum of $20 million and a swingline facility up to a maximum of $20 million; and (ii) a Supplemental Loan, in the form of an asset based revolving loan, in an amount up to $45 million. The Revolving Loans will be extended by these banks and financial institutions: Wachovia Bank, National Association $42,222,222 Bank of America, NA 42,222,222 General Electric Capital Corporation 31,666,666 Wells Fargo Foothill, LLC 31,666,666 The CIT Group/Commercial Services, Inc. 16,888,888 Landsbanki Commercial Finance 12,666,666 Allied Irish Banks, p.l.c. 12,666,666 Pursuant to the Interim DIP Order dated February 5, 2009, proceeds from the DIP Loans will be used in accordance with a 13- Week Budget, a full-text copy of which is available for free at http://bankrupt.com/misc/spectrumdipbudget.pdf The Debtors will be presenting these documents and witnesses at the Final DIP hearing: * Kent J. Hussey, Joshua Scherer and Anthony Genito as witnesses; * 13-Week Cash Flow; * Assumptions to 13-Week Cash Flow; * Intercreditor Agreement, dated September 28, 2007, among Spectrum Brands, the Subsidiary Loan Parties, Goldman Sachs Credit Partners, L.P., as collateral agent for the Term Secured Parties and Wachovia Bank, N.A., as collateral agent for the Revolving Secured Parties; * Ratification and Amendment Agreement, dated February 3, 2009, by and among Wachovia Bank, as administrative agent, collateral agent, and supplemental loan lender, Spectrum Brands, as borrower, and the Subsidiary Loan Parties; * DIP Comparison Analysis; and * Commitment Letter, dated February 4, 2009, to Spectrum Brands from Goldman Sachs Lending Partners, LLC, Caspian Select Credit Master Fund, Ltd., Castlerigg Master Investments, Ltd., and Silver Point Finance, LLC. About Spectrum Brands Based in Cibolo, Texas, Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- supplies consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products, and portable lighting. Spectrum Brands' business is operated in three reportable segments: (a) Global Batteries and Personal Car; (b) Global Pet Supplies; and (c) Home and Garden. Spectrum Brands has roughly 5,960 employees worldwide, with about 2,700 of those employees working within the United States. In addition, Spectrum Brands holds a 50% interest in a domestic entity; minority interests (less than 25% each) in a domestic entity and a foreign entity; a limited partnership interest in a foreign entity; and a 100% interest in a foreign trust. Spectrum Brands, Inc. and 13 subsidiaries filed separate Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead Case No. 09-50455). The Hon. Ronald B. King presides over the cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr., Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B. Kingman, Esq., in San Antonio, serve as the Debtors' counsel. Sutherland Asbill & Brennan LLP acts as special counsel; Perella Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as tax consultant; and Logan & Company Inc. as claims and noticing agent. As of September 30, 2008, Spectrum Brands had $2,247,479,000 in total assets and $3,274,717,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Spectrum Brands Inc. and its various subsidiaries. (http://bankrupt.com/newsstand/or 215/945-7000) SPECTRUM BRANDS: Seeks Permission to Hire Skadden Arps as Counsel ----------------------------------------------------------------- Pursuant to Sections 327(a) and 329 of the Bankruptcy Code, Spectrum Brands, Inc., and its affiliates seek authority from the U.S. Bankruptcy Court for the Western District of Texas to employ Skadden, Arps, Slate, Meagher & Flom LLP and its affiliated law practice entities as their bankruptcy co-counsel, nunc pro tunc the Petition Date. The Debtors, according to Anthony L. Genito, the Debtors' executive vice president and chief financial officer, have selected Skadden Arps because of its extensive knowledge of the Debtors' businesses and financial affairs, its general experience and knowledge, and its recognized expertise in the field of debtors' and creditors' rights and business reorganizations under Chapter 11 of the Bankruptcy Code. Skadden Arps, Mr. Genito relates, has a long-standing relationship with the Debtors, having served as counsel to the Debtors for several years in a variety of matters including several financing transactions, class action and derivative action lawsuits, and general securities law advice. As a result of the firm's long-term relationship with the Debtors and its role in advising the Debtors with respect to restructuring issues, Skadden Arps has extensive background, knowledge and understanding of the Debtors' operations and businesses and is therefore well-suited to serve as bankruptcy co-counsel, Mr. Genito says. The Debtors desire to employ Skadden Arps under a general retainer because of the extensive legal services that will be required in connection with these cases and the firm's familiarity with the businesses of the Debtors. As co-counsel, Skadden Arps will: (a) advise the Debtors with respect to their powers and duties as debtors and debtors in possession in the continued management and operation of their businesses and properties; (b) negotiate and advise the Debtors with respect to debtor in possession financing and exit financing; (c) attend meetings and negotiating with representatives of creditors and other parties in interest and advise and consult on the conduct of the cases, including all of the legal and administrative requirements of operating in Chapter 11; (d) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on behalf of the Debtors' estates, the defense of any actions commenced against those estates, negotiations concerning litigation in which the Debtors may be involved and objections to claims filed against the estates; (e) prepare, on behalf of the Debtors, motions, applications, answers, orders, reports, and papers necessary to the administration of the estates; (f) prepare and negotiate on the Debtors' behalf the plan of reorganization, disclosure statement, and all related or similar agreements or documents, and taking any necessary action on behalf of the Debtors to obtain confirmation of the plan; (g) advise the Debtors in connection with any sale of assets; (h) perform other necessary legal services and providing other necessary legal advice to the Debtors in connection with these Chapter 11 cases; and (i) appear g before the Court, any appellate courts, and the United States Trustee and protecting the interests of the Debtors' estates before these courts and the United States Trustee. For their professional services, the Debtors will pay Skadden Arps based on its hourly rates: Professional Hourly Rate ------------ ----------- Partners $730 to 1,050 Counsel and Special counsel 695 to 835 Associates 360 to 680 Legal assistants 175 to 295 The Debtors will also reimburse Skadden Arps for their reasonable and necessary out-of-pocket expenses incurred in the rendition of its services with the Debtors. The Debtors have paid Skadden Arps $750,000 for its professional services on behalf of the Debtors. Within the one-year period preceding the Petition Date, the total aggregate amount of fees earned and expenses incurred by Skadden Arps on behalf of the Debtors in contemplation of these cases was approximately $4,137,225. D.J. Baker, Esq., a member at Skadden, Arps, Slate, Meagher & Flom, LLP, assures the Court that his firm is a "disinterested person," as the term is defined in Section 101(14) of the Bankruptcy Code and as modified by Section 1107(b). Skadden Arps, he adds, does not hold or represent any interest adverse to the estates. About Spectrum Brands Based in Cibolo, Texas, Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- supplies consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products, and portable lighting. Spectrum Brands' business is operated in three reportable segments: (a) Global Batteries and Personal Car; (b) Global Pet Supplies; and (c) Home and Garden. Spectrum Brands has roughly 5,960 employees worldwide, with about 2,700 of those employees working within the United States. In addition, Spectrum Brands holds a 50% interest in a domestic entity; minority interests (less than 25% each) in a domestic entity and a foreign entity; a limited partnership interest in a foreign entity; and a 100% interest in a foreign trust. Spectrum Brands, Inc. and 13 subsidiaries filed separate Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead Case No. 09-50455). The Hon. Ronald B. King presides over the cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr., Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B. Kingman, Esq., in San Antonio, serve as the Debtors' counsel. Sutherland Asbill & Brennan LLP acts as special counsel; Perella Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as tax consultant; and Logan & Company Inc. as claims and noticing agent. As of September 30, 2008, Spectrum Brands had $2,247,479,000 in total assets and $3,274,717,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Spectrum Brands Inc. and its various subsidiaries. (http://bankrupt.com/newsstand/or 215/945-7000) SPECTRUM BRANDS: Seeks Court OK to Engage W. Kingman as Co-Counsel ------------------------------------------------------------------ Pursuant to Sections 327(a) and 329 of the Bankruptcy Code, Spectrum Brands, Inc., and its affiliates seek authority from the U.S. Bankruptcy Court for the Western District of Texas to employ the Law Offices of William B. Kingman, P.C., as their bankruptcy co-counsel, effective as of the Petition Date. Anthony L. Genito, executive vice president and chief financial officer of Spectrum Brands, Inc., informs the Court that William Kingman will serve as the Debtors' bankruptcy co-counsel with Skadden, Arps, Slate, Meagher & Flom, LLP, and the law firm of Vinson & Elkins L.L.P., and handle specific bankruptcy matters as directed by the Debtors. The Debtors, Mr. Genito relates, have selected William Kingman because of the firm's extensive knowledge of the Western District of Texas' local rules and procedures, its general experience and knowledge, Mr. Kingman's board certification in Business Bankruptcy Law with the Texas Board of Legal Specialization, and his expertise in the field of debtors' and creditors' rights and business reorganizations under Chapter 11 of the Bankruptcy Code. The Debtors desire to employ Mr. Kingman under a general retainer. As bankruptcy co-counsel, Mr. Kingman will: (a) advise the Debtors with respect to their powers and duties as debtors and debtors in possession in the continued management and operation of their businesses and properties; (b) negotiate and advise the Debtors with respect to debtor in possession financing and exit financing; (c) attend meetings and negotiating with representatives of creditors and other parties-in-interest and advise and consult on the conduct of the cases, including all of the legal and administrative requirements of operating in chapter 11; (d) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on behalf of the Debtors' estates, the defense of any actions commenced against those estates, negotiations concerning litigation in which the Debtors may be involved and objections to claims filed against the estates; (e) prepare, on behalf of the Debtors, motions, applications, answers, orders, reports, and papers necessary to the administration of the estates; (f) negotiate on the Debtors' behalf the plan of reorganization, disclosure statement, and all related or similar agreements and/or documents, and taking any necessary action on behalf of the Debtors to obtain confirmation of the plan; (g) advise the Debtors in connection with any sale of assets; (h) perform other necessary legal services and providing other necessary legal advice to the Debtors in connection with these Chapter 11 cases; and (i) appear before the Court, any appellate courts, and the United States Trustee and protecting the interests of the Debtors' estates before such courts and the United States Trustee. The Debtors will pay Mr. Kingman based on its hourly rates: Professional Hourly rate ------------ ----------- William B. Kingman, Esq. $300 Paralegals $75 With respect to restructuring matters, the Debtors paid the firm an initial retainer of $50,000 on January 30, 2009, to satisfy prepetition fees and expenses of $8,596, with the remaining $41,403 balance to satisfy all or a portion of the firm's Court- approved postpetition fees. William B. Kingman, Esq., a shareholder and president of the Law Offices of William B. Kingman, P.C., assures the Court that his firm has no interest adverse to the Debtors and is a "disinterested person" as term is defined in Section 327 of the Bankruptcy Code. Mr. Kingman further states that his firm has no connections with the Debtors, creditors or any other parties-in- interest in these bankruptcy cases. About Spectrum Brands Based in Cibolo, Texas, Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- supplies consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products, and portable lighting. Spectrum Brands' business is operated in three reportable segments: (a) Global Batteries and Personal Car; (b) Global Pet Supplies; and (c) Home and Garden. Spectrum Brands has roughly 5,960 employees worldwide, with about 2,700 of those employees working within the United States. In addition, Spectrum Brands holds a 50% interest in a domestic entity; minority interests (less than 25% each) in a domestic entity and a foreign entity; a limited partnership interest in a foreign entity; and a 100% interest in a foreign trust. Spectrum Brands, Inc. and 13 subsidiaries filed separate Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead Case No. 09-50455). The Hon. Ronald B. King presides over the cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr., Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B. Kingman, Esq., in San Antonio, serve as the Debtors' counsel. Sutherland Asbill & Brennan LLP acts as special counsel; Perella Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as tax consultant; and Logan & Company Inc. as claims and noticing agent. As of September 30, 2008, Spectrum Brands had $2,247,479,000 in total assets and $3,274,717,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Spectrum Brands Inc. and its various subsidiaries. (http://bankrupt.com/newsstand/or 215/945-7000) SPRINT NEXTEL: Implements Discounts to Keep Subscribers ------------------------------------------------------- Amol Sharma and Roger Cheng at The Wall Street Journal report that Sprint Nextel Corp. will implement discounts to counter subscriber loss, after new marketing campaign and improved customer service have failed to do so. According to WSJ, Sprint has lost 1.3 million subscribers in the fourth quarter 2008, bringing total losses for 2008 to 4.6 million and ending the year with about 49.3 million subscribers. Sprint, WSJ relates, said that it is making some progress and predicts subscriber losses will lessen in 2009. Sprint could undercut rivals on pricing, WSJ says. Spring CEO Dan Hesse said that the firm's marketing will increasingly highlight the savings of the company's monthly plans versus other carriers, according to the report. The report notes that Sprint plan with unlimited calling, text, e-mail, Web access, and navigation costs $99.99 per month, while similar plans from AT&T and Verizon are $139.99. Sprint also added to the plan a laptop broadband access for a total of $149.99 per month, compared with $199.99 for similar bundles with AT&T and Verizon, the report says. WSJ states that Sprint's Boost Mobile unit added a $50 monthly prepaid plan for unlimited calling, text messaging, and Web surfing. Citing telecom operator consultant Rory Altman, WSJ says that Sprint has to get more aggressive in its pricing to stop market-share losses. According to WSJ, analysts said that carriers risk "cannibalizing" their business if they market discounted plans too aggressively. Sprint has so far seen "negligible" numbers of higher-paying users switching to the $50 Boost plan, WSJ says, citing Mr. Hesse. WSJ notes that pricing changes alone won't revive Sprint's business. Mr. Hesse, WSJ relates, admitted that Sprint must repair an image that became associated with poor client service and inferior network quality in 2007 and that the company has been ramping up spending on television ads. Carrying a hit phone such as Apple Inc.'s iPhone also would attract subscribers. Sprint, WSJ states, said that it has had success with devices like Samsung Electronics Co.'s Instinct and that it is optimistic about the Pre from Palm Inc. WSJ relates that Sprint hasn't had a phone that lures significant numbers of clients away from rivals. WSJ reports that Mr. Hesse told investors on a conference call on Thursday that Sprint has cash to meet debt obligations at least through 2010. Fourth Quarter and Full-Year 2008 Results Sprint reported fourth quarter and full-year 2008 financial results. The company generated $536 million of Free Cash Flow* in the quarter, and $1.8 billion for full-year 2008. During the quarter, the company repaid approximately $1 billion in principal of debt and received $213 million in proceeds at the closing of the Clearwire transaction. As of Dec. 31, 2008, the company had $3.7 billion of cash and cash equivalents and $1.4 billion of borrowing capacity available under its revolving bank credit facility, for a total liquidity of $5.1 billion. The company reported consolidated net operating revenues of $8.4 billion and a diluted loss per share of 57 cents. Full-year 2008 revenues were $35.6 billion. The company recorded a non-cash goodwill impairment charge of approximately $1 billion in the quarter, which finalizes the accounting for the goodwill related to the Sprint Nextel merger and other acquisitions. Adjusted EPS before Amortization*, which removes the impact of non-cash goodwill and other asset impairment charges, as well as the effects of other special items and non-cash amortization expense, was a loss of 1 cent for the quarter. "In tough economic times, we're generating substantial cash and reducing costs to ensure we remain financially sound. We already have the cash on hand to be able to meet our debt service requirements at least through the end of 2010," said Mr. Hesse. "With this financial stability, we can build on the improvements we've made in customer care, strengthen our brand and maintain continued strong network performance in 2009. "Independent evaluations report our significant improvement in customer care and network performance. Customers are responding to our messages of value, simplicity and productivity. Simply EverythingTM provides a worry-free postpaid experience, and we are bringing the lessons learned from this success to our new family plans and to the prepaid market with the hassle-free national Boost Monthly Unlimited offer. We also have high expectations for the Palm(R) Pre handset which will be launched later this year," Mr. Hesse said. On Nov. 28, 2008, the company closed a transaction with Clearwire Corporation. At closing, the company contributed assets, including its 2.5 gigahertz spectrum and WiMAX-related assets, in exchange for an ownership interest in Clearwire. Clearwire is deploying WiMAX, a 4G technology, as a new nationwide network. The services supported by these technologies will give subscribers with compatible devices high-speed access to the Internet and a variety of increasingly sophisticated data services. The company has entered into a mobile virtual network operator (MVNO) arrangement with Clearwire that enables it to resell Clearwire's 4G wireless services under the Sprint brand name. Consolidated Results Consolidated net operating revenues of $8.4 billion for the quarter were 4% lower than in the third quarter, primarily due to a lower contribution from Wireless. Adjusted OIBDA of $1.7 billion reflects a sequential decline in net operating revenues due to subscriber losses, partially offset by lower cost of service and continued improvement in SG&A expenses. Fourth quarter Adjusted OIBDA includes $60 million in non-cash compensation expense. Also included in the fourth quarter and full-year 2008 Adjusted OIBDA is approximately $60 million and $290 million, respectively, in operating expenses associated with the company's WiMAX efforts that will not recur in 2009 due to the closing of the Clearwire transaction. Capital expenditures were $548 million in the quarter, as compared to $485 million in the third quarter. The increase reflects higher spending in both Wireless and Wireline segments. Included in the fourth quarter and full-year 2008 capital expenditures is $90 million and $560 million, respectively, in capital expenditures related to the deployment of WiMAX that will not recur in 2009 due to the closing of the Clearwire transaction. In the quarter, the company recorded cash expenditures of $146 million related to intangible asset acquisitions, compared to $187 million in the third quarter. All of the acquisitions during the quarter were associated with re-banding efforts. Free Cash Flow* was $536 million for the quarter, compared to $211 million in the fourth quarter of 2007 and $1.1 billion in the third quarter of 2008. The sequential decline reflects primarily an increase in working capital, partially offset by the $213 million proceeds received from Clearwire to reimburse us for the $388 million financing that we provided to the company's WiMAX business between April and the closing of the transaction. Additionally, cash paid for capital expenditures and FCC licenses decreased by $134 million. Net Debt* decreased by approximately $550 million from the end of the third quarter to $17.9 billion at the end of the fourth quarter, consisting of total debt of $21.6 billion, offset by cash and marketable securities of $3.7 billion. The company repaid $1 billion of its revolving credit facility in November 2008. Wireless Results The company served 49.3 million customers at the end of 2008, compared to 53.8 million at the end of 2007. The credit quality of its customer base improved every quarter in 2008, and prime customers represent almost 84% of the post-paid base, compared to 79% a year ago. For the quarter, total wireless customers declined by a net 1.3 million, including losses of 1.1 million post-paid customers and 314,000 prepaid users, which was slightly offset by a 146,000 increase in the number of wholesale and affiliate subscribers. At the end of the fourth quarter, the company served 36.7 million post-paid subscribers, 3.6 million prepaid subscribers and 9.0 million wholesale and affiliate subscribers. Subscribers by network platform include 35.5 million on CDMA, 12.4 million on iDEN and 1.4 million Power Source users who utilize both networks. Almost 10% of post-paid customers upgraded their handsets during the fourth quarter, resulting in increased contract renewals. In the fourth quarter, the company added to its device and service capabilities with the launch of the Samsung Highnote(TM), LG Lotus(TM) and the award-winning Samsung Rant(TM), all featuring the easy-to-use One Click interactive user interface, and the HTC Touch Pro(TM), Touch Diamond(TM) by HTC, and i576 by Motorola. Additionally, the company launched the BlackBerry(R) Curve(TM) 8350i -- the newest Nextel Direct Connect-capable BlackBerry smartphone. For 2009, Sprint has announced that it will be the exclusive carrier partner for both the Palm(R) Pre(TM) and Motorola Stature(TM) i9. The company plans to launch a total of seven new Nextel Direct Connect handsets as part of its new device portfolio, with most launching during the first half of the year. Wireless Churn Wireless post-paid churn was 2.16% compared to 2.15% in the third quarter and 2.29% in the year-ago period. The sequential increase in churn is primarily driven by deactivations on business lines as a result of current economic conditions, and the year-over-year decrease is primarily due to the improvement in the credit quality of the company's customer base, partially offset by the slight increase in voluntary churn. Boost churn in the fourth quarter was 8.20%, compared to 8.16% in the third quarter of 2008. Wireless Service Revenues Wireless service revenues for the quarter of $6.6 billion declined 13% year-over-year and 4% sequentially. The year-over-year decline and the sequential decline were due primarily to fewer wireless subscribers. Wholesale, affiliate, and other revenues were down sequentially and as compared to the year-ago period primarily due to a decline in average monthly service revenue per wholesale subscriber. Wireless post-paid ARPU in the quarter was stable sequentially at $56, as growth in data helped offset voice declines. Wireless post-paid ARPU declined by approximately 4% compared to the year- ago period, reflecting continued pressure on iDEN voice monthly access and overage revenues, partially offset by data revenue growth. Data revenues contributed more than $14.50 to overall post-paid ARPU in the fourth quarter, led by growth in CDMA data ARPU. CDMA data ARPU increased about 9% from third quarter, to more than $17.75, now representing almost 31% of total CDMA ARPU. The increase was driven by strong take rates on bundled data services, such as those included with Simply Everything(TM), as well as continued growth in data cards. Prepaid ARPU in the quarter was approximately $30 compared to $28 in the year-ago period and $31 in the third quarter of 2008. The year-over-year increase reflects a growing contribution from CDMA Boost Unlimited subscribers. The sequential decline is due to lower ARPU from traditional prepaid users. Wireless Operating Expenses and Adjusted OIBDA* Total operating expenses, after normalizing for special items, were $7.6 billion in the fourth quarter, compared to $8.2 billion in the year-ago period and $7.8 billion in the third quarter of 2008. Adjusted OIBDA* of $1.5 billion in the quarter compares to $2.2 billion in the fourth quarter of 2007 and $1.6 billion in the third quarter of 2008. The year-over-year decline in Adjusted OIBDA* was primarily due to fewer wireless subscribers, offset by an improvement of over $500 million in SG&A expenses. The sequential decline was due primarily to fewer wireless subscribers partially offset by lower cost of service and continued improvement in SG&A expense. Equipment subsidy of $800 million (equipment revenue of approximately $400 million less cost of products of $1.2 billion) compared to almost $700 million in the third quarter and over $500 million a year ago. The year-over-year increase in subsidy is primarily due to the increase in the average cost per handset sold as the company continued to sell a greater number of higher-priced units, partially offset by a decrease in the number of handsets sold. SG&A expenses declined 19% from the fourth quarter of 2007 and 4% from the third quarter of 2008. The year-over-year improvement is due to lower selling, bad debt and labor expenses. On a sequential basis, the decline reflects lower selling and bad debt expenses. Bad debt expense was at its lowest level since the Sprint Nextel merger in 2005 due to the continued increase in the credit quality of the company's subscribers and improved collection efforts. Wireless Capital Spending Wireless capital expenditures were $304 million in the fourth quarter, compared to $217 million spent in the third quarter of 2008 and $1.4 billion spent in the fourth quarter of 2007. Fourth quarter Wireless capital expenditures increased sequentially, principally due to the timing of projects to increase capacity and introduce EVDO capability in certain smaller markets. The year- over-year decrease in wireless capital spending reflects reduced capacity needs and the conclusion of several network and IT investment initiatives. At the end of the quarter, Sprint's CDMA and iDEN networks continue to operate at best-ever levels, and Sprint has the most dependable+ 3G network in the country. Wireline Results Wireline revenues of $1.5 billion for the quarter were 3% lower sequentially and 6% lower year-over-year as legacy voice and data declines offset Internet revenue growth. Internet revenues for the quarter increased 25% from the year-ago period and 2% sequentially. The year-over-year increase reflects strong enterprise demand for Global MPLS services and the increasing base of cable subscribers who utilize the company's VoIP services. Internet revenues as a percent of Wireline revenue have increased from 24% in 2007 to 34% in 2008. At the end of the fourth quarter, the company supported nearly 4.4 million users of cable partner VoIP services. These services are currently available to almost 31 million MSO households. Legacy voice revenues for the quarter declined 5% sequentially and 14% year-over-year. Legacy data revenues are impacted in part by customer transitions to IP services. These legacy services declined 28% compared to the fourth quarter of 2007 and 10% quarter-over-quarter. Adjusted OIBDA* was $326 million compared to $263 million reported for the third quarter of 2008. Total operating expenses, after normalizing for special items, were $1.3 billion in the fourth quarter, 8% lower sequentially and 7% lower year-over-year. Wireline capital expenditures in the quarter were $110 million and were primarily deployed to support IP growth. Forecast Sprint expects that both post-paid and total subscriber losses will improve in 2009, as compared to 2008. The company expects full-year capital expenditures in 2009 to be consistent with 2008 levels, excluding WiMAX. The company expects to continue to generate positive Free Cash Flow* during 2009. About Sprint Nextel Sprint Nextel Corp. -- http://www.sprint.com/-- offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel is widely recognized for developing, engineering and deploying innovative technologies, including two robust wireless networks serving about 54 million customers at the end of the fourth quarter 2007; industry-leading mobile data services; instant national and international walkie- talkie capabilities; and a global Tier 1 Internet backbone. * * * The Troubled Company Reporter reported on Aug. 13, 2008, that DBRS assigned the Sprint Nextel Corporation proposed issuance of $3.0 billion of Cumulative Perpetual Convertible Preferred Shares a rating of BB. The trend is negative. According to the TCR on January 27, 2009, Sprint will lay off 14% of its work force, to be completed by the end of the first quarter. Sprint Nextel will take actions in the first quarter of 2009 to reduce internal and external labor costs by approximately $1.2 billion on an annualized basis. The actions include the elimination of approximately 8,000 positions within the company, which is expected to be largely completed by March 31. The positions to be eliminated will impact all levels of the company, and the impact on geographic locations will vary. STANLEY BUDRYK: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Stanley E. Budryk 44 Mill Street Framingham, MA 01701 Bankruptcy Case No.: 09-11181 Debtor Description: Stanley E. Budryk is a Trustee/Beneficiary of New England Realty Trust and Arlington Realty Trust. Chapter 11 Petition Date: February 17, 2009 Court: United States Bankruptcy Court District of Massachusetts (Boston) Judge: Frank J. Bailey Debtor's Counsel: Harold B. Murphy, Esq. Hanify & King, P. C. One Beacon Street 21st Floor Boston, MA 02108 Tel: (617) 423-0400 Fax: (617)556-8985 Email: bankruptcy@hanify.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 incorporated in its petition filing, a full-text copy of which is available for free at: http://bankrupt.com/misc/mab09-11181.pdf The petition was signed by Stanley E. Budryk. STEVE & BARRY'S: Glimcher Reports Impact of Co.'s Liquidation ------------------------------------------------------------- Glimcher Realty Trust reported total revenues of $82.0 million in the fourth quarter of 2008 compared to revenues of $84.6 million for the fourth quarter of 2007. Glimcher said Wednesday that the $2.6 million decrease in revenue relates primarily to a $1.5 million decline in outparcel sales, $746,000 decrease in base rents and $231,000 decrease in straight-line rents. It said the decrease in base rents relates primarily to the write off of non- cash inducements and lost rents related to the closing of some Steve & Barry's stores. These decreases were partially offset by a $286,000 increase in lease termination income. Glimcher also said net operating income for comparable wholly owned mall properties -- Comp Malls -- decreased 2.0% in the fourth quarter of 2008 over the fourth quarter of 2007 when excluding the impact of the Steve & Barry's bankruptcy and liquidation -- decrease of 2.6% when including the impact of Steve & Barry's. It said net operating income was up nearly 0.5% for the fiscal year 2008 compared to the fiscal year 2007 when excluding the impact of the Steve & Barry's bankruptcy and liquidation and flat when including the impact of Steve & Barry's. Glimcher reported that net income available to common shareholders during the fourth quarter of 2008 was $1.7 million as compared to a loss of $21.3 million in the fourth quarter of 2007. For the year ended December 31, 2008, it disclosed net loss to common shareholders of $700,000, compared to net income of $20.9 million for the year ended December 31, 2007. Based in Columbus, Ohio, Glimcher Realty Trust is a real estate investment trust that owns, manages, acquires and develops regional and super-regional malls. At December 31, 2008, the Company's mall portfolio, including assets held through one of the Company's strategic joint ventures, consisted of 23 properties located in 14 states with gross leasable area totaling approximately 20.9 million square feet. The community center portfolio is comprised of four properties representing approximately 769,000 square feet. BH S&B Holdings LLC filed for bankruptcy protection together with seven other affiliates on Nov. 19, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-14604). The seven debtor-affiliates are BH S&B Distribution LLC, BH S&B Lico LLC, BH S&B Retail LLC, BHY S&B Intermediate Holdco LLC, Cubicle Licensing LLC, Fashion Plate Licensing LLC, and Heritage Licensing LLC. BH S&B was formed by investment firms Bay Harbour Management and York Capital Management in August 2008 to acquire the business operations and assets of bankrupt retailer Steve & Barry's for $163 million in August 2008. Steve and Barry's, based in Port Washington, New York, was a specialty retailer of apparel and accessories, selling, among other things, university apparel and lifestyle brands, private-label casual clothing, and exclusive celebrity endorsed apparel. Steve & Barry's had 240 locations when it was bought and the new owners had planned to cut that down to 173 stores. BH S&B had intended to operate certain Steve & Barry's stores as going concerns and to liquidate inventory at other locations. Since the sale closing, however, for various reasons, including the general health of the American economy and the state of the retail market in particular, sales at all stores have been disappointing, and BH S&B's revenue has suffered. As a result, BH S&B was not in compliance with certain covenants under their senior secured credit facility and had no prospects for continued financing of their business as a going concern. In consultation with its lenders, BH S&B decided the appropriate course of action to maximize value for the benefit of all of its stakeholders was an orderly liquidation in Chapter 11. Bay Harbour Management is an SEC registered investment advisor with significant experience in purchasing distressed companies and effectuating their turnaround. The firm's holdings have included the retailer Barneys New York, the facilities based CLEC Telcove, and the former Aladdin Casino, now operating on the Las Vegas strip as the Planet Hollywood Resort and Casino following its rebranding and turnaround. York Capital Management is an SEC registered investment advisor with offices in New York, London, and Hong Kong with more than $15 billion in assets under management. York Capital was founded in 1991 and specializes in value oriented and event driven equity and credit investments. BH S&B is 100% owned by BHY S&B Intermediate Holdco LLC. BH S&B and its affiliates' chapter 11 cases are presided over by the Honorable Martin Glenn. Joel H. Levitin, Esq., and Richard A. Stieglitz, Jr., Esq., at Cahill Gordon & Reindel LLP, in New York, serve as bankruptcy counsel to BH S&B and its affiliates. RAS Management Advisors LLC acts as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and notice agent. TENNECO INC: Moody's Cuts Rating to 'B3' on Low Auto Demand ----------------------------------------------------------- Moody's Investors Service has lowered the ratings of Tenneco Inc. -- Corporate Family Rating to B3 from B1. The rating outlook remains Negative. The rating downgrade reflects the potential for further erosion of the company's credit metrics due to dramatic deterioration in global automotive production levels. Auto production declined approximately 25% in the fourth quarter of 2008 in both North America and Europe, and parts suppliers have struggled to adjust their cost structures to the weaker business environment. The decline in global economic conditions and the weakening of consumer credit markets will likely force automotive OEMs to further reduce production levels during 2009, which will place further pressure on the performance of auto parts suppliers such as Tenneco. Because of the erosion of credit metrics, Tenneco is proactively seeking an amendment to its bank credit facility to provide additional cushion for covenant compliance. Despite the deterioration of financial metrics, the B3 rating considers Tenneco's established position as a global supplier of critical automotive products, including critical emission and ride control products. The company has maintained a high level of investment in technology and should be well positioned to benefit when industry conditions rebound. Tenneco has also announced restructuring actions which include plant closings, headcount and compensation reductions, and other actions that are expected to help mitigate the effects of global industry volume pressures. These actions, along with expected new business wins in the company's emissions control segment supported by new emission regulations, could provide a basis for improvement in the company's performance in 2010, particularly if overall industry volumes begin to recover. The negative outlook embodies the risk of additional near-term downward revisions to production schedules in Tenneco's end markets which could further weaken financial performance. Also incorporated in Tenneco's outlook is the financial deterioration of its largest customers in North America. Approximately 24% of Tenneco's revenues are to the North American operations of the Big 3 OEMs and a significant portion of revenue relates to light truck and SUV platforms. The negative outlook also considers the potential for ongoing weakness in performance to impair the company's ability to remain compliant with financial covenants in its bank agreement and the need for amendments to existing covenant requirements. For the fiscal year ending December 31, 2008, Tenneco's EBIT/Interest (including Moody's Standard adjustments) approximated 1.2x and Debt/EBITDA approximated 5.4x. Future events that have potential to drive Tenneco's ratings lower include further declines in global OEM production; failure to successfully implement the restructuring initiatives to help offset industry conditions, elevated working capital levels resulting in continuing negative free cash flow; or deteriorating liquidity. Consideration for a lower rating could arise if any combination of these factors were to lead to leverage being sustained over 6.0x or result in EBIT/Interest coverage sustained below 1.0x times. Future events that have potential to stabilize Tenneco's outlook include: a stabilization of production levels in the automotive markets, growth driven by regulatory emissions control requirements sufficient to offset declines in automotive production while maintaining adequate liquidity, and higher levels of free cash flow over the intermediate term resulting in debt reduction. Consideration for a higher rating could arise if any combination of these factors were to lead to EBIT/Interest coverage approaching 1.5x or a reduction in leverage approaching 4.0x. As of December 30, 2008, Tenneco maintained cash and cash equivalents of $126 million. The company's $550 million revolving credit had about $265 million available after considering $239MM of cash drawings and about $47 million of outstanding letters of credit. The recessionary environment is expected to challenge the company's ability to generate free cash flow in 2009. As a result, the company is expected to be more heavily reliant on the $550 million revolving credit facility over the near-term. There are no major debt maturities over the near-term. The company's $130 million senior secured tranche B letter of credit facility also permits revolving borrowings. Tenneco is in the process of seeking an amendment to its bank credit facility providing additional financial covenant cushion. Alternative sources of liquidity are limited as essentially all the company's assets are secure the bank credit facilities. These ratings were lowered: -- Corporate Family rating, to B3 from B1; -- Probability of Default rating, to B3 from B1; -- $550.0 million first lien senior secured revolving credit facility, Ba3 (LGD2, 11%) from Ba1 (LGD2, 12%); -- $150 million first lien senior secured term loan A, Ba3 (LGD2, 11%) from Ba1 (LGD2, 12%); -- $130 million first lien senior secured letter of credit / revolving loan facility, to Ba3 (LGD2, 11%) from Ba1 (LGD2, 12%); rating for the; - 10.25% guaranteed senior secured second-lien notes due 2013, to B1 (LGD2, 29%) from Ba3 (LGD2 31%) - 8.125% guaranteed senior unsecured notes due 2015, to B3 (LGD4, 49%) from B2 (LGD4, 64%); - 8.625% guaranteed senior subordinated notes due November 2014, to Caa2 (LGD6, 82%) from B3 (LGD6, 92%); The last rating action was for Tenneco was on November 4, 2008 when the company's B1 Corporate Family Rating was affirmed and the outlook changed to Negative. Tenneco, headquartered in Lake Forest, Illinois, is a leading manufacturer of automotive ride control (approximately 33% of sales) and emissions control (approximately 67% of sales) products and systems for both the worldwide original equipment market and aftermarket. Leading brands include Monroe, Rancho, Clevite, and Fric Rot ride control products and Walker, Fonos, and Gillet emission control products. Net sales in 2008 were approximately $5.9 billion. TRUMP ENTERTAINMENT: To Promptly Seek Approval of Marina Sale ------------------------------------------------------------- Notwithstanding their bankruptcy filing on February 16, Trump Entertainment Resorts Inc. and its affiliates will continue to pursue the sale of Trump Marina, one of their three casinos. Opened in 1985 and acquired by Trump Entertainment's predecessor in October 1996, Trump Marina is situated in Atlantic City's marina district, consists of a 27-story hotel with 728 guest rooms. The casino offers approximately 79,000 square feet of gaming space and 58,000 square feet of convention, ballroom and meeting space. On May 28, 2008, Trump Marina Associates, LLC entered into an Asset Purchase Agreement, to sell Trump Marina to Coastal Marina, LLC, an affiliate of Coastal Development, LLC. On October 28, 2008, the parties entered into an amendment to the APA to modify certain terms and conditions of the APA. John P. Burke, executive vice president and chief financial officer, relates, in a document submitted before the U.S. Bankruptcy Court for the District of New Jersey, that "the Debtors intend to file motions to obtain court approval for the sale promptly after the [Petition Date]." A closing is anticipated in May 2009, Mr. Burke relates. The closing is subject to the satisfaction of certain conditions, including receipt of approvals from New Jersey governmental authorities and the Court. The resignation of Donald Trump as chairman two days before the Company's bankruptcy filing, according to Bloomberg, could threaten to kill the $270 million sale of its Trump Marina Casino. The price of the sale includes the settlement of a lawsuit Trump Entertainment filed against the property's buyer, Richard T. Fields. Donald Trump, the Wall Street Journal reported, said Feb. 13 that he'd resign as chairman of the board due to disagreements with the noteholders, which actions forced Trump Entertainment to return to Chapter 11. The noteholders had conveyed their plans to submit an involuntary petition for Trump Entertainment upon the Feb. 13 expiration of their forbearance agreement. About Trump Entertainment Resorts Inc. Based in Atlantic City, New Jersey, Trump Entertainment Resorts Inc. (NASDAQ: TRMP) -- http://www.trumpcasinos.com/-- owns and operates three casino hotel properties in Atlantic City, New Jersey, which include Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino, and Trump Marina Hotel Casino. The company conducts gaming activities and provides customers with casino resort and entertainment. Donald Trump is a shareholder of the company and, as its non- executive Chairman, is not involved in the daily operations of the company. The company is separate and distinct from Mr. Trump's privately held real estate and other holdings. Trump Entertainment Resorts, TCI 2 Holdings, LLC and other affiliates filed for Chapter 11 on Feb. 17, 2009 (Bankr. D. N.J., Lead Case No. 09-13654). The Company has tapped Charles A. Stanziale, Jr., Esq., at McCarter & English, LLP, as lead counsel, and Weil Gotshal & Manges as co-counsel. Ernst & Young LLP is the Company's auditor and accountant and Lazard Freres & Co. LLC is the financial advisor. The Company disclosed assets of $2,055,555,000 and debts of $1,737,726,000 as of Dec. 31, 2008. TRUMP ENTERTAINMENT: Seeks to Use Lenders' Cash Collateral ---------------------------------------------------------- An immediate need exists for Trump Entertainment Resorts Inc., and its affiliates to use cash collateral in order to continue the operation of their business, relates John P. Burke, the company's executive vice president and chief financial officer. He asserts that without use of those funds, the Debtors' trade creditors will cease to provide goods and services to the Debtors on credit, and the Debtors will not be able to pay their payroll and other direct operating expenses and obtain goods and services needed to carry on their businesses in a manner that will avoid irreparable harm to the Debtors' estates. The Debtors accordingly seek authority from the U.S. Bankruptcy Court for the District of New Jersey to use cash collateral in accordance with a budget. A copy of the budget is available for free at http://bankrupt.com/misc/Trump_cashcoll_budget.pdf The Debtors owe $488.8 million to lenders who are backed by first priority liens on Trump Entertainment and its affiliates' assets, and $1.2 billion to lenders who have second liens on Trump's assets. In exchange for the use of their cash collateral, the Debtors will grant adequate protection to the Prepetition Secured Parties in the form of: -- postpetition replacement liens in substantially all of the Debtors' assets and -- valid non-voidable liens existing as of the Petition Date. The Replacement Liens secure for the Prepetition Secured Parties (x) the aggregate diminution, if any, whether by use, sale, lease, depreciation, decline in market price or otherwise of their respective Collateral (including the cash collateral), or the imposition of the automatic stay and (y) the sum of the aggregate amount of all cash proceeds of their respective cash collateral and the aggregate fair market value of all of their respective non-cash Collateral. Mr. Burke asserts that the ability of the Debtors to finance their operations and the availability to the Debtors of sufficient working capital and liquidity through the use of cash collateral is vital to the confidence of the Debtors' employees, major suppliers and to the preservation and maintenance of the going concern values and other values of the Debtors' estates. The Company won't be looking for secured financing, a company officer told Bloomberg News. About Trump Entertainment Resorts Inc. Based in Atlantic City, New Jersey, Trump Entertainment Resorts Inc. (NASDAQ: TRMP) -- http://www.trumpcasinos.com/-- owns and operates three casino hotel properties in Atlantic City, New Jersey, which include Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino, and Trump Marina Hotel Casino. The company conducts gaming activities and provides customers with casino resort and entertainment. Donald Trump is a shareholder of the company and, as its non- executive Chairman, is not involved in the daily operations of the company. The company is separate and distinct from Mr. Trump's privately held real estate and other holdings. Trump Entertainment Resorts, TCI 2 Holdings, LLC and other affiliates filed for Chapter 11 on Feb. 17, 2009 (Bankr. D. N.J., Lead Case No. 09-13654). The Company has tapped Charles A. Stanziale, Jr., Esq., at McCarter & English, LLP, as lead counsel, and Weil Gotshal & Manges as co-counsel. Ernst & Young LLP is the Company's auditor and accountant and Lazard Freres & Co. LLC is the financial advisor. The Company disclosed assets of $2,055,555,000 and debts of $1,737,726,000 as of Dec. 31, 2008. TWIN VEE: Files for Chapter 11 Bankruptcy Protection ---------------------------------------------------- Nadia Vanderhoof at Tcpalm.com reports that Twin Vee Inc. has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Florida. According to court documents, Twin Vee has listed $1.7 million in liabilities. Jason Slatkin, Esq., at Slatkin & Reynolds, assists Twin Vee in its restructuring effort, Tcpalm.com says. Twin Vee, Tcpalm.com states, is asking the Court to let them return into its headquarters in Fort Pierce to collect company assets like computers and boat moldings. Tcpalm.com relates that Twin Vee founder Roger Dunshee, who sold his majority share in the firm to Stonehenge Capital Co. in 2003, evicted the company from his Fort Pierce manufacturing facility in January 2009. Mr. Dunshee said that Twin Vee still owes him about $200,000 in back rent, according to the report. The report quoted Mr. Dunshee as saying, "I've been ordered by a judge to keep things under protection, for the time being." Citing former Twin Vee CEO Scott Noble, Tcpalm.com relates that the firm laid off the majority of its hourly production workers and would have only seven employees, including management. Twin Vee, according to the report, stopped the production of boats in January 2009. Twin Vee Inc. is based in Fort Pierce, Florida. UNITED SUBCONTRACTORS: S&P Cuts Corp. Credit Rating to 'CCC-' ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Edina, Minnisota-based United Subcontractors Inc. S&P lowered the corporate credit rating to 'CCC-' from 'CCC+'. The outlook is negative. "The downgrade reflects our assessment that USI's ability to service its current capital structure over the intermediate term will be difficult because of the continued depressed level of residential construction activity, particularly in USI's key end markets in Florida, Arizona, and Utah," said Standard & Poor's credit analyst Thomas Nadramia. In 2008, EBITDA declined 60%, and S&P expects that performance in the next few quarters to stay weak. Furthermore, the downgrade reflects the likelihood of a near-term covenant violation. In S&P's previous downgrade on Dec. 9, 2008, S&P indicated that USI might need to access its letter of credit or excess cash balances to meet fixed charges, and maintaining compliance with bank covenants could prove difficult. Given extremely weak credit measures, and with consolidated EBITDA interest coverage likely to fall to less than 1x , S&P is skeptical that any amendment to the credit facility that does not include a significant equity infusion will allow USI to meet debt service requirements over the intermediate term. Also, an amendment to the bank facility would likely include an increase in pricing, which would further strain EBITDA coverage of interest. S&P believes that with the operating environment likely to be very difficult for the next few quarters, it is now less certain that there are sufficient economic incentives in place such that the owners would step in to cure a covenant default under the equity cure provision in the credit facility or contribute an amount of equity sufficient to allow USI to meet debt service obligations over the intermediate term. The 'CCC-' corporate credit rating reflects USI's heavy debt burden, limited covenant cushion and liquidity position, weak credit metrics, modest revenue base, cyclical end markets, narrow product focus, and limited geographic diversity. USI is an installer of insulation, windows, and other products. The company is also a provider of shell-contracting services, which include concrete foundation, exterior wall, wood flooring, and roof truss construction for homebuilders. USI has significant exposure to new residential construction, particularly in Florida (about 32% of sales), Utah (19%), and Arizona (15%), markets that have been significantly affected by the ongoing housing downturn due to significant oversupply of new homes and high foreclosure rates. As a result, USI has experienced large double-digit percentage declines in year over year revenues from these markets. S&P expects revenues will decline further in 2009 at a greater rate, due to fewer projected housing starts. The outlook is negative. S&P believes the continued depressed state of new residential construction markets, weakening commercial construction markets, increased pricing pressures, and the recessionary environment will further challenge USI's earnings and cash flow generation over the next 12 to 18 months. As a result, in S&P's view USI will be challenged to service its current capital structure, without lender waivers and amendments, which may be difficult given the current credit market situation. S&P would likely lower the ratings if USI is unable to obtain the necessary waivers, leading to a restructuring of its obligations. VALHI INC: S&P Downgrades Corporate Credit Rating to 'B-' --------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit ratings on Dallas-based Valhi Inc. and its subsidiary, Kronos International Inc., to 'B-' from 'B' and placed the ratings on CreditWatch with negative implications. S&P also lowered the rating on Kronos' EUR400 million senior secured notes issue due 2013 to 'CCC+' from 'B' and placed the notes on CreditWatch with negative implications. S&P revised the recovery rating on these notes to '5', indicating S&P's expectation of modest (10% to 30%) recovery in the event of a payment default, from '3'. The downgrade reflects S&P's expectation of weaker 2009 operating results related to the company's titanium dioxide business, driven by a challenging operating environment with weak global demand and a sustained recession. The downgrade also incorporates the deterioration in year-over-year operating trends versus S&P's expectations, a weakening of the already highly leveraged financial profile, and S&P's expectation that the company will not be able to improve its credit metrics in the near term. The CreditWatch listing indicates that another downgrade is possible if operating performance does not meaningfully improve in the fourth quarter 2008, resulting in further deterioration in the financial profile. In addition, another downgrade is possible if Valhi's cash flows and profitability continue to deteriorate resulting in a weaker liquidity position from current levels. A decent cash balance and availability under several credit facilities support liquidity in the near term, however, S&P remains concerned about the company's ability to extend credit facilities if operating results do not stabilize soon. Valhi has about $1.55 billion in sales and approximately $801 million in total debt, adjusted for operating leases and postretirement benefit obligations and excluding Snake River Sugar Co. debt. W.R. GRACE: Trial on Libby Criminal Case Began Yesterday -------------------------------------------------------- Trial on the U.S. Government's criminal case against W.R. Grace & Co., and six of its former executives relating to the chemical company's former operations of a vermiculite mine in Libby, Montana, started February 19, 2009. The trial is being held before Hon. Donald W. Molloy, Chief Judge of the U.S. District Court for the District of Montana. Grace has stated in its financial report for the quarter ended September 30, 2008, that the trial could last three to five months. Grace, from 1963 to 1992, operated a vermiculite mine outside of Libby, Montana. Vermiculite ore, which is contaminated with a form of asbestos, has spread around Libby and has brought asbestos-related diseases, including mesothelioma, a form of cancer caused by asbestos, to Libby residents. Though vermiculite was processed and sold commercially as attic insulation through the product called Zonolite Attic Insulation, in Libby, where people have easy access to the ore, vermiculite is used in many things, including plasters in walls, on driveways, and as soil amendments. In response to the health complaints, the Government obtained an indictment on February 7, 2005, charging Grace and seven of its executives with criminal conduct arising from Grace's Libby operations. The indictment accused the Grace Defendants of: (1) conspiring knowingly to release asbestos, a hazardous air pollutant, into the ambient air, thereby knowingly placing persons in imminent danger of death or serious bodily injury in violation of Section 7413(c)(5)(A) of the Public Health and Welfare Code; and (2) conspiring to defraud the United States in violation of Section 371 of the Crimes and Criminal Procedures Code. In addition to the dual-object conspiracy, the indictment charges Grace and its executives with three counts of knowing endangerment under the Clean Air Act and four counts of obstruction of justice in violation of Sections 1505 and 1515(b) of the Crimes and Criminal Procedures Code. The Government accuses that: * Grace and its executives acted corruptly, meaning that it acted with an improper purpose, personally or by influencing another, including making a false or misleading statement, or withholding, concealing, altering, or destroying a document or other information; * Grace and its executives obstructed, impeded or endeavored to influence, obstruct, or impede the due and proper administration of the law; and * there was a pending proceeding before a department or agency of the United States. The Grace executive defendants are: -- William McCraig, former manager of operations at the Libby mine; -- Robert Walsh and Robert Bettacchi, former presidents of Grace's Construction Products Division; -- Jack Wolter, ex-general manager of the Construction Products Division; -- Henry Eschenbach, a former director of health and safety at Grace; and -- Mario Favorito, a former legal counsel for Grace. Alan Stringer, also a named defendant in the Libby case, died in February 2007. He was a Grace's general operations manager in Libby. During the trial, the Government will show evidence that the defendants knew the dangers of the asbestos released from the Libby mine yet concealed the dangers, putting Libby residents at risk while enriching themselves. Among others, the Government will present testimony of expert witnesses who will identify as asbestos material found at Grace's Libby plants as well as other locations around Libby, including schools, and findings from the U.S. Environmental Protection Agency that the asbestos poses imminent danger to the community. A full-text copy of the Government's trial brief is available for free at http://bankrupt.com/misc/govttrialbrief.pdf Grace will argue during the trial that the nature of a criminal prosecution provides the company with little opportunity to explain its side of the story before trial. Grace complained that the numerous issues litigated to date have been resolved almost exclusively on the basis of the Government's "unsubstantiated" allegations. Grace said the Government has not explained what quantum of risk it believes is required to establish "imminent danger," limiting its argument only to the purported probative value of its evidence. A full-text copy of the Defendants' trial brief is available for free at http://bankrupt.com/misc/gracetrialbrief.pdf Pre-Trial Hearings & Issues Judge Molloy held a three-day evidentiary hearing, which began on January 21, 2009, during which prosecutors and Grace's defense lawyers presented Daubert arguments to exclude materials and testimonies from evidence. During the evidentiary hearing, Judge Molloy granted Grace and its executives' motion Section 615 of the Federal Rules of Evidence determining that lay witnesses would be excluded from the trial. The Government, however, argued that some of its witnesses are victims of the crimes alleged in the Superseding Indictment, and are therefore entitled to exercise the rights Congress has granted to victims of federal criminal offenses through the enactment of the Crime Victim Rights Act, one of which is the right to not be excluded from court proceedings. Judge Molloy denied the Government's request holding that "there are no crime victims identifiable in this case." On the eve of the trial, Grace and its former executives asked the District Court for a venue change pointing out that "inflammatory pre-trial publicity has saturated the community in which the [District] Court intends to conduct the trial in this case, jeopardizing the Defendants' Fifth and Sixth Amendment right to trial by an impartial jury and necessitating a change of venue." Judge Molloy denied Grace's request, without prejudice to renewal of the request "in the event that a fair and impartial jury cannot be seated." During the evidentiary hearing, the Government and Grace and its executives presented Daubert motions to exclude materials and testimonies as evidence during the trial. In preparation of the February 19 jury trial, attorneys have received the names of 80 prospective jurors. The 80-person pool will be pared down to a dozen individuals and several alternates prior to the trial. Trial Delay Trial on the criminal case has been repeatedly delayed due to appeals. In 2006, Judge Molloy preliminarily dismissed as time-barred the knowing endangerment object of conspiracy charges against Grace. Subsequently, the Government obtained permission to file an amended indictment but Judge Molloy again dismissed a portion of the Government's allegations, asserting conspiracy to knowingly endanger residents of the Libby area and others in violation of the Clean Air Act, of the new indictment. Judge Molloy also granted a request by the Defendants to exclude as evidence sample results that included minerals that do not constitute asbestos under the Clean Air Act. In October 2007, a three-judge panel of the U.S. Court of Appeals in the Ninth Circuit reversed some of Judge Molloy's rulings and reinstated the conspiracy charges. Appellate Court Judge Betty B. Fletcher found that the District Court erred in dismissing the knowing endangerment object in the original indictment. "[T]he parties do not dispute that the original indictment was timely filed. The district court's holding that the indictment was time-barred referred only to its failure to allege the necessary overt acts in the original indictment -- a flaw that can be cured through re-indictment under Section 3288 of the Crimes and Criminal Procedures Code. Judge Fletcher also held that the District Court erred in concluding that ambiguity exists simply because of the existence of two oversight structures -- a civil regulatory structure and a criminal enforcement provision -- that use different definitions of the term "asbestos." In addition, Judge Fletcher held that the District Court improperly limited the term "asbestos" to the six minerals covered by the civil regulations. Asbestos is adequately defined as a term and need not include mineral-by-mineral classifications to provide notice of its hazardous nature, particularly to these knowledgeable defendants, Judge Fletcher said. The Ninth Circuit also granted the Government's request for a writ of mandamus, and held that Grace cannot avail itself at trial of the affirmative defense articulated in Section 7413(c)(5)(A) of the Public Health and Welfare Code. In relevant part, Section 7413(c)(5)(A) states that the release of certain pollutant on which "the Administrator has set an emissions standard" will not constitute a violation under that provision. A copy of the 36-page Ninth Circuit Ruling is available for free at http://bankrupt.com/misc/grace_9thCircuitRuling.pdf Grace, in December 2007, appealed asked for a rehearing of the Appellate Court's ruling but was denied. In April 2008, Grace asked the U.S. Supreme Court for a review of the reinstatement of the conspiracy charges and to overrule the Appellate Court's definition of "asbestos." The Government opposed Grace's request for a Supreme Court review arguing that a review will further delay the trial. The Government pointed out that some witnesses and many victims are dying from mesothelioma, asbestosis, and other asbestos-related diseases, and as time passes, more witnesses will be unavailable to testify, and fewer victims will be able to attend the trial. The Supreme Court rejected Grace's request for a review. Grace Faces Up to $280-Mil. in Libby Fines Grace said that it could be subject to up to $280 million in fines, plus additional amounts for restitution to victims. The indictment alleges that Grace could face an amount equal to twice the after-tax profit earned from its Libby operations or twice the alleged loss suffered by victims. The Government said Grace's after-tax profits were $140 million. If found guilty, Grace executives could face maximum prison sentences from 55 to 70 years. The U.S. Bankruptcy Court for the District of Delaware, who is overseeing Grace's Chapter 11 case, previously granted Grace's request to advance legal and defense costs to the employees involved in the criminal case, subject to a reimbursement obligation if it is later determined that the employees did not meet the standards for indemnification set forth under the appropriate state corporate law. For the nine months ended September 30, 2008 and 2007, total expense for Grace and the employees was $16.6 million and $11.2 million, respectively. Cumulative expenses to address this matter were $108.3 million through September 30, 2008. Grace stated that it is unable to assess whether the indictment, or any conviction resulting therefrom, will have a material adverse effect on the results of its operations or financial condition or affect its bankruptcy proceedings. For the remainder of 2008, Grace expected legal fees for the case to range from $8 million to $10 million. In June 2008, Grace sought and obtained permission from the Delaware Bankruptcy Court to pay $250 million for environmental clean-up costs in Libby to the Government, the largest ever clean-up cost paid by a company to the Government. An August 2008 report prepared by Dr. Alan Whitehouse and Dr. Brad Black of Libby's Center for Asbestos Related Disease, forecasted an epidemic of mesothelioma in "years to come." The report said that Libby residents who were exposed to asbestos-tainted vermiculite will begin to show symptoms of mesothelioma. According to the report, the extent of the epidemic of environmental mesothelioma due to exposures based at Libby will probably not peak for another 10 to 20 years because Grace's vermiculite mine was operated from 1963 until 1992. On October 2007, the Government Accountability Office, the United States Congress' investigative arm, issued a report finding, among other things, that the U.S. Environmental Protection Agency failed to adequately warn the public of hazards of Grace's vermiculite mine. The GAO Report also found that the EPA used outdated information in conducting research and clean-up of about 270 areas thought to have received asbestos-contaminated materials from Grace's Libby mine. John B. Stephenson, director of GAO's Natural Resources and Environment division, related that the standards used by the EPA are not "health-based" and, according to the Agency for Toxic Substances and Disease Registry, were "limited and have since been improved." The GAO Report also found that the EPA's regional offices did not implement key provisions of the agency's public notification regulations at eight of the 13 sites for which the EPA had lead responsibility. At four sites, the EPA neither provided and maintained documentation about the cleanups for public review and comment nor provided for a public comment period. A full-text copy of the 76-page GAO Report is available for free at http://bankrupt.com/misc/grace_2007GAOReport.pdf Counsel The Government is represented by John C. Cruden, Esq., Acting Assistant Attorney General, ENRD, Stacey Mitchell, Esq., Chief Environmental Crimes Section, Kevin M. Cassidy, Esq., Senior Trial Attorney of the Environmental Crimes Section, and Kris A. McLean, Esq., of the Office of the U.S. Attorney, in Missoula, Montana. Grace is represented by Barbara Harding, Esq., Brian T. Stansbury, Esq., David M. Bernick, Esq., Laurence A. Urgenson, Esq., and Tyler D. Mace, at Kirkland & Ellis LLP, in Washington, D.C.; Scott A. McMillin, Esq., and Walter R. Lancaser, Esq., from Kirkland & Ellis' Chicago, Illinois office; and Charles E. McNeil, Esq., Kathleen L. DeSoto, Esq., and Stephen R. Brown, Esq., at Garlington, Lohn & Robinson, PLLP, in Missoula, Montana. Harry Eschenbach is represented by David Krakoff, Esq., Gary Winters, Esq., James Parkinson, Esq., Lauren Randall, Esq., at Mayer Brown, JSM, in Washington, D.C., and Ronald Waterman, Esq., at Gough, Shanahan, Johnson & Waterman, in Helena, Montana. Jack Wolter is represented by Carolyn Kubota, Esq., and Jeremy Maltby, Esq., at O'Melveny & Myers, LLP, in Los Angeles, California, and Christian Nygren, Esq., and W. Adam Duerk, Esq., at Milodragovich, Dale, Steinbrenner & Binney, in Missoula, Montana. William McCraig is represented by Elizabeth Van Doren Gray, Esq., at Sowell, Gray, Stepp & Lafitte, in Columbia, South Carolina; William Coates, Esq., at Roe, Cassidy, Coates & Price, P.A., in Greenville, South Carolina, and Palmer Hoovestal, Esq., at Hoovestal Law Firm, PLLC, in Helena, Montana. Robert Bettachi is represented by Tom Frongillo, Esq., Patrick O'Toole, Esq., Vermon Broderick, Esq., and David Hird, Esq., at Weil, Gotshal & Manges, in Boston, Massachusetts, and Brian Gallik, Esq., at Goetz, Gallik & Baldwin, P.C., in Bozeman, Montana. Mario Favorito is represented by Stephen Jonas, Esq., Howard Shapiro, Esq., and Jeannie Rhee, Esq., at Wilmer Cutler Pickering Hale and Dorr, in Boston, Massachusetts, and C.J. Johnson, Esq., at Kalkstein Law Firm, in Missoula, Montana. Robert Walsh is represented by Stephen Spivack, Esq., David Roth, Esq., and Daniel Golden, Esq., at Bradley Arant Boult Cummings, in Washington, D.C., and Catherian Laughner, Esq., and Aimee Grmoljez, Esq., at Browning Kaleczyc Berry & Hoven, P.C., in Bozeman, Montana. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) - - http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Debtors' Disclosure Statement began on Jan. 21, 2005. The Debtors' exclusive period to file a chapter 11 plan expired on July 23, 2007. Estimation of W.R. Grace's asbestos personal injury liabilities commenced on Jan. 14, 2008. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) W.R. GRACE: Seeks to Employ Janet Baer as Bankruptcy Co-Counsel --------------------------------------------------------------- W.R. Grace & Co. seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ The Law Offices of Janet S. Baer, P.C., as their bankruptcy co-counsel, nunc pro tunc to February 11, 2009. Ms. Baer was a former partner at Kirkland & Ellis, LLP, and has served as one of the Debtors' lead restructuring lawyers since the Petition Date. Effective February 10, 2009, Ms. Baer resigned from K&E and formed her own law corporation. The Debtors seek to continue to employ Ms. Baer due to her vast experience and knowledge of the Debtors' business and operations. The Debtors tell the Court that their estates would not be unduly prejudiced by the time and expense necessary to replicate Ms. Baer's ready familiarity with the intricacies of the Debtors' business operations and issues involving the Chapter 11 cases. The Debtors believe that both the business interruption and the costs that would be involved in educating other counsel at this stage in their Chapter 11 cases would be extremely harmful to their estates. As bankruptcy co-counsel, JSB will: (a) advise the Debtors with respect to their powers and duties as debtors in possession in the continued management and operation of their businesses and properties; (b) advise the Debtors on the conduct of their Chapter 11 cases, including all of the legal and administrative requirements of operating in Chapter 11; (c) attend meetings and negotiate with representatives of the creditors and other parties-in-interest; (d) prosecute actions on the Debtors' behalf, defend actions commenced against the Debtors and represent the Debtors' interests in negotiations concerning litigation in which the Debtors are involved, including objections to claims filed against the Debtors' estates; (e) prepare pleadings in connection with the Chapter 11 cases, including motions, applications, answers, orders, reports and papers necessary or otherwise beneficial to the administration of the Debtors' estates; (f) advise the Debtors in connection with any potential sale of assets; (g) appear before the Court and any other courts, including appellate courts, to represent the interests of the Debtors' estates; and (h) assist the Debtors in obtaining approval of a disclosure statement and confirmation of a Chapter 11 plan of reorganization and all other related documents. The Debtors will pay JSB in accordance with the firm's hourly rates. The Debtors' matters will primarily be handled by Janet S. Baer, Esq., whose current standard hourly rate is $625 per hour. JSB's current attorney billing rates range from $350 to $325 per hour. JSB paralegals' rates range from $80 to $175 per hour. The Debtors will also reimburse JSB for any necessary out-of- pocket expenses. Ms. Baer, sole shareholder of The Law Offices of Janet S. Baer, P.C., assures the Court that her firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) - - http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Debtors' Disclosure Statement began on Jan. 21, 2005. The Debtors' exclusive period to file a chapter 11 plan expired on July 23, 2007. Estimation of W.R. Grace's asbestos personal injury liabilities commenced on Jan. 14, 2008. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) W.R. GRACE: Hartford, Other Insurers Object to Amended Plan ----------------------------------------------------------- Hartford Accident and Indemnity Company, First State Insurance Company, Twin City Fire Insurance Company, and New England Reinsurance Corporation join in Federal Insurance Company's preliminary objection to the confirmation of W.R. Grace & Co.'s First Amended Plan of Reorganization. Federal Insurance has complained that the Plan is not insurance neutral. Federal contends that the Plan has not been proposed in good faith pursuant to the Bankruptcy Code because it impairs Federal's rights under the insurance policies. As reported by the Troubled Company Reporter on January 8, 2009, various parties submitted objections to the proposed confirmation of W.R. Grace's First Amended Plan, saying the Plan cannot be confirmed pursuant to Section 1129 of the Bankruptcy Code: -- Travelers Casualty and Surety Company, formerly known as The Aetna Casualty and Surety Company; -- Continental Casualty Company and Continental Insurance Company, collectively as CNA; -- Allstate Insurance Company, as successor-in-interest to Northbrook Excess and Surplus Insurance Company, formerly Northbrook Insurance Company; -- Zurich Insurance Company, Zurich International (Bermuda) Ltd., and Maryland Casualty Company; -- Fireman's Fund Insurance Company, Allianz S.p.A., formerly known as Riunione Adritica di Sicurta, collectively as FFIC; -- AXA Belgium, as successor to Royale Belge SA; -- Seaton Insurance Company and OneBeacon America Insurance Company; -- Columbia Insurance Company, formerly known as Republic Insurance Company and Government Employees Insurance Company; -- certain London Market Insurance Companies; -- Federal Insurance Company; and -- Arrowood Indemnity Company, formerly known as Royal Indemnity Company. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) - - http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Debtors' Disclosure Statement began on Jan. 21, 2005. The Debtors' exclusive period to file a chapter 11 plan expired on July 23, 2007. Estimation of W.R. Grace's asbestos personal injury liabilities commenced on Jan. 14, 2008. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) WERECYCLE! INC: Files for Chapter 11 Bankruptcy Protection ---------------------------------------------------------- Sdbmagazine.com reports that WeRecycle! Inc. has filed for Chapter 11 bankruptcy protection. According to Sdbmagazine.com, WeRecycle! said that it has received a proposal for investment from Hugo Neu Corp., a privately owned firm that manages, builds and invests in recycling, real estate, water transportation, and cleantech businesses. WeRecycle! and Hugo Neu launched talks about a partnership in the fourth quarter of 2008, Sdbmagazine.com states, citing WeRecycle! chief operating officer Gina Chiarella. According to the report, Hugo Neu heard about WeRecycle! through a number of non-government organizations, which offered WeRecycle! as an example of a reputable electronics recycling operation. Sdbmagazine.com relates that Hugo Neu's plan would provide interim resources to help finance WeRecycle!'s reorganization. Hugo Neu would acquire a controlling interest in WeRecycle! and would make further investments in technology and downstream recycling processes, according to the report. The report says that the proposal is subject to bankruptcy court approval. Sdbmagazine.com quoted WeRecycle! president Mick Schum as saying, "We have grown tremendously over the past several years, but the unprecedented downturn in the economy and the subsequent credit crunch created liquidity problems and made it impossible for us to raise the capital needed to fund our continuing expansion." Ms. Chiarella, according to Sdbmagazine.com relates that the firm grew 30% last year, adding a new plant in Mount Vernon, New York WeRecycle!, says Sdbmagazine.com, had difficulty securing loans due to the credit crunch. "The downturn in the economy made it difficult to keep up with our growth. We were operating under strain for a while and just keeping ahead of it. Chapter 11 was unavoidable," the report quoted Ms. Chiarella as saying. Ms. Chiarella said that she doesn't anticipate that WeRecycle! would lay off workers when the firm's Chapter 11 filing gets court approval, Sdbmagazine.com notes. WeRecycle!'s restructuring will take six months, the report says, citing Ms. Chiarella. Sdbmagazine.com quoted Mr. Schum as saying, "We believe the planned investment by Hugo Neu Corp. will allow us to fulfill our vision of bringing the highest quality electronics recycling processes to the public and private sector." WeRecycle! Inc. is an electronics recycling firm based in Meriden. WERECYCLE! INC: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: We Recycle!, Inc. dba Techbite Sales dba Bytech Electronics dba Protech Electronics P.O. Box 4699 Wallingford, CT 06492 Bankruptcy Case No.: 09-22208 Chapter 11 Petition Date: February 17, 2009 Court: United States Bankruptcy Court Southern District of New York (White Plains) Debtor's Counsel: Dawn K. Arnold, Esq. Rattet, Pasternak & Gordon-Oliver, LLP 550 Mamaroneck Avenue Harrison, NY 10528 Tel: (914) 381-7400 Fax: (914) 381-7406 Email: darnold@rattetlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of 20 largest unsecured creditors together with its petition. The petition was signed by Michael Schum, president of the company. WHITEHALL JEWELERS: Panel Taps CBIZ as Financial Advisor -------------------------------------------------------- The Official Committee of Unsecured Creditors in Whitehall Jewelers Holdings, Inc., and Whitehall Jewelers, Inc.'s Chapter 11 cases asks the U.S. Bankruptcy Court for the District of Delaware to employ CBIZ Accounting, Tax & Advisory of New York, LLC dba CBIZ Mahoney Cohen and CBIZ, Inc. as financial advisors. The committee relates that CBIZ, successors in interest to Mahoney Cohen & Company, CPA, P.C., will continue the services previously provided by MC. CBIZ will provide the committee accounting, tax and advisory services, employee benefits design and administration, human resources, information technology, payroll, specialty insurance, valuation, workers compensation, medical account billing and management services, practice management and consulting services. Charles M. Berk, managing director of CBIZ Accounting, Tax & Advisory of New York, LLC dba CBIZ Mahoney Cohen, tells the Court that the scope, terms and conditions of CBIZ's proposed employment are identical to MC's. Mr. Berk assures the Court that CBIZ is a "disinterested person" a disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Chicago, Illinois, Whitehall Jewelers Holdings, Inc. -- http://www.whitehalljewellers.com/-- through its subsidiary, Whitehall Jewelers, Inc., operates as a specialty retailer of fine jewelry in the United States. It offers a selection of merchandise, including diamonds, gold, precious and semi-precious jewelry, and watches. As of June 23, 2008, it operated 373 stores in regional and super-regional shopping malls under the names Whitehall and Lundstrom. The company and Whitehall Jewelers, Inc., filed for Chapter 11 relief on June 23, 2008 (Bankr. D. Del. Lead Case No. 08-11261). James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang Ziehl & Jones, LLP; Scott Rutsky, Esq., Peter Antoszyk, Esq., Adam T. Berkowitz, Esq., and Jesse I. Redlener, Esq., at Proskauer Rose LLP, represent the Debtors in their restructuring efforts. Epiq Bankruptcy Solutions LLC is their claims, noticing and balloting agent. In its schedules, Whitehall Jewelers, Inc. listed total assets of $246,571,775 and total debts of $173,694,918. WL HOMES LLC: Case Summary & 35 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: WL Homes LLC dba John Laing Homes John Laing Homes Luxury Laing Urban Laing Luxury Homes John Laing Urban 19520 Jamboree Road Irvine, CA 92612 Bankruptcy Case No.: 09-10571 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- JLH Realty & Construction, Inc. 09-10572 JLH Arizona Construction, LLC 09-10573 WL Texas LP 09-10574 WL Homes Texas LLC 09-10575 Laing Texas LLC 09-10576 Chapter 11 Petition Date: February 19, 2009 Court: District of Delaware (Delaware) Judge: Brendan Linehan Debtor's Counsel: Laura Davis Jones ljones@pszyj.com Timothy P. Cairns tcairns@pszjlaw.com Pachulski Stang Ziehl & Jones LLP 17th Floor, 919 N. Market Street Wilmington, DE 19899-8705 Tel: (302) 652-4100 Fax: (302) 652-4400 Estimated Assets: More than $1 billion Estimated Debts: $500 million to $1 billion Debtor's list of its 35 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Lawrence Webb Obligation $1,200,000 96 Archipelago Drive Newport Coast, CA 92657 Van Dyk Construction, Inc. Trade Debt $331,627 12905 Division Street Unit A Littleton, CA 80125 Roddan Paolucci Vendor Debt $319,739 2516 Via Tejon, Suite 114 Palos Verdes Estates, CA 90274 John Mecklenburg Obligation $262,287 P.O. Box 9207 Rancho Santa Fe, CA 92067 Eartworks Soil Amendments, Inc. Vendor Debt $257,378 1725 Aqua Mansa Road Riverside, CA 92509 Jim Lemming Obligation $250,000 210 Park Laureate Drive Houston, TX 77024 Weber Construction, Inc. Trade Debt $248,339 Ceramic Tile Art, Inc. Trade Debt $230,009 Park Vista Builders, LLC Trade Debt $218,243 HNR Framing System Trade Debt $218,135 Newmeyer & Dillion LLP Vendor Debt $214,281 Van Elk, Ltd. Trade Debt $197,921 MBC Construction, Inc. Trade Debt $195,580 Rocky Mountain Drywall, Inc. Trade Debt $187,580 Capital Drywall LP Trade Debt $186,718 Serimsher Construction Dev't. Trade Debt $186,259 KTGY Group, Inc. Vendor Debt $183,554 Pacific Masonry Walls, Inc. Trade Debt $177,325 Solera Homes, Inc. Trade Debt $170,000 Rober Hidey Architects Vendor Debt $168,125 E.B.S. Inc. Elite Bobcat Services Trade Debt $164,672 Smilanic Tile Trade Debt $162,007 Elite Tile Trade Debt $153,088 City of Fremont Gov't. Contract $152,719 Creative Touch Interiors Vendor Debt $151,689 East Bay Construction Co., Inc. Trade Debt $146,217 SelectBuild Northern California, Inc. Trade Debt $144,245 Proulx Company, Inc. Trade Debt $143,793 Endrissi Excavating, Inc. Trade Debt $132,076 Plumbing Concepts, Inc. Trade Debt $131,594 Heart Wood MFG, Inc. Trade Debt $127,826 Citibank NA Vendor Debt $125,500 Slimform Concrete Co. Trade Debt $122,527 JA Hill Corporation Trade Debt $121,741 Wood, Smith, Henning, & Bermann LLP Vendor Debt $118,137 WP EVENFLO: S&P Downgrades Corporate Credit Rating to 'CCC' ----------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered the corporate credit rating on WP Evenflo Holdings Inc. to 'CCC' from 'CCC+'. At the same time, S&P lowered the company's first-lien senior secured bank loan rating to 'CCC+' from 'B-' and its second-lien senior secured bank loan rating to 'CC' from 'CCC-'. The recovery ratings on the bank loan ratings remain unchanged. The outlook is negative. As of Sept. 30, 2008, Vandalia, Ohio-based WP Evenflo had about $183 million of debt. WP Evenflo is the parent of Evenflo Co. Inc., a leading manufacturer and marketer of specialty and juvenile products. "The ratings downgrade is based on the company's very weak liquidity as the company has minimal cash balances and revolver availability, and S&P believes there is very limited cushion under its bank financial covenants," said Standard & Poor's credit analyst Susan H. Ding. "In addition, S&P expects that the recent company recall of more than 200,000 units of its Evenflo ExerSaucer will further pressure already-weak operating fundamentals," she continued. The weak U.S. economy, costs related to an earlier product recall, and revolver borrowings the company used to fund an acquisition in 2008 all contributed to weaker operating results and credit metrics. Accordingly, S&P believes the company will be challenged to improve its operating performance to materially improve liquidity and restore adequate cushion to its financial covenants. S&P expects liquidity to remain very weak over the near term as a result of currently limited availability on the company's revolving credit facility, minimal cash balances, and estimated very tight cushion on its financial covenants. S&P could lower the ratings if the company cannot comply with its bank covenants and does not enhance its liquidity position. S&P would consider an outlook revision to developing or stable if the company can materially improve its liquidity and operating results. YRC WORLDWIDE: Fitch Downgrades Issuer Default Rating to 'CC' ------------------------------------------------------------- Fitch Ratings has taken these rating actions on YRC Worldwide Inc. and its YRC Regional Transportation, Inc. subsidiary: YRC Worldwide Inc. -- Issuer Default Rating downgraded to 'CC' from 'CCC'; -- Secured credit facilities to 'B-/RR2' from 'B/RR1'; -- Senior unsecured affirmed at 'C/RR6'. YRC Regional Transportation, Inc. -- IDR downgraded to 'CC' from 'CCC'; -- Senior secured notes affirmed at 'C/RR6'. In addition, Fitch has removed the ratings from Rating Watch Negative where they were originally placed on Jan. 9, 2009. Fitch's ratings apply to approximately $550 million in notes, a $111.5 million secured term loan and a $950 million secured revolving credit facility. Fitch is not providing a Rating Outlook for YRCW. The downgrade in the ratings follows YRCW's announcement that it has entered into an amendment to its credit facility agreement that revises a number of its key provisions, including a revision to the facility's financial covenants. In conjunction with the credit facility amendment, YRCW also has renewed its asset backed securitization facility, a type of receivables sales program that provides crucial liquidity to the company. Market conditions in the less-than-truckload sector remain extremely challenging, however, and Fitch views the credit facility's new EBITDA covenant as very stringent. In addition, Fitch has deep concerns regarding YRCW's ability to meet the $400 million in debt obligations that the company faces in 2010. The most important change in the amended credit facility agreement is a modification to the facility's covenant package. The amended facility now contains a minimum EBITDA covenant, a minimum liquidity covenant and a maximum capital expenditures covenant. Of the three, the EBITDA covenant is expected to be the most challenging, as the company is required to produce successively higher levels of EBITDA through year-end 2010, beginning with $45 million in the quarter ending June 30, 2009, and rising to $240 million in the four quarters ended Dec. 31, 2010. Fitch notes that YRCW's ability to meet the requirements of the minimum EBITDA covenant will be determined to a large extent by LTL market conditions, which remain very difficult. By way of comparison, Fitch calculates that YRCW produced negative EBITDA of $73 million in the fourth quarter of 2008, so the $45 million EBITDA covenant in the second quarter of 2009 will require a $118 million improvement in EBITDA in the second quarter of this year compared to the fourth quarter of last year. Although the revised Teamsters contract and the labor cost savings imposed on non-union employees could provide about $75 million in cost savings in the quarter (versus the fourth quarter of 2008), and the integration of the Yellow and Roadway networks will provide some additional cost (and, potentially, revenue) benefits, Fitch believes achieving the required improvement in second-quarter EBITDA will be a challenge. Fitch expects YRCW to have little difficulty achieving the other two new credit facility covenants, at least in the near term. The minimum liquidity covenant, which runs through Aug. 17, 2012 (which is the maturity of the credit facility), requires YRCW to maintain a minimum five-day rolling liquidity of $100 million, but as the calculation of liquidity includes availability on the credit and ABS facilities, Fitch expects the company to be able to meet the covenant threshold. The maximum capital expenditures covenant limits capital expenditures to $150 million in 2009 and $235 million in 2010, both of which are within the company's control. Beginning on March 31, 2011, YRCW will again be required to maintain the 3.5 times (x) leverage ratio and 2.5x interest coverage ratio as prescribed in the credit facility agreement before the most-recent amendment. Fitch has significant concerns regarding YRCW's debt obligations that arise in 2010. The remaining $150 million in YRC National Transportation notes mature in April 2010, while the $250 million in 5% contingent convertible senior notes are callable at par in August 2010. These two sets of notes result in $400 million in debt obligations that YRCW will need to satisfy next year. In addition, a provision of the amended credit facility allows the lenders to terminate the facility if $50 million or more remains outstanding on the YRC Regional Transportation notes on or after March 1, 2010, or if $50 million or more remains outstanding on the 5% contingent convertible senior notes on or after June 25, 2010. Thus, the amended credit facility requires YRCW to meet the majority of both obligations early. Given credit market conditions, Fitch expects that YRCW will likely be unable to refinance these obligations when they arise. This will require the company to pay down the notes with a combination of cash on hand and credit facility and/or ABS facility borrowings, raise cash through an equity sale (which Fitch views as unlikely unless the company's share price rises significantly), or seek to tender for the debt below par value. Given the circumstances of a below-par tender in this case, Fitch would view such a transaction as a distressed debt exchange and would downgrade the rating on the affected notes to 'RD.' Against the backdrop of virtually unprecedented weakness in LTL market conditions, YRCW continues to look for additional ways to bolster its cash liquidity. The company ended 2008 with $325 million in cash on its balance sheet, although much of this was due to borrowings on YRCW's revolving credit facility. Fitch estimates outstanding borrowings on the credit facility totaled around $500 million on Dec. 31, 2008. Further bolstering cash liquidity, on Jan. 30, 2009, the company closed on the first tranche of a two-part facility sale-leaseback transaction that provided the company with a total of $101 million in cash proceeds. YRCW will receive an additional $50 million when the second tranche closes, which is expected later in the first quarter of 2009. YRCW is actively pursuing additional sale- leaseback transactions, as well as the sale of facilities freed up as part of the YRC National Transportation integration process. Although the facilities sales could provide the company with significant cash proceeds over the medium term, the timing of sales in the current environment is unclear, and sale-leaseback financing can be relatively expensive. Also, provisions in the credit facility require a portion of the cash proceeds received from asset sales that occur after July 15, 2009 to be used to prepay outstanding amounts on the credit facility. The credit facility limits total facilities sales to $400 million in 2009 and 10% of YRCW's total consolidated assets in subsequent years. Prior to its renewal, the ABS facility had been due in April, and a failure to successfully renew it would have had serious consequences for YRCW's liquidity position. The limit of the renewed ABS facility has declined to $500 million from $600 million, due in part to a decline in the available receivables pledged under the facility, which have recently tended to run too low to allow YRCW to utilize the full $600 million limit. Helping to mitigate the liquidity effects of the reduced ABS availability is the unwinding of YRCW's captive insurance subsidiary, which had invested in a portion of the receivables backing the ABS facility. This investment in receivables by the insurance subsidiary had reduced the ABS facility's available liquidity by $245 million at Sept. 30, 2008. The ABS facility agreement contains a covenant package that is substantially similar to the credit facility. ZIM CORPORATION: Earns $203,620 in Quarter ended December 31 ------------------------------------------------------------ ZIM Corporation elected to begin filing annual reports under the Exchange Act on Form 20-F and other reports on Form 6-K and will no longer file reports on Forms 10-K, 10-Q or 8-K. ZIM's also disclosed financial position at Dec. 31, 2008, and results of operations for the three and nine months ended Dec. 31, 2008, well as certain other information that ZIM deems of material importance to its shareholders. For three months ended Dec. 31, 2008, Zim reported net income of $203,620 compared with net income of 155,758 for the same period in the previous year. For nine months ended Dec. 31, 2008, Zim reported net income of 170,170 compared with net loss of $42,846 for the same period in the previous year. At Dec. 31, 2008, the Zim's balance sheet showed total assets of $1,035,516, total liabilities of $342,258 and stockholders' equity of $693,258. Liquidity and Going Concern At Dec. 31, 2008, the Company had access to a line of credit for approximately $410,509 from its chief executive officer and a working capital line from its principal banker for approximately $41,051, in addition to a cash and cash equivalent balance of $628,906. Management believes that these funds, together with cash from on-going operations, will be sufficient to fund existing operations for the next 12 months. However, there is no guarantee that unanticipated circumstances will not require additional liquidity, and in any event, these funds alone may not allow for any additional expenditures or growth. Cash and cash equivalents of $628,906 are comprised of $162,205 cash and $466,701 cash equivalents. The cash equivalents of $466,701 at Dec. 31, 2008 (Nil at March 31, 2008,) are comprised of Bankers Acceptances with original maturities of 30, 60 or 90 days. Future liquidity and cash requirements will depend on a range of factors, including the level of success the Company has in executing its strategic plan as well as its ability to maintain business in existing operations and its ability to raise additional financing. Accordingly, there can be no assurance that ZIM will be able to meet its working capital needs for any future period. In addition, the Company has an accumulated deficit of $21,285,653 and, during the fiscal year ended March 31, 2008, generated negative cash flows from operations of $315,458. The Company also has generated negative cash flows from operations during four of the previous five fiscal years. If ZIM's expenses surpass the funds available or if ZIM requires additional expenditures to grow the business, the Company may be unable to obtain the necessary funds and ZIM may have to curtail or suspend some or all of its business operations, which would likely have a material adverse effect on its business relationships, financial results, financial condition and prospects, well as on the ability of shareholders to recover their investment. A full-text copy of the 6K filing is available for free at: http://ResearchArchives.com/t/s?39a2 About ZIM Corp. Ottawa, Canada-based ZIM Corporation (OTC BB: ZIMCF) -- http://www.zim.biz/-- is a mobile content, Enterprise Database Software and Internet TV service provider. Through its global infrastructure, ZIM provides publishing and licensing services for market-leading mobile content and for Internet TV broadcasting. Going Concern Doubt Raymond Chabot Grant Thornton LLP raised substantial doubt on the ability of ZIM Corporation to continue as a going concern after it audited the company's financial statements for the year ended March 31, 2008. The auditor disclosed that the company has an accumulated deficit of $21,455,824 and generated negative cash flows from operations of $315,458 during the year ended March 31, 2008. The company also has generated negative cash flows from operations during four of the previous five years. * BOOK REVIEW: Corporate Recovery - Managing Cos. in Distress ------------------------------------------------------------- Authors: Stuart Slatter and David Lovett Publisher: Beard Books Softcover: 352 pages List Price: $34.95 Review by Henry Berry According to the authors, "turnaround management is everyday management." There are no miraculous remedies for bringing a company out of its troubles; no formulas to apply that will guarantee recovery. Management has to be alert and flexible to adapt to ever-changing business conditions both outside and within a company. Although turnaround management (or "crisis management" as the authors also call it) is often regarded as a specialized type of management or a gifted set of management skills, Slatter and Lovett argue that any good manager should have the skills to be able to move his or her company toward recovery. Managers often fail because they do not recognize or acknowledge the warning signs of a crisis, not because they lacked the relevant management skills. Corporate Recovery does not teach managers how to become "crisis managers." While the book does provide guidance on what management skills are required if a company slips into a crisis, for the most part the authors take a broader view. Crisis management involves applying traditional management techniques in an environment where the patient is seriously ill, both cash and time are in short supply, and rapid recovery is required. The authors suggest that these same skills are necessary when a company has been acquired and is inevitably undergoing some changes, improvement of short-time financial performance is sought, and a company is trying to head off a crisis rather than pull itself out of one. The authors give attention to both external and internal factors and their interrelationship. The reader is taken chapter by chapter through all of the stages of distress in a company, from early warning signs through pervasive problems to moving onto solid ground and emerging from a turnaround. The book does not offer merely an academic analysis of the distinguishing factors of each stage. The authors provide relevant, effective action for each stage of distress. Different stages require different actions. Under circumstances of distress, the enthusiasm and morale that are signs of a healthy company in normal times cannot fix the causes of the problems. Ordinary leadership skills such as setting a good example and inspiring loyalty will not effect a turnaround. Fundamental in a successful turnaround is the actions taken by a company's key decisionmakers. Only they are in a position to make the crucial decisions that can bring an organization out of distress. Corporate Recovery is an incomparable guide for managers of companies in distress. The book brings clarity to what is often a clouded, disturbing, and stressful situation, even for the most experienced decisionmakers. This book can help an organization's decisionmakers ward off or minimize hazards to its well being. For ones who find themselves already in worrisome crisis situations, it can be an invaluable handbook, no matter what stage of the crisis. Slatter is founding member of the Society of Turnaround Professionals. He works with corporations on turnarounds and provides training for managers and executives. Lovett has extensive experience in turnarounds and heads his own firm helping companies improve their operations and financial performance and restore or increase corporate value. ********* 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, 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. *** End of Transmission ***